Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-4637 June 30, 1952
JOSE A. LUNA, petitioner,
vs.
DEMETRIO B. ENCARNACION, Judge of First Instance of Rizal, TRINIDAD REYES and THE
PROVINCIAL SHERIFF OF RIZAL, respondents.
Jose S. Fineza for petitioner.
BAUTISTA ANGELO, J .:
On September 25, 1948, a deed designated as chattel mortgage was executed by Jose A. Luna in
favor of Trinidad Reyes whereby the former conveyed by way of first mortgage to the latter a certain
house of mixed materials stated in barrio San Nicolas, municipality of Pasig, Province of Rizal, to
secure the payment of a promissory note in the amount of P1,500, with interest at 12 per cent per
annum. The document was registered in the office of the register of deeds for the Province of Rizal.
The mortgagor having filed to pay the promissory note when it fell due, the mortgage requested the
sheriff of said province to sell the house at public auction so that with its proceeds the amount
indebted may be paid notifying the mortgagor in writing of the time and place of the sale as required
by law. The sheriff acceded to the request and sold the property to the mortgagee for the amount
covering the whole indebtedness with interest and costs. The certificate of sale was issued by the
sheriff on May 28, 1949. After the period for the redemption of the property had expired without the
mortgagor having exercised his right to repurchase, the mortgagee demanded from the mortgagor
the surrender of the possession of the property, but the later refused and so on October 13, 1950,
she filed a petition in the Court of First Instance of Rizal praying that the provincial sheriff be
authorized to place her in possession of the property invoking in her favor the provisions of Act No.
3135, as amended by Act No. 4118.
When the petition came up for hearing before the court on October 25, 1950, Jose A. Luna, the
mortgagor, opposed the petition on the following grounds: (1) that Act No. 3135 as amended by Act
No. 4118 is applicable only to a real estate mortgage; (2) that the mortgage involved herein is a
chattel mortgage; and (3) that even if the mortgage executed by the parties herein be considered as
real estate mortgage, the extra-judicial sale made by the sheriff of the property in question was valid
because the mortgage does not contain an express stipulation authorizing the extra-judicial sale of
the property. After hearing, at which both parties have expressed their views in support of their
respective contentions, respondent judge, then presiding the court, overruled the opposition and
granted the petition ordering the provincial sheriff of Rizal, or any of this disputives, to immediately
place petitioner in possession of the property in question while at the same time directing the
mortgagor Jose A. Luna to vacate it and relinquish it in favor of petitioner. It is from this order that
Jose A. Luna desires now to obtain relief by filing this petition for certiorari contending that the
respondent judge has acted in excess of his jurisdiction.
The first question which petitioner poses in his petition for certiorari is that which relates to the
validity of the extra-judicial sale made by the provincial sheriff of Rizal of the property in question in
line with the request of the mortgagee Trinidad Reyes. It is contended that said extra-judicial sale
having been conducted under the provisions of Act No. 3135, as amended by Act No. 4118, is
invalid because the mortgage in question is not a real estate mortgage and, besides, it does not
contain an express stipulation authorizing the mortgagee to foreclose the mortgage extra-judicially.
There is merit in this claim. As may be gleaned from a perusal of the deed signed by the parties
(Annex "C"), the understanding executed by them is a chattel mortgage, as the parties have so
expressly designated, and not a real estate mortgage, specially when it is considered that the
property given as security is a house of mixed materials which by its very nature is considered as
personal property. Such being the case, it is indeed a mistake for the mortgagee to consider this
transaction in the light of Act No. 3135, as amended by Act No. 4118, as was so considered by her
when she requested to provincial sheriff to sell it extra-judicially in order to secure full satisfaction of
the indebtedness still owed her by the mortgagor. It is clear that Act No. 3135, as amended, only
covers real estate mortgages and is intended merely to regulate the extra-judicial sale of the
property mortgaged if and when the mortgagee is given a special power or express authority to do
so in the deed itself, or in a document annexed thereto. These conditions do not here obtain. The
mortgage before us is not a real estate mortgage nor does it contain an express authority or power
to sell the property extra-judicially.
But regardless of what we have heretofore stated, we find that the validity of the sale in question
may be maintained, it appearing that the mortgage in question is a chattel mortgage and as such it is
covered and regulated by the Chattel Mortgage Law, Act No. 1508. Section 14 of this Act allows the
mortgagee through a public officer in almost the same manner as that allowed by Act No. 3135, as
amended by Act No. 4118, provided that the requirements of the law relative to notice and
registration are complied with. We are not prepared to state if these requirements of the law had
been complied with in the case for the record before us is not complete and there is no showing to
that effect. At any rate, this issue is not how important because the same can be treshed out when
the opportunity comes for its determination, nor is it necessary for us to consider it in reaching a
decision in the present case. Suffice it to state that for the present we are not expressing any opinion
on this matter which concerns the validity of the sale in question for the reason that this opinion will
only be limited to a matter of procedure relative to the step taken by the mortgagee in securing the
possession of the property involved.
In the supposition that the sale of the property made by the sheriff has been made in accordance
with law, and the question he is confronted is how to deliver the possession of the property to the
purchaser in case of refusal to surrender its possession on the part of the debtor or mortgagor, the
remedy of the purchaser according to the authorities, is to bring an ordinary action for recovery of
possession (Continental Gin Co. vs. Pannell, 160 P., 598; 61 Okl., 102; 14 C.J.S., pp. 1027, 1028).
The purchaser cannot take possession of the property by force either directly or through the sheriff.
And the reason for this is "that the creditor's right of possession is conditioned upon the fact of
default, and the existence of this fact may naturally be the subject of controversy" (Bachrah Motor
Co. vs. Summers, 42 Phil., 3, 6). The creditor cannot merely file a petition for a writ of possession as
was done by Trinidad Reyes in this case. Her remedy is to file an ordinary action for recovery of
possession in ordered that the debtor may be given an opportunity to be heard not only in regarding
possession but also regarding the obligation covered by the mortgage. The petition she has filed in
the lower court, which was not even docketed, is therefore improper and should be regarded.
Wherefore, the order subject of the present petition for certiorari is hereby set aside, with costs
against respondent Trinidad Reyes.
Bengzon, Tuason, Padilla and Pablo, JJ., concur in the result.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-11658 February 15, 1918
LEUNG YEE, plaintiff-appellant,
vs.
FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants-appellees.
Booram and Mahoney for appellant.
Williams, Ferrier and SyCip for appellees.
CARSON, J .:
The "Compaia Agricola Filipina" bought a considerable quantity of rice-cleaning machinery
company from the defendant machinery company, and executed a chattel mortgage thereon to
secure payment of the purchase price. It included in the mortgage deed the building of strong
materials in which the machinery was installed, without any reference to the land on which it stood.
The indebtedness secured by this instrument not having been paid when it fell due, the mortgaged
property was sold by the sheriff, in pursuance of the terms of the mortgage instrument, and was
bought in by the machinery company. The mortgage was registered in the chattel mortgage registry,
and the sale of the property to the machinery company in satisfaction of the mortgage was
annotated in the same registry on December 29, 1913.
A few weeks thereafter, on or about the 14th of January, 1914, the "Compaia Agricola Filipina"
executed a deed of sale of the land upon which the building stood to the machinery company, but
this deed of sale, although executed in a public document, was not registered. This deed makes no
reference to the building erected on the land and would appear to have been executed for the
purpose of curing any defects which might be found to exist in the machinery company's title to the
building under the sheriff's certificate of sale. The machinery company went into possession of the
building at or about the time when this sale took place, that is to say, the month of December, 1913,
and it has continued in possession ever since.
At or about the time when the chattel mortgage was executed in favor of the machinery company,
the mortgagor, the "Compaia Agricola Filipina" executed another mortgage to the plaintiff upon the
building, separate and apart from the land on which it stood, to secure payment of the balance of its
indebtedness to the plaintiff under a contract for the construction of the building. Upon the failure of
the mortgagor to pay the amount of the indebtedness secured by the mortgage, the plaintiff secured
judgment for that amount, levied execution upon the building, bought it in at the sheriff's sale on or
about the 18th of December, 1914, and had the sheriff's certificate of the sale duly registered in the
land registry of the Province of Cavite.
At the time when the execution was levied upon the building, the defendant machinery company,
which was in possession, filed with the sheriff a sworn statement setting up its claim of title and
demanding the release of the property from the levy. Thereafter, upon demand of the sheriff, the
plaintiff executed an indemnity bond in favor of the sheriff in the sum of P12,000, in reliance upon
which the sheriff sold the property at public auction to the plaintiff, who was the highest bidder at the
sheriff's sale.
This action was instituted by the plaintiff to recover possession of the building from the machinery
company.
The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment in favor of the
machinery company, on the ground that the company had its title to the building registered prior to
the date of registry of the plaintiff's certificate.
Article 1473 of the Civil Code is as follows:
If the same thing should have been sold to different vendees, the ownership shall be transfer
to the person who may have the first taken possession thereof in good faith, if it should be
personal property.
Should it be real property, it shall belong to the person acquiring it who first recorded it in the
registry.
Should there be no entry, the property shall belong to the person who first took possession of
it in good faith, and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith.
The registry her referred to is of course the registry of real property, and it must be apparent that the
annotation or inscription of a deed of sale of real property in a chattel mortgage registry cannot be
given the legal effect of an inscription in the registry of real property. By its express terms, the
Chattel Mortgage Law contemplates and makes provision for mortgages of personal property; and
the sole purpose and object of the chattel mortgage registry is to provide for the registry of "Chattel
mortgages," that is to say, mortgages of personal property executed in the manner and form
prescribed in the statute. The building of strong materials in which the rice-cleaning machinery was
installed by the "Compaia Agricola Filipina" was real property, and the mere fact that the parties
seem to have dealt with it separate and apart from the land on which it stood in no wise changed its
character as real property. It follows that neither the original registry in the chattel mortgage of the
building and the machinery installed therein, not the annotation in that registry of the sale of the
mortgaged property, had any effect whatever so far as the building was concerned.
We conclude that the ruling in favor of the machinery company cannot be sustained on the ground
assigned by the trial judge. We are of opinion, however, that the judgment must be sustained on the
ground that the agreed statement of facts in the court below discloses that neither the purchase of
the building by the plaintiff nor his inscription of the sheriff's certificate of sale in his favor was made
in good faith, and that the machinery company must be held to be the owner of the property under
the third paragraph of the above cited article of the code, it appearing that the company first took
possession of the property; and further, that the building and the land were sold to the machinery
company long prior to the date of the sheriff's sale to the plaintiff.
It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith,"
in express terms, in relation to "possession" and "title," but contain no express requirement as to
"good faith" in relation to the "inscription" of the property on the registry, it must be presumed that
good faith is not an essential requisite of registration in order that it may have the effect
contemplated in this article. We cannot agree with this contention. It could not have been the
intention of the legislator to base the preferential right secured under this article of the code upon an
inscription of title in bad faith. Such an interpretation placed upon the language of this section would
open wide the door to fraud and collusion. The public records cannot be converted into instruments
of fraud and oppression by one who secures an inscription therein in bad faith. The force and effect
given by law to an inscription in a public record presupposes the good faith of him who enters such
inscription; and rights created by statute, which are predicated upon an inscription in a public
registry, do not and cannot accrue under an inscription "in bad faith," to the benefit of the person who
thus makes the inscription.
Construing the second paragraph of this article of the code, the supreme court of Spain held in its
sentencia of the 13th of May, 1908, that:
This rule is always to be understood on the basis of the good faith mentioned in the first
paragraph; therefore, it having been found that the second purchasers who record their
purchase had knowledge of the previous sale, the question is to be decided in accordance
with the following paragraph. (Note 2, art. 1473, Civ. Code, Medina and Maranon [1911]
edition.)
Although article 1473, in its second paragraph, provides that the title of conveyance of
ownership of the real property that is first recorded in the registry shall have preference, this
provision must always be understood on the basis of the good faith mentioned in the first
paragraph; the legislator could not have wished to strike it out and to sanction bad faith, just
to comply with a mere formality which, in given cases, does not obtain even in real disputes
between third persons. (Note 2, art. 1473, Civ. Code, issued by the publishers of the La
Revista de los Tribunales, 13th edition.)
The agreed statement of facts clearly discloses that the plaintiff, when he bought the building at the
sheriff's sale and inscribed his title in the land registry, was duly notified that the machinery company
had bought the building from plaintiff's judgment debtor; that it had gone into possession long prior to
the sheriff's sale; and that it was in possession at the time when the sheriff executed his levy. The
execution of an indemnity bond by the plaintiff in favor of the sheriff, after the machinery company
had filed its sworn claim of ownership, leaves no room for doubt in this regard. Having bought in the
building at the sheriff's sale with full knowledge that at the time of the levy and sale the building had
already been sold to the machinery company by the judgment debtor, the plaintiff cannot be said to
have been a purchaser in good faith; and of course, the subsequent inscription of the sheriff's
certificate of title must be held to have been tainted with the same defect.
Perhaps we should make it clear that in holding that the inscription of the sheriff's certificate of sale
to the plaintiff was not made in good faith, we should not be understood as questioning, in any way,
the good faith and genuineness of the plaintiff's claim against the "Compaia Agricola Filipina." The
truth is that both the plaintiff and the defendant company appear to have had just and righteous
claims against their common debtor. No criticism can properly be made of the exercise of the utmost
diligence by the plaintiff in asserting and exercising his right to recover the amount of his claim from
the estate of the common debtor. We are strongly inclined to believe that in procuring the levy of
execution upon the factory building and in buying it at the sheriff's sale, he considered that he was
doing no more than he had a right to do under all the circumstances, and it is highly possible and
even probable that he thought at that time that he would be able to maintain his position in a contest
with the machinery company. There was no collusion on his part with the common debtor, and no
thought of the perpetration of a fraud upon the rights of another, in the ordinary sense of the word.
He may have hoped, and doubtless he did hope, that the title of the machinery company would not
stand the test of an action in a court of law; and if later developments had confirmed his unfounded
hopes, no one could question the legality of the propriety of the course he adopted.
But it appearing that he had full knowledge of the machinery company's claim of ownership when he
executed the indemnity bond and bought in the property at the sheriff's sale, and it appearing further
that the machinery company's claim of ownership was well founded, he cannot be said to have been
an innocent purchaser for value. He took the risk and must stand by the consequences; and it is in
this sense that we find that he was not a purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim
that he has acquired title thereto in good faith as against the true owner of the land or of an interest
therein; and the same rule must be applied to one who has knowledge of facts which should have
put him upon such inquiry and investigation as might be necessary to acquaint him with the defects
in the title of his vendor. A purchaser cannot close his eyes to facts which should put a reasonable
man upon his guard, and then claim that he acted in good faith under the belief that there was no
defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful
closing of his eyes to the possibility of the existence of a defect in his vendor's title, will not make him
an innocent purchaser for value, if afterwards develops that the title was in fact defective, and it
appears that he had such notice of the defects as would have led to its discovery had he acted with
that measure of precaution which may reasonably be acquired of a prudent man in a like situation.
Good faith, or lack of it, is in its analysis a question of intention; but in ascertaining the intention by
which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the
conduct and outward acts by which alone the inward motive may, with safety, be determined. So it is
that "the honesty of intention," "the honest lawful intent," which constitutes good faith implies a
"freedom from knowledge and circumstances which ought to put a person on inquiry," and so it is
that proof of such knowledge overcomes the presumption of good faith in which the courts always
indulge in the absence of proof to the contrary. "Good faith, or the want of it, is not a visible, tangible
fact that can be seen or touched, but rather a state or condition of mind which can only be judged of
by actual or fancied tokens or signs." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas Lumber
Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)
We conclude that upon the grounds herein set forth the disposing part of the decision and judgment
entered in the court below should be affirmed with costs of this instance against the appellant. So
ordered.
Arellano, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur.
Torres, Avancea and Fisher, JJ., took no part.










Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-26278 August 4, 1927
LEON SIBAL , plaintiff-appellant,
vs.
EMILIANO J. VALDEZ ET AL., defendants.
EMILIANO J. VALDEZ, appellee.
J. E. Blanco for appellant.
Felix B. Bautista and Santos and Benitez for appellee.
JOHNSON, J .:
The action was commenced in the Court of First Instance of the Province of Tarlac on the 14th day
of December 1924. The facts are about as conflicting as it is possible for facts to be, in the trial
causes.
As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of
the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of
Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the
plaintiff and his tenants on seven parcels of land described in the complaint in the third paragraph of
the first cause of action; that within one year from the date of the attachment and sale the plaintiff
offered to redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to
cover the price paid by the latter, the interest thereon and any assessments or taxes which he may
have paid thereon after the purchase, and the interest corresponding thereto and that Valdez
refused to accept the money and to return the sugar cane to the plaintiff.
As a second cause of action, the plaintiff alleged that the defendant Emiliano J. Valdez was
attempting to harvest the palay planted in four of the seven parcels mentioned in the first cause of
action; that he had harvested and taken possession of the palay in one of said seven parcels and in
another parcel described in the second cause of action, amounting to 300 cavans; and that all of
said palay belonged to the plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against the defendant Emiliano J.
Valdez his attorneys and agents, restraining them (1) from distributing him in the possession of the
parcels of land described in the complaint; (2) from taking possession of, or harvesting the sugar
cane in question; and (3) from taking possession, or harvesting the palay in said parcels of land.
Plaintiff also prayed that a judgment be rendered in his favor and against the defendants ordering
them to consent to the redemption of the sugar cane in question, and that the defendant Valdez be
condemned to pay to the plaintiff the sum of P1,056 the value of palay harvested by him in the two
parcels above-mentioned ,with interest and costs.
On December 27, 1924, the court, after hearing both parties and upon approval of the bond for
P6,000 filed by the plaintiff, issued the writ of preliminary injunction prayed for in the complaint.
The defendant Emiliano J. Valdez, in his amended answer, denied generally and specifically each
and every allegation of the complaint and step up the following defenses:
(a) That the sugar cane in question had the nature of personal property and was not,
therefore, subject to redemption;
(b) That he was the owner of parcels 1, 2 and 7 described in the first cause of action of the
complaint;
(c) That he was the owner of the palay in parcels 1, 2 and 7; and
(d) That he never attempted to harvest the palay in parcels 4 and 5.
The defendant Emiliano J. Valdez by way of counterclaim, alleged that by reason of the preliminary
injunction he was unable to gather the sugar cane, sugar-cane shoots (puntas de cana dulce) palay
in said parcels of land, representing a loss to him of P8,375.20 and that, in addition thereto, he
suffered damages amounting to P3,458.56. He prayed, for a judgment (1) absolving him from all
liability under the complaint; (2) declaring him to be the absolute owner of the sugar cane in question
and of the palay in parcels 1, 2 and 7; and (3) ordering the plaintiff to pay to him the sum of
P11,833.76, representing the value of the sugar cane and palay in question, including damages.
Upon the issues thus presented by the pleadings the cause was brought on for trial. After hearing
the evidence, and on April 28, 1926, the Honorable Cayetano Lukban, judge, rendered a judgment
against the plaintiff and in favor of the defendants
(1) Holding that the sugar cane in question was personal property and, as such, was not
subject to redemption;
(2) Absolving the defendants from all liability under the complaint; and
(3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos
Sibal to jointly and severally pay to the defendant Emiliano J. Valdez the sum of P9,439.08
as follows:
(a) P6,757.40, the value of the sugar cane;
(b) 1,435.68, the value of the sugar-cane shoots;
(c) 646.00, the value of palay harvested by plaintiff;
(d) 600.00, the value of 150 cavans of palay which the defendant was not able to
raise by reason of the injunction, at P4 cavan. 9,439.08 From that judgment the
plaintiff appealed and in his assignments of error contends that the lower court erred:
(1) In holding that the sugar cane in question was personal property and, therefore,
not subject to redemption;
(2) In holding that parcels 1 and 2 of the complaint belonged to Valdez, as well as parcels 7
and 8, and that the palay therein was planted by Valdez;
(3) In holding that Valdez, by reason of the preliminary injunction failed to realized P6,757.40
from the sugar cane and P1,435.68 from sugar-cane shoots (puntas de cana dulce);
(4) In holding that, for failure of plaintiff to gather the sugar cane on time, the defendant was
unable to raise palay on the land, which would have netted him the sum of P600; and.
(5) In condemning the plaintiff and his sureties to pay to the defendant the sum of P9,439.08.
It appears from the record:
(1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by virtue of writ of
execution in civil case No. 20203 of the Court of First Instance of Manila (Macondray & Co.,
Inc. vs. Leon Sibal),levied an attachment on eight parcels of land belonging to said Leon
Sibal, situated in the Province of Tarlac, designated in the second of attachment as parcels
1, 2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A).
(2) That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels of land, at the
auction held by the sheriff of the Province of Tarlac, for the sum to P4,273.93, having paid for
the said parcels separately as follows (Exhibit C, and 2-A):

Parcel
1 ..................................................................... P1.00
2 ..................................................................... 2,000.00
3 ..................................................................... 120.93
4 ..................................................................... 1,000.00
5 ..................................................................... 1.00
6 ..................................................................... 1.00
7 with the house thereon .......................... 150.00
8 .....................................................................

1,000.00
==========
4,273.93
(3) That within one year from the sale of said parcel of land, and on the 24th day of
September, 1923, the judgment debtor, Leon Sibal, paid P2,000 to Macondray & Co., Inc.,
for the account of the redemption price of said parcels of land, without specifying the
particular parcels to which said amount was to applied. The redemption price said eight
parcels was reduced, by virtue of said transaction, to P2,579.97 including interest (Exhibit C
and 2).
The record further shows:
(1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy sheriff of the Province
of Tarlac, by virtue of a writ of execution in civil case No. 1301 of the Province of Pampanga
(Emiliano J. Valdez vs. Leon Sibal 1. the same parties in the present case), attached the
personal property of said Leon Sibal located in Tarlac, among which was included the sugar
cane now in question in the seven parcels of land described in the complaint (Exhibit A).
(2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction said personal
properties of Leon Sibal, including the sugar cane in question to Emilio J. Valdez, who paid
therefor the sum of P1,550, of which P600 was for the sugar cane (Exhibit A).
(3) That on April 29,1924, said deputy sheriff, by virtue of said writ of execution, also
attached the real property of said Leon Sibal in Tarlac, including all of his rights, interest and
participation therein, which real property consisted of eleven parcels of land and a house and
camarin situated in one of said parcels (Exhibit A).
(4) That on June 25, 1924, eight of said eleven parcels, including the house and the camarin,
were bought by Emilio J. Valdez at the auction held by the sheriff for the sum of P12,200.
Said eight parcels were designated in the certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and
11. The house and camarin were situated on parcel 7 (Exhibit A).
(5) That the remaining three parcels, indicated in the certificate of the sheriff as parcels 2, 12,
and 13, were released from the attachment by virtue of claims presented by Agustin
Cuyugan and Domiciano Tizon (Exhibit A).
(6) That on the same date, June 25, 1924, Macondray & Co. sold and conveyed to Emilio J.
Valdez for P2,579.97 all of its rights and interest in the eight parcels of land acquired by it at
public auction held by the deputy sheriff of Tarlac in connection with civil case No. 20203 of
the Court of First Instance of Manila, as stated above. Said amount represented the unpaid
balance of the redemption price of said eight parcels, after payment by Leon Sibal of P2,000
on September 24, 1923, fro the account of the redemption price, as stated above. (Exhibit C
and 2).
The foregoing statement of facts shows:
(1) The Emilio J. Valdez bought the sugar cane in question, located in the seven parcels of
land described in the first cause of action of the complaint at public auction on May 9 and 10,
1924, for P600.
(2) That on July 30, 1923, Macondray & Co. became the owner of eight parcels of land
situated in the Province of Tarlac belonging to Leon Sibal and that on September 24, 1923,
Leon Sibal paid to Macondray & Co. P2,000 for the account of the redemption price of said
parcels.
(3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray & Co. all of its rights
and interest in the said eight parcels of land.
(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights and interest which
Leon Sibal had or might have had on said eight parcels by virtue of the P2,000 paid by the
latter to Macondray.
(5) That Emilio J. Valdez became the absolute owner of said eight parcels of land.
The first question raised by the appeal is, whether the sugar cane in question is personal or real
property. It is contended that sugar cane comes under the classification of real property as
"ungathered products" in paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of article 334
enumerates as real property the following: Trees, plants, and ungathered products, while they are
annexed to the land or form an integral part of any immovable property." That article, however, has
received in recent years an interpretation by the Tribunal Supremo de Espaa, which holds that,
under certain conditions, growing crops may be considered as personal property. (Decision of March
18, 1904, vol. 97, Civil Jurisprudence of Spain.)
Manresa, the eminent commentator of the Spanish Civil Code, in discussing section 334 of the Civil
Code, in view of the recent decisions of the supreme Court of Spain, admits that growing crops are
sometimes considered and treated as personal property. He says:
No creemos, sin embargo, que esto excluya la excepcionque muchos autores hacen tocante
a la venta de toda cosecha o de parte de ella cuando aun no esta cogida (cosa frecuente
con la uvay y la naranja), y a la de lenas, considerando ambas como muebles. El Tribunal
Supremo, en sentencia de 18 de marzo de 1904, al entender sobre un contrato de
arrendamiento de un predio rustico, resuelve que su terminacion por desahucio no extingue
los derechos del arrendario, para recolectar o percibir los frutos correspondientes al ao
agricola, dentro del que nacieron aquellos derechos, cuando el arrendor ha percibido a su
vez el importe de la renta integra correspondiente, aun cuando lo haya sido por precepto
legal durante el curso del juicio, fundandose para ello, no solo en que de otra suerte se daria
al desahucio un alcance que no tiene, sino en que, y esto es lo interesante a nuestro
proposito, la consideracion de inmuebles que el articulo 334 del Codigo Civil atribuge a los
frutos pendientes, no les priva del caracter de productos pertenecientes, como tales, a
quienes a ellos tenga derecho, Ilegado el momento de su recoleccion.
x x x x x x x x x
Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria, publicada en 16 de
diciembre de 1909, con las reformas introducidas por la de 21 de abril anterior, la hipoteca,
salvo pacto expreso que disponga lo contrario, y cualquiera que sea la naturaleza y forma
de la obligacion que garantice, no comprende los frutos cualquiera que sea la situacion en
que se encuentre. (3 Manresa, 5. edicion, pags. 22, 23.)
From the foregoing it appears (1) that, under Spanish authorities, pending fruits and ungathered
products may be sold and transferred as personal property; (2) that the Supreme Court of Spain, in a
case of ejectment of a lessee of an agricultural land, held that the lessee was entitled to gather the
products corresponding to the agricultural year, because said fruits did not go with the land but
belonged separately to the lessee; and (3) that under the Spanish Mortgage Law of 1909, as
amended, the mortgage of a piece of land does not include the fruits and products existing thereon,
unless the contract expressly provides otherwise.
An examination of the decisions of the Supreme Court of Louisiana may give us some light on the
question which we are discussing. Article 465 of the Civil Code of Louisiana, which corresponds to
paragraph 2 of article 334 of our Civil Code, provides: "Standing crops and the fruits of trees not
gathered, and trees before they are cut down, are likewise immovable, and are considered as part of
the land to which they are attached."
The Supreme Court of Louisiana having occasion to interpret that provision, held that in some cases
"standing crops" may be considered and dealt with as personal property. In the case of Lumber Co.
vs. Sheriff and Tax Collector (106 La., 418) the Supreme Court said: "True, by article 465 of the Civil
Code it is provided that 'standing crops and the fruits of trees not gathered and trees before they are
cut down . . . are considered as part of the land to which they are attached, but the immovability
provided for is only one in abstracto and without reference to rights on or to the crop acquired by
others than the owners of the property to which the crop is attached. . . . The existence of a right on
the growing crop is a mobilization by anticipation, a gathering as it were in advance, rendering the
crop movable quoad the right acquired therein. Our jurisprudence recognizes the possible
mobilization of the growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann., 244; Porche vs. Bodin, 28
La., Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629; Lewis vs. Klotz, 39 La. Ann., 267.)
"It is true," as the Supreme Court of Louisiana said in the case of Porche vs. Bodin (28 La. An., 761)
that "article 465 of the Revised Code says that standing crops are considered as immovable and as
part of the land to which they are attached, and article 466 declares that the fruits of an immovable
gathered or produced while it is under seizure are considered as making part thereof, and incurred
to the benefit of the person making the seizure. But the evident meaning of these articles, is where
the crops belong to the owner of the plantation they form part of the immovable, and where it is
seized, the fruits gathered or produced inure to the benefit of the seizing creditor.
A crop raised on leased premises in no sense forms part of the immovable. It belongs to the
lessee, and may be sold by him, whether it be gathered or not, and it may be sold by his
judgment creditors. If it necessarily forms part of the leased premises the result would be that
it could not be sold under execution separate and apart from the land. If a lessee obtain
supplies to make his crop, the factor's lien would not attach to the crop as a separate thing
belonging to his debtor, but the land belonging to the lessor would be affected with the
recorded privilege. The law cannot be construed so as to result in such absurd
consequences.
In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:
If the crop quoad the pledge thereof under the act of 1874 was an immovable, it would be
destructive of the very objects of the act, it would render the pledge of the crop objects of the
act, it would render the pledge of the crop impossible, for if the crop was an inseparable part
of the realty possession of the latter would be necessary to that of the former; but such is not
the case. True, by article 465 C. C. it is provided that "standing crops and the fruits of trees
not gathered and trees before they are cut down are likewise immovable and are considered
as part of the land to which they are attached;" but the immovability provided for is only
one in abstracto and without reference to rights on or to the crop acquired by other than the
owners of the property to which the crop was attached. The immovability of a growing crop is
in the order of things temporary, for the crop passes from the state of a growing to that of a
gathered one, from an immovable to a movable. The existence of a right on the growing crop
is a mobilization by anticipation, a gathering as it were in advance, rendering the crop
movable quoad the right acquired thereon. The provision of our Code is identical with the
Napoleon Code 520, and we may therefore obtain light by an examination of the
jurisprudence of France.
The rule above announced, not only by the Tribunal Supremo de Espaa but by the Supreme Court
of Louisiana, is followed in practically every state of the Union.
From an examination of the reports and codes of the State of California and other states we find that
the settle doctrine followed in said states in connection with the attachment of property and
execution of judgment is, that growing crops raised by yearly labor and cultivation are considered
personal property. (6 Corpuz Juris, p. 197; 17 Corpus Juris, p. 379; 23 Corpus Juris, p. 329:
Raventas vs. Green, 57 Cal., 254; Norris vs. Watson, 55 Am. Dec., 161; Whipple vs. Foot, 3 Am.
Dec., 442; 1 Benjamin on Sales, sec. 126; McKenzie vs. Lampley, 31 Ala., 526; Crinevs. Tifts and
Co., 65 Ga., 644; Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45 Mich., 174; Freeman on
Execution, vol. 1, p. 438; Drake on Attachment, sec. 249; Mechem on Sales, sec. 200 and 763.)
Mr. Mechem says that a valid sale may be made of a thing, which though not yet actually in
existence, is reasonably certain to come into existence as the natural increment or usual incident of
something already in existence, and then belonging to the vendor, and then title will vest in the buyer
the moment the thing comes into existence. (Emerson vs. European Railway Co., 67 Me., 387;
Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.) Things of this nature are said to have a
potential existence. A man may sell property of which he is potentially and not actually possessed.
He may make a valid sale of the wine that a vineyard is expected to produce; or the gain a field may
grow in a given time; or the milk a cow may yield during the coming year; or the wool that shall
thereafter grow upon sheep; or what may be taken at the next cast of a fisherman's net; or fruits to
grow; or young animals not yet in existence; or the good will of a trade and the like. The thing sold,
however, must be specific and identified. They must be also owned at the time by the vendor.
(Hull vs. Hull, 48 Conn., 250 [40 Am. Rep., 165].)
It is contended on the part of the appellee that paragraph 2 of article 334 of the Civil Code has been
modified by section 450 of the Code of Civil Procedure as well as by Act No. 1508, the Chattel
Mortgage Law. Said section 450 enumerates the property of a judgment debtor which may be
subjected to execution. The pertinent portion of said section reads as follows: "All goods, chattels,
moneys, and other property, both real and personal, * * * shall be liable to execution. Said section
450 and most of the other sections of the Code of Civil Procedure relating to the execution of
judgment were taken from the Code of Civil Procedure of California. The Supreme Court of
California, under section 688 of the Code of Civil Procedure of that state (Pomeroy, p. 424) has held,
without variation, that growing crops were personal property and subject to execution.
Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are personal property.
Section 2 of said Act provides: "All personal property shall be subject to mortgage, agreeably to the
provisions of this Act, and a mortgage executed in pursuance thereof shall be termed a chattel
mortgage." Section 7 in part provides: "If growing crops be mortgaged the mortgage may contain an
agreement stipulating that the mortgagor binds himself properly to tend, care for and protect the crop
while growing.
It is clear from the foregoing provisions that Act No. 1508 was enacted on the assumption that
"growing crops" are personal property. This consideration tends to support the conclusion
hereinbefore stated, that paragraph 2 of article 334 of the Civil Code has been modified by section
450 of Act No. 190 and by Act No. 1508 in the sense that "ungathered products" as mentioned in
said article of the Civil Code have the nature of personal property. In other words, the phrase
"personal property" should be understood to include "ungathered products."
At common law, and generally in the United States, all annual crops which are raised by
yearly manurance and labor, and essentially owe their annual existence to cultivation by
man, . may be levied on as personal property." (23 C. J., p. 329.) On this question Freeman,
in his treatise on the Law of Executions, says: "Crops, whether growing or standing in the
field ready to be harvested, are, when produced by annual cultivation, no part of the realty.
They are, therefore, liable to voluntary transfer as chattels. It is equally well settled that they
may be seized and sold under execution. (Freeman on Executions, vol. p. 438.)
We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has been modified by
section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of
attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products"
have the nature of personal property. The lower court, therefore, committed no error in holding that
the sugar cane in question was personal property and, as such, was not subject to redemption.
All the other assignments of error made by the appellant, as above stated, relate to questions of fact
only. Before entering upon a discussion of said assignments of error, we deem it opportune to take
special notice of the failure of the plaintiff to appear at the trial during the presentation of evidence by
the defendant. His absence from the trial and his failure to cross-examine the defendant have lent
considerable weight to the evidence then presented for the defense.
Coming not to the ownership of parcels 1 and 2 described in the first cause of action of the
complaint, the plaintiff made a futile attempt to show that said two parcels belonged to Agustin
Cuyugan and were the identical parcel 2 which was excluded from the attachment and sale of real
property of Sibal to Valdez on June 25, 1924, as stated above. A comparison of the description of
parcel 2 in the certificate of sale by the sheriff (Exhibit A) and the description of parcels 1 and 2 of
the complaint will readily show that they are not the same.
The description of the parcels in the complaint is as follows:
1. La caa dulce sembrada por los inquilinos del ejecutado Leon Sibal 1. en una parcela de
terreno de la pertenencia del citado ejecutado, situada en Libutad, Culubasa, Bamban,
Tarlac, de unas dos hectareas poco mas o menos de superficie.
2. La caa dulce sembrada por el inquilino del ejecutado Leon Sibal 1., Ilamado Alejandro
Policarpio, en una parcela de terreno de la pertenencia del ejecutado, situada en Dalayap,
Culubasa, Bamban, Tarlac de unas dos hectareas de superficie poco mas o menos." The
description of parcel 2 given in the certificate of sale (Exhibit A) is as follows:
2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090 metros cuadrados
de superficie, linda al N. con Canuto Sibal, Esteban Lazatin and Alejandro Dayrit; al E. con
Francisco Dizon, Felipe Mau and others; al S. con Alejandro Dayrit, Isidro Santos and
Melecio Mau; y al O. con Alejandro Dayrit and Paulino Vergara. Tax No. 2854, vador
amillarado P4,200 pesos.
On the other hand the evidence for the defendant purported to show that parcels 1 and 2 of the
complaint were included among the parcels bought by Valdez from Macondray on June 25, 1924,
and corresponded to parcel 4 in the deed of sale (Exhibit B and 2), and were also included among
the parcels bought by Valdez at the auction of the real property of Leon Sibal on June 25, 1924, and
corresponded to parcel 3 in the certificate of sale made by the sheriff (Exhibit A). The description of
parcel 4 (Exhibit 2) and parcel 3 (Exhibit A) is as follows:
Parcels No. 4. Terreno palayero, ubicado en el barrio de Culubasa,Bamban, Tarlac, I. F.
de 145,000 metros cuadrados de superficie, lindante al Norte con Road of the barrio of
Culubasa that goes to Concepcion; al Este con Juan Dizon; al Sur con Lucio Mao y Canuto
Sibal y al Oeste con Esteban Lazatin, su valor amillarado asciende a la suma de P2,990.
Tax No. 2856.
As will be noticed, there is hardly any relation between parcels 1 and 2 of the complaint and parcel 4
(Exhibit 2 and B) and parcel 3 (Exhibit A). But, inasmuch as the plaintiff did not care to appear at the
trial when the defendant offered his evidence, we are inclined to give more weight to the evidence
adduced by him that to the evidence adduced by the plaintiff, with respect to the ownership of
parcels 1 and 2 of the compliant. We, therefore, conclude that parcels 1 and 2 of the complaint
belong to the defendant, having acquired the same from Macondray & Co. on June 25, 1924, and
from the plaintiff Leon Sibal on the same date.
It appears, however, that the plaintiff planted the palay in said parcels and harvested therefrom 190
cavans. There being no evidence of bad faith on his part, he is therefore entitled to one-half of the
crop, or 95 cavans. He should therefore be condemned to pay to the defendant for 95 cavans only,
at P3.40 a cavan, or the sum of P323, and not for the total of 190 cavans as held by the lower court.
As to the ownership of parcel 7 of the complaint, the evidence shows that said parcel corresponds to
parcel 1 of the deed of sale of Macondray & Co, to Valdez (Exhibit B and 2), and to parcel 4 in the
certificate of sale to Valdez of real property belonging to Sibal, executed by the sheriff as above
stated (Exhibit A). Valdez is therefore the absolute owner of said parcel, having acquired the interest
of both Macondray and Sibal in said parcel.
With reference to the parcel of land in Pacalcal, Tarlac, described in paragraph 3 of the second
cause of action, it appears from the testimony of the plaintiff himself that said parcel corresponds to
parcel 8 of the deed of sale of Macondray to Valdez (Exhibit B and 2) and to parcel 10 in the deed of
sale executed by the sheriff in favor of Valdez (Exhibit A). Valdez is therefore the absolute owner of
said parcel, having acquired the interest of both Macondray and Sibal therein.
In this connection the following facts are worthy of mention:
Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land were attached under
said execution. Said parcels of land were sold to Macondray & Co. on the 30th day of July, 1923.
Rice paid P4,273.93. On September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 on the
redemption of said parcels of land. (See Exhibits B and C ).
Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was attached, including the
sugar cane in question. (Exhibit A) The said personal property so attached, sold at public auction
May 9 and 10, 1924. April 29, 1924, the real property was attached under the execution in favor of
Valdez (Exhibit A). June 25, 1924, said real property was sold and purchased by Valdez (Exhibit A).
June 25, 1924, Macondray & Co. sold all of the land which they had purchased at public auction on
the 30th day of July, 1923, to Valdez.
As to the loss of the defendant in sugar cane by reason of the injunction, the evidence shows that
the sugar cane in question covered an area of 22 hectares and 60 ares (Exhibits 8, 8-b and 8-c); that
said area would have yielded an average crop of 1039 picos and 60 cates; that one-half of the
quantity, or 519 picos and 80 cates would have corresponded to the defendant, as owner; that
during the season the sugar was selling at P13 a pico (Exhibit 5 and 5-A). Therefore, the defendant,
as owner, would have netted P 6,757.40 from the sugar cane in question. The evidence also shows
that the defendant could have taken from the sugar cane 1,017,000 sugar-cane shoots (puntas de
cana) and not 1,170,000 as computed by the lower court. During the season the shoots were selling
at P1.20 a thousand (Exhibits 6 and 7). The defendant therefore would have netted P1,220.40 from
sugar-cane shoots and not P1,435.68 as allowed by the lower court.
As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint, amounting to 190
cavans, one-half of said quantity should belong to the plaintiff, as stated above, and the other half to
the defendant. The court erred in awarding the whole crop to the defendant. The plaintiff should
therefore pay the defendant for 95 cavans only, at P3.40 a cavan, or P323 instead of P646 as
allowed by the lower court.
The evidence also shows that the defendant was prevented by the acts of the plaintiff from
cultivating about 10 hectares of the land involved in the litigation. He expected to have raised about
600 cavans of palay, 300 cavans of which would have corresponded to him as owner. The lower
court has wisely reduced his share to 150 cavans only. At P4 a cavan, the palay would have netted
him P600.
In view of the foregoing, the judgment appealed from is hereby modified. The plaintiff and his
sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal are hereby ordered to pay to the
defendant jointly and severally the sum of P8,900.80, instead of P9,439.08 allowed by the lower
court, as follows:
P6,757.40 for the sugar cane;
1,220.40 for the sugar cane shoots;
323.00 for the palay harvested by plaintiff in parcels 1 and 2;
600.00 for the palay which defendant could have raised.

8,900.80
============

In all other respects, the judgment appealed from is hereby affirmed, with costs. So ordered.
Street, Malcolm, Villamor, Romualdez and Villa-Real., JJ., concur.












Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-17870 September 29, 1962
MINDANAO BUS COMPANY, petitioner,
vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro
City,respondents.
Binamira, Barria and Irabagon for petitioner.
Vicente E. Sabellina for respondents.


LABRADOR, J .:
This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A. Case No. 710
holding that the petitioner Mindanao Bus Company is liable to the payment of the realty tax on its
maintenance and repair equipment hereunder referred to.
Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-
mentioned equipment. Petitioner appealed the assessment to the respondent Board of Tax Appeals
on the ground that the same are not realty. The Board of Tax Appeals of the City sustained the city
assessor, so petitioner herein filed with the Court of Tax Appeals a petition for the review of the
assessment.
In the Court of Tax Appeals the parties submitted the following stipulation of facts:
Petitioner and respondents, thru their respective counsels agreed to the following stipulation
of facts:
1. That petitioner is a public utility solely engaged in transporting passengers and cargoes by
motor trucks, over its authorized lines in the Island of Mindanao, collecting rates approved by
the Public Service Commission;
2. That petitioner has its main office and shop at Cagayan de Oro City. It maintains Branch
Offices and/or stations at Iligan City, Lanao; Pagadian, Zamboanga del Sur; Davao City and
Kibawe, Bukidnon Province;
3. That the machineries sought to be assessed by the respondent as real properties are the
following:
(a) Hobart Electric Welder Machine, appearing in the attached photograph, marked
Annex "A";
(b) Storm Boring Machine, appearing in the attached photograph, marked Annex "B";
(c) Lathe machine with motor, appearing in the attached photograph, marked Annex
"C";
(d) Black and Decker Grinder, appearing in the attached photograph, marked Annex
"D";
(e) PEMCO Hydraulic Press, appearing in the attached photograph, marked Annex
"E";
(f) Battery charger (Tungar charge machine) appearing in the attached photograph,
marked Annex "F"; and
(g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked
Annex "G".
4. 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;
5. That petitioner is the owner of the land where it maintains and operates a garage for its
TPU motor trucks; a repair shop; blacksmith and carpentry shops, and with these
machineries which are placed therein, its TPU trucks are made; body constructed; and same
are repaired in a condition to be serviceable in the TPU land transportation business it
operates;
6. That these machineries have never been or were never used as industrial equipments to
produce finished products for sale, nor to repair machineries, parts and the like offered to the
general public indiscriminately for business or commercial purposes for which petitioner has
never engaged in, to date.1awphl. nt
The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied
a motion for reconsideration, petitioner brought the case to this Court assigning the following errors:
1. The Honorable Court of Tax Appeals erred in upholding respondents' contention that the
questioned assessments are valid; and that said tools, equipments or machineries are
immovable taxable real properties.
2. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil
Code, and holding that pursuant thereto the movable equipments are taxable realties, by
reason of their being intended or destined for use in an industry.
3. The Court of Tax Appeals erred in denying petitioner's contention that the respondent City
Assessor's power to assess and levy real estate taxes on machineries is further restricted by
section 31, paragraph (c) of Republic Act No. 521; and
4. The Tax Court erred in denying petitioner's motion for reconsideration.
Respondents contend that said equipments, tho movable, are immobilized by destination, in
accordance with paragraph 5 of Article 415 of the New Civil Code which provides:
Art. 415. The following are immovable properties:
x x x x x x x x x
(5) Machinery, receptacles, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said industry or works. (Emphasis
ours.)
Note that the stipulation expressly states that the equipment are placed on wooden or cement
platforms. They can be moved around and about in petitioner's repair shop. In the case of B. H.
Berkenkotter vs. Cu Unjieng, 61 Phil. 663, the Supreme Court said:
Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the character of real
property to "machinery, liquid containers, instruments or 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."
If the installation of the machinery and equipment in question in the central of the Mabalacat
Sugar Co., Inc., in lieu of the other of less capacity existing therein, for its sugar and industry,
converted them into real property by reason of their purpose, it cannot be said that their
incorporation therewith was not permanent in character because, as essential and principle
elements of a sugar central, without them the sugar central would be unable to function or
carry on the industrial purpose for which it was established. Inasmuch as the central is
permanent in character, the necessary machinery and equipment installed for carrying on the
sugar industry for which it has been established must necessarily be permanent. (Emphasis
ours.)
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." We may here
distinguish, therefore, those movable which become immobilized by destination because they
are essential and principal elements in the industry for those which may not be so considered
immobilized because they are merely incidental, not essential and principal. Thus, cash registers,
typewriters, etc., usually found and used in hotels, restaurants, theaters, etc. are merely incidentals
and are not and should not be considered immobilized by destination, for these businesses can
continue or carry on their functions without these equity comments. Airline companies use forklifts,
jeep-wagons, pressure pumps, IBM machines, etc. which are incidentals, not essentials, and thus
retain their movable nature. On the other hand, machineries of breweries used in the manufacture of
liquor and soft drinks, though movable in nature, are immobilized because they are essential to said
industries; 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.
Similarly, the tools and equipments in question in this instant case are, by their nature, not essential
and principle municipal elements of petitioner's business of transporting passengers and cargoes by
motor trucks. They are merely incidentals acquired as movables and used only for expediency to
facilitate and/or improve its service. Even without such tools and equipments, its business may be
carried on, as petitioner has carried on, without such equipments, before the war. 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.
The law that governs the determination of the question at issue is as follows:
Art. 415. The following are immovable property:
x x x x x x x x x
(5) Machinery, receptacles, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said industry or works; (Civil Code of
the Phil.)
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. Thus in the case of Berkenkotter vs. Cu
Unjieng, supra, the "machinery, liquid containers, and instruments or implements" are found in a
building constructed on the land. A sawmill would also be installed in a building on land more or less
permanently, and the sawing is conducted in the land or building.
But in the case at bar the equipments in question are destined only to repair or service the
transportation business, which is not carried on in a building or permanently on a piece of land, as
demanded by the law. Said equipments may not, therefore, be deemed real property.
Resuming what we have set forth above, we hold that the equipments in question are not absolutely
essential to the petitioner's transportation business, and petitioner's business is not carried on in a
building, tenement or on a specified land, so said equipment may not be considered real estate
within the meaning of Article 415 (c) of the Civil Code.
WHEREFORE, 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.
Without costs.
So ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Reyes, J.B.L., Paredes, Dizon and Makalintal, JJ., concur.
Regala, Concepcion and Barrera JJ., took no part.










Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-41643 July 31, 1935
B.H. BERKENKOTTER, plaintiff-appellant,
vs.
CU UNJIENG E HIJOS, YEK TONG LIN FIRE AND MARINE INSURANCE COMPANY,
MABALACAT SUGAR COMPANY and THE PROVINCE SHERIFF OF PAMPANGA, defendants-
appellees.
Briones and Martinez for appellant.
Araneta, Zaragoza and Araneta for appellees Cu Unjieng e Hijos.
No appearance for the other appellees.
VILLA-REAL, J .:
This is an appeal taken by the plaintiff, B.H. Berkenkotter, from the judgment of the Court of First
Instance of Manila, dismissing said plaintiff's complaint against Cu Unjiengs e Hijos et al., with costs.
In support of his appeal, 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.
The first question to be decided in this appeal, which is raised in the first assignment of alleged error,
is whether or not the lower court erred in declaring that the additional machinery and equipment, as
improvement incorporated with the central are subject to the mortgage deed executed in favor of the
defendants Cu Unjieng e Hijos.
It is admitted by the parties that on April 26, 1926, the Mabalacat Sugar Co., Inc., owner of the sugar
central situated in Mabalacat, Pampanga, obtained from the defendants, Cu Unjieng e Hijos, a loan
secured by a first mortgage constituted on two parcels and land "with all its buildings, improvements,
sugar-cane mill, steel railway, telephone line, apparatus, utensils and whatever forms part or is
necessary complement of said sugar-cane mill, steel railway, telephone line, now existing or that
may in the future exist is said lots."
On October 5, 1926, shortly after said mortgage had been constituted, the Mabalacat Sugar Co.,
Inc., decided to increase the capacity of its sugar central by buying additional machinery and
equipment, so that instead of milling 150 tons daily, it could produce 250. The estimated cost of said
additional machinery and equipment was approximately P100,000. In order to carry out this plan,
B.A. Green, president of said corporation, proposed to the plaintiff, B.H. Berkenkotter, to advance
the necessary amount for the purchase of said machinery and equipment, promising to reimburse
him as soon as he could obtain an additional loan from the mortgagees, the herein defendants Cu
Unjieng e Hijos. Having agreed to said proposition made in a letter dated October 5, 1926 (Exhibit
E), B.H. Berkenkotter, on October 9th of the same year, delivered the sum of P1,710 to B.A. Green,
president of the Mabalacat Sugar Co., Inc., the total amount supplied by him to said B.A. Green
having been P25,750. Furthermore, B.H. Berkenkotter had a credit of P22,000 against said
corporation for unpaid salary. With the loan of P25,750 and said credit of P22,000, the Mabalacat
Sugar Co., Inc., purchased the additional machinery and equipment now in litigation.
On June 10, 1927, B.A. Green, president of the Mabalacat Sugar Co., Inc., applied to Cu Unjieng e
Hijos for an additional loan of P75,000 offering as security the additional machinery and equipment
acquired by said B.A. Green and installed in the sugar central after the execution of the original
mortgage deed, on April 27, 1927, together with whatever additional equipment acquired with said
loan. B.A. Green failed to obtain said loan.
Article 1877 of the Civil Code provides as follows.
ART. 1877. A mortgage includes all natural accessions, improvements, growing fruits, and
rents not collected when the obligation falls due, 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, with the declarations, amplifications, and limitations established by
law, whether the estate continues in the possession of the person who mortgaged it or
whether it passes into the hands of a third person.
In the case of Bischoff vs. Pomar and Compaia General de Tabacos (12 Phil., 690), cited with
approval in the case of Cea vs. Villanueva (18 Phil., 538), this court laid shown the following
doctrine:
1. REALTY; MORTGAGE OF REAL ESTATE INCLUDES IMPROVEMENTS AND
FIXTURES. It is a rule, established by the Civil Code and also by the Mortgage Law, with
which the decisions of the courts of the United States are in accord, that in a mortgage of
real estate, the improvements on the same are included; therefore, all objects permanently
attached to a mortgaged building or land, although they may have been placed there after
the mortgage was constituted, are also included. (Arts. 110 and 111 of the Mortgage Law,
and 1877 of the Civil Code; decision of U.S. Supreme Court in the matter of Royal Insurance
Co. vs. R. Miller, liquidator, and Amadeo [26 Sup. Ct. Rep., 46; 199 U.S., 353].)
2. ID.; ID.; INCLUSION OR EXCLUSION OF MACHINERY, ETC. 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, when it was stated in the mortgage that
the improvements, buildings, and machinery that existed thereon were also comprehended,
it is indispensable that the exclusion thereof be stipulated between the contracting parties.
The appellant contends that the installation of the machinery and equipment claimed by him in the
sugar central of the Mabalacat Sugar Company, Inc., was not permanent in character inasmuch as
B.A. Green, in proposing to him to advance the money for the purchase thereof, made it appear in
the letter, Exhibit E, that in case B.A. Green should fail to obtain an additional loan from the
defendants Cu Unjieng e Hijos, said machinery and equipment would become security therefor, said
B.A. Green binding himself not to mortgage nor encumber them to anybody until said plaintiff be fully
reimbursed for the corporation's indebtedness to him.
Upon acquiring the machinery and equipment in question with money obtained as loan from the
plaintiff-appellant by B.A. Green, as president of the Mabalacat Sugar Co., Inc., the latter became
owner of said machinery and equipment, otherwise B.A. Green, as such president, could not have
offered them to the plaintiff as security for the payment of his credit.
Article 334, paragraph 5, of the Civil Code gives the character of real property to "machinery, liquid
containers, 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.
If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar
Co., Inc., in lieu of the other of less capacity existing therein, for its sugar industry, converted them
into real property by reason of their purpose, it cannot be said that their incorporation therewith was
not permanent in character because, as essential and principal elements of a sugar central, without
them the sugar central would be unable to function or carry on the industrial purpose for which it was
established. Inasmuch as the central is permanent in character, the necessary machinery and
equipment installed for carrying on the sugar industry for which it has been established must
necessarily be permanent.
Furthermore, the fact that B.A. Green bound himself to the plaintiff B.H. 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, is
not incompatible with the permanent character of the incorporation of said machinery and equipment
with the sugar central of the Mabalacat Sugar Co., Inc., as nothing could prevent B.A. Green from
giving them as security at least under a second mortgage.
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., Inc., and while the
mortgage constituted on said sugar central to Cu Unjieng e Hijos remained in force, only the right of
redemption of the vendor Mabalacat Sugar Co., Inc., in the sugar central with which said machinery
and equipment had been incorporated, was transferred thereby, subject to the right of the
defendants Cu Unjieng e Hijos under the first mortgage.
For the foregoing considerations, we are of the opinion and so hold: (1) That the installation of a
machinery and equipment in a mortgaged sugar central, in lieu of another of less capacity, for the
purpose of carrying out the industrial functions of the latter and increasing production, constitutes a
permanent improvement on said sugar central and subjects said machinery and equipment to the
mortgage constituted thereon (article 1877, Civil Code); (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, 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; and (3) that the sale of the machinery and equipment in
question by the purchaser who was supplied the purchase money, as a loan, to the person who
supplied the money, after the incorporation thereof with the mortgaged sugar central, does not vest
the creditor with ownership of said machinery and equipment but simply with the right of redemption.
Wherefore, finding no error in the appealed judgment, it is affirmed in all its parts, with costs to the
appellant. So ordered.
Malcolm, Imperial, Butte, and Goddard, JJ., concur.
]





Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-17898 October 31, 1962
PASTOR D. AGO, petitioner,
vs.
THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the Court of First
Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO and GRACE PARK
ENGINEERING, INC., respondents.
Jose M. Luison for petitioner.
Norberto J. Quisumbing for respondent Grace Park Engineering, Inc.
The Provincial Fiscal of Surigao for respondent Sheriff of Surigao.
LABRABOR, J .:
Appeal by certiorari to review the decision of respondent Court of Appeals in CA-G.R. No. 26723-R
entitled "Pastor D. Ago vs. The Provincial Sheriff of Surigao, et al." which in part reads:
In this case for certiorari and prohibition with preliminary injunction, it appears from the
records that the respondent Judge of the Court of First Instance of Agusan rendered
judgment (Annex "A") in open court on January 28, 1959, basing said judgment on a
compromise agreement between the parties.
On August 15, 1959, upon petition, the Court of First Instance issued a writ of execution.
Petitioner's motion for reconsideration dated October 12, 1959 alleges that he, or his
counsel, did not receive a formal and valid notice of said decision, which motion for
reconsideration was denied by the court below in the order of November 14, 1959.
Petitioner now contends that the respondent Judge exceeded in his jurisdiction in rendering
the execution without valid and formal notice of the decision.
A compromise agreement is binding between the parties and becomes the law between
them. (Gonzales vs. Gonzales G.R. No. L-1254, May 21, 1948, 81 Phil. 38; Martin vs. Martin,
G.R. No. L-12439, May 22, 1959) .
It is a general rule in this jurisdiction that a judgment based on a compromise agreement is
not appealable and is immediately executory, unless a motion is filed on the ground fraud,
mistake or duress. (De los Reyes vs. Ugarte, 75 Phil. 505; Lapena vs. Morfe, G.R. No. L-
10089, July 31, 1957)
Petitioner's claim that he was not notified or served notice of the decision is untenable. The
judgment on the compromise agreement rendered by the court below dated January 28,
1959, was given in open court. This alone is a substantial compliance as to notice. (De los
Reyes vs. Ugarte, supra)
IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse its jurisdiction
in ordering the execution of the judgment. The petition for certiorari is hereby dismissed and
the writ of preliminary injunction heretofore dissolved, with costs against the petitioner.
IT IS SO ORDERED.
The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor D. Ago bought
sawmill machineries and equipments from respondent Grace Park Engineer domineering, Inc.,
executing a chattel mortgage over said machineries and equipments to secure the payment of
balance of the price remaining unpaid of P32,000.00, which petitioner agreed to pay on installment
basis.
Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace Park Engineering, Inc.
instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin said foreclosure,
petitioner herein instituted Special Civil Case No. 53 in the Court of First Instance of Agusan. The
parties to the case arrived at a compromise agreement and submitted the same in court in writing,
signed by Pastor D. Ago and the Grace Park Engineering, Inc. The Hon. Montano A. Ortiz, Judge of
the Court of First Instance of Agusan, then presiding, dictated a decision in open court on January
28, 1959.
Petitioner continued to default in his payments as provided in the judgment by compromise, so
Grace Park Engineering, Inc. filed with the lower court a motion for execution, which was granted by
the court on August 15, 1959. A writ of execution, dated September 23, 1959, later followed.
The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of execution issued by the
lower court, levied upon and ordered the sale of the sawmill machineries and equipments in
question. These machineries and equipments had been taken to and installed in a sawmill building
located in Lianga, Surigao del Sur, and owned by the Golden Pacific Sawmill, Inc., to whom,
petitioner alleges, he had sold them on February 16, 1959 (a date after the decision of the lower
court but before levy by the Sheriff).
Having been advised by the sheriff that the public auction sale was set for December 4, 1959,
petitioner, on December 1, 1959, filed the petition for certiorari and prohibition with preliminary
injunction with respondent Court of Appeals, alleging that a copy of the aforementioned judgment
given in open court on January 28, 1959 was served upon counsel for petitioner only on September
25, 1959 (writ of execution is dated September 23, 1959); that the order and writ of execution having
been issued by the lower court before counsel for petitioner received a copy of the judgment, its
resultant last order that the "sheriff may now proceed with the sale of the properties levied
constituted a grave abuse of discretion and was in excess of its jurisdiction; and that the respondent
Provincial Sheriff of Surigao was acting illegally upon the allegedly void writ of execution by levying
the same upon the sawmill machineries and equipments which have become real properties of the
Golden Pacific sawmill, Inc., and is about to proceed in selling the same without prior publication of
the notice of sale thereof in some newspaper of general circulation as required by the Rules of
Court.
The Court of Appeals, on December 8, 1959, issued a writ of preliminary injunction against the
sheriff but it turned out that the latter had already sold at public auction the machineries in question,
on December 4, 1959, as scheduled. The respondent Grace Park Engineering, Inc. was the only
bidder for P15,000.00, although the certificate sale was not yet executed. The Court of Appeals
constructed the sheriff to suspend the issuance of a certificate of sale of the said sawmill
machineries and equipment sold by him on December 4, 1959 until the final decision of the case. On
November 9, 1960 the Court of Appeals rendered the aforequoted decision.
Before this Court, petitioner alleges that the Court of Appeals erred (1) in holding that the rendition of
judgment on compromise in open court on January 1959 was a sufficient notice; and (2) in not
resolving the other issues raised before it, namely, (a) the legality of the public auction sale made by
the sheriff, and (b) the nature of the machineries in question, whether they are movables or
immovables.
The Court of Appeals held that as a judgment was entered by the court below in open court upon the
submission of the compromise agreement, the parties may be considered as having been notified of
said judgment and this fact constitutes due notice of said judgment. This raises the following legal
question: Is the order dictated in open court of the judgment of the court, and is the fact the petitioner
herein was present in open court was the judgment was dictated, sufficient notice thereof? The
provisions of the Rules of Court decree otherwise. Section 1 of Rule 35 describes the manner in
which judgment shall be rendered, thus:
SECTION 1. How judgment rendered. All judgments determining the merits of cases shall
be in writing personally and directly prepared by the judge, and signed by him, stating clearly
and distinctly the facts and the law on which it is based, filed with the clerk of the court.
The court of first instance being a court of record, in order that a judgment may be considered as
rendered, must not only be in writing, signed by the judge, but it must also be filed with the clerk of
court. The mere pronouncement of the judgment in open court with the stenographer taking note
thereof does not, therefore, constitute a rendition of the judgment. It is the filing of the signed
decision with the clerk of court that constitutes rendition. While it is to be presumed that the
judgment that was dictated in open court will be the judgment of the court, the court may still modify
said order as the same is being put into writing. And even if the order or judgment has already been
put into writing and signed, while it has not yet been delivered to the clerk for filing it is still subject to
amendment or change by the judge. It is only when the judgment signed by the judge is actually filed
with the clerk of court that it becomes a valid and binding judgment. Prior thereto, it could still be
subject to amendment and change and may not, therefore, constitute the real judgment of the court.
Regarding the notice of judgment, the mere fact that a party heard the judge dictating the judgment
in open court, is not a valid notice of said judgment. If rendition thereof is constituted by the filing
with the clerk of court of a signed copy (of the judgment), it is evident that the fact that a party or an
attorney heard the order or judgment being dictated in court cannot be considered as notice of the
real judgment. No judgment can be notified to the parties unless it has previously been rendered.
The notice, therefore, that a party has of a judgment that was being dictated is of no effect because
at the time no judgment has as yet been signed by the judge and filed with the clerk.
Besides, the Rules expressly require that final orders or judgments be served personally or by
registered mail. Section 7 of Rule 27 provides as follows:
SEC. 7. Service of final orders or judgments. Final orders or judgments shall be served
either personally or by registered mail.
In accordance with this provision, a party is not considered as having been served with the judgment
merely because he heard the judgment dictating the said judgment in open court; it is necessary that
he be served with a copy of the signed judgment that has been filed with the clerk in order that he
may legally be considered as having been served with the judgment.
For all the foregoing, the fact that the petitioner herein heard the trial judge dictating the judgment in
open court, is not sufficient to constitute the service of judgement as required by the above-quoted
section 7 of Rule 2 the signed judgment not having been served upon the petitioner, said judgment
could not be effective upon him (petitioner) who had not received it. It follows as a consequence that
the issuance of the writ of execution null and void, having been issued before petitioner her was
served, personally or by registered mail, a copy of the decision.
The second question raised in this appeal, which has been passed upon by the Court of Appeals,
concerns the validity of the proceedings of the sheriff in selling the sawmill machineries and
equipments at public auction with a notice of the sale having been previously published.
The record shows that after petitioner herein Pastor D. Ago had purchased the sawmill machineries
and equipments he assigned the same to the Golden Pacific Sawmill, Inc. in payment of his
subscription to the shares of stock of said corporation. Thereafter the sawmill machinery and
equipments were installed in a building and permanently attached to the ground. By reason of such
installment in a building, the said sawmill machineries and equipment became real estate properties
in accordance with the provision of Art. 415 (5) of the Civil Code, thus:
ART. 415. The following are immovable property:
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements tended by the owner of the tenement
for an industry or works which may be carried on in a building or on a piece of land, and
which tend directly to meet the needs of the said industry or works;
This Court in interpreting a similar question raised before it in the case of Berkenkotter vs. Cu
Unjieng e Hijos, 61 Phil. 683, held that the installation of the machine and equipment in the central of
the Mabalacat Sugar Co., Inc. for use in connection with the industry carried by the company,
converted the said machinery and equipment into real estate by reason of their purpose.
Paraphrasing language of said decision we hold that by the installment of the sawmill machineries in
the building of the Gold Pacific Sawmill, Inc., for use in the sawing of logs carried on in said building,
the same became a necessary and permanent part of the building or real estate on which the same
was constructed, converting the said machineries and equipments into real estate within the
meaning of Article 415(5) above-quoted of the Civil Code of the Philippines.
Considering that the machineries and equipments in question valued at more than P15,000.00
appear to have been sold without the necessary advertisement of sale by publication in a
newspaper, as required in Sec. 16 of Rule 39 of the Rules of Court, which is as follows:
SEC. 16. Notice of sale of property on execution. Before the sale of property on
execution, notice thereof must be given as follows:
xxx xxx xxx
(c) In case of real property, by posting a similar notice particularly describing the property for
twenty days in three public places in the municipality or city where the property is situated,
and also where the property is to be sold, and, if the assessed value of the property exceeds
four hundred pesos, by publishing a copy of the notice once a week, for the same period, in
some newspaper published or having general circulation in the province, if there be one. If
there are newspapers published in the province in both the English and Spanish languages,
then a like publication for a like period shall be made in one newspaper published in the
English language, and in one published in the Spanish language.
the sale made by the sheriff must be declared null and void.
WHEREFORE, the decision of the Court of Appeals sought to be reviewed is hereby set aside and
We declare that the issuance of the writ of execution in this case against the sawmill machineries
and equipments purchased by petitioner Pastor D. Ago from the Grace Park Engineering, Inc., as
well as the sale of the same by the Sheriff of Surigao, are null and void. Costs shall be against the
respondent Grace Park Engineering, Inc.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and
Makalintal, JJ.,concur.
Padilla, J., took no part.




















Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19527 March 30, 1963
RICARDO PRESBITERO, in his capacity as Executor of the Testate Estate of EPERIDION
PRESBITERO,petitioner,
vs.
THE HON. JOSE F. FERNANDEZ, HELEN CARAM NAVA, and the PROVINCIAL SHERIFF OF
NEGROS OCCIDENTAL, respondents.
San Juan, Africa and Benedicto and Hilado and Hilado for petitioner.
Paredes, Poblador, Cruz and Nazareno and Manuel Soriano for respondents.
REYES, J.B.L., J .:
Petition for a writ of certiorari against the Court of First Instance of Negros Occidental.
It appears that during the lifetime of Esperidion Presbitero, judgment was rendered against him by
the Court of Appeals on October 14, 1959, in CA-G.R. No. 20879,
... to execute in favor of the plaintiff, within 30 days from the time this judgment becomes
final, a deed of reconveyance of Lot No. 788 of the cadastral survey of Valladolid, free from
all liens and encumbrances, and another deed of reconveyance of a 7-hectare portion of Lot
No. 608 of the same cadastral survey, also free from all liens and encumbrances, or, upon
failure to do so, to pay to the plaintiff the value of each of the said properties, as may be
determined by the Court a quo upon evidence to be presented by the parties before it. The
defendant is further adjudged to pay to the plaintiff the value of the products received by him
from the 5-hectare portion equivalent to 20 cavans of palay per hectare every year, or 125
cavans yearly, at the rate of P10.00 per cavan, from 1951 until possession of the said 5-
hectare portion is finally delivered to the plaintiff with legal interest thereon from the time the
complaint was filed; and to pay to the plaintiff the sum of P1,000.00 by way of attorney's
fees, plus costs.
This judgment, which became final, was a modification of a decision of the Court of First Instance of
Negros Occidental, in its Civil Case No. 3492, entitled "Helen Caram Nava, plaintiff, versus
Esperidion Presbitero, defendant."
Thereafter, plaintiff's counsel, in a letter dated December 8, 1959, sought in vain to amicably settle
the case through petitioner's son, Ricardo Presbitero. When no response was forthcoming, said
counsel asked for, and the court a quo ordered on June 9, 1960, the issuance of a partial writ of
execution for the sum of P12,250.00. On the following day, June 10, 1960, said counsel, in another
friendly letter, reiterated his previous suggestion for an amicable settlement, but the same produced
no fruitful result. Thereupon, on June 21, 1960, the sheriff levied upon and garnished the sugar
quotas allotted to plantation audit Nos. 26-237, 26-238, 26-239, 26-240 and 26-241 adhered to the
Ma-ao Mill District and "registered in the name of Esperidion Presbitero as the original plantation-
owner", furnishing copies of the writ of execution and the notice of garnishment to the manager of
the Ma-ao Sugar Central Company, Bago, Negros Occidental, and the Sugar Quota Administration
at Bacolod City, but without presenting for registration copies thereof to the Register of Deeds.
Plaintiff Helen Caram Nava (herein respondent) then moved the court, on June 22, 1960, to hear
evidence on the market value of the lots; and after some hearings, occasionally protracted by
postponements, the trial court, on manifestation of defendant's willingness to cede the properties in
litigation, suspended the proceedings and ordered him to segregate the portion of Lot 608 pertaining
to the plaintiff from the mass of properties belonging to the defendant within a period to expire on
August 24, 1960, and to effect the final conveyance of the said portion of Lot 608 and the whole of
Lot 788 free from any lien and encumbrance whatsoever. Because of Presbitero's failure to comply
with this order within the time set forth by the court, the plaintiff again moved on August 25, 1960 to
declare the market value of the lots in question to be P2,500.00 per hectare, based on
uncontradicted evidence previously adduced. But the court, acting on a prayer of defendant
Presbitero, in an order dated August 27, 1960, granted him twenty (20) days to finalize the survey of
Lot 608, and ordered him to execute a reconveyance of Lot 788 not later than August 31, 1960.
Defendant again defaulted; and so plaintiff, on September 21, 1960, moved the court for payment by
the defendant of the sum of P35,000.00 for the 14 hectares of land at P2,500.00 to the hectare, and
the court, in its order dated September 24, 1960, gave the defendant until October 15, 1960 either to
pay the value of the 14 hectares at the rate given or to deliver the clean titles of the lots. On October
15, 1960, the defendant finally delivered Certificate of Title No. T-28046 covering Lot 788, but not
the title covering Lot 608 because of an existing encumbrance in favor of the Philippine National
Bank. In view thereof, Helen Caram Nava moved for, and secured on October 19, 1960, a writ of
execution for P17,500.00, and on the day following wrote the sheriff to proceed with the auction sale
of the sugar quotas previously scheduled for November 5, 1960. The sheriff issued the notice of
auction sale on October 20, 1960.
On October 22, 1960, death overtook the defendant Esperidion Presbitero.
Proceedings for the settlement of his estate were commenced in Special Proceedings No. 2936 of
the Court of First Instance of Negros Occidental; and on November 4, 1960, the special
administrator, Ricardo Presbitero, filed an urgent motion, in Case No. 3492, to set aside the writs of
execution, and to order the sheriff to desist from holding the auction sale on the grounds that the
levy on the sugar quotas was invalid because the notice thereof was not registered with the Register
of Deeds, as for real property, and that the writs, being for sums of money, are unenforceable since
Esperidion Presbitero died on October 22, 1960, and, therefore, could only be enforced as a money
claim against his estate.
This urgent motion was heard on November 5, 1960, but the auction sale proceeded on the same
date, ending in the plaintiff's putting up the highest bid for P34,970.11; thus, the sheriff sold 21,640
piculs of sugar quota to her.
On November 10, 1960, plaintiff Nava filed her opposition to Presbitero's urgent motion of November
4, 1960; the latter filed on May 4, 1961 a supplement to his urgent motion; and on May 8 and 23,
1961, the court continued hearings on the motion, and ultimately denied it on November 18, 1961.
On January 11, 1962, plaintiff Nava also filed an urgent motion to order the Ma-ao Sugar Central to
register the sugar quotas in her name and to deliver the rentals of these quotas corresponding to the
crop year 1960-61 and succeeding years to her. The court granted this motion in its order dated
February 3, 1962. A motion for reconsideration by Presbitero was denied in a subsequent order
under date of March 5, 1962. Wherefore, Presbitero instituted the present proceedings for certiorari.
A preliminary restraining writ was thereafter issued by the court against the respondents from
implementing the aforesaid orders of the respondent Judge, dated February 3, 1960 and March 5,
1962, respectively. The petition further seeks the setting aside of the sheriff's certificate of sale of the
sugar quotas made out in favor of Helen Caram Nava, and that she be directed to file the judgment
credit in her favor in Civil Case No. 3492 as a money claim in the proceedings to settle the Estate of
Esperidion Presbitero.
The petitioner denies having been personally served with notice of the garnishment of the sugar
quotas, but this disclaimer cannot be seriously considered since it appears that he was sent a copy
of the notice through the chief of police of Valladolid on June 21, 1960, as certified to by the sheriff,
and that he had actual knowledge of the garnishment, as shown by his motion of November 4, 1960
to set aside the writs of execution and to order the sheriff to desist from holding the auction sale.
Squarely at issue in this case is whether sugar quotas are real (immovable) or personal properties. If
they be realty, then the levy upon them by the sheriff is null and void for lack of compliance with the
procedure prescribed in Section 14, Rule 39, in relation with Section 7, Rule 59, of the Rules of
Court requiring "the filing with the register of deeds a copy of the orders together with a description
of the property . . . ."
In contending that sugar quotas are personal property, the respondent, Helen Caram Nava, invoked
the test formulated by Manresa (3 Manresa, 6th Ed. 43), and opined that sugar quotas can be
carried from place to place without injury to the land to which they are attached, and are not one of
those included in Article 415 of the Civil Code; and not being thus included, they fall under the
category of personal properties:
ART. 416. The following are deemed to be personal property:
x x x x x x x x x
4. In general, all things which can be transported from place to place without impairment of
the real property to which they are fixed.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted
and approved by this Honorable Court, without prejudice to the parties adducing other
evidence to prove their case not covered by this stipulation of facts. 1wph1.t
Respondent likewise points to evidence she submitted that sugar quotas are, in fact, transferred
apart from the plantations to which they are attached, without impairing, destroying, or diminishing
the potentiality of either quota or plantation. She was sustained by the lower court when it stated that
"it is a matter of public knowledge and it is universal practice in this province, whose principal
industry is sugar, to transfer by sale, lease, or otherwise, sugar quota allocations from one plantation
to any other" and that it is "specious to insist that quotas are improvements attaching to one
plantation when in truth and in fact they are no longer attached thereto for having been sold or
leased away to be used in another plantation". Respondent would add weight to her argument by
invoking the role that sugar quotas play in our modern social and economic life, and cites that the
Sugar Office does not require any registration with the Register of Deeds for the validity of the sale
of these quotas; and, in fact, those here in question were not noted down in the certificate of title of
the land to which they pertain; and that Ricardo Presbitero had leased sugar quotas independently
of the land. The respondent cites further that the U.S.-Philippine Trade Relations Act, approved by
the United States Congress in 1946, limiting the production of unrefined sugar in the Philippines did
not allocate the quotas for said unrefined sugar among lands planted to sugarcane but among "the
sugar producing mills and plantation OWNERS", and for this reason Section 3 of Executive Order
No. 873, issued by Governor General Murphy, authorizes the lifting of sugar allotments from one
land to another by means only of notarized deeds.
While respondent's arguments are thought-provoking, they cannot stand against the positive
mandate of the pertinent statute. The Sugar Limitation Law (Act 4166, as amended) provides
SEC. 9. The allotment corresponding to each piece of land under the provisions of this Act
shall be deemed to be an improvement attaching to the land entitled thereto ....
and Republic Act No. 1825 similarly provides
SEC. 4. The production allowance or quotas corresponding to each piece of land under the
provisions of this Act shall be deemed to be an improvement attaching to the land entitled thereto ....
And Executive Order No. 873 defines "plantation" as follows:
(a) The term 'plantation' means any specific area of land under sole or undivided ownership
to which is attached an allotment of centrifugal sugar.
Thus, under express provisions of law, the sugar quota allocations are accessories to land, and can
not have independent existence away from a plantation, although the latter may vary. Indeed, this
Court held in the case ofAbelarde vs. Lopez, 74 Phil. 344, that even if a contract of sale
of haciendas omitted "the right, title, interest, participation, action (and) rent" which the grantors had
or might have in relation to the parcels of land sold, the sale would include the quotas, it being
provided in Section 9, Act 4166, that the allotment is deemed an improvement attached to the land,
and that at the time the contract of sale was signed the land devoted to sugar were practically of no
use without the sugar allotment.
As an improvement attached to land, by express provision of law, though not physically so united,
the sugar quotas are inseparable therefrom, just like servitudes and other real rights over an
immovable. Article 415 of the Civil Code, in enumerating what are immovable properties, names
10. Contracts for public works, and servitudes and other real rights over immovable property.
(Emphasis supplied)
It is by law, therefore, that these properties are immovable or real, Article 416 of the Civil Code being
made to apply only when the thing (res) sought to be classified is not included in Article 415.
The fact that the Philippine Trade Act of 1946 (U.S. Public Law 371-79th Congress) allows transfers
of sugar quotas does not militate against their immovability. Neither does the fact that the Sugar
Quota Office does not require registration of sales of quotas with the Register of Deeds for their
validity, nor the fact that allocation of unrefined sugar quotas is not made among lands planted to
sugarcane but among "the sugar producing mills and plantation OWNERS", since the lease or sale
of quotas are voluntary transactions, the regime of which, is not necessarily identical
to involuntary transfers or levies; and there cannot be a sugar plantation owner without land to which
the quota is attached; and there can exist no quota without there being first a corresponding
plantation.
Since the levy is invalid for non-compliance with law, it is impertinent to discuss the survival or non-
survival of claims after the death of the judgment debtor, gauged from the moment of actual levy.
Suffice it to state that, as the case presently stands, the writs of execution are not in question, but
the levy on the quotas, and, because of its invalidity, the levy amount to no levy at all. Neither is it
necessary, or desirable, to pass upon the conscionableness or unconscionableness of the amount
produced in the auction sale as compared with the actual value of the quotas inasmuch as the sale
must necessarily be also illegal.
As to the remedial issue that the respondents have presented: that certiorari does not lie in this case
because the petitioner had a remedy in the lower court to "suspend" the auction sale, but did not
avail thereof, it may be stated that the latter's urgent motion of November 4, 1960, a day before the
scheduled sale (though unresolved by the court on time), did ask for desistance from holding the
sale.
WHEREFORE, the preliminary injunction heretofore granted is hereby made permanent, and the
sheriff's certificate of sale of the sugar quotas in question declared null and void. Costs against
respondent Nava.
Bengzon, C.J., Padilla, Labrador, Barrera, Paredes, Dizon and Regala, JJ., concur.
Makalintal, J., took no part.


















Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15334 January 31, 1964
BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF QUEZON
CITY, petitioners,
vs.
MANILA ELECTRIC COMPANY, respondent.
Assistant City Attorney Jaime R. Agloro for petitioners.
Ross, Selph and Carrascoso for respondent.
PAREDES, J .:
From the stipulation of facts and evidence adduced during the hearing, the following appear:
On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the
Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric street
railway and electric light, heat and power system in the City of Manila and its suburbs to the person
or persons making the most favorable bid. Charles M. Swift was awarded the said franchise on
March 1903, the terms and conditions of which were embodied in Ordinance No. 44 approved on
March 24, 1903. Respondent Manila Electric Co. (Meralco for short), became the transferee and
owner of the franchise.
Meralco's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna
and is transmitted to the City of Manila by means of electric transmission wires, running from the
province of Laguna to the said City. These electric transmission wires which carry high voltage
current, are fastened to insulators attached on steel towers constructed by respondent at intervals,
from its hydro-electric plant in the province of Laguna to the City of Manila. The respondent Meralco
has constructed 40 of these steel towers within Quezon City, on land belonging to it. A photograph of
one of these steel towers is attached to the petition for review, marked Annex A. Three steel towers
were inspected by the lower court and parties and the following were the descriptions given there of
by said court:
The first steel tower is located in South Tatalon, Espaa Extension, Quezon City. The
findings were as follows: the ground around one of the four posts was excavated to a depth
of about eight (8) feet, with an opening of about one (1) meter in diameter, decreased to
about a quarter of a meter as it we deeper until it reached the bottom of the post; at the
bottom of the post were two parallel steel bars attached to the leg means of bolts; the tower
proper was attached to the leg three bolts; with two cross metals to prevent mobility; there
was no concrete foundation but there was adobe stone underneath; as the bottom of the
excavation was covered with water about three inches high, it could not be determined with
certainty to whether said adobe stone was placed purposely or not, as the place abounds
with this kind of stone; and the tower carried five high voltage wires without cover or any
insulating materials.
The second tower inspected was located in Kamuning Road, K-F, Quezon City, on land
owned by the petitioner approximate more than one kilometer from the first tower. As in the
first tower, the ground around one of the four legs was excavate from seven to eight (8) feet
deep and one and a half (1-) meters wide. There being very little water at the bottom, it
was seen that there was no concrete foundation, but there soft adobe beneath. The leg was
likewise provided with two parallel steel bars bolted to a square metal frame also bolted to
each corner. Like the first one, the second tower is made up of metal rods joined together by
means of bolts, so that by unscrewing the bolts, the tower could be dismantled and
reassembled.
The third tower examined is located along Kamias Road, Quezon City. As in the first two
towers given above, the ground around the two legs of the third tower was excavated to a
depth about two or three inches beyond the outside level of the steel bar foundation. It was
found that there was no concrete foundation. Like the two previous ones, the bottom
arrangement of the legs thereof were found to be resting on soft adobe, which, probably due
to high humidity, looks like mud or clay. It was also found that the square metal frame
supporting the legs were not attached to any material or foundation.
On November 15, 1955, petitioner City Assessor of Quezon City declared the aforesaid steel towers
for real property tax under Tax declaration Nos. 31992 and 15549. After denying respondent's
petition to cancel these declarations, an appeal was taken by respondent to the Board of
Assessment Appeals of Quezon City, which required respondent to pay the amount of P11,651.86
as real property tax on the said steel towers for the years 1952 to 1956. Respondent paid the
amount under protest, and filed a petition for review in the Court of Tax Appeals (CTA for short)
which rendered a decision on December 29, 1958, ordering the cancellation of the said tax
declarations and the petitioner City Treasurer of Quezon City to refund to the respondent the sum of
P11,651.86. The motion for reconsideration having been denied, on April 22, 1959, the instant
petition for review was filed.
In upholding the cause of respondents, the CTA held that: (1) the steel towers come within the term
"poles" which are declared exempt from taxes under part II paragraph 9 of respondent's franchise;
(2) the steel towers are personal properties and are not subject to real property tax; and (3) the City
Treasurer of Quezon City is held responsible for the refund of the amount paid. These are assigned
as errors by the petitioner in the brief.
The tax exemption privilege of the petitioner is quoted hereunder:
PAR 9. The grantee shall be liable to pay the same taxes upon its real estate, buildings,
plant (not including poles, wires, transformers, and insulators), machinery and personal
property as other persons are or may be hereafter required by law to pay ... Said percentage
shall be due and payable at the time stated in paragraph nineteen of Part One hereof, ... and
shall be in lieu of all taxes and assessments of whatsoever nature and by whatsoever
authority upon the privileges, earnings, income, franchise, and poles, wires, transformers,
and insulators of the grantee from which taxes and assessments the grantee is hereby
expressly exempted. (Par. 9, Part Two, Act No. 484 Respondent's Franchise; emphasis
supplied.)
The word "pole" means "a long, comparatively slender usually cylindrical piece of wood or timber, as
typically the stem of a small tree stripped of its branches; also by extension, a similar typically
cylindrical piece or object of metal or the like". The term also refers to "an upright standard to the top
of which something is affixed or by which something is supported; as a dovecote set on a pole;
telegraph poles; a tent pole; sometimes, specifically a vessel's master (Webster's New International
Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of Manila, may be seen cylindrical metal
poles, cubical concrete poles, and poles of the PLDT Co. which are made of two steel bars joined
together by an interlacing metal rod. They are called "poles" notwithstanding the fact that they are no
made of wood. It must be noted from paragraph 9, above quoted, that the concept of the "poles" for
which exemption is granted, is not determined by their place or location, nor by the character of the
electric current it carries, nor the material or form of which it is made, but the use to which they are
dedicated. In accordance with the definitions, pole is not restricted to a long cylindrical piece of wood
or metal, but includes "upright standards to the top of which something is affixed or by which
something is supported. As heretofore described, respondent's steel supports consists of a
framework of four steel bars or strips which are bound by steel cross-arms atop of which are cross-
arms supporting five high voltage transmission wires (See Annex A) and their sole function is to
support or carry such wires.
The conclusion of the CTA that the steel supports in question are embraced in the term "poles" is not
a novelty. Several courts of last resort in the United States have called these steel supports "steel
towers", and they denominated these supports or towers, as electric poles. In their decisions the
words "towers" and "poles" were used interchangeably, and it is well understood in that jurisdiction
that a transmission tower or pole means the same thing.
In a proceeding to condemn land for the use of electric power wires, in which the law provided that
wires shall be constructed upon suitable poles, this term was construed to mean either wood or
metal poles and in view of the land being subject to overflow, and the necessary carrying of
numerous wires and the distance between poles, the statute was interpreted to
include towers or poles. (Stemmons and Dallas Light Co. (Tex) 212 S.W. 222, 224; 32-A Words and
Phrases, p. 365.)
The term "poles" was also used to denominate the steel supports or towers used by an association
used to convey its electric power furnished to subscribers and members, constructed for the purpose
of fastening high voltage and dangerous electric wires alongside public highways. The steel supports
or towers were made of iron or other metals consisting of two pieces running from the ground up
some thirty feet high, being wider at the bottom than at the top, the said two metal pieces being
connected with criss-cross iron running from the bottom to the top, constructed like ladders and
loaded with high voltage electricity. In form and structure, they are like the steel towers in question.
(Salt River Valley Users' Ass'n v. Compton, 8 P. 2nd, 249-250.)
The term "poles" was used to denote the steel towers of an electric company engaged in the
generation of hydro-electric power generated from its plant to the Tower of Oxford and City of
Waterbury. These steel towers are about 15 feet square at the base and extended to a height of
about 35 feet to a point, and are embedded in the cement foundations sunk in the earth, the top of
which extends above the surface of the soil in the tower of Oxford, and to the towers are attached
insulators, arms, and other equipment capable of carrying wires for the transmission of electric
power (Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl. p. 1).
In a case, the defendant admitted that the structure on which a certain person met his death was
built for the purpose of supporting a transmission wire used for carrying high-tension electric power,
but claimed that the steel towers on which it is carried were so large that their wire took their
structure out of the definition of a pole line. It was held that in defining the word pole, one should not
be governed by the wire or material of the support used, but was considering the danger from any
elevated wire carrying electric current, and that regardless of the size or material wire of its individual
members, any continuous series of structures intended and used solely or primarily for the purpose
of supporting wires carrying electric currents is a pole line (Inspiration Consolidation Cooper Co. v.
Bryan 252 P. 1016).
It is evident, therefore, that the word "poles", as used in Act No. 484 and incorporated in the
petitioner's franchise, should not be given a restrictive and narrow interpretation, as to defeat the
very object for which the franchise was granted. The poles as contemplated thereon, should be
understood and taken as a part of the electric power system of the respondent Meralco, for the
conveyance of electric current from the source thereof to its consumers. If the respondent would be
required to employ "wooden poles", or "rounded poles" as it used to do fifty years back, then one
should admit that the Philippines is one century behind the age of space. It should also be conceded
by now that steel towers, like the ones in question, for obvious reasons, can better effectuate the
purpose for which the respondent's franchise was granted.
Granting for the purpose of argument that the steel supports or towers in question are not embraced
within the term poles, the logical question posited is whether they constitute real properties, so that
they can be subject to a real property tax. The tax law does not provide for a definition of real
property; but Article 415 of the Civil Code does, by stating the following are immovable property:
(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;
x x x x x x x x x
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object;
x x x x x x x x x
(5) Machinery, receptacles, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried in a building or on a piece of land,
and which tends directly to meet the needs of the said industry or works;
x x x x x x x x x
The steel towers or supports in question, do not come within the objects mentioned in paragraph 1,
because they do not constitute buildings or constructions adhered to the soil. They are not
construction analogous to buildings nor adhering to the soil. As per description, given by the lower
court, they are removable and merely attached to a square metal frame by means of bolts, which
when unscrewed could easily be dismantled and moved from place to place. They can not be
included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they
can be separated without breaking the material or causing deterioration upon the object to which
they are attached. Each of these steel towers or supports consists of steel bars or metal strips,
joined together by means of bolts, which can be disassembled by unscrewing the bolts and
reassembled by screwing the same. These steel towers or supports do not also fall under paragraph
5, for they are not machineries, receptacles, instruments or implements, and even if they were, they
are not intended for industry or works on the land. Petitioner is not engaged in an industry or works
in the land in which the steel supports or towers are constructed.
It is finally contended that the CTA erred in ordering the City Treasurer of Quezon City to refund the
sum of P11,651.86, despite the fact that Quezon City is not a party to the case. It is argued that as
the City Treasurer is not the real party in interest, but Quezon City, which was not a party to the suit,
notwithstanding its capacity to sue and be sued, he should not be ordered to effect the refund. This
question has not been raised in the court below, and, therefore, it cannot be properly raised for the
first time on appeal. The herein petitioner is indulging in legal technicalities and niceties which do not
help him any; for factually, it was he (City Treasurer) whom had insisted that respondent herein pay
the real estate taxes, which respondent paid under protest. Having acted in his official capacity as
City Treasurer of Quezon City, he would surely know what to do, under the circumstances.
IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs against the petitioners.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and Regala,
JJ., concur.
Makalintal, J., concurs in the result.
Dizon, J., took no part.




















Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-47943 May 31, 1982
MANILA ELECTRIC COMPANY, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF
BATANGAS and PROVINCIAL ASSESSOR OF BATANGAS, respondents.

AQUINO, J .:
This case is about the imposition of the realty tax on two oil storage tanks installed in 1969 by Manila
Electric Company on a lot in San Pascual, Batangas which it leased in 1968 from Caltex (Phil.), Inc.
The tanks are within the Caltex refinery compound. They have a total capacity of 566,000 barrels.
They are used for storing fuel oil for Meralco's power plants.
According to Meralco, the storage tanks are made of steel plates welded and assembled on the
spot. Their bottoms rest on a foundation consisting of compacted earth as the outermost layer, a
sand pad as the intermediate layer and a two-inch thick bituminous asphalt stratum as the top layer.
The bottom of each tank is in contact with the asphalt layer,
The steel sides of the tank are directly supported underneath by a circular wall made of concrete,
eighteen inches thick, to prevent the tank from sliding. Hence, according to Meralco, the tank is not
attached to its foundation. It is not anchored or welded to the concrete circular wall. Its bottom plate
is not attached to any part of the foundation by bolts, screws or similar devices. The tank merely sits
on its foundation. Each empty tank can be floated by flooding its dike-inclosed location with water
four feet deep. (pp. 29-30, Rollo.)
On the other hand, according to the hearing commissioners of the Central Board of Assessment
Appeals, the area where the two tanks are located is enclosed with earthen dikes with electric steel
poles on top thereof and is divided into two parts as the site of each tank. The foundation of the
tanks is elevated from the remaining area. On both sides of the earthen dikes are two separate
concrete steps leading to the foundation of each tank.
Tank No. 2 is supported by a concrete foundation with an asphalt lining about an inch thick.
Pipelines were installed on the sides of each tank and are connected to the pipelines of the Manila
Enterprises Industrial Corporation whose buildings and pumping station are near Tank No. 2.
The Board concludes that while the tanks rest or sit on their foundation, the foundation itself and the
walls, dikes and steps, which are integral parts of the tanks, are affixed to the land while the
pipelines are attached to the tanks. (pp. 60-61, Rollo.) In 1970, the municipal treasurer of Bauan,
Batangas, on the basis of an assessment made by the provincial assessor, required Meralco to pay
realty taxes on the two tanks. For the five-year period from 1970 to 1974, the tax and penalties
amounted to P431,703.96 (p. 27, Rollo). The Board required Meralco to pay the tax and penalties as
a condition for entertaining its appeal from the adverse decision of the Batangas board of
assessment appeals.
The Central Board of Assessment Appeals (composed of Acting Secretary of Finance Pedro M.
Almanzor as chairman and Secretary of Justice Vicente Abad Santos and Secretary of Local
Government and Community Development Jose Roo as members) in its decision dated November
5, 1976 ruled that the tanks together with the foundation, walls, dikes, steps, pipelines and other
appurtenances constitute taxable improvements.
Meralco received a copy of that decision on February 28, 1977. On the fifteenth day, it filed a motion
for reconsideration which the Board denied in its resolution of November 25, 1977, a copy of which
was received by Meralco on February 28, 1978.
On March 15, 1978, Meralco filed this special civil action of certiorari to annul the Board's decision
and resolution. It contends that the Board acted without jurisdiction and committed a grave error of
law in holding that its storage tanks are taxable real property.
Meralco contends that the said oil storage tanks do not fall within any of the kinds of real property
enumerated in article 415 of the Civil Code and, therefore, they cannot be categorized as realty by
nature, by incorporation, by destination nor by analogy. Stress is laid on the fact that the tanks are
not attached to the land and that they were placed on leased land, not on the land owned by
Meralco.
This is one of those highly controversial, borderline or penumbral cases on the classification of
property where strong divergent opinions are inevitable. The issue raised by Meralco has to be
resolved in the light of the provisions of the Assessment Law, Commonwealth Act No. 470, and the
Real Property Tax Code, Presidential Decree No. 464 which took effect on June 1, 1974.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land,
buildings, machinery, and other improvements" not specifically exempted in section 3 thereof. This
provision is reproduced with some modification in the Real Property Tax Code which provides:
Sec. 38. Incidence of Real Property Tax. They shall be levied, assessed and
collected in all provinces, cities and municipalities an annual ad valorem tax on real
property, such as land, buildings, machinery and other improvements affixed or
attached to real property not hereinafter specifically exempted.
The Code contains the following definition in its section 3:
k) Improvements is a valuable addition made to property or an amelioration in its
condition, amounting to more than mere repairs or replacement of waste, costing
labor or capital and intended to enhance its value, beauty or utility or to adapt it for
new or further purposes.
We hold that while the two storage tanks are not embedded in the land, they may, nevertheless, be
considered as improvements on the land, enhancing its utility and rendering it useful to the oil
industry. 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.
Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey vs. Atlantic City,
15 Atl. 2nd 271.
For purposes of taxation, the term "real property" may include things which should generally be
regarded as personal property(84 C.J.S. 171, Note 8). 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. of New York vs. Jaramillo, 44 Phil. 630, 633).
The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil. 328, wherein
Meralco's steel towers were held not to be subject to realty tax, is not in point because in that case
the steel towers were regarded as poles and under its franchise Meralco's poles are exempt from
taxation. Moreover, the steel towers were not attached to any land or building. They were removable
from their metal frames.
Nor is there any parallelism between this case and Mindanao Bus Co. vs. City Assessor, 116 Phil.
501, where the tools and equipment in the repair, carpentry and blacksmith shops of a transportation
company were held not subject to realty tax because they were personal property.
WHEREFORE, the petition is dismissed. The Board's questioned decision and resolution are
affirmed. No costs.
SO ORDERED.
Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur.
Concepcion, Jr., J., is on leave.
Justice Abad Santos, J., took no part.












Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-40411 August 7, 1935
DAVAO SAW MILL CO., INC., plaintiff-appellant,
vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees.
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees.
MALCOLM, J .:
The issue in this case, as announced in the opening sentence of the decision in the trial court and as
set forth by counsel for the parties on appeal, involves the determination of the nature of the
properties described in the complaint. The trial judge found that those properties were personal in
nature, and as a consequence absolved the defendants from the complaint, with costs against the
plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the
Philippine Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of
Davao, Province of Davao. However, the land upon which the business was conducted belonged to
another person. On the land the sawmill company erected a building which housed the machinery
used by it. Some of the implements thus used were clearly personal property, the conflict concerning
machines which were placed and mounted on foundations of cement. In the contract of lease
between the sawmill company and the owner of the land there appeared the following provision:
That on the expiration of the period agreed upon, 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; also, in the event the party of the second part should leave or
abandon the land leased before the time herein stipulated, 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, however, 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 another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw,
Mill Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action
against the defendant in that action; a writ of execution issued thereon, and the properties now in
question were levied upon as personalty by the sheriff. No third party claim was filed for such
properties at the time of the sales thereof as is borne out by the record made by the plaintiff herein.
Indeed the bidder, which was the plaintiff in that action, and the defendant herein having
consummated the sale, proceeded to take possession of the machinery and other properties
described in the corresponding certificates of sale executed in its favor by the sheriff of Davao.
As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has
on a number of occasions treated the machinery as personal property by executing chattel
mortgages in favor of third persons. One of such persons is the appellee by assignment from the
original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property
consists of
1. Land, buildings, roads and constructions of all kinds adhering to the soil;
x x x x x x x x x
5. Machinery, liquid containers, 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.
Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain
no doubt that the trial judge and appellees are right in their appreciation of the legal doctrines flowing
from the facts.
In the first place, it must again be pointed out that the appellant should have registered its protest
before or at the time of the sale of this property. It must further be pointed out that while not
conclusive, 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. In this connection the
decision of this court in the case of Standard Oil Co. of New Yorkvs. Jaramillo ( [1923], 44 Phil.,
630), whether obiter dicta or not, furnishes the key to such a situation.
It is, however not necessary to spend overly must time in the resolution of this appeal on side issues.
It is machinery which is involved; moreover, machinery not intended by the owner of any building or
land for use in connection therewith, but intended by a lessee for use in a building erected on the
land by the latter to be returned to the lessee on the expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme
Court, it was held that machinery which is 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, a
usufructuary, or any person having only a temporary right, unless such person acted as the agent of
the owner. In the opinion written by Chief Justice White, whose knowledge of the Civil Law is well
known, it was in part said:
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.
Following the Code Napoleon, the Porto Rican Code treats as immovable (real) property, not
only land and buildings, but also attributes immovability in some cases to property of a
movable nature, that is, personal property, because of the destination to which it is applied.
"Things," says section 334 of the Porto Rican Code, "may be immovable either by their own
nature or by their destination or the object to which they are applicable." Numerous
illustrations are given in the fifth subdivision of section 335, which is as follows: "Machinery,
vessels, instruments or implements intended by the owner of the tenements for the industrial
or works that they may carry on in any building or upon any land and which tend directly to
meet the needs of the said industry or works." (See also Code Nap., articles 516, 518 et seq.
to and inclusive of article 534, recapitulating the things which, though in themselves
movable, may be immobilized.) So far as the subject-matter with which we are dealing
machinery placed in the plant it is plain, both under the provisions of the Porto Rican Law
and of the Code Napoleon, that machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or plant. Such result would
not be accomplished, therefore, by the placing of machinery in a plant by a tenant or a
usufructuary or any person having only a temporary right. (Demolombe, Tit. 9, No. 203;
Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in
Fuzier-Herman ed. Code Napoleon under articles 522 et seq.) The distinction rests, as
pointed out by Demolombe, 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. 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. But in the concrete immobilization
took place because of the express provisions of the lease under which the Altagracia held,
since the lease in substance required the putting in of improved machinery, deprived the
tenant of any right to charge against the lessor the cost such machinery, and it was
expressly stipulated that the machinery so put in should become a part of the plant belonging
to the owner without compensation to the lessee. Under such 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, 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.
x x x x x x x x x
The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the
plant by the Altagracia Company, being, as regards Nevers & Callaghan, movable property,
it follows that they had the right to levy on it under the execution upon the judgment in their
favor, and the exercise of that right did not in a legal sense conflict with the claim of Valdes,
since as to him the property was a part of the realty which, as the result of his obligations
under the lease, he could not, for the purpose of collecting his debt, proceed separately
against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.)
Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of
this instance to be paid by the appellant.
Villa-Real, Imperial, Butte, and Goddard, JJ., concur.







FIRST DIVISION
[G.R. No. 156295. September 23, 2003]
MARCELO R. SORIANO, petitioner, vs. SPOUSES RICARDO and
ROSALINA GALIT, respondents.
D E C I S I O N
YNARES-SANTIAGO, J .:
Petitioner was issued a writ of possession in Civil Case No. 6643
[1]
for Sum of
Money by the Regional Trial Court of Balanga, Bataan, Branch 1. The writ of
possession was, however, nullified by the Court of Appeals in CA-G.R. SP No.
65891
[2]
because it included a parcel of land which was not among those explicitly
enumerated in the Certificate of Sale issued by the Deputy Sheriff, but on which stand
the immovables covered by the said Certificate. Petitioner contends that the sale of
these immovables necessarily encompasses the land on which they stand.
Dissatisfied, petitioner filed the instant petition for review on certiorari.
Respondent Ricardo Galit contracted a loan from petitioner Marcelo Soriano, in the
total sum of P480,000.00, evidenced by four promissory notes in the amount of
P120,000.00 each datedAugust 2, 1996;
[3]
August 15, 1996;
[4]
September 4,
1996
[5]
and September 14, 1996.
[6]
This loan was secured by a real estate mortgage over
a parcel of land covered by Original Certificate of Title No. 569.
[7]
After he failed to pay
his obligation, Soriano filed a complaint for sum of money against him with
the Regional Trial Court of Balanga City, Branch 1, which was docketed as Civil Case
No. 6643.
[8]

Respondents, the Spouses Ricardo and Rosalina Galit, failed to file their answer.
Hence, upon motion of Marcelo Soriano, the trial court declared the spouses in default
and proceeded to receive evidence for petitioner Soriano ex parte.
On July 7, 1997, the Regional Trial Court of Balanga City, Branch 1 rendered
judgment
[9]
in favor of petitioner Soriano, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant
ordering the latter to pay:
1. the plaintiff the amount of P350,000.00 plus 12% interest to be computed from
the dates of maturity of the promissory notes until the same are fully paid;
2. the plaintiff P20,000.00, as attorneys fees; and
3. the costs of suit.
SO ORDERED.
[10]

The judgment became final and executory. Accordingly, the trial court issued a writ
of execution in due course, by virtue of which, Deputy Sheriff Renato E. Robles levied
on the following real properties of the Galit spouses:
1. A parcel of land covered by Original Certificate of Title No. T-569 (Homestead
Patent No. 14692) situated in the Bo. of Tapulac, Orani, Bataan. Bounded on the
SW, along line 1-2 by Lot No. 3, Cad. 145; containing an area of THIRTY FIVE
THOUSAND SEVEN HUNDRED FIFTY NINE (35,759) SQUARE METERS,
more or less x x x;
2. STORE/HOUSE CONSTRUCTED on Lot No. 1103 made of strong materials
G.I. roofing situated at Centro I, Orani, Bataan, x x x containing an area of 30 sq.
meters, more or less x x x (constructed on TCT No. T40785);
3. BODEGA constructed on Lot 1103, made of strong materials, G.I. roofing,
situated in Centro I, Orani, Bataan, x x x with a floor area of 42.75 sq. m. more or
less x x x.
[11]

At the sale of the above-enumerated properties at public auction held on December
23, 1998, petitioner was the highest and only bidder with a bid price of
P483,000.00. Accordingly, onFebruary 4, 1999, Deputy Sheriff Robles issued a
Certificate of Sale of Execution of Real Property,
[12]
which reads:
CERTIFICATE OF SALE ON EXECUTION OF REAL PROPERTY
TO ALL WHO MAY SEE THESE PRESENTS:
GREETINGS:
I HEREBY that (sic) by virtue of the writ of execution dated October 16, 1998, issued in the
above-entitled case by the HON. BENJAMIN T. VIANZON, ordering the Provincial Sheriff
of Bataan or her authorized Deputy Sheriff to cause to be made (sic) the sum of P350,000.00
plus 12% interest to be computed from the date of maturity of the promissory notes until the
same are fully paid; P20,000.00 as attorneys fees plus legal expenses in the implementation of
the writ of execution, the undersigned Deputy Sheriff sold at public auction on December 23,
1998 the rights and interests of defendants Sps. Ricardo and Rosalina Galit, to the plaintiff
Marcelo Soriano, the highest and only bidder for the amount of FOUR HNDRED EIGHTY
THREE THOUSAND PESOS (P483,000.00, Philippine Currency), the following real estate
properties more particularly described as follows :
ORIGINAL CERTIFICATE OF TITLE NO. T-569
A parcel of land (Homestead Patent No. 14692) situated in the Bo. of Tapulac, Orani, Bataan,
x x x. Bounded on the SW., along line 1-2 by Lot No. 3, Cad. 145, containing an area of
THIRTY FIVE THOUSAND SEVEN HUNDRED FIFTY NINE (35,759) SQUARE METERS,
more or less x x x
TAX DEC. NO. PROPERTY INDEX NO. 018-09-001-02
STOREHOUSE constructed on Lot 1103, made of strong materials G.I. roofing situated at
Centro I, Orani, Bataan x x x containing an area of 30 sq. meters, more or less x x (constructed
on TCT No. 40785)
TAX DEC. NO. 86 PROPERTY INDEX No. 018-09-001-02
BODEGA constructed on Lot 1103, made of strong materials G.I. roofing situated in Centro
I, Orani, Bataan, x x x with a floor area of 42.75 sq. m. more or less x x x
IT IS FURTHER CERTIFIED, that the aforesaid highest and lone bidder, Marcelo Soriano,
being the plaintiff did not pay to the Provincial Sheriff of Bataan the amount of P483,000.00, the
sale price of the above-described property which amount was credited to partial/full satisfaction
of the judgment embodied in the writ of execution.
The period of redemption of the above described real properties together with all the
improvements thereon will expire One (1) year from and after the registration of this Certificate
of Sale with the Register of Deeds.
This Certificate of Sheriffs Sale is issued to the highest and lone bidder, Marcelo Soriano, under
guarantees prescribed by law.
Balanga, Bataan, February 4, 1999.
On April 23, 1999, petitioner caused the registration of the Certificate of Sale on
Execution of Real Property with the Registry of Deeds.
The said Certificate of Sale registered with the Register of Deeds includes at the
dorsal portion thereof the following entry, not found in the Certificate of Sale on file with
Deputy Sheriff RenatoE. Robles:
[13]

ORIGINAL CERTIFICATE OF TITLE NO. T-40785
A parcel of land (Lot No. 1103 of the Cadastral Survey of Orani) , with the improvements
thereon, situated in the Municipality of Orani, Bounded on the NE; by Calle P. Gomez; on the E.
by Lot No. 1104; on the SE byCalle Washington; and on the W. by Lot 4102, containing an area
of ONE HUNDRED THIRTY NINE (139) SQUARE METERS, more or less. All points referred
to are indicated on the plan; bearing true; declination 0 deg. 40E., date of survey, February 191-
March 1920.
On February 23, 2001, ten months from the time the Certificate of Sale on
Execution was registered with the Registry of Deeds, petitioner moved
[14]
for the
issuance of a writ of possession. He averred that the one-year period of redemption had
elapsed without the respondents having redeemed the properties sold at public auction;
thus, the sale of said properties had already become final. He also argued that after the
lapse of the redemption period, the titles to the properties should be considered, for all
legal intents and purposes, in his name and favor.
[15]

On June 4, 2001, the Regional Trial Court of Balanga City, Branch 1 granted the
motion for issuance of writ of possession.
[16]
Subsequently, on July 18, 2001, a writ of
possession
[17]
was issued in petitioners favor which reads:
WRIT OF POSSESSION
Mr. Renato E. Robles
Deputy Sheriff
RTC, Br. 1, Balanga City
Greetings :
WHEREAS on February 3, 2001, the counsel for plaintiff filed Motion for the Issuance of Writ
of Possession;
WHEREAS on June 4, 2001, this court issued an order granting the issuance of the Writ of
Possession;
WHEREFORE, you are hereby commanded to place the herein plaintiff Marcelo Soriano in
possession of the property involved in this case situated (sic) more particularly described as:
1. STORE HOUSE constructed on Lot No. 1103 situated at Centro
1, Orani, Bataan covered by TCT No. 40785;
2. BODEGA constructed on Lot No. 1103 with an area of 42.75 square meters
under Tax Declaration No. 86 situated at Centro 1, Orani, Bataan;
3. Original Certificate of Title No. 40785 with an area of 134 square meters known
as Lot No. 1103 of the Cadastral Survey of Orani
against the mortgagor/former owners Sps. Ricardo and Rosalinda (sic) Galit, her (sic) heirs,
successors, assigns and all persons claiming rights and interests adverse to the petitioner and
make a return of this writ every thirty (30) days from receipt hereof together with all the
proceedings thereon until the same has been fully satisfied.
WITNESS THE HONORABLE BENJAMIN T. VIANZON, Presiding Judge, this 18
th
day of
July 2001, at Balanga City.
(Sgd) GILBERT
S. ARGONZA
OI
C
Respondents filed a petition for certiorari with the Court of Appeals, which was
docketed as CA-G.R. SP No. 65891, assailing the inclusion of the parcel of land
covered by Transfer Certificate of Title No. T-40785 among the list of real properties in
the writ of possession.
[18]
Respondents argued that said property was not among those
sold on execution by Deputy SheriffRenato E. Robles as reflected in the Certificate of
Sale on Execution of Real Property.
In opposition, petitioner prayed for the dismissal of the petition because respondent
spouses failed to move for the reconsideration of the assailed order prior to the filing of
the petition. Moreover, the proper remedy against the assailed order of the trial court is
an appeal, or a motion to quash the writ of possession.
On May 13, 2002, the Court of Appeals rendered judgment as follows:
WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the writ of possession
issued by the Regional Trial Court of Balanga City, Branch 1, on 18 July 2001 is
declared NULL and VOID.
In the event that the questioned writ of possession has already been implemented, the Deputy
Sheriff of the Regional Trial Court of Balanga City, Branch 1, and private respondent
Marcelo Soriano are hereby ordered to cause the redelivery of Transfer Certificate of Title No.
T-40785 to the petitioners.
SO ORDERED.
[19]

Aggrieved, petitioner now comes to this Court maintaining that
1.) THE SPECIAL CIVIL ACTION OF CERTIORARI UNDER RULE 65 IS NOT
THE PLAIN, SPEEDY AND ADEQUATE REMEDY OF THE
RESPONDENTS IN ASSAILING THE WRIT OF POSSESSION ISSUED BY
THE LOWER COURT BUT THERE WERE STILL OTHER REMEDIES
AVAILABLE TO THEM AND WHICH WERE NOT RESORTED TO LIKE
THE FILING OF A MOTION FOR RECONSIDERATION OR MOTION TO
QUASH OR EVEN APPEAL.
2.) THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
DECLARAING THE CERTIFICATE OF SALE ON EXECUTION OF REAL
PROPERTY AS NULL AND VOID AND SUBSEQUENTLY THE WRIT OF
POSSESSION BECAUSE THE SAME IS A PUBLIC DOCUMENT WHICH
ENJOYS THE PRESUMPTION OF REGULARITY AND IT CANNOT BE
OVERCOME BY A MERE STRANGE FEELING THAT SOMETHING IS
AMISS ON ITS SURFACE SIMPLY BECAUSE THE TYPEWRITTEN
WORDS ON THE FRONT PAGE AND AT THE DORSAL PORTION
THEREOF IS DIFFERENT OR THAT IT IS UNLIKELY FOR THE SHERIFF
TO USE THE DORSAL PORTION OF THE FIRST PAGE BECAUSE THE
SECOND PAGE IS MERELY HALF FILLED AND THE NOTATION ON THE
DORSAL PORTION COULD STILL BE MADE AT THE SECOND PAGE.
On the first ground, petitioner contends that respondents were not without remedy
before the trial court. He points out that respondents could have filed a motion for
reconsideration of the Order dated June 4, 1999, but they did not do so. Respondents
could also have filed an appeal but they, likewise, did not do so. When the writ of
possession was issued, respondents could have filed a motion to quash the writ. Again
they did not. Respondents cannot now avail of the special civil action for certiorari as a
substitute for these remedies. They should suffer the consequences for sleeping on
their rights.
We disagree.
Concededly, those who seek to avail of the procedural remedies provided by the
rules must adhere to the requirements thereof, failing which the right to do so is lost. It
is, however, equally settled that the Rules of Court seek to eliminate undue reliance on
technical rules and to make litigation as inexpensive as practicable and as convenient
as can be done.
[20]
This is in accordance with the primary purpose of the 1997 Rules of
Civil Procedure as provided in Rule 1, Section 6, which reads:
Section 6. Construction. These rules shall be liberally construed in order to promote their
objective of securing a just, speedy and inexpensive determination of every action and
proceeding.
[21]

The rules of procedure are not to be applied in a very rigid, technical sense and are
used only to help secure substantial justice. If a technical and rigid enforcement of the
rules is made, their aim would be defeated.
[22]
They should be liberally construed so that
litigants can have ample opportunity to prove their claims and thus prevent a denial of
justice due to technicalities.
[23]
Thus, inChina Banking Corporation v. Members of the
Board of Trustees of Home Development Mutual Fund,
[24]
it was held:
while certiorari as a remedy may not be used as a substitute for an appeal, especially for a lost
appeal, this rule should not be strictly enforced if the petition is genuinely meritorious.
[25]
I t has
been said that where the rigid application of the rules would frustrate substantial justice, or
bar the vindication of a legitimate grievance, the courts are justified in exempting a particular
case from the operation of the rules.
[26]
(Emphasis ours)
Indeed, well-known is the rule that departures from procedure may be forgiven
where they do not appear to have impaired the substantial rights of the
parties.
[27]
Apropos in this regard isCometa v. CA,
[28]
where we said that
There is no question that petitioners were remiss in attending with dispatch to the protection of
their interests as regards the subject lots, and for that reason the case in the lower court was
dismissed on a technicality and no definitive pronouncement on the inadequacy of the price paid
for the levied properties was ever made. In this regard, it bears stressing that procedural rules
are not to be belittled or dismissed simply because their non-observance may have resulted in
prejudice to a partys substantive rights as in this case. Like all rules, they are required to be
followed except when only for the most persuasive of reasons they may be relaxed to relieve a
litigant of an injustice not commensurate with the degree of his thoughtlessness in not
complying with the procedure prescribed.
[29]
(emphasis and italics supplied.)
In short, since rules of procedure are mere tools designed to facilitate the
attainment of justice, their strict and rigid application which would result in technicalities
that tend to frustrate rather than promote substantial justice must always be
avoided.
[30]
Technicality should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties.
[31]

Eschewing, therefore, the procedural objections raised by petitioner, it behooves us
to address the issue of whether or not the questioned writ of possession is in fact a
nullity considering that it includes real property not expressly mentioned in the
Certificate of Sale of Real Property.
Petitioner, in sum, dwells on the general proposition that since the certificate of sale
is a public document, it enjoys the presumption of regularity and all entries therein are
presumed to be done in the performance of regular functions.
The argument is not persuasive.
There are actually two (2) copies of the Certificate of Sale on Execution of Real
Properties issued on February 4, 1999 involved, namely: (a) copy which is on file with
the deputy sheriff; and (b) copy registered with the Registry of Deeds. The object of
scrutiny, however, is not the copy of the Certificate of Sale on Execution of Real
Properties issued by the deputy sheriff on February 4, 1999,
[32]
but the copy
thereof subsequently registered by petitioner with the Registry of Deeds on April 23,
1999,
[33]
which included an entry on the dorsal portion of the first page thereof describing
a parcel of land covered by OCT No. T-40785 not found in the Certificate of Sale of
Real Properties on file with the sheriff.
True, public documents by themselves may be adequate to establish the
presumption of their validity. However, their probative weight must be evaluated not in
isolation but in conjunction with other evidence adduced by the parties in the
controversy, much more so in this case where the contents of a copy thereof
subsequently registered for documentation purposes is being contested. No reason has
been offered how and why the questioned entry was subsequently intercalated in the
copy of the certificate of sale subsequently registered with the Registry of Deeds.
Absent any satisfactory explanation as to why said entry was belatedly inserted, the
surreptitiousness of its inclusion coupled with the furtive manner of its intercalation casts
serious doubt on the authenticity of petitioners copy of the Certificate of Sale. Thus, it
has been held that while a public document like a notarized deed of sale is vested with
the presumption of regularity, this is not a guarantee of the validity of its contents.
[34]

It must be pointed out in this regard that the issuance of a Certificate of Sale is an
end result of judicial foreclosure where statutory requirements are strictly adhered to;
where even the slightest deviations therefrom will invalidate the proceeding
[35]
and the
sale.
[36]
Among these requirements is an explicit enumeration and correct description of
what properties are to be sold stated in the notice. The stringence in the observance of
these requirements is such that an incorrect title number together with a correct
technical description of the property to be sold and vice versa is deemed a substantial
and fatal error which results in the invalidation of the sale.
[37]

The certificate of sale is an accurate record of what properties were actually sold to
satisfy the debt. The strictness in the observance of accuracy and correctness in the
description of the properties renders the enumeration in the certificate exclusive. Thus,
subsequently including properties which have not been explicitly mentioned therein for
registration purposes under suspicious circumstances smacks of fraud. The explanation
that the land on which the properties sold is necessarily included and, hence, was
belatedly typed on the dorsal portion of the copy of the certificate subsequently
registered is at best a lame excuse unworthy of belief.
The appellate court correctly observed that there was a marked difference in the
appearance of the typewritten words appearing on the first page of the copy of the
Certificate of Sale registered with the Registry of Deeds
[38]
and those appearing at the
dorsal portion thereof. Underscoring the irregularity of the intercalation is the clearly
devious attempt to let such an insertion pass unnoticed by typing the same at the back
of the first page instead of on the second page which was merely half-filled and could
accommodate the entry with room to spare.
The argument that the land on which the buildings levied upon in execution is
necessarily included is, likewise, tenuous. Article 415 of the Civil Code provides:
ART. 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil.
x x x x x x
x x x
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking them material or deterioration of the object;
(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or
on lands by the owner of the immovable in such a manner that it reveals the intention to attach
them permanently to the tenements;
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement
for an industry or works which may be carried on in a building or on a piece of land, and which
tend directly to meet the needs of the said industry or works;
(6) Animal houses, pigeon houses, beehives, fish ponds or breeding places of similar nature, in
case their owner has placed them or preserves them with the intention to have them permanently
attached to the land, and forming a permanent part of it; the animals in these places are also
included;
x x x x x x
x x x
(9) Docks and structures which, though floating, are intended by their nature and object to
remain at a fixed place on a river, lake or coast;
x x x x x x
x x x.
The foregoing provision of the Civil Code enumerates land and
buildings separately. This can only mean that a building is, by itself, considered
immovable.
[39]
Thus, it has been held that
. . . while it is true that a mortgage of land necessarily includes, in the absence of stipulation of
the improvements thereon, buildings, still a building by itself may be mortgaged apart from the
land on which it has been built. Such 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.
[40]
(emphasis and italics supplied)
In this case, considering that what was sold by virtue of the writ of execution issued
by the trial court was merely the storehouse and bodega constructed on the parcel of
land covered by Transfer Certificate of Title No. T-40785, which by themselves are real
properties of respondents spouses, the same should be regarded as separate and
distinct from the conveyance of the lot on which they stand.
WHEREFORE, in view of all the foregoing, the petition is hereby DENIED for lack of
merit. The Decision dated May 13, 2002 of the Court of Appeals in CA-G.R. SP No.
65891, which declared the writ of possession issued by
the Regional Trial Court of Balanga City, Branch 1, on July 18, 2001, null and void, is
AFFIRMED in toto.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, and Carpio, JJ., concur.
Azcuna, J., on leave.



[1]
Entitled Marcelo R. Soriano v. Spouses Ricardo L. Galit and Rosalina Galvez.
[2]
Entitled Spouses Ricardo and Rosalina Galit v. Hon. Benjamin Vianzon, Marcelo Soriano, et al.
[3]
Record, p. 16.
[4]
Id., p. 21.
[5]
Id., p. 26.
[6]
Id., p. 32.
[7]
Id., p. 20.
[8]
Id., p. 9.
[9]
Id., pp. 37-40.
[10]
Id., p. 40.
[11]
Id., pp. 41-42.
[12]
Id.
[13]
Id., pp. 43-44.
[14]
Id., p. 13.
[15]
Id., p. 14.
[16]
Id., p. 12.
[17]
Id., p. 15.
[18]
Entitled Spouses Ricardo and Rosalina Galit v. Hon. Benjamin T. Vianzon, Marcelo Soriano, et al.
[19]
Rollo, p. 37; penned by Associate Justice Perlita J. Tria-Tirona; concurred in by Associate Justices
Buenaventura J. Guerrero and Rodrigo V. Cosico.
[20]
Francisco V.J., The Revised Rules of Court in the Philippines, Vol. I, 1973 ed., pp. 155-156, citing an
article of Professor Sunderland in the University of Cincinnati.
[21]
See Casil v. CA, G.R. No. 121534, 28 January 1998, 285 SCRA 264.
[22]
Director of Lands v. CA, 363 Phil. 117 [1999].
[23]
Cometa v. CA, 361 Phil. 383 [1999].
[24]
366 Phil. 913 (1999).
[25]
De la Paz v. Panis, 315 Phil.238 [1995]; Vasquez v. Hobilla-Alinio, 337 Phil. 517 [1997].
[26]
Nerves v. CSC, 342 Phil. 578 [1997].
[27]
Mercader v. DBP (Cebu Branch), 387 Phil. 283 [2000].
[28]
G.R. No. 141855, 6 February 2001, 351 SCRA 294, 306.
[29]
Citing Limpot v. CA, G.R. No. 44642, 20 February 1989, 170 SCRA 367.
[30]
RCPI v. NLRC, G.R. Nos. 101181-84, 22 June 1992, 210 SCRA 222.
[31]
Casa Filipina Realty Corporation v. Office of the President, 311 Phil. 170 [1995], citing Rapid
Manpower Consultants, Inc. v. NLRC, G.R. No. 88683, 18 October 1990, 190 SCRA 747.
[32]
Rollo, pp. 41-42.
[33]
Id., pp. 43-44.
[34]
Nazareno v. CA, G.R. No. 138842, 18 October 2000, 343 SCRA 637, 652.
[35]
Tambunting v. CA, G.R. No. L-48278, 8 November 1988, 167 SCRA 16.
[36]
Roxas v. CA, G.R. No. 100480, 11 May 1993, 221 SCRA 729.
[37]
San Jose v. CA, G.R. No. 106953, 19 August 1993, 225 SCRA 450, 545.
[38]
Rollo, pp. 43-44.
[39]
Lopez v. Orosa, G.R. No. L-10817-18, 28 February 1958; Associated Inc. and Surety Co.,
Inc. v. Isabel Iya, G.R. No. L-10837-38, 30 May 1958.
[40]
Prudential Bank v. Panis, G.R. No. L-50008, 31 August 1987, 153 SCRA 390, 396, citing Leung
Yee v. Strong Machinery Co., 37 Phil. 644 [1918].























Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-46245 May 31, 1982
MERALCO SECURITIES INDUSTRIAL CORPORATION, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF
LAGUNA and PROVINCIAL ASSESSOR OF LAGUNA, respondents.

AQUINO, J .:
In this special civil action of certiorari, Meralco Securities Industrial Corporation assails the decision
of the Central Board of Assessment Appeals (composed of the Secretary of Finance as chairman
and the Secretaries of Justice and Local Government and Community Development as members)
dated May 6, 1976, holding that Meralco Securities' oil pipeline is subject to realty tax.
The record reveals that pursuant to a pipeline concession issued under the Petroleum Act of 1949,
Republic Act No. 387, Meralco Securities installed from Batangas to Manila a pipeline system
consisting of cylindrical steel pipes joined together and buried not less than one meter below the
surface along the shoulder of the public highway. The portion passing through Laguna is about thirty
kilometers long.
The pipes for white oil products measure fourteen inches in diameter by thirty-six feet with a
maximum capacity of 75,000 barrels daily. The pipes for fuel and black oil measure sixteen inches
by forty-eight feet with a maximum capacity of 100,000 barrels daily.
The pipes are embedded in the soil and are firmly and solidly welded together so as to preclude
breakage or damage thereto and prevent leakage or seepage of the oil. The valves are welded to
the pipes so as to make the pipeline system one single piece of property from end to end.
In order to repair, replace, remove or transfer segments of the pipeline, the pipes have to be cold-cut
by means of a rotary hard-metal pipe-cutter after digging or excavating them out of the ground where
they are buried. In points where the pipeline traversed rivers or creeks, the pipes were laid beneath
the bed thereof. Hence, the pipes are permanently attached to the land.
However, Meralco Securities notes that segments of the pipeline can be moved from one place to
another as shown in the permit issued by the Secretary of Public Works and Communications which
permit provides that the government reserves the right to require the removal or transfer of the pipes
by and at the concessionaire's expense should they be affected by any road repair or improvement.
Pursuant to the Assessment Law, Commonwealth Act No. 470, the provincial assessor of Laguna
treated the pipeline as real property and issued Tax Declarations Nos. 6535-6537, San Pedro; 7473-
7478, Cabuyao; 7967-7971, Sta. Rosa; 9882-9885, Bian and 15806-15810, Calamba, containing
the assessed values of portions of the pipeline.
Meralco Securities appealed the assessments to the Board of Assessment Appeals of Laguna
composed of the register of deeds as chairman and the provincial auditor as member. That board in
its decision of June 18, 1975 upheld the assessments (pp. 47-49, Rollo).
Meralco Securities brought the case to the Central Board of Assessment Appeals. As already stated,
that Board, composed of Acting Secretary of Finance Pedro M. Almanzor as chairman and Secretary
of Justice Vicente Abad Santos and Secretary of Local Government and Community Development
Jose Roo as members, ruled that the pipeline is subject to realty tax (p. 40, Rollo).
A copy of that decision was served on Meralco Securities' counsel on August 27, 1976. Section 36 of
the Real Property Tax Code, Presidential Decree No. 464, which took effect on June 1, 1974,
provides that the Board's decision becomes final and executory after the lapse of fifteen days from
the date of receipt of a copy of the decision by the appellant.
Under Rule III of the amended rules of procedure of the Central Board of Assessment Appeals (70
O.G. 10085), a party may ask for the reconsideration of the Board's decision within fifteen days after
receipt. On September 7, 1976 (the eleventh day), Meralco Securities filed its motion for
reconsideration.
Secretary of Finance Cesar Virata and Secretary Roo (Secretary Abad Santos abstained) denied
the motion in a resolution dated December 2, 1976, a copy of which was received by appellant's
counsel on May 24, 1977 (p. 4, Rollo). On June 6, 1977, Meralco Securities filed the instant petition
for certiorari.
The Solicitor General contends that certiorari is not proper in this case because the Board acted
within its jurisdiction and did not gravely abuse its discretion and Meralco Securities was not denied
due process of law.
Meralco Securities explains that because the Court of Tax Appeals has no jurisdiction to review the
decision of the Central Board of Assessment Appeals and because no judicial review of the Board's
decision is provided for in the Real Property Tax Code, Meralco Securities' recourse is to file a
petition for certiorari.
We hold that certiorari was properly availed of in this case. It is a writ issued by a superior court to
an inferior court, board or officer exercising judicial or quasi-judicial functions whereby the record of
a particular case is ordered to be elevated for review and correction in matters of law (14 C.J.S. 121-
122; 14 Am Jur. 2nd 777).
The rule is that as to administrative agencies exercising quasi-judicial power there is an underlying
power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even
though no right of review is given by the statute (73 C.J.S. 506, note 56).
"The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect
substantial rights of parties affected by its decisions" (73 C.J.S. 507, See. 165). The review is a part
of the system of checks and balances which is a limitation on the separation of powers and which
forestalls arbitrary and unjust adjudications.
Judicial review of the decision of an official or administrative agency exercising quasi-judicial
functions is proper in cases of lack of jurisdiction, error of law, grave abuse of discretion, fraud or
collusion or in case the administrative decision is corrupt, arbitrary or capricious (Mafinco Trading
Corporation vs. Ople, L-37790, March 25, 1976, 70 SCRA 139, 158; San Miguel Corporation vs.
Secretary of Labor, L-39195, May 16, 1975, 64 SCRA 56, 60, Mun. Council of Lemery vs. Prov.
Board of Batangas, 56 Phil. 260, 268).
The Central Board of Assessment Appeals, in confirming the ruling of the provincial assessor and
the provincial board of assessment appeals that Meralco Securities' pipeline is subject to realty tax,
reasoned out that the pipes are machinery or improvements, as contemplated in the Assessment
Law and the Real Property Tax Code; that they do not fall within the category of property exempt
from realty tax under those laws; that articles 415 and 416 of the Civil Code, defining real and
personal property, have no application to this case; that even under article 415, the steel pipes can
be regarded as realty because they are constructions adhered to the soil and things attached to the
land in a fixed manner and that Meralco Securities is not exempt from realty tax under the Petroleum
Law (pp. 36-40).
Meralco Securities insists that its pipeline is not subject to realty tax because it is not real property
within the meaning of article 415. This contention is not sustainable under the provisions of the
Assessment Law, the Real Property Tax Code and the Civil Code.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land,
buildings, machinery, and other improvements" not specifically exempted in section 3 thereof. This
provision is reproduced with some modification in the Real Property Tax Code which provides:
SEC. 38. Incidence of Real Property Tax. There shall be levied, assessed and
collected in all provinces, cities and municipalities an annual ad valorem tax on real
property, such as land, buildings, machinery and other improvements affixed or
attached to real property not hereinafter specifically exempted. *
It is incontestable that the pipeline of Meralco Securities does not fall within any of the classes of
exempt real property enumerated in section 3 of the Assessment Law and section 40 of the Real
Property Tax Code.
Pipeline means a line of pipe connected to pumps, valves and control devices for conveying liquids,
gases or finely divided solids. It is a line of pipe running upon or in the earth, carrying with it the right
to the use of the soil in which it is placed (Note 21[10],54 C.J.S. 561).
Article 415[l] and [3] provides that real property may consist of constructions of all kinds adhered to
the soil and everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or deterioration of the object.
The pipeline system in question is indubitably a construction adhering to the soil (Exh. B, p. 39,
Rollo). 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.
Insofar as the pipeline uses valves, pumps and control devices to maintain the flow of oil, it is in a
sense machinery within the meaning of the Real Property Tax Code.
It should be borne in mind that what are being characterized as real property are not the steel pipes
but the pipeline system as a whole. Meralco Securities has apparently two pipeline systems.
A pipeline for conveying petroleum has been regarded as real property for tax purposes (Miller
County Highway, etc., Dist. vs. Standard Pipe Line Co., 19 Fed. 2nd 3; Board of Directors of Red
River Levee Dist. No. 1 of Lafayette County, Ark vs. R. F. C., 170 Fed. 2nd 430; 50 C. J. 750, note
86).
The other contention of Meralco Securities is that the Petroleum Law exempts it from the payment of
realty taxes. The alleged exemption is predicated on the following provisions of that law which
exempt Meralco Securities from local taxes and make it liable for taxes of general application:
ART. 102. Work obligations, taxes, royalties not to be changed. Work obligations,
special taxes and royalties which are fixed by the provisions of this Act or by the
concession for any of the kinds of concessions to which this Act relates, are
considered as inherent on such concessions after they are granted, and shall not be
increased or decreased during the life of the concession to which they apply; nor
shall any other special taxes or levies be applied to such concessions, nor shall
0concessionaires under this Act be subject to any provincial, municipal or other local
taxes or levies;nor shall any sales tax be charged on any petroleum produced from
the concession or portion thereof, manufactured by the concessionaire and used in
the working of his concession. All such concessionaires, however, shall be subject
to such taxes as are of general application in addition to taxes and other levies
specifically provided in this Act.
Meralco Securities argues that the realty tax is a local tax or levy and not a tax of general
application. This argument is untenable because the realty tax has always been imposed by the
lawmaking body and later by the President of the Philippines in the exercise of his lawmaking
powers, as shown in section 342 et seq. of the Revised Administrative Code, Act No. 3995,
Commonwealth Act No. 470 and Presidential Decree No. 464.
The realty tax is enforced throughout the Philippines and not merely in a particular municipality or
city but the proceeds of the tax accrue to the province, city, municipality and barrio where the realty
taxed is situated (Sec. 86, P.D. No. 464). In contrast, a local tax is imposed by the municipal or city
council by virtue of the Local Tax Code, Presidential Decree No. 231, which took effect on July 1,
1973 (69 O.G. 6197).
We hold that the Central Board of Assessment Appeals did not act with grave abuse of discretion,
did not commit any error of law and acted within its jurisdiction in sustaining the holding of the
provincial assessor and the local board of assessment appeals that Meralco Securities' pipeline
system in Laguna is subject to realty tax.
WHEREFORE, the questioned decision and resolution are affirmed. The petition is dismissed. No
costs.
SO ORDERED.
Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur.
Justice Abad Santos, Concepcion, Jr., JJ., took no part.

Footnotes
* The Real Property Tax Code contains the following definitions in its section 3:
"k) Improvements - is a valuable addition made to property or an amelioration in its
condition, amounting to more than mere repairs or replacement of waste, costing
labor or capital and intended to enhance its value, beauty or utility or to adapt it for
new or further purposes. "
"m) Machinery - shall embrace machines, mechanical contrivances, instruments,
appliances and apparatus attached to the real estate. It includes the physical
facilities available for production, as well as the installations and appurtenant service
facilities, together with all other equipment designed for or essential to its
manufacturing, industrial or agricultural purposes." (See sec. 3[f], Assessment Law).




















Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 168557 February 16, 2007
FELS ENERGY, INC., Petitioner,
vs.
THE PROVINCE OF BATANGAS and
THE OFFICE OF THE PROVINCIAL ASSESSOR OF BATANGAS, Respondents.
x----------------------------------------------------x
G.R. No. 170628 February 16, 2007
NATIONAL POWER CORPORATION, Petitioner,
vs.
LOCAL BOARD OF ASSESSMENT APPEALS OF BATANGAS, LAURO C. ANDAYA, in his
capacity as the Assessor of the Province of Batangas, and the PROVINCE OF BATANGAS
represented by its Provincial Assessor, Respondents.
D E C I S I O N
CALLEJO, SR., J .:
Before us are two consolidated cases docketed as G.R. No. 168557 and G.R. No. 170628, which
were filed by petitioners FELS Energy, Inc. (FELS) and National Power Corporation (NPC),
respectively. The first is a petition for review on certiorari assailing the August 25, 2004 Decision
1
of
the Court of Appeals (CA) in CA-G.R. SP No. 67490 and its Resolution
2
dated June 20, 2005; the
second, also a petition for review on certiorari, challenges the February 9, 2005 Decision
3
and
November 23, 2005 Resolution
4
of the CA in CA-G.R. SP No. 67491. Both petitions were dismissed
on the ground of prescription.
The pertinent facts are as follows:
On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW
diesel engine power barges moored at Balayan Bay in Calaca, Batangas. The contract,
denominated as an Energy Conversion Agreement
5
(Agreement), was for a period of five years.
Article 10 reads:
10.1 RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all taxes, import
duties, fees, charges and other levies imposed by the National Government of the Republic of the
Philippines or any agency or instrumentality thereof to which POLAR may be or become subject to
or in relation to the performance of their obligations under this agreement (other than (i) taxes
imposed or calculated on the basis of the net income of POLAR and Personal Income Taxes of its
employees and (ii) construction permit fees, environmental permit fees and other similar fees and
charges) and (b) all real estate taxes and assessments, rates and other charges in respect of the
Power Barges.
6

Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. The NPC initially
opposed the assignment of rights, citing paragraph 17.2 of Article 17 of the Agreement.
On August 7, 1995, FELS received an assessment of real property taxes on the power barges from
Provincial Assessor Lauro C. Andaya of Batangas City. The assessed tax, which likewise covered
those due for 1994, amounted to P56,184,088.40 per annum. FELS referred the matter to NPC,
reminding it of its obligation under the Agreement to pay all real estate taxes. It then gave NPC the
full power and authority to represent it in any conference regarding the real property assessment of
the Provincial Assessor.
In a letter
7
dated September 7, 1995, NPC sought reconsideration of the Provincial Assessors
decision to assess real property taxes on the power barges. However, the motion was denied on
September 22, 1995, and the Provincial Assessor advised NPC to pay the assessment.
8
This
prompted NPC to file a petition with the Local Board of Assessment Appeals (LBAA) for the setting
aside of the assessment and the declaration of the barges as non-taxable items; it also prayed that
should LBAA find the barges to be taxable, the Provincial Assessor be directed to make the
necessary corrections.
9

In its Answer to the petition, the Provincial Assessor averred that the barges were real property for
purposes of taxation under Section 199(c) of Republic Act (R.A.) No. 7160.
Before the case was decided by the LBAA, NPC filed a Manifestation, informing the LBAA that the
Department of Finance (DOF) had rendered an opinion
10
dated May 20, 1996, where it is clearly
stated that power barges are not real property subject to real property assessment.
On August 26, 1996, the LBAA rendered a Resolution
11
denying the petition. The fallo reads:
WHEREFORE, the Petition is DENIED. FELS is hereby ordered to pay the real estate tax in the
amount ofP56,184,088.40, for the year 1994.
SO ORDERED.
12

The LBAA ruled that the power plant facilities, while they may be classified as movable or personal
property, are nevertheless considered real property for taxation purposes because they are installed
at a specific location with a character of permanency. The LBAA also pointed out that the owner of
the bargesFELS, a private corporationis the one being taxed, not NPC. A mere agreement making
NPC responsible for the payment of all real estate taxes and assessments will not justify the
exemption of FELS; such a privilege can only be granted to NPC and cannot be extended to FELS.
Finally, the LBAA also ruled that the petition was filed out of time.
Aggrieved, FELS appealed the LBAAs ruling to the Central Board of Assessment Appeals (CBAA).
On August 28, 1996, the Provincial Treasurer of Batangas City issued a Notice of Levy and Warrant
by Distraint
13
over the power barges, seeking to collect real property taxes amounting
to P232,602,125.91 as of July 31, 1996. The notice and warrant was officially served to FELS on
November 8, 1996. It then filed a Motion to Lift Levy dated November 14, 1996, praying that the
Provincial Assessor be further restrained by the CBAA from enforcing the disputed assessment
during the pendency of the appeal.
On November 15, 1996, the CBAA issued an Order
14
lifting the levy and distraint on the properties of
FELS in order not to preempt and render ineffectual, nugatory and illusory any resolution or
judgment which the Board would issue.
Meantime, the NPC filed a Motion for Intervention
15
dated August 7, 1998 in the proceedings before
the CBAA. This was approved by the CBAA in an Order
16
dated September 22, 1998.
During the pendency of the case, both FELS and NPC filed several motions to admit bond to
guarantee the payment of real property taxes assessed by the Provincial Assessor (in the event that
the judgment be unfavorable to them). The bonds were duly approved by the CBAA.
On April 6, 2000, the CBAA rendered a Decision
17
finding the power barges exempt from real
property tax. The dispositive portion reads:
WHEREFORE, the Resolution of the Local Board of Assessment Appeals of the Province of
Batangas is hereby reversed. Respondent-appellee Provincial Assessor of the Province of Batangas
is hereby ordered to drop subject property under ARP/Tax Declaration No. 018-00958 from the List
of Taxable Properties in the Assessment Roll. The Provincial Treasurer of Batangas is hereby
directed to act accordingly.
SO ORDERED.
18

Ruling in favor of FELS and NPC, the CBAA reasoned that the power barges belong to NPC; since
they are actually, directly and exclusively used by it, the power barges are covered by the
exemptions under Section 234(c) of R.A. No. 7160.
19
As to the other jurisdictional issue, the CBAA
ruled that prescription did not preclude the NPC from pursuing its claim for tax exemption in
accordance with Section 206 of R.A. No. 7160. The Provincial Assessor filed a motion for
reconsideration, which was opposed by FELS and NPC.
In a complete volte face, the CBAA issued a Resolution
20
on July 31, 2001 reversing its earlier
decision. The fallo of the resolution reads:
WHEREFORE, premises considered, it is the resolution of this Board that:
(a) The decision of the Board dated 6 April 2000 is hereby reversed.
(b) The petition of FELS, as well as the intervention of NPC, is dismissed.
(c) The resolution of the Local Board of Assessment Appeals of Batangas is hereby affirmed,
(d) The real property tax assessment on FELS by the Provincial Assessor of Batangas is
likewise hereby affirmed.
SO ORDERED.
21

FELS and NPC filed separate motions for reconsideration, which were timely opposed by the
Provincial Assessor. The CBAA denied the said motions in a Resolution
22
dated October 19, 2001.
Dissatisfied, FELS filed a petition for review before the CA docketed as CA-G.R. SP No. 67490.
Meanwhile, NPC filed a separate petition, docketed as CA-G.R. SP No. 67491.
On January 17, 2002, NPC filed a Manifestation/Motion for Consolidation in CA-G.R. SP No. 67490
praying for the consolidation of its petition with CA-G.R. SP No. 67491. In a Resolution
23
dated
February 12, 2002, the appellate court directed NPC to re-file its motion for consolidation with CA-
G.R. SP No. 67491, since it is the ponente of the latter petition who should resolve the request for
reconsideration.
NPC failed to comply with the aforesaid resolution. On August 25, 2004, the Twelfth Division of the
appellate court rendered judgment in CA-G.R. SP No. 67490 denying the petition on the ground of
prescription. The decretal portion of the decision reads:
WHEREFORE, the petition for review is DENIED for lack of merit and the assailed Resolutions
dated July 31, 2001 and October 19, 2001 of the Central Board of Assessment Appeals are
AFFIRMED.
SO ORDERED.
24

On September 20, 2004, FELS timely filed a motion for reconsideration seeking the reversal of the
appellate courts decision in CA-G.R. SP No. 67490.
Thereafter, NPC filed a petition for review dated October 19, 2004 before this Court, docketed as
G.R. No. 165113, assailing the appellate courts decision in CA-G.R. SP No. 67490. The petition
was, however, denied in this Courts Resolution
25
of November 8, 2004, for NPCs failure to
sufficiently show that the CA committed any reversible error in the challenged decision. NPC filed a
motion for reconsideration, which the Court denied with finality in a Resolution
26
dated January 19,
2005.
Meantime, the appellate court dismissed the petition in CA-G.R. SP No. 67491. It held that the right
to question the assessment of the Provincial Assessor had already prescribed upon the failure of
FELS to appeal the disputed assessment to the LBAA within the period prescribed by law. Since
FELS had lost the right to question the assessment, the right of the Provincial Government to collect
the tax was already absolute.
NPC filed a motion for reconsideration dated March 8, 2005, seeking reconsideration of the February
5, 2005 ruling of the CA in CA-G.R. SP No. 67491. The motion was denied in a Resolution
27
dated
November 23, 2005.
The motion for reconsideration filed by FELS in CA-G.R. SP No. 67490 had been earlier denied for
lack of merit in a Resolution
28
dated June 20, 2005.
On August 3, 2005, FELS filed the petition docketed as G.R. No. 168557 before this Court, raising
the following issues:
A.
Whether power barges, which are floating and movable, are personal properties and therefore, not
subject to real property tax.
B.
Assuming that the subject power barges are real properties, whether they are exempt from real
estate tax under Section 234 of the Local Government Code ("LGC").
C.
Assuming arguendo that the subject power barges are subject to real estate tax, whether or not it
should be NPC which should be made to pay the same under the law.
D.
Assuming arguendo that the subject power barges are real properties, whether or not the same is
subject to depreciation just like any other personal properties.
E.
Whether the right of the petitioner to question the patently null and void real property tax assessment
on the petitioners personal properties is imprescriptible.
29

On January 13, 2006, NPC filed its own petition for review before this Court (G.R. No. 170628),
indicating the following errors committed by the CA:
I
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE APPEAL TO THE LBAA
WAS FILED OUT OF TIME.
II
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE POWER BARGES
ARE NOT SUBJECT TO REAL PROPERTY TAXES.
III
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE ASSESSMENT ON
THE POWER BARGES WAS NOT MADE IN ACCORDANCE WITH LAW.
30

Considering that the factual antecedents of both cases are similar, the Court ordered the
consolidation of the two cases in a Resolution
31
dated March 8, 2006.1awphi1.net
In an earlier Resolution dated February 1, 2006, the Court had required the parties to submit their
respective Memoranda within 30 days from notice. Almost a year passed but the parties had not
submitted their respective memoranda. Considering that taxesthe lifeblood of our economyare
involved in the present controversy, the Court was prompted to dispense with the said pleadings,
with the end view of advancing the interests of justice and avoiding further delay.
In both petitions, FELS and NPC maintain that the appeal before the LBAA was not time-barred.
FELS argues that when NPC moved to have the assessment reconsidered on September 7, 1995,
the running of the period to file an appeal with the LBAA was tolled. For its part, NPC posits that the
60-day period for appealing to the LBAA should be reckoned from its receipt of the denial of its
motion for reconsideration.
Petitioners contentions are bereft of merit.
Section 226 of R.A. No. 7160, otherwise known as the Local Government Code of 1991, provides:
SECTION 226. Local Board of Assessment Appeals. Any owner or person having legal interest in
the property who is not satisfied with the action of the provincial, city or municipal assessor in the
assessment of his property may, within sixty (60) days from the date of receipt of the written notice
of assessment, appeal to the Board of Assessment Appeals of the province or city by filing a petition
under oath in the form prescribed for the purpose, together with copies of the tax declarations and
such affidavits or documents submitted in support of the appeal.
We note that the notice of assessment which the Provincial Assessor sent to FELS on August 7,
1995, contained the following statement:
If you are not satisfied with this assessment, you may, within sixty (60) days from the date of receipt
hereof, appeal to the Board of Assessment Appeals of the province by filing a petition under oath on
the form prescribed for the purpose, together with copies of ARP/Tax Declaration and such affidavits
or documents submitted in support of the appeal.
32

Instead of appealing to the Board of Assessment Appeals (as stated in the notice), NPC opted to file
a motion for reconsideration of the Provincial Assessors decision, a remedy not sanctioned by law.
The remedy of appeal to the LBAA is available from an adverse ruling or action of the provincial, city
or municipal assessor in the assessment of the property. It follows then that the determination made
by the respondent Provincial Assessor with regard to the taxability of the subject real properties falls
within its power to assess properties for taxation purposes subject to appeal before the LBAA.
33

We fully agree with the rationalization of the CA in both CA-G.R. SP No. 67490 and CA-G.R. SP No.
67491. The two divisions of the appellate court cited the case of Callanta v. Office of the
Ombudsman,
34
where we ruled that under Section 226 of R.A. No 7160,
35
the last action of the local
assessor on a particular assessment shall be the notice of assessment; it is this last action which
gives the owner of the property the right to appeal to the LBAA. The procedure likewise does not
permit the property owner the remedy of filing a motion for reconsideration before the local assessor.
The pertinent holding of the Court in Callanta is as follows:
x x x [T]he same Code is equally clear that the aggrieved owners should have brought their appeals
before the LBAA. Unfortunately, despite the advice to this effect contained in their respective notices
of assessment, the owners chose to bring their requests for a review/readjustment before the city
assessor, a remedy not sanctioned by the law. To allow this procedure would indeed invite
corruption in the system of appraisal and assessment. It conveniently courts a graft-prone situation
where values of real property may be initially set unreasonably high, and then subsequently reduced
upon the request of a property owner. In the latter instance, allusions of a possible covert, illicit
trade-off cannot be avoided, and in fact can conveniently take place. Such occasion for mischief
must be prevented and excised from our system.
36

For its part, the appellate court declared in CA-G.R. SP No. 67491:
x x x. The Court announces: Henceforth, whenever the local assessor sends a notice to the owner or
lawful possessor of real property of its revised assessed value, the former shall no longer have any
jurisdiction to entertain any request for a review or readjustment. The appropriate forum where the
aggrieved party may bring his appeal is the LBAA as provided by law. It follows ineluctably that the
60-day period for making the appeal to the LBAA runs without interruption. This is what We held in
SP 67490 and reaffirm today in SP 67491.
37

To reiterate, if the taxpayer fails to appeal in due course, the right of the local government to collect
the taxes due with respect to the taxpayers property becomes absolute upon the expiration of the
period to appeal.
38
It also bears stressing that the taxpayers failure to question the assessment in
the LBAA renders the assessment of the local assessor final, executory and demandable, thus,
precluding the taxpayer from questioning the correctness of the assessment, or from invoking any
defense that would reopen the question of its liability on the merits.
39

In fine, the LBAA acted correctly when it dismissed the petitioners appeal for having been filed out
of time; the CBAA and the appellate court were likewise correct in affirming the dismissal.
Elementary is the rule that the perfection of an appeal within the period therefor is both mandatory
and jurisdictional, and failure in this regard renders the decision final and executory.
40

In the Comment filed by the Provincial Assessor, it is asserted that the instant petition is barred by
res judicata; that the final and executory judgment in G.R. No. 165113 (where there was a final
determination on the issue of prescription), effectively precludes the claims herein; and that the filing
of the instant petition after an adverse judgment in G.R. No. 165113 constitutes forum shopping.
FELS maintains that the argument of the Provincial Assessor is completely misplaced since it was
not a party to the erroneous petition which the NPC filed in G.R. No. 165113. It avers that it did not
participate in the aforesaid proceeding, and the Supreme Court never acquired jurisdiction over it. As
to the issue of forum shopping, petitioner claims that no forum shopping could have been committed
since the elements of litis pendentia or res judicata are not present.
We do not agree.
Res judicata pervades every organized system of jurisprudence and is founded upon two grounds
embodied in various maxims of common law, namely: (1) public policy and necessity, which makes it
to the interest of the
State that there should be an end to litigation republicae ut sit litium; and (2) the hardship on the
individual of being vexed twice for the same cause nemo debet bis vexari et eadem causa. A
conflicting doctrine would subject the public peace and quiet to the will and dereliction of individuals
and prefer the regalement of the litigious disposition on the part of suitors to the preservation of the
public tranquility and happiness.
41
As we ruled in Heirs of Trinidad De Leon Vda. de Roxas v. Court
of Appeals:
42

x x x An existing final judgment or decree rendered upon the merits, without fraud or collusion, by
a court of competent jurisdiction acting upon a matter within its authority is conclusive on the rights
of the parties and their privies. This ruling holds in all other actions or suits, in the same or any other
judicial tribunal of concurrent jurisdiction, touching on the points or matters in issue in the first suit.
x x x
Courts will simply refuse to reopen what has been decided. They will not allow the same parties or
their privies to litigate anew a question once it has been considered and decided with finality.
Litigations must end and terminate sometime and somewhere. The effective and efficient
administration of justice requires that once a judgment has become final, the prevailing party should
not be deprived of the fruits of the verdict by subsequent suits on the same issues filed by the same
parties.
This is in accordance with the doctrine of res judicata which has the following elements: (1) the
former judgment must be final; (2) the court which rendered it had jurisdiction over the subject matter
and the parties; (3) the judgment must be on the merits; and (4) there must be between the first and
the second actions, identity of parties, subject matter and causes of action. The application of the
doctrine of res judicata does not require absolute identity of parties but merely substantial identity of
parties. There is substantial identity of parties when there is community of interest or privity of
interest between a party in the first and a party in the second case even if the first case did not
implead the latter.
43

To recall, FELS gave NPC the full power and authority to represent it in any proceeding regarding
real property assessment. Therefore, when petitioner NPC filed its petition for review docketed as
G.R. No. 165113, it did so not only on its behalf but also on behalf of FELS. Moreover, the assailed
decision in the earlier petition for review filed in this Court was the decision of the appellate court in
CA-G.R. SP No. 67490, in which FELS was the petitioner. Thus, the decision in G.R. No. 165116 is
binding on petitioner FELS under the principle of privity of interest. In fine, FELS and NPC are
substantially "identical parties" as to warrant the application of res judicata. FELSs argument that it
is not bound by the erroneous petition filed by NPC is thus unavailing.
On the issue of forum shopping, we rule for the Provincial Assessor. Forum shopping exists when,
as a result of an adverse judgment in one forum, a party seeks another and possibly favorable
judgment in another forum other than by appeal or special civil action or certiorari. There is also
forum shopping when a party institutes two or more actions or proceedings grounded on the same
cause, on the gamble that one or the other court would make a favorable disposition.
44

Petitioner FELS alleges that there is no forum shopping since the elements of res judicata are not
present in the cases at bar; however, as already discussed, res judicata may be properly applied
herein. Petitioners engaged in forum shopping when they filed G.R. Nos. 168557 and 170628 after
the petition for review in G.R. No. 165116. Indeed, petitioners went from one court to another trying
to get a favorable decision from one of the tribunals which allowed them to pursue their cases.
It must be stressed that an important factor in determining the existence of forum shopping is the
vexation caused to the courts and the parties-litigants by the filing of similar cases to claim
substantially the same reliefs.
45
The rationale against forum shopping is that a party should not be
allowed to pursue simultaneous remedies in two different fora. Filing multiple petitions or complaints
constitutes abuse of court processes, which tends to degrade the administration of justice, wreaks
havoc upon orderly judicial procedure, and adds to the congestion of the heavily burdened dockets
of the courts.
46

Thus, there is forum shopping when there exist: (a) identity of parties, or at least such parties as
represent the same interests in both actions, (b) identity of rights asserted and relief prayed for, the
relief being founded on the same facts, and (c) the identity of the two preceding particulars is such
that any judgment rendered in the pending case, regardless of which party is successful, would
amount to res judicata in the other.
47

Having found that the elements of res judicata and forum shopping are present in the consolidated
cases, a discussion of the other issues is no longer necessary. Nevertheless, for the peace and
contentment of petitioners, we shall shed light on the merits of the case.
As found by the appellate court, the CBAA and LBAA power barges are real property and are thus
subject to real property tax. This is also the inevitable conclusion, considering that G.R. No. 165113
was dismissed for failure to sufficiently show any reversible error. Tax assessments by tax
examiners are presumed correct and made in good faith, with the taxpayer having the burden of
proving otherwise.
48
Besides, factual findings of administrative bodies, which have acquired
expertise in their field, are generally binding and conclusive upon the Court; we will not assume to
interfere with the sensible exercise of the judgment of men especially trained in appraising property.
Where the judicial mind is left in doubt, it is a sound policy to leave the assessment
undisturbed.
49
We find no reason to depart from this rule in this case.
In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al.,
50
a power
company brought an action to review property tax assessment. On the citys motion to dismiss, the
Supreme Court of New York held that the barges on which were mounted gas turbine power plants
designated to generate electrical power, the fuel oil barges which supplied fuel oil to the power plant
barges, and the accessory equipment mounted on the barges were subject to real property taxation.
Moreover, Article 415 (9) of the New Civil Code provides that "[d]ocks and structures which, though
floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast"
are considered immovable property. Thus, power barges are categorized as immovable property by
destination, being in the nature of machinery and other implements intended by the owner for an
industry or work which may be carried on in a building or on a piece of land and which tend directly
to meet the needs of said industry or work.
51

Petitioners maintain nevertheless that the power barges are exempt from real estate tax under
Section 234 (c) of R.A. No. 7160 because they are actually, directly and exclusively used by
petitioner NPC, a government- owned and controlled corporation engaged in the supply, generation,
and transmission of electric power.
We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is petitioner
FELS, which in fine, is the entity being taxed by the local government. As stipulated under Section
2.11, Article 2 of the Agreement:
OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures,
fittings, machinery and equipment on the Site used in connection with the Power Barges which have
been supplied by it at its own cost. POLAR shall operate, manage and maintain the Power Barges
for the purpose of converting Fuel of NAPOCOR into electricity.
52

It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its
exemption in Section 234 (c) of R.A. No. 7160, which reads:
SECTION 234. Exemptions from Real Property Tax. The following are exempted from payment of
the real property tax:
x x x
(c) All machineries and equipment that are actually, directly and exclusively used by local water
districts and government-owned or controlled corporations engaged in the supply and distribution of
water and/or generation and transmission of electric power; x x x
Indeed, the law states that the machinery must be actually, directly and exclusively used by the
government owned or controlled corporation; nevertheless, petitioner FELS still cannot find solace in
this provision because Section 5.5, Article 5 of the Agreement provides:
OPERATION. POLAR undertakes that until the end of the Lease Period, subject to the supply of the
necessary Fuel pursuant to Article 6 and to the other provisions hereof, it will operate the Power
Barges to convert such Fuel into electricity in accordance with Part A of Article 7.
53

It is a basic rule that obligations arising from a contract have the force of law between the parties.
Not being contrary to law, morals, good customs, public order or public policy, the parties to the
contract are bound by its terms and conditions.
54

Time and again, the Supreme Court has stated that taxation is the rule and exemption is the
exception.
55
The law does not look with favor on tax exemptions and the entity that would seek to be
thus privileged must justify it by words too plain to be mistaken and too categorical to be
misinterpreted.
56
Thus, applying the rule of strict construction of laws granting tax exemptions, and
the rule that doubts should be resolved in favor of provincial corporations, we hold that FELS is
considered a taxable entity.
The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be
responsible for the payment of all real estate taxes and assessments, does not justify the exemption.
The privilege granted to petitioner NPC cannot be extended to FELS. The covenant is between
FELS and NPC and does not bind a third person not privy thereto, in this case, the Province of
Batangas.
It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local
governments deprivation of revenues. The power to tax is an incident of sovereignty and is unlimited
in its magnitude, acknowledging in its very nature no perimeter so that security against its abuse is
to be found only in the responsibility of the legislature which imposes the tax on the constituency
who are to pay for it.
57
The right of local government units to collect taxes due must always be
upheld to avoid severe tax erosion. This consideration is consistent with the State policy to
guarantee the autonomy of local governments
58
and the objective of the Local Government Code
that they enjoy genuine and meaningful local autonomy to empower them to achieve their fullest
development as self-reliant communities and make them effective partners in the attainment of
national goals.
59

In conclusion, we reiterate that the power to tax is the most potent instrument to raise the needed
revenues to finance and support myriad activities of the local government units for the delivery of
basic services essential to the promotion of the general welfare and the enhancement of peace,
progress, and prosperity of the people.
60

WHEREFORE, the Petitions are DENIED and the assailed Decisions and Resolutions AFFIRMED.
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
MA. ALICIA AUSTRIA-MARTINEZ
Asscociate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, it is
hereby certified that the conclusions in the above decision were reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice


Footnotes
1
Penned by Associate Justice Marina L. Buzon, with Associate Justices Mario L. Guaria III
and Santiago Javier Ranada (retired), concurring; rollo (G.R. No. 168557), pp. 103-116.
2
Penned by Associate Justice Marina L. Buzon, with Associate Justices Mario L. Guaria III
and Santiago Javier Ranada; concurring; id. at 118-120.
3
Penned by Associate Justice Mario L. Guaria III, with Associate Justices Marina L. Buzon
and Santiago Javier Ranada; concurring; rollo (G.R. No. 170628), pp. 59-64.
4
Penned by Associate Justice Mario L. Guaria III, with Associate Justices Marina L. Buzon
and Santiago Javier Ranada; concurring; id. at 65.
5
Rollo (G.R. No. 168557), pp. 121-245.
6
Id. at 155.
7
Id. at 249-250.
8
Id. at 253-255.
9
Rollo (G.R. No. 168557), pp. 256-267.
10
Id. at 286-288.
11
Id. at 289-294.
12
Id. at 294.
13
Rollo (G.R. No. 170628), pp. 122-124.
14
Id. at 129.
15
Rollo (G.R. No. 168557), pp. 364-369.
16
Id. at 370-372.
17
Id. at 383-394.
18
Id. at 394.
19
Otherwise known as the "Local Government Code of 1991."
20
Rollo (G.R. No. 168557), pp. 425-431.
21
Id. at 430-431.
22
Id. at 478.
23
CA Rollo (CA-G.R. SP No. 67490), p. 422.
24
Rollo (G.R. No. 168557), pp. 49-50.
25
Id. at 605.
26
Id. at 606.
27
Rollo (G.R. No. 170628), p. 65.
28
Rollo (G.R. No. 168557), pp. 23-25.
29
Id. at 61.
30
Rollo (G.R. No. 170628), pp. 18-19.
31
Rollo (G.R. No. 168557), p. 637.
32
Id. at 246 (Italics supplied).
33
Systems Plus Computer College of Caloocan City v. Local Government of Caloocan City,
455 Phil. 956, 962-963 (2003).
34
G.R. Nos. 115253-74, January 30, 1998, 285 SCRA 648.
35
Formerly Section 30 of The Real Property Tax Code.
36
Callanta v. Office of the Ombudsman, supra note 33, at 661-662.
37
Rollo (G.R. No. 170628), pp. 62-63.
38
Manila Electric Company v. Barlis, G. R. No. 114231, June 29, 2004, 433 SCRA 11, 32.
39
Id. at 32-33.
40
See Borja Estate v. Ballad, G.R. No. 152550, June 8, 2005, 459 SCRA 657, 668, 670.
41
Cruz v. Court of Appeals, G.R. No. 164797, February 13, 2006, 482 SCRA 379, 395, citing
Heirs of the Late Faustina Adalid v. Court of Appeals, 459 SCRA 27, 41 (2005).
42
G.R. No. 138660, February 5, 2004, 422 SCRA 101.
43
Id. at 116.
44
Municipality of Taguig v. Court of Appeals, G.R. No. 142619, September 13, 2005, 469
SCRA 588, 594-595.
45
Foronda v. Guerrero, Adm. Case No. 5469, August 10, 2004, 436 SCRA 9, 23.
46
Wee v. Galvez, G.R. No. 147394, August 11, 2004, 436 SCRA 96, 108-109.
47
Hongkong and Shanghai Banking Corporation Limited v. Catalan, G.R. Nos. 159590 and
159591, October 18, 2004, 440 SCRA 498, 513-514.
48
Commissioner of Internal Revenue v. Hantex Trading Co., Inc., G.R. No. 136975, March
31, 2005, 454 SCRA 301, 329.
49
Cagayan Robina Sugar Milling Co. v. Court of Appeals, 396 Phil. 830, 840 (2000).
50
80 Misc.2d 1065 (1975).
51
J. Vitug, civil law volume ii, property, ownership, and its modifications, 3-4 (2003).
52
Rollo (G.R. No. 168557), p. 135.
53
Id. at 142. (Emphasis supplied)
54
L & L Lawrence Footwear, Inc. v. PCI Leasing and Finance Corporation, G.R. No. 160531,
August 30, 2005, 468 SCRA 393, 402.
55
Commissioner of Internal Revenue v. Philippine Long Distance Telephone Company, G.R.
No. 140230, December 15, 2005, 478 SCRA 61, 74.
56
Republic v. City of Kidapawan, G.R. No. 166651, December 9, 2005, 477 SCRA 324, 335,
citing Sea-Land Service, Inc. v. Court of Appeals, 357 SCRA 441, 444 (2001).
57
Mactan Cebu International Airport Authority v. Marcos, G.R. No. 120082, September 11,
1996, 261 SCRA 667, 679.
58
CONSTITUTION, Section 25, Article II, and Section 2, Article X.
59
Republic Act No. 7160, Section 2(a).
60
Mactan Cebu International Airport Authority v. Marcos, supra note 56, at 690.























Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 106041 January 29, 1993
BENGUET CORPORATION, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF
ZAMBALES, PROVINCIAL ASSESSOR OF ZAMBALES, PROVINCE OF ZAMBALES, and
MUNICIPALITY OF SAN MARCELINO, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.

CRUZ, J .:
The realty tax assessment involved in this case amounts to P11,319,304.00. It has been imposed on
the petitioner's tailings dam and the land thereunder over its protest.
The controversy arose in 1985 when the Provincial Assessor of Zambales assessed the said
properties as taxable improvements. The assessment was appealed to the Board of Assessment
Appeals of the Province of Zambales. On August 24, 1988, 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 petitioner seasonably elevated the matter to the Central Board of Assessment Appeals,
1
one of
the herein respondents. In its decision dated March 22, 1990, the Board reversed the dismissal of the
appeal but, on the merits, agreed that "the tailings dam and the lands submerged thereunder (were)
subject to realty tax."
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.
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. The immovable nature of the dam as an improvement determines its
character as real property, hence taxable under Section 38 of the Real Property Tax
Code. (P.D. 464).
Although the dam is partly used as an anti-pollution device, this Board cannot accede
to the request for tax exemption in the absence of a law authorizing the same.
xxx xxx xxx
We find the appraisal on the land submerged as a result of the construction of the
tailings dam, covered by Tax Declaration Nos.
002-0260 and 002-0266, 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. No serious attempt was made by
Petitioner-Appellant Benguet Corporation to impugn its reasonableness, i.e., that the
P50.00 per square meter applied by Respondent-Appellee Provincial Assessor is
indeed excessive and unconscionable. Hence, we find no cause to disturb the
market value applied by Respondent Appellee Provincial Assessor of Zambales on
the properties of Petitioner-Appellant Benguet Corporation covered by Tax
Declaration Nos. 002-0260 and 002-0266.
This petition for certiorari now seeks to reverse the above ruling.
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. More
particularly, 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; hence, by itself it cannot be considered an improvement
separately assessable;
(b) that it is an integral part of the mine;
(c) that at the end of the mining operation of the petitioner corporation
in the area, the tailings dam will benefit the local community by
serving as an irrigation facility;
(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;
(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;
(f) that the installation and utilization of the tailings dam as a pollution
control device is a requirement imposed by law;
(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;
(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;
(c) that the "residual value formula" used by the Provincial Assessor
and adopted by respondent CBAA is arbitrary and erroneous; 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, no
penalty shall be collected in addition to the basic tax;
(b) that no other mining companies in the Philippines operating a
tailings dam have been made to declare the dam for realty tax
purposes.
The petitioner does not dispute that the tailings dam may be considered realty within the meaning of
Article 415. It insists, however, 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.
To support its theory, the petitioner cites the following cases:
1. Municipality of Cotabato v. Santos (105 Phil. 963), where this Court considered the dikes and
gates constructed by the taxpayer in connection with a fishpond operation as integral parts of the
fishpond.
2. Bislig Bay Lumber Co. v. Provincial Government of Surigao (100 Phil. 303), involving a road
constructed by the timber concessionaire in the area, where this Court did not impose a realty tax on
the road primarily for two reasons:
In the first place, 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 . . . but also
because upon the expiration of the concession said road would ultimately pass to the
national government. . . . In the second place, while the road was constructed by
appellee primarily for its use and benefit, the privilege is not exclusive, for . . .
appellee cannot prevent the use of portions of the concession for homesteading
purposes. 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. . . . In other words, the government has practically reserved the rights to use
the road to promote its varied activities. Since, as above shown, the road in question
cannot be considered as an improvement which belongs to appellee, although in part
is for its benefit, it is clear that the same cannot be the subject of assessment within
the meaning of Section 2 of C.A.
No. 470.
Apparently, 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.
3. Kendrick v. Twin Lakes Reservoir Co. (144 Pacific 884), an American case, 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, and the water rights in the
reservoir represent and include whatever utility or value there is in the dam and headgates."
4. Ontario Silver Mining Co. v. Hixon (164 Pacific 498), also from the United States. This case
involved drain tunnels constructed by plaintiff when it expanded its mining operations downward,
resulting in a constantly increasing flow of water in the said mine. It was held that:
Whatever value they have is connected with and in fact is an integral part of the mine
itself. Just as much so as any shaft which descends into the earth or an underground
incline, tunnel, or drift would be which was used in connection with the mine.
On the other hand, the Solicitor General argues that the dam is an assessable improvement
because it enhances the value and utility of the mine. The primary function of the dam is to receive,
retain and hold the water coming from the operations of the mine, and it also enables the petitioner
to impound water, which is then recycled for use in the plant.
There is also ample jurisprudence to support this view, thus:
. . . The said equipment and machinery, 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, 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, are taxable improvements and machinery within the
meaning of the Assessment Law and the Real Property Tax Code. (Caltex [Phil.] Inc.
v. CBAA, 114 SCRA 296).
We hold that while the two storage tanks are not embedded in the land, they may,
nevertheless, be considered as improvements on the land, enhancing its utility and
rendering it useful to the oil industry. 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. (Manila Electric Co. v.
CBAA, 114 SCRA 273).
The pipeline system in question is indubitably a construction adhering to the soil. 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. (MERALCO
Securities Industrial Corp. v. CBAA, 114 SCRA 261).
The tax upon the dam was properly assessed to the plaintiff as a tax upon real
estate. (Flax-Pond Water Co. v. City of Lynn, 16 N.E. 742).
The oil tanks are structures within the statute, that they are designed and used by the
owner as permanent improvement of the free hold, and that for such reasons they
were properly assessed by the respondent taxing district as improvements.
(Standard Oil Co. of New Jersey v. Atlantic City, 15 A 2d. 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, such as lands, buildings, machinery and other improvements
affixed or attached to real property." In the absence of such a definition, we apply Article 415 of the
Civil Code, the pertinent portions of which state:
Art. 415. The following are immovable property.
(1) Lands, buildings and constructions of all kinds adhered to the soil;
xxx xxx xxx
(3) Everything attached to an immovable in a fixed manner, in such a way that it
cannot be separated therefrom without breaking the material or deterioration of the
object.
Section 2 of C.A. No. 470, otherwise known as the Assessment Law, provides that the realty tax is
due "on the real property, including land, buildings, machinery and other improvements" not
specifically exempted in Section 3 thereof. 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.
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, amounting to more than mere repairs or replacement of waste, costing
labor or capital and intended to enhance its value, beauty or utility or to adopt it for
new or further purposes.
The term has also been interpreted as "artificial alterations of the physical condition of the ground
that arereasonably permanent in character."
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, which were indispensable to the successful
development and extraction of the minerals therein. This is not true in the present case.
Even without the tailings dam, 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. 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. In fact, as a result of the
construction of the dam, the petitioner can now impound and recycle water without having to spend
for the building of a water reservoir. And as the petitioner itself points out, even if the petitioner's
mine is shut down or ceases operation, the dam may still be used for irrigation of the surrounding
areas, again unlike in the Ontario case.
As correctly observed by the CBAA, 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. By
contrast, the tailings dam in question is being used exclusively for the benefit of the petitioner.
Curiously, the petitioner, while vigorously arguing that the tailings dam has no separate existence,
just as vigorously contends that at the end of the mining operation the tailings dam will serve the
local community as an irrigation facility, thereby implying that it can exist independently of the mine.
From the definitions and the cases cited above, 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. 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. 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.
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. Moreover,
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.
The Court will also reject the contention that the appraisal at P50.00 per square meter made by the
Provincial Assessor is excessive and that his use of the "residual value formula" is arbitrary and
erroneous.
Respondent Provincial Assessor explained the use of the "residual value formula" as follows:
A 50% residual value is applied in the computation because, while it is true that when
slime fills the dike, it will then be covered by another dike or stage, the stage covered
is still there and still exists and since only one face of the dike is filled, 50% or the
other face is unutilized.
In sustaining this formula, the CBAA gave the following justification:
We find the appraisal on the land submerged as a result of the construction of the
tailings dam, covered by Tax Declaration Nos.
002-0260 and 002-0266, to be in accordance with the Schedule of Market Values for
San Marcelino, Zambales, which is fifty (50.00) pesos per square meter for third
class industrial land (TSN, page 17, July 5, 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. No serious attempt was made by
Petitioner-Appellant Benguet Corporation to impugn its reasonableness, i.e, that the
P50.00 per square meter applied by Respondent-Appellee Provincial Assessor is
indeed excessive and unconscionable. Hence, we find no cause to disturb the
market value applied by Respondent-Appellee Provincial Assessor of Zambales on
the properties of Petitioner-Appellant Benguet Corporation covered by Tax
Declaration Nos. 002-0260 and 002-0266.
It has been the long-standing policy of this Court to respect the conclusions of quasi-judicial
agencies like the CBAA, which, because of the nature of its functions and its frequent exercise
thereof, has developed expertise in the resolution of assessment problems. 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. There
is no such showing in the case at bar.
We disagree, however, with the ruling of respondent CBAA that it cannot take cognizance of the
issue of the propriety of the penalties imposed upon it, which was raised by the petitioner for the first
time only on appeal. 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 . . ., and in case of an adverse decision by either the Local
Board or the local sanggunian, (it can) elevate the same to this Board for appropriate action."
There is no need for this time-wasting procedure. The Court may resolve the issue in this petition
instead of referring it back to the local authorities. 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. It is clear that it has not done
so for the purpose of evading or delaying the payment of the questioned tax. Hence, 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.
WHEREFORE, 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. Costs against the
petitioner. It is so ordered.
Narvasa, C.J., Gutierrez, Jr., Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero, Nocon,
Bellosillo, Melo and Campos, Jr., JJ., concur.
Feliciano, J., took no part.

# Footnotes
1 Secretary of Finance Jesus Estanislao as chairman with Secretary of Justice
Franklin M. Drilon and Secretary of Local Government Luis T. Santos as members.
2 Francisco, Philippine Mining Law, Vol. 1, 2nd Ed., p. 274.








EN BANC


LUIS MARCOS P. LAUREL, G.R. No. 155076
Petitioner,
Present:

Puno, C.J.,
Quisumbing,
Ynares-Santiago,
Carpio,
- versus - Austria-Martinez,
Corona,
Carpio Morales,
Azcuna,
Tinga,
Chico-Nazario,
Velasco, Jr.,
Nachura,
Leonardo-De Castro, and
Brion, JJ.
HON. ZEUS C. ABROGAR,
Presiding Judge of the Regional
Trial Court, Makati City, Branch 150,
PEOPLE OF THE PHILIPPINES Promulgated:
& PHILIPPINE LONG DISTANCE
TELEPHONE COMPANY,
Respondents. January 13, 2009

x ---------------------------------------------------------------------------------------- x

RESOLUTI ON

YNARES-SANTIAGO, J .:


On February 27, 2006, this Courts First Division rendered judgment in this
case as follows:

IN LIGHT OF ALL THE FOREGOING, the petition
is GRANTED. The assailed Orders of the Regional Trial Court and the Decision
of the Court of Appeals are REVERSED and SET ASIDE. The Regional Trial
Court is directed to issue an order granting the motion of the petitioner to quash
the Amended Information.

SO ORDERED.
[1]


By way of brief background, petitioner is one of the accused in Criminal
Case No. 99-2425, filed with the Regional Trial Court of Makati City, Branch
150. The Amended Information charged the accused with theft under Article 308
of the Revised Penal Code, committed as follows:

On or about September 10-19, 1999, or prior thereto in Makati City, and
within the jurisdiction of this Honorable Court, the accused, conspiring and
confederating together and all of them mutually helping and aiding one another,
with intent to gain and without the knowledge and consent of the Philippine Long
Distance Telephone (PLDT), did then and there willfully, unlawfully and
feloniously take, steal and use the international long distance calls belonging to
PLDT by conducting International Simple Resale (ISR), which is a method of
routing and completing international long distance calls using lines, cables,
antenae, and/or air wave frequency which connect directly to the local or
domestic exchange facilities of the country where the call is destined, effectively
stealing this business from PLDT while using its facilities in the estimated amount
of P20,370,651.92 to the damage and prejudice of PLDT, in the said amount.

CONTRARY TO LAW.
[2]


Petitioner filed a Motion to Quash (with Motion to Defer Arraignment),
on the ground that the factual allegations in the Amended Information do not
constitute the felony of theft. The trial court denied the Motion to Quash the
Amended Information, as well petitioners subsequent Motion for Reconsideration.

Petitioners special civil action for certiorari was dismissed by the Court of
Appeals. Thus, petitioner filed the instant petition for review with this Court.

In the above-quoted Decision, this Court held that the Amended Information
does not contain material allegations charging petitioner with theft of personal
property since international long distance calls and the business of providing
telecommunication or telephone services are not personal properties under Article
308 of the Revised Penal Code.

Respondent Philippine Long Distance Telephone Company (PLDT) filed a
Motion for Reconsideration with Motion to Refer the Case to the Supreme Court
En Banc. It maintains that the Amended Information charging petitioner with theft
is valid and sufficient; that it states the names of all the accused who were
specifically charged with the crime of theft of PLDTs international calls and
business of providing telecommunication or telephone service on or about
September 10 to 19, 1999 in Makati City by conducting ISR or International
Simple Resale; that it identifies the international calls and business of providing
telecommunication or telephone service of PLDT as the personal properties which
were unlawfully taken by the accused; and that it satisfies the test of sufficiency as
it enabled a person of common understanding to know the charge against him and
the court to render judgment properly.

PLDT further insists that the Revised Penal Code should be interpreted in
the context of the Civil Codes definition of real and personal property. The
enumeration of real properties in Article 415 of the Civil Code is exclusive such
that all those not included therein are personal properties. Since Article 308 of the
Revised Penal Code used the words personal property without qualification, it
follows that all personal properties as understood in the context of the Civil
Code, may be the subject of theft under Article 308 of the Revised Penal
Code. PLDT alleges that the international calls and business of providing
telecommunication or telephone service are personal properties capable of
appropriation and can be objects of theft.

PLDT also argues that taking in relation to theft under the Revised Penal
Code does not require asportation, the sole requisite being that the object should
be capable of appropriation. The element of taking referred to in Article 308
of the Revised Penal Code means the act of depriving another of the possession
and dominion of a movable coupled with the intention, at the time of the taking,
of withholding it with the character of permanency. There must be intent to
appropriate, which means to deprive the lawful owner of the thing. Thus, the term
personal properties under Article 308 of the Revised Penal Code is not limited to
only personal properties which are susceptible of being severed from a mass or
larger quantity and of being transported from place to place.

PLDT likewise alleges that as early as the 1930s, international telephone
calls were in existence; hence, there is no basis for this Courts finding that the
Legislature could not have contemplated the theft of international telephone calls
and the unlawful transmission and routing of electronic voice signals or impulses
emanating from such calls by unlawfully tampering with the telephone device as
within the coverage of the Revised Penal Code.

According to respondent, the international phone calls which are electric
currents or sets of electric impulses transmitted through a medium, and carry a
pattern representing the human voice to a receiver, are personal properties which
may be subject of theft. Article 416(3) of the Civil Code deems forces of nature
(which includes electricity) which are brought under the control by science, are
personal property.

In his Comment to PLDTs motion for reconsideration, petitioner Laurel
claims that a telephone call is a conversation on the phone or a communication
carried out using the telephone. It is not synonymous to electric current or
impulses. Hence, it may not be considered as personal property susceptible of
appropriation. Petitioner claims that the analogy between generated electricity and
telephone calls is misplaced. PLDT does not produce or generate telephone
calls. It only provides the facilities or services for the transmission and switching
of the calls. He also insists that business is not personal property. It is not the
business that is protected but the right to carry on a business. This right is
what is considered as property. Since the services of PLDT cannot be considered
as property, the same may not be subject of theft.

The Office of the Solicitor General (OSG) agrees with respondent PLDT
that international phone calls and the business or service of providing
international phone calls are subsumed in the enumeration and definition of
personal property under the Civil Code hence, may be proper subjects of theft. It
noted that the cases of United States v. Genato,
[3]
United States v.
Carlos
[4]
and United States v. Tambunting,
[5]
which recognized intangible
properties like gas and electricity as personal properties, are deemed incorporated
in our penal laws. Moreover, the theft provision in the Revised Penal Code was
deliberately couched in broad terms precisely to be all-encompassing and
embracing even such scenario that could not have been easily anticipated.

According to the OSG, prosecution under Republic Act (RA) No. 8484 or
the Access Device Regulations Act of 1998 and RA 8792 or the Electronic
Commerce Act of 2000 does not preclude prosecution under the Revised Penal
Code for the crime of theft. The latter embraces unauthorized appropriation or use
of PLDTs international calls, service and business, for personal profit or gain, to
the prejudice of PLDT as owner thereof. On the other hand, the special laws
punish the surreptitious and advanced technical means employed to illegally obtain
the subject service and business. Even assuming that the correct indictment should
have been under RA 8484, the quashal of the information would still not be
proper. The charge of theft as alleged in the Information should be taken in
relation to RA 8484 because it is the elements, and not the designation of the
crime, that control.

Considering the gravity and complexity of the novel questions of law
involved in this case, the Special First Division resolved to refer the same to the
Banc.

We resolve to grant the Motion for Reconsideration but remand the case to
the trial court for proper clarification of the Amended Information.

Article 308 of the Revised Penal Code provides:

Art. 308. Who are liable for theft. Theft is committed by any person
who, with intent to gain but without violence against, or intimidation of persons
nor force upon things, shall take personal property of another without the latters
consent.


The elements of theft under Article 308 of the Revised Penal Code are as
follows: (1) that there be taking of personal property; (2) that said property belongs
to another; (3) that the taking be done with intent to gain; (4) that the taking be
done without the consent of the owner; and (5) that the taking be accomplished
without the use of violence against or intimidation of persons or force upon things.

Prior to the passage of the Revised Penal Code on December 8, 1930, the
definition of the term personal property in the penal code provision on theft had
been established in Philippine jurisprudence. This Court, in United States v.
Genato, United States v. Carlos, and United States v. Tambunting, consistently
ruled that any personal property, tangible or intangible, corporeal or
incorporeal, capable of appropriation can be the object of theft.

Moreover, since the passage of the Revised Penal Code on December 8,
1930, the term personal property has had a generally accepted definition in civil
law. In Article 335 of the Civil Code of Spain, personal property is defined as
anything susceptible of appropriation and not included in the foregoing chapter
(not real property). Thus, the term personal property in the Revised Penal
Code should be interpreted in the context of the Civil Code provisions in
accordance with the rule on statutory construction that where words have been
long used in a technical sense and have been judicially construed to have a certain
meaning, and have been adopted by the legislature as having a certain meaning
prior to a particular statute, in which they are used, the words used in such statute
should be construed according to the sense in which they have been previously
used.
[6]
In fact, this Court used the Civil Code definition of personal property in
interpreting the theft provision of the penal code in United States v. Carlos.

Cognizant of the definition given by jurisprudence and the Civil Code of
Spain to the term personal property at the time the old Penal Code was being
revised, still the legislature did not limit or qualify the definition of personal
property in the Revised Penal Code. Neither did it provide a restrictive definition
or an exclusive enumeration of personal property in the Revised Penal Code,
thereby showing its intent to retain for the term an extensive and unqualified
interpretation. Consequently, any property which is not included in the
enumeration of real properties under the Civil Code and capable of appropriation
can be the subject of theft under the Revised Penal Code.

The only requirement for a personal property to be the object of theft under
the penal code is that it be capable of appropriation. It need not be capable of
asportation, which is defined as carrying away.
[7]
Jurisprudence is settled that
to take under the theft provision of the penal code does not require asportation or
carrying away.
[8]


To appropriate means to deprive the lawful owner of the thing.
[9]
The word
take in the Revised Penal Code includes any act intended to transfer possession
which, as held in the assailed Decision, may be committed through the use of the
offenders own hands, as well as any mechanical device, such as an access device
or card as in the instant case. This includes controlling the destination of the
property stolen to deprive the owner of the property, such as the use of a meter
tampering, as held in Natividad v. Court of Appeals,
[10]
use of a device to
fraudulently obtain gas, as held in United States v. Tambunting, and the use of a
jumper to divert electricity, as held in the cases of United States v. Genato, United
States v. Carlos, and United States v. Menagas.
[11]



As illustrated in the above cases, appropriation of forces of nature which are
brought under control by science such as electrical energy can be achieved by
tampering with any apparatus used for generating or measuring such forces of
nature, wrongfully redirecting such forces of nature from such apparatus, or using
any device to fraudulently obtain such forces of nature. In the instant case,
petitioner was charged with engaging in International Simple Resale (ISR) or the
unauthorized routing and completing of international long distance calls using
lines, cables, antennae, and/or air wave frequency and connecting these calls
directly to the local or domestic exchange facilities of the country where destined.

As early as 1910, the Court declared in Genato that ownership over
electricity (which an international long distance call consists of), as well
as telephone service, is protected by the provisions on theft of the Penal Code. The
pertinent provision of the Revised Ordinance of the City of Manila, which was
involved in the said case, reads as follows:

Injury to electric apparatus; Tapping current; Evidence. No person shall
destroy, mutilate, deface, or otherwise injure or tamper with any wire, meter, or
other apparatus installed or used for generating, containing, conducting, or
measuring electricity, telegraph or telephone service, nor tap or otherwise
wrongfully deflect or take any electric current from such wire, meter, or other
apparatus.

No person shall, for any purpose whatsoever, use or enjoy the benefits of
any device by means of which he may fraudulently obtain any current of
electricity or any telegraph or telephone service; and the existence in any building
premises of any such device shall, in the absence of satisfactory explanation, be
deemed sufficient evidence of such use by the persons benefiting thereby.


It was further ruled that even without the above ordinance the acts of
subtraction punished therein are covered by the provisions on theft of the Penal
Code then in force, thus:

Even without them (ordinance), the right of the ownership of electric
current is secured by articles 517 and 518 of the Penal Code; the application of
these articles in cases of subtraction of gas, a fluid used for lighting, and in some
respects resembling electricity, is confirmed by the rule laid down in the decisions
of the supreme court of Spain of January 20, 1887, and April 1, 1897, construing
and enforcing the provisions of articles 530 and 531 of the Penal Code of that
country, articles 517 and 518 of the code in force in these islands.

The acts of subtraction include: (a) tampering with any wire, meter, or
other apparatus installed or used for generating, containing, conducting, or
measuring electricity, telegraph or telephone service; (b) tapping or otherwise
wrongfully deflecting or taking any electric current from such wire, meter, or other
apparatus; and (c) using or enjoying the benefits of any device by means of which
one may fraudulently obtain any current of electricity or any telegraph or telephone
service.

In the instant case, the act of conducting ISR operations by illegally
connecting various equipment or apparatus to private respondent PLDTs
telephone system, through which petitioner is able to resell or re-route international
long distance calls using respondent PLDTs facilities constitutes all three acts of
subtraction mentioned above.

The business of providing telecommunication or telephone service is
likewise personal property which can be the object of theft under Article 308 of the
Revised Penal Code. Business may be appropriated under Section 2 of Act No.
3952 (Bulk Sales Law), hence, could be object of theft:

Section 2. Any sale, transfer, mortgage, or assignment of a stock of
goods, wares, merchandise, provisions, or materials otherwise than in the ordinary
course of trade and the regular prosecution of the business of the vendor,
mortgagor, transferor, or assignor, or any sale, transfer, mortgage, or assignment
of all, or substantially all, of the business or trade theretofore conducted by the
vendor, mortgagor, transferor or assignor, or all, or substantially all, of the
fixtures and equipment used in and about the business of the vendor, mortgagor,
transferor, or assignor, shall be deemed to be a sale and transfer in bulk, in
contemplation of the Act. x x x.


In Strochecker v. Ramirez,
[12]
this Court stated:

With regard to the nature of the property thus mortgaged which is one-half
interest in the business above described, such interest is a personal property
capable of appropriation and not included in the enumeration of real properties in
article 335 of the Civil Code, and may be the subject of mortgage.


Interest in business was not specifically enumerated as personal property in
the Civil Code in force at the time the above decision was rendered. Yet, interest
in business was declared to be personal property since it is capable of appropriation
and not included in the enumeration of real properties. Article 414 of the Civil
Code provides that all things which are or may be the object of appropriation are
considered either real property or personal property. Business is likewise not
enumerated as personal property under the Civil Code. Just like interest in
business, however, it may be appropriated. Following the ruling in Strochecker v.
Ramirez, business should also be classified as personal property. Since it is not
included in the exclusive enumeration of real properties under Article 415, it is
therefore personal property.
[13]


As can be clearly gleaned from the above disquisitions, petitioners acts
constitute theft of respondent PLDTs business and service, committed by means
of the unlawful use of the latters facilities. In this regard, the Amended
Information inaccurately describes the offense by making it appear that what
petitioner took were the international long distance telephone calls, rather than
respondent PLDTs business.

A perusal of the records of this case readily reveals that petitioner and
respondent PLDT extensively discussed the issue of ownership of telephone
calls. The prosecution has taken the position that said telephone calls belong to
respondent PLDT. This is evident from its Comment where it defined the issue of
this case as whether or not the unauthorized use or appropriation of PLDT
international telephone calls, service and facilities, for the purpose of generating
personal profit or gain that should have otherwise belonged to PLDT, constitutes
theft.
[14]


In discussing the issue of ownership, petitioner and respondent PLDT gave
their respective explanations on how a telephone call is generated.
[15]
For its part,
respondent PLDT explains the process of generating a telephone call as follows:

38. The role of telecommunication companies is not limited to merely
providing the medium (i.e. the electric current) through which the human
voice/voice signal of the caller is transmitted. Before the human voice/voice
signal can be so transmitted, a telecommunication company, using its facilities,
must first break down or decode the human voice/voice signal into electronic
impulses and subject the same to further augmentation and enhancements. Only
after such process of conversion will the resulting electronic impulses be
transmitted by a telecommunication company, again, through the use of its
facilities. Upon reaching the destination of the call, the telecommunication
company will again break down or decode the electronic impulses back to human
voice/voice signal before the called party receives the same. In other words, a
telecommunication company both converts/reconverts the human voice/voice
signal and provides the medium for transmitting the same.

39. Moreover, in the case of an international telephone call, once the
electronic impulses originating from a foreign telecommunication company
country (i.e. Japan) reaches the Philippines through a local telecommunication
company (i.e. private respondent PLDT), it is the latter which decodes, augments
and enhances the electronic impulses back to the human voice/voice signal and
provides the medium (i.e. electric current) to enable the called party to receive the
call. Thus, it is not true that the foreign telecommunication company provides (1)
the electric current which transmits the human voice/voice signal of the caller and
(2) the electric current for the called party to receive said human voice/voice
signal.

40. Thus, contrary to petitioner Laurels assertion, once the electronic
impulses or electric current originating from a foreign telecommunication
company (i.e. Japan) reaches private respondent PLDTs network, it is private
respondent PLDT which decodes, augments and enhances the electronic impulses
back to the human voice/voice signal and provides the medium (i.e. electric
current) to enable the called party to receive the call. Without private respondent
PLDTs network, the human voice/voice signal of the calling party will never
reach the called party.
[16]



In the assailed Decision, it was conceded that in making the international
phone calls, the human voice is converted into electrical impulses or electric
current which are transmitted to the party called. A telephone call, therefore, is
electrical energy. It was also held in the assailed Decision that intangible property
such as electrical energy is capable of appropriation because it may be taken and
carried away. Electricity is personal property under Article 416 (3) of the Civil
Code, which enumerates forces of nature which are brought under control by
science.
[17]


Indeed, while it may be conceded that international long distance calls, the
matter alleged to be stolen in the instant case, take the form of electrical energy, it
cannot be said that such international long distance calls were personal properties
belonging to PLDT since the latter could not have acquired ownership over such
calls. PLDT merely encodes, augments, enhances, decodes and transmits said calls
using its complex communications infrastructure and facilities. PLDT not being
the owner of said telephone calls, then it could not validly claim that such
telephone calls were taken without its consent. It is the use of these
communications facilities without the consent of PLDT that constitutes the crime
of theft, which is the unlawful taking of the telephone services and business.

Therefore, the business of providing telecommunication and the telephone
service are personal property under Article 308 of the Revised Penal Code, and the
act of engaging in ISR is an act of subtraction penalized under said
article. However, the Amended Information describes the thing taken as,
international long distance calls, and only later mentions stealing the business
from PLDT as the manner by which the gain was derived by the accused. In
order to correct this inaccuracy of description, this case must be remanded to the
trial court and the prosecution directed to amend the Amended Information, to
clearly state that the property subject of the theft are the services and business of
respondent PLDT. Parenthetically, this amendment is not necessitated by a
mistake in charging the proper offense, which would have called for the dismissal
of the information under Rule 110, Section 14 and Rule 119, Section 19 of the
Revised Rules on Criminal Procedure. To be sure, the crime is properly designated
as one of theft. The purpose of the amendment is simply to ensure that the accused
is fully and sufficiently apprised of the nature and cause of the charge against him,
and thus guaranteed of his rights under the Constitution.

ACCORDINGLY, the motion for reconsideration is GRANTED. The
assailed Decision dated February 27, 2006 is RECONSIDERED and SET
ASIDE. The Decision of the Court of Appeals in CA-G.R. SP No. 68841
affirming the Order issued by Judge Zeus C. Abrogar of the Regional Trial Court
of Makati City, Branch 150, which denied the Motion to Quash (With Motion to
Defer Arraignment) in Criminal Case No. 99-2425 for theft, is AFFIRMED. The
case is remanded to the trial court and the Public Prosecutor of Makati City is
hereby DIRECTED to amend the Amended Information to show that the property
subject of the theft were services and business of the private offended party.

SO ORDERED.



CONSUELO YNARES-SANTIAGO
Associate Justice


WE CONCUR:



REYNATO S. PUNO
Chief Justice




LEONARDO A. QUISUMBING ANTONIO T. CARPIO
Associate Justice Associate Justice




MA. ALICIA AUSTRIA-MARTINEZ RENATO C. CORONA
Associate Justice Associate Justice




CONCHITA CARPIO MORALES ADOLFO S. AZCUNA
Associate Justice Associate Justice




DANTE O. TINGA MINITA V. CHICO-NAZARIO
Associate Justice Associate Justice




PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA
Associate Justice Associate Justice




TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION
Associate Justice Associate Justice










CERTI FI CATI ON


Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified
that the conclusions in the above Resolution were reached in consultation before
the case was assigned to the writer of the opinion of the Court.




REYNATO S. PUNO
Chief Justice






[1]
Rollo, p. 728.
[2]
Id. at 57-58.
[3]
15 Phil. 170 (1910).
[4]
21 Phil. 553 (1911).
[5]
41 Phil. 364 (1921).
[6]
Krivenko v. Register of Deeds, 79 Phil. 461 (1947).
[7]
People v. Mercado, 65 Phil. 665 (1938).
[8]
Id.; Duran v. Tan, 85 Phil 476 (1950).
[9]
Regalado, Criminal Law Conspectus (2000 ed.), p. 520.
[10]
G.R. No. L-14887, January 31, 1961, 1 SCRA 380.
[11]
11 N.E. 2d 403 (1937).
[12]
44 Phil. 933 (1922).
[13]
II Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines 26 (1992 ed.).
[14]
Rollo, p. 902.
[15]
Id. at 781-783; 832-837; 872, 874-877.
[16]
Id. at 875-877.
[17]
Supra note









EN BANC

[G.R. No. 6295. September 1, 1911.]

THE UNITED STATES, Plaintiff-Appellee, v. IGNACIO CARLOS, Defendant-Appellant.

A. D. Gibbs, for Appellant.

Acting Attorney-General Harvey, for Appellee.

SYLLABUS
1. ELECTRICITY; UNLAWFUL USE: OF ELECTRIC CURRENT; LARCENY. A person to whom an
electric light company furnishes electric current for lighting purposes, and who, by means of a
"jumper," uses electricity which does not pass through the meter installed for the purpose of
measuring the current used, thus depriving the company of such electric current, is guilty of
larceny.

D E C I S I O N

PER CURIAM:

The information filed in this case is as follows:jgc:chanrobles. com.ph

"The undersigned accuses Ignacio Carlos of the crime of theft, committed as follows:jgc:chanrobles.com.ph

"That on, during, and between the 13th day of February, 1909, and the 3d day of March, 1910, in
the city of Manila, Philippine Islands, the said Ignacio Carlos, with intent of gain and without
violence or intimidation against the person or force against the thing, did then and there, willfully,
unlawfully, and feloniously, take, steal, and carry away two thousand two hundred and seventy-
three (2,2~3) kilowatts of electric current, of the value of nine hundred and nine (909) pesos and
twenty (20) cents Philippine currency, the property of the Manila Electric Railroad and Light
Company, a corporation doing business in the Philippine Islands, without the consent of the owner
thereof; to the damage and prejudice of the said Manila Electric Railroad and Light Company in the
said sum of nine hundred and nine (909) pesos and twenty (20) cents Philippine currency, equal to
and the equivalent of 4,546 pesetas Philip pine currency. All contrary to law.

(Sgd. )L.M. SOUTHWORTH,

Prosecuting Attorney

"Subscribed and sworn to before me this 4th day of March, 1910, in the city of Manila, Philippine
Islands, by L. M. Southworth, prosecuting attorney for the city of Manila.

(Sgd.) "CHARLES S. LOBINGIER,

"Judge, First Instance.

"A preliminary investigation has heretofore been con ducted in this case, under my direction,
having examined the witnesses under oath, in accordance with the provisions of section 39 of Act

No. 183 of the Philippine Commission, as amended by section 2 of Act No. 6-12 of the Philippine
Commission.

(Sgd.) "L. M. SOUTHWORTH,

"Prosecuting Attorney.

"Subscribed and sworn to before me this 4th day of March, 1910, in the city of Manila, Philippine
Islands, by L. M. Southworth, prosecuting attorney for the city of Manila.

(Sgd.) "CHARLES S. LOBINGIER,

"Judge, First Instance."cralaw virtua1aw library

A warrant for the arrest of the defendant was issued by the Honorable J. C. Jenkins on the 4th of
March and placed in the hands of the sheriff. The sheriffs return shows that the defendant gave
bond for his appearance. On the 14th of the same month counsel for the defendant demurred to
the complaint on the following grounds:jgc:chanrobles.com.ph

"1. That the court has no jurisdiction over the person of the accused nor of the offense charged
because the accused has not been accorded a preliminary investigation or examination as required
by law and no court, magistrate, or other competent authority has determined from a sworn
complaint or evidence adduced that there is probable cause to believe that a crime has been
committed, or that this defendant has committed any crime.

"2. That the facts charged do not constitute a public offense."cralaw virtua1aw library

The demurrer was overruled on the same day and the defendant having refused to plead, a plea of
not guilty was entered by direction of the court for him and the trial proceeded.

After due consideration of all the proofs presented and the arguments of counsel the trial court
found the defendant guilty of the crime charged and sentenced him to one year eight months and
twenty-one days presidio correccional, to indemnify the offended party, The Manila Electric Rail
road and Light Company, in the sum of P865.26, to the corresponding subsidiary imprisonment in
case of insolvency and to the payment of the costs. From this judgment the defendant appealed
and makes the following assignments of error:chanrob1es vi rtual 1aw li brary
"I


"The court erred in overruling the objection of the accused to the jurisdiction of the court, because
he was not given a preliminary investigation as required by law, and in overruling his demurrer for
the same reason.
"II.


"The court erred in declaring the accused to be guilty, in view of the evidence submitted.
"III.


"The court erred in declaring that electrical energy may be stolen.
"IV.


"The court erred in not declaring that the plaintiff consented to the taking of the current.
"V


"The court erred in finding the accused guilty of more than one offense.
"VI.


"The court erred in condemning the accused to pay P15.26 to the electric company as damages."cralaw virtua1aw
library

Exactly the same question as that raised in the first assignment of error was, after a thorough
examination and due consideration, decided adversely to appellants contention in the case of U.
S. v. Grant and Kennedy (18 Phil. Rep., 122). No sufficient reason is presented why we should not
follow the doctrine enunciated in that case. The question raised in the second assignment of error
is purely one of fact. Upon this point the trial court said:jgc:chanrobles.com.ph

"For considerably more than a year previous to the filing of this complaint the accused had been a
consumer of electricity furnished by the Manila Electric Railroad and Light Company for a building
containing the residence of the accused and three other residences, and which was equipped,
according to the defendants testimony, with thirty electric lights. On March 15, 1909, the
representatives of the company, believing that more light was being used than their meter
showed, installed an additional meter (Exhibit A) on a pole outside of defendants house, and both
it and the meter (Exhibit B) which had been previously installed in the house were read on said
date. Exhibit A read 218 kilowatt hours; Exhibit B, 746 kilowatt hours. On March 3, 1910, each
was read again, Exhibit A showing 2,718 kilo watt hours and Exhibit B, 968. It is undisputed that
the current which supplied the house passed through both meters and the city electrician testifies
that each meter was tested on the date of the last reading and was "in good condition." The result
of this registration therefore is that while the outside meter (Exhibit A) showed a consumption in
defendants building of 2,500 kilowatt hours of electricity, the inside meter (Exhibit B) showed but
223 kilowatt hours. In other words the actual consumption, according to the outside meter, was
more than ten times as great as that registered by the one inside. (obviously this difference could
not be due to normal causes, for while the electrician called by the defense (Lanusa) testifies to
the possibility of a difference between two such meters, he places the extreme limit of such
difference between them at 5 per cent. Here, as we have seen. the difference is more than 900
per cent. Besides, according to the defendants electrician, the outside meter should normally run
faster, while according to the test made in this case the inside meter (Exhibit B) ran the faster.
The city electrician also testifies that the electric current could have been deflected from the inside
meter by placing thereon a device known as a jumper connecting the two outside wires, and
there is other testimony that there were marks on the insulation of the meter Exhibit B which
showed the use of such a device. There is further evidence that the consumption of 223 kilowatt
hours, registered by the inside meter would not be a reasonable amount for the number of lights
installed in defendants building during the period in question, and the accused fails to explain why
he should have had thirty lights installed if he needed but four or five.

"On the strength of this showing a search warrant was issued for the examination of defendants
premises and was duly served by a police officer (Hartpence). He was accompanied at the time by
three employees of the Manila Electric Railroad and Light Company, and he found there the
accused, his wife and son, and perhaps one or two others. There is a sharp conflict between the
several spectators on some points but on one there is no dispute. All agree that the jumper
(Exhibit C) was found in a drawer of a small cabinet in the room of defendants house where the
meter was installed and not more than 20 feet therefrom. In the absence of a satisfactory
explanation this constituted possession on defendants part, and such possession, under the Code
of Civil Procedure, section 334 (10), raises the presumption that the accused was the owner of a
device whose only use was to deflect the current from the meter.

"Is there any other satisfactory explanation of the jumpers presence? The only one sought to be
offered is the statement by the son of the accused, a boy of twelve years, that he saw the jumper
placed there by the witness Porter, an employee of the Light Company. The boy is the only witness
who so testifies and Porter himself squarely denies it. We can Dot agree with counsel for the
defense that the boys interest in the outcome of this case is less than that of the witnesses for the
prosecution. It seems to us that his natural desire to shield his father would far outweigh any
interest such an employee like Porter would have and which, at most, would be merely pecuniary.

"There is, however, one witness whom so far as appears, has no interest in the matter
whatsoever. This is officer Hartpence, who executed the search warrant. He testifies that after
inspecting other articles and places in the building as he and the other spectators, including the
accused, approached the cabinet in which the jumper was found, the officers attention was called
to the defendants appearance and the former noticed that the latter was becoming nervous.
Where the only two witnesses who are supposed to know anything of the matter thus contradict
each other this item of testimony by the officer is of more than ordinary significance; for if, as the
accused claims, the jumper was placed in the cabinet for the first time by Porter there would be
no occasion for any change of demeanor on the part of the accused. We do not think that the
officers declination to wait until defendant should secure a notary public shows bias. The presence
of such an official was neither required nor authorized by law and the very efficacy of a search
often depends upon its swiftness.

"We must also agree with the prosecuting attorney that the attending circumstances do not
strengthen the story told by the boy; that the latter would have been likely to call out at the time
he saw the jumper being placed in the drawer, or at least directed his fathers attention to it
immediately instead of waiting, as he says, until the latter was called by the officer. Finally, to
accept the boys story we must believe that this company or its representatives deliberately
conspired not merely to lure the defendant into the commission of a crime but to fasten upon him
a crime which he did not commit and thus convict an innocent man by perjured evidence. This is a
much more serious charge than that contained in the complaint and should be supported by very
strong corroborating circumstances which we do not find here. We are, accordingly, unable to
consider as satisfactory defendants explanation of the jumpers presence.

"The only alternative is the conclusion that the jumper was placed there by the accused or by
some one acting for him and that it was the instrument by which the current was deflected from
the meter Exhibit B and the Light Company deprived of its lawful compensation." After a careful
examination of the entire record we are satisfied beyond peradventure of a doubt that the proofs
presented fully support the facts as set forth in the fore- going finding.

Counsel for the appellant insists that only corporeal property can be the subject of the crime of
larceny, and in support of this proposition cites several authorities for the purpose of showing that
the only subjects of larceny are tangible, movable, chattels, something which could be taken in
possession and carried away, and which had some, although trifling, intrinsic value, and also to
show that electricity is an unknown force and can not be a subject of larceny.

In the case of U. S. v. Genato (15 Phil. Rep., 170) the defendant, the owner of the store situated
at No. 154 Escolta, Manila, was using a contrivance known as a "jumper" on the electric meter
installed by the Manila Electric Rail road and Light Company. As a result of the use of this "jumper"
the meter, instead of making one revolution in every four seconds, registered one in seventy-
seven seconds, thereby reducing the current approximately 95 per cent. Genato was charged in
the municipal court with a violation of a certain ordinance of the city of Manila, and was sentenced
to pay a fine of P200. He appealed to the Court of First Instance, was again tried and sentenced to
pay the same fine. An appeal was taken from the judgment of the Court of First Instance to the
Supreme Court on the ground that the ordinance in question was null and void. It is true that the
only question directly presented was that of the validity of the city ordinance. The court, after
holding that said ordinance was valid, said:jgc:chanrobles. com.ph

"Even without them (ordinances), the right of ownership of electric current is secured by articles
517 and 518 of the Penal Code; the application of these articles in cases of substraction of gas, a
fluid used for lighting, and in some respects resembling electricity, is confirmed by the rule laid
down in the decisions of the supreme court of Spain January 20, 1887, and April 1, 1897,
construing and enforcing the provisions of articles 530 and 531 of the penal code of that country,
articles identical with articles 517 and 518 of the code in force in these Islands."cralaw virtua1aw l ibrary

Article 517 of the Penal Code above referred to reads as follows:jgc:chanrobles. com.ph

"The following are guilty of larceny:jgc:chanrobles. com.ph

"(1) Those who with intent of gain and without violence or intimidation against the person, or force
against things, shall take anothers personal property without the owners consent."cralaw virtua1aw library

And article 518 fixes the penalty for larceny in proportion to the value of the personal property
stolen.

It is true that electricity is no longer, as formerly, regarded by electricians as a fluid, but its
manifestations and effects, like those of gas, may be seen and felt. The true test of what is a
proper subject of larceny seems to be not whether the subject is corporeal or incorporeal, but
whether it is capable of appropriation by another than the owner.

It is well-settled that illuminating gas may be the subject of larceny, even in the absence of a
statute so providing. (Decisions of supreme court of Spain, January 20, 1887. and April 1, 1897,
supra; also (England) Queen v. Firth, L. R. 1 C. C., 172, 11 Cox C. C., 234; Queen v. White, 3 C. &
K., 363, 6 Cox C. C., 213; Woods v. People, 222 Ill., 293, 7 L. R. A., 520; Commonwealth v.
Shaw, 4 Allen (Mass.) , 308; State v. Wellman, 34 Minn., 221, N. W. Rep., 385, and 25 Cyc., p.
12, note 10.)

In the case of Commonwealth v. Shaw, supra, the court, speaking through Chief Justice Bigelow,
said:jgc:chanrobles.com.ph

"There is nothing in the nature of gas used for illuminating purposes which renders it incapable of
being feloniously taken and carried away. It is a valuable article of merchandise, bought and sold
like other personal property, susceptible of being severed from a mass or larger quantity, and of
being transported from place to place. In the present case it appears that it was the property of
the Boston Gas Light Company; that it was in their possession by being confined in conduits and
tubes which belonged to them, and that the defendant severed a portion of that which was in the
pipes of the company by taking it into her house and there consuming it. All this being proved to
have been done by her secretly and with intent to deprive the company of their property and to
appropriate it to her own use, clearly constitutes the crime of larceny."cralaw virtua1aw library

Electricity, the same as gas, is a valuable article of merchandise, bought and sold like other
personal property and is capable of appropriation by another. So no error was committed by the
trial court in holding that electricity is a subject of larceny.

It is urged in support of the fourth assignment of error that if it be true that the appellant did
appropriate to his own use the electricity as charged he can not be held guilty of larceny for any
part of the electricity thus appropriated, after the first month, for the reason that the complaining
party, the Manila Electric Railroad and Light Company, knew of this misappropriation and
consented thereto.

The outside meter was installed on March 15, 1909, and read 218 kilowatt hours. On the same day
the inside meter was read and showed 745 kilowatt hours. Both meters were again read on March
3, 1910, and the outside one showed 2,718 kilowatt hours while the one on the inside only showed
968, the difference in consumption during this time being 2,277 kilowatt hours. The taking of this
cur rent continued over a period of one year, less twelve days.

Assuming that the company read both meters at the end of each month; that it knew the
defendant was misappropriating the current to that extent; and that it continued to furnish the
current, thereby giving the defendant an opportunity to continue the misappropriation still, we
think, that the defendant is criminally responsible for the taking of the whole amount, 2,277
kilowatt hours. The company had a contract with the defendant to furnish him with current for
lighting purposes. It could not stop the misappropriation without cutting off the current entirely. It
could not reduce the current so as to just furnish sufficient for the lighting of two, three, or five
lights, as claimed by the defendant that he used during the most of this times but the current
must always be sufficiently strong to furnish current for the thirty lights, at any time the defendant
desired to use them.

There is no pretense that the accused was solicited by the company or any one else to commit the
acts charged At most there was a mere passive submission on the part of the company that the
current should be taken and no indication that it wished it to be taken, and no knowledge by the
defendant that the company wished him to take the current, and no mutual understanding
between the company and the defendant, and no measures of induce ment of any kind were
employed by the company for the purpose of leading the defendant into temptation, and no
preconcert whatever between him and the company: The original design to misappropriate this
current was formed by the defendant absolutely independent of any acts on the part of the
company or its agents. It is true, no doubt, as a general proposition, that larceny is not committed
when the property is taken with the consent of its owner. It may be difficult in some instances to
determine whether certain acts constitute, in law, such "consent." But under the facts in the case
at bar it is not difficult to reach a conclusion that the acts performed by the plaintiff company did
not constitute a consent on its part that the defendant take its property. We have been unable to
find a well considered case holding a contrary opinion under similar facts, but, there are numerous
cases holding that such acts do not constitute such consent as would relieve the taker of criminal
responsibility. The fourth assignment of error is, therefore, not well founded.

It is also contended that since the "jumper" was not used continuously, the defendant committed
not a single offense but a series of offenses. It is, no doubt, true that the defendant did not allow
the "jumper" to remain in place continuously for any number of days as the company inspected
monthly the inside meter. So the "jumper" was put on and taken off at least monthly, if not daily,
in order to avoid detection, and while the "jumper" was off the defendant was not
misappropriating the current. The complaint alleged that the defendant did on, during, and
between the 13th day of February, 1909, and the 3d of March, 1910, willfully, unlawfully, and
feloniously take, steal, and carry away 2,277 kilowatts of electric current of the value of P909. No
demurrer was presented against this complaint on the ground that more than one crime was
charged. The Government had no opportunity to amend or correct this error, if error at all. In the
case of U. S. v. Macaspac (12 Phil. Rep., 26), the defendant received from one Joaquina Punu the
sum of P31.50, with the request to deliver it to Marcelina Dy-Oco. The defendant called upon
Marcelina, but instead of delivering the said amount she asked Marcelina for P30 in the name of
Joaquina who had in no way authorized her to do so. Marcelina gave her P30, believing that
Joaquina had sent for it. Counsel for the defendant insisted that the complaint charged his client
with two different crimes of estafa in violation of section 11 of General Orders, No. 58. In
disposing of this question this court said:jgc:chanrobles.com.ph

"The said defect constitutes one of the dilatory pleas indicated by section 21, and the accused
ought to have raised the point before the trial began. Had this been done, the complaint might
have been amended in time, because it is merely a defect of form easily remedies. . . . Inasmuch
as in the first instance the accused did not make the corresponding dilatory plea to the irregularity
of the complaint, it must be understood that she has waived such objection, and is not now
entitled to raise for the first time any question in reference thereto when submitting to this court
her assignment of errors. Apart from the fact that the defense does not pretend that any of the
essential rights of the accused have been injured, the allegation of the defect above alluded to,
which in any case would only affect the form of the complaint, can not justify a reversal of the
judgment appealed from, according to the provisions of section 10 of General Orders, No. 58."cralaw virtua1aw l ibrary

In the case at bar it is not pointed out wherein any of the essential rights of the defendant have
been prejudiced by reason of the fact that the complaint covered the entire period. If twelve
distinct and separate complaints had been filed against the defendant, one for each month, the
sum total of the penalties imposed might have been very much greater than that imposed by the
court in this case. The covering of the entire period by one charge has been beneficial, if anything,
and not prejudicial to the rights of the defendant. The prosecuting attorney elected to cover the
entire period with one charge and the accused having been convicted for this offense, he can not
again be prosecuted for the stealing of the current at any time within that period. Then, again, we
are of the opinion that the charge was properly laid. The electricity was stolen from the same
person, in the same manner, and in the same place. It was substantially one continuous act,
although the "jumper" might have been removed and replaced daily or monthly. The defendant
was moved by one impulse to appropriate to his own use the current, and the means adopted by
him for the taking of the current were in the execution of a general fraudulent plan.

"A person stole gas for the use of a manufactory by means of a pipe, which drew off the gas from
the main without allowing it to pass through the meter. The gas from this pipe was burnt
everyday, and turned off at night. The pipe was never closed at its junction with the main, and
consequently always remained full of gas. It was held, that if the pipe always remained full, there
was, in fact, a continuous taking of the gas and not a series of separate takings. It was held also
that even if the pipe had not been kept full, the taking would have been continuous, as it was
substantially all one transaction." (Regina v. Firth, L. R., 1 C. C., 172; 11 Cox C. C., 234. Cited on
p. 758 of Whartons Criminal-Law, vol. 1, 10th ed.)

The value of the electricity taken by the defendant was found by the trial court to be P865.26. This
finding is fully in accordance with the evidence presented. So no error was committed in
sentencing the defendant to indemnify the company in this amount, or to suffer the corresponding
subsidiary imprisonment in case of insolvency.

The judgment being strictly in accordance with the law and the merits of the case, same is hereby
affirmed, with costs against the Appellant.

Arellano, C.J., Torres, Mapa, and Carson, JJ.,





















Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 18520 September 26, 1922
INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER, appellee,
vs.
ILDEFONSO RAMIREZ, creditor and appellant.
WILLIAM EDMONDS, assignee.
Lim & Lim for appellant.
Ross & Lawrence and Antonio T. Carrascoso, jr., for the Fidelity & Surety Co.
ROMUALDEZ, J .:
The question at issue in this appeal is, which of the two mortgages here in question must be given
preference? Is it the one in favor of the Fidelity & Surety Co., or that in favor of Ildefonso Ramirez.
The first was declared by the trial court to be entitled to preference.
In the lower court there were three mortgagees each of whom claimed preference. They were the
two above mentioned and Concepcion Ayala. The latter's claim was rejected by the trial court, and
from that ruling she did not appeal.
There is no question as to the priority in time of the mortgage in favor of the Fidelity & Surety Co.
which was executed on March 10, 1919, and registered in due time in the registry of property, that in
favor of the appellant being dated September 22, 1919, and registered also in the registry.
The appellant claims preference on these grounds: (a) That the first mortgage above-mentioned is
not valid because the property which is the subject-matter thereof is not capable of being mortgaged,
and the description of said property is not sufficient; and (b) that the amount due the appellant is a
purchase price, citing article 1922 of the Civil Code in support thereof, and that his mortgage is but a
modification of the security given by the debtor on February 15, 1919, that is, prior to the mortgage
executed in favor of the Fidelity & Surety Co.
As to the first ground, the thing that was mortgaged to this corporation is described in the document
as follows:
. . . his half interest in the drug business known as Antigua Botica Ramirez (owned by Srta.
Dolores del Rosario and the mortgagor herein referred to as the partnership), located at
Calle Real Nos. 123 and 125, District of Intramuros, Manila, Philippine Islands.
With regard to the nature of the property thus mortgaged, which is one-half interest in the business
above described, such interest is a personal property capable of appropriation and not included in
the enumeration of real properties in article 335 of the Civil Code, and may be the subject of
mortgage. All personal property may be mortgaged. (Sec. 2, Act No. 1508.)
The description contained in the document is sufficient. The law (sec. 7, Act No. 1508) requires only
a description of the following nature:
The description of the mortgaged property shall be such as to enable the parties to the
mortgage, or any other person, after reasonable inquiry and investigation, to identify the
same.
Turning to the second error assigned, numbers 1, 2, and 3 of article 1922 of the Civil Code invoked
by the appellant are not applicable. Neither he, as debtor, nor the debtor himself, is in possession of
the property mortgaged, which is, and since the registration of the mortgage has been, legally in
possession of the Fidelity & Surety Co. (Sec. 4, Act No. 1508; Meyers vs. Thein, 15 Phil., 303.)
In no way can the mortgage executed in favor of the appellant on September 22, 1919, be given
effect as of February 15, 1919, the date of the sale of the drug store in question. On the 15th of
February of that year, there was a stipulation about a persons security, but not a mortgage upon any
property, and much less upon the property in question.
Moreover, the appellant cannot deny the preferential character of the mortgage in favor of the
Fidelity & Surety Co. because in the very document executed in his favor it was stated that his
mortgage was a second mortgage, subordinate to the one made in favor of the Fidelity & Surety Co.
The judgment appealed from is affirmed with costs against the appellant. So ordered.
Araullo, C.J., Street, Malcolm, Avancea, Villamor, Ostrand and Johns, JJ., concur.















EN BANC


LUIS MARCOS P. LAUREL, G.R. No. 155076
Petitioner,
Present:

Puno, C.J.,
Quisumbing,
Ynares-Santiago,
Carpio,
- versus - Austria-Martinez,
Corona,
Carpio Morales,
Azcuna,
Tinga,
Chico-Nazario,
Velasco, Jr.,
Nachura,
Leonardo-De Castro, and
Brion, JJ.
HON. ZEUS C. ABROGAR,
Presiding Judge of the Regional
Trial Court, Makati City, Branch 150,
PEOPLE OF THE PHILIPPINES Promulgated:
& PHILIPPINE LONG DISTANCE
TELEPHONE COMPANY,
Respondents. January 13, 2009

x ---------------------------------------------------------------------------------------- x

RESOLUTI ON

YNARES-SANTIAGO, J .:


On February 27, 2006, this Courts First Division rendered judgment in this
case as follows:

IN LIGHT OF ALL THE FOREGOING, the petition
is GRANTED. The assailed Orders of the Regional Trial Court and the Decision
of the Court of Appeals are REVERSED and SET ASIDE. The Regional Trial
Court is directed to issue an order granting the motion of the petitioner to quash
the Amended Information.

SO ORDERED.
[1]


By way of brief background, petitioner is one of the accused in Criminal
Case No. 99-2425, filed with the Regional Trial Court of Makati City, Branch
150. The Amended Information charged the accused with theft under Article 308
of the Revised Penal Code, committed as follows:

On or about September 10-19, 1999, or prior thereto in Makati City, and
within the jurisdiction of this Honorable Court, the accused, conspiring and
confederating together and all of them mutually helping and aiding one another,
with intent to gain and without the knowledge and consent of the Philippine Long
Distance Telephone (PLDT), did then and there willfully, unlawfully and
feloniously take, steal and use the international long distance calls belonging to
PLDT by conducting International Simple Resale (ISR), which is a method of
routing and completing international long distance calls using lines, cables,
antenae, and/or air wave frequency which connect directly to the local or
domestic exchange facilities of the country where the call is destined, effectively
stealing this business from PLDT while using its facilities in the estimated amount
of P20,370,651.92 to the damage and prejudice of PLDT, in the said amount.

CONTRARY TO LAW.
[2]


Petitioner filed a Motion to Quash (with Motion to Defer Arraignment),
on the ground that the factual allegations in the Amended Information do not
constitute the felony of theft. The trial court denied the Motion to Quash the
Amended Information, as well petitioners subsequent Motion for Reconsideration.

Petitioners special civil action for certiorari was dismissed by the Court of
Appeals. Thus, petitioner filed the instant petition for review with this Court.

In the above-quoted Decision, this Court held that the Amended Information
does not contain material allegations charging petitioner with theft of personal
property since international long distance calls and the business of providing
telecommunication or telephone services are not personal properties under Article
308 of the Revised Penal Code.

Respondent Philippine Long Distance Telephone Company (PLDT) filed a
Motion for Reconsideration with Motion to Refer the Case to the Supreme Court
En Banc. It maintains that the Amended Information charging petitioner with theft
is valid and sufficient; that it states the names of all the accused who were
specifically charged with the crime of theft of PLDTs international calls and
business of providing telecommunication or telephone service on or about
September 10 to 19, 1999 in Makati City by conducting ISR or International
Simple Resale; that it identifies the international calls and business of providing
telecommunication or telephone service of PLDT as the personal properties which
were unlawfully taken by the accused; and that it satisfies the test of sufficiency as
it enabled a person of common understanding to know the charge against him and
the court to render judgment properly.

PLDT further insists that the Revised Penal Code should be interpreted in
the context of the Civil Codes definition of real and personal property. The
enumeration of real properties in Article 415 of the Civil Code is exclusive such
that all those not included therein are personal properties. Since Article 308 of the
Revised Penal Code used the words personal property without qualification, it
follows that all personal properties as understood in the context of the Civil
Code, may be the subject of theft under Article 308 of the Revised Penal
Code. PLDT alleges that the international calls and business of providing
telecommunication or telephone service are personal properties capable of
appropriation and can be objects of theft.

PLDT also argues that taking in relation to theft under the Revised Penal
Code does not require asportation, the sole requisite being that the object should
be capable of appropriation. The element of taking referred to in Article 308
of the Revised Penal Code means the act of depriving another of the possession
and dominion of a movable coupled with the intention, at the time of the taking,
of withholding it with the character of permanency. There must be intent to
appropriate, which means to deprive the lawful owner of the thing. Thus, the term
personal properties under Article 308 of the Revised Penal Code is not limited to
only personal properties which are susceptible of being severed from a mass or
larger quantity and of being transported from place to place.

PLDT likewise alleges that as early as the 1930s, international telephone
calls were in existence; hence, there is no basis for this Courts finding that the
Legislature could not have contemplated the theft of international telephone calls
and the unlawful transmission and routing of electronic voice signals or impulses
emanating from such calls by unlawfully tampering with the telephone device as
within the coverage of the Revised Penal Code.

According to respondent, the international phone calls which are electric
currents or sets of electric impulses transmitted through a medium, and carry a
pattern representing the human voice to a receiver, are personal properties which
may be subject of theft. Article 416(3) of the Civil Code deems forces of nature
(which includes electricity) which are brought under the control by science, are
personal property.

In his Comment to PLDTs motion for reconsideration, petitioner Laurel
claims that a telephone call is a conversation on the phone or a communication
carried out using the telephone. It is not synonymous to electric current or
impulses. Hence, it may not be considered as personal property susceptible of
appropriation. Petitioner claims that the analogy between generated electricity and
telephone calls is misplaced. PLDT does not produce or generate telephone
calls. It only provides the facilities or services for the transmission and switching
of the calls. He also insists that business is not personal property. It is not the
business that is protected but the right to carry on a business. This right is
what is considered as property. Since the services of PLDT cannot be considered
as property, the same may not be subject of theft.

The Office of the Solicitor General (OSG) agrees with respondent PLDT
that international phone calls and the business or service of providing
international phone calls are subsumed in the enumeration and definition of
personal property under the Civil Code hence, may be proper subjects of theft. It
noted that the cases of United States v. Genato,
[3]
United States v.
Carlos
[4]
and United States v. Tambunting,
[5]
which recognized intangible
properties like gas and electricity as personal properties, are deemed incorporated
in our penal laws. Moreover, the theft provision in the Revised Penal Code was
deliberately couched in broad terms precisely to be all-encompassing and
embracing even such scenario that could not have been easily anticipated.

According to the OSG, prosecution under Republic Act (RA) No. 8484 or
the Access Device Regulations Act of 1998 and RA 8792 or the Electronic
Commerce Act of 2000 does not preclude prosecution under the Revised Penal
Code for the crime of theft. The latter embraces unauthorized appropriation or use
of PLDTs international calls, service and business, for personal profit or gain, to
the prejudice of PLDT as owner thereof. On the other hand, the special laws
punish the surreptitious and advanced technical means employed to illegally obtain
the subject service and business. Even assuming that the correct indictment should
have been under RA 8484, the quashal of the information would still not be
proper. The charge of theft as alleged in the Information should be taken in
relation to RA 8484 because it is the elements, and not the designation of the
crime, that control.

Considering the gravity and complexity of the novel questions of law
involved in this case, the Special First Division resolved to refer the same to the
Banc.

We resolve to grant the Motion for Reconsideration but remand the case to
the trial court for proper clarification of the Amended Information.

Article 308 of the Revised Penal Code provides:

Art. 308. Who are liable for theft. Theft is committed by any person
who, with intent to gain but without violence against, or intimidation of persons
nor force upon things, shall take personal property of another without the latters
consent.


The elements of theft under Article 308 of the Revised Penal Code are as
follows: (1) that there be taking of personal property; (2) that said property belongs
to another; (3) that the taking be done with intent to gain; (4) that the taking be
done without the consent of the owner; and (5) that the taking be accomplished
without the use of violence against or intimidation of persons or force upon things.

Prior to the passage of the Revised Penal Code on December 8, 1930, the
definition of the term personal property in the penal code provision on theft had
been established in Philippine jurisprudence. This Court, in United States v.
Genato, United States v. Carlos, and United States v. Tambunting, consistently
ruled that any personal property, tangible or intangible, corporeal or
incorporeal, capable of appropriation can be the object of theft.

Moreover, since the passage of the Revised Penal Code on December 8,
1930, the term personal property has had a generally accepted definition in civil
law. In Article 335 of the Civil Code of Spain, personal property is defined as
anything susceptible of appropriation and not included in the foregoing chapter
(not real property). Thus, the term personal property in the Revised Penal
Code should be interpreted in the context of the Civil Code provisions in
accordance with the rule on statutory construction that where words have been
long used in a technical sense and have been judicially construed to have a certain
meaning, and have been adopted by the legislature as having a certain meaning
prior to a particular statute, in which they are used, the words used in such statute
should be construed according to the sense in which they have been previously
used.
[6]
In fact, this Court used the Civil Code definition of personal property in
interpreting the theft provision of the penal code in United States v. Carlos.

Cognizant of the definition given by jurisprudence and the Civil Code of
Spain to the term personal property at the time the old Penal Code was being
revised, still the legislature did not limit or qualify the definition of personal
property in the Revised Penal Code. Neither did it provide a restrictive definition
or an exclusive enumeration of personal property in the Revised Penal Code,
thereby showing its intent to retain for the term an extensive and unqualified
interpretation. Consequently, any property which is not included in the
enumeration of real properties under the Civil Code and capable of appropriation
can be the subject of theft under the Revised Penal Code.

The only requirement for a personal property to be the object of theft under
the penal code is that it be capable of appropriation. It need not be capable of
asportation, which is defined as carrying away.
[7]
Jurisprudence is settled that
to take under the theft provision of the penal code does not require asportation or
carrying away.
[8]


To appropriate means to deprive the lawful owner of the thing.
[9]
The word
take in the Revised Penal Code includes any act intended to transfer possession
which, as held in the assailed Decision, may be committed through the use of the
offenders own hands, as well as any mechanical device, such as an access device
or card as in the instant case. This includes controlling the destination of the
property stolen to deprive the owner of the property, such as the use of a meter
tampering, as held in Natividad v. Court of Appeals,
[10]
use of a device to
fraudulently obtain gas, as held in United States v. Tambunting, and the use of a
jumper to divert electricity, as held in the cases of United States v. Genato, United
States v. Carlos, and United States v. Menagas.
[11]



As illustrated in the above cases, appropriation of forces of nature which are
brought under control by science such as electrical energy can be achieved by
tampering with any apparatus used for generating or measuring such forces of
nature, wrongfully redirecting such forces of nature from such apparatus, or using
any device to fraudulently obtain such forces of nature. In the instant case,
petitioner was charged with engaging in International Simple Resale (ISR) or the
unauthorized routing and completing of international long distance calls using
lines, cables, antennae, and/or air wave frequency and connecting these calls
directly to the local or domestic exchange facilities of the country where destined.

As early as 1910, the Court declared in Genato that ownership over
electricity (which an international long distance call consists of), as well
as telephone service, is protected by the provisions on theft of the Penal Code. The
pertinent provision of the Revised Ordinance of the City of Manila, which was
involved in the said case, reads as follows:

Injury to electric apparatus; Tapping current; Evidence. No person shall
destroy, mutilate, deface, or otherwise injure or tamper with any wire, meter, or
other apparatus installed or used for generating, containing, conducting, or
measuring electricity, telegraph or telephone service, nor tap or otherwise
wrongfully deflect or take any electric current from such wire, meter, or other
apparatus.

No person shall, for any purpose whatsoever, use or enjoy the benefits of
any device by means of which he may fraudulently obtain any current of
electricity or any telegraph or telephone service; and the existence in any building
premises of any such device shall, in the absence of satisfactory explanation, be
deemed sufficient evidence of such use by the persons benefiting thereby.


It was further ruled that even without the above ordinance the acts of
subtraction punished therein are covered by the provisions on theft of the Penal
Code then in force, thus:

Even without them (ordinance), the right of the ownership of electric
current is secured by articles 517 and 518 of the Penal Code; the application of
these articles in cases of subtraction of gas, a fluid used for lighting, and in some
respects resembling electricity, is confirmed by the rule laid down in the decisions
of the supreme court of Spain of January 20, 1887, and April 1, 1897, construing
and enforcing the provisions of articles 530 and 531 of the Penal Code of that
country, articles 517 and 518 of the code in force in these islands.

The acts of subtraction include: (a) tampering with any wire, meter, or
other apparatus installed or used for generating, containing, conducting, or
measuring electricity, telegraph or telephone service; (b) tapping or otherwise
wrongfully deflecting or taking any electric current from such wire, meter, or other
apparatus; and (c) using or enjoying the benefits of any device by means of which
one may fraudulently obtain any current of electricity or any telegraph or telephone
service.

In the instant case, the act of conducting ISR operations by illegally
connecting various equipment or apparatus to private respondent PLDTs
telephone system, through which petitioner is able to resell or re-route international
long distance calls using respondent PLDTs facilities constitutes all three acts of
subtraction mentioned above.

The business of providing telecommunication or telephone service is
likewise personal property which can be the object of theft under Article 308 of the
Revised Penal Code. Business may be appropriated under Section 2 of Act No.
3952 (Bulk Sales Law), hence, could be object of theft:

Section 2. Any sale, transfer, mortgage, or assignment of a stock of
goods, wares, merchandise, provisions, or materials otherwise than in the ordinary
course of trade and the regular prosecution of the business of the vendor,
mortgagor, transferor, or assignor, or any sale, transfer, mortgage, or assignment
of all, or substantially all, of the business or trade theretofore conducted by the
vendor, mortgagor, transferor or assignor, or all, or substantially all, of the
fixtures and equipment used in and about the business of the vendor, mortgagor,
transferor, or assignor, shall be deemed to be a sale and transfer in bulk, in
contemplation of the Act. x x x.


In Strochecker v. Ramirez,
[12]
this Court stated:

With regard to the nature of the property thus mortgaged which is one-half
interest in the business above described, such interest is a personal property
capable of appropriation and not included in the enumeration of real properties in
article 335 of the Civil Code, and may be the subject of mortgage.


Interest in business was not specifically enumerated as personal property in
the Civil Code in force at the time the above decision was rendered. Yet, interest
in business was declared to be personal property since it is capable of appropriation
and not included in the enumeration of real properties. Article 414 of the Civil
Code provides that all things which are or may be the object of appropriation are
considered either real property or personal property. Business is likewise not
enumerated as personal property under the Civil Code. Just like interest in
business, however, it may be appropriated. Following the ruling in Strochecker v.
Ramirez, business should also be classified as personal property. Since it is not
included in the exclusive enumeration of real properties under Article 415, it is
therefore personal property.
[13]


As can be clearly gleaned from the above disquisitions, petitioners acts
constitute theft of respondent PLDTs business and service, committed by means
of the unlawful use of the latters facilities. In this regard, the Amended
Information inaccurately describes the offense by making it appear that what
petitioner took were the international long distance telephone calls, rather than
respondent PLDTs business.

A perusal of the records of this case readily reveals that petitioner and
respondent PLDT extensively discussed the issue of ownership of telephone
calls. The prosecution has taken the position that said telephone calls belong to
respondent PLDT. This is evident from its Comment where it defined the issue of
this case as whether or not the unauthorized use or appropriation of PLDT
international telephone calls, service and facilities, for the purpose of generating
personal profit or gain that should have otherwise belonged to PLDT, constitutes
theft.
[14]


In discussing the issue of ownership, petitioner and respondent PLDT gave
their respective explanations on how a telephone call is generated.
[15]
For its part,
respondent PLDT explains the process of generating a telephone call as follows:

38. The role of telecommunication companies is not limited to merely
providing the medium (i.e. the electric current) through which the human
voice/voice signal of the caller is transmitted. Before the human voice/voice
signal can be so transmitted, a telecommunication company, using its facilities,
must first break down or decode the human voice/voice signal into electronic
impulses and subject the same to further augmentation and enhancements. Only
after such process of conversion will the resulting electronic impulses be
transmitted by a telecommunication company, again, through the use of its
facilities. Upon reaching the destination of the call, the telecommunication
company will again break down or decode the electronic impulses back to human
voice/voice signal before the called party receives the same. In other words, a
telecommunication company both converts/reconverts the human voice/voice
signal and provides the medium for transmitting the same.

39. Moreover, in the case of an international telephone call, once the
electronic impulses originating from a foreign telecommunication company
country (i.e. Japan) reaches the Philippines through a local telecommunication
company (i.e. private respondent PLDT), it is the latter which decodes, augments
and enhances the electronic impulses back to the human voice/voice signal and
provides the medium (i.e. electric current) to enable the called party to receive the
call. Thus, it is not true that the foreign telecommunication company provides (1)
the electric current which transmits the human voice/voice signal of the caller and
(2) the electric current for the called party to receive said human voice/voice
signal.

40. Thus, contrary to petitioner Laurels assertion, once the electronic
impulses or electric current originating from a foreign telecommunication
company (i.e. Japan) reaches private respondent PLDTs network, it is private
respondent PLDT which decodes, augments and enhances the electronic impulses
back to the human voice/voice signal and provides the medium (i.e. electric
current) to enable the called party to receive the call. Without private respondent
PLDTs network, the human voice/voice signal of the calling party will never
reach the called party.
[16]



In the assailed Decision, it was conceded that in making the international
phone calls, the human voice is converted into electrical impulses or electric
current which are transmitted to the party called. A telephone call, therefore, is
electrical energy. It was also held in the assailed Decision that intangible property
such as electrical energy is capable of appropriation because it may be taken and
carried away. Electricity is personal property under Article 416 (3) of the Civil
Code, which enumerates forces of nature which are brought under control by
science.
[17]


Indeed, while it may be conceded that international long distance calls, the
matter alleged to be stolen in the instant case, take the form of electrical energy, it
cannot be said that such international long distance calls were personal properties
belonging to PLDT since the latter could not have acquired ownership over such
calls. PLDT merely encodes, augments, enhances, decodes and transmits said calls
using its complex communications infrastructure and facilities. PLDT not being
the owner of said telephone calls, then it could not validly claim that such
telephone calls were taken without its consent. It is the use of these
communications facilities without the consent of PLDT that constitutes the crime
of theft, which is the unlawful taking of the telephone services and business.

Therefore, the business of providing telecommunication and the telephone
service are personal property under Article 308 of the Revised Penal Code, and the
act of engaging in ISR is an act of subtraction penalized under said
article. However, the Amended Information describes the thing taken as,
international long distance calls, and only later mentions stealing the business
from PLDT as the manner by which the gain was derived by the accused. In
order to correct this inaccuracy of description, this case must be remanded to the
trial court and the prosecution directed to amend the Amended Information, to
clearly state that the property subject of the theft are the services and business of
respondent PLDT. Parenthetically, this amendment is not necessitated by a
mistake in charging the proper offense, which would have called for the dismissal
of the information under Rule 110, Section 14 and Rule 119, Section 19 of the
Revised Rules on Criminal Procedure. To be sure, the crime is properly designated
as one of theft. The purpose of the amendment is simply to ensure that the accused
is fully and sufficiently apprised of the nature and cause of the charge against him,
and thus guaranteed of his rights under the Constitution.

ACCORDINGLY, the motion for reconsideration is GRANTED. The
assailed Decision dated February 27, 2006 is RECONSIDERED and SET
ASIDE. The Decision of the Court of Appeals in CA-G.R. SP No. 68841
affirming the Order issued by Judge Zeus C. Abrogar of the Regional Trial Court
of Makati City, Branch 150, which denied the Motion to Quash (With Motion to
Defer Arraignment) in Criminal Case No. 99-2425 for theft, is AFFIRMED. The
case is remanded to the trial court and the Public Prosecutor of Makati City is
hereby DIRECTED to amend the Amended Information to show that the property
subject of the theft were services and business of the private offended party.

SO ORDERED.



CONSUELO YNARES-SANTIAGO
Associate Justice


WE CONCUR:



REYNATO S. PUNO
Chief Justice




LEONARDO A. QUISUMBING ANTONIO T. CARPIO
Associate Justice Associate Justice




MA. ALICIA AUSTRIA-MARTINEZ RENATO C. CORONA
Associate Justice Associate Justice




CONCHITA CARPIO MORALES ADOLFO S. AZCUNA
Associate Justice Associate Justice




DANTE O. TINGA MINITA V. CHICO-NAZARIO
Associate Justice Associate Justice




PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA
Associate Justice Associate Justice




TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION
Associate Justice Associate Justice










CERTI FI CATI ON


Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified
that the conclusions in the above Resolution were reached in consultation before
the case was assigned to the writer of the opinion of the Court.




REYNATO S. PUNO
Chief Justice






[1]
Rollo, p. 728.
[2]
Id. at 57-58.
[3]
15 Phil. 170 (1910).
[4]
21 Phil. 553 (1911).
[5]
41 Phil. 364 (1921).
[6]
Krivenko v. Register of Deeds, 79 Phil. 461 (1947).
[7]
People v. Mercado, 65 Phil. 665 (1938).
[8]
Id.; Duran v. Tan, 85 Phil 476 (1950).
[9]
Regalado, Criminal Law Conspectus (2000 ed.), p. 520.
[10]
G.R. No. L-14887, January 31, 1961, 1 SCRA 380.
[11]
11 N.E. 2d 403 (1937).
[12]
44 Phil. 933 (1922).
[13]
II Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines 26 (1992 ed.).
[14]
Rollo, p. 902.
[15]
Id. at 781-783; 832-837; 872, 874-877.
[16]
Id. at 875-877.
[17]
Supra note 13.



Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 155650 July 20, 2006
MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner,
vs.
COURT OF APPEALS, CITY OF PARAAQUE, CITY MAYOR OF PARAAQUE,
SANGGUNIANG PANGLUNGSOD NG PARAAQUE, CITY ASSESSOR OF PARAAQUE, and
CITY TREASURER OF PARAAQUE, respondents.
D E C I S I O N
CARPIO, J .:
The Antecedents
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International
Airport (NAIA) Complex in Paraaque City under Executive Order No. 903, otherwise known as
the Revised Charter of the Manila International Airport Authority ("MIAA Charter"). Executive Order
No. 903 was issued on 21 July 1983 by then President Ferdinand E. Marcos. Subsequently,
Executive Order Nos. 909
1
and 298
2
amended the MIAA Charter.
As operator of the international airport, MIAA administers the land, improvements and equipment
within the NAIA Complex. The MIAA Charter transferred to MIAA approximately 600 hectares of
land,
3
including the runways and buildings ("Airport Lands and Buildings") then under the Bureau of
Air Transportation.
4
The MIAA Charter further provides that no portion of the land transferred to
MIAA shall be disposed of through sale or any other mode unless specifically approved by the
President of the Philippines.
5

On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No.
061. The OGCC opined that the Local Government Code of 1991 withdrew the exemption from real
estate tax granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA negotiated with
respondent City of Paraaque to pay the real estate tax imposed by the City. MIAA then paid some
of the real estate tax already due.
On 28 June 2001, MIAA received Final Notices of Real Estate Tax Delinquency from the City of
Paraaque for the taxable years 1992 to 2001. MIAA's real estate tax delinquency is broken down as
follows:
TAX
DECLARATION
TAXABLE YEAR TAX DUE PENALTY TOTAL
E-016-01370 1992-2001 19,558,160.00 11,201,083.20 30,789,243.20
E-016-01374 1992-2001 111,689,424.90 68,149,479.59 179,838,904.49
E-016-01375 1992-2001 20,276,058.00 12,371,832.00 32,647,890.00
E-016-01376 1992-2001 58,144,028.00 35,477,712.00 93,621,740.00
E-016-01377 1992-2001 18,134,614.65 11,065,188.59 29,199,803.24
E-016-01378 1992-2001 111,107,950.40 67,794,681.59 178,902,631.99
E-016-01379 1992-2001 4,322,340.00 2,637,360.00 6,959,700.00
E-016-01380 1992-2001 7,776,436.00 4,744,944.00 12,521,380.00
*E-016-013-85 1998-2001 6,444,810.00 2,900,164.50 9,344,974.50
*E-016-01387 1998-2001 34,876,800.00 5,694,560.00 50,571,360.00
*E-016-01396 1998-2001 75,240.00 33,858.00 109,098.00
GRAND TOTAL

P392,435,861.95 P232,070,863.47 P 624,506,725.42
1992-1997 RPT was paid on Dec. 24, 1997 as per O.R.#9476102 for P4,207,028.75
#9476101 for P28,676,480.00
#9476103 for P49,115.00
6

On 17 July 2001, the City of Paraaque, through its City Treasurer, issued notices of levy and
warrants of levy on the Airport Lands and Buildings. The Mayor of the City of Paraaque threatened
to sell at public auction the Airport Lands and Buildings should MIAA fail to pay the real estate tax
delinquency. MIAA thus sought a clarification of OGCC Opinion No. 061.
On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC Opinion No. 061. The OGCC
pointed out that Section 206 of the Local Government Code requires persons exempt from real
estate tax to show proof of exemption. The OGCC opined that Section 21 of the MIAA Charter is the
proof that MIAA is exempt from real estate tax.
On 1 October 2001, MIAA filed with the Court of Appeals an original petition for prohibition and
injunction, with prayer for preliminary injunction or temporary restraining order. The petition sought to
restrain the City of Paraaque from imposing real estate tax on, levying against, and auctioning for
public sale the Airport Lands and Buildings. The petition was docketed as CA-G.R. SP No. 66878.
On 5 October 2001, the Court of Appeals dismissed the petition because MIAA filed it beyond the
60-day reglementary period. The Court of Appeals also denied on 27 September 2002 MIAA's
motion for reconsideration and supplemental motion for reconsideration. Hence, MIAA filed on 5
December 2002 the present petition for review.
7

Meanwhile, in January 2003, the City of Paraaque posted notices of auction sale at the Barangay
Halls of Barangays Vitalez, Sto. Nio, and Tambo, Paraaque City; in the public market of Barangay
La Huerta; and in the main lobby of the Paraaque City Hall. The City of Paraaque published the
notices in the 3 and 10 January 2003 issues of the Philippine Daily Inquirer, a newspaper of general
circulation in the Philippines. The notices announced the public auction sale of the Airport Lands and
Buildings to the highest bidder on 7 February 2003, 10:00 a.m., at the Legislative Session Hall
Building of Paraaque City.
A day before the public auction, or on 6 February 2003, at 5:10 p.m., MIAA filed before this Court an
Urgent Ex-Parte and Reiteratory Motion for the Issuance of a Temporary Restraining Order. The
motion sought to restrain respondents the City of Paraaque, City Mayor of
Paraaque, Sangguniang Panglungsod ng Paraaque, City Treasurer of Paraaque, and the City
Assessor of Paraaque ("respondents") from auctioning the Airport Lands and Buildings.
On 7 February 2003, this Court issued a temporary restraining order (TRO) effective immediately.
The Court ordered respondents to cease and desist from selling at public auction the Airport Lands
and Buildings. Respondents received the TRO on the same day that the Court issued it. However,
respondents received the TRO only at 1:25 p.m. or three hours after the conclusion of the public
auction.
On 10 February 2003, this Court issued a Resolution confirming nunc pro tunc the TRO.
On 29 March 2005, the Court heard the parties in oral arguments. In compliance with the directive
issued during the hearing, MIAA, respondent City of Paraaque, and the Solicitor General
subsequently submitted their respective Memoranda.
MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in the
name of MIAA. However, MIAA points out that it cannot claim ownership over these properties since
the real owner of the Airport Lands and Buildings is the Republic of the Philippines. The MIAA
Charter mandates MIAA to devote the Airport Lands and Buildings for the benefit of the general
public. Since the Airport Lands and Buildings are devoted to public use and public service, the
ownership of these properties remains with the State. The Airport Lands and Buildings are thus
inalienable and are not subject to real estate tax by local governments.
MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from the
payment of real estate tax. MIAA insists that it is also exempt from real estate tax under Section 234
of the Local Government Code because the Airport Lands and Buildings are owned by the Republic.
To justify the exemption, MIAA invokes the principle that the government cannot tax itself. MIAA
points out that the reason for tax exemption of public property is that its taxation would not inure to
any public advantage, since in such a case the tax debtor is also the tax creditor.
Respondents invoke Section 193 of the Local Government Code, which expressly withdrew the tax
exemption privileges of "government-owned and-controlled corporations" upon the effectivity of
the Local Government Code. Respondents also argue that a basic rule of statutory construction is
that the express mention of one person, thing, or act excludes all others. An international airport is
not among the exceptions mentioned in Section 193 of the Local Government Code. Thus,
respondents assert that MIAA cannot claim that the Airport Lands and Buildings are exempt from
real estate tax.
Respondents also cite the ruling of this Court in Mactan International Airport v. Marcos
8
where we
held that the Local Government Code has withdrawn the exemption from real estate tax granted to
international airports. Respondents further argue that since MIAA has already paid some of the real
estate tax assessments, it is now estopped from claiming that the Airport Lands and Buildings are
exempt from real estate tax.
The Issue
This petition raises the threshold issue of whether the Airport Lands and Buildings of MIAA are
exempt from real estate tax under existing laws. If so exempt, then the real estate tax assessments
issued by the City of Paraaque, and all proceedings taken pursuant to such assessments, are void.
In such event, the other issues raised in this petition become moot.
The Court's Ruling
We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by local
governments.
First, MIAA is not a government-owned or controlled corporation but an instrumentality of the
National Government and thus exempt from local taxation. Second, the real properties of MIAA
are owned by the Republic of the Philippines and thus exempt from real estate tax.
1. MIAA is Not a Government-Owned or Controlled Corporation
Respondents argue that MIAA, being a government-owned or controlled corporation, is not exempt
from real estate tax. Respondents claim that the deletion of the phrase "any government-owned or
controlled so exempt by its charter" in Section 234(e) of the Local Government Code withdrew the
real estate tax exemption of government-owned or controlled corporations. The deleted phrase
appeared in Section 40(a) of the 1974 Real Property Tax Code enumerating the entities exempt
from real estate tax.
There is no dispute that a government-owned or controlled corporation is not exempt from real
estate tax. However, MIAA is not a government-owned or controlled corporation. Section 2(13) of the
Introductory Provisions of the Administrative Code of 1987 defines a government-owned or
controlled corporation as follows:
SEC. 2. General Terms Defined. x x x x
(13) Government-owned or controlled corporation refers to any agency organized as a
stock or non-stock corporation, vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the Government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock corporations, to
the extent of at least fifty-one (51) percent of its capital stock: x x x. (Emphasis supplied)
A government-owned or controlled corporation must be "organized as a stock or non-stock
corporation." MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock
corporation because it has no capital stock divided into shares. MIAA has no stockholders or
voting shares. Section 10 of the MIAA Charter
9
provides:
SECTION 10. Capital. The capital of the Authority to be contributed by the National
Government shall be increased from Two and One-half Billion (P2,500,000,000.00) Pesos to
Ten Billion (P10,000,000,000.00) Pesos to consist of:
(a) The value of fixed assets including airport facilities, runways and equipment and such
other properties, movable and immovable[,] which may be contributed by the National
Government or transferred by it from any of its agencies, the valuation of which shall be
determined jointly with the Department of Budget and Management and the Commission on
Audit on the date of such contribution or transfer after making due allowances for
depreciation and other deductions taking into account the loans and other liabilities of the
Authority at the time of the takeover of the assets and other properties;
(b) That the amount of P605 million as of December 31, 1986 representing about seventy
percentum (70%) of the unremitted share of the National Government from 1983 to 1986 to
be remitted to the National Treasury as provided for in Section 11 of E. O. No. 903 as
amended, shall be converted into the equity of the National Government in the Authority.
Thereafter, the Government contribution to the capital of the Authority shall be provided in
the General Appropriations Act.
Clearly, under its Charter, MIAA does not have capital stock that is divided into shares.
Section 3 of the Corporation Code
10
defines a stock corporation as one whose "capital stock is
divided into shares and x x x authorized to distribute to the holders of such shares dividends
x x x." MIAA has capital but it is not divided into shares of stock. MIAA has no stockholders or voting
shares. Hence, MIAA is not a stock corporation.
MIAA is also not a non-stock corporation because it has no members. Section 87 of the Corporation
Code defines a non-stock corporation as "one where no part of its income is distributable as
dividends to its members, trustees or officers." A non-stock corporation must have members. Even if
we assume that the Government is considered as the sole member of MIAA, this will not make MIAA
a non-stock corporation. Non-stock corporations cannot distribute any part of their income to their
members. Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual gross
operating income to the National Treasury.
11
This prevents MIAA from qualifying as a non-stock
corporation.
Section 88 of the Corporation Code provides that non-stock corporations are "organized for
charitable, religious, educational, professional, cultural, recreational, fraternal, literary, scientific,
social, civil service, or similar purposes, like trade, industry, agriculture and like chambers." MIAA is
not organized for any of these purposes. MIAA, a public utility, is organized to operate an
international and domestic airport for public use.
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-
owned or controlled corporation. What then is the legal status of MIAA within the National
Government?
MIAA is a government instrumentality vested with corporate powers to perform efficiently its
governmental functions. MIAA is like any other government instrumentality, the only difference is that
MIAA is vested with corporate powers. Section 2(10) of the Introductory Provisions of the
Administrative Code defines a government "instrumentality" as follows:
SEC. 2. General Terms Defined. x x x x
(10) Instrumentality refers to any agency of the National Government, not integrated within
the department framework, vested with special functions or jurisdiction by law, endowed
with some if not all corporate powers, administering special funds, and enjoying
operational autonomy, usually through a charter. x x x (Emphasis supplied)
When the law vests in a government instrumentality corporate powers, the instrumentality does not
become a corporation. Unless the government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not only governmental but also
corporate powers. Thus, MIAA exercises the governmental powers of eminent domain,
12
police
authority
13
and the levying of fees and charges.
14
At the same time, MIAA exercises "all the powers
of a corporation under the Corporation Law, insofar as these powers are not inconsistent with the
provisions of this Executive Order."
15

Likewise, when the law makes a government instrumentality operationally autonomous, the
instrumentality remains part of the National Government machinery although not integrated with the
department framework. The MIAA Charter expressly states that transforming MIAA into a "separate
and autonomous body"
16
will make its operation more "financially viable."
17

Many government instrumentalities are vested with corporate powers but they do not become stock
or non-stock corporations, which is a necessary condition before an agency or instrumentality is
deemed a government-owned or controlled corporation. Examples are the Mactan International
Airport Authority, the Philippine Ports Authority, the University of the Philippines and Bangko Sentral
ng Pilipinas. All these government instrumentalities exercise corporate powers but they are not
organized as stock or non-stock corporations as required by Section 2(13) of the Introductory
Provisions of the Administrative Code. These government instrumentalities are sometimes loosely
called government corporate entities. However, they are not government-owned or controlled
corporations in the strict sense as understood under the Administrative Code, which is the governing
law defining the legal relationship and status of government entities.
A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code,
which states:
SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:
x x x x
(o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities and local government units.(Emphasis and underscoring supplied)
Section 133(o) recognizes the basic principle that local governments cannot tax the national
government, which historically merely delegated to local governments the power to tax. While the
1987 Constitution now includes taxation as one of the powers of local governments, local
governments may only exercise such power "subject to such guidelines and limitations as the
Congress may provide."
18

When local governments invoke the power to tax on national government instrumentalities, such
power is construed strictly against local governments. The rule is that a tax is never presumed and
there must be clear language in the law imposing the tax. Any doubt whether a person, article or
activity is taxable is resolved against taxation. This rule applies with greater force when local
governments seek to tax national government instrumentalities.
Another rule is that a tax exemption is strictly construed against the taxpayer claiming the
exemption. However, when Congress grants an exemption to a national government instrumentality
from local taxation, such exemption is construed liberally in favor of the national government
instrumentality. As this Court declared in Maceda v. Macaraig, J r.:
The reason for the rule does not apply in the case of exemptions running to the benefit of the
government itself or its agencies. In such case the practical effect of an exemption is merely
to reduce the amount of money that has to be handled by government in the course of its
operations. For these reasons, provisions granting exemptions to government agencies may
be construed liberally, in favor of non tax-liability of such agencies.
19

There is, moreover, no point in national and local governments taxing each other, unless a sound
and compelling policy requires such transfer of public funds from one government pocket to another.
There is also no reason for local governments to tax national government instrumentalities for
rendering essential public services to inhabitants of local governments. The only exception is
when the legislature clearly intended to tax government instrumentalities for the delivery of
essential public services for sound and compelling policy considerations. There must be
express language in the law empowering local governments to tax national government
instrumentalities. Any doubt whether such power exists is resolved against local governments.
Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in the
Code, local governments cannot tax national government instrumentalities. As this Court held
in Basco v. Philippine Amusements and Gaming Corporation:
The states have no power by taxation or otherwise, to retard, impede, burden or in
any manner control the operation of constitutional laws enacted by Congress to carry
into execution the powers vested in the federal government. (MC Culloch v.
Maryland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the National Government over local
governments.
"Justice Holmes, speaking for the Supreme Court, made reference to the entire
absence of power on the part of the States to touch, in that way (taxation) at least,
the instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it
can be agreed that no state or political subdivision can regulate a federal
instrumentality in such a way as to prevent it from consummating its federal
responsibilities, or even to seriously burden it in the accomplishment of them."
(Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies thru extermination of
what local authorities may perceive to be undesirable activities or enterprise using the power
to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US 42).
The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch
v. Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very
entity which has the inherent power to wield it.
20

2. Airport Lands and Buildings of MIAA are Owned by the Republic
a. Airport Lands and Buildings are of Public Dominion
The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by
the State or the Republic of the Philippines. The Civil Code provides:
ARTICLE 419. Property is either of public dominion or of private ownership.
ARTICLE 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth. (Emphasis supplied)
ARTICLE 421. All other property of the State, which is not of the character stated in the
preceding article, is patrimonial property.
ARTICLE 422. Property of public dominion, when no longer intended for public use or for
public service, shall form part of the patrimonial property of the State.
No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like
"roads, canals, rivers, torrents, ports and bridges constructed by the State," are owned by the
State. The term "ports" includes seaports and airports. The MIAA Airport Lands and Buildings
constitute a "port" constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport
Lands and Buildings are properties of public dominion and thus owned by the State or the Republic
of the Philippines.
The Airport Lands and Buildings are devoted to public use because they are used by the public for
international and domestic travel and transportation. The fact that the MIAA collects terminal
fees and other charges from the public does not remove the character of the Airport Lands and
Buildings as properties for public use. The operation by the government of a tollway does not
change the character of the road as one for public use. Someone must pay for the maintenance of
the road, either the public indirectly through the taxes they pay the government, or only those among
the public who actually use the road through the toll fees they pay upon using the road. The tollway
system is even a more efficient and equitable manner of taxing the public for the maintenance of
public roads.
The charging of fees to the public does not determine the character of the property whether it is of
public dominion or not. Article 420 of the Civil Code defines property of public dominion as one
"intended for public use." Even if the government collects toll fees, the road is still "intended for
public use" if anyone can use the road under the same terms and conditions as the rest of the public.
The charging of fees, the limitation on the kind of vehicles that can use the road, the speed
restrictions and other conditions for the use of the road do not affect the public character of the road.
The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines,
constitute the bulk of the income that maintains the operations of MIAA. The collection of such fees
does not change the character of MIAA as an airport for public use. Such fees are often termed
user's tax. This means taxing those among the public who actually use a public facility instead of
taxing all the public including those who never use the particular public facility. A user's tax is more
equitable a principle of taxation mandated in the 1987 Constitution.
21

The Airport Lands and Buildings of MIAA, which its Charter calls the "principal airport of the
Philippines for both international and domestic air traffic,"
22
are properties of public dominion
because they are intended for public use. As properties of public dominion, they indisputably
belong to the State or the Republic of the Philippines.
b. Airport Lands and Buildings are Outside the Commerce of Man
The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of public
dominion. As properties of public dominion, the Airport Lands and Buildings are outside the
commerce of man. The Court has ruled repeatedly that properties of public dominion are outside
the commerce of man. As early as 1915, this Court already ruled in Municipality of Cavite v.
Rojas that properties devoted to public use are outside the commerce of man, thus:
According to article 344 of the Civil Code: "Property for public use in provinces and in towns
comprises the provincial and town roads, the squares, streets, fountains, and public waters,
the promenades, and public works of general service supported by said towns or provinces."
The said Plaza Soledad being a promenade for public use, the municipal council of Cavite
could not in 1907 withdraw or exclude from public use a portion thereof in order to lease it for
the sole benefit of the defendant Hilaria Rojas. In leasing a portion of said plaza or public
place to the defendant for private use the plaintiff municipality exceeded its authority in the
exercise of its powers by executing a contract over a thing of which it could not dispose, nor
is it empowered so to do.
The Civil Code, article 1271, prescribes that everything which is not outside the commerce of
man may be the object of a contract, and plazas and streets are outside of this commerce,
as was decided by the supreme court of Spain in its decision of February 12, 1895, which
says: "Communal things that cannot be sold because they are by their very nature
outside of commerce are those for public use, such as the plazas, streets, common
lands, rivers, fountains, etc." (Emphasis supplied)
23

Again in Espiritu v. Municipal Council, the Court declared that properties of public dominion are
outside the commerce of man:
xxx Town plazas are properties of public dominion, to be devoted to public use and to be
made available to the public in general. They are outside the commerce of man and
cannot be disposed of or even leased by the municipality to private parties. While in case of
war or during an emergency, town plazas may be occupied temporarily by private
individuals, as was done and as was tolerated by the Municipality of Pozorrubio, when the
emergency has ceased, said temporary occupation or use must also cease, and the town
officials should see to it that the town plazas should ever be kept open to the public and free
from encumbrances or illegal private constructions.
24
(Emphasis supplied)
The Court has also ruled that property of public dominion, being outside the commerce of man,
cannot be the subject of an auction sale.
25

Properties of public dominion, being for public use, are not subject to levy, encumbrance or
disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any
property of public dominion is void for being contrary to public policy. Essential public services will
stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale.
This will happen if the City of Paraaque can foreclose and compel the auction sale of the 600-
hectare runway of the MIAA for non-payment of real estate tax.
Before MIAA can encumber
26
the Airport Lands and Buildings, the President must first withdraw
from public use the Airport Lands and Buildings. Sections 83 and 88 of the Public Land Law or
Commonwealth Act No. 141, which "remains to this day the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral
lands,"
27
provide:
SECTION 83. Upon the recommendation of the Secretary of Agriculture and Natural
Resources, the President may designate by proclamation any tract or tracts of land of the
public domain as reservations for the use of the Republic of the Philippines or of any of its
branches, or of the inhabitants thereof, in accordance with regulations prescribed for this
purposes, or for quasi-public uses or purposes when the public interest requires it, including
reservations for highways, rights of way for railroads, hydraulic power sites, irrigation
systems, communal pastures or lequas communales, public parks, public quarries, public
fishponds, working men's village and other improvements for the public benefit.
SECTION 88. The tract or tracts of land reserved under the provisions of Section
eighty-three shall be non-alienable and shall not be subject to occupation, entry, sale,
lease, or other disposition until again declared alienable under the provisions of this
Act or by proclamation of the President. (Emphasis and underscoring supplied)
Thus, unless the President issues a proclamation withdrawing the Airport Lands and Buildings from
public use, these properties remain properties of public dominion and are inalienable. Since the
Airport Lands and Buildings are inalienable in their present status as properties of public dominion,
they are not subject to levy on execution or foreclosure sale. As long as the Airport Lands and
Buildings are reserved for public use, their ownership remains with the State or the Republic of the
Philippines.
The authority of the President to reserve lands of the public domain for public use, and to withdraw
such public use, is reiterated in Section 14, Chapter 4, Title I, Book III of the Administrative Code of
1987, which states:
SEC. 14. Power to Reserve Lands of the Public and Private Domain of the Government.
(1) The President shall have the power to reserve for settlement or public use, and for
specific public purposes, any of the lands of the public domain, the use of which is
not otherwise directed by law. The reserved land shall thereafter remain subject to the
specific public purpose indicated until otherwise provided by law or proclamation;
x x x x. (Emphasis supplied)
There is no question, therefore, that unless the Airport Lands and Buildings are withdrawn by law or
presidential proclamation from public use, they are properties of public dominion, owned by the
Republic and outside the commerce of man.
c. MIAA is a Mere Trustee of the Republic
MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48,
Chapter 12, Book I of the Administrative Code allows instrumentalities like MIAA to hold title to
real properties owned by the Republic, thus:
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed
in behalf of the government by the following:
(1) For property belonging to and titled in the name of the Republic of the Philippines, by the
President, unless the authority therefor is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name of
any political subdivision or of any corporate agency or instrumentality, by the
executive head of the agency or instrumentality. (Emphasis supplied)
In MIAA's case, its status as a mere trustee of the Airport Lands and Buildings is clearer because
even its executive head cannot sign the deed of conveyance on behalf of the Republic. Only the
President of the Republic can sign such deed of conveyance.
28

d. Transfer to MIAA was Meant to Implement a Reorganization
The MIAA Charter, which is a law, transferred to MIAA the title to the Airport Lands and Buildings
from the Bureau of Air Transportation of the Department of Transportation and Communications.
The MIAA Charter provides:
SECTION 3. Creation of the Manila International Airport Authority. x x x x
The land where the Airport is presently located as well as the surrounding land area of
approximately six hundred hectares, are hereby transferred, conveyed and assigned
to the ownership and administration of the Authority, subject to existing rights, if any.
The Bureau of Lands and other appropriate government agencies shall undertake an actual
survey of the area transferred within one year from the promulgation of this Executive Order
and the corresponding title to be issued in the name of the Authority. Any portion thereof
shall not be disposed through sale or through any other mode unless specifically
approved by the President of the Philippines. (Emphasis supplied)
SECTION 22. Transfer of Existing Facilities and Intangible Assets. All existing public
airport facilities, runways, lands, buildings and other property, movable or immovable,
belonging to the Airport, and all assets, powers, rights, interests and privileges belonging to
the Bureau of Air Transportation relating to airport works or air operations, including all
equipment which are necessary for the operation of crash fire and rescue facilities, are
hereby transferred to the Authority. (Emphasis supplied)
SECTION 25. Abolition of the Manila International Airport as a Division in the Bureau of Air
Transportation and Transitory Provisions. The Manila International Airport including the
Manila Domestic Airport as a division under the Bureau of Air Transportation is hereby
abolished.
x x x x.
The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the Republic
receiving cash, promissory notes or even stock since MIAA is not a stock corporation.
The whereas clauses of the MIAA Charter explain the rationale for the transfer of the Airport Lands
and Buildings to MIAA, thus:
WHEREAS, the Manila International Airport as the principal airport of the Philippines for both
international and domestic air traffic, is required to provide standards of airport
accommodation and service comparable with the best airports in the world;
WHEREAS, domestic and other terminals, general aviation and other facilities, have to be
upgraded to meet the current and future air traffic and other demands of aviation in Metro
Manila;
WHEREAS, a management and organization study has indicated that the objectives of
providing high standards of accommodation and service within the context of a
financially viable operation, will best be achieved by a separate and autonomous
body; and
WHEREAS, under Presidential Decree No. 1416, as amended by Presidential Decree No.
1772, the President of the Philippines is given continuing authority to reorganize the
National Government, which authority includes the creation of new entities, agencies
and instrumentalities of the Government[.] (Emphasis supplied)
The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was
not meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose
was merely to reorganize a division in the Bureau of Air Transportation into a separate and
autonomous body. The Republic remains the beneficial owner of the Airport Lands and Buildings.
MIAA itself is owned solely by the Republic. No party claims any ownership rights over MIAA's
assets adverse to the Republic.
The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be disposed
through sale or through any other mode unless specifically approved by the President of the
Philippines." This only means that the Republic retained the beneficial ownership of the Airport
Lands and Buildings because under Article 428 of the Civil Code, only the "owner has the right to x x
x dispose of a thing." Since MIAA cannot dispose of the Airport Lands and Buildings, MIAA does not
own the Airport Lands and Buildings.
At any time, the President can transfer back to the Republic title to the Airport Lands and Buildings
without the Republic paying MIAA any consideration. Under Section 3 of the MIAA Charter, the
President is the only one who can authorize the sale or disposition of the Airport Lands and
Buildings. This only confirms that the Airport Lands and Buildings belong to the Republic.
e. Real Property Owned by the Republic is Not Taxable
Section 234(a) of the Local Government Code exempts from real estate tax any "[r]eal property
owned by the Republic of the Philippines." Section 234(a) provides:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from
payment of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person;
x x x. (Emphasis supplied)
This exemption should be read in relation with Section 133(o) of the same Code, which prohibits
local governments from imposing "[t]axes, fees or charges of any kind on the National Government,
its agencies andinstrumentalities x x x." The real properties owned by the Republic are titled either
in the name of the Republic itself or in the name of agencies or instrumentalities of the National
Government. The Administrative Code allows real property owned by the Republic to be titled in the
name of agencies or instrumentalities of the national government. Such real properties remain
owned by the Republic and continue to be exempt from real estate tax.
The Republic may grant the beneficial use of its real property to an agency or instrumentality of the
national government. This happens when title of the real property is transferred to an agency or
instrumentality even as the Republic remains the owner of the real property. Such arrangement does
not result in the loss of the tax exemption. Section 234(a) of the Local Government Code states that
real property owned by the Republic loses its tax exemption only if the "beneficial use thereof has
been granted, for consideration or otherwise, to a taxable person." MIAA, as a government
instrumentality, is not a taxable person under Section 133(o) of the Local Government Code. Thus,
even if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and
Buildings, such fact does not make these real properties subject to real estate tax.
However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not
exempt from real estate tax. For example, the land area occupied by hangars that MIAA leases to
private corporations is subject to real estate tax. In such a case, MIAA has granted the beneficial use
of such land area for a consideration to ataxable person and therefore such land area is subject to
real estate tax. In Lung Center of the Philippines v. Quezon City, the Court ruled:
Accordingly, we hold that the portions of the land leased to private entities as well as those
parts of the hospital leased to private individuals are not exempt from such taxes. On the
other hand, the portions of the land occupied by the hospital and portions of the hospital
used for its patients, whether paying or non-paying, are exempt from real property taxes.
29

3. Refutation of Arguments of Minority
The minority asserts that the MIAA is not exempt from real estate tax because Section 193 of the
Local Government Code of 1991 withdrew the tax exemption of "all persons, whether natural or
juridical" upon the effectivity of the Code. Section 193 provides:
SEC. 193. Withdrawal of Tax Exemption Privileges Unless otherwise provided in this
Code, tax exemptions or incentives granted to, or presently enjoyed by all persons,
whether natural or juridical, including government-owned or controlled corporations,
except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and
non-profit hospitals and educational institutions are hereby withdrawn upon effectivity of this
Code. (Emphasis supplied)
The minority states that MIAA is indisputably a juridical person. The minority argues that since the
Local Government Code withdrew the tax exemption of all juridical persons, then MIAA is not
exempt from real estate tax. Thus, the minority declares:
It is evident from the quoted provisions of the Local Government Code that the
withdrawn exemptions from realty tax cover not just GOCCs, but all persons. To
repeat, the provisions lay down the explicit proposition that the withdrawal of realty tax
exemption applies to all persons. The reference to or the inclusion of GOCCs is only
clarificatory or illustrative of the explicit provision.
The term "All persons" encompasses the two classes of persons recognized under
our laws, natural and juridical persons. Obviously, MIAA is not a natural person. Thus,
the determinative test is not just whether MIAA is a GOCC, but whether MIAA is a
juridical person at all. (Emphasis and underscoring in the original)
The minority posits that the "determinative test" whether MIAA is exempt from local taxation is its
status whether MIAA is a juridical person or not. The minority also insists that "Sections 193 and
234 may be examined in isolation from Section 133(o) to ascertain MIAA's claim of exemption."
The argument of the minority is fatally flawed. Section 193 of the Local Government Code expressly
withdrew the tax exemption of all juridical persons "[u]nless otherwise provided in this Code."
Now, Section 133(o) of the Local Government Code expressly provides otherwise,
specifically prohibiting local governments from imposing any kind of tax on national government
instrumentalities. Section 133(o) states:
SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:
x x x x
(o) Taxes, fees or charges of any kinds on the National Government, its agencies and
instrumentalities, and local government units. (Emphasis and underscoring supplied)
By express mandate of the Local Government Code, local governments cannot impose any kind of
tax on national government instrumentalities like the MIAA. Local governments are devoid of power
to tax the national government, its agencies and instrumentalities. The taxing powers of local
governments do not extend to the national government, its agencies and instrumentalities, "[u]nless
otherwise provided in this Code" as stated in the saving clause of Section 133. The saving clause
refers to Section 234(a) on the exception to the exemption from real estate tax of real property
owned by the Republic.
The minority, however, theorizes that unless exempted in Section 193 itself, all juridical persons are
subject to tax by local governments. The minority insists that the juridical persons exempt from local
taxation are limited to the three classes of entities specifically enumerated as exempt in Section 193.
Thus, the minority states:
x x x Under Section 193, the exemption is limited to (a) local water districts; (b) cooperatives
duly registered under Republic Act No. 6938; and (c) non-stock and non-profit hospitals and
educational institutions. It would be belaboring the obvious why the MIAA does not fall within
any of the exempt entities under Section 193. (Emphasis supplied)
The minority's theory directly contradicts and completely negates Section 133(o) of the Local
Government Code. This theory will result in gross absurdities. It will make the national government,
which itself is a juridical person, subject to tax by local governments since the national government is
not included in the enumeration of exempt entities in Section 193. Under this theory, local
governments can impose any kind of local tax, and not only real estate tax, on the national
government.
Under the minority's theory, many national government instrumentalities with juridical personalities
will also be subject to any kind of local tax, and not only real estate tax. Some of the national
government instrumentalities vested by law with juridical personalities are: Bangko Sentral ng
Pilipinas,
30
Philippine Rice Research Institute,
31
Laguna Lake
Development Authority,
32
Fisheries Development Authority,
33
Bases Conversion Development
Authority,
34
Philippine Ports Authority,
35
Cagayan de Oro Port Authority,
36
San Fernando Port
Authority,
37
Cebu Port Authority,
38
and Philippine National Railways.
39

The minority's theory violates Section 133(o) of the Local Government Code which expressly
prohibits local governments from imposing any kind of tax on national government instrumentalities.
Section 133(o) does not distinguish between national government instrumentalities with or without
juridical personalities. Where the law does not distinguish, courts should not distinguish. Thus,
Section 133(o) applies to all national government instrumentalities, with or without juridical
personalities. The determinative test whether MIAA is exempt from local taxation is not whether
MIAA is a juridical person, but whether it is a national government instrumentality under Section
133(o) of the Local Government Code. Section 133(o) is the specific provision of law prohibiting local
governments from imposing any kind of tax on the national government, its agencies and
instrumentalities.
Section 133 of the Local Government Code starts with the saving clause "[u]nless otherwise
provided in this Code." This means that unless the Local Government Code grants an express
authorization, local governments have no power to tax the national government, its agencies and
instrumentalities. Clearly, the rule is local governments have no power to tax the national
government, its agencies and instrumentalities. As an exception to this rule, local governments may
tax the national government, its agencies and instrumentalities only if the Local Government Code
expressly so provides.
The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) of the
Code, which makes the national government subject to real estate tax when it gives the beneficial
use of its real properties to a taxable entity. Section 234(a) of the Local Government Code provides:
SEC. 234. Exemptions from Real Property Tax The following are exempted from payment
of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person.
x x x. (Emphasis supplied)
Under Section 234(a), real property owned by the Republic is exempt from real estate tax. The
exception to this exemption is when the government gives the beneficial use of the real property to a
taxable entity.
The exception to the exemption in Section 234(a) is the only instance when the national government,
its agencies and instrumentalities are subject to any kind of tax by local governments. The exception
to the exemption applies only to real estate tax and not to any other tax. The justification for the
exception to the exemption is that the real property, although owned by the Republic, is not devoted
to public use or public service but devoted to the private gain of a taxable person.
The minority also argues that since Section 133 precedes Section 193 and 234 of the Local
Government Code, the later provisions prevail over Section 133. Thus, the minority asserts:
x x x Moreover, sequentially Section 133 antecedes Section 193 and 234. Following an
accepted rule of construction, in case of conflict the subsequent provisions should prevail.
Therefore, MIAA, as a juridical person, is subject to real property taxes, the general
exemptions attaching to instrumentalities under Section 133(o) of the Local Government
Code being qualified by Sections 193 and 234 of the same law. (Emphasis supplied)
The minority assumes that there is an irreconcilable conflict between Section 133 on one hand, and
Sections 193 and 234 on the other. No one has urged that there is such a conflict, much less has
any one presenteda persuasive argument that there is such a conflict. The minority's assumption of
an irreconcilable conflict in the statutory provisions is an egregious error for two reasons.
First, there is no conflict whatsoever between Sections 133 and 193 because Section 193 expressly
admits its subordination to other provisions of the Code when Section 193 states "[u]nless otherwise
provided in this Code." By its own words, Section 193 admits the superiority of other provisions of
the Local Government Code that limit the exercise of the taxing power in Section 193. When a
provision of law grants a power but withholds such power on certain matters, there is no conflict
between the grant of power and the withholding of power. The grantee of the power simply cannot
exercise the power on matters withheld from its power.
Second, Section 133 is entitled "Common Limitations on the Taxing Powers of Local Government
Units." Section 133 limits the grant to local governments of the power to tax, and not merely the
exercise of a delegated power to tax. Section 133 states that the taxing powers of local governments
"shall not extend to the levy" of any kind of tax on the national government, its agencies and
instrumentalities. There is no clearer limitation on the taxing power than this.
Since Section 133 prescribes the "common limitations" on the taxing powers of local governments,
Section 133 logically prevails over Section 193 which grants local governments such taxing powers.
By their very meaning and purpose, the "common limitations" on the taxing power prevail over the
grant or exercise of the taxing power. If the taxing power of local governments in Section 193
prevails over the limitations on such taxing power in Section 133, then local governments can
impose any kind of tax on the national government, its agencies and instrumentalities a gross
absurdity.
Local governments have no power to tax the national government, its agencies and
instrumentalities, except as otherwise provided in the Local Government Code pursuant to the
saving clause in Section 133 stating "[u]nless otherwise provided in this Code." This exception
which is an exception to the exemption of the Republic from real estate tax imposed by local
governments refers to Section 234(a) of the Code. The exception to the exemption in Section
234(a) subjects real property owned by the Republic, whether titled in the name of the national
government, its agencies or instrumentalities, to real estate tax if the beneficial use of such property
is given to a taxable entity.
The minority also claims that the definition in the Administrative Code of the phrase "government-
owned or controlled corporation" is not controlling. The minority points out that Section 2 of the
Introductory Provisions of the Administrative Code admits that its definitions are not controlling when
it provides:
SEC. 2. General Terms Defined. Unless the specific words of the text, or the context as a
whole, or a particular statute, shall require a different meaning:
x x x x
The minority then concludes that reliance on the Administrative Code definition is "flawed."
The minority's argument is a non sequitur. True, Section 2 of the Administrative Code recognizes
that a statute may require a different meaning than that defined in the Administrative Code.
However, this does not automatically mean that the definition in the Administrative Code does not
apply to the Local Government Code. Section 2 of the Administrative Code clearly states that
"unless the specific words x x x of a particular statute shall require a different meaning," the definition
in Section 2 of the Administrative Code shall apply. Thus, unless there is specific language in the
Local Government Code defining the phrase "government-owned or controlled corporation"
differently from the definition in the Administrative Code, the definition in the Administrative Code
prevails.
The minority does not point to any provision in the Local Government Code defining the phrase
"government-owned or controlled corporation" differently from the definition in the Administrative
Code. Indeed, there is none. The Local Government Code is silent on the definition of the phrase
"government-owned or controlled corporation." The Administrative Code, however, expressly defines
the phrase "government-owned or controlled corporation." The inescapable conclusion is that the
Administrative Code definition of the phrase "government-owned or controlled corporation" applies to
the Local Government Code.
The third whereas clause of the Administrative Code states that the Code "incorporates in a unified
document the major structural, functional and procedural principles and rules of governance." Thus,
the Administrative Code is the governing law defining the status and relationship of government
departments, bureaus, offices, agencies and instrumentalities. Unless a statute expressly provides
for a different status and relationship for a specific government unit or entity, the provisions of the
Administrative Code prevail.
The minority also contends that the phrase "government-owned or controlled corporation" should
apply only to corporations organized under the Corporation Code, the general incorporation law, and
not to corporations created by special charters. The minority sees no reason why government
corporations with special charters should have a capital stock. Thus, the minority declares:
I submit that the definition of "government-owned or controlled corporations" under the
Administrative Code refer to those corporations owned by the government or its
instrumentalities which are created not by legislative enactment, but formed and organized
under the Corporation Code through registration with the Securities and Exchange
Commission. In short, these are GOCCs without original charters.
x x x x
It might as well be worth pointing out that there is no point in requiring a capital structure for
GOCCs whose full ownership is limited by its charter to the State or Republic. Such GOCCs
are not empowered to declare dividends or alienate their capital shares.
The contention of the minority is seriously flawed. It is not in accord with the Constitution and
existing legislations. It will also result in gross absurdities.
First, the Administrative Code definition of the phrase "government-owned or controlled corporation"
does not distinguish between one incorporated under the Corporation Code or under a special
charter. Where the law does not distinguish, courts should not distinguish.
Second, Congress has created through special charters several government-owned corporations
organized as stock corporations. Prime examples are the Land Bank of the Philippines and the
Development Bank of the Philippines. The special charter
40
of the Land Bank of the Philippines
provides:
SECTION 81. Capital. The authorized capital stock of the Bank shall be nine billion pesos,
divided into seven hundred and eighty million common shares with a par value of ten pesos
each, which shall be fully subscribed by the Government, and one hundred and twenty
million preferred shares with a par value of ten pesos each, which shall be issued in
accordance with the provisions of Sections seventy-seven and eighty-three of this Code.
(Emphasis supplied)
Likewise, the special charter
41
of the Development Bank of the Philippines provides:
SECTION 7. Authorized Capital Stock Par value. The capital stock of the Bank shall be
Five Billion Pesos to be divided into Fifty Million common shares with par value of P100 per
share. These shares are available for subscription by the National Government. Upon the
effectivity of this Charter, the National Government shall subscribe to Twenty-Five Million
common shares of stock worth Two Billion Five Hundred Million which shall be deemed paid
for by the Government with the net asset values of the Bank remaining after the transfer of
assets and liabilities as provided in Section 30 hereof. (Emphasis supplied)
Other government-owned corporations organized as stock corporations under their special charters
are the Philippine Crop Insurance Corporation,
42
Philippine International Trading Corporation,
43
and
the Philippine National Bank
44
before it was reorganized as a stock corporation under the
Corporation Code. All these government-owned corporations organized under special charters as
stock corporations are subject to real estate tax on real properties owned by them. To rule that they
are not government-owned or controlled corporations because they are not registered with the
Securities and Exchange Commission would remove them from the reach of Section 234 of the
Local Government Code, thus exempting them from real estate tax.
Third, the government-owned or controlled corporations created through special charters are those
that meet the two conditions prescribed in Section 16, Article XII of the Constitution. The first
condition is that the government-owned or controlled corporation must be established for the
common good. The second condition is that the government-owned or controlled corporation must
meet the test of economic viability. Section 16, Article XII of the 1987 Constitution provides:
SEC. 16. The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned or controlled
corporations may be created or established by special charters in the interest of the common
good and subject to the test of economic viability. (Emphasis and underscoring supplied)
The Constitution expressly authorizes the legislature to create "government-owned or controlled
corporations" through special charters only if these entities are required to meet the twin conditions
of common good and economic viability. In other words, Congress has no power to create
government-owned or controlled corporations with special charters unless they are made to comply
with the two conditions of common good and economic viability. The test of economic viability
applies only to government-owned or controlled corporations that perform economic or commercial
activities and need to compete in the market place. Being essentially economic vehicles of the State
for the common good meaning for economic development purposes these government-owned
or controlled corporations with special charters are usually organized as stock corporations just like
ordinary private corporations.
In contrast, government instrumentalities vested with corporate powers and performing
governmental or public functions need not meet the test of economic viability. These
instrumentalities perform essential public services for the common good, services that every modern
State must provide its citizens. These instrumentalities need not be economically viable since the
government may even subsidize their entire operations. These instrumentalities are not the
"government-owned or controlled corporations" referred to in Section 16, Article XII of the 1987
Constitution.
Thus, the Constitution imposes no limitation when the legislature creates government
instrumentalities vested with corporate powers but performing essential governmental or public
functions. Congress has plenary authority to create government instrumentalities vested with
corporate powers provided these instrumentalities perform essential government functions or public
services. However, when the legislature creates through special charters corporations that perform
economic or commercial activities, such entities known as "government-owned or controlled
corporations" must meet the test of economic viability because they compete in the market place.
This is the situation of the Land Bank of the Philippines and the Development Bank of the Philippines
and similar government-owned or controlled corporations, which derive their income to meet
operating expenses solely from commercial transactions in competition with the private sector. The
intent of the Constitution is to prevent the creation of government-owned or controlled corporations
that cannot survive on their own in the market place and thus merely drain the public coffers.
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the
Constitutional Commission the purpose of this test, as follows:
MR. OPLE: Madam President, the reason for this concern is really that when the government
creates a corporation, there is a sense in which this corporation becomes exempt from the
test of economic performance. We know what happened in the past. If a government
corporation loses, then it makes its claim upon the taxpayers' money through new equity
infusions from the government and what is always invoked is the common good. That is the
reason why this year, out of a budget of P115 billion for the entire government, about P28
billion of this will go into equity infusions to support a few government financial institutions.
And this is all taxpayers' money which could have been relocated to agrarian reform, to
social services like health and education, to augment the salaries of grossly underpaid public
employees. And yet this is all going down the drain.
Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common
good," this becomes a restraint on future enthusiasts for state capitalism to excuse
themselves from the responsibility of meeting the market test so that they become viable.
And so, Madam President, I reiterate, for the committee's consideration and I am glad that I
am joined in this proposal by Commissioner Foz, the insertion of the standard of
"ECONOMIC VIABILITY OR THE ECONOMIC TEST," together with the common good.
45

Father Joaquin G. Bernas, a leading member of the Constitutional Commission, explains in his
textbook The 1987 Constitution of the Republic of the Philippines: A Commentary:
The second sentence was added by the 1986 Constitutional Commission. The significant
addition, however, is the phrase "in the interest of the common good and subject to the test
of economic viability." The addition includes the ideas that they must show capacity to
function efficiently in business and that they should not go into activities which the private
sector can do better. Moreover, economic viability is more than financial viability but also
includes capability to make profit and generate benefits not quantifiable in financial
terms.
46
(Emphasis supplied)
Clearly, the test of economic viability does not apply to government entities vested with corporate
powers and performing essential public services. The State is obligated to render essential public
services regardless of the economic viability of providing such service. The non-economic viability of
rendering such essential public service does not excuse the State from withholding such essential
services from the public.
However, government-owned or controlled corporations with special charters, organized essentially
for economic or commercial objectives, must meet the test of economic viability. These are the
government-owned or controlled corporations that are usually organized under their special charters
as stock corporations, like the Land Bank of the Philippines and the Development Bank of the
Philippines. These are the government-owned or controlled corporations, along with government-
owned or controlled corporations organized under the Corporation Code, that fall under the definition
of "government-owned or controlled corporations" in Section 2(10) of the Administrative Code.
The MIAA need not meet the test of economic viability because the legislature did not create MIAA
to compete in the market place. MIAA does not compete in the market place because there is no
competing international airport operated by the private sector. MIAA performs an essential public
service as the primary domestic and international airport of the Philippines. The operation of an
international airport requires the presence of personnel from the following government agencies:
1. The Bureau of Immigration and Deportation, to document the arrival and departure of
passengers, screening out those without visas or travel documents, or those with hold
departure orders;
2. The Bureau of Customs, to collect import duties or enforce the ban on prohibited
importations;
3. The quarantine office of the Department of Health, to enforce health measures against the
spread of infectious diseases into the country;
4. The Department of Agriculture, to enforce measures against the spread of plant and
animal diseases into the country;
5. The Aviation Security Command of the Philippine National Police, to prevent the entry of
terrorists and the escape of criminals, as well as to secure the airport premises from terrorist
attack or seizure;
6. The Air Traffic Office of the Department of Transportation and Communications, to
authorize aircraft to enter or leave Philippine airspace, as well as to land on, or take off from,
the airport; and
7. The MIAA, to provide the proper premises such as runway and buildings for the
government personnel, passengers, and airlines, and to manage the airport operations.
All these agencies of government perform government functions essential to the operation of an
international airport.
MIAA performs an essential public service that every modern State must provide its citizens. MIAA
derives its revenues principally from the mandatory fees and charges MIAA imposes on passengers
and airlines. The terminal fees that MIAA charges every passenger are regulatory or administrative
fees
47
and not income from commercial transactions.
MIAA falls under the definition of a government instrumentality under Section 2(10) of the
Introductory Provisions of the Administrative Code, which provides:
SEC. 2. General Terms Defined. x x x x
(10) Instrumentality refers to any agency of the National Government, not integrated within
the department framework, vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds, and enjoying operational
autonomy, usually through a charter. x x x (Emphasis supplied)
The fact alone that MIAA is endowed with corporate powers does not make MIAA a government-
owned or controlled corporation. Without a change in its capital structure, MIAA remains a
government instrumentality under Section 2(10) of the Introductory Provisions of the Administrative
Code. More importantly, as long as MIAA renders essential public services, it need not comply with
the test of economic viability. Thus, MIAA is outside the scope of the phrase "government-owned or
controlled corporations" under Section 16, Article XII of the 1987 Constitution.
The minority belittles the use in the Local Government Code of the phrase "government-owned or
controlled corporation" as merely "clarificatory or illustrative." This is fatal. The 1987 Constitution
prescribes explicit conditions for the creation of "government-owned or controlled corporations." The
Administrative Code defines what constitutes a "government-owned or controlled corporation." To
belittle this phrase as "clarificatory or illustrative" is grave error.
To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13) of
the Introductory Provisions of the Administrative Code because it is not organized as a stock or non-
stock corporation. Neither is MIAA a government-owned or controlled corporation under Section 16,
Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic
viability. MIAA is a government instrumentality vested with corporate powers and performing
essential public services pursuant to Section 2(10) of the Introductory Provisions of the
Administrative Code. As a government instrumentality, MIAA is not subject to any kind of tax by local
governments under Section 133(o) of the Local Government Code. The exception to the exemption
in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under the Local
Government Code. Such exception applies only if the beneficial use of real property owned by the
Republic is given to a taxable entity.
Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are
properties of public dominion. Properties of public dominion are owned by the State or the Republic.
Article 420 of the Civil Code provides:
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth. (Emphasis supplied)
The term "ports x x x constructed by the State" includes airports and seaports. The Airport Lands
and Buildings of MIAA are intended for public use, and at the very least intended for public service.
Whether intended for public use or public service, the Airport Lands and Buildings are properties of
public dominion. As properties of public dominion, the Airport Lands and Buildings are owned by the
Republic and thus exempt from real estate tax under Section 234(a) of the Local Government Code.
4. Conclusion
Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code, which
governs the legal relation and status of government units, agencies and offices within the entire
government machinery, MIAA is a government instrumentality and not a government-owned or
controlled corporation. Under Section 133(o) of the Local Government Code, MIAA as a government
instrumentality is not a taxable person because it is not subject to "[t]axes, fees or charges of any
kind" by local governments. The only exception is when MIAA leases its real property to a "taxable
person" as provided in Section 234(a) of the Local Government Code, in which case the specific real
property leased becomes subject to real estate tax. Thus, only portions of the Airport Lands and
Buildings leased to taxable persons like private parties are subject to real estate tax by the City of
Paraaque.
Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public
use, are properties of public dominion and thus owned by the State or the Republic of the
Philippines. Article 420 specifically mentions "ports x x x constructed by the State," which includes
public airports and seaports, as properties of public dominion and owned by the Republic. As
properties of public dominion owned by the Republic, there is no doubt whatsoever that the Airport
Lands and Buildings are expressly exempt from real estate tax under Section 234(a) of the Local
Government Code. This Court has also repeatedly ruled that properties of public dominion are not
subject to execution or foreclosure sale.
WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the Court of
Appeals of 5 October 2001 and 27 September 2002 in CA-G.R. SP No. 66878. We DECLARE the
Airport Lands and Buildings of the Manila International Airport Authority EXEMPT from the real
estate tax imposed by the City of Paraaque. We declare VOID all the real estate tax assessments,
including the final notices of real estate tax delinquencies, issued by the City of Paraaque on the
Airport Lands and Buildings of the Manila International Airport Authority, except for the portions that
the Manila International Airport Authority has leased to private parties. We also declareVOID the
assailed auction sale, and all its effects, of the Airport Lands and Buildings of the Manila
International Airport Authority.
No costs.
SO ORDERED.
Panganiban, C.J., Puno, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez,
Corona, Carpio Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, Garcia, Velasco, Jr.,
J.J., concur.



x-------------------------------------------------------------------------------x
DISSENTING OPINION
TINGA, J . :
The legally correct resolution of this petition would have had the added benefit of an utterly fair and
equitable result a recognition of the constitutional and statutory power of the City of Paraaque to
impose real property taxes on the Manila International Airport Authority (MIAA), but at the same
time, upholding a statutory limitation that prevents the City of Paraaque from seizing and
conducting an execution sale over the real properties of MIAA. In the end, all that the City of
Paraaque would hold over the MIAA is a limited lien, unenforceable as it is through the sale or
disposition of MIAA properties. Not only is this the legal effect of all the relevant constitutional and
statutory provisions applied to this case, it also leaves the room for negotiation for a mutually
acceptable resolution between the City of Paraaque and MIAA.
Instead, with blind but measured rage, the majority today veers wildly off-course, shattering statutes
and judicial precedents left and right in order to protect the precious Ming vase that is the Manila
International Airport Authority (MIAA). While the MIAA is left unscathed, it is surrounded by the
wreckage that once was the constitutional policy, duly enacted into law, that was local autonomy.
Make no mistake, the majority has virtually declared war on the seventy nine (79) provinces, one
hundred seventeen (117) cities, and one thousand five hundred (1,500) municipalities of the
Philippines.
1

The icing on this inedible cake is the strained and purposely vague rationale used to justify the
majority opinion. Decisions of the Supreme Court are expected to provide clarity to the parties and to
students of jurisprudence, as to what the law of the case is, especially when the doctrines of long
standing are modified or clarified. With all due respect, the decision in this case is plainly so, so
wrong on many levels. More egregious, in the majority's resolve to spare the Manila International
Airport Authority (MIAA) from liability for real estate taxes, no clear-cut rule emerges on the
important question of the power of local government units (LGUs) to tax government corporations,
instrumentalities or agencies.
The majority would overturn sub silencio, among others, at least one dozen precedents enumerated
below:
1) Mactan-Cebu International Airport Authority v. Hon. Marcos,
2
the leading case penned in 1997 by
recently retired Chief Justice Davide, which held that the express withdrawal by the Local
Government Code of previously granted exemptions from realty taxes applied to instrumentalities
and government-owned or controlled corporations (GOCCs) such as the Mactan-Cebu International
Airport Authority (MCIAA). The majority invokes the ruling in Basco v. Pagcor,
3
a precedent
discredited in Mactan, and a vanguard of a doctrine so noxious to the concept of local government
rule that the Local Government Code was drafted precisely to counter such philosophy. The efficacy
of several rulings that expressly rely on Mactan, such as PHILRECA v. DILG Secretary,
4
City
Government of San Pablo v. Hon. Reyes
5
is now put in question.
2) The rulings in National Power Corporation v. City of Cabanatuan,
6
wherein the Court, through
Justice Puno, declared that the National Power Corporation, a GOCC, is liable for franchise taxes
under the Local Government Code, and succeeding cases that have relied on it such as Batangas
Power Corp. v. Batangas City
7
The majority now states that deems instrumentalities as defined
under the Administrative Code of 1987 as purportedly beyond the reach of any form of taxation by
LGUs, stating "[l]ocal governments are devoid of power to tax the national government, its agencies
and instrumentalities."
8
Unfortunately, using the definition employed by the majority, as provided by
Section 2(d) of the Administrative Code, GOCCs are also considered as instrumentalities, thus
leading to the astounding conclusion that GOCCs may not be taxed by LGUs under the Local
Government Code.
3) Lung Center of the Philippines v. Quezon City,
9
wherein a unanimous en banc Court held that the
Lung Center of the Philippines may be liable for real property taxes. Using the majority's reasoning,
the Lung Center would be properly classified as an instrumentality which the majority now holds as
exempt from all forms of local taxation.
10

4) City of Davao v. RTC,
11
where the Court held that the Government Service Insurance System
(GSIS) was liable for real property taxes for the years 1992 to 1994, its previous exemption having
been withdrawn by the enactment of the Local Government Code.
12
This decision, which expressly
relied on Mactan, would be directly though silently overruled by the majority.
5) The common essence of the Court's rulings in the two Philippine Ports Authority v. City of
Iloilo,
13
cases penned by Justices Callejo and Azcuna respectively, which relied in part on Mactan in
holding the Philippine Ports Authority (PPA) liable for realty taxes, notwithstanding the fact that it is a
GOCC. Based on the reasoning of the majority, the PPA cannot be considered a GOCC. The
reliance of these cases on Mactan, and its rationale for holding governmental entities like the PPA
liable for local government taxation is mooted by the majority.
6) The 1963 precedent of Social Security System Employees Association v. Soriano,
14
which
declared the Social Security Commission (SSC) as a GOCC performing proprietary functions. Based
on the rationale employed by the majority, the Social Security System is not a GOCC. Or perhaps
more accurately, "no longer" a GOCC.
7) The decision penned by Justice (now Chief Justice) Panganiban, Light Rail Transit Authority v.
Central Board of Assessment.
15
The characterization therein of the Light Rail Transit Authority
(LRTA) as a "service-oriented commercial endeavor" whose patrimonial property is subject to local
taxation is now rendered inconsequential, owing to the majority's thinking that an entity such as the
LRTA is itself exempt from local government taxation
16
, irrespective of the functions it performs.
Moreover, based on the majority's criteria, LRTA is not a GOCC.
8) The cases of Teodoro v. National Airports Corporation
17
and Civil Aeronautics Administration v.
Court of Appeals.
18
wherein the Court held that the predecessor agency of the MIAA, which was
similarly engaged in the operation, administration and management of the Manila International
Agency, was engaged in the exercise of proprietary, as opposed to sovereign functions. The majority
would hold otherwise that the property maintained by MIAA is actually patrimonial, thus implying that
MIAA is actually engaged in sovereign functions.
9) My own majority in Phividec Industrial Authority v. Capitol Steel,
19
wherein the Court held that the
Phividec Industrial Authority, a GOCC, was required to secure the services of the Office of the
Government Corporate Counsel for legal representation.
20
Based on the reasoning of the majority,
Phividec would not be a GOCC, and the mandate of the Office of the Government Corporate
Counsel extends only to GOCCs.
10) Two decisions promulgated by the Court just last month (June 2006), National Power
Corporation v. Province of Isabela
21
and GSIS v. City Assessor of Iloilo City.
22
In the former, the
Court pronounced that "[a]lthough as a general rule, LGUs cannot impose taxes, fees, or charges of
any kind on the National Government, its agencies and instrumentalities, this rule admits of an
exception, i.e., when specific provisions of the LGC authorize the LGUs to impose taxes, fees or
charges on the aforementioned entities." Yet the majority now rules that the exceptions in the LGC
no longer hold, since "local governments are devoid of power to tax the national government, its
agencies and instrumentalities."
23
The ruling in the latter case, which held the GSIS as liable for real
property taxes, is now put in jeopardy by the majority's ruling.
There are certainly many other precedents affected, perhaps all previous jurisprudence regarding
local government taxation vis-a-vis government entities, as well as any previous definitions of
GOCCs, and previous distinctions between the exercise of governmental and proprietary functions
(a distinction laid down by this Court as far back as 1916
24
). What is the reason offered by the
majority for overturning or modifying all these precedents and doctrines? None is given, for the
majority takes comfort instead in the pretense that these precedents never existed. Only children
should be permitted to subscribe to the theory that something bad will go away if you pretend hard
enough that it does not exist.
I.
Case Should Have Been Decided
Following Mactan Precedent
The core issue in this case, whether the MIAA is liable to the City of Paraaque for real property
taxes under the Local Government Code, has already been decided by this Court in the Mactan
case, and should have been resolved by simply applying precedent.
Mactan Explained
A brief recall of the Mactan case is in order. The Mactan-Cebu International Airport Authority
(MCIAA) claimed that it was exempt from payment of real property taxes to the City of Cebu,
invoking the specific exemption granted in Section 14 of its charter, Republic Act No. 6958, and its
status as an instrumentality of the government performing governmental functions.
25
Particularly,
MCIAA invoked Section 133 of the Local Government Code, precisely the same provision utilized by
the majority as the basis for MIAA's exemption. Section 133 reads:
Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:
x x x
(o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities and local government units. (emphasis and underscoring supplied).
However, the Court in Mactan noted that Section 133 qualified the exemption of the National
Government, its agencies and instrumentalities from local taxation with the phrase "unless otherwise
provided herein." It then considered the other relevant provisions of the Local Government Code,
particularly the following:
SEC. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this Code, tax
exemption or incentives granted to, or enjoyed by all persons, whether natural or juridical, including
government-owned and controlled corporations, except local water districts, cooperatives duly
registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are
hereby withdrawn upon the effectivity of this Code.
26

SECTION 232. Power to Levy Real Property Tax. A province or city or a municipality within the
Metropolitan Manila area may levy an annual ad valorem tax on real property such as land, building,
machinery, and other improvements not hereafter specifically exempted.
27

SECTION 234. Exemptions from Real Property Tax. -- The following are exempted from payment of
the real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except
when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person:
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-
profit or religious cemeteries and all lands, buildings, and improvements actually, directly, and
exclusively used for religious charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water
districts and government-owned and controlled corporations engaged in the distribution of water
and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property tax previously granted to,
or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or
controlled corporations are hereby withdrawn upon the effectivity of this Code.
28

Clearly, Section 133 was not intended to be so absolute a prohibition on the power of LGUs to tax
the National Government, its agencies and instrumentalities, as evidenced by these cited provisions
which "otherwise provided." But what was the extent of the limitation under Section 133? This is how
the Court, correctly to my mind, defined the parameters in Mactan:
The foregoing sections of the LGC speak of: (a) the limitations on the taxing powers of local
government units and the exceptions to such limitations; and (b) the rule on tax exemptions and the
exceptions thereto. The use of exceptions or provisos in these sections, as shown by the following
clauses:
(1) "unless otherwise provided herein" in the opening paragraph of Section 133;
(2) "Unless otherwise provided in this Code" in Section 193;
(3) "not hereafter specifically exempted" in Section 232; and
(4) "Except as provided herein" in the last paragraph of Section 234
initially hampers a ready understanding of the sections. Note, too, that the aforementioned clause in
Section 133 seems to be inaccurately worded. Instead of the clause "unless otherwise provided
herein," with the "herein" to mean, of course, the section, it should have used the clause "unless
otherwise provided in this Code." The former results in absurdity since the section itself enumerates
what are beyond the taxing powers of local government units and, where exceptions were intended,
the exceptions are explicitly indicated in the next. For instance, in item (a) which excepts income
taxes "when levied on banks and other financial institutions"; item (d) which excepts "wharfage on
wharves constructed and maintained by the local government unit concerned"; and item (1) which
excepts taxes, fees and charges for the registration and issuance of licenses or permits for the
driving of "tricycles." It may also be observed that within the body itself of the section, there are
exceptions which can be found only in other parts of the LGC, but the section interchangeably uses
therein the clause, "except as otherwise provided herein" as in items (c) and (i), or the clause
"except as provided in this Code" in item (j). These clauses would be obviously unnecessary or mere
surplusages if the opening clause of the section were "Unless otherwise provided in this Code"
instead of "Unless otherwise provided herein." In any event, even if the latter is used, since under
Section 232 local government units have the power to levy real property tax, except those exempted
therefrom under Section 234, then Section 232 must be deemed to qualify Section 133.
Thus, reading together Sections 133, 232, and 234 of the LGC, we conclude that as a general rule,
as laid down in Section 133, the taxing powers of local government units cannot extend to the levy
of, inter alia, "taxes, fees and charges of any kind on the National Government, its agencies and
instrumentalities, and local government units"; however, pursuant to Section 232, provinces, cities,
and municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter
alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except
when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person," as provided in item (a) of the first paragraph of Section 234.
As to tax exemptions or incentives granted to or presently enjoyed by natural or judicial persons,
including government-owned and controlled corporations, Section 193 of the LGC prescribes the
general rule, viz., they are withdrawn upon the effectivity of the LGC, except those granted to local
water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals
and educational institutions, and unless otherwise provided in the LGC. The latter proviso could refer
to Section 234 which enumerates the properties exempt from real property tax. But the last
paragraph of Section 234 further qualifies the retention of the exemption insofar as real property
taxes are concerned by limiting the retention only to those enumerated therein; all others not
included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover, even as to
real property owned by the Republic of the Philippines or any of its political subdivisions covered by
item (a) of the first paragraph of Section 234, the exemption is withdrawn if the beneficial use of such
property has been granted to a taxable person for consideration or otherwise.
Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC,
exemptions from payment of real property taxes granted to natural or juridical persons, including
government-owned or controlled corporations, except as provided in the said section, and the
petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its exemption
from such tax granted it in Section 14 of its Charter, R.A. No. 6958, has been withdrawn. Any claim
to the contrary can only be justified if the petitioner can seek refuge under any of the exceptions
provided in Section 234, but not under Section 133, as it now asserts, since, as shown above, the
said section is qualified by Sections 232 and 234.
29

The Court in Mactan acknowledged that under Section 133, instrumentalities were generally exempt
from all forms of local government taxation, unless otherwise provided in the Code. On the other
hand, Section 232 "otherwise provided" insofar as it allowed LGUs to levy an ad valorem real
property tax, irrespective of who owned the property. At the same time, the imposition of real
property taxes under Section 232 is in turn qualified by the phrase "not hereinafter specifically
exempted." The exemptions from real property taxes are enumerated in Section 234, which
specifically states that only real properties owned "by the Republic of the Philippines or any of its
political subdivisions" are exempted from the payment of the tax. Clearly, instrumentalities or
GOCCs do not fall within the exceptions under Section 234.
30

Mactan Overturned the
Precedents Now Relied
Upon by the Majority
But the petitioners in Mactan also raised the Court's ruling in Basco v. PAGCOR,
31
decided before
the enactment of the Local Government Code. The Court in Basco declared the PAGCOR as
exempt from local taxes, justifying the exemption in this wise:
Local governments have no power to tax instrumentalities of the National Government. PAGCOR is
a government owned or controlled corporation with an original charter, PD 1869. All of its shares of
stocks are owned by the National Government. In addition to its corporate powers (Sec. 3, Title II,
PD 1869) it also exercises regulatory powers xxx
PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is
governmental, which places it in the category of an agency or instrumentality of the Government.
Being an instrumentality of the Government, PAGCOR should be and actually is exempt from local
taxes. Otherwise, its operation might be burdened, impeded or subjected to control by a mere Local
government.
"The states have no power by taxation or otherwise, to retard impede, burden or in any manner
control the operation of constitutional laws enacted by Congress to carry into execution the powers
vested in the federal government." (McCulloch v. Marland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the "supremacy" of the National Government over local governments.
"Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of power on
the part of the States to touch, in that way (taxation) at least, the instrumentalities of the United
States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or political subdivision
can regulate a federal instrumentality in such a way as to prevent it from consummating its federal
responsibilities, or even to seriously burden it in the accomplishment of them." (Antieau, Modern
Constitutional Law, Vol. 2, p. 140, emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies thru extermination of what local
authorities may perceive to be undesirable activates or enterprise using the power to tax as "a tool
for regulation" (U.S. v. Sanchez, 340 US 42).
The power to tax which was called by Justice Marshall as the "power to destroy" (McCulloch v.
Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very entity which
has the inherent power to wield it.
32

Basco is as strident a reiteration of the old guard view that frowned on the principle of local
autonomy, especially as it interfered with the prerogatives and privileges of the national government.
Also consider the following citation from Maceda v. Macaraig,
33
decided the same year as Basco.
Discussing the rule of construction of tax exemptions on government instrumentalities, the
sentiments are of a similar vein.
Moreover, it is a recognized principle that the rule on strict interpretation does not apply in the case
of exemptions in favor of a government political subdivision or instrumentality.
The basis for applying the rule of strict construction to statutory provisions granting tax exemptions
or deductions, even more obvious than with reference to the affirmative or levying provisions of tax
statutes, is to minimize differential treatment and foster impartiality, fairness, and equality of
treatment among tax payers.
The reason for the rule does not apply in the case of exemptions running to the benefit of the
government itself or its agencies. In such case the practical effect of an exemption is merely to
reduce the amount of money that has to be handled by government in the course of its operations.
For these reasons, provisions granting exemptions to government agencies may be construed
liberally, in favor of non tax-liability of such agencies.
In the case of property owned by the state or a city or other public corporations, the express
exemption should not be construed with the same degree of strictness that applies to exemptions
contrary to the policy of the state, since as to such property "exemption is the rule and taxation the
exception."
34

Strikingly, the majority cites these two very cases and the stodgy rationale provided therein. This
evinces the perspective from which the majority is coming from. It is admittedly a viewpoint once
shared by this Court, and en vogue prior to the enactment of the Local Government Code of 1991.
However, the Local Government Code of 1991 ushered in a new ethos on how the art of governance
should be practiced in the Philippines, conceding greater powers once held in the private reserve of
the national government to LGUs. The majority might have private qualms about the wisdom of the
policy of local autonomy, but the members of the Court are not expected to substitute their personal
biases for the legislative will, especially when the 1987 Constitution itself promotes the principle of
local autonomy.
Article II. Declaration of Principles and State Policies
xxx
Sec. 25. The State shall ensure the autonomy of local governments.
Article X. Local Government
xxx
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
Section 3. The Congress shall enact a local government code which shall provide for a more
responsive and accountable local government structure instituted through a system of
decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the
different local government units their powers, responsibilities, and resources, and provide for the
qualifications, election, appointment and removal, term, salaries, powers and functions and duties of
local officials, and all other matters relating to the organization and operation of the local units.
xxx
Section 5. Each local government unit shall have the power to create its own sources of revenues
and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall
accrue exclusively to the local governments.
xxx
The Court in Mactan recognized that a new day had dawned with the enactment of the 1987
Constitution and the Local Government Code of 1991. Thus, it expressly rejected the contention of
the MCIAA that Basco was applicable to them. In doing so, the language of the Court was dramatic,
if only to emphasize how monumental the shift in philosophy was with the enactment of the Local
Government Code:
Accordingly, the position taken by the [MCIAA] is untenable. Reliance on Basco v. Philippine
Amusement and Gaming Corporation is unavailing since it was decided before the effectivity of the
[Local Government Code]. Besides, nothing can prevent Congress from decreeing that even
instrumentalities or agencies of the Government performing governmental functions may be subject
to tax. Where it is done precisely to fulfill a constitutional mandate and national policy, no one can
doubt its wisdom.
35
(emphasis supplied)
The Court Has Repeatedly
Reaffirmed Mactan Over the
Precedents Now Relied Upon
By the Majority
Since then and until today, the Court has been emphatic in declaring the Basco doctrine as dead.
The notion that instrumentalities may be subjected to local taxation by LGUs was again affirmed in
National Power Corporation v. City of Cabanatuan,
36
which was penned by Justice Puno. NPC or
Napocor, invoking its continued exemption from payment of franchise taxes to the City of
Cabanatuan, alleged that it was an instrumentality of the National Government which could not be
taxed by a city government. To that end, Basco was cited by NPC. The Court had this to say about
Basco.
xxx[T]he doctrine in Basco vs. Philippine Amusement and Gaming Corporation relied upon by the
petitioner to support its claim no longer applies. To emphasize, the Basco case was decided prior to
the effectivity of the LGC, when no law empowering the local government units to tax
instrumentalities of the National Government was in effect. However, as this Court ruled in the case
of Mactan Cebu International Airport Authority (MCIAA) vs. Marcos, nothing prevents Congress from
decreeing that even instrumentalities or agencies of the government performing governmental
functions may be subject to tax. In enacting the LGC, Congress exercised its prerogative to tax
instrumentalities and agencies of government as it sees fit. Thus, after reviewing the specific
provisions of the LGC, this Court held that MCIAA, although an instrumentality of the national
government, was subject to real property tax.
37

In the 2003 case of Philippine Ports Authority v. City of Iloilo,
38
the Court, in the able ponencia of
Justice Azcuna, affirmed the levy of realty taxes on the PPA. Although the taxes were assessed
under the old Real Property Tax Code and not the Local Government Code, the Court again cited
Mactan to refute PPA's invocation of Basco as the basis of its exemption.
[Basco] did not absolutely prohibit local governments from taxing government instrumentalities. In
fact we stated therein:
The power of local government to "impose taxes and fees" is always subject to "limitations" which
Congress may provide by law. Since P.D. 1869 remains an "operative" law until "amended, repealed
or revoked". . . its "exemption clause" remains an exemption to the exercise of the power of local
governments to impose taxes and fees.
Furthermore, in the more recent case of Mactan Cebu International Airport Authority v. Marcos,
where the Basco case was similarly invoked for tax exemption, we stated: "[N]othing can prevent
Congress from decreeing that even instrumentalities or agencies of the Government performing
governmental functions may be subject to tax. Where it is done precisely to fulfill a constitutional
mandate and national policy, no one can doubt its wisdom." The fact that tax exemptions of
government-owned or controlled corporations have been expressly withdrawn by the present Local
Government Code clearly attests against petitioner's claim of absolute exemption of government
instrumentalities from local taxation.
39

Just last month, the Court in National Power Corporation v. Province of Isabela
40
again rejected
Basco in emphatic terms. Held the Court, through Justice Callejo, Sr.:
Thus, the doctrine laid down in the Basco case is no longer true. In the Cabanatuan case, the Court
noted primarily that the Basco case was decided prior to the effectivity of the LGC, when no law
empowering the local government units to tax instrumentalities of the National Government was in
effect. It further explained that in enacting the LGC, Congress empowered the LGUs to impose
certain taxes even on instrumentalities of the National Government.
41

The taxability of the PPA recently came to fore in Philippine Ports Authority v. City of Iloilo
42
case, a
decision also penned by Justice Callejo, Sr., wherein the Court affirmed the sale of PPA's properties
at public auction for failure to pay realty taxes. The Court again reiterated that "it was the intention of
Congress to withdraw the tax exemptions granted to or presently enjoyed by all persons, including
government-owned or controlled corporations, upon the effectivity" of the Code.
43
The Court in the
second Public Ports Authority case likewise cited Mactan as providing the "raison d'etre for the
withdrawal of the exemption," namely, "the State policy to ensure autonomy to local governments
and the objective of the [Local Government Code] that they enjoy genuine and meaningful local
autonomy to enable them to attain their fullest development as self-reliant communities. . . . "
44

Last year, the Court, in City of Davao v. RTC,
45
affirmed that the legislated exemption from real
property taxes of the Government Service Insurance System (GSIS) was removed under the Local
Government Code. Again, Mactan was relied upon as the governing precedent. The removal of the
tax exemption stood even though the then GSIS law
46
prohibited the removal of GSIS' tax
exemptions unless the exemption was specifically repealed, "and a provision is enacted to substitute
the declared policy of exemption from any and all taxes as an essential factor for the solvency of the
fund."
47
The Court, citing established doctrines in statutory construction and Duarte v. Dade
48
ruled
that such proscription on future legislation was itself prohibited, as "the legislature cannot bind a
future legislature to a particular mode of repeal."
49

And most recently, just less than one month ago, the Court, through Justice Corona in Government
Service Insurance System v. City Assessor of Iloilo
50
again affirmed that the Local Government Code
removed the previous exemption from real property taxes of the GSIS. Again Mactan was cited as
having "expressly withdrawn the [tax] exemption of the [GOCC].
51

Clearly then, Mactan is not a stray or unique precedent, but the basis of a jurisprudential rule
employed by the Court since its adoption, the doctrine therein consistent with the Local Government
Code. Corollarily, Basco, the polar opposite of Mactan has been emphatically rejected and declared
inconsistent with the Local Government Code.
II.
Majority, in Effectively Overturning Mactan,
Refuses to Say Why Mactan Is Wrong
The majority cites Basco in support. It does not cite Mactan, other than an incidental reference that it
is relied upon by the respondents.
52
However, the ineluctable conclusion is that the majority rejects
the rationale and ruling in Mactan. The majority provides for a wildly different interpretation of
Section 133, 193 and 234 of the Local Government Code than that employed by the Court in
Mactan. Moreover, the parties in Mactan and in this case are similarly situated, as can be obviously
deducted from the fact that both petitioners are airport authorities operating under similarly worded
charters. And the fact that the majority cites doctrines contrapuntal to the Local Government Code
as in Basco and Maceda evinces an intent to go against the Court's jurisprudential trend adopting
the philosophy of expanded local government rule under the Local Government Code.
Before I dwell upon the numerous flaws of the majority, a brief comment is necessitated on the
majority's studied murkiness vis--vis the Mactan precedent. The majority is obviously inconsistent
with Mactan and there is no way these two rulings can stand together. Following basic principles in
statutory construction, Mactan will be deemed as giving way to this new ruling.
However, the majority does not bother to explain why Mactan is wrong. The interpretation in Mactan
of the relevant provisions of the Local Government Code is elegant and rational, yet the majority
refuses to explain why this reasoning of the Court in Mactan is erroneous. In fact, the majority does
not even engage Mactan in any meaningful way. If the majority believes that Mactan may still stand
despite this ruling, it remains silent as to the viable distinctions between these two cases.
The majority's silence on Mactan is baffling, considering how different this new ruling is with the
ostensible precedent. Perhaps the majority does not simply know how to dispense with the ruling in
Mactan. If Mactan truly deserves to be discarded as precedent, it deserves a more honorable end
than death by amnesia or ignonominous disregard. The majority could have devoted its discussion in
explaining why it thinks Mactan is wrong, instead of pretending that Mactan never existed at all.
Such an approach might not have won the votes of the minority, but at least it would provide some
degree of intellectual clarity for the parties, LGUs and the national government, students of
jurisprudence and practitioners. A more meaningful debate on the matter would have been possible,
enriching the study of law and the intellectual dynamic of this Court.
There is no way the majority can be justified unless Mactan is overturned. The MCIAA and the MIAA
are similarly situated. They are both, as will be demonstrated, GOCCs, commonly engaged in the
business of operating an airport. They are the owners of airport properties they respectively maintain
and hold title over these properties in their name.
53
These entities are both owned by the State, and
denied by their respective charters the absolute right to dispose of their properties without prior
approval elsewhere.
54
Both of them are
not empowered to obtain loans or encumber their properties without prior approval the prior approval
of the President.
55

III.
Instrumentalities, Agencies
And GOCCs Generally
Liable for Real Property Tax
I shall now proceed to demonstrate the errors in reasoning of the majority. A bulwark of my position
lies with Mactan, which will further demonstrate why the majority has found it inconvenient to even
grapple with the precedent that is Mactan in the first place.
Mactan held that the prohibition on taxing the national government, its agencies and
instrumentalities under Section 133 is qualified by Section 232 and Section 234, and accordingly, the
only relevant exemption now applicable to these bodies is as provided under Section 234(o), or on
"real property owned by the Republic of the Philippines or any of its political subdivisions except
when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person."
It should be noted that the express withdrawal of previously granted exemptions by the Local
Government Code do not even make any distinction as to whether the exempt person is a
governmental entity or not. As Sections 193 and 234 both state, the withdrawal applies to "all
persons, including [GOCCs]", thus encompassing the two classes of persons recognized under our
laws, natural persons
56
and juridical persons.
57

The fact that the Local Government Code mandates the withdrawal of previously granted
exemptions evinces certain key points. If an entity was previously granted an express exemption
from real property taxes in the first place, the obvious conclusion would be that such entity would
ordinarily be liable for such taxes without the exemption. If such entities were already deemed
exempt due to some overarching principle of law, then it would be a redundancy or surplusage to
grant an exemption to an already exempt entity. This fact militates against the claim that MIAA is
preternaturally exempt from realty taxes, since it required the enactment of an express exemption
from such taxes in its charter.
Amazingly, the majority all but ignores the disquisition in Mactan and asserts that government
instrumentalities are not taxable persons unless they lease their properties to a taxable person. The
general rule laid down in Section 232 is given short shrift. In arriving at this conclusion, several leaps
in reasoning are committed.
Majority's Flawed Definition
of GOCCs.
The majority takes pains to assert that the MIAA is not a GOCC, but rather an instrumentality.
However, and quite grievously, the supposed foundation of this assertion is an adulteration.
The majority gives the impression that a government instrumentality is a distinct concept from a
government corporation.
58
Most tellingly, the majority selectively cites a portion of Section 2(10) of
the Administrative Code of 1987, as follows:
Instrumentality refers to any agency of the National Government not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some if not
all corporate powers, administering special funds, and enjoying operational autonomy, usually
through a charter. xxx
59
(emphasis omitted)
However, Section 2(10) of the Administrative Code, when read in full, makes an important
clarification which the majority does not show. The portions omitted by the majority are highlighted
below:
(10)Instrumentality refers to any agency of the National Government not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with some if not
all corporate powers, administering special funds, and enjoying operational autonomy, usually
through a charter. This term includes regulatory agencies, chartered institutions and government
owned or controlled corporations.
60

Since Section 2(10) makes reference to "agency of the National Government," Section 2(4) is also
worth citing in full:
(4) Agency of the Government refers to any of the various units of the Government, including a
department, bureau, office, instrumentality, or government-owned or controlled corporation, or a
local government or a distinct unit therein. (emphasis supplied)
61

Clearly then, based on the Administrative Code, a GOCC may be an instrumentality or an agency of
the National Government. Thus, there actually is no point in the majority's assertion that MIAA is not
a GOCC, since based on the majority's premise of Section 133 as the key provision, the material
question is whether MIAA is either an instrumentality, an agency, or the National Government itself.
The very provisions of the Administrative Code provide that a GOCC can be either an instrumentality
or an agency, so why even bother to extensively discuss whether or not MIAA is a GOCC?
Indeed as far back as the 1927 case of Government of the Philippine Islands v. Springer,
62
the
Supreme Court already noted that a corporation of which the government is the majority stockholder
"remains an agency or instrumentality of government."
63

Ordinarily, the inconsequential verbiage stewing in judicial opinions deserve little rebuttal. However,
the entire discussion of the majority on the definition of a GOCC, obiter as it may ultimately be,
deserves emphatic refutation. The views of the majority on this matter are very dangerous, and
would lead to absurdities, perhaps unforeseen by the majority. For in fact, the majority effectively
declassifies many entities created and recognized as GOCCs and would give primacy to the
Administrative Code of 1987 rather than their respective charters as to the definition of these
entities.
Majority Ignores the Power
Of Congress to Legislate and
Define Chartered Corporations
First, the majority declares that, citing Section 2(13) of the Administrative Code, a GOCC must be
"organized as a stock or non-stock corporation," as defined under the Corporation Code. To insist on
this as an absolute rule fails on bare theory. Congress has the undeniable power to create a
corporation by legislative charter, and has been doing so throughout legislative history. There is no
constitutional prohibition on Congress as to what structure these chartered corporations should take
on. Clearly, Congress has the prerogative to create a corporation in whatever form it chooses, and it
is not bound by any traditional format. Even if there is a definition of what a corporation is under the
Corporation Code or the Administrative Code, these laws are by no means sacrosanct. It should be
remembered that these two statutes fall within the same level of hierarchy as a congressional
charter, since they all are legislative enactments. Certainly, Congress can choose to disregard either
the Corporation Code or the Administrative Code in defining the corporate structure of a GOCC,
utilizing the same extent of legislative powers similarly vesting it the putative ability to amend or
abolish the Corporation Code or the Administrative Code.
These principles are actually recognized by both the Administrative Code and the Corporation Code.
The definition of GOCCs, agencies and instrumentalities under the Administrative Code are laid
down in the section entitled "General Terms Defined," which qualifies:
Sec. 2. General Terms Defined. Unless the specific words of the text, or the context as a whole, or
a particular statute, shall require a different meaning: (emphasis supplied)
xxx
Similar in vein is Section 6 of the Corporation Code which provides:
SEC. 4. Corporations created by special laws or charters. Corporations created by special laws or
charters shall be governed primarily by the provisions of the special law or charter creating them or
applicable to them, supplemented by the provisions of this Code, insofar as they are applicable.
(emphasis supplied)
Thus, the clear doctrine emerges the law that governs the definition of a corporation or entity
created by Congress is its legislative charter. If the legislative enactment defines an entity as a
corporation, then it is a corporation, no matter if the Corporation Code or the Administrative Code
seemingly provides otherwise. In case of conflict between the legislative charter of a government
corporation, on one hand, and the Corporate Code and the Administrative Code, on the other, the
former always prevails.
Majority, in Ignoring the
Legislative Charters, Effectively
Classifies Duly Established GOCCs,
With Disastrous and Far Reaching
Legal Consequences
Second, the majority claims that MIAA does not qualify either as a stock or non-stock corporation, as
defined under the Corporation Code. It explains that the MIAA is not a stock corporation because it
does not have any capital stock divided into shares. Neither can it be considered as a non-stock
corporation because it has no members, and under Section 87, a non-stock corporation is one
where no part of its income is distributable as dividends to its members, trustees or officers.
This formulation of course ignores Section 4 of the Corporation Code, which again provides that
corporations created by special laws or charters shall be governed primarily by the provisions of the
special law or charter, and not the Corporation Code.
That the MIAA cannot be considered a stock corporation if only because it does not have a stock
structure is hardly a plausible proposition. Indeed, there is no point in requiring a capital stock
structure for GOCCs whose full ownership is limited by its charter to the State or Republic. Such
GOCCs are not empowered to declare dividends or alienate their capital shares.
Admittedly, there are GOCCs established in such a manner, such as the National Power Corporation
(NPC), which is provided with authorized capital stock wholly subscribed and paid for by the
Government of the Philippines, divided into shares but at the same time, is prohibited from
transferring, negotiating, pledging, mortgaging or otherwise giving these shares as security for
payment of any obligation.
64
However, based on the Corporation Code definition relied upon by the
majority, even the NPC cannot be considered as a stock corporation. Under Section 3 of the
Corporation Code, stock corporations are defined as being "authorized to distribute to the holders of
its shares dividends or allotments of the surplus profits on the basis of the shares held."
65
On the
other hand, Section 13 of the NPC's charter states that "the Corporation shall be non-profit and shall
devote all its returns from its capital investment, as well as excess revenues from its operation, for
expansion."
66
Can the holder of the shares of NPC, the National Government, receive its surplus
profits on the basis of its shares held? It cannot, according to the NPC charter, and hence, following
Section 3 of the Corporation Code, the NPC is not a stock corporation, if the majority is to be
believed.
The majority likewise claims that corporations without members cannot be deemed non-stock
corporations. This would seemingly exclude entities such as the NPC, which like MIAA, has no
ostensible members. Moreover, non-stock corporations cannot distribute any part of its income as
dividends to its members, trustees or officers. The majority faults MIAA for remitting 20% of its gross
operating income to the national government. How about the Philippine Health Insurance
Corporation, created with the "status of a tax-exempt government corporation attached to the
Department of Health" under Rep. Act No. 7875.
67
It too cannot be considered as a stock corporation
because it has no capital stock structure. But using the criteria of the majority, it is doubtful if it would
pass muster as a non-stock corporation, since the PHIC or Philhealth, as it is commonly known, is
expressly empowered "to collect, deposit, invest, administer and disburse" the National Health
Insurance Fund.
68
Or how about the Social Security System, which under its revised charter,
Republic Act No. 8282, is denominated as a "corporate body."
69
The SSS has no capital stock
structure, but has capital comprised of contributions by its members, which are eventually remitted
back to its members. Does this disqualify the SSS from classification as a GOCC, notwithstanding
this Court's previous pronouncement in Social Security System Employees Association v. Soriano?
70

In fact, Republic Act No. 7656, enacted in 1993, requires that all GOCCs, whether stock or non-
stock,
71
declare and remit at least fifty percent (50%) of their annual net earnings as cash, stock or
property dividends to the National Government.
72
But according to the majority, non-stock
corporations are prohibited from declaring any part of its income as dividends. But if Republic Act
No. 7656 requires even non-stock corporations to declare dividends from income, should it not follow
that the prohibition against declaration of dividends by non-stock corporations under the Corporation
Code does not apply to government-owned or controlled corporations? For if not, and the majority's
illogic is pursued, Republic Act No. 7656, passed in 1993, would be fatally flawed, as it would
contravene the Administrative Code of 1987 and the Corporation Code.
In fact, the ruinous effects of the majority's hypothesis on the nature of GOCCs can be illustrated by
Republic Act No. 7656. Following the majority's definition of a GOCC and in accordance with
Republic Act No. 7656, here are but a few entities which are not obliged to remit fifty (50%) of its
annual net earnings to the National Government as they are excluded from the scope of Republic
Act No. 7656:
1) Philippine Ports Authority
73
has no capital stock
74
, no members, and obliged to apply the
balance of its income or revenue at the end of each year in a general reserve.
75

2) Bases Conversion Development Authority
76
- has no capital stock,
77
no members.
3) Philippine Economic Zone Authority
78
- no capital stock,
79
no members.
4) Light Rail Transit Authority
80
- no capital stock,
81
no members.
5) Bangko Sentral ng Pilipinas
82
- no capital stock,
83
no members, required to remit fifty percent
(50%) of its net profits to the National Treasury.
84

6) National Power Corporation
85
- has capital stock but is prohibited from "distributing to the holders
of its shares dividends or allotments of the surplus profits on the basis of the shares held;"
86
no
members.
7) Manila International Airport Authority no capital stock
87
, no members
88
, mandated to remit twenty
percent (20%) of its annual gross operating income to the National Treasury.
89

Thus, for the majority, the MIAA, among many others, cannot be considered as within the coverage
of Republic Act No. 7656. Apparently, President Fidel V. Ramos disagreed. How else then could
Executive Order No. 483, signed in 1998 by President Ramos, be explained? The issuance
provides:
WHEREAS, Section 1 of Republic Act No. 7656 provides that:
"Section 1. Declaration of Policy. - It is hereby declared the policy of the State that in order for the
National Government to realize additional revenues, government-owned and/or controlled
corporations, without impairing their viability and the purposes for which they have been established,
shall share a substantial amount of their net earnings to the National Government."
WHEREAS, to support the viability and mandate of government-owned and/or controlled
corporations [GOCCs], the liquidity, retained earnings position and medium-term plans and
programs of these GOCCs were considered in the determination of the reasonable dividend rates of
such corporations on their 1997 net earnings.
WHEREAS, pursuant to Section 5 of RA 7656, the Secretary of Finance recommended the
adjustment on the percentage of annual net earnings that shall be declared by the Manila
International Airport Authority [MIAA] and Phividec Industrial Authority [PIA] in the interest of national
economy and general welfare.
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Philippines, by virtue of the powers
vested in me by law, do hereby order:
SECTION 1. The percentage of net earnings to be declared and remitted by the MIAA and PIA as
dividends to the National Government as provided for under Section 3 of Republic Act No. 7656 is
adjusted from at least fifty percent [50%] to the rates specified hereunder:
1. Manila International Airport Authority - 35% [cash]
2. Phividec Industrial Authority - 25% [cash]
SECTION 2. The adjusted dividend rates provided for under Section 1 are only applicable on 1997
net earnings of the concerned government-owned and/or controlled corporations.
Obviously, it was the opinion of President Ramos and the Secretary of Finance that MIAA is a
GOCC, for how else could it have come under the coverage of Republic Act No. 7656, a law
applicable only to GOCCs? But, the majority apparently disagrees, and resultantly holds that MIAA is
not obliged to remit even the reduced rate of thirty five percent (35%) of its net earnings to the
national government, since it cannot be covered by Republic Act No. 7656.
All this mischief because the majority would declare the Administrative Code of 1987 and the
Corporation Code as the sole sources of law defining what a government corporation is. As I stated
earlier, I find it illogical that chartered corporations are compelled to comply with the templates of the
Corporation Code, especially when the Corporation Code itself states that these corporations are to
be governed by their own charters. This is especially true considering that the very provision cited by
the majority, Section 87 of the Corporation Code, expressly says that the definition provided therein
is laid down "for the purposes of this [Corporation] Code." Read in conjunction with Section 4 of the
Corporation Code which mandates that corporations created by charter be governed by the law
creating them, it is clear that contrary to the majority, MIAA is not disqualified from classification as a
non-stock corporation by reason of Section 87, the provision not being applicable to corporations
created by special laws or charters. In fact, I see no real impediment why the MIAA and similarly
situated corporations such as the PHIC, the SSS, the Philippine Deposit Insurance Commission, or
maybe even the NPC could at the very least, be deemed as no stock corporations (as differentiated
from non-stock corporations).
The point, stripped to bare simplicity, is that entity created by legislative enactment is a corporation if
the legislature says so. After all, it is the legislature that dictates what a corporation is in the first
place. This is better illustrated by another set of entities created before martial law. These include
the Mindanao Development Authority,
90
the Northern Samar Development Authority,
91
the Ilocos Sur
Development Authority,
92
the Southeastern Samar Development Authority
93
and the Mountain
Province Development Authority.
94
An examination of the first section of the statutes creating these
entities reveal that they were established "to foster accelerated and balanced growth" of their
respective regions, and towards such end, the charters commonly provide that "it is recognized that
a government corporation should be created for the purpose," and accordingly, these charters
"hereby created a body corporate."
95
However, these corporations do not have capital stock nor
members, and are obliged to return the unexpended balances of their appropriations and earnings to
a revolving fund in the National Treasury. The majority effectively declassifies these entities as
GOCCs, never mind the fact that their very charters declare them to be GOCCs.
I mention these entities not to bring an element of obscurantism into the fray. I cite them as
examples to emphasize my fundamental pointthat it is the legislative charters of these entities, and
not the Administrative Code, which define the class of personality of these entities created by
Congress. To adopt the view of the majority would be, in effect, to sanction an implied repeal of
numerous congressional charters for the purpose of declassifying GOCCs. Certainly, this could not
have been the intent of the crafters of the Administrative Code when they drafted the "Definition of
Terms" incorporated therein.
MIAA Is Without
Doubt, A GOCC
Following the charters of government corporations, there are two kinds of GOCCs, namely: GOCCs
which are stock corporations and GOCCs which are no stock corporations (as distinguished from
non-stock corporation). Stock GOCCs are simply those which have capital stock while no stock
GOCCs are those which have no capital stock. Obviously these definitions are different from the
definitions of the terms in the Corporation Code. Verily, GOCCs which are not incorporated with the
Securities and Exchange Commission are not governed by the Corporation Code but by their
respective charters.
For the MIAA's part, its charter is replete with provisions that indubitably classify it as a GOCC.
Observe the following provisions from MIAA's charter:
SECTION 3. Creation of the Manila International Airport Authority.There is hereby established a
body corporate to be known as the Manila International Airport Authority which shall be attached to
the Ministry of Transportation and Communications. The principal office of the Authority shall be
located at the New Manila International Airport. The Authority may establish such offices, branches,
agencies or subsidiaries as it may deem proper and necessary; Provided, That any subsidiary that
may be organized shall have the prior approval of the President.
The land where the Airport is presently located as well as the surrounding land area of
approximately six hundred hectares, are hereby transferred, conveyed and assigned to the
ownership and administration of the Authority, subject to existing rights, if any. The Bureau of Lands
and other appropriate government agencies shall undertake an actual survey of the area transferred
within one year from the promulgation of this Executive Order and the corresponding title to be
issued in the name of the Authority. Any portion thereof shall not be disposed through sale or
through any other mode unless specifically approved by the President of the Philippines.
xxx
SECTION 5. Functions, Powers, and Duties. The Authority shall have the following functions,
powers and duties:
xxx
(d) To sue and be sued in its corporate name;
(e) To adopt and use a corporate seal;
(f) To succeed by its corporate name;
(g) To adopt its by-laws, and to amend or repeal the same from time to time;
(h) To execute or enter into contracts of any kind or nature;
(i) To acquire, purchase, own, administer, lease, mortgage, sell or otherwise dispose of any land,
building, airport facility, or property of whatever kind and nature, whether movable or immovable, or
any interest therein;
(j) To exercise the power of eminent domain in the pursuit of its purposes and objectives;
xxx
(o) To exercise all the powers of a corporation under the Corporation Law, insofar as these powers
are not inconsistent with the provisions of this Executive Order.
xxx
SECTION 16. Borrowing Power. The Authority may, after consultation with the Minister of
Finance and with the approval of the President of the Philippines, as recommended by the Minister
of Transportation and Communications, raise funds, either from local or international sources, by
way of loans, credits or securities, and other borrowing instruments, with the power to create
pledges, mortgages and other voluntary liens or encumbrances on any of its assets or properties.
All loans contracted by the Authority under this Section, together with all interests and other sums
payable in respect thereof, shall constitute a charge upon all the revenues and assets of the
Authority and shall rank equally with one another, but shall have priority over any other claim or
charge on the revenue and assets of the Authority: Provided, That this provision shall not be
construed as a prohibition or restriction on the power of the Authority to create pledges, mortgages,
and other voluntary liens or encumbrances on any assets or property of the Authority.
Except as expressly authorized by the President of the Philippines the total outstanding
indebtedness of the Authority in the principal amount, in local and foreign currency, shall not at any
time exceed the net worth of the Authority at any given time.
xxx
The President or his duly authorized representative after consultation with the Minister of Finance
may guarantee, in the name and on behalf of the Republic of the Philippines, the payment of the
loans or other indebtedness of the Authority up to the amount herein authorized.
These cited provisions establish the fitness of MIAA to be the subject of legal relations.
96
MIAA under
its charter may acquire and possess property, incur obligations, and bring civil or criminal actions. It
has the power to contract in its own name, and to acquire title to real or personal property. It likewise
may exercise a panoply of corporate powers and possesses all the trappings of corporate
personality, such as a corporate name, a corporate seal and by-laws. All these are contained in
MIAA's charter which, as conceded by the Corporation Code and even the Administrative Code, is
the primary law that governs the definition and organization of the MIAA.
In fact, MIAA itself believes that it is a GOCC represents itself as such. It said so itself in the very
first paragraph of the present petition before this Court.
97
So does, apparently, the Department of
Budget and Management, which classifies MIAA as a "government owned & controlled corporation"
on its internet website.
98
There is also the matter of Executive Order No. 483, which evinces the
belief of the then-president of the Philippines that MIAA is a GOCC. And the Court before had
similarly characterized MIAA as a government-owned and controlled corporation in the earlier MIAA
case, Manila International Airport Authority v. Commission on Audit.
99

Why then the hesitance to declare MIAA a GOCC? As the majority repeatedly asserts, it is because
MIAA is actually an instrumentality. But the very definition relied upon by the majority of an
instrumentality under the Administrative Code clearly states that a GOCC is likewise an
instrumentality or an agency. The question of whether MIAA is a GOCC might not even be
determinative of this Petition, but the effect of the majority's disquisition on that matter may even be
more destructive than the ruling that MIAA is exempt from realty taxes. Is the majority ready to live
up to the momentous consequences of its flawed reasoning?
Novel Proviso in 1987 Constitution
Prescribing Standards in the
Creation of GOCCs Necessarily
Applies only to GOCCs Created
After 1987.
One last point on this matter on whether MIAA is a GOCC. The majority triumphantly points to
Section 16, Article XII of the 1987 Constitution, which mandates that the creation of GOCCs through
special charters be "in the interest of the common good and subject to the test of economic viability."
For the majority, the test of economic viability does not apply to government entities vested with
corporate powers and performing essential public services. But this test of "economic viability" is
new to the constitutional framework. No such test was imposed in previous Constitutions, including
the 1973 Constitution which was the fundamental law in force when the MIAA was created. How
then could the MIAA, or any GOCC created before 1987 be expected to meet this new precondition
to the creation of a GOCC? Does the dissent seriously suggest that GOCCs created before 1987
may be declassified on account of their failure to meet this "economic viability test"?
Instrumentalities and Agencies
Also Generally Liable For
Real Property Taxes
Next, the majority, having bludgeoned its way into asserting that MIAA is not a GOCC, then argues
that MIAA is an instrumentality. It cites incompletely, as earlier stated, the provision of Section 2(10)
of the Administrative Code. A more convincing view offered during deliberations, but which was not
adopted by the ponencia, argued that MIAA is not an instrumentality but an agency, considering the
fact that under the Administrative Code, the MIAA is attached within the department framework of
the Department of Transportation and Communications.
100
Interestingly, Executive Order No. 341,
enacted by President Arroyo in 2004, similarly calls MIAA an agency. Since instrumentalities are
expressly defined as "an agency not integrated within the department framework," that view
concluded that MIAA cannot be deemed an instrumentality.
Still, that distinction is ultimately irrelevant. Of course, as stated earlier, the Administrative Code
considers GOCCs as agencies,
101
so the fact that MIAA is an agency does not exclude it from
classification as a GOCC. On the other hand, the majority justifies MIAA's purported exemption on
Section 133 of the Local Government Code, which similarly situates "agencies and instrumentalities"
as generally exempt from the taxation powers of LGUs. And on this point, the majority again evades
Mactan and somehow concludes that Section 133 is the general rule, notwithstanding Sections 232
and 234(a) of the Local Government Code. And the majority's ultimate conclusion? "By express
mandate of the Local Government Code, local governments cannot impose any kind of tax on
national government instrumentalities like the MIAA. Local governments are devoid of power to tax
the national government, its agencies and instrumentalities."
102

The Court's interpretation of the Local Government Code in Mactan renders the law integrally
harmonious and gives due accord to the respective prerogatives of the national government and
LGUs. Sections 133 and 234(a) ensure that the Republic of the Philippines or its political
subdivisions shall not be subjected to any form of local government taxation, except realty taxes if
the beneficial use of the property owned has been granted for consideration to a taxable entity or
person. On the other hand, Section 133 likewise assures that government instrumentalities such as
GOCCs may not be arbitrarily taxed by LGUs, since they could be subjected to local taxation if there
is a specific proviso thereon in the Code. One such proviso is Section 137, which as the Court found
in National Power Corporation,
103
permits the imposition of a franchise tax on businesses enjoying a
franchise, even if it be a GOCC such as NPC. And, as the Court acknowledged in Mactan, Section
232 provides another exception on the taxability of instrumentalities.
The majority abjectly refuses to engage Section 232 of the Local Government Code although it
provides the indubitable general rule that LGUs "may levy an annual ad valorem tax on real property
such as land, building, machinery, and other improvements not hereafter specifically exempted." The
specific exemptions are provided by Section 234. Section 232 comes sequentially after Section
133(o),
104
and even if the sequencing is irrelevant, Section 232 would fall under the qualifying phrase
of Section 133, "Unless otherwise provided herein." It is sad, but not surprising that the majority is
not willing to consider or even discuss the general rule, but only the exemptions under Section 133
and Section 234. After all, if the majority is dead set in ruling for MIAA no matter what the law says,
why bother citing what the law does say.
Constitution, Laws and
Jurisprudence Have Long
Explained the Rationale
Behind the Local Taxation
Of GOCCs.
This blithe disregard of precedents, almost all of them unanimously decided, is nowhere more
evident than in the succeeding discussion of the majority, which asserts that the power of local
governments to tax national government instrumentalities be construed strictly against local
governments. The Maceda case, decided before the Local Government Code, is cited, as is Basco.
This section of the majority employs deliberate pretense that the Code never existed, or that the
fundamentals of local autonomy are of limited effect in our country. Why is it that the Local
Government Code is barely mentioned in this section of the majority? Because Section 5 of the
Code, purposely omitted by the majority provides for a different rule of interpretation than that
asserted:
Section 5. Rules of Interpretation. In the interpretation of the provisions of this Code, the following
rules shall apply:
(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor, and
in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the
lower local government unit. Any fair and reasonable doubt as to the existence of the power shall be
interpreted in favor of the local government unit concerned;
(b) In case of doubt, any tax ordinance or revenue measure shall be construed strictly against the
local government unit enacting it, and liberally in favor of the taxpayer. Any tax exemption, incentive
or relief granted by any local government unit pursuant to the provisions of this Code shall be
construed strictly against the person claiming it; xxx
Yet the majority insists that "there is no point in national and local governments taxing each other,
unless a sound and compelling policy requires such transfer of public funds from one government
pocket to another."
105
I wonder whether the Constitution satisfies the majority's desire for "a sound
and compelling policy." To repeat:
Article II. Declaration of Principles and State Policies
xxx
Sec. 25. The State shall ensure the autonomy of local governments.
Article X. Local Government
xxx
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
xxx
Section 5. Each local government unit shall have the power to create its own sources of revenues
and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall
accrue exclusively to the local governments.
Or how about the Local Government Code, presumably an expression of sound and compelling
policy considering that it was enacted by the legislature, that veritable source of all statutes:
SEC. 129. Power to Create Sources of Revenue. - Each local government unit shall exercise its
power to create its own sources of revenue and to levy taxes, fees, and charges subject to the
provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges
shall accrue exclusively to the local government units.
Justice Puno, in National Power Corporation v. City of Cabanatuan,
106
provides a more "sound and
compelling policy considerations" that would warrant sustaining the taxability of government-owned
entities by local government units under the Local Government Code.
Doubtless, the power to tax is the most effective instrument to raise needed revenues to finance and
support myriad activities of the local government units for the delivery of basic services essential to
the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the
people. As this Court observed in the Mactan case, "the original reasons for the withdrawal of tax
exemption privileges granted to government-owned or controlled corporations and all other units of
government were that such privilege resulted in serious tax base erosion and distortions in the tax
treatment of similarly situated enterprises." With the added burden of devolution, it is even more
imperative for government entities to share in the requirements of development, fiscal or otherwise,
by paying taxes or other charges due from them.
107

I dare not improve on Justice Puno's exhaustive disquisition on the statutory and jurisprudential shift
brought about the acceptance of the principles of local autonomy:
In recent years, the increasing social challenges of the times expanded the scope of state activity,
and taxation has become a tool to realize social justice and the equitable distribution of wealth,
economic progress and the protection of local industries as well as public welfare and similar
objectives. Taxation assumes even greater significance with the ratification of the 1987 Constitution.
Thenceforth, the power to tax is no longer vested exclusively on Congress; local legislative bodies
are now given direct authority to levy taxes, fees and other charges pursuant to Article X, section 5
of the 1987 Constitution, viz:
"Section 5. Each Local Government unit shall have the power to create its own sources of revenue,
to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees and charges shall
accrue exclusively to the Local Governments."
This paradigm shift results from the realization that genuine development can be achieved only by
strengthening local autonomy and promoting decentralization of governance. For a long time, the
country's highly centralized government structure has bred a culture of dependence among local
government leaders upon the national leadership. It has also "dampened the spirit of initiative,
innovation and imaginative resilience in matters of local development on the part of local government
leaders." 35 The only way to shatter this culture of dependence is to give the LGUs a wider role in
the delivery of basic services, and confer them sufficient powers to generate their own sources for
the purpose. To achieve this goal, section 3 of Article X of the 1987 Constitution mandates Congress
to enact a local government code that will, consistent with the basic policy of local autonomy, set the
guidelines and limitations to this grant of taxing powers, viz:
"Section 3. The Congress shall enact a local government code which shall provide for a more
responsive and accountable local government structure instituted through a system of
decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the
different local government units their powers, responsibilities, and resources, and provide for the
qualifications, election, appointment and removal, term, salaries, powers and functions and duties of
local officials, and all other matters relating to the organization and operation of the local units."
To recall, prior to the enactment of the Rep. Act No. 7160, also known as the Local Government
Code of 1991 (LGC), various measures have been enacted to promote local autonomy. These
include the Barrio Charter of 1959, the Local Autonomy Act of 1959, the Decentralization Act of 1967
and the Local Government Code of 1983. Despite these initiatives, however, the shackles of
dependence on the national government remained. Local government units were faced with the
same problems that hamper their capabilities to participate effectively in the national development
efforts, among which are: (a) inadequate tax base, (b) lack of fiscal control over external sources of
income, (c) limited authority to prioritize and approve development projects, (d) heavy dependence
on external sources of income, and (e) limited supervisory control over personnel of national line
agencies.
Considered as the most revolutionary piece of legislation on local autonomy, the LGC effectively
deals with the fiscal constraints faced by LGUs. It widens the tax base of LGUs to include taxes
which were prohibited by previous laws such as the imposition of taxes on forest products, forest
concessionaires, mineral products, mining operations, and the like. The LGC likewise provides
enough flexibility to impose tax rates in accordance with their needs and capabilities. It does not
prescribe graduated fixed rates but merely specifies the minimum and maximum tax rates and
leaves the determination of the actual rates to the respective sanggunian.
108

And the Court's ruling through Justice Azcuna in Philippine Ports Authority v. City of Iloilo
109
, provides
especially clear and emphatic rationale:
In closing, we reiterate that in taxing government-owned or controlled corporations, the State
ultimately suffers no loss. In National Power Corp. v. Presiding Judge, RTC, Br. XXV, 38 we
elucidated:
Actually, the State has no reason to decry the taxation of NPC's properties, as and by way of real
property taxes. Real property taxes, after all, form part and parcel of the financing apparatus of the
Government in development and nation-building, particularly in the local government level.
xxxxxxxxx
To all intents and purposes, real property taxes are funds taken by the State with one hand and
given to the other. In no measure can the government be said to have lost anything.
Finally, we find it appropriate to restate that the primary reason for the withdrawal of tax exemption
privileges granted to government-owned and controlled corporations and all other units of
government was that such privilege resulted in serious tax base erosion and distortions in the tax
treatment of similarly situated enterprises, hence resulting in the need for these entities to share in
the requirements of development, fiscal or otherwise, by paying the taxes and other charges due
from them.
110

How does the majority counter these seemingly valid rationales which establish the soundness of a
policy consideration subjecting national instrumentalities to local taxation? Again, by simply ignoring
that these doctrines exist. It is unfortunate if the majority deems these cases or the principles of
devolution and local autonomy as simply too inconvenient, and relies instead on discredited
precedents. Of course, if the majority faces the issues squarely, and expressly discusses why Basco
was right and Mactan was wrong, then this entire endeavor of the Court would be more intellectually
satisfying. But, this is not a game the majority wants to play.
Mischaracterization of My
Views on the Tax Exemption
Enjoyed by the National Government
Instead, the majority engages in an extended attack pertaining to Section 193, mischaracterizing my
views on that provision as if I had been interpreting the provision as making "the national
government, which itself is a juridical person, subject to tax by local governments since the national
government is not included in the enumeration of exempt entities in Section 193."
111

Nothing is farther from the truth. I have never advanced any theory of the sort imputed in the
majority. My main thesis on the matter merely echoes the explicit provision of Section 193 that
unless otherwise provided in the Local Government Code (LGC) all tax exemptions enjoyed by all
persons, whether natural or juridical, including GOCCs, were withdrawn upon the effectivity of the
Code. Since the provision speaks of withdrawal of tax exemptions of persons, it follows that the
exemptions theretofore enjoyed by MIAA which is definitely a person are deemed withdrawn upon
the advent of the Code.
On the other hand, the provision does not address the question of who are beyond the reach of the
taxing power of LGUs. In fine, the grant of tax exemption or the withdrawal thereof assumes that the
person or entity involved is subject to tax. Thus, Section 193 does not apply to entities which were
never given any tax exemption. This would include the national government and its political
subdivisions which, as a general rule, are not subjected to tax in the first place.
112
Corollarily, the
national government and its political subdivisions do not need tax exemptions. And Section 193
which ordains the withdrawal of tax exemptions is obviously irrelevant to them.
Section 193 is in point for the disposition of this case as it forecloses dependence for the grant of tax
exemption to MIAA on Section 21 of its charter. Even the majority should concede that the charter
section is now ineffectual, as Section 193 withdraws the tax exemptions previously enjoyed by all
juridical persons.
With Section 193 mandating the withdrawal of tax exemptions granted to all persons upon the
effectivity of the LGC, for MIAA to continue enjoying exemption from realty tax, it will have to rely on
a basis other than Section 21 of its charter.
Lung Center of the Philippines v. Quezon City
113
provides another illustrative example of the
jurisprudential havoc wrought about by the majority. Pursuant to its charter, the Lung Center was
organized as a trust administered by an eponymous GOCC organized with the SEC.
114
There is no
doubt it is a GOCC, even by the majority's reckoning. Applying the Administrative Code, it is also
considered as an agency, the term encompassing even GOCCs. Yet since the Administrative Code
definition of "instrumentalities" encompasses agencies, especially those not attached to a line
department such as the Lung Center, it also follows that the Lung Center is an instrumentality, which
for the majority is exempt from all local government taxes, especially real estate taxes. Yet just in
2004, the Court unanimously held that the Lung Center was not exempt from real property taxes.
Can the majority and Lung Center be reconciled? I do not see how, and no attempt is made to
demonstrate otherwise.
Another key point. The last paragraph of Section 234 specifically asserts that any previous
exemptions from realty taxes granted to or enjoyed by all persons, including all GOCCs, are thereby
withdrawn. The majority's interpretation of Sections 133 and 234(a) however necessarily implies that
all instrumentalities, including GOCCs, can never be subjected to real property taxation under the
Code. If that is so, what then is the sense of the last paragraph specifically withdrawing previous tax
exemptions to all persons, including GOCCs when juridical persons such as MIAA are anyway, to
his view, already exempt from such taxes under Section 133? The majority's interpretation would
effectively render the express and emphatic withdrawal of previous exemptions to GOCCs inutile. Ut
magis valeat quam pereat. Hence, where a statute is susceptible of more than one interpretation, the
court should adopt such reasonable and beneficial construction which will render the provision
thereof operative and effective, as well as harmonious with each other.
115

But, the majority seems content rendering as absurd the Local Government Code, since it does not
have much use anyway for the Code's general philosophy of fiscal autonomy, as evidently seen by
the continued reliance on Basco or Maceda. Local government rule has never been a grant of
emancipation from the national government. This is the favorite bugaboo of the opponents of local
autonomythe fallacy that autonomy equates to independence.
Thus, the conclusion of the majority is that under Section 133(o), MIAA as a government
instrumentality is beyond the reach of local taxation because it is not subject to taxes, fees or
charges of any kind. Moreover, the taxation of national instrumentalities and agencies by LGUs
should be strictly construed against the LGUs, citing Maceda and Basco. No mention is made of the
subsequent rejection of these cases in jurisprudence following the Local Government Code,
including Mactan. The majority is similarly silent on the general rule under Section 232 on real
property taxation or Section 5 on the rules of construction of the Local Government Code.
V.
MIAA, and not the National Government
Is the Owner of the Subject Taxable Properties
Section 232 of the Local Government Code explicitly provides that there are exceptions to the
general rule on rule property taxation, as "hereafter specifically exempted." Section 234, certainly
"hereafter," provides indubitable basis for exempting entities from real property taxation. It provides
the most viable legal support for any claim that an governmental entity such as the MIAA is exempt
from real property taxes. To repeat:
SECTION 234. Exemptions from Real Property Tax. -- The following are exempted from payment of
the real property tax:
xxx
(f) Real property owned by the Republic of the Philippines or any of its political subdivisions except
when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person:
The majority asserts that the properties owned by MIAA are owned by the Republic of the
Philippines, thus placing them under the exemption under Section 234. To arrive at this conclusion,
the majority employs four main arguments.
MIAA Property Is Patrimonial
And Not Part of Public Dominion
The majority claims that the Airport Lands and Buildings are property of public dominion as defined
by the Civil Code, and therefore owned by the State or the Republic of the Philippines. But as
pointed out by Justice Azcuna in the first PPA case, if indeed a property is considered part of the
public dominion, such property is "owned by the general public and cannot be declared to be owned
by a public corporation, such as [the PPA]."
Relevant on this point are the following provisions of the MIAA charter:
Section 3. Creation of the Manila International Airport Authority. xxx
The land where the Airport is presently located as well as the surrounding land area of
approximately six hundred hectares, are hereby transferred, conveyed and assigned to the
ownership and administration of the Authority, subject to existing rights, if any. xxx Any portion
thereof shall not be disposed through sale or through any other mode unless specifically approved
by the President of the Philippines.
Section 22. Transfer of Existing Facilities and Intangible Assets. All existing public airport facilities,
runways, lands, buildings and other property, movable or immovable, belonging to the Airport, and
all assets, powers rights, interests and privileges belonging to the Bureau of Air Transportation
relating to airport works or air operations, including all equipment which are necessary for the
operation of crash fire and rescue facilities, are hereby transferred to the Authority.
Clearly, it is the MIAA, and not either the State, the Republic of the Philippines or the national
government that asserts legal title over the Airport Lands and Buildings. There was an express
transfer of ownership between the MIAA and the national government. If the distinction is to be
blurred, as the majority does, between the State/Republic/Government and a body corporate such
as the MIAA, then the MIAA charter showcases the remarkable absurdity of an entity transferring
property to itself.
Nothing in the Civil Code or the Constitution prohibits the State from transferring ownership over
property of public dominion to an entity that it similarly owns. It is just like a family transferring
ownership over the properties its members own into a family corporation. The family exercises
effective control over the administration and disposition of these properties. Yet for several purposes
under the law, such as taxation, it is the corporation that is deemed to own those properties. A
similar situation obtains with MIAA, the State, and the Airport Lands and Buildings.
The second Public Ports Authority case, penned by Justice Callejo, likewise lays down useful
doctrines in this regard. The Court refuted the claim that the properties of the PPA were owned by
the Republic of the Philippines, noting that PPA's charter expressly transferred ownership over these
properties to the PPA, a situation which similarly obtains with MIAA. The Court even went as far as
saying that the fact that the PPA "had not been issued any torrens title over the port and port
facilities and appurtenances is of no legal consequence. A torrens title does not, by itself, vest
ownership; it is merely an evidence of title over properties. xxx It has never been recognized as a
mode of acquiring ownership over real properties."
116

The Court further added:
xxx The bare fact that the port and its facilities and appurtenances are accessible to the general
public does not exempt it from the payment of real property taxes. It must be stressed that the said
port facilities and appurtenances are the petitioner's corporate patrimonial properties, not for public
use, and that the operation of the port and its facilities and the administration of its buildings are in
the nature of ordinary business. The petitioner is clothed, under P.D. No. 857, with corporate status
and corporate powers in the furtherance of its proprietary interests xxx The petitioner is even
empowered to invest its funds in such government securities approved by the Board of Directors,
and derives its income from rates, charges or fees for the use by vessels of the port premises,
appliances or equipment. xxx Clearly then, the petitioner is a profit-earning corporation; hence, its
patrimonial properties are subject to tax.
117

There is no doubt that the properties of the MIAA, as with the PPA, are in a sense, for public use. A
similar argument was propounded by the Light Rail Transit Authority in Light Rail Transit Authority v.
Central Board of Assessment,
118
which was cited in Philippine Ports Authority and deserves renewed
emphasis. The Light Rail Transit Authority (LRTA), a body corporate, "provides valuable
transportation facilities to the paying public."
119
It claimed that its carriage-ways and terminal stations
are immovably attached to government-owned national roads, and to impose real property taxes
thereupon would be to impose taxes on public roads. This view did not persuade the Court, whose
decision was penned by Justice (now Chief Justice) Panganiban. It was noted:
Though the creation of the LRTA was impelled by public service to provide mass transportation to
alleviate the traffic and transportation situation in Metro Manila its operation undeniably partakes
of ordinary business. Petitioner is clothed with corporate status and corporate powers in the
furtherance of its proprietary objectives. Indeed, it operates much like any private corporation
engaged in the mass transport industry. Given that it is engaged in a service-oriented commercial
endeavor, its carriageways and terminal stations are patrimonial property subject to tax,
notwithstanding its claim of being a government-owned or controlled corporation.
xxx
Petitioner argues that it merely operates and maintains the LRT system, and that the actual users of
the carriageways and terminal stations are the commuting public. It adds that the public use
character of the LRT is not negated by the fact that revenue is obtained from the latter's operations.
We do not agree. Unlike public roads which are open for use by everyone, the LRT is accessible
only to those who pay the required fare. It is thus apparent that petitioner does not exist solely for
public service, and that the LRT carriageways and terminal stations are not exclusively for public
use. Although petitioner is a public utility, it is nonetheless profit-earning. It actually uses those
carriageways and terminal stations in its public utility business and earns money therefrom.
120

xxx
Even granting that the national government indeed owns the carriageways and terminal stations, the
exemption would not apply because their beneficial use has been granted to petitioner, a taxable
entity.
121

There is no substantial distinction between the properties held by the PPA, the LRTA, and the MIAA.
These three entities are in the business of operating facilities that promote public transportation.
The majority further asserts that MIAA's properties, being part of the public dominion, are outside the
commerce of man. But if this is so, then why does Section 3 of MIAA's charter authorize the
President of the Philippines to approve the sale of any of these properties? In fact, why does MIAA's
charter in the first place authorize the transfer of these airport properties, assuming that indeed
these are beyond the commerce of man?
No Trust Has Been Created
Over MIAA Properties For
The Benefit of the Republic
The majority posits that while MIAA might be holding title over the Airport Lands and Buildings, it is
holding it in trust for the Republic. A provision of the Administrative Code is cited, but said provision
does not expressly provide that the property is held in trust. Trusts are either express or implied, and
only those situations enumerated under the Civil Code would constitute an implied trust. MIAA does
not fall within this enumeration, and neither is there a provision in MIAA's charter expressly stating
that these properties are being held in trust. In fact, under its charter, MIAA is obligated to retain up
to eighty percent (80%) of its gross operating income, not an inconsequential sum assuming that the
beneficial owner of MIAA's properties is actually the Republic, and not the MIAA.
Also, the claim that beneficial ownership over the MIAA remains with the government and not MIAA
is ultimately irrelevant. Section 234(a) of the Local Government Code provides among those
exempted from paying real property taxes are "[r]eal property owned by the [Republic] except
when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person." In the context of Section 234(a), the identity of the beneficial owner over the properties is
not determinative as to whether the exemption avails. It is the identity of the beneficial user of the
property owned by the Republic or its political subdivisions that is crucial, for if said beneficial user is
a taxable person, then the exemption does not lie.
I fear the majority confuses the notion of what might be construed as "beneficial ownership" of the
Republic over the properties of MIAA as nothing more than what arises as a consequence of the fact
that the capital of MIAA is contributed by the National Government.
122
If so, then there is no
difference between the State's ownership rights over MIAA properties than those of a majority
stockholder over the properties of a corporation. Even if such shareholder effectively owns the
corporation and controls the disposition of its assets, the personality of the stockholder remains
separately distinct from that of the corporation. A brief recall of the entrenched rule in corporate law
is in order:
The first consequence of the doctrine of legal entity regarding the separate identity of the corporation
and its stockholders insofar as their obligations and liabilities are concerned, is spelled out in this
general rule deeply entrenched in American jurisprudence:
Unless the liability is expressly imposed by constitutional or statutory provisions, or by the charter, or
by special agreement of the stockholders, stockholders are not personally liable for debts of the
corporation either at law or equity. The reason is that the corporation is a legal entity or artificial
person, distinct from the members who compose it, in their individual capacity; and when it contracts
a debt, it is the debt of the legal entity or artificial person the corporation and not the debt of the
individual members. (13A Fletcher Cyc. Corp. Sec. 6213)
The entirely separate identity of the rights and remedies of a corporation itself and its individual
stockholders have been given definite recognition for a long time. Applying said principle, the
Supreme Court declared that a corporation may not be made to answer for acts or liabilities of its
stockholders or those of legal entities to which it may be connected, or vice versa. (Palay Inc. v.
Clave et. al. 124 SCRA 638) It was likewise declared in a similar case that a bonafide corporation
should alone be liable for corporate acts duly authorized by its officers and directors. (Caram Jr. v.
Court of Appeals et.al. 151 SCRA, p. 372)
123

It bears repeating that MIAA under its charter, is expressly conferred the right to exercise all the
powers of a corporation under the Corporation Law, including the right to corporate succession, and
the right to sue and be sued in its corporate name.
124
The national government made a particular
choice to divest ownership and operation of the Manila International Airport and transfer the same to
such an empowered entity due to perceived advantages. Yet such transfer cannot be deemed
consequence free merely because it was the State which contributed the operating capital of this
body corporate.
The majority claims that the transfer the assets of MIAA was meant merely to effect a reorganization.
The imputed rationale for such transfer does not serve to militate against the legal consequences of
such assignment. Certainly, if it was intended that the transfer should be free of consequence, then
why was it effected to a body corporate, with a distinct legal personality from that of the State or
Republic? The stated aims of the MIAA could have very well been accomplished by creating an
agency without independent juridical personality.
VI.
MIAA Performs Proprietary Functions
Nonetheless, Section 234(f) exempts properties owned by the Republic of the Philippines or its
political subdivisions from realty taxation. The obvious question is what comprises "the Republic of
the Philippines." I think the key to understanding the scope of "the Republic" is the phrase "political
subdivisions." Under the Constitution, political subdivisions are defined as "the provinces, cities,
municipalities and barangays."
125
In correlation, the Administrative Code of 1987 defines "local
government" as referring to "the political subdivisions established by or in accordance with the
Constitution."
Clearly then, these political subdivisions are engaged in the exercise of sovereign functions and are
accordingly exempt. The same could be said generally of the national government, which would be
similarly exempt. After all, even with the principle of local autonomy, it is inherently noxious and self-
defeatist for local taxation to interfere with the sovereign exercise of functions. However, the
exercise of proprietary functions is a different matter altogether.
Sovereign and Proprietary
Functions Distinguished
Sovereign or constituent functions are those which constitute the very bonds of society and are
compulsory in nature, while ministrant or proprietary functions are those undertaken by way of
advancing the general interests of society and are merely optional.
126
An exhaustive discussion on
the matter was provided by the Court in Bacani v. NACOCO:
127

xxx This institution, when referring to the national government, has reference to what our
Constitution has established composed of three great departments, the legislative, executive, and
the judicial, through which the powers and functions of government are exercised. These functions
are twofold: constituent and ministrant. The former are those which constitute the very bonds of
society and are compulsory in nature; the latter are those that are undertaken only by way of
advancing the general interests of society, and are merely optional. President Wilson enumerates
the constituent functions as follows:
"'(1) The keeping of order and providing for the protection of persons and property from violence and
robbery.
'(2) The fixing of the legal relations between man and wife and between parents and children.
'(3) The regulation of the holding, transmission, and interchange of property, and the determination
of its liabilities for debt or for crime.
'(4) The determination of contract rights between individuals.
'(5) The definition and punishment of crime.
'(6) The administration of justice in civil cases.
'(7) The determination of the political duties, privileges, and relations of citizens.
'(8) Dealings of the state with foreign powers: the preservation of the state from external danger or
encroachment and the advancement of its international interests.'" (Malcolm, The Government of the
Philippine Islands, p. 19.)
The most important of the ministrant functions are: public works, public education, public charity,
health and safety regulations, and regulations of trade and industry. The principles determining
whether or not a government shall exercise certain of these optional functions are: (1) that a
government should do for the public welfare those things which private capital would not naturally
undertake and (2) that a government should do these things which by its very nature it is better
equipped to administer for the public welfare than is any private individual or group of individuals.
(Malcolm, The Government of the Philippine Islands, pp. 19-20.)
From the above we may infer that, strictly speaking, there are functions which our government is
required to exercise to promote its objectives as expressed in our Constitution and which are
exercised by it as an attribute of sovereignty, and those which it may exercise to promote merely the
welfare, progress and prosperity of the people. To this latter class belongs the organization of those
corporations owned or controlled by the government to promote certain aspects of the economic life
of our people such as the National Coconut Corporation. These are what we call government-owned
or controlled corporations which may take on the form of a private enterprise or one organized with
powers and formal characteristics of a private corporations under the Corporation Law.
128

The Court in Bacani rejected the proposition that the National Coconut Corporation exercised
sovereign functions:
Does the fact that these corporations perform certain functions of government make them a part of
the Government of the Philippines?
The answer is simple: they do not acquire that status for the simple reason that they do not come
under the classification of municipal or public corporation. Take for instance the National Coconut
Corporation. While it was organized with the purpose of "adjusting the coconut industry to a position
independent of trade preferences in the United States" and of providing "Facilities for the better
curing of copra products and the proper utilization of coconut by-products," a function which our
government has chosen to exercise to promote the coconut industry, however, it was given a
corporate power separate and distinct from our government, for it was made subject to the
provisions of our Corporation Law in so far as its corporate existence and the powers that it may
exercise are concerned (sections 2 and 4, Commonwealth Act No. 518). It may sue and be sued in
the same manner as any other private corporations, and in this sense it is an entity different from our
government. As this Court has aptly said, "The mere fact that the Government happens to be a
majority stockholder does not make it a public corporation" (National Coal Co. vs. Collector of
Internal Revenue, 46 Phil., 586-587). "By becoming a stockholder in the National Coal Company, the
Government divested itself of its sovereign character so far as respects the transactions of the
corporation. . . . Unlike the Government, the corporation may be sued without its consent, and is
subject to taxation. Yet the National Coal Company remains an agency or instrumentality of
government." (Government of the Philippine Islands vs. Springer, 50 Phil., 288.)
The following restatement of the entrenched rule by former SEC Chairperson Rosario Lopez bears
noting:
The fact that government corporations are instrumentalities of the State does not divest them with
immunity from suit. (Malong v. PNR, 138 SCRA p. 63) It is settled that when the government
engages in a particular business through the instrumentality of a corporation, it divests itself pro hoc
vice of its sovereign character so as to subject itself to the rules governing private corporations,
(PNB v. Pabolan 82 SCRA 595) and is to be treated like any other corporation. (PNR v. Union de
Maquinistas Fogonero y Motormen, 84 SCRA 223)
In the same vein, when the government becomes a stockholder in a corporation, it does not exercise
sovereignty as such. It acts merely as a corporator and exercises no other power in the
management of the affairs of the corporation than are expressly given by the incorporating act. Nor
does the fact that the government may own all or a majority of the capital stock take from the
corporation its character as such, or make the government the real party in interest. (Amtorg Trading
Corp. v. US 71 F2d 524, 528)
129

MIAA Performs Proprietary
Functions No Matter How
Vital to the Public Interest
The simple truth is that, based on these accepted doctrinal tests, MIAA performs proprietary
functions. The operation of an airport facility by the State may be imbued with public interest, but it is
by no means indispensable or obligatory on the national government. In fact, as demonstrated in
other countries, it makes a lot of economic sense to leave the operation of airports to the private
sector.
The majority tries to becloud this issue by pointing out that the MIAA does not compete in the
marketplace as there is no competing international airport operated by the private sector; and that
MIAA performs an essential public service as the primary domestic and international airport of the
Philippines. This premise is false, for one. On a local scale, MIAA competes with other international
airports situated in the Philippines, such as Davao International Airport and MCIAA. More pertinently,
MIAA also competes with other international airports in Asia, at least. International airlines take into
account the quality and conditions of various international airports in determining the number of
flights it would assign to a particular airport, or even in choosing a hub through which destinations
necessitating connecting flights would pass through.
Even if it could be conceded that MIAA does not compete in the market place, the example of the
Philippine National Railways should be taken into account. The PNR does not compete in the
marketplace, and performs an essential public service as the operator of the railway system in the
Philippines. Is the PNR engaged in sovereign functions? The Court, in Malong v. Philippine National
Railways,
130
held that it was not.
131

Even more relevant to this particular case is Teodoro v. National Airports Corporation,
132
concerning
the proper appreciation of the functions performed by the Civil Aeronautics Administration (CAA),
which had succeeded the defunction National Airports Corporation. The CAA claimed that as an
unincorporated agency of the Republic of the Philippines, it was incapable of suing and being sued.
The Court noted:
Among the general powers of the Civil Aeronautics Administration are, under Section 3, to execute
contracts of any kind, to purchase property, and to grant concession rights, and under Section 4, to
charge landing fees, royalties on sales to aircraft of aviation gasoline, accessories and supplies, and
rentals for the use of any property under its management.
These provisions confer upon the Civil Aeronautics Administration, in our opinion, the power to sue
and be sued. The power to sue and be sued is implied from the power to transact private business.
And if it has the power to sue and be sued on its behalf, the Civil Aeronautics Administration with
greater reason should have the power to prosecute and defend suits for and against the National
Airports Corporation, having acquired all the properties, funds and choses in action and assumed all
the liabilities of the latter. To deny the National Airports Corporation's creditors access to the courts
of justice against the Civil Aeronautics Administration is to say that the government could impair the
obligation of its corporations by the simple expedient of converting them into unincorporated
agencies.
133

xxx
Eventually, the charter of the CAA was revised, and it among its expanded functions was "[t]o
administer, operate, manage, control, maintain and develop the Manila International
Airport."
134
Notwithstanding this expansion, in the 1988 case of CAA v. Court of Appeals
135
the Court
reaffirmed the ruling that the CAA was engaged in "private or non-governmental functions."
136
Thus,
the Court had already ruled that the predecessor agency of MIAA, the CAA was engaged in private
or non-governmental functions. These are more precedents ignored by the majority. The following
observation from the Teodoro case very well applies to MIAA.
The Civil Aeronautics Administration comes under the category of a private entity. Although not a
body corporate it was created, like the National Airports Corporation, not to maintain a necessary
function of government, but to run what is essentially a business, even if revenues be not its prime
objective but rather the promotion of travel and the convenience of the traveling public. It is engaged
in an enterprise which, far from being the exclusive prerogative of state, may, more than the
construction of public roads, be undertaken by private concerns.
137

If the determinative point in distinguishing between sovereign functions and proprietary functions is
the vitality of the public service being performed, then it should be noted that there is no more
important public service performed than that engaged in by public utilities. But notably, the
Constitution itself authorizes private persons to exercise these functions as it allows them to operate
public utilities in this country
138
If indeed such functions are actually sovereign and belonging
properly to the government, shouldn't it follow that the exercise of these tasks remain within the
exclusive preserve of the State?
There really is no prohibition against the government taxing itself,
139
and nothing obscene with
allowing government entities exercising proprietary functions to be taxed for the purpose of raising
the coffers of LGUs. On the other hand, it would be an even more noxious proposition that the
government or the instrumentalities that it owns are above the law and may refuse to pay a validly
imposed tax. MIAA, or any similar entity engaged in the exercise of proprietary, and not sovereign
functions, cannot avoid the adverse-effects of tax evasion simply on the claim that it is imbued with
some of the attributes of government.
VII.
MIAA Property Not Subject to
Execution Sale Without Consent
Of the President.
Despite the fact that the City of Paraaque ineluctably has the power to impose real property taxes
over the MIAA, there is an equally relevant statutory limitation on this power that must be fully
upheld. Section 3 of the MIAA charter states that "[a]ny portion [of the [lands transferred, conveyed
and assigned to the ownership and administration of the MIAA] shall not be disposed through sale or
through any other mode unless specifically approved by the President of the Philippines."
140

Nothing in the Local Government Code, even with its wide grant of powers to LGUs, can be deemed
as repealing this prohibition under Section 3, even if it effectively forecloses one possible remedy of
the LGU in the collection of delinquent real property taxes. While the Local Government Code
withdrew all previous local tax exemptions of the MIAA and other natural and juridical persons, it did
not similarly withdraw any previously enacted prohibitions on properties owned by GOCCs, agencies
or instrumentalities. Moreover, the resulting legal effect, subjecting on one hand the MIAA to local
taxes but on the other hand shielding its properties from any form of sale or disposition, is not
contradictory or paradoxical, onerous as its effect may be on the LGU. It simply means that the LGU
has to find another way to collect the taxes due from MIAA, thus paving the way for a mutually
acceptable negotiated solution.
141

There are several other reasons this statutory limitation should be upheld and applied to this case. It
is at this juncture that the importance of the Manila Airport to our national life and commerce may be
accorded proper consideration. The closure of the airport, even by reason of MIAA's legal omission
to pay its taxes, will have an injurious effect to our national economy, which is ever reliant on air
travel and traffic. The same effect would obtain if ownership and administration of the airport were to
be transferred to an LGU or some other entity which were not specifically chartered or tasked to
perform such vital function. It is for this reason that the MIAA charter specifically forbids the sale or
disposition of MIAA properties without the consent of the President. The prohibition prevents the
peremptory closure of the MIAA or the hampering of its operations on account of the demands of its
creditors. The airport is important enough to be sheltered by legislation from ordinary legal
processes.
Section 3 of the MIAA charter may also be appreciated as within the proper exercise of executive
control by the President over the MIAA, a GOCC which despite its separate legal personality, is still
subsumed within the executive branch of government. The power of executive control by the
President should be upheld so long as such exercise does not contravene the Constitution or the
law, the President having the corollary duty to faithfully execute the Constitution and the laws of the
land.
142
In this case, the exercise of executive control is precisely recognized and authorized by the
legislature, and it should be upheld even if it comes at the expense of limiting the power of local
government units to collect real property taxes.
Had this petition been denied instead with Mactan as basis, but with the caveat that the MIAA
properties could not be subject of execution sale without the consent of the President, I suspect that
the parties would feel little distress. Through such action, both the Local Government Code and the
MIAA charter would have been upheld. The prerogatives of LGUs in real property taxation, as
guaranteed by the Local Government Code, would have been preserved, yet the concerns about the
ruinous effects of having to close the Manila International Airport would have been averted. The
parties would then be compelled to try harder at working out a compromise, a task, if I might add,
they are all too willing to engage in.
143
Unfortunately, the majority will cause precisely the opposite
result of unremitting hostility, not only to the City of Paraaque, but to the thousands of LGUs in the
country.
VIII.
Summary of Points
My points may be summarized as follows:
1) Mactan and a long line of succeeding cases have already settled the rule that under the Local
Government Code, enacted pursuant to the constitutional mandate of local autonomy, all natural and
juridical persons, even those GOCCs, instrumentalities and agencies, are no longer exempt from
local taxes even if previously granted an exemption. The only exemptions from local taxes are those
specifically provided under the Local Government Code itself, or those enacted through subsequent
legislation.
2) Under the Local Government Code, particularly Section 232, instrumentalities, agencies and
GOCCs are generally liable for real property taxes. The only exemptions therefrom under the same
Code are provided in Section 234, which include real property owned by the Republic of the
Philippines or any of its political subdivisions.
3) The subject properties are owned by MIAA, a GOCC, holding title in its own name. MIAA, a
separate legal entity from the Republic of the Philippines, is the legal owner of the properties, and is
thus liable for real property taxes, as it does not fall within the exemptions under Section 234 of the
Local Government Code.
4) The MIAA charter expressly bars the sale or disposition of MIAA properties. As a result, the City
of Paraaque is prohibited from seizing or selling these properties by public auction in order to
satisfy MIAA's tax liability. In the end, MIAA is encumbered only by a limited lien possessed by the
City of Paraaque.
On the other hand, the majority's flaws are summarized as follows:
1) The majority deliberately ignores all precedents which run counter to its hypothesis, including
Mactan. Instead, it relies and directly cites those doctrines and precedents which were overturned by
Mactan. By imposing a different result than that warranted by the precedents without explaining why
Mactan or the other precedents are wrong, the majority attempts to overturn all these ruling sub
silencio and without legal justification, in a manner that is not sanctioned by the practices and
traditions of this Court.
2) The majority deliberately ignores the policy and philosophy of local fiscal autonomy, as mandated
by the Constitution, enacted under the Local Government Code, and affirmed by precedents.
Instead, the majority asserts that there is no sound rationale for local governments to tax national
government instrumentalities, despite the blunt existence of such rationales in the Constitution, the
Local Government Code, and precedents.
3) The majority, in a needless effort to justify itself, adopts an extremely strained exaltation of the
Administrative Code above and beyond the Corporation Code and the various legislative charters, in
order to impose a wholly absurd definition of GOCCs that effectively declassifies innumerable
existing GOCCs, to catastrophic legal consequences.
4) The majority asserts that by virtue of Section 133(o) of the Local Government Code, all national
government agencies and instrumentalities are exempt from any form of local taxation, in
contravention of several precedents to the contrary and the proviso under Section 133, "unless
otherwise provided herein [the Local Government Code]."
5) The majority erroneously argues that MIAA holds its properties in trust for the Republic of the
Philippines, and that such properties are patrimonial in character. No express or implied trust has
been created to benefit the national government. The legal distinction between sovereign and
proprietary functions, as affirmed by jurisprudence, likewise preclude the classification of MIAA
properties as patrimonial.
IX.
Epilogue
If my previous discussion still fails to convince on how wrong the majority is, then the following points
are well-worth considering. The majority cites the Bangko Sentral ng Pilipinas (Bangko Sentral) as a
government instrumentality that exercises corporate powers but not organized as a stock or non-
stock corporation. Correspondingly for the majority, the Bangko ng Sentral is exempt from all forms
of local taxation by LGUs by virtue of the Local Government Code.
Section 125 of Rep. Act No. 7653, The New Central Bank Act, states:
SECTION 125. Tax Exemptions. The Bangko Sentral shall be exempt for a period of five (5)
years from the approval of this Act from all national, provincial, municipal and city taxes, fees,
charges and assessments.
The New Central Bank Act was promulgated after the Local Government Code if the BSP is already
preternaturally exempt from local taxation owing to its personality as an "government
instrumentality," why then the need to make a new grant of exemption, which if the majority is to be
believed, is actually a redundancy. But even more tellingly, does not this provision evince a clear
intent that after the lapse of five (5) years, that the Bangko Sentral will be liable for provincial,
municipal and city taxes? This is the clear congressional intent, and it is Congress, not this Court
which dictates which entities are subject to taxation and which are exempt.
Perhaps this notion will offend the majority, because the Bangko Sentral is not even a government
owned corporation, but a government instrumentality, or perhaps "loosely", a "government corporate
entity." How could such an entity like the Bangko Sentral , which is not even a government owned
corporation, be subjected to local taxation like any mere mortal? But then, see Section 1 of the New
Central Bank Act:
SECTION 1. Declaration of Policy. The State shall maintain a central monetary authority that shall
function and operate as an independent and accountable body corporate in the discharge of its
mandated responsibilities concerning money, banking and credit. In line with this policy, and
considering its unique functions and responsibilities, the central monetary authority established
under this Act, while being a government-owned corporation, shall enjoy fiscal and administrative
autonomy.
Apparently, the clear legislative intent was to create a government corporation known as the Bangko
Sentral ng Pilipinas. But this legislative intent, the sort that is evident from the text of the provision
and not the one that needs to be unearthed from the bowels of the archival offices of the House and
the Senate, is for naught to the majority, as it contravenes the Administrative Code of 1987, which
after all, is "the governing law defining the status and relationship of government agencies and
instrumentalities" and thus superior to the legislative charter in determining the personality of a
chartered entity. Its like saying that the architect who designed a school building is better equipped
to teach than the professor because at least the architect is familiar with the geometry of the
classroom.
Consider further the example of the Philippine Institute of Traditional and Alternative Health Care
(PITAHC), created by Republic Act No. 8243 in 1997. It has similar characteristics as MIAA in that it
is established as a body corporate,
144
and empowered with the attributes of a
corporation,
145
including the power to purchase or acquire real properties.
146
However the PITAHC
has no capital stock and no members, thus following the majority, it is not a GOCC.
The state policy that guides PITAHC is the development of traditional and alternative health
care,
147
and its objectives include the promotion and advocacy of alternative, preventive and curative
health care modalities that have been proven safe, effective and cost effective.
148
"Alternative health
care modalities" include "other forms of non-allophatic, occasionally non-indigenous or imported
healing methods" which include, among others "reflexology, acupuncture, massage, acupressure"
and chiropractics.
149

Given these premises, there is no impediment for the PITAHC to purchase land and construct
thereupon a massage parlor that would provide a cheaper alternative to the opulent spas that have
proliferated around the metropolis. Such activity is in line with the purpose of the PITAHC and with
state policy. Is such massage parlor exempt from realty taxes? For the majority, it is, for PITAHC is
an instrumentality or agency exempt from local government taxation, which does not fall under the
exceptions under Section 234 of the Local Government Code. Hence, this massage parlor would not
just be a shelter for frazzled nerves, but for taxes as well.
Ridiculous? One might say, certainly a decision of the Supreme Court cannot be construed to
promote an absurdity. But precisely the majority, and the faulty reasoning it utilizes, opens itself up
to all sorts of mischief, and certainly, a tax-exempt massage parlor is one of the lesser evils that
could arise from the majority ruling. This is indeed a very strange and very wrong decision.
I dissent.
DANTE O. TINGA
Associate Justice


Footnotes
1
Dated 16 September 1983.
2
Dated 26 July 1987.
3
Section 3, MIAA Charter.
4
Section 22, MIAA Charter.
5
Section 3, MIAA Charter.
6
Rollo, pp. 22-23.
7
Under Rule 45 of the 1997 Rules of Civil Procedure.
8
330 Phil. 392 (1996).
9
MIAA Charter as amended by Executive Order No. 298. See note 2.
10
Batas Pambansa Blg. 68.
11
Section 11 of the MIAA Charter provides:
Contribution to the General Fund for the Maintenance and Operation of other
Airports. Within thirty (30) days after the close of each quarter, twenty percentum
(20%) of the gross operating income, excluding payments for utilities of tenants and
concessionaires and terminal fee collections, shall be remitted to the General Fund in
the National Treasury to be used for the maintenance and operation of other
international and domestic airports in the country. Adjustments in the amount paid by
the Authority to the National Treasury under this Section shall be made at the end of
each year based on the audited financial statements of the Authority.
12
Section 5(j), MIAA Charter.
13
Section 6, MIAA Charter.
14
Section 5(k), MIAA Charter.
15
Section 5(o), MIAA Charter.
16
Third Whereas Clause, MIAA Charter.
17
Id.
18
Constitution, Art. X, Sec. 5.
19
274 Phil. 1060, 1100 (1991) quoting C. Dallas Sands, 3 Statutes and Statutory
Construction 207.
20
274 Phil. 323, 339-340 (1991).
21
Constitution, Art. VI, Sec. 28(1).
22
First Whereas Clause, MIAA Charter.
23
30 Phil. 602, 606-607 (1915).
24
102 Phil. 866, 869-870 (1958).
25
PNB v. Puruganan, 130 Phil. 498 (1968). See also Martinez v. CA, 155 Phil. 591 (1974).
26
MIAA Charter, Sec.16.
27
Chavez v. Public Estates Authority, 433 Phil. 506 (2002).
28
Section 3, MIAA Charter.
29
G.R. No. 144104, 29 June 2004, 433 SCRA 119, 138.
30
Republic Act No. 7653, 14 June 1993, Sec. 5.
31
Executive Order No. 1061, 5 November 1985, Sec. 3(p).
32
Republic Act No. 4850, 18 July 1966, Sec. 5.
33
Presidential Decree No. 977, 11 August 1976, Section 4(j).
34
Republic Act No. 7227, 13 March 1992, Sec. 3.
35
Presidential Decree No. 857, 23 December 1975, Sec. 6(b)(xvi).
36
Republic Act No. 4663, 18 June 1966, Sec. 7(m).
37
Republic Act No. 4567, 19 June 1965, Sec. 7(m).
38
Republic Act No. 7621, 26 June 1992, Sec. 7(m).
39
Republic Act No. 4156, 20 June 1964. Section 4(b).
40
Republic Act No. 3844, 8 August 1963, as amended by Republic Act No. 7907, 23
February 1995.
41
Executive Order No. 81, 3 December 1986.
42
Republic Act No. 8175, 29 December 1995.
43
Presidential Decree No. 252, 21 July 1973, as amended by Presidential Decree No. 1071,
25 January 1977 and Executive Order No. 1067, 25 November 1985.
44
Executive Order No. 80, 3 December 1986.
45
III Records, Constitutional Commission 63 (22 August 1986).
46
2003 ed., 1181.
47
Manila International Airport Authority v. Airspan Corporation, G.R. No. 157581, 1
December 2004, 445 SCRA 471.
TINGA, J .
1
Per Department of Interior and Local Government. See also "Summary" from the National
Statistical Coordination Board, http://www.nscb.gov.ph/activestats
/psgc/NSCB_PSGC_SUMMARY_DEC04.pdf.
2
330 Phil. 392 (1996).
3
G.R. No. 91649, 14 May 1991, 197 SCRA 52.
4
451 Phil. 683, 698 (2003).
5
364 Phil. 843, 855 (1999).
6
449 Phil. 233 (2003).
7
G.R. No. 152675 & 152771, 28 April 2004.
8
Decision, p. 24.
9
G.R. No. 144104, 29 June 2004, 433 SCRA 119.
10
Supra note 8.
11
G.R. No. 127383, 18 August 2005, 467 SCRA 280. Per the author of this Dissenting
Opinion.
12
Nonetheless, the Court noted therein GSIS's exemption from real property taxes was
reenacted in 1997, and the GSIS at present is exempt from such taxes under the GSIS Act
of 1997. Id., at 299.
13
G.R. No. 109791, 14 July 2003, 406 SCRA 88, and G.R. No. 143214, 11 November 2004,
442 SCRA 175, respectively.
14
118 Phil. 1354 (1963).
15
396 Phil. 860 (2000).
16
Supra note 8.
17
91 Phil 203 (1952).
18
G.R. No. L-51806, 8 November 1988, 167 SCRA 28.
19
G.R. No. 155692, 23 October 2003, 414 SCRA 327.
20
Id. at 333, citing Section 10, Book IV, Title III, Chapter 3, Administrative Code of 1987.
21
G.R. No. 165827, 16 June 2006.
22
G.R. No. 147192, 27 June 2006.
23
Supra note 8.
24
See Mendoza v. De Leon, 33 Phil. 508 (1916).
25
Mactan, supra note 2, at 397-398.
26
Section 193, Rep. Act No. 7160.
27
Section 232, Rep. Act No. 7160.
28
Section 234, Rep. Act No. 7160. Emphasis supplied.
29
Id. at 411-413.
30
See City of Davao v. RTC, supra note 11, at 293.
31
Supra note 3.
32
Id. at 63-65.
33
G.R. No. 88921, 31 May 1991, 197 SCRA 771.
34
Id. at 799.
35
Mactan, supra note 2, at 419-420.
36
Supra note 6.
37
Id. at 250-251.
38
G.R. No. 109791, 14 July 2003, 406 SCRA 88.
39
Id. at 99-100.
40
Supra note 21.
41
Id.
42
G.R. No. 143214, 11 November 2004, 442 SCRA 175.
43
Id., at 184.
44
Id. at 185-186, citing MCIAA v. Marcos, supra note 2.
45
Supra note 11.
46
P.D. No. 1981. See City of Davao v. RTC, supra note 40, at 289.
47
Id. at 287-288.
48
32 Phil. 36, 49; cited in City of Davao v. RTC, supra note 40 at 296-297.
49
Id.
50
Supra note 22.
51
Id.
52
Decision, p. 6.
53
MIAA's Charter (E.O No. 903, as amended) provides:
Section 3. Creation of the Manila International Airport Authority. xxx
The land where the Airport is presently located as well as the surrounding land area
of approximately six hundred hectares, are hereby transferred, conveyed and
assigned to the ownership and administration of the Authority, subject to existing
rights, if any. xxx Any portion thereof shall not be disposed through sale or through
any other mode unless specifically approved by the President of the Philippines.
Section 22. Transfer of Existing Facilities and Intangible Assets. All existing public
airport facilities, runways, lands, buildings and other property, movable or
immovable, belonging to the Airport, and all assets, powers rights, interests and
privileges belonging to the Bureau of Air Transportation relating to airport works or air
operations, including all equipment which are necessary for the operation of crash
fire and rescue facilities, are hereby transferred to the Authority.
On the other hand, MCIAA's charter (Rep. Act No. 6958) provides:
Section 15. Transfer of Existing Facilities and Intangible Assets. All existing public
airport facilities, runways, lands, buildings and other properties, movable or
immovable, belonging to or presently administered by the airports, and all assets,
powers, rights, interest and privileges relating to airport works or air operations,
including all equipment which are necessary for the operation of air navigation,
aerodrome control towers, crash, fire, and rescue facilities are hereby transferred to
the Authority: Provided, however, That the operational control of all equipment
necessary for the operation of radio aids to air navigation, airways communication,
the approach control office and the area control center shall be retained by the Air
Transportation Office. xxx
54
See Section 3, E.O. 903 (as amended), infra note 140; and Section Section 4(c), Rep. Act
No. 6958, which qualifies the power of the MCIAA to sell its properties, providing that "any
asset located in the Mactan International Airport important to national security shall not be
subject to alienation or mortgage by the Authority nor to transfer to any entity other than the
National Government."
55
See Section 16, E.O. 903 (as amended) and Section 13, Rep. Act No. 6958.
56
See Articles 40 to 43, Civil Code.
57
See Articles 44 to 47, Civil Code.
58
This is apparent from such assertions as "When the law vests in a government
instrumentality corporate powers, the instrumentality does not become a corporation. Unless
the government instrumentality is organized as a stock or non-stock corporation, it remains a
government instrumentality exercising not only governmental but also corporate powers."
See Decision, p. 9-10.
59
Decision, p. 9.
60
See Section 2(10), E.O. 292.
61
See Section 2(4), E.O No. 292.
62
50 Phil. 259 (1927).
63
Id., at 288.
64
See Sec. 5, Rep. Act No. 6395.
65
Section 3, Corporation Code.
66
See Section 13, Rep. Act No. 6395.
67
See Section 1, Rep. Act No. 7875.
68
See Section 16(i), Rep. Act No. 7875.
69
See Section 3, Rep. Act 8282.
70
Supra note 14.
71
See Section 2(b), Rep. Act No. 7656, which defines GOCCs as "corporations organized as
a stock or non-stock corporation xxx"
72
See Rep. Act No. 7656, the pertinent provisions of which read:
c. 3. Dividends.All government-owned or -controlled corporations shall declare and
remit at least fifty percent (50%) of their annual net earnings as cash, stock or
property dividends to the National Government. This section shall also apply to those
government-owned or -controlled corporations whose profit distribution is provided by
their respective charters or by special law, but shall exclude those enumerated in
Section 4 hereof: Provided, That such dividends accruing to the National
Government shall be received by the National Treasury and recorded as income of
the General Fund.
Sec. 4. Exemptions.The provisions of the preceding section notwithstanding,
government-owned or -controlled corporations created or organized by law to
administer real or personal properties or funds held in trust for the use and the
benefit of its members, shall not be covered by this Act such as, but not limited to:
the Government Service Insurance System, the Home Development Mutual Fund,
the Employees Compensation Commission, the Overseas Workers Welfare
Administration, and the Philippine Medical Care Commission.
73
See Pres. Decree No. 857 (as amended).
74
See Section 10, Pres. Decree No. 857.
75
See Section 11, Pres. Decree No. 857.
76
See Rep. Act No. 7227.
77
See Section 6, Rep. Act No. 7227.
78
See Rep. Act No. 7916.
79
See Section 47, Rep. Act No. 7916 in relation to Section 5, Pres. Decree No. 66.
80
See Executive Order No. 603, as amended.
81
See Article 6, Section 15 of Executive Order No. 603, as amended.
82
See Rep. Act No. 7653. If there is any doubt whether the BSP was intended to be covered
by Rep. Act No. 7656, see Section 2(b), Rep. Act No. 7656, which states that "This term
[GOCCs shall also include financial institutions, owned or controlled by the National
Government, but shall exclude acquired asset corporations, as defined in the next
paragraphs, state universities, and colleges."
83
See Section 2, Rep. Act No. 7653.
84
See Sections 43 & 44, Rep. Act No. 7653.
85
See Rep. Act No. 6395.
86
Supra note 35.
87
See Decision, p. 10.
88
Id. at 10-11.
89
Id.
90
See Rep. Act No. 3034.
91
See Rep. Act No. 4132.
92
See Rep. Act No. 6070.
93
See Rep. Act No. 5920.
94
See Rep. Act No. 4071.
95
See e.g., Sections 1 & 2, Rep. Act No. 6070.
Section 1. Declaration of Policy. It is hereby declared to be the policy of the
Congress to foster the accelerated and balanced growth of the Province of Ilocos
Sur, within the context of national plans and policies for social and economic
development, through the leadership, guidance, and support of the government. To
achieve this end, it is recognized that a government corporation should be created
for the purpose of drawing up the necessary plans of provincial development; xxx
Sec. 2. Ilocos Sur Development Authority created. There is hereby created a body
corporate to be known as the Ilocos Sur Development Authority xxx. The Authority
shall execute the powers and functions herein vested and conferred upon it in such
manner as will in its judgment, aid to the fullest possible extent in carrying out the
aims and purposes set forth below."
96
See Art. 37, Civil Code, which provides in part, "Juridical capacity, which is the fitness to
be the subject of legal relations"
97
See rollo, p. 18. "Petitioner [MIAA] is a government-owned and controlled corporation with
original charter as it was created by virtue of Executive Order No. 903 issued by then
President Ferdinand E. Marcos on July 21, 1983, as amended by Executive Order No. 298
issued by President Corazon C. Aquino on July 26, 1987, and with office address at the
MIAA Administration Bldg Complex, MIAA Road, Pasay City." (emphasis supplied).
98
See "Department of Budget and Management Web Linkages," http://www.dbm.
gov.ph/web_linkages.htm (Last visited 25 February 2005).
99
G.R. No. 104217, 5 December 1994, 238 SCRA 714; per Quiazon, J.. "Petitioner MIAA is
a government-owned and controlled corporation for the purpose, among others, of
encouraging and promoting international and domestic air traffic in the Philippines as a
means of making the Philippines a center of international trade and tourism and accelerating
the development of the means of transportation and communications in the country". Id. at
716.
100
See Section 23, Chapter 6, Title XV, Book IV, Administrative Code of 1987.
101
Supra note 60.
102
Supra note 8.
103
Supra note 6.
104
Assuming that there is conflict between Section 133(o), Section 193, Section 232 and
Section 234 of the Local Government Code, the rule in statutory construction is, "If there be
no such ground for choice between inharmonious provisions or sections, the latter provision
or section, being the last expression of the legislative will, must, in construction, vacate the
former to the extent of the repugnancy. It has been held that in case of irreconcilable conflict
between two provisions of the same statute, the last in order of position is frequently held to
prevail, unless it clearly appears that the intent of the legislature is otherwise." R. Agpalo,
Statutory Construction (3rd ed., 1995), p. 201; citing Lichauco & Co. v. Apostol, 44 Phil. 138
(1922); Cuyegkeng v. Cruz, 108 Phil. 1147 (1960); Montenegro v. Castaeda, 91 Phil. 882
(1952).
105
Decision, p. 12.
106
Supra note 6.
107
Id. at 261-262.
108
Id., at 248-250.
109
Supra note 38.
110
Id, at 102; citing National Power Corp. v. Presiding Judge, RTC, Br. XXV, 190 SCRA 477
(1990).
111
Decision, p. 25.
112
"Unless otherwise expressed in the tax law, the government and its political subdivisions
are exempt therefrom." J. Vitug and E. Acosta, Tax Law and Jurisprudence (2nd ed., 2000),
at 36.
113
Supra note 9.
114
See P.D. No. 1423.
115
R. Agpalo, Statutory Construction (3rd ed., 1995), at 199; citing Javellana v. Tayo, G.R.
No. 18919, 29 December 1982, 6 SCRA 1042 (1962); Radiola-Toshiba Phil., Inc. v. IAC, 199
SCRA 373 (1991).
116
PPA v. City of Iloilo, supra note 42.
117
Id., at 186-187.
118
Supra note 15.
119
Id. at 869.
120
Id. at 871.
121
Id. at 872.
122
See Section 10, E.O. No. 903.
123
R. Lopez, I The Corporation Code of the Philippines Annotated, pp. 15-16 (1994).
124
See Section 5, E.O. No. 903.
125
See Section 1, Article X of the Constitution, which reads: "The territorial and political
subdivisions of the Republic of the Philippines are the provinces, cities, municipalities and
barangays xxx"
126
Romualdez-Yap v. CSC, G.R. No. 104226, 12 August 1993, 225 SCRA 285, 294.
127
100 Phil. 468. (1956)
128
Id., at 471-473.
129
Lopez, supra note 123 at 67.
130
G.R. No. L-49930, 7 August 1985, 138 SCRA 63.
131
"Did the State act in a sovereign capacity or in a corporate capacity when it organized the
PNR for the purpose of engaging in transportation? Did it act differently when it organized
the PNR as successor of the Manila Railroad Company? xxx We hold that in the instant case
the State divested itself of its sovereign capacity when it organized the PNR which is no
different from its predecessor, the Manila Railroad Company." Id, at 66.
132
Supra note 17.
133
Id., at 206.
134
Section 32(24), Rep. Act No. 776. See CAA v. Court of Appeals, supra note 18, at 36.
135
Supra note 18.
136
Id., at 36.
137
Teodoro v. National Airports Commission, supra note 17, at 207.
138
See Article XII, Section 11, Const.
139
Vitug & Acosta, supra note 112, at 35; citing Bisaya Land Transportation Co., Inc. v.
Collector of Internal Revenue, L-11812, 29 May 1959, 105 Phil. 1338.
140
See Section 3, E.O. 903, as amended.
141
Indeed, last 4 February 2005, the MIAA filed a Manifestation before this Court stating that
its new General Manager had been conferring with the newly elected local government of
Paraaque with the end of settling the case at mutually acceptable terms. See rollo, pp. 315-
316. While this Manifestation was withdrawn a few weeks later, see rollo, pp. 320-322, it still
stands as proof that the parties are nevertheless willing to explore an extrajudicial settlement
of this case.
142
See Section 17, Article VII, Constitution. "The President shall have control of all the
executive departments. He shall ensure that the laws be faithfully executed."
143
See note 141.
144
See Section 5, Rep. Act No. 8423.
145
See Section 6(s), Rep. Act No. 8423.
146
See Section 6(r), Rep. Act No. 8423.
147
See Section 2, Rep. Act No. 8423.
148
See Section 3(b), Rep. Act No. 8423.
149
See Section 4(d), Rep. Act No. 8423.
















Republic of the Philippines
Supreme Court
Baguio City




SECOND DIVISION


HACIENDA BIGAA, INC.,
Petitioner,


- versus -



EPIFANIO V. CHAVEZ (deceased),
substituted by SANTIAGO V.
CHAVEZ,
Respondent. -- -
G.R. No. 174160

Present:

CARPIO, J., Chairperson,
BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.


Promulgated:

April 20, 2010
x----------------------------------------------------------------------------------------x

D E C I S I O N

BRION, J.:


This petition for review on certiorari
[1]
challenges the Court of Appeals (CA)
decision of May 31, 2001
[2]
and resolution of August 2, 2006
[3]
in CA-G.R. SP No.
46176, affirming in toto the judgments of both the Municipal Trial Court (MTC) of
Calatagan and the Regional Trial Court (RTC) of Batangas dismissing the complaint
for forcible entry in Civil Case No. 129.




THE FACTS

We summarize below the factual antecedents of the present case based on
the records before us.

On June 5, 1996, petitioner Hacienda Bigaa, Inc. (Hacienda Bigaa) filed with
the Municipal Trial Court (MTC) of Calatagan, Batangas a complaint
[4]
for
ejectment (forcible entry) and damages with application for writ of preliminary
injunction against respondent Epifanio V. Chavez (Chavez), docketed as Civil Case
No. 129. The complaint alleged that Chavez, by force, strategy and/or stealth,
entered on April 29, 1996 the premises of Hacienda Bigaa's properties covered by
Transfer Certificate of Title (TCT) Nos. 44695 and 56120 by cutting through a
section of the barbed wire fence surrounding the properties and destroying the
lock of one of its gates, subsequently building a house on the property, and
occupying the lots without the prior consent and against the will of Hacienda
Bigaa.

The records show that the lots were originally covered by TCT No.
722 owned by Ayala y Cia
[5]
and/or Alfonso, Jacobo and Enrique Zobel, with an
area of 9,652.583 hectares, known as Hacienda Calatagan. Ayala and/or the
Zobels expanded TCT No. 722 to cover an additional 2,000 hectares of land
consisting, among others, of beach, foreshore and bay areas, and navigable
waters (excess areas), making it appear that these excess areas are part of
Hacienda Calatagan's TCT No. 722. The Ayalas and/or the Zobels later ordered
the subdivision of the hacienda, including these excess areas, and sold the
subdivided lots to third parties.
[6]


Among the buyers or transferees of the expanded and subdivided areas
was Hacienda Bigaa which caused the issuance of titles TCT Nos. 44695 and
56120 under its name covering the purchased subdivided areas. Thus, in his
answer before the MTC of Calatagan, then defendant (now respondent) Epifanio
V. Chavez alleged that then plaintiff (now petitioner) Hacienda Bigaa is
the successor-in-interest of Ayala y Cia, Hacienda Calatagan, Alfonso Zobel, Jacobo
Zobel and Enrique Zobel the original titular owners of TCT No. 722.

Portions of the same lands foreshore lands were leased out by the
Republic, through the Bureau of Fisheries, to qualified applicants in whose favor
fishpond permits were issued. The government-issued fishpond permits
pertaining to lands covered by titles derived from TCT No. 722 of Ayala y Cia
and/or the Zobels, gave rise to ownership and/or possessory disputes between
the owners of Hacienda Calatagan and their privies and/or successors-in-interest,
on the one hand, and the Republic or its lessees or fishpond permittees, on the
other.

Suits were filed in various courts in Batangas for the recovery of the areas
in excess of the area originally covered by TCT No. 722, which suits ultimately
reached the Supreme Court. In the Court's 1965 decisions in Dizon v.
Rodriguez
[7]
(for quieting of title) and Republic v. Ayala y Cia and/or Hacienda
Calatagan, et al.
[8]
(for annulment of titles), the excess areas of TCT No. 722 were
categorically declared as unregisterable lands of the public domain such that any
title covering these excess areas are necessarily null and void. In these cases, the
Ayalas and the Zobels were found to be mere usurpers of public domain areas,
and all subdivision titles issued to them or their privies and covering these areas
were invalidated; the wrongfully registered public domain areas reverted to the
Republic. In Dizon, the Court declared as void the Zobels' TCT No. 2739 and its
derivative titles covering subdivision Lots 1 and 49 areas sold to the Dizons as
areas in excess of TCT No. 722 and are properly part of the public
domain. In Ayala y Cia, the Court invalidated TCT No. 9550 and all other
subdivision titles issued in favor of Ayala y Cia and/or the Zobels of Hacienda
Calatagan over the areas outside its private land covered by TCT No. 722. These
areas, including the lots covered by TCT No. 9550, reverted to public dominion.
[9]


The pronouncement in the above cases led to the Court's 1988 decision
in Republic v. De los Angeles,
[10]
a case covering the same excess areas under a
reinvindicatory claim of the Republic aimed at recovering lands usurped by the
Ayalas and the Zobels and at placing the Republics lessees and fishpond
permittees in possession. The Court effectively held that as owner of the excess
lands, the Republic has the right to place its lessees and fishpond permittees
among them Zoila de Chavez, predecessor-in-interest of Chavez in possession.
The Court invalidated TCT Nos. 3699 and 9262 for being among the other
subdivision titles declared void and ordered reverted to public dominion.

To return to the forcible entry case, then defendant (now respondent)
Chavez alleged in his answer before the MTC of Calatagan that his mother, Zoila
de Chavez (who died intestate on September 14, 1979) was a fishpond
permittee/lessee under Fishpond Permit Nos. F-4572-0 and F-24735 issued by the
Bureau of Fisheries on April 21, 1959 and June 3, 1966, respectively; that the
areas covered by the permits are the same parcels of land which he presently
occupies as Zoila's successor-in-interest and which Hacienda Bigaa also claims.

Chavez likewise asserted that Hacienda Bigaa is the successor-in-interest of
Ayala y Cia, Hacienda Calatagan, Alfonso Zobel, Jacobo Zobel and Enrique Zobel
who owned land with an area of 9,652.583 hectares, covered by TCT No. 722 in
the Registry of Deeds of Batangas; that Ayala y Cia, the Zobels, or Hacienda
Calatagan, illegally expanded the original area of TCT No. 722 by 2,000 hectares;
that suits were filed to recover the expanded area; that these suits reached the
Supreme Court which declared that these excess areas are part of the public
domain and ordered their reversion to the Republic; that the Supreme Court
likewise declared certain TCTs covering the subdivision lots outside the area of
TCT No. 722 and issued to transferees as null and void; therefore, Hacienda
Bigaa's titles TCT Nos. 44695 and 56120 carry no probative value as they are of
dubious origins and have been nullified by the Supreme Court.
[11]


Chavez further argued that the suit is barred by prior judgment in two prior
cases (1) Civil Case No. 78, a suit for unlawful detainer filed by the Zobels
against Chavezs predecessor-in-interest, Zoila de Chavez, before the then Justice
of the Peace Court (now Municipal Trial Court) of Calatagan, Batangas; and (2)
Civil Case No. 653, a case ofaccion reinvindicatoria with prayer for preliminary
mandatory injunction filed by the Republic, Zoila de Chavez, and other lessees or
fishpond permittees of the Republic, against Enrique Zobel (Hacienda Bigaa's
predecessor-in-interest) before the then Court of First Instance of Batangas. This
case reached this Court as G.R. No. L-30240 entitled Republic of the Philippines v.
De los Angeles, Enrique Zobel, et al.
[12]
and was decided in 1988. Chavez asserts
that the subject matter and the issues involved in these cases are squarely similar
and/or identical to the subject matter and issues involved in the present forcible
entry suit; the rulings in these two cases, therefore constitute res judicata with
respect to the present case.

The MTC held a preliminary conference where the parties stipulated and
identified the issues in the forcible entry case, viz: (1) who between the parties
has a better right of possession over the premises in question; (2) whether there
is res judicata; and (3) whether the parties are entitled to damages.
[13]
These are
essentially the same basic issues that are before us in the present petition.
The MTC, the RTC and the CAs Decision

The MTC rendered a decision
[14]
dismissing Hacienda Bigaa's complaint,
holding that the disputed lots form part of the areas illegally expanded and made
to appear to be covered by TCT No. 722 of Hacienda Bigaa's predecessors-in-
interest (Ayala y Cia and/or the Zobels of Hacienda Calatagan); hence, the
Hacienda's title are null and void. In so ruling, the MTC applied this Court's
pronouncements in the antecedent cases of Dizon v. Rodriguez,
[15]
Republic v.
Ayala y Cia and/or Hacienda Calatagan, Zobel, et al.,
[16]
and Republic v. De los
Angeles.
[17]


The MTC added that since Hacienda Bigaa did not present proof to
counter Chavez's claim that the disputed lots form part of the illegally expanded
areas of Hacienda Calatagan, these lots are deemed to be the same lots litigated
in the previous cases. The MTC also found prior possession in favor of Chavez, as
revealed by the antecedent cases particularly, De los Angeles where Chavezs
mother, Zoila de Chavez, had been ousted by the Zobels from the fishpond lots
she occupied. The MTC reasoned out that Zoila could not have been ousted from
the premises had she not been in prior possession. Since Epifanio succeeded Zoila
in the possession of the property, he inherited the latters prior possession and
cannot now be ousted by Hacienda Bigaa.

The MTC likewise rejected Hacienda Bigaa's contention that the subdivision
titles covering the disputed lots TCT Nos. 44695 and 56120 which were not
specifically canceled by the previous decisions of the Court should be given
probative value. The MTC ruled that the subsequent issuance of a certificate of
title in favor of the plaintiff does not vest title on it as the lands belong to the
public domain and cannot be registered.
[18]
The MTC stressed that the titles of
Hacienda Bigaa were among the other subdivision titles declared void in the
case of Ayala y Cia as areas not legitimately covered by TCT No. 722 and which
are therefore part of the public domain. As ordered in the three antecedent cases
of Dizon,
[19]
Ayala y Cia,
[20]
and De los Angeles,
[21]
they should revert to the
Republic. The MTC opined that Hacienda Bigaa has the burden of proving that
the subject lots are not part of the illegally expanded areas; Hacienda Bigaa failed
to discharge this duty when it did not present proof to controvert Chavez's
allegation that the lots covered by Haciendas TCTs are among the lots litigated in
the cited cases. The MTC reiterated the following ruling of the Court in Republic v.
De los Angeles:

x x x [F]or almost 23 years now execution of the 1965 final judgment in G.R. No.
L-20950, ordering the cancellation of the subdivision titles covering the expanded areas
outside the private lands of Hacienda Calatagan, is being frustrated by respondent
Zobel, the Ayala and/or Hacienda Calatagan. As a consequence, the mass usurpation of
lands of public domain consisting of portions of the territorial sea, the foreshore, beach
and navigable water bordering the Balayan Bay, Pagaspas Bay and the China Sea, still
remain unabated. The efforts of Ayala and Zobel to prevent execution of said final
judgment are evident from the heretofore-mentioned technical maneuvers they have
resorted to.

Clearly, the burden of proof lies on respondent Zobel and other transferees to
show that his subdivision titles are not among the unlawful expanded subdivision titles
declared null and void by the said 1965 judgment. Respondent Zobel not only did not
controvert the Republic's assertion that his titles are embraced within the phrase
other subdivision titles ordered canceled but failed to show that the subdivision
titles in his name cover lands within the original area covered by Ayala's TCT No. 722
(derived from OCT No. 20) and not part of the beach, foreshore and territorial sea
belonging and ordered reverted to public dominion in the aforesaid 1965
judgment.
[22]
x x x (Emphasis supplied.)

Based on the above disquisition and taking into account the consistent
efforts of Hacienda Bigaa's predecessors-in-interest in thwarting the execution
of the Court's decision in the antecedent cases, the MTC declared that the
Chavezes, as the Republics lessees/permittees, should have been in possession
long ago. The MTC held:

Thus, the court holds that the land now in litigation forms part of the public
dominion which properly belongs to the State. Suffice it to say that when the
defendant [Epifanio V. Chavez] entered and occupied the same on April 29, 1996, it
was in representation of the State being the successor-in-interest of Zoila de Chavez, a
government fishpond permittee and/or lessee. It should be recounted that Zoila de
Chavez was in actual physical possession of the land until she was ousted by Enrique
Zobel by bulldozing and flattening the area.

The recovery of this public land in favor of the State is long overdue. Zoila de
Chavez or her successor-in-interest should have been in actual and adequate
possession and occupation thereof long time ago by virtue of the Supreme Court
decisions anent the matter in 1965 which were reiterated in 1988 had not the plaintiff
and its predecessors-in-interest succeeded in defeating the enforcement of the said
decisions. To allow the plaintiff to retain possession of these usurped public lands by
ousting the government's fishpond permittees and/or lessees such as the defendant is
to further frustrate the decisions of the Supreme Court on the matter. (Emphasis
supplied.)


The MTC finally ruled that the elements of res judicata are present. The
forcible entry case before it shared an identity of parties with Civil Case No. 78
for unlawful detainer and Civil Case No. 653 (the Delos Angeles case) of accion
reinvindicatoria because all of these cases involve the predecessors-in-interest of
the present parties. In Civil Case No. 78, the plaintiff was Enrique Zobel,
predecessor of Hacienda Bigaa, and the defendant was Zoila de Chavez, mother
and predecessor of Epifanio V. Chavez. In Civil Case No. 653 which reached and
was decided by this Court in 1988 as Republic vs. De los Angeles, Zoila de Chavez
was one of the plaintiffs and Enrique Zobel was one of the defendants.
[23]
The
MTC also found identity of subject matter because the forcible entry case shared
with the previous cases the same subject matter, i.e., the same lands adjudged by
the Supreme Court as part of the public domain usurped by the Zobels, et
al. through their illegally expanded titles.
[24]
As to identity of causes of action,
the MTC held that although the previous cases were for unlawful detainer
and accion reinvindicatoria while the case before it was for forcible entry,
an identity of issues existed because all these cases involved conflicting claims of
ownership, occupation and possession of the property which have long been
settled by the Supreme Court. It recognized that under the concept of
conclusiveness of judgment, res judicata merely requires an identity of issue, not
an absolute identity of causes of action.
[25]


On October 1, 1996, Hacienda Bigaa appealed the MTC's decision to the
Regional Trial Court (RTC) of Batangas
[26]
which affirmed in toto the appealed
decision.

On February 16, 1998, Hacienda Bigaa filed its petition for review
[27]
with
the Court of Appeals (CA), docketed as CA-G.R. SP No. 46716. The CA in its
decision of June 1, 2001 dismissed the petition for review, totally affirming the
RTC and MTC decisions.
[28]
Hacienda Bigaa timely filed a motion for
reconsideration. However, while the motion was pending, Associate Justice
Salvador J. Valdez, Jr., the ponente of the decision sought to be reconsidered,
retired from the Judiciary. As a result, the motion slipped into hibernation for
five years.
[29]


The CA, on August 2, 2006, this time through Associate Justice Juan Q.
Enriquez, Jr., rendered its resolution on the motion for reconsideration.
[30]
It
denied reconsideration on the reasoning that the grounds and arguments raised
were mere iterations of those already raised in the petition for review.

THE PETITION

Hacienda Bigaa is now before us via a petition for review under Rule 45 of
the Rules of Court to assail the CA ruling. Among other things, it argues that the
CA's Resolution is patently erroneous because the grounds and arguments raised
in its motion for reconsideration were not mere reiterations; it claims, as one of
the grounds in its motion for reconsideration, that the final determination of the
scope and extent of the area allegedly in excess of that covered by TCT No. 722
of Ayala y Cia was made only after the petition for review was filed on February
16, 1998.

In its petition, Hacienda Bigaa raises the following issues of law:

I. WHETHER THE REGISTERED OWNER OF LAND IN POSSESSION
OF A TORRENS CERTIFICATE OF TITLE MUST ENJOY THE
OWNERSHIP AND POSSESSION, AMONG OTHERS, OF THE LAND
COVERED THEREBY, WHERE THE SAID TITLE HAS NOT BEEN
DECLARED NULL AND VOID, SUCH THAT THE TITLE MUST BE
GIVEN PROBATIVE VALUE.

II. WHETHER IT IS PETITIONER HACIENDA BIGAA OR ZOILA DE
CHAVEZ (OR HER SUCCESSOR, RESPONDENT EPIFANIO V.
CHAVEZ) WHO HAS A BETTER RIGHT OF POSSESSION OVER THE
SUBJECT LOTS.


THE COURT'S RULING

We find the petition unmeritorious.

We note at the outset that the objection on the delineation of the scope and
extent of the excess areas of TCT No. 722 came too late in the day; it is an issue
that the Hacienda admits to have raised for the first time when it sought
reconsideration of the CA decision. We significantly note, too, that this issue
involves a question of fact whose determination is improper in a Rule 45
proceeding before this Court.

Thus, to our mind, the only real questions appropriate for resolution at this
stage of the case are: (1) Do the TCTs of Hacienda Bigaa have probative value in
determining the issues of ownership and possession of the disputed lots? (2) Is
Chavez as successor-in-interest of government lessee or fishpond permittee
Zoila de Chavez entitled to possession of these lots? In these lights, the
resolution of this case hinges on the question of better title who, between the
petitioner and the respondent, has the better right of possession of the disputed
lots.

Are these issues misplaced in a forcible entry case?

To answer this, we hark back to the origins of the present case a complaint
for forcible entry that the MTC of Calatagan, Batangas dismissed. Both the RTC
and the CA subsequently affirmed this dismissal. As a forcible entry suit, the
threshold question presented is: was the prior possession of the then plaintiff (now
petitioner) Hacienda Bigaa over the disputed lots sufficiently established to give it
cause for the ejectment of then defendant (now respondent) Epifanio Chavez?

We recall in this regard that the MTC issued a pre-trial order identifying the
issues of (1) who has the better right of possession; and (2) res judicata.
[31]
On the
issue of possession, the MTC found the need to determine the question of title or
ownership in passing upon the question of possession after Chavez raised the issue
of ownership at that level. As a general rule in forcible entry cases, ownership or
title is inconsequential; the primordial issue is possession de facto and not
possession de jure. The court, however, may tackle the issue of ownership or title,
if raised, if this issue is indispensable in resolving the issue of possession.
[32]
Since
Chavez raised the question of ownership or title in his answer, the issue of
ownership became a material consideration in the lower court's inquiry into the
character, nature and extent of the parties claimed possession.

The MTC tackled the issue of prior possession by taking judicial notice of
our factual determination in De los Angeles that Zobel of Hacienda Calatagan
Hacienda Bigaa's predecessor-in-interest had ousted Zoila de Chavez Chavez's
predecessor-in-interest from the lots she occupied as a holder of government-
issued fishpond permits. The MTC in this regard held
[T]he court holds that the land now in litigation forms part of the public
dominion which properly belongs to the State. Suffice it to say that when
[respondent Chavez] entered and occupied the [premises] on April 29, 1996, it
was in representation of the State being the successor-in-interest of Zoila de
Chavez, a government fishpond permittee and/or lessee. It should be recounted
thatZoila de Chavez was in actual physical possession of the land until she
was ousted by Enrique Zobel by bulldozing and flattening the area.
(Emphasis supplied.)

Zoila de Chavez's ouster from the premises became the basis of the MTCs
conclusion that she had prior possession as she could not have been ousted from
the premises had she not been in prior possession. This point was reiterated in the
present petition by Chavez who died pending the resolution of this case and has
been substituted by his brother, Santiago V. Chavez.
[33]
The respondents
comment before us states:
[34]


Of note, as hereafter shown, [in the case of Republic vs. De los Angeles,
G.R. No. L-30240, March 25, 1988], the Supreme Court explicitly recognized the
priority of possession of the respondent [Chavez] over the subject lots:

[Respondent therein] Zobel had ousted Zoila de Chavez,
a government fishpond permittee, from a portion of subject
fishpond lot described as Lot 33 of Plan Swo-30999 (also known
as Lots 55 and 56 of subdivision TCT No. 3699) by bulldozing the
same, and [threatening] to eject fishpond permittees Zoila de
Chavez, Guillermo Mercado, Deogracias Mercado, and Rosendo
Ibaez from their respective fishpond lots described as Lots 4, 5, 6,
and 7, and Lots 55 and 56, of Plan Swo-30999, embraced in the
void subdivision titles TCT No. 6399 and TCT No. 9262 claimed
by said respondent. Thus, on August 2, 1967, the Republic filed an
Amended Complaint captioned Accion Reinvindicatoria with
Preliminary Injunction against respondent Zobel and the Register
of Deeds of Batangas, docketed as Civil Case No. 653, for
cancellation of Zobel's void subdivision titles TCT No. 3699 and
TCT No. 9262 and the reconveyance of the same to the
government; to place aforenamed fishpond permittees in peaceful
and adequate possession thereof; to require respondent Zobel to
pay back rentals to the Republic, and to enjoin said respondent
from usurping and exercising further acts of dominion and
ownership over the subject land of public domain.
[35]
(Emphasis
supplied.)

This argument on the direct issue of prior possession is separate from the
issue of ownership that Chavez raised as an issue determinative of
possession. The issue of ownership shifts our determination to who, between the
parties, has title and the concomitant right of possession to the disputed lots.

The issue of possession, as it relates with
the ownership of the disputed property,
has been conclusively resolved in the
antecedent cases.

As framed above, the case before us inevitably brings to memory the
antecedent decided cases touching on the ownership of the vast tract of land in
Calatagan, Batangas, covered by Transfer Certificate of Title (TCT) No. 722 in the
name/s of Ayala y Cia, Alfonso Zobel, Jacobo Zobel and Enrique Zobel and/or
Hacienda Calatagan the predecessors-in-interest of petitioner Hacienda
Bigaa. We ruled in the antecedent cases of Dizon,
[36]
Ayala y Cia,
[37]
and De los
Angeles,
[38]
that: (1) all expanded subdivision titles issued in the name of
Ayala y Cia, the Zobels and/or Hacienda Calatagan covering areas beyond the true
extent of TCT No. 722 are null and void because they cover areas belonging to the
public domain; (2) Ayala y Cia and the Zobels of Hacienda Calatagan are
mere usurpers of these public domain areas; and that (3) these areas
must revert to theRepublic. Significantly, we declared in De los Angeles that the
Republic, as the rightful owner of the expanded areas portions of the public
domain has the right to place its lessees and permittees (among them Zoila de
Chavez) in possession of the fishpond lots whose ownership and possession
were in issue in the case.

These antecedent cases lay to rest the issues of ownership and of
possession as an attribute thereof, which we both ruled to be in favor of the
Republic and its lessees or permittees.

The present case is a stark repetition of scenarios in these cases. The
protagonists remain virtually the same with petitioner Hacienda Bigaa taking
the place of its predecessors-in-interest Ayala y Cia and/or the Zobels of Hacienda
Calatagan, and respondent Epifanio V. Chavez taking the place of his predecessor-
in-interest Zoila de Chavez whose possession was under bona fide authority from
the Republic. Considering that in this case the disputed lots are among those
litigated in the antecedent cases and the issues of ownership and possession are
again in issue, the principle of res judicata inevitably must be considered and
applied, if warranted.

The doctrine of res judicata is set forth in Section 47 of Rule 39 of the Rules
of Court, which in its relevant part reads:

Sec. 47. Effect of judgments or final orders. The effect of a judgment
or final order rendered by a court of the Philippines, having jurisdiction to
pronounce the judgment or final order, may be as follows:

x x x x

(b) In other cases, the judgment or final order is, with respect to the matter
directly adjudged or as to any other matter that could have been raised in relation
thereto, conclusive between the parties and their successors in interest by title
subsequent to the commencement of the action or special proceeding, litigating
for the same thing and under the same title and in the same capacity; and

(c) In any other litigation between the same parties or their successors in
interest, that only is deemed to have been adjudged in a former judgment or final
order which appears upon its face to have been so adjudged, or which was
actually and necessarily included therein or necessary thereto.

This provision comprehends two distinct concepts of res judicata: (1) bar by
former judgment and (2) conclusiveness of judgment. Under the first
concept, res judicataabsolutely bars any subsequent action when the following
requisites concur: (a) the former judgment or order was final; (b) it adjudged the
pertinent issue or issues on their merits; (c) it was rendered by a court that had
jurisdiction over the subject matter and the parties; and (d) between the first and
the second actions, there was identity of parties, of subject matter, and of causes of
action.
[39]


Where no identity of causes of action but only identity of
issues exists, res judicata comes under the second concept i.e.,
under conclusiveness of judgment. Under this concept, the rule bars the re-
litigation of particular facts or issues involving the same parties even if raised
under different claims or causes of action.
[40]
Conclusiveness ofjudgment finds
application when a fact or question has been squarely put in issue, judicially passed
upon, and adjudged in a former suit by a court of competent jurisdiction. The fact
or question settled by final judgment or order binds the parties to that action (and
persons in privity with them or their successors-in-interest), and continues to bind
them while the judgment or order remains standing and unreversed by proper
authority on a timely motion or petition; the conclusively settled fact or question
furthermore cannot again be litigated in any future or other action between the
same parties or their privies and successors-in-interest, in the same or in any other
court of concurrent jurisdiction, either for the same or for a different cause of
action. Thus, only the identities of parties and issues are required for the operation
of the principle of conclusiveness of judgment.
[41]

While conclusiveness of judgment does not have the same barring effect as
that of a bar by former judgment that proscribes subsequent actions, the
former nonetheless estops the parties from raising in a later case the issues or
points that were raised and controverted, and were determinative of the ruling in
the earlier case.
[42]
In other words, the dictum laid down in the earlier final
judgment or order becomes conclusive and continues to be binding between the
same parties, their privies and successors-in-interest, as long as the facts on which
that judgment was predicated continue to be the facts of the case or incident before
the court in a later case; the binding effect and enforceability of that earlier dictum
can no longer be re-litigated in a later case since the issue has already been
resolved and finally laid to rest in the earlier case.
[43]


a. Identity of Parties

As already stated above, the parties to the present case are virtually the same
as those in the antecedent cases. Specifically in De los Angeles, the parties were
Enrique Zobel, the predecessor-in-interest of petitioner Hacienda Bigaa, and Zoila
de Chavez, the mother and predecessor-in-interest of Chavez.

b. Identity of Subject Matter

Hacienda Bigaa and Chavez are litigating the same properties subject of the
antecedent cases inasmuch as they claim better right of possession to parcels of
land covered by subdivision titles derived from Hacienda Calatagan's TCT No. 722
and by government-issued fishpond permits. Specifically in De los Angeles, the
Zobels and Zoila de Chavez litigated the disputed lots covered by subdivision titles
in Zobels name and by fishpond permits the Republic issued in favor of de
Chavez.

In ruling that the subject lots are the same lots litigated in the previously
decided cases, the courts below based their findings on De los Angeles that in turn
was guided by our rulings in Dizon and Ayala y Cia. For emphasis, we reiterate
our ruling in De los Angeles: all areas the Ayalas and/or the Zobels made to
appear to be covered by TCT No. 722 are owned by the Republic because they
form part of the public domain; specifically, portions of the navigable water
or of the foreshores of the bay converted into fishponds are parts of the public
domain that cannot be sold by the Ayalas and/or the Zobels to third parties.
In his answer before the MTC, Chavez asserted that the areas covered by the
fishpond permits of Zoila de Chavez are the same parcels of land that he now
occupies as Zoila's successor-in-interest. Given the rulings in the antecedent cases
that Chavez invoked, Hacienda Bigaa never bothered to object to or to rebut this
allegation to show that the presently disputed lots are not part of the expanded
areas that, apart from the specifically described titles, Ayala y Cia described
as other subdivision titles covering unregisterable lands of the public domain that
must revert to the Republic.
[44]
Hacienda Bigaa should have objected as we held
in De los Angeles that the onus is on Ayala and the Zobels Hacienda Bigaas
predecessors-in-interest to show that their titles do not cover the expanded
areas whose titles were declared null and void.
[45]
We find no cogent reason to
depart from our past rulings in the antecedent cases, and from the ruling of the
courts below in this case that the lots claimed by Hacienda Bigaa are the same lots
covered by our rulings in the antecedent cases.

c. Identity of Issues

This case and the antecedent cases all involve the issue of ownership or
better right of possession. In Ayala y Cia, we affirmed an RTC decision that
decreed:
WHEREFORE, judgment is hereby rendered as follows:

(a) Declaring as null and void Transfer Certificate of Title No. T-9550 (or Exhibit
24) of the Register of Deeds of the Province of Batangas and other subdivision
titles issued in favor of Ayala y Cia and;or Hacienda de Calatagan over the areas
outside its private land covered by TCT No. 722, which, including the lots in T-9550 (lots
360, 362, 363 and 182) are hereby reverted to public dominion.
[46]
(Emphasis supplied,
italics in the original.)

Consequently, lots and their titles derived from the Ayalas and the Zobels TCT
No. 722 not shown to be within the original coverage of this title are conclusively
public domain areas and their titles will be struck down as nullities.
Thus, De los Angeles
[47]
effectively annulled the subdivision titles disputed
in the case for being among the other subdivision titles declared void for
covering public domain areas, and ordered their reversion to the Republic. De los
Angeles recognized, too, the right of the Republic's lessees and public fishpond
permittees (among them Zoila de Chavez, mother and predecessor-in-interest of
Chavez) to possess the fishpond lots in question because they derive their right
of possession from the Republic the rightful owner of these lots.

We reject, based on these discussions, Hacienda Bigaa's position that there
could be no res judicata in this case because the present suit is for forcible entry
while the antecedent cases adverted were based on different causes of action
i.e., quieting of title, annulment of titles and accion reinvindicatoria. For, res
judicata, under the concept of conclusiveness of judgment, operates even if no
absolute identity of causes of action exists. Res judicata, in its conclusiveness of
judgment concept, merely requires identity of issues. We thus agree with the
uniform view of the lower courts the MTC, RTC and the CA on the application
of res judicata to the present case.

Hacienda Bigaa's Titles
Carry No Probative Value

Hacienda Bigaa contends that the rulings in the antecedent cases on the
nullity of its subdivision titles should not apply to the present case because the
titles TCT Nos. 44695 and 56120 have not been specifically declared void by
court order and must be given probative value. It likewise posits that Chavez
failed to introduce evidence before the MTC that the land subject matter of the
suit is the same land covered by the decision of the Supreme Court in the
antecedent cases.

We reject this contention in light of our holding in the Ayala y Cia and De los
Angeles cases that apart from those expressly litigated and annulled, all other
subdivision titles over the excess areas of Hacienda Calatagan must be nullified
for covering unregisterable lands of the public domain that must revert to the
Republic.
[48]
To reiterate, lots and their titles derived from the Ayalas and the
Zobels TCT No. 722 not shown to be within the original coverage of this title
are conclusively public domain areas and their titles will be struck down as
nullities. What could have saved Hacienda Bigaa, as successor-in-interest of the
Ayalas and the Zobels, is competent evidence that the subdivision titles in its
possession do not fall within the excess areas of TCT No. 722 that are null and
void because they are lands of the public domain. Hacienda Bigaa however
failed to discharge this burden.

Therefore, the Court of Appeals, citing Ayala y Cia and De los Angeles,
correctly held that

x x x [S]uffice it to state that as heretofore shown, the Supreme Court took
cognizance of the fact that Zoila de Chavez's fishpond permit is within the land
covered by the cited decision. Moreover, the Supreme Court has shifted the
burden of proof in this regard to Zobel or Ayala y Cia when it declared
that, Clearly, the burden of proof lies on respondent Zobel and other
transferees to show that his subdivision titles are not among the unlawful
expanded subdivision titles declared null and void by the said 1965
judgment.
[49]
(Emphasis supplied.)


In any event, Hacienda Bigaa can never have a better right of possession
over the subject lots above that of the Republic because the lots pertain to the
public domain. All lands of the public domain are owned by the State the
Republic. Thus, all attributes of ownership, including the right to possess and use
these lands, accrue to the Republic. Granting Hacienda Bigaa the right to possess
the subject premises would be equivalent to condoning an illegal act by allowing
it to perpetuate an affront and an offense against the State i.e., occupying and
claiming as its own lands of public dominion that are not susceptible of private
ownership and appropriation.
[50]
Hacienda Bigaa like its predecessors-in-
interests, the Ayalas and the Zobels is a mere usurper in these public lands. The
registration in Hacienda Bigaa's name of the disputed lots does not give it a better
right than what it had prior to the registration;
[51]
the issuance of the titles in its
favor does not redeem it from the status of a usurper. We so held in Ayala y
Cia and we reiterated this elementary principle of law in De los Angeles.
[52]
The
registration of lands of the public domain under the Torrens system, by itself,
cannot convert public lands into private lands.
[53]


As our last word, we find it particularly relevant to state here that we issued
on October 6, 2008 a Resolution in relation with the execution of our decision in
the antecedent cases of Ayala y Cia and De los Angeles.
[54]
In this Resolution, we
emphasized that the decision we consistently affirmed ordered the following: (1)
the nullification of all subdivision titles that were issued in favor of Ayala y Cia
and/or Hacienda Calatagan (and their successors-in-interest) over the areas
outside its private land covered by TCT No. 722; and (2) the declaration that all
lands or areas covered by these nullified titles are reverted to the public
domain. This should write finis to Hacienda Bigaas claim that its titles are
beyond the reach of our decision in the antecedent cases.

In sum, we find no reversible errors of law in the appealed decision of the
Court of Appeals.

WHEREFORE, we DENY the present petition and AFFIRM the Court of
Appeals decision of May 31, 2001 and resolution of August 2, 2006. We
accordinglyDISMISS WITH FINALITY the complaint for forcible entry in Civil
Case No. 129 before the Municipal Trial Court of Calatagan.



SO ORDERED.


ARTURO D. BRION
Associate Justice

WE CONCUR:



ANTONIO T. CARPIO
Associate Justice
Chairperson




MARIANO C. DEL CASTILLO
Associate Justice



ROBERTO A. ABAD
Associate Justice




JOSE PORTUGAL PEREZ
Associate Justice



ATTESTATION


I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.



ANTONIO T. CARPIO
Associate Justice
Chairperson










CERTIFICATION


Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the
above Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.




REYNATO S. PUNO
Chief
Justice



[1]
Under Rule 45 of the RULES OF COURT, rollo pp. 10-51.
[2]
In CA-G.R. SP No. 46716, rendered by the Seventeenth Division through Associate Justice Salvador J. Valdez,
Jr. and concurred in by Associate Justices Wenceslao I. Agnir, Jr. and Juan Q. Enriquez, Jr.; id. at 120-131.
[3]
Rendered by the Special Former Seventeenth Division, penned by Associate Justice Juan Q. Enriquez, Jr. and
concurred in by Associate Justices Edgardo P. Cruz and Vicente Q. Roxas; id. at 161-163.
[4]
Rollo, pp. 62-67.
[5]
For convenience, the abbreviation of Compania or Cia. shall be written simply as Cia without a period.
[6]
Decision of the Municipal Trial Court, September 4, 1996, rollo, pp. 68-83.
[7]
121 Phil 681 (1965).
[8]
121 Phil 1052 (1965).
[9]
Ibid.
[10]
G.R. No. L-30240, March 25, 1988, 159 SCRA 264; this case originated from an accion reinvidicatoria with
preliminary injunction filed by the Republic against Zobel for cancellation of Zobels void subdivision titles and
the reconveyance of the same to the government; to place the fishpond permittees Zoila de Chavez included in
peaceful and adequate possession thereof. In his Answer with counterclaim, Zobel argued that he has a valid title
to the lands. The RTC dismissed the complaint and found for Zobel as regards his counterclaim. We reversed the
RTC.
[11]
Decision of the Municipal Trial Court, infra note 13, at 71.
[12]
Supra note 9.
[13]
Decision of the Municipal Trial Court, infra, at 73.
[14]
Rollo, pp. 68-83.
[15]
Supra note 7.
[16]
Supra note 8.
[17]
Supra note 10.
[18]
See note 13, at 77-78.
[19]
Supra note 7.
[20]
Supra note 8.
[21]
Supra note 10.
[22]
Supra note 13, at 78-79, citing Republic v. De los Angeles; supra note 10, at 284 and 287.
[23]
See note 13, at 80.
[24]
Ibid.
[25]
Id. at 81-82.
[26]
Branch IX.
[27]
Supra note 1.
[28]
Supra note 2.
[29]
Petition for Review; supra note 1, at 29.
[30]
Supra note 3.
[31]
Decision of the Municipal Trial Court, supra note 13, at 73; see p. 5 of this decision.
[32]
Wilmon Auto Supply v. Court of Appeals, G.R. No. 97637, April 10, 1992, 208 SCRA 108; see also Sec. 33 (2),
Batas Pambansa Bilang 129, eff. Aug. 14, 1981, otherwise known as "The Judiciary Reorganization Act of 1980,"
which provides that the Municipal Trial Court, among others, has x x x [e]xclusive original jurisdiction over
cases of forcible entry and unlawful detainer: Provided, That when, in such cases the defendant raises the
question of ownership in his pleadings and the question of possession cannot be resolved without deciding the
issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession; x x x
[33]
Notice of Death and Substitution of Party Respondent, rollo, pp. 205-206, received by this Court on February 23,
2007.
[34]
Comment of Respondent Chavez, id. at 209-222.
[35]
Id. at 212-213, citing Republic v. De los Angeles; supra note 10, at 274-275.
[36]
Supra note 7.
[37]
Supra note 8.
[38]
Supra note 10.
[39]
Sta. Lucia Realty and Development v. Cabrigas, 411 Phil 369 (2001)
[40]
Ibid.
[41]
Calalang v. Register of Deeds, G.R. No. 76265, March 11, 1994, 231 SCRA 88
[42]
Camara v. Court of Appeals, 369 Phil 858, 868 (1999).
[43]
See Miranda v. Court of Appeals, 225 Phil 261, 265-266 (1986).
[44]
See Republic v. De los Angeles, supra note 10, at 284.
[45]
Id. at 301-302.
[46]
Republic v. Ayala y Cia, supra note 8, quoted in Republic v. De los Angeles, supra note 10, at 284.
[47]
Supra note 10.
[48]
Supra note 44.
[49]
Decision of the Court of Appeals, May 31, 2001, supra note 2, at 127-128, citing Republic v. De los
Angeles, supra note 10.
[50]
Republic v. De los Angeles, supra note 10, at 297.
[51]
Avila v. Tapucar, G.R. Nos. 93832 and 45947, August 27, 1991, 201 SCRA 148.
[52]
Republic v. Ayala y Cia, supra note 8, at 263, citing Dizon v. Bayona, 98 Phil 942, 948-949 (1956) and Dizon v.
Rodriguez, supra note 7.
[53]
Ibid.
[54]
G.R. Nos. L-26612 and L-30240, Resolution dated October 6, 2008, 567 SCRA 722.






Republic of the Philippines
Supreme Court
Manila


THIRD DIVISION



PIO MODESTO and CIRILA
RIVERA-MODESTO,
Petitioners,


- versus -


CARLOS URBINA, substituted by
the heirs of OLYMPIA MIGUEL
VDA. DE URBINA (Surviving
Spouse) and children, namely:
ESCOLASTICA M. URBINA, ET
AL.,
Respondents.
G.R. No. 189859

Present:

NACHURA, J.,

BRION, Acting Chairperson,

VILLARAMA, JR.,

MENDOZA, and
SERENO, JJ.


Promulgated:

October 18, 2010
x----------------------------------------------------------------------------------------x

R E S O L U T I O N


BRION, J .:

We resolve the motion for reconsideration filed by petitioners Pio Modesto
and Cirila Rivera Modesto (Modestos or petitioners) dated March 1,
2010,
[1]
seeking to reverse our January 11, 2010 Resolution, which denied their
petition for review on certiorari for lack of merit.
[2]



FACTUAL ANTECEDENTS

Civil Case No. 53483

This case stems from a complaint for recovery of possession filed by
respondent Carlos Urbina (Urbina) against the petitioners with the Regional Trial
Court of Pasig (RTC), docketed as Civil Case No. 53483.

In his complaint, Urbina alleged that he is the owner of a parcel of land
situated at Lower Bicutan, Taguig, designated as Lot 56, PLS 272. According to
Urbina, the Modestos, through stealth, scheme, and machination, were able to
occupy a portion of this property, designated as Lot 356, PLS 272. Thereafter, the
Modestos negotiated with Urbina for the sale of this lot. However, before the
parties could finalize the sale, the Modestos allegedly cancelled the transaction and
began claiming ownership over the lot. Urbina made several demands on the
Modestos to vacate the property, the last of which was through a demand letter sent
on July 22, 1983. When the Modestos still refused to vacate, Urbina filed the
present action against them.

In their answer, the Modestos claimed that Urbina could not be the lawful
owner of the property because it was still government property, being a part of the
Fort Bonifacio Military Reservation.

After the resolution of various procedural issues,
[3]
the RTC of Pasig City
rendered a decision in favor of Urbina on April 24, 2000, ordering the petitioners
to immediately vacate and surrender the lot to Urbina and to pay him P200.00
monthly as compensation for the use of the property from July 22, 1983 until they
finally vacate.
[4]


The RTC noted that the petitioners recognized Urbinas possessory rights
over the property when they entered into a negotiated contract of sale with him for
the property. Thus, the Modestos were estopped from subsequently assailing or
disclaiming Urbinas possessory rights over this lot.

The petitioners appealed this decision with the Court of Appeals (CA).

LMB Conflict No. 110

Urbinas claim of ownership over Lot 56 is based primarily on his
Miscellaneous Sales Application No. (III-1) 460 (Miscellaneous Sales
Application), which he filed on July 21, 1966.
[5]


While Urbinas accion publiciana complaint was pending before the RTC,
the Modestos filed a letter-protest against Urbinas Miscellaneous Sales
Application with the Land Management Bureau (LMB) on January 29, 1993,
claiming that: (a) they are the owners of Lot 356, PLS 272;
[6]
(b) they have been
occupying this lot for almost 33 years; and (c) their house is constructed on this
lot.

The Modestos also alleged that they filed an unnumbered sales application
for Lot 356 with the LMB, based on their actual occupancy of the property,
pursuant to Proclamations 2476 and 172, on February 10, 1993.

On January 31, 2008, the LMB denied with finality the Modestos
unnumbered sales application/protest against Urbinas application, in turn
upholding Urbinas Miscellaneous Sales Application.

Refusing to give up, the Modestos filed a motion for reconsideration. They
also filed an Insular Government Patent Sales Application over Lot 356 on January
27, 2009.
[7]


THE COURT OF APPEALS DECISION

The CA affirmed in toto the RTC decision in Civil Case No. 53483 on
January 26, 2009.
[8]
The CA agreed with the RTCs observation that the Modestos
were estopped from challenging Urbinas right to possess the property after they
acknowledged this right when they entered into the negotiated contract of
sale. The CA also gave credence to the January 31, 2008 LMB order in LMB
Conflict No. 110, ruling that this LMB order bolstered Urbinas possessory rights
over the subject property.

At the time the CA decision was issued, respondent Carlos Urbina had
already passed away and had been substituted by his surviving heirs, his spouse,
Olympia Miguel Vda. de Urbina, and his children, Escolastica, Cecilia, Efren,
Manolito, and Purificacion, all surnamed Urbina (respondents).

THE PETITION

The petitioners subsequently filed a petition for review on certiorari with
this Court, asserting that the CA committed reversible error in finding that Urbina
had possessory rights over the property. The Modestos mainly argued that at the
time Urbina filed his MSA and acquired tax declarations over the subject
property, the property was still government property, being part of a military
reservation. The property was thus not alienable and disposable, and could not
legally be possessed by a private individual. Accordingly, Urbina could not use the
MSA and the tax declarations as proof of a better right to possess the property as
against the Modestos.

The Modestos further claimed that the CA committed grievous error when it
held that they were estopped from challenging Urbinas right to possess the subject
property. While they admitted to negotiating with Urbina for the sale of the
property, they alleged that they did so based on Urbinas misrepresentation that he
had a legal claim of ownership over the property. Since their offer to buy the
property from Urbina was based on his false assertions, the principle of
estoppel cannot apply.

Additionally, the Modestos alleged that since the property is covered by
Proclamation No. 172 and Memorandum Order No. 119, the lower courts should
have given due consideration to the primary and exclusive jurisdiction of the
Director of Lands (of the Bureau of Lands, now Director of the Land Management
Bureau) over these parcels of public lands.

Lastly, the Modestos questioned Urbinas qualifications to possess the
property, claiming that Urbina was not in actual, adverse, public and continuous
possession of the property. According to the Modestos, from the time that Urbina
filed his Miscellaneous Sales Application in 1966 until the present, Urbina was a
resident of Makati City, and did not actually occupy the property.

In our Order dated January 11, 2010, we denied the Modestos petition for
failing to sufficiently show any reversible error in the assailed CA decision.



THE MOTION FOR RECONSIDERATION

On March 3, 2010, the Modestos filed their motion for reconsideration,
raising essentially the same grounds already brought up in their petition for review
on certiorari.

Notably, the Modestos attached LMB Order dated February 19, 2010
(February 19, 2010 LMB Order), which resolved their motion for reconsideration
of the LMBs January 31, 2008 order in LMB Conflict No. 110. This Order held
that the subject property had indeed been a part of the Fort Bonifacio Military
Reservation, and only became alienable and disposable after October 16, 1987.
Thus, Urbinas Miscellaneous Sales Application over the property was improper
and could not be the source of possessory rights over the property.

The order also noted that Urbina failed to comply with the requirements of
an applicant for ownership of the property, as set forth in Memorandum No. 119,
the implementing guidelines of Proclamation No. 172.

Responding to this motion, the respondents, in their Comment dated May 31,
2010, reiterated that the petitioners are estopped from assailing Urbinas
possessory rights over the property after they entered into a negotiated sales
contract with him over the subject property. They also accused the Modestos of
employing dilatory tactics in filing the present motion.

THE RULING

We GRANT the motion for reconsideration.



Procedural issue

An accion publiciana is an ordinary civil proceeding to determine the better
right of possession of realty independently of title.
[9]
Accion publiciana is also
used to refer to an ejectment suit where the cause of dispossession is not among the
grounds for forcible entry and unlawful detainer, or when possession has been lost
for more than one year and can no longer be maintained under Rule 70 of the Rules
of Court. The objective of a plaintiff in accion publiciana is to recover possession
only, not ownership.
[10]


In asking us to determine which of the parties has a better right to possess
the property, we are asked to resolve a factual issue, involving as it does the
weighing and evaluation of the evidence presented by the parties in the courts
below. Generally, such an exercise is not appropriate in a petition for review
on certiorari under Rule 45 of the Rules of Court, which seeks to resolve only
questions of law. Moreover, the factual findings of the CA, when supported by
substantial evidence, are conclusive and binding on the parties and are not
reviewable by this Court, unless the case falls under any of the following
recognized exceptions:

(1) When the conclusion is a finding grounded entirely on speculation,
surmises and conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the
issues of the case and the same is contrary to the admissions of both
appellant and appellee;
(7) When the findings are contrary to those of the trial court;
(8) When the findings of fact are conclusions without citation of specific
evidence on which they are based;
(9) When the facts set forth in the petition as well as in the petitioners' main
and reply briefs are not disputed by the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on the
supposed absence of evidence and contradicted by the evidence on
record.
[11]


Since the CA affirmed the factual findings of the RTC, we would normally
be precluded from re-examining the factual circumstances of this case. However, it
appears that the RTC and the CA, in concluding that Urbina has the right to
lawfully eject the Modestos from the lot in question, have greatly misapprehended
the facts of this case.

In finding for Urbina, both the RTC and the CA mainly relied on the
principle of estoppel, and focused on the Modestos admission that they entered
into a negotiated contract of sale with Urbina. In the process, they injudiciously
ignored the other material issues that the Modestos raised regarding the validity of
Urbinas possession of the property, specifically the Modestos allegation that at
the time Urbina began staking his claim over the property, it was still government
land.

This error on the part of the lower courts is made more evident when we take
into account an intervening event which significantly affects the resolution of this
case the issuance by the LMB of its order dated February 19, 2010, which
expressly stated that Urbina did not acquire any possessory rights over the lot. For
these reasons, we find the review of the evidence on record proper.



J urisdiction of the Court

The authority of the courts to resolve and settle questions relating to the
possession of property has long been settled.
[12]
This authority continues, even
when the land in question is public land. As we explained in Solis v. Intermediate
Appellate Court:
[13]

We hold that the power and authority given to the Director of Lands to
alienate and dispose of public lands does not divest the regular courts of their
jurisdiction over possessory actions instituted by occupants or applicants
against others to protect their respective possessions and occupations. While
the jurisdiction of the Bureau of Lands [now the Land Management Bureau] is
confined to the determination of the respective rights of rival claimants to public
lands or to cases which involve disposition of public lands, the power to
determine who has the actual, physical possession or occupation or the better right
of possession over public lands remains with the courts.
The rationale is evident. The Bureau of Lands does not have the
wherewithal to police public lands. Neither does it have the means to prevent
disorders or breaches of peace among the occupants. Its power is clearly limited
to disposition and alienation and while it may decide disputes over possession,
this is but in aid of making the proper awards. The ultimate power to resolve
conflicts of possession is recognized to be within the legal competence of the
civil courts and its purpose is to extend protection to the actual possessors
and occupants with a view to quell social unrest.

Consequently, while we leave it to the LMB to determine the issue of who
among the parties should be awarded the title to the subject property, there is no
question that we have sufficient authority to resolve which of the parties is entitled
to rightful possession.

On the issue of possessory rights

Prefatorily, we observe that the subject property has not yet been titled, nor
has it been the subject of a validly issued patent by the LMB. Therefore, the land
remains part of the public domain, and neither Urbina nor the Modestos can legally
claim ownership over it. This does not mean, however, that neither of the parties
have the right to possess the property.

Urbina alleged that he is the rightful possessor of the property since he has a
pending Miscellaneous Sales Application, as well as tax declarations over the
property. He also relied, to support his claim of a better right to possess the
property, on the admission on the part of the Modestos that they negotiated with
him for the sale of the lot in question.

On the other hand, the Modestos anchored their right to possess the same on
their actual possession of the property. They also questioned the legality of
Urbinas Miscellaneous Sales Application, and his tax declarations over the
property, arguing that since these were obtained when the land was still not
alienable and disposable, they could not be the source of any legal rights.

After reviewing the records of this case, we find the reasoning of the
Modestos to be more in accord with applicable laws and jurisprudence.

The February 19, 2010 LMB Order

Factual findings of administrative agencies are generally respected and even
accorded finality because of the special knowledge and expertise gained by these
agencies from handling matters falling under their specialized
jurisdiction.
[14]
Given that the LMB is the administrative agency tasked with
assisting the Secretary of the Department of Environment and Natural Resources
(DENR) in the management and disposition of alienable and disposable lands of
the public domain,
[15]
we defer to its specialized knowledge on these matters. In
this regard, we quote with approval the observations made by the Director of the
LMB in the February 19, 2010 LMB Order:

Movants [the Modestos] have anchored their Motion for Reconsideration
on three (3) assigned errors, to wit:

I. THIS OFFICE ERRED IN ITS FINDINGS THAT THE AREA IS NOT
COVERED BY PROCLAMATION NO. 172, AS IMPLEMENTED BY
MEMORANDUM ORDER NO. 119;

II. THIS OFFICE ERRED IN ITS FINDINGS THAT CARLOS T. URBINA
WAS IN ACTUAL, ADVERSE, PUBLIC AND CONTINUOUS
POSSESSION OF THE PROPERTY IN QUESTION;

III. THIS OFFICE ERRED IN NOT HOLDING THAT A NEW SURVEY
OF THE AREA IN QUESTION SHOULD BE DONE AND
CONDUCTED TO DETERMINE THE TRUE BOUNDARIES OF THE
PROPERTY IN QUESTION VIS--VIS THE CLAIMS OF EACH
PARTY.

In order to clarify the issues raised in the Motion for Reconsideration, this
Office ordered that another ocular inspection and investigation on the subject
premises be conducted by Special Investigator Danilo Lim. After said
investigation, Special Investigator, Danilo Lim, submitted his Report to the
Regional Technical Director, Lands Management Services, thru the Chief, Land
Management Division, DENR-NCR.

In his Report, Special Investigator, Danilo Lim made the following
findings:

The Miscellaneous Sales Application filed by Carlos
Urbina is not appropriate because Lot 356 had ceased to be
public land as it had become part of the Fort Bonifacio
Military Reservation, and hence, no one can claim possessory
rights over the said property since it is within said Military
Reservation. The subject area which is located in Lower Bicutan,
Taguig, only became alienable and disposable upon the issuance of
Presidential Proclamation No. 172 and its implementing guidelines
Memorandum Order No. 119 on October 16, 1987.

After a judicious evaluation of the arguments raised in the instant motion,
and taking into account the findings and recommendations of Special Investigator
Danilo Lim as contained in his Report, this Office finds the same to be not
entirely without merit.

Anent the first assigned error, Special Investigator Danilo Lim has found
that the area is indeed a part of the Fort Bonifacio Military Reservation and
is covered by Proclamation No. 172and Memorandum Order No. 119. Upon a
thorough research of the origin of the subject property, it turned out that the area
was originally part of the vast parcel of land known as Hacienda De Maricaban.
Sometime in 1902, the United States of America purchased said vast tract of land
with an area of Seven Hundred and Twenty Nine and Fifteenth Hundred (729.15)
Hectares and spanning the Municipalities of Pasig, Taguig, Paranaque and Pasay,
from its original owner, Dona Dolores Pacual Casal Y Ochoa, for the purpose
of establishing a US Military Reservation which they later named Fort William
Mc Kinley. On July 12, 1957, President Carlos P. Garcia issued Proclamation
No. 423, reserving for military purposes, the parcels of land identified as Parcel
No. 2, No. 3 and No. 4, Psu-2031, on which parcels of land excluding Parcel No.
2, the present Fort Bonifacio was established for the Republic of the Philippines.
Parcel No. 3, Psu-2031 is covered by T.C.T. No. 61524 registered in the name of
the Republic of the Philippines. On October 16, 1987, President Corazon C.
Aquino issued Proclamation No. 172 in order to exclude from the operation of
Proclamation No. 423 which established Fort Bonifacio, certain portions of land
embraced therein known as Barangays Lower Bicutan, Upper Bicutan, Western
Bicutan and Signal Village, all situated in the Municipality of Taguig, and to
declare the same open for disposition to actual occupants and qualified applicants
under the provisions of Republic Act No. 274 and Republic Act No. 730 in
relation to the Public Land Act as amended; and under Memorandum Order No.
119 issued by President Corazon Aquino. In Proclamation No. 172, Lower
Bicutan is described as Lot 3 situated in the Municipality of Taguig, M.M., and
containing an area of One Million Eighty Four Thousand Three Hundred Eleven
(1,084,311) sqm more or less or 108.43 hectares.

In view of all the above recitals, it appears that the parcel of land subject
of this case (Lot 356) which is located in Barangay Lower Bicutan, City of
Taguig is covered by Proclamation No. 172 issued by President Corazon C.
Aquino, and hence, the same only became alienable and disposable to qualified
applicants after October 16, 1987, the date of its issuance, contrary to what is
believed in the assailed Order of this Office.

With respect to the second assigned error, the issue can be resolved by the
application of the legal provisions covering the subject property, which is
Proclamation No. 172 and its implementing guidelines. Under its implementing
guidelines, Memorandum No. 119, the following are the qualifications for an
applicant to be qualified to apply for and acquire a lot under Proclamation No.
172, among others, to wit:

(1) He/She must be a bona fideresident of the proclaimed areas. To be
considered a bona fide resident, the applicant must have the following
qualifications:

a) A Filipino citizen of legal age and/or a head of the family;
b) Must have constructed a house in the area proclaimed for disposition
on or before January 6, 1986 and actually residing therein;
c) Must not own any other residential or commercial lot in Metro
Manila;
d) Must not have been a registered awardee of any lot under the
administration of the NHA, MHS, or any other government agency,
nor the AFP Officers village;
e) Must not be a professional squatter. A professional squatter, for
purposes of this Order, is one who engages in selling lots in the areas
proclaimed for disposition; and
f) Has filed the proper application to purchase.

Based on the Report of Special Investigator Lim and the other Land
Inspectors who investigated this case, namely: Jose P. Antonio and Jose P.
Parayno, it was found that Pio Modesto and his family are the actual occupants
of the area with a residential house and chapel made of light materials and
Pio Modesto and his family are actually residing in the said residential house. On
the other hand, it was established that Carlos Urbina has been a resident of
Pasay Road or 4929 Pio Del Pilar, Makati City. Applying the qualifications
provided for in Memorandum Order No. 119, we find that Spouses Modesto are
to be qualified to apply for the subject lot as they have been in occupation thereof
and have constructed their residential house thereon. Hence, they satisfy the
requirements in order to be considered a Bonafide Resident as defined in the
guidelines. As per our records, Spouses Pio and Cirila Modesto have also filed
an unnumbered I.G.P.S.A. Application for the subject lot on January 27,
2009. Carlos Urbina, however, never constructed any house on the subject lot
and neither did he actually reside therein. Besides, he already owns a
residential lot in Makati City where he had been residing all this time. Hence,
he cannot be considered a bonafide resident of the subject lot. He likewise failed
to file his I.G.P.S.A application for the lot. Instead, what he had filed on January
20, 1966 was a Miscellaneous Sales Application. At that time, however, the area
of Barangay Lower Bicutan, where the subject lot is located, was still part of the
Fort Bonifacio Military Reservation, and the same had not yet been segregated
and declared to be alienable and disposable. Hence, no possessory rights could
have been acquired by his over the subject lot.
[16]



From this LMB order, we consider the following facts established:

First, the lot in question, situated in Barangay Lower Bicutan, was part of
the Fort Bonifacio Military Reservation, and only became alienable and disposable
after October 16, 1987, pursuant to Proclamation No. 172. This factual finding
finds further support in the testimony, before the RTC, of Jose Exequiel Vale,
Special Investigator and Assisting Hearing Officer of the DENR.
[17]


Second, the Modestos are bona fide residents of the lot in question, being the
actual residents of the lot and having built a house and chapel on the property.

Third, the Modestos have a pending Insular Government Patent Sales
Application over the lot in question, filed after the property became alienable and
disposable.

Taking these facts into account, we now make a distinction, based on the
corresponding legal effects, between: (a) possession of the property before October
16, 1987, when the land was still considered inalienable government land, and (b)
possession of the property after October 16, 1987, when the land had already been
declared alienable and disposable.

Possession prior to October 16, 1987

Unless a public land is shown to have been reclassified as alienable or
actually alienated by the State to a private person, that piece of land remains part of
the public domain,
[18]
and its occupation in the concept of owner, no matter how
long, cannot confer ownership or possessory rights.
[19]
It is only after the
property has been declared alienable and disposable that private persons can
legally claim possessory rights over it.

Accordingly, even if we recognize that Urbina had been in possession of the
property as early as July 21, 1966, when he filed his Miscellaneous Sales
Application, his occupation was unlawful and could not be the basis of possessory
rights, in keeping with Section 88 of the Public Land Act, that states:
Section 88. The tract or tracts of land reserved under the provisions of section
eighty-three shall be non-alienable and shall not be subject to occupation, entry,
sale, lease, or other disposition until again declared alienable under the provisions
of this Act or by proclamation of the President.

The same holds true for Urbinas tax declarations. Absent any proof that the
property in question had already been declared alienable at the time that Urbina
declared it for tax purposes, his tax declarations over the subject property cannot
be used to support his claim of possession.

Similarly, while the Modestos claim to have been in possession of Lot 356
for almost 33 years,
[20]
this occupation could not give rise to possessory rights
while the property being occupied remain government land that had not yet been
declared alienable and disposable.

Possession after October 16, 1987

The different land investigators
[21]
sent by the LMB to survey the subject
property have consistently held that the Modestos are the actual occupants of the
lot in question. This actual occupation is not denied by Urbina. As a matter of fact,
we know from Urbinas final demand letter that the Modestos have been in open
and continuous possession of the property since July 22, 1983.
[22]
We also consider
established that the Modestos built a house on the subject property, a fact that
Urbina affirmed in his testimony before the RTC.
[23]
From these circumstances, we
consider as settled the fact that the Modestos were the actual possessors of the
property when it was declared alienable and disposable on October 16, 1987,
and continued to possess the property until the present time.



Furthermore, the Modestos have a valid Insular Government Patent Sales
Application over the property pending with the LMB, which they filed on January
27, 2009.
[24]
In contrast, Urbina has a Miscellaneous Sales Application filed in
1966, which the LMB considered invalid since it was filed when the property still
formed part of a military reservation.

As for the Certification from the City Treasurer of Taguig that the
respondents presented,
[25]
which certified that Carlos Urbina had paid real estate
taxes on real property describe[d] in the name of Carlos Urbina, with property
located at Lower Bicutan, Taguig City from 2009 and prior years, we note that the
certification contains no description of the property subject of the tax declaration,
leaving us to wonder on the identity of the property covered by the declaration.

In any case, even if we consider this certification as sufficient proof that
Urbina declared the subject property for tax declaration purposes, it must be
stressed that the mere declaration of land for taxation purposes does not
constitute possession thereof nor is it proof of ownership in the absence of the
claimants actual possession.
[26]
And in light of our categorical finding that the
Modestos actually occupied the property in question from the time that it was
declared alienable and disposable until the present time, the tax declaration fails to
convince us that Urbina has a right to legally possess it.

For these reasons, we find that Urbina utterly failed to prove that he has a
better right to possess the property. Thus, we cannot sustain his complaint for
ejectment against the Modestos and, perforce, must dismiss the same for lack of
merit.



On the finding of estoppel

Lastly, we find the CAs reliance on the principle of estoppel against the
Modestos to be misplaced.

Through estoppel, an admission or representation is rendered conclusive
upon the person making it, and cannot be denied or disproved as against the person
relying on it.
[27]
This doctrine is based on the grounds of public policy, fair
dealing, good faith and justice, and its purpose is to forbid one to speak against his
own act, representations, or commitments to the injury of one to whom they were
directed and who reasonably relied on it.
[28]
It bears noting, however, that no
estoppel arises where the representation or conduct of the party sought to be
estopped is due to ignorance founded upon an innocent mistake.
[29]


Here, the Modestos do not deny that they negotiated with Urbina for the sale
of the subject property. However, because they entered the negotiated sales
contract with Urbina on the mistaken belief, based on Urbinas erroneous assertion,
that he was the lawful owner-possessor of the property in question, we do not
consider them bound by this action. Consequently, the principle of estoppel finds
no application in this case.

WHEREFORE, premises considered, we GRANT the motion
and REINSTATE the petition. Consequently, we REVERSE and SET
ASIDE the Decision dated January 26, 2009 and Resolution dated October 5, 2009
of the Court of Appeals in CA-G.R. CV No. 68007. We DISMISS the complaint
for Recovery of Possession filed by Carlos T. Urbina for lack of merit.


SO ORDERED.


ARTURO D. BRION
Associate Justice


WE CONCUR:





ANTONIO EDUARDO B. NACHURA
Associate Justice





MARTIN S. VILLARAMA, JR.
Associate Justice

JOSE CATRAL MENDOZA
Associate Justice





MARIA LOURDES P.A. SERENO
Associate Justice



ATTESTATION


I attest that the conclusions in the above Resolution had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.




ARTURO D. BRION
Associate Justice
Acting Chairperson




CERTIFICATION


Pursuant to Section 13, Article VIII of the Constitution, and the Division
Acting Chairpersons Attestation, it is hereby certified that the conclusions in the
above Resolutionhad been reached in consultation before the case was assigned to
the writer of the opinion of the Courts Division.




RENATO C. CORONA
Chief Justice

Designated Additional Member of the Third Division, per Special Order No. 907 dated October 13, 2010.

Designated Acting Chairperson of the Third Division, per Special Order No. 906 dated October 13, 2010.

Designated Additional Member of the Third Division, per Special Order No. 911 dated October 15, 2010.
[1]
Rollo, pp. 97-118.
[2]
Id. at 95.
[3]
On February 17, 1989, the RTC issued a ruling based solely on the pleadings in favor of Urbina, and ordered the
Modestos to vacate the lot. The RTC also ordered the Modestos to pay Urbina the amount of P200.00 a month as
reasonable rental from the time of their occupation in July 1983 until they finally vacated the premises, and to
pay P3,000.00 as attorneys fees.
On appeal, the CA set aside the RTC judgment on the pleadings, and ordered a remand of the case to the lower
court for further proceedings or trial on the merits, as the case may be.
After conducting trial on the merits, the RTC rendered a decision dated March 4, 1996 which dismissed Urbinas
complaint without prejudice on the ground that the proper government office in charge of the Fort Bonifacio
Military Reservation, being an indispensable party, should be impleaded under Section 7, Rule 3 of the Rules of
Court.
Urbina moved for reconsideration, which the RTC thereafter granted in its Order dated May 21, 1996. In the same
order, it ordered Urbina to include Fort Bonifacio Military Reservation in its complaint. Urbina then filed an
amended complaint, impleading the Bases Conversion Development Authority as party defendant. The RTC
admitted the amended complaint. The parties, however, subsequently agreed to drop the Bases Conversion and
Development Authority as party defendant since the assailed lot is no longer within the supervision of the BCDA
but within the jurisdiction of the Bureau of Lands. Id. at 63-65.
[4]
Rollo, pp. 62-69.
[5]
Id. at 65.
[6]
The portion of Lot 56 that the Modestos were occupying.
[7]
Rollo, p. 122.
[8]
Penned by Associate Justice Arturo G. Tayag, with the concurrence of Presiding Justice Conrado M. Vasquez,
Jr., and Associate Justice Hakim S. Abdulwahid. Id. at 45-60.
[9]
Bejar v. Caluag, G.R. No. 171277, February 17, 2007, 516 SCRA 84, 90; Sps. Cruz v. Torres, 374 Phil. 529, 533
(1999); Bishop of Cebu v. Mangaron, 6 Phil. 286, 291 (1906); Ledesma v. Marcos, 9 Phil. 618, 620 (1908).
[10]
Spouses Padilla v. Velasco, G.R. No. 169956, January 19, 2009, 576 SCRA 219.
[11]
Ontimare, Jr. v. Elep, G.R. No. 159224, January 20, 2006, 479 SCRA 257, 265.
[12]
See Omandam v. Court of Appeals, G.R. No. 128750, January 18, 2001, 349 SCRA 483; Heirs of Sabanpan v.
Comorposa, G.R. No. 152807, August 12, 2003, 408 SCRA 692; City of Baguio v. Nino, G.R. No. 161811, April
12, 2006, 487 SCRA 216;Estrella v. Robles, Jr., G.R. No. 171029, November 22, 2007, 538 SCRA 60.
[13]
G.R. No. 72486, June 19, 1991, 198 SCRA 267.
[14]
Lim v. Commission on Audit, G.R. No. 130325, March 11, 2003, citing Mapa v. Arroyo, 175 SCRA 76, 81
(1989).
[15]
Section 14, Executive Order No. 192, provides:
There is hereby created the Lands Management Bureau which shall absorb functions and powers of the Bureau
of Lands except those line functions and powers which are transferred to the regional field office. The Lands
Management Bureau to be headed by a Director and assisted by an Assistant Director shall advise the Secretary on
matters pertaining to rational land classification management and disposition and shall have the following
functions, but not limited to:
a. Recommend policies and programs for the efficient and effective administration, surveys,
management and disposition of alienable and disposable lands of the public domain and other
lands outside the responsibilities of other government agencies; such as reclaimed areas and other
areas not needed for or are not being utilized for the purposes for which they have been
established;
b. Advise the Regional Offices on the efficient and effective implementation of policies,
programs and projects for more effective public lands management;
c. Assist in the monitoring and evaluation of land surveys, management and disposition of
lands to ensure efficiency and effectiveness thereof;
d. Issue standards, guidelines, regulations and orders to enforce policies for the maximization of
land use and development;
e. Develop operating standards and procedure to enhance the Bureau's objectives and functions;
f. Assist the Secretary as Executive Officer charged with carrying out the provisions of the
Public Land Act [C.A. 141, as amended], who shall have direct executive control of the survey,
classification, lease, sale, or any other forms of concessions or disposition and management of the
lands of the public domain; and
g. Perform other functions as may be assigned by the Secretary and/or provided by law.
[16]
Rollo, pp. 120-122.
[17]
Id. at 64.
[18]
Seville v. National Development Company, G.R. No. 129401, February 2, 2001, 351 SCRA 112.
[19]
Spouses de Ocampo v. Arlos, G.R. No.135527, October 19, 2000, 343 SCRA 716.
[20]
Counted from January 29, 1993, when the Modestos filed their protest to Urbinas miscellaneous sales
application in LMB Conflict No. 110.
[21]
Special Investigator Danilo Lim, Land Inspectors Jose P. Antonio and Jose P. Parayno.
[22]
Rollo, p. 62.
[23]
Id. at 63.
[24]
Id. at 122.
[25]
Attached to respondent Urbinas Comment dated May 31, 2010; id. at 140.
[26]
See de Luna vs. Court of Appeals, G.R. No. 94490, August 6, 1992, 212 SCRA 276.
[27]
CIVIL CODE, Article 1431.
[28]
Rockland Construction Company v. Mid-Pasig Land Development Corporation, G.R. No. 164587, February 04,
2008, citing Philippine National Bank v. Court of Appeals, Nos. L-30831 & L-31176, November 21, 1979, 94
SCRA 357, 368.
[29]
Ramiro v. Grano, 54 Phil. 744 (1930), citing 21 C.J., 1125, 1126.











Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. 175806 and 175810 October 20, 2010
MANUEL ALMAGRO joined by his spouse, ELIZABETH ALMAGRO, Petitioners,
vs.
SALVACION C. KWAN, WILLIAM C. KWAN, VICTORIA C. KWAN, assisted by her husband,
JOSE A. ARBAS, and CECILIA C. KWAN, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 175849
Petitioners,
vs.
WILLIAM C. KWAN, SALVACION C. KWAN, VICTORIA C. KWAN, assisted by her husband,
JOSE A. ARBAS, and CECILIA C. KWAN, Respondents.
MARGARITA PACHORO, DRONICA ORLINA, PIO TUBAT, JR., ANDRES TUBAT, EDUVIGIS
KISKIS, ELSA BIALBER, NOELA TUBAT, ELSA TUBAT, and ROGELIO DURAN,
D E C I S I O N
CARPIO, J .:
This is a consolidation of two separate petitions for review,
1
assailing the 4 April 2006 Decision
2
and
the 31 October 2006 Resolution
3
of the Court of Appeals in CA-G.R. SP Nos. 71237 and 71437.
This case involves Lot No. 6278-M, a 17,181 square meter parcel of land covered by TCT No. T-
11397. Lot No. 6278-M is located at Maslog, Sibulan, Negros Oriental and is registered in the name
of spouses Kwan Chin and Zosima Sarana. Respondents are the legitimate children of spouses
Kwan Chin and Zosima Sarana, who both died intestate on 2 November 1986 and 23 January 1976,
respectively, in Dumaguete City. Upon the death of their parents, respondents inherited Lot No.
6278-M through hereditary succession.
On 18 September 1996, respondents filed with the Municipal Trial Court (MTC) an action for
recovery of possession and damages against spouses Rogelio and Lourdes Duran, spouses
Romulo Vinalver and Elsa Vinalver,
4
spouses Marte
5
Bati-on and Liz E. Bati-on, spouses Pablo
Deciar and Marlyn Deciar, spouses Salvador Palongpalong and Bienvenida Palongpalong, spouses
Sabas Kiskis and Eduvigis Kiskis, spouses Pio Tubat, Jr. and Encarnita Tubat, spouses Andres
Tubat and Leonides Tubat, spouses George Tubat and Noela Tubat, spouses Dodong Go and Alice
Go, spouses Delano Bangay and Maria Bangay,
6
spouses Simeon Pachoro and Margarita Pachoro,
spouses Cepriano
7
Tubat and Elsa Tubat, spouses Jovito Remolano and Editha Orlina Remolano,
spouses Nelson Miravalles and Erlene Miravalles, Dronica Orlina,
8
Clarita Barot Lara, Conchita
Orlina, Antonia Malahay and the Philippine National Police (PNP),
9
Agan-an, Sibulan, Negros
Oriental. Subsequently, spouses Manuel Almagro and Elizabeth Almagro intervened as successors-
in-interest of spouses Delano Bangay and Maria Bangay.
During pre-trial, the parties agreed to refer the case to the Chief of the Land Management Services
Division, PENRO-DENR, Dumaguete City, to conduct a verification survey of Lot No. 6278-M. When
the PENRO personnel failed to conduct the verification survey, the court and the parties designated
Geodetic Engineer Jorge Suasin, Sr. (Engr. Suasin) as joint commissioner to do the task. Engr.
Suasin conducted the verification and relocation survey of Lot No. 6278-M on 12-13 September
2000 in the presence of the parties, some of their lawyers, and the MTC Clerk of Court. Thereafter,
Engr. Suasin submitted a written report with the following findings:
WRITTEN REPORT
Comes now, the undersigned Geodetic Engineer Jorge S. Suasin, Sr., to this Honorable Court, most
respectfully submit the following written report of the verification and relocation survey of the lot
6278-M located at Maslog, Sibulan, Negros Oriental with T.C.T. No. T-11397 owned by Salvacion G.
Kwan, et al.
A. That a big portion of the lot is submerged under the sea and only a small portion
remain as dry land.
B. That some of the defendants have constructed their buildings or houses inside the
dry land while others have constructed outside or only a small portion of their
buildings or houses are on the said dry land.
The defendants and their buildings or houses are as follows:
1. Sps. Rogelio Duran . . . . . . . . . . . . .
. . . . .
inside
2. Sps. Romulo Vinalver. . . . . . . . . . . .
. . . .
inside
3. Sps. Marto Bati-on . . . . . . . . . . . . .
. . . . .
inside
4. Sps. Salvador Palongpalong . . . . . .
. . . . .
inside
5. Sps. Pablo Deciar . . . . . . . . . . . . . .
. . . . .
inside
6. Sps. Sabas Kiskis . . . . . . . . . . . . . .
. . . .
inside
7. Sps. Pio Tubat, Jr. . . . . . . . . . . . . . .
. . . .
2 houses, the first house a portion, and the second
one - inside
8. Sps. Andres Tubat . . . . . . . . . . . . .
. . . . .
inside
9. Sps. George Tubat . . . . . . . . . . . . .
. . . . .
portion
10. Sps. Dodong Go . . . . . . . . . . . . . .
. . . . .
inside
11. Sps. Delano Bangay-Almagro . . . .
. . . . .
portion
12. Sps. Simeon Pachoro . . . . . . . . . .
. . . . .
inside
13. Sps. Cipriano Tubat . . . . . . . . . . .
. . . . .
inside
14. Sps. Jovito Remolano . .. . . . . . . .
. . . . .
inside
15. Sps. Nelson Miravalles . . . . . . . . .
. . . . .
cottage and house - outside
16. Monica Orlina . . . . . . . . . . . . . . . .
. . .
cottage inside and house - portion
17. Clarita Barot . . . . . . . . . . . . . . . . .
. . . . .
outside
18. Conchita Orlina . . . . . . . . . . . . . . .
. . . . .
outside
19. Antonia Malahay . . . . . . . . . . . . . .
. . . . .
outside
The verification and relocation survey was executed last September 12-13, 2000 with the presence
of both parties and of the Clerk of Court. The cost of the survey was FIFTEEN THOUSAND
PESOS(P15,000) shouldered by the plaintiffs and the defendants equally.
Enclosed are a blue print of the sketch plan and a xerox copy of the land title of the said lot.
Respectfully submitted by:
(Sgd) JORGE SUASIN, SR.
Geodetic Engineer
10

After the court admitted Engr. Suasin's report and the pleadings of the parties, respondents filed a
motion for judgment on the pleadings, which the MTC granted.
In its Judgment dated 11 May 2001, the MTC dismissed the complaint on the ground that the
remaining dry portion of Lot No. 6278-M has become foreshore land and should be returned to the
public domain. The MTC explained:
The term "foreshore" refers to that part of the land adjacent to the sea which is alternately covered
and left dry by the ordinary flow of the tides. "Foreshore lands" refers to the strip of land that lies
between the high and low water marks and that is alternately wet and dry according to the flow of the
tide. The term "foreshore land" clearly does not include submerged lands.
From these definitions, it is safe to conclude that the remaining dry portion of Lot No. 6278-M is now
"foreshore land." A big portion of the said lot is presently underwater or submerged under the sea.
When the sea moves towards the estate and the tide invades it, the invaded property becomes
foreshore land and passes to the realm of public domain. The subject land, being foreshore land,
should therefore be returned to the public domain. Besides, Article 420 of the Civil Code provides:
"Art. 420. The following thin[g]s are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;
Plaintiff cannot use the doctrine of indefeasibility of their Torrens title, as property in question is
clearly foreshore land. At the time of its registration, property was along the shores. In fact, it is
bounded by the Taon Strait on the NW along lines 2-3-4. The property was of public dominion and
should not have been subject of registration. The survey showed that the sea had advanced and the
waves permanently invaded a big portion of the property making the land part of the shore or the
beach. The remaining dry land is foreshore and therefore should be returned to the public domain.
11

Respondents appealed to the Regional Trial Court (RTC). The RTC conducted ocular inspections of
Lot No. 6278-M on two separate dates: on 5 October 2001 during low tide and on 15 October 2001
when the high tide registered 1.5 meters. All the parties and their lawyers were notified before the
two ocular inspections were conducted. During the ocular inspections, in which some parties and
their lawyers were present, the RTC observed that the small portion referred to by Engr. Suasin as
dry land in his report actually remained dry even during high tide.
12
Thus, the RTC concluded that the
disputed remaining portion of Lot No. 6278-M is not foreshore land. The RTC stated:
It is the Court's considered view that the small portion of plaintiff's property which remains as dry
land is not within the scope of the well-settled definition of foreshore and foreshore land as
mentioned above. For one thing, the small dry portion is not adjacent to the sea as the term adjacent
as defined in Webster's Dictionary means "contiguous or touching one another or lying next to."
Secondly, the small dry portion is not alternately wet and dry by the ordinary flow of the tides as it is
dry land. Granting, as posited by defendants, that at certain times of the year, said dry portion is
reached by the waves, then that is not anymore caused by the ordinary flow of the tide as
contemplated in the above definition. The Court then finds that the testimony of Engr. Suasin
dovetails with the import and meaning of foreshore and foreshore land as defined above.1avvphil
Anent the case of Republic vs. Court of Appeals, 281 SCRA 639, also cited in the appealed
judgment, the same has a different factual milieu. Said case involves a holder of a free patent on a
parcel of land situated at Pinagtalleran, Caluag, Quezon who mortgaged and leased portions thereof
within the prescribed five-year period from the date of issuance of the patent. It was established in
said case that the land subject of the free patent is five (5) to six (6) feet deep under water
during high tide and two (2) feet deep at low tide. Such is not the situation of the "remaining small
dry portion" which plaintiffs seek to recover in the case at bar.
13

On 8 January 2002, the RTC rendered its Decision,
14
the dispositive portion of which reads:
WHEREFORE, all told and circumspectly considered, the appealed judgment is hereby reversed
and set aside insofar as it states that plaintiffs are not entitled to recover possession of the property
in question.
Plaintiffs-appellants have the right to recover possession of the remaining small dry portion of the
subject property in question. It is further ordered to remand this case to the court of origin for the
reception of further evidence to determine who among the defendants-appellees are builders or
possessors in good faith and who are not and once determined, to apply accordingly the pertinent
laws and jurisprudence on the matter.
SO ORDERED.
15

Petitioners moved for reconsideration, which the RTC denied in its Order
16
dated 6 May 2002.
Petitioners filed separate petitions for review with the Court of Appeals, alleging that the disputed
portion of Lot No. 6278-M is no longer private land but has become foreshore land and is now part of
the public domain.
The Ruling of the Court of Appeals
On 4 April 2006, the Court of Appeals promulgated its decision, affirming with modification the RTC
Decision. The dispositive portion of the Court of Appeals Decision
17
reads:
WHEREFORE, the instant petitions for review are DENIED. And the Decision dated January 8, 2002
of Branch 38 of the Regional Trial Court of Dumaguete City is hereby AFFIRMED with
MODIFICATION as regards the dispositive portion only. Based on the written report of Geodetic
Engr. Suasin categorically indentifying who among herein petitioners are illegally occupying a portion
of Lot No. 6278-M, the following petitioners are ordered to vacate the premises and/or remove
the houses and/or cottages constructed on Lot No. 6278-M within thirty (30) days from finality
of judgment, namely: 1)Sps. Rogelio Duran, 2) Sps. Romulo Vinalver, 3) Sps. Marto Bati-on, 4)
Sps. Salvador Palongpalong, 5) Sps. Pablo Deciar, 6) Sps. Sabas Kiskis, 7) Sps. Pio Tubat, Jr. (first
house portion, second house inside), 8) Sps. Andres Tubat, 9) George Tubat (portion), 10) Sps.
Dodong Go, 11) Sps. Delano Bangay-Almagro (portion), 12) Sps. Simeon Pachoro, 13) Sps.
Cipriano Tubat, 14) Sps. Jovito Remolano and 15) Monica Orlina (cottageinside and house
portion).
Costs against petitioners.
SO ORDERED.
18

In modifying the RTC Decision, the Court of Appeals explained:
Lastly, the argument that the RTC decision was "vague and indefinite" is utterly bereft of merit. We
have found no reversible error in the appreciation of the facts and in the application of the law by the
RTC which will warrant the reversal of the questioned decision. However, litigation must end and
terminate sometime and somewhere, and it is essential to the administration of justice that the
issues or causes therein should be laid to rest. Hence, in keeping with this principle, We modify the
assailed decision insofar as the dispositive portion is concerned. It is our considered view that there
is no longer a need to determine who among the petitioners are builders in good faith or not
considering that it has been established in the MTC that they knew all along that the subject lot is a
titled property. As such, petitioners should vacate and/or demolish the houses and/or cottages they
constructed on Lot No. 6278-M as stated in the written report of Geodetic Engineer Jorge S. Suasin,
Sr. Remanding this case to the court of origin would not only unduly prolong the resolution of the
issues of this case, but would also subject the parties to unnecessary expenses.
19

Hence, these consolidated petitions.
The Issue
The primary issue in this case is whether the disputed portion of Lot No. 6278-M is still private land
or has become foreshore land which forms part of the public domain.
The Ruling of the Court
We find the petitions without merit.
Petitioners contend that the disputed portion of Lot No. 6278-M is already foreshore land. In fact,
most of them allegedly have foreshore lease permits from the Department of Environment and
Natural Resources (DENR) on the said foreshore land.
However, petitioners failed to present evidence to prove their claim that they are holders of foreshore
lease permits from the DENR. Thus, the RTC Order dated 6 May 2002 stated:
Defendants-appellees have been harping that they have been granted foreshore leases by DENR.
However, this is merely lip service and not supported at all by concrete evidence. Not even an iota of
evidence was submitted to the lower court to show that defendants-appellees herein have been
granted foreshore leases.
20

Although the MTC concluded that the subject land is foreshore land, we find such conclusion
contrary to the evidence on record.
It is undisputed that the subject land is part of Lot No. 6278-M, which is covered by TCT No. T-
11397, registered in the name of respondents' parents, Kwan Chin and Zosimo Sarana. In fact, as
found by the Court of Appeals, even the Provincial Environment and Natural Resources Officer
(PENRO) declared in May 1996 that Lot No. 6278-M is a private property covered by a Torrens Title
and that petitioners should vacate the disputed property or make other arrangements with
respondents.
21

Furthermore, from the report of Engr. Suasin, the geodetic engineer designated by the court and the
parties as joint commissioner to conduct the survey, it can be clearly gleaned that the contested land
is the small portion of dry land of Lot No. 6278-M. Even in his testimony, Engr. Suasin was
adamant in stating that the remaining portion of Lot No. 6278-M is not foreshore because "it is
already dry land" and is "away from the shoreline."
22
Because of this apparent contradiction between
the evidence and the conclusion of the MTC, the RTC conducted ocular inspection twice, during low
tide and high tide, and observed that the disputed portion of Lot No. 6278-M actually remained dry
land even during high tide. Thus, the RTC concluded that the said land is not foreshore land. On
appeal, the Court of Appeals adopted the findings and conclusion of the RTC that the disputed land
is not foreshore land and that it remains as private land owned by respondents.
We are in accord with the conclusion of the Court of Appeals and the RTC that the disputed land is
not foreshore land. To qualify as foreshore land, it must be shown that the land lies between the high
and low water marks and is alternately wet and dry according to the flow of the tide.
23
The land's
proximity to the waters alone does not automatically make it a foreshore land.
24

Thus, in Republic of the Philippines v. Lensico,
25
the Court held that although the two corners of the
subject lot adjoins the sea, the lot cannot be considered as foreshore land since it has not been
proven that the lot was covered by water during high tide.
Similarly in this case, it was clearly proven that the disputed land remained dry even during high tide.
Indeed, all the evidence supports the conclusion that the disputed portion of Lot No. 6278-M is not
foreshore land but remains private land owned by respondents.
WHEREFORE, we DENY the petitions. We AFFIRM the 4 April 2006 Decision and the 31 October
2006 Resolution of the Court of Appeals in CA-G.R. SP Nos. 71237 and 71437.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
ANTONIO EDUARDO B. NACHURA
Associate Justice
TERESITA J. LEONARDO-DE CASTRO
*

Associate Justice
DIOSDADO M. PERALTA
Associate Justice
JOSE C. MENDOZA
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice


Footnotes
*
Designated additional member per Special Order No. 905 dated 5 October 2010.
1
Under Rule 45 of the 1997 Rules of Civil Procedure.
2
Rollo (G.R. Nos. 175806 and 175810), pp. 28-43. Penned by Associate Justice Ramon M.
Bato, Jr. with Associate Justices Isaias P. Dicdican and Apolinario D. Bruselas, Jr.,
concurring.
3
Id. at 50-51.
4
Also spelled as Bialber in the title of the case.
5
Also spelled as Marto.
6
Stated as Sps. Delano Bangay-Almagro in the Written Report of Engr. Suasin.
7
Also spelled as Cirpriano.
8
Also spelled as Monica Orlina in the Written Report of Engr. Suasin.
9
The PNP, through its Provincial Director Paneda, filed a manifestation, acknowledging and
respecting the ownership of respondents over Lot No. 6278-M and stating that demolition of
its building would be done before the year 1996 ended. Thus, the PNP prayed that the case
against them be dismissed; rollo (G.R. Nos. 175806 and 175810), p. 63.
10
Rollo (G.R. Nos. 175806 and 175810), pp. 67-68; MTC Judgment dated 11 May 2001, pp.
5-6.
11
Rollo (G.R. Nos. 175806 and 175810), pp. 68-69.
12
Id. at 80.
13
Id. at 81. (Underscoring in the original)
14
Id. at 71-84.
15
Id. at 84.
16
Id. at 85-89.
17
Id. at 28-43.
18
Id. at. 42. (Emphasis in the original)
19
Id. at 41.
20
Id. at 88.
21
Id. at 37.
22
Id. at 79.
23
Republic v. Leonor, G.R. No. 161424, 23 December 2009, 609 SCRA 75.
24
Id.
25
503 Phil. 967 (2005).
Republic of the Philippines
Supreme Court
Manila


FIRST DIVISION


JOSE FERNANDO, JR., ZOILO
FERNANDO, NORMA FERNANDO
BANARES, ROSARIO FERNANDO
TANGKENCGO, HEIRS OF TOMAS
FERNANDO, represented by
ALFREDO V. FERNANDO, HEIRS OF
GUILLERMO FERNANDO,
represented by Ronnie H. Fernando,
HEIRS OF ILUMINADA FERNANDO,
represented by Benjamin Estrella
and HEIRS OF GERMOGENA
FERNANDO,
Petitioners,

- versus -

LEON ACUNA, HERMOGENES
FERNANDO, HEIRS OF SPOUSES
ANTONIO FERNANDO AND FELISA
CAMACHO, represented by
HERMOGENES FERNANDO,
Respondents.
G.R. No. 161030


Present:

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.











Promulgated:


September 14, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x



D E C I S I O N


LEONARDO-DE CASTRO, J.:


This is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure seeking to reverse and set aside the Decision
[1]
dated November
24, 2003 of the Court of Appeals in CA-G.R. CV No. 75773, entitled Jose
Fernando, Jr., et al. v. Heirs of Germogena Fernando, et al., which reversed and
set aside the Decision
[2]
dated May 16, 2002 of Branch 84, Regional Trial Court
(RTC) of Malolos, Bulacan in Civil Case No. 256-M-97.

At the heart of this controversy is a parcel of land covered by Original
Certificate of Title (OCT) No. RO-487 (997)
[3]
registered in the names of Jose A.
Fernando, married to Lucila Tinio, and Antonia A. Fernando, married to Felipe
Galvez, and located in San Jose, Baliuag, Bulacan. When they died intestate, the
property remained undivided. Petitioners herein namely, Jose Fernando, Jr.,
Zoilo Fernando, Norma Fernando Banares, Rosario Fernando Tangkencgo, the
heirs of Tomas Fernando, the heirs of Guillermo Fernando, the heirs of Iluminada
Fernando and the heirs of Germogena Fernando are the heirs and successors-in-
interest of the deceased registered owners. However, petitioners failed to agree
on the division of the subject property amongst themselves, even after
compulsory conciliation before the Barangay Lupon.



Thus, petitioners, except for the heirs of Germogena Fernando, filed a
Complaint
[4]
for partition on April 17, 1997 against the heirs of Germogena
Fernando. In the Complaint, plaintiffs alleged, among others, that they and
defendants are common descendants and compulsory heirs of the late spouses
Jose A. Fernando and Lucila Tinio, and the late spouses Antonia A. Fernando and
Felipe Galvez. They further claimed that their predecessors-in-interest died
intestate and without instructions as to the disposition of the property left by
them covered by OCT No. RO-487 (997). There being no settlement, the heirs are
asking for their rightful and lawful share because they wish to build up their
homes or set up their business in the respective portions that will be allotted to
them. In sum, they prayed that the subject property be partitioned into eight
equal parts, corresponding to the hereditary interest of each group of heirs.

In their Answer
[5]
filed on May 20, 1997, defendants essentially admitted all
of the allegations in the complaint. They alleged further that they are not
opposing the partition and even offered to share in the expenses that will be
incurred in the course of the proceedings.

In his Complaint in Intervention
[6]
filed on January 12, 1998, respondent
Leon Acuna (Acuna) averred that in the Decision
[7]
dated November 29, 1929 of
the Cadastral Court of Baliuag, Bulacan, the portion of the property identified as
Lot 1303 was already adjudicated to: (a) Antonio Fernando, married to Felisa
Camacho; (b) spouses Jose Martinez and Gregoria Sison; (c) spouses Ignacio de la
Cruz and Salud Wisco; and (d) Jose Fernando, married to Lucila Tinio, the
petitioners predecessor-in-interest. He likewise claimed that in a 1930 Decision
of the Cadastral Court, the portion identified as Lot 1302 was also already
adjudicated to other people as well.

Respondent Acuna further alleged that Salud Wisco, through her
authorized attorney-in-fact, Amador W. Cruz, sold her lawful share denominated
as Lot 1303-D with an area of 3,818 square meters to Simeon P. Cunanan,
[8]
who
in turn sold the same piece of land to him as evidenced by a Deed of Sale.
[9]
He
also belied petitioners assertion that the subject property has not been settled by
the parties after the death of the original owners in view of the Decision
[10]
dated
July 30, 1980 of the Court of First Instance (CFI) of Baliuag, Bulacan, in LRC Case
No. 80-389 which ordered the Register of Deeds of Bulacan to issue the
corresponding certificates of title to the claimants of the portion of the subject
property designated as Lot 1302.
[11]
Norma Fernando, one of the petitioners in
the instant case, even testified in LRC Case No. 80-389. According to respondent
Acuna, this circumstance betrayed bad faith on the part of petitioners in filing the
present case for partition.

Respondent Acuna likewise averred that the action for partition cannot
prosper since the heirs of the original owners of the subject property, namely
Rosario, Jose Jr., Norma, Tomas, Guillermo, Leopoldo, Hermogena, Illuminada and
Zoilo, all surnamed Fernando, and Lucila Tinio, purportedly had already sold their
respective one-tenth (1/10) share each in the subject property to Ruperta Sto.
Domingo Villasenor for the amount of P35,000.00 on January 25, 1978 as
evidenced by a Kasulatan sa Bilihang Patuluyan.
[12]
He added that he was in
possession of the original copy of OCT No. RO-487 (997) and that he had not
commenced the issuance of new titles to the subdivided lots because he was
waiting for the owners of the other portions of the subject property to bear their
respective shares in the cost of titling.

Subsequently, a Motion for Intervention
[13]
was filed on June 23, 1998 by
respondent Hermogenes Fernando (Hermogenes), for himself and on behalf of
the heirs of the late spouses, Antonio A. Fernando and Felisa Camacho. According
to him, in the July 30, 1980 Decision of the CFI of Bulacan, their predecessors-in-
interest had already been adjudged owners of Lots 1302-A, 1302-F, 1302-
G,
[14]
1302-H and 1302-J of OCT No. RO-487 (997) and any adverse distribution of
the properties would cause respondents damage and prejudice. He would also
later claim, in his Answer-in-Intervention,
[15]
that the instant case is already
barred by res judicata and, should be dismissed.

In the interest of substantial justice, the trial court allowed the respondents
to intervene in the case.

The plaintiffs and defendants jointly moved to have the case submitted for
judgment on the pleadings on May 7, 1999.
[16]
However, the trial court denied
said motion in a Resolution
[17]
dated August 23, 1999 primarily due to the
question regarding the ownership of the property to be partitioned, in light of the
intervention of respondents Acuna and Hermogenes who were claiming legal
right thereto.

In their Manifestation
[18]
filed on April 12, 2000, petitioners affirmed their
execution of a Deed of Sale in favor of Ruperta Sto. Domingo Villasenor in 1978,
wherein they sold to her 1,000 square meters from Lot 1303 for the sum of
35,000.00.

After the pre-trial conference, trial ensued. On September 19, 2000,
petitioner Elizabeth Alarcon testified that they (plaintiffs) are not claiming the
entire property covered by OCT No. RO-487 (997) but only the area referred to as
Lot 1303 and Sapang Bayan. She also admitted that Lot 1302 had already been
divided into ten (10) sublots and allocated to various owners pursuant to the July
30, 1980 Decision of the CFI of Baliuag, Bulacan and these owners already have
their own titles. She likewise claimed that the entire area consisting of Lot 1303
and Sapang Bayan is based on the subdivision plan of Lot 1303. She admitted
that plaintiffs predecessor-in-interest was only allocated a portion of Lot 1303
based on the said plan. However, she claimed that the November 29, 1929
Decision subdividing Lot 1303 was never implemented nor executed by the
parties.
[19]


Petitioner Norma Fernando testified on October 3, 2000 that she is one of
the children of Jose A. Fernando and Lucila Tinio. She affirmed that plaintiffs
were only claiming Lot 1303 and Sapang Bayan. She also testified that Sapang
Bayan was supposedly included in Lot 1302 and was previously a river until it
dried up. Unlike Lot 1302, the rest of the property was purportedly not
distributed. She likewise averred that she is aware of a November 29, 1929
Decision concerning the distribution of Lot 1303 issued by the cadastral court but
insisted that the basis of the claims of the petitioners over Lot 1303 is the title in
the name of her ascendants and not said Decision.
[20]


On November 16, 2000, as previously directed by the trial court and agreed
to by the parties, counsel for respondent Hermogenes prepared and submitted an
English translation of the November 29, 1929 Decision. The same was admitted
and marked in evidence as Exhibit X
[21]
as a common exhibit of the parties. The
petitioners also presented Alfredo Borja, the Geodetic Engineer who conducted a
relocation survey of the subject property.

After plaintiffs rested their case, respondent Hermogenes testified on
December 7, 2000. In his testimony, he claimed to know the plaintiffs and
defendants as they were allegedly his relatives and neighbors. He confirmed that
according to the November 29, 1929 Decision, portions of Lot 1303 was
designated as Lots 1303-A, 1303-B, 1303-C and 1303-D which were adjudicated to
certain persons, including Jose Fernando, while the rest of Lot 1303 was
adjudicated to his parents, Antonio A. Fernando married to Felisa
Camacho. According to respondent Hermogenes, his familys tenant and the
latters children occupied the portion of Lot 1303 allotted to his (Hermogenes)
parents while the rest of Lot 1303 was occupied by the persons named in the said
November 29, 1929 Decision. He admitted, however, that nobody among the
purported possessors of Lot 1303 registered the lots assigned to them in the
Decision.
[22]


On January 18, 2001, respondent Hermogenes presented a witness,
Engineer Camilo Vergara who testified that the subject land is divided into Lots
1302 and 1303 with a creek dividing the two lots known as Sapang Bayan. He
also identified a Sketch Plan numbered as PSD-45657 and approved on November
11, 1955.
[23]
During the hearing on January 30, 2001, respondent Hermogenes
made an oral offer of his evidence and rested his case. On the same date,
respondent Acuna, in lieu of his testimony, offered for the parties to simply
stipulate on the due execution and authenticity of the Deeds of Sale dated April 6,
1979 and December 28, 1980, showing the transfer of Lot 1303-D from Salud
Wisco to Simeon Cunanan and subsequently to respondent Acuna. When
counsel for plaintiffs and defendants agreed to the stipulation, albeit objecting to
the purpose for which the deeds of sale were offered, the trial court admitted
Acunas exhibits and Acuna rested his case.
[24]


On February 15, 2001, plaintiffs recalled Norma Fernando as a rebuttal
witness. In her rebuttal testimony, she identified the tax declaration
[25]
over the
said property in the name of Jose A. Fernando; an official receipt
[26]
dated October
3, 1997 issued by the Office of the Treasurer of the Municipality of Baliuag,
Bulacan for payment of real property taxes from 1991 to 1997; and a real
property tax clearance
[27]
dated October 6, 1997, to show that plaintiffs have
allegedly been paying the real property taxes on the entire property covered by
OCT No. RO-487 (997). However, she further testified that they were now willing
to pay taxes only over the portion with an area of 44,234 square meters, which is
included in their claim.
[28]


In a Decision dated May 16, 2002, the trial court ruled that plaintiffs and
defendants (petitioners herein) were indeed the descendants and successors-in-
interest of the registered owners, Jose A. Fernando (married to Lucila Tinio) and
Antonia Fernando (married to Felipe Galvez), of the property covered by OCT No.
RO-487 (997). After finding that the parties admitted that Lot 1302 was already
distributed and titled in the names of third persons per the July 30, 1980 Decision
of the CFI of Baliuag, Bulacan the trial court proceeded to rule on the allocation of
Lot 1303 and Sapang Bayan.

With respect to Lot 1303, the trial court found that the November 29, 1929
Decision of the Cadastral Court, adjudicating said lot to different persons and
limiting Jose Fernandos share to Lot 1303-C, was never implemented nor
executed despite the lapse of more than thirty years. Thus, the said decision has
already prescribed and can no longer be executed. The trial court ordered the
reversion of Lot 1303 to the ownership of spouses Jose A. Fernando and Lucila
Tinio and spouses Antonia A. Fernando and Felipe Galvez under OCT No. RO-487
(997) and allowed the partition of Lot 1303 among petitioners as successors-in-
interest of said registered owners. Excluded from the partition, however, were
the portions of the property which petitioners admitted had been sold or
transferred to Ruperta Sto. Domingo Villasenor and respondent Acuna.

As for the ownership of Sapang Bayan, the trial court found that the same
had not been alleged in the pleadings nor raised as an issue during the pre-trial
conference. Also, according to the trial court, the parties failed to clearly show
whether Sapang Bayan was previously a dry portion of either Lot 1302 or Lot
1303. Neither was there any proof that Sapang Bayan was a river that just dried
up or that it was an accretion which the adjoining lots gradually received from the
effects of the current of water. It was likewise not established who were the
owners of the lots adjoining Sapang Bayan. The trial court concluded that none of
the parties had clearly and sufficiently established their claims over Sapang
Bayan.

The dispositive portion of the May 16, 2002 Decision of the trial court
reads:

WHEREFORE, all the foregoing considered, judgment is hereby rendered
ordering the reversion of Lot 1303, except the portions allotted to Acuna and Ruperta
Sto. Domingo Villasenor, to the ownership of Jose Fernando and Lucia Tinio and Antonia
Fernando and Felipe Galvez under OCT No. 997 and thereafter allowing the partition of
said Lot 1303 among the plaintiffs and the defendants as successors-in-interest of Jose
and Lucia as well as Antonia and Felipe after the settlement of any inheritance tax, fees,
dues and/or obligation chargeable against their estate.
[29]



All the parties, with the exception of respondent Acuna, elevated this case
to the Court of Appeals which rendered the assailed November 24, 2003 Decision,
the dispositive portion of which reads:

WHEREFORE, premises considered, the decision dated May 16, 2002, of the
Regional Trial Court of Malolos, Bulacan, Third Judicial Region, Branch 84, in Civil Case
No. 256-M-97, is hereby REVERSED and SET ASIDE and the complaint dated April 17,
1997 filed by plaintiffs-appellants is dismissed. Costs against plaintiffs-appellants.
[30]



Hence, plaintiffs and defendants in the court a quo elevated the matter for
our review through the instant petition.

Petitioner raises the following issues for consideration:

1. Whether or not the ownership of Lot 1303 and the Sapang Bayan portion of the piece
of land covered by O.C.T. No. RO-487 (997) or Plan Psu-39080 should revert to the
descendants and heirs of the late spouses Jose Fernando and Lucila Tinio and Antonia
Fernando, married to Felipe Galvez;

2. Whether or not a title registered under the Torrens system, as the subject original
certificate of title is the best evidence of ownership of land and is a notice against the
world.
[31]



The petition is without merit.

Petitioners based their claims to the disputed areas designated as Lot 1303
and Sapang Bayan on their ascendants title, OCT No. RO-487 (997), which was
issued on February 26, 1927 in the name of Jose A. Fernando married to Lucila
Tinio and Antonia A. Fernando married to Felipe Galvez. The Court now rules on
these claims in seriatim.

Petitioners claim with respect to Lot 1303

As the records show, in the November 29, 1929 Decision of the Cadastral
Court of Baliuag, Bulacan (in Cadastral Record No. 14, GLRO Cad. Record No. 781)
which was written in Spanish, Lot 1303 had already been divided and adjudicated
to spouses Jose A. Fernando and Lucila Tinio; spouses Antonia A. Fernando and
Felipe Galvez; spouses Antonio A. Fernando and Felisa Camacho; spouses Jose
Martinez and Gregoria Sison; and spouses Ignacio de la Cruz and Salud Wisco
from whom respondent Acuna derived his title. The English translation of the said
November 29, 1929 Decision was provided by respondent Hermogenes and was
adopted by all the parties as a common exhibit designated as Exhibit X. The
agreed English translation of said Decision reads:

Lot No. 1303 This lot is decreed in record No. 448, G.L.R.O. Record No. 25414
and actually with Original Certificate No. 997 (exhibited today) in the name of Jose A.
Fernando and Antonia A. Fernando, who now pray that said lot be subdivided in
accordance with the answers recorded in the instant cadastral record, and the sketch,
Exh. A, which is attached to the records.

A part or portion of the lot has been claimed by Antonio A. Fernando, of legal
age, married to Felisa Camacho; another portion by the spouses Jose Martinez and
Gregoria Sison; another portion by Antonia A. Fernando, of legal age, married to Felipe
Galvez; another portion by Jose A. Fernando, of legal age, married to Lucila Tinio; and
another portion by the spouses Ignacio de la Cruz and Salud Wisco, both of legal age.
The part claimed by the spouses Jose A. Martinez and Gregoria Sison is Lot 1303-A of
Exh. A; the part claimed by Antonia A. Fernando is Lot 1303-B of said exhibit; the part
claimed by Jose A. Fernando is Lot 1303-C of said exhibit, and the part claimed by the
spouses Ignacio de la Cruz and Salud Wisco is Lot 1303-D of the aforementioned Exhibit.

The subdivision of said lot is hereby ordered, separating from the same the
portions that correspond to each of the claimants, which portions are known as Lots
1303-A, 1303-B, 1303-C, and 1303-D in the sketch, Exh. A, and once subdivided, are
adjudicated in favor of the spouses, Jose Martinez and Gregoria Sison, of legal age, Lot
No. 1303-A, in favor of Antonia A. Fernando, of legal age, married to Felipe Galvez, Lot
No. 1303-B; in favor of Jose A. Fernando, of legal age, married to Lucila Tinio, Lot 1303-
C; in favor of the spouses Ignacio de la Cruz and Salud Wisco, of legal age, Lot 1303-D;
and the rest of Lot 1303 is adjudged in favor of Antonio A. Fernando married to Felisa
Camacho. It is likewise ordered that once the subdivision plan is approved, the same be
forwarded by the Director of Lands to this Court for its final decision.

It is ordered that the expense for mentioned subdivision, shall be for the
account of the spouses Jose Martinez and Gregoria Sison, Antonia A. Fernando, Jose A.
Fernando, the spouses Ignacio de la Cruz and Salud Wisco, and Antonio A. Fernando.
[32]



From the foregoing, it would appear that petitioners ascendants
themselves petitioned for the cadastral court to divide Lot 1303 among the
parties to the 1929 case and they were only allocated Lots 1303-B and 1303-C.
Still, as the trial court noted, the November 29, 1929 Decision was never fully
implemented in the sense that the persons named therein merely proceeded to
occupy the lots assigned to them without having complied with the other
directives of the cadastral court which would have led to the titling of the
properties in their names. Nonetheless, it is undisputed that the persons named
in the said November 29, 1929 Decision and, subsequently, their heirs and assigns
have since been in peaceful and uncontested possession of their respective lots
for more than seventy (70) years until the filing of the suit for partition on April
17, 1997 by petitioners which is the subject matter of this case. Respondent
Hermogenes, who testified that petitioners were his relatives and neighbors,
further affirmed before the trial court that the persons named in the November
29, 1929 Decision took possession of their respective lots:


ATTY. VENERACION:

Q This Jose A. Fernando married to Lucila Tinio, you testified earlier are the parents
of the plaintiffs. Did they take possession of lot 1303-C?

A Yes, sir. They took possession.

Q Did they take possession of the other lots?

A No. Yes, the portion

Q The other lots in the name of the other persons. Did they take possession of that?

A Yes, they took took possession of the other No, sir.

Q I am asking you whether they took possession, the children

ATTY. SANTIAGO:

The questions are already answered, your Honor.

ATTY. VENERACION:

What is the answer?

ATTY. SANTIAGO:

Its in the record.

COURT:

The persons named in the Decision already took possession of the lots allotted
to them as per that Decision. So that was already answered. Anything else?


ATTY. VENERACION;

No more question, Your Honor.
[33]



It is noteworthy that petitioners do not dispute that the November 29,
1929 Decision of the cadastral court already adjudicated the ownership of Lot
1303 to persons other than the registered owners thereof. Petitioners would,
nonetheless, claim that respondents purported failure to execute the November
29, 1929 Decision over Lot 1303 (i.e., their failure to secure their own titles)
meant that the entire Lot 1303 being still registered in the name of their
ascendants rightfully belongs to them. This is on the theory that respondents
right to have the said property titled in their names have long prescribed.

On this point, we agree with the appellate court.

Section 47 of Presidential Decree No. 1529, otherwise known as the
Property Registration Decree, states that [n]o title to registered land in
derogation of the title of the registered owner shall be acquired by prescription or
adverse possession. Thus, the Court has held that the right to recover
possession of registered land is imprescriptible because possession is a mere
consequence of ownership.
[34]


However, in Heirs of Anacleto B. Nieto v. Municipality of Meycauayan,
Bulacan,
[35]
the Court had recognized the jurisprudential thread regarding the
exception to the foregoing doctrine that while it is true that a Torrens title is
indefeasible and imprescriptible, the registered landowner may lose his right to
recover possession of his registered property by reason of laches.

Thus, in Heirs of Batiog Lacamen v. Heirs of Laruan,
[36]
the Court had held
that while a person may not acquire title to the registered property through
continuous adverse possession, in derogation of the title of the original registered
owner, the heir of the latter, however, may lose his right to recover back the
possession of such property and the title thereto, by reason of laches.

In the more recent case of Bartola M. Vda. De Tirona v. Encarnacion,
[37]
we
similarly held that while jurisprudence is settled on the imprescriptibility and
indefeasibility of a Torrens title, there is equally an abundance of cases where we
unequivocally ruled that registered owners may lose their right to recover
possession of property through the equitable principle of laches.

Laches means the failure or neglect for an unreasonable and unexplained
length of time to do that which, by observance of due diligence, could or should
have been done earlier. It is negligence or omission to assert a right within a
reasonable time, warranting the presumption that the party entitled to assert his
right either has abandoned or declined to assert it. Laches thus operates as a bar
in equity.
[38]
The essential elements of laches are: (a) conduct on the part of the
defendant, or of one under whom he claims, giving rise to the situation
complained of; (b) delay in asserting complainants rights after he had knowledge
of defendants acts and after he has had the opportunity to sue; (c) lack of
knowledge or notice by defendant that the complainant will assert the right on
which he bases his suit; and (d) injury or prejudice to the defendant in the event
the relief is accorded to the complainant.
[39]


In view of respondents decades long possession and/or ownership of their
respective lots by virtue of a court judgment and the erstwhile registered owners
inaction and neglect for an unreasonable and unexplained length of time in
pursuing the recovery of the land, assuming they retained any right to recover the
same, it is clear that respondents possession may no longer be disturbed. The
right of the registered owners as well as their successors-in-interest to recover
possession of the property is already a stale demand and, thus, is barred by
laches.

In the same vein, we uphold the finding of the Court of Appeals that the
title of petitioners ascendants wrongfully included lots belonging to third
persons.
[40]
Indeed, petitioners ascendants appeared to have acknowledged this
fact as they were even the ones that prayed for the cadastral court to subdivide
Lot 1303 as evident in the November 29, 1929 Decision. We concur with the
Court of Appeals that petitioners ascendants held the property erroneously titled
in their names under an implied trust for the benefit of the true owners. Article
1456 of the Civil Code provides:

ART. 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of
the person from whom the property comes.


As aptly observed by the appellate court, the party thus aggrieved has the
right to recover his or their title over the property by way of reconveyance while
the same has not yet passed to an innocent purchaser for value.
[41]
As we held
in Medizabel v. Apao,
[42]
the essence of an action for reconveyance is that the
certificate of title is respected as incontrovertible. What is sought is the transfer
of the property, in this case its title, which has been wrongfully or erroneously
registered in another person's name, to its rightful owner or to one with a better
right. It is settled in jurisprudence that mere issuance of the certificate of title in
the name of any person does not foreclose the possibility that the real property
may be under co-ownership with persons not named in the certificate or that the
registrant may only be a trustee or that other parties may have acquired interest
subsequent to the issuance of the certificate of title.
[43]


We cannot subscribe to petitioners argument that whatever rights or
claims respondents may have under the November 29, 1929 Decision has
prescribed for their purported failure to fully execute the same. We again concur
with the Court of Appeals in this regard. An action for reconveyance of registered
land based on implied trust prescribes in ten (10) years, the point of reference
being the date of registration of the deed or the date of the issuance of the
certificate of title over the property. However, this Court has ruled that the ten-
year prescriptive period applies only when the person enforcing the trust is not in
possession of the property. If a person claiming to be its owner is in actual
possession of the property, the right to seek reconveyance, which in effect seeks
to quiet title to the property, does not prescribe. The reason is that the one who
is in actual possession of the land claiming to be its owner may wait until his
possession is disturbed or his title is attacked before taking steps to vindicate his
right.
[44]


Petitioners claim with respect to Sapang Bayan

As for the issue of the ownership of Sapang Bayan, we sustain the appellate
court insofar as it ruled that petitioners failed to substantiate their ownership
over said area. However, we find that the Court of Appeals erred in ruling that the
principle of accretion is applicable. The said principle is embodied in Article 457
of the Civil Code which states that [t]o the owners of lands adjoining the banks of
rivers belong the accretion which they gradually receive from the effects of the
current of the waters. We have held that for Article 457 to apply the following
requisites must concur: (1) that the deposit be gradual and imperceptible; (2) that
it be made through the effects of the current of the water; and (3) that the land
where accretion takes place is adjacent to the banks of rivers.
[45]
The character of
the Sapang Bayan property was not shown to be of the nature that is being
referred to in the provision which is an accretion known as alluvion as no
evidence had been presented to support this assertion.

In fact from the transcripts of the proceedings, the parties could not agree
how Sapang Bayan came about. Whether it was a gradual deposit received from
the river current or a dried-up creek bed connected to the main river could not be
ascertained.

Even assuming that Sapang Bayan was a dried-up creek bed, under Article
420, paragraph 1
[46]
and Article 502, paragraph 1
[47]
of the Civil Code, rivers and
their natural beds are property of public dominion. In the absence of any
provision of law vesting ownership of the dried-up river bed in some other
person, it must continue to belong to the State.

We ruled on this issue in Republic v. Court of Appeals,
[48]
to wit:


The lower court cannot validly order the registration of Lots 1 and 2 in the
names of the private respondents. These lots were portions of the bed of the
Meycauayan river and are therefore classified as property of the public domain under
Article 420 paragraph 1 and Article 502, paragraph 1 of the Civil Code of the Philippines.
They are not open to registration under the Land Registration act. The adjudication of
the lands in question as private property in the names of the private respondents is null
and void.
[49]




Furthermore, in Celestial v. Cachopero,
[50]
we similarly ruled that a dried-up
creek bed is property of public dominion:


A creek, like the Salunayan Creek, is a recess or arm extending from a river and
participating in the ebb and flow of the sea. As such, under Articles 420(1) and 502(1) of
the Civil Code, the Salunayan Creek, including its natural bed, is property of the public
domain which is not susceptible to private appropriation and acquisitive prescription.
And, absent any declaration by the government, that a portion of the creek has dried-up
does not, by itself, alter its inalienable character.
[51]




Therefore, on the basis of the law and jurisprudence on the matter, Sapang
Bayan cannot be adjudged to any of the parties in this case.

WHEREFORE, premises considered, the petition is hereby DENIED. The
assailed Decision dated November 24, 2003 of the Court of Appeals in CA-G.R. CV
No. 75773 is hereby AFFIRMED. Costs against petitioners.

SO ORDERED.





TERESITA J. LEONARDO-DE CASTRO
Associate Justice





WE CONCUR:





RENATO C. CORONA
Chief Justice
Chairperson






LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO
Associate Justice Associate Justice












MARTIN S. VILLARAMA, JR.
Associate Justice



CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.


RENATO C. CORONA
Chief Justice






[1]
Rollo, pp. 26-44; penned by Associate Justice Mercedes Gozo-Dadole with Associate Justices Eugenio S.
Labitoria and Rosmari D. Carandang, concurring.
[2]
CA rollo, pp. 31-38.
[3]
Records, Vol. 1, pp. 6-7.
[4]
Id. at 2-5.
[5]
Id. at 11-12.
[6]
Id. at 80-85.
[7]
Id. at 88-89.
[8]
Id. at 91.
[9]
Id. at 92.
[10]
Id. at 93-98.
[11]
It would appear from the annotation of said July 30, 1980 Decision on the back of OCT No. RO-
487 (997) that Lot 1302 was further subdivided into Lots 1302-A to 1302-J with petitioners ascendant Jose
Fernando allocated Lot 1302-D.
[12]
Records, Vol. 1, p. 99.
[13]
Id. at 137-138.
[14]
In the dispositive portion of said 1980 Decision, Lot 1302-G was adjudicated to Antonia A. Fernando.
[15]
Records, Vol. 1, pp. 149-152.
[16]
Id. at 165.
[17]
Id. at 185-188.
[18]
Id. at 264-266.
[19]
Records, Vol. 2, pp. 7-65; TSN, September 19, 2000.
[20]
Id. at 97-129; TSN, October 3, 2000.
[21]
Id. at 155-156.
[22]
Id. at 201-237; TSN, December 7, 2000.
[23]
Id. at 258-296; TSN, January 18, 2001.
[24]
Id. at 330-340; TSN, January 30, 2001.
[25]
Id. at 429.
[26]
Id. at 430.
[27]
Id. at 431.
[28]
Id. at 352-360; TSN, February 15, 2001.
[29]
CA rollo, pp. 37-38.
[30]
Rollo, p. 44.
[31]
Records, Vol. 2, p. 12.
[32]
Id. at 155-156.
[33]
TSN, December 7, 2000, pp. 28-29.
[34]
Umbay v. Alecha, 220 Phil. 103, 107 (1985).
[35]
G.R. No. 150654, December 13, 2007, 540 SCRA 100, 107.
[36]
160 Phil. 615, 622 (1975).
[37]
G.R. No. 168902, September 28, 2007, 534 SCRA 394, 409.
[38]
Heirs of Domingo Hernandez, Sr. v. Mingoa, Sr., G.R. No. 146548, December 18, 2009, 608 SCRA 394,
415, citing Isabela Colleges, Inc. v. Heirs of Nieves Tolentino-Rivera, 397 Phil. 955, 969 (2000).
[39]
Olegario v. Mari, G.R. No. 147951, December 14, 2009, 608 SCRA 134, 147.
[40]
Rollo, p. 42.
[41]
Id., citing Huang v. Court of Appeals, G.R. No. 108525, September 13, 1994, 236 SCRA 420; Vda. De
Esconde v. Court of Appeals, 323 Phil. 81 (1996).
[42]
G.R. No. 143185, February 20, 2006, 482 SCRA 587, 608.
[43]
Pineda v. Court of Appeals. 456 Phil. 732, 748 (2003), citing Lee Tek Sheng v. Court of Appeals, 354
Phil. 556, 561-562 (1998).
[44]
Medizabel v. Apao, supra note 42.
[45]
Republic v. Court of Appeals, 217 Phil. 483, 489 (1984).
[46]
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by
the State, banks, shores, roadsteads, and others of similar character; x x x.
[47]
Art. 502. The following are of public dominion:
(1) Rivers and their natural beds; x x x.
[48]
Supra note 45.
[49]
Id. at 491.
[50]
459 Phil. 903 (2003).
[51]
Id. at 928.

























Republic of the Philippines
Supreme Court
Manila


FIRST DIVISION


JOSE FERNANDO, JR., ZOILO
FERNANDO, NORMA FERNANDO
BANARES, ROSARIO FERNANDO
TANGKENCGO, HEIRS OF TOMAS
FERNANDO, represented by
ALFREDO V. FERNANDO, HEIRS OF
GUILLERMO FERNANDO,
represented by Ronnie H. Fernando,
HEIRS OF ILUMINADA FERNANDO,
represented by Benjamin Estrella
and HEIRS OF GERMOGENA
FERNANDO,
Petitioners,

- versus -

LEON ACUNA, HERMOGENES
FERNANDO, HEIRS OF SPOUSES
ANTONIO FERNANDO AND FELISA
CAMACHO, represented by
HERMOGENES FERNANDO,
Respondents.
G.R. No. 161030


Present:

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.











Promulgated:


September 14, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x



D E C I S I O N


LEONARDO-DE CASTRO, J.:


This is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure seeking to reverse and set aside the Decision
[1]
dated November
24, 2003 of the Court of Appeals in CA-G.R. CV No. 75773, entitled Jose
Fernando, Jr., et al. v. Heirs of Germogena Fernando, et al., which reversed and
set aside the Decision
[2]
dated May 16, 2002 of Branch 84, Regional Trial Court
(RTC) of Malolos, Bulacan in Civil Case No. 256-M-97.

At the heart of this controversy is a parcel of land covered by Original
Certificate of Title (OCT) No. RO-487 (997)
[3]
registered in the names of Jose A.
Fernando, married to Lucila Tinio, and Antonia A. Fernando, married to Felipe
Galvez, and located in San Jose, Baliuag, Bulacan. When they died intestate, the
property remained undivided. Petitioners herein namely, Jose Fernando, Jr.,
Zoilo Fernando, Norma Fernando Banares, Rosario Fernando Tangkencgo, the
heirs of Tomas Fernando, the heirs of Guillermo Fernando, the heirs of Iluminada
Fernando and the heirs of Germogena Fernando are the heirs and successors-in-
interest of the deceased registered owners. However, petitioners failed to agree
on the division of the subject property amongst themselves, even after
compulsory conciliation before the Barangay Lupon.



Thus, petitioners, except for the heirs of Germogena Fernando, filed a
Complaint
[4]
for partition on April 17, 1997 against the heirs of Germogena
Fernando. In the Complaint, plaintiffs alleged, among others, that they and
defendants are common descendants and compulsory heirs of the late spouses
Jose A. Fernando and Lucila Tinio, and the late spouses Antonia A. Fernando and
Felipe Galvez. They further claimed that their predecessors-in-interest died
intestate and without instructions as to the disposition of the property left by
them covered by OCT No. RO-487 (997). There being no settlement, the heirs are
asking for their rightful and lawful share because they wish to build up their
homes or set up their business in the respective portions that will be allotted to
them. In sum, they prayed that the subject property be partitioned into eight
equal parts, corresponding to the hereditary interest of each group of heirs.

In their Answer
[5]
filed on May 20, 1997, defendants essentially admitted all
of the allegations in the complaint. They alleged further that they are not
opposing the partition and even offered to share in the expenses that will be
incurred in the course of the proceedings.

In his Complaint in Intervention
[6]
filed on January 12, 1998, respondent
Leon Acuna (Acuna) averred that in the Decision
[7]
dated November 29, 1929 of
the Cadastral Court of Baliuag, Bulacan, the portion of the property identified as
Lot 1303 was already adjudicated to: (a) Antonio Fernando, married to Felisa
Camacho; (b) spouses Jose Martinez and Gregoria Sison; (c) spouses Ignacio de la
Cruz and Salud Wisco; and (d) Jose Fernando, married to Lucila Tinio, the
petitioners predecessor-in-interest. He likewise claimed that in a 1930 Decision
of the Cadastral Court, the portion identified as Lot 1302 was also already
adjudicated to other people as well.

Respondent Acuna further alleged that Salud Wisco, through her
authorized attorney-in-fact, Amador W. Cruz, sold her lawful share denominated
as Lot 1303-D with an area of 3,818 square meters to Simeon P. Cunanan,
[8]
who
in turn sold the same piece of land to him as evidenced by a Deed of Sale.
[9]
He
also belied petitioners assertion that the subject property has not been settled by
the parties after the death of the original owners in view of the Decision
[10]
dated
July 30, 1980 of the Court of First Instance (CFI) of Baliuag, Bulacan, in LRC Case
No. 80-389 which ordered the Register of Deeds of Bulacan to issue the
corresponding certificates of title to the claimants of the portion of the subject
property designated as Lot 1302.
[11]
Norma Fernando, one of the petitioners in
the instant case, even testified in LRC Case No. 80-389. According to respondent
Acuna, this circumstance betrayed bad faith on the part of petitioners in filing the
present case for partition.

Respondent Acuna likewise averred that the action for partition cannot
prosper since the heirs of the original owners of the subject property, namely
Rosario, Jose Jr., Norma, Tomas, Guillermo, Leopoldo, Hermogena, Illuminada and
Zoilo, all surnamed Fernando, and Lucila Tinio, purportedly had already sold their
respective one-tenth (1/10) share each in the subject property to Ruperta Sto.
Domingo Villasenor for the amount of P35,000.00 on January 25, 1978 as
evidenced by a Kasulatan sa Bilihang Patuluyan.
[12]
He added that he was in
possession of the original copy of OCT No. RO-487 (997) and that he had not
commenced the issuance of new titles to the subdivided lots because he was
waiting for the owners of the other portions of the subject property to bear their
respective shares in the cost of titling.

Subsequently, a Motion for Intervention
[13]
was filed on June 23, 1998 by
respondent Hermogenes Fernando (Hermogenes), for himself and on behalf of
the heirs of the late spouses, Antonio A. Fernando and Felisa Camacho. According
to him, in the July 30, 1980 Decision of the CFI of Bulacan, their predecessors-in-
interest had already been adjudged owners of Lots 1302-A, 1302-F, 1302-
G,
[14]
1302-H and 1302-J of OCT No. RO-487 (997) and any adverse distribution of
the properties would cause respondents damage and prejudice. He would also
later claim, in his Answer-in-Intervention,
[15]
that the instant case is already
barred by res judicata and, should be dismissed.

In the interest of substantial justice, the trial court allowed the respondents
to intervene in the case.

The plaintiffs and defendants jointly moved to have the case submitted for
judgment on the pleadings on May 7, 1999.
[16]
However, the trial court denied
said motion in a Resolution
[17]
dated August 23, 1999 primarily due to the
question regarding the ownership of the property to be partitioned, in light of the
intervention of respondents Acuna and Hermogenes who were claiming legal
right thereto.

In their Manifestation
[18]
filed on April 12, 2000, petitioners affirmed their
execution of a Deed of Sale in favor of Ruperta Sto. Domingo Villasenor in 1978,
wherein they sold to her 1,000 square meters from Lot 1303 for the sum of
35,000.00.

After the pre-trial conference, trial ensued. On September 19, 2000,
petitioner Elizabeth Alarcon testified that they (plaintiffs) are not claiming the
entire property covered by OCT No. RO-487 (997) but only the area referred to as
Lot 1303 and Sapang Bayan. She also admitted that Lot 1302 had already been
divided into ten (10) sublots and allocated to various owners pursuant to the July
30, 1980 Decision of the CFI of Baliuag, Bulacan and these owners already have
their own titles. She likewise claimed that the entire area consisting of Lot 1303
and Sapang Bayan is based on the subdivision plan of Lot 1303. She admitted
that plaintiffs predecessor-in-interest was only allocated a portion of Lot 1303
based on the said plan. However, she claimed that the November 29, 1929
Decision subdividing Lot 1303 was never implemented nor executed by the
parties.
[19]


Petitioner Norma Fernando testified on October 3, 2000 that she is one of
the children of Jose A. Fernando and Lucila Tinio. She affirmed that plaintiffs
were only claiming Lot 1303 and Sapang Bayan. She also testified that Sapang
Bayan was supposedly included in Lot 1302 and was previously a river until it
dried up. Unlike Lot 1302, the rest of the property was purportedly not
distributed. She likewise averred that she is aware of a November 29, 1929
Decision concerning the distribution of Lot 1303 issued by the cadastral court but
insisted that the basis of the claims of the petitioners over Lot 1303 is the title in
the name of her ascendants and not said Decision.
[20]


On November 16, 2000, as previously directed by the trial court and agreed
to by the parties, counsel for respondent Hermogenes prepared and submitted an
English translation of the November 29, 1929 Decision. The same was admitted
and marked in evidence as Exhibit X
[21]
as a common exhibit of the parties. The
petitioners also presented Alfredo Borja, the Geodetic Engineer who conducted a
relocation survey of the subject property.

After plaintiffs rested their case, respondent Hermogenes testified on
December 7, 2000. In his testimony, he claimed to know the plaintiffs and
defendants as they were allegedly his relatives and neighbors. He confirmed that
according to the November 29, 1929 Decision, portions of Lot 1303 was
designated as Lots 1303-A, 1303-B, 1303-C and 1303-D which were adjudicated to
certain persons, including Jose Fernando, while the rest of Lot 1303 was
adjudicated to his parents, Antonio A. Fernando married to Felisa
Camacho. According to respondent Hermogenes, his familys tenant and the
latters children occupied the portion of Lot 1303 allotted to his (Hermogenes)
parents while the rest of Lot 1303 was occupied by the persons named in the said
November 29, 1929 Decision. He admitted, however, that nobody among the
purported possessors of Lot 1303 registered the lots assigned to them in the
Decision.
[22]


On January 18, 2001, respondent Hermogenes presented a witness,
Engineer Camilo Vergara who testified that the subject land is divided into Lots
1302 and 1303 with a creek dividing the two lots known as Sapang Bayan. He
also identified a Sketch Plan numbered as PSD-45657 and approved on November
11, 1955.
[23]
During the hearing on January 30, 2001, respondent Hermogenes
made an oral offer of his evidence and rested his case. On the same date,
respondent Acuna, in lieu of his testimony, offered for the parties to simply
stipulate on the due execution and authenticity of the Deeds of Sale dated April 6,
1979 and December 28, 1980, showing the transfer of Lot 1303-D from Salud
Wisco to Simeon Cunanan and subsequently to respondent Acuna. When
counsel for plaintiffs and defendants agreed to the stipulation, albeit objecting to
the purpose for which the deeds of sale were offered, the trial court admitted
Acunas exhibits and Acuna rested his case.
[24]


On February 15, 2001, plaintiffs recalled Norma Fernando as a rebuttal
witness. In her rebuttal testimony, she identified the tax declaration
[25]
over the
said property in the name of Jose A. Fernando; an official receipt
[26]
dated October
3, 1997 issued by the Office of the Treasurer of the Municipality of Baliuag,
Bulacan for payment of real property taxes from 1991 to 1997; and a real
property tax clearance
[27]
dated October 6, 1997, to show that plaintiffs have
allegedly been paying the real property taxes on the entire property covered by
OCT No. RO-487 (997). However, she further testified that they were now willing
to pay taxes only over the portion with an area of 44,234 square meters, which is
included in their claim.
[28]


In a Decision dated May 16, 2002, the trial court ruled that plaintiffs and
defendants (petitioners herein) were indeed the descendants and successors-in-
interest of the registered owners, Jose A. Fernando (married to Lucila Tinio) and
Antonia Fernando (married to Felipe Galvez), of the property covered by OCT No.
RO-487 (997). After finding that the parties admitted that Lot 1302 was already
distributed and titled in the names of third persons per the July 30, 1980 Decision
of the CFI of Baliuag, Bulacan the trial court proceeded to rule on the allocation of
Lot 1303 and Sapang Bayan.

With respect to Lot 1303, the trial court found that the November 29, 1929
Decision of the Cadastral Court, adjudicating said lot to different persons and
limiting Jose Fernandos share to Lot 1303-C, was never implemented nor
executed despite the lapse of more than thirty years. Thus, the said decision has
already prescribed and can no longer be executed. The trial court ordered the
reversion of Lot 1303 to the ownership of spouses Jose A. Fernando and Lucila
Tinio and spouses Antonia A. Fernando and Felipe Galvez under OCT No. RO-487
(997) and allowed the partition of Lot 1303 among petitioners as successors-in-
interest of said registered owners. Excluded from the partition, however, were
the portions of the property which petitioners admitted had been sold or
transferred to Ruperta Sto. Domingo Villasenor and respondent Acuna.

As for the ownership of Sapang Bayan, the trial court found that the same
had not been alleged in the pleadings nor raised as an issue during the pre-trial
conference. Also, according to the trial court, the parties failed to clearly show
whether Sapang Bayan was previously a dry portion of either Lot 1302 or Lot
1303. Neither was there any proof that Sapang Bayan was a river that just dried
up or that it was an accretion which the adjoining lots gradually received from the
effects of the current of water. It was likewise not established who were the
owners of the lots adjoining Sapang Bayan. The trial court concluded that none of
the parties had clearly and sufficiently established their claims over Sapang
Bayan.

The dispositive portion of the May 16, 2002 Decision of the trial court
reads:

WHEREFORE, all the foregoing considered, judgment is hereby rendered
ordering the reversion of Lot 1303, except the portions allotted to Acuna and Ruperta
Sto. Domingo Villasenor, to the ownership of Jose Fernando and Lucia Tinio and Antonia
Fernando and Felipe Galvez under OCT No. 997 and thereafter allowing the partition of
said Lot 1303 among the plaintiffs and the defendants as successors-in-interest of Jose
and Lucia as well as Antonia and Felipe after the settlement of any inheritance tax, fees,
dues and/or obligation chargeable against their estate.
[29]



All the parties, with the exception of respondent Acuna, elevated this case
to the Court of Appeals which rendered the assailed November 24, 2003 Decision,
the dispositive portion of which reads:

WHEREFORE, premises considered, the decision dated May 16, 2002, of the
Regional Trial Court of Malolos, Bulacan, Third Judicial Region, Branch 84, in Civil Case
No. 256-M-97, is hereby REVERSED and SET ASIDE and the complaint dated April 17,
1997 filed by plaintiffs-appellants is dismissed. Costs against plaintiffs-appellants.
[30]



Hence, plaintiffs and defendants in the court a quo elevated the matter for
our review through the instant petition.

Petitioner raises the following issues for consideration:

1. Whether or not the ownership of Lot 1303 and the Sapang Bayan portion of the piece
of land covered by O.C.T. No. RO-487 (997) or Plan Psu-39080 should revert to the
descendants and heirs of the late spouses Jose Fernando and Lucila Tinio and Antonia
Fernando, married to Felipe Galvez;

2. Whether or not a title registered under the Torrens system, as the subject original
certificate of title is the best evidence of ownership of land and is a notice against the
world.
[31]



The petition is without merit.

Petitioners based their claims to the disputed areas designated as Lot 1303
and Sapang Bayan on their ascendants title, OCT No. RO-487 (997), which was
issued on February 26, 1927 in the name of Jose A. Fernando married to Lucila
Tinio and Antonia A. Fernando married to Felipe Galvez. The Court now rules on
these claims in seriatim.

Petitioners claim with respect to Lot 1303

As the records show, in the November 29, 1929 Decision of the Cadastral
Court of Baliuag, Bulacan (in Cadastral Record No. 14, GLRO Cad. Record No. 781)
which was written in Spanish, Lot 1303 had already been divided and adjudicated
to spouses Jose A. Fernando and Lucila Tinio; spouses Antonia A. Fernando and
Felipe Galvez; spouses Antonio A. Fernando and Felisa Camacho; spouses Jose
Martinez and Gregoria Sison; and spouses Ignacio de la Cruz and Salud Wisco
from whom respondent Acuna derived his title. The English translation of the said
November 29, 1929 Decision was provided by respondent Hermogenes and was
adopted by all the parties as a common exhibit designated as Exhibit X. The
agreed English translation of said Decision reads:

Lot No. 1303 This lot is decreed in record No. 448, G.L.R.O. Record No. 25414
and actually with Original Certificate No. 997 (exhibited today) in the name of Jose A.
Fernando and Antonia A. Fernando, who now pray that said lot be subdivided in
accordance with the answers recorded in the instant cadastral record, and the sketch,
Exh. A, which is attached to the records.

A part or portion of the lot has been claimed by Antonio A. Fernando, of legal
age, married to Felisa Camacho; another portion by the spouses Jose Martinez and
Gregoria Sison; another portion by Antonia A. Fernando, of legal age, married to Felipe
Galvez; another portion by Jose A. Fernando, of legal age, married to Lucila Tinio; and
another portion by the spouses Ignacio de la Cruz and Salud Wisco, both of legal age.
The part claimed by the spouses Jose A. Martinez and Gregoria Sison is Lot 1303-A of
Exh. A; the part claimed by Antonia A. Fernando is Lot 1303-B of said exhibit; the part
claimed by Jose A. Fernando is Lot 1303-C of said exhibit, and the part claimed by the
spouses Ignacio de la Cruz and Salud Wisco is Lot 1303-D of the aforementioned Exhibit.

The subdivision of said lot is hereby ordered, separating from the same the
portions that correspond to each of the claimants, which portions are known as Lots
1303-A, 1303-B, 1303-C, and 1303-D in the sketch, Exh. A, and once subdivided, are
adjudicated in favor of the spouses, Jose Martinez and Gregoria Sison, of legal age, Lot
No. 1303-A, in favor of Antonia A. Fernando, of legal age, married to Felipe Galvez, Lot
No. 1303-B; in favor of Jose A. Fernando, of legal age, married to Lucila Tinio, Lot 1303-
C; in favor of the spouses Ignacio de la Cruz and Salud Wisco, of legal age, Lot 1303-D;
and the rest of Lot 1303 is adjudged in favor of Antonio A. Fernando married to Felisa
Camacho. It is likewise ordered that once the subdivision plan is approved, the same be
forwarded by the Director of Lands to this Court for its final decision.

It is ordered that the expense for mentioned subdivision, shall be for the
account of the spouses Jose Martinez and Gregoria Sison, Antonia A. Fernando, Jose A.
Fernando, the spouses Ignacio de la Cruz and Salud Wisco, and Antonio A. Fernando.
[32]



From the foregoing, it would appear that petitioners ascendants
themselves petitioned for the cadastral court to divide Lot 1303 among the
parties to the 1929 case and they were only allocated Lots 1303-B and 1303-C.
Still, as the trial court noted, the November 29, 1929 Decision was never fully
implemented in the sense that the persons named therein merely proceeded to
occupy the lots assigned to them without having complied with the other
directives of the cadastral court which would have led to the titling of the
properties in their names. Nonetheless, it is undisputed that the persons named
in the said November 29, 1929 Decision and, subsequently, their heirs and assigns
have since been in peaceful and uncontested possession of their respective lots
for more than seventy (70) years until the filing of the suit for partition on April
17, 1997 by petitioners which is the subject matter of this case. Respondent
Hermogenes, who testified that petitioners were his relatives and neighbors,
further affirmed before the trial court that the persons named in the November
29, 1929 Decision took possession of their respective lots:


ATTY. VENERACION:

Q This Jose A. Fernando married to Lucila Tinio, you testified earlier are the parents
of the plaintiffs. Did they take possession of lot 1303-C?

A Yes, sir. They took possession.

Q Did they take possession of the other lots?

A No. Yes, the portion

Q The other lots in the name of the other persons. Did they take possession of that?

A Yes, they took took possession of the other No, sir.

Q I am asking you whether they took possession, the children

ATTY. SANTIAGO:

The questions are already answered, your Honor.

ATTY. VENERACION:

What is the answer?

ATTY. SANTIAGO:

Its in the record.

COURT:

The persons named in the Decision already took possession of the lots allotted
to them as per that Decision. So that was already answered. Anything else?


ATTY. VENERACION;

No more question, Your Honor.
[33]



It is noteworthy that petitioners do not dispute that the November 29,
1929 Decision of the cadastral court already adjudicated the ownership of Lot
1303 to persons other than the registered owners thereof. Petitioners would,
nonetheless, claim that respondents purported failure to execute the November
29, 1929 Decision over Lot 1303 (i.e., their failure to secure their own titles)
meant that the entire Lot 1303 being still registered in the name of their
ascendants rightfully belongs to them. This is on the theory that respondents
right to have the said property titled in their names have long prescribed.

On this point, we agree with the appellate court.

Section 47 of Presidential Decree No. 1529, otherwise known as the
Property Registration Decree, states that [n]o title to registered land in
derogation of the title of the registered owner shall be acquired by prescription or
adverse possession. Thus, the Court has held that the right to recover
possession of registered land is imprescriptible because possession is a mere
consequence of ownership.
[34]


However, in Heirs of Anacleto B. Nieto v. Municipality of Meycauayan,
Bulacan,
[35]
the Court had recognized the jurisprudential thread regarding the
exception to the foregoing doctrine that while it is true that a Torrens title is
indefeasible and imprescriptible, the registered landowner may lose his right to
recover possession of his registered property by reason of laches.

Thus, in Heirs of Batiog Lacamen v. Heirs of Laruan,
[36]
the Court had held
that while a person may not acquire title to the registered property through
continuous adverse possession, in derogation of the title of the original registered
owner, the heir of the latter, however, may lose his right to recover back the
possession of such property and the title thereto, by reason of laches.

In the more recent case of Bartola M. Vda. De Tirona v. Encarnacion,
[37]
we
similarly held that while jurisprudence is settled on the imprescriptibility and
indefeasibility of a Torrens title, there is equally an abundance of cases where we
unequivocally ruled that registered owners may lose their right to recover
possession of property through the equitable principle of laches.

Laches means the failure or neglect for an unreasonable and unexplained
length of time to do that which, by observance of due diligence, could or should
have been done earlier. It is negligence or omission to assert a right within a
reasonable time, warranting the presumption that the party entitled to assert his
right either has abandoned or declined to assert it. Laches thus operates as a bar
in equity.
[38]
The essential elements of laches are: (a) conduct on the part of the
defendant, or of one under whom he claims, giving rise to the situation
complained of; (b) delay in asserting complainants rights after he had knowledge
of defendants acts and after he has had the opportunity to sue; (c) lack of
knowledge or notice by defendant that the complainant will assert the right on
which he bases his suit; and (d) injury or prejudice to the defendant in the event
the relief is accorded to the complainant.
[39]


In view of respondents decades long possession and/or ownership of their
respective lots by virtue of a court judgment and the erstwhile registered owners
inaction and neglect for an unreasonable and unexplained length of time in
pursuing the recovery of the land, assuming they retained any right to recover the
same, it is clear that respondents possession may no longer be disturbed. The
right of the registered owners as well as their successors-in-interest to recover
possession of the property is already a stale demand and, thus, is barred by
laches.

In the same vein, we uphold the finding of the Court of Appeals that the
title of petitioners ascendants wrongfully included lots belonging to third
persons.
[40]
Indeed, petitioners ascendants appeared to have acknowledged this
fact as they were even the ones that prayed for the cadastral court to subdivide
Lot 1303 as evident in the November 29, 1929 Decision. We concur with the
Court of Appeals that petitioners ascendants held the property erroneously titled
in their names under an implied trust for the benefit of the true owners. Article
1456 of the Civil Code provides:

ART. 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of
the person from whom the property comes.


As aptly observed by the appellate court, the party thus aggrieved has the
right to recover his or their title over the property by way of reconveyance while
the same has not yet passed to an innocent purchaser for value.
[41]
As we held
in Medizabel v. Apao,
[42]
the essence of an action for reconveyance is that the
certificate of title is respected as incontrovertible. What is sought is the transfer
of the property, in this case its title, which has been wrongfully or erroneously
registered in another person's name, to its rightful owner or to one with a better
right. It is settled in jurisprudence that mere issuance of the certificate of title in
the name of any person does not foreclose the possibility that the real property
may be under co-ownership with persons not named in the certificate or that the
registrant may only be a trustee or that other parties may have acquired interest
subsequent to the issuance of the certificate of title.
[43]


We cannot subscribe to petitioners argument that whatever rights or
claims respondents may have under the November 29, 1929 Decision has
prescribed for their purported failure to fully execute the same. We again concur
with the Court of Appeals in this regard. An action for reconveyance of registered
land based on implied trust prescribes in ten (10) years, the point of reference
being the date of registration of the deed or the date of the issuance of the
certificate of title over the property. However, this Court has ruled that the ten-
year prescriptive period applies only when the person enforcing the trust is not in
possession of the property. If a person claiming to be its owner is in actual
possession of the property, the right to seek reconveyance, which in effect seeks
to quiet title to the property, does not prescribe. The reason is that the one who
is in actual possession of the land claiming to be its owner may wait until his
possession is disturbed or his title is attacked before taking steps to vindicate his
right.
[44]


Petitioners claim with respect to Sapang Bayan

As for the issue of the ownership of Sapang Bayan, we sustain the appellate
court insofar as it ruled that petitioners failed to substantiate their ownership
over said area. However, we find that the Court of Appeals erred in ruling that the
principle of accretion is applicable. The said principle is embodied in Article 457
of the Civil Code which states that [t]o the owners of lands adjoining the banks of
rivers belong the accretion which they gradually receive from the effects of the
current of the waters. We have held that for Article 457 to apply the following
requisites must concur: (1) that the deposit be gradual and imperceptible; (2) that
it be made through the effects of the current of the water; and (3) that the land
where accretion takes place is adjacent to the banks of rivers.
[45]
The character of
the Sapang Bayan property was not shown to be of the nature that is being
referred to in the provision which is an accretion known as alluvion as no
evidence had been presented to support this assertion.

In fact from the transcripts of the proceedings, the parties could not agree
how Sapang Bayan came about. Whether it was a gradual deposit received from
the river current or a dried-up creek bed connected to the main river could not be
ascertained.

Even assuming that Sapang Bayan was a dried-up creek bed, under Article
420, paragraph 1
[46]
and Article 502, paragraph 1
[47]
of the Civil Code, rivers and
their natural beds are property of public dominion. In the absence of any
provision of law vesting ownership of the dried-up river bed in some other
person, it must continue to belong to the State.

We ruled on this issue in Republic v. Court of Appeals,
[48]
to wit:


The lower court cannot validly order the registration of Lots 1 and 2 in the
names of the private respondents. These lots were portions of the bed of the
Meycauayan river and are therefore classified as property of the public domain under
Article 420 paragraph 1 and Article 502, paragraph 1 of the Civil Code of the Philippines.
They are not open to registration under the Land Registration act. The adjudication of
the lands in question as private property in the names of the private respondents is null
and void.
[49]




Furthermore, in Celestial v. Cachopero,
[50]
we similarly ruled that a dried-up
creek bed is property of public dominion:


A creek, like the Salunayan Creek, is a recess or arm extending from a river and
participating in the ebb and flow of the sea. As such, under Articles 420(1) and 502(1) of
the Civil Code, the Salunayan Creek, including its natural bed, is property of the public
domain which is not susceptible to private appropriation and acquisitive prescription.
And, absent any declaration by the government, that a portion of the creek has dried-up
does not, by itself, alter its inalienable character.
[51]




Therefore, on the basis of the law and jurisprudence on the matter, Sapang
Bayan cannot be adjudged to any of the parties in this case.

WHEREFORE, premises considered, the petition is hereby DENIED. The
assailed Decision dated November 24, 2003 of the Court of Appeals in CA-G.R. CV
No. 75773 is hereby AFFIRMED. Costs against petitioners.

SO ORDERED.





TERESITA J. LEONARDO-DE CASTRO
Associate Justice





WE CONCUR:





RENATO C. CORONA
Chief Justice
Chairperson






LUCAS P. BERSAMIN
Associate Justice
MARIANO C. DEL CASTILLO
Associate Justice












MARTIN S. VILLARAMA, JR.
Associate Justice



CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.


RENATO C. CORONA
Chief Justice

EN BANC
[G.R. No. 126183. March 25, 1999]
LUZVIMINDA DE LA CRUZ, MERCY DE LEON, TERESITA EUGENIO,
CORAZON GOMEZ, ELENA GUEVARRA, ROSALINA JINGCO,
LOIDA IGNACIO, and EMERITA PIZARRO, petitioners vs., COURT
OF APPEALS, CIVIL SERVICE COMMISSION and THE
SECRETARY OF THE DEPARTMENT OF EDUCATION,
CULTURE AND SPORTS, respondents.
[G.R. No. 129221. March 25, 1999]
ROLANDO ALURA, CLARA ALVAREZ, PORFIRIO AUSTRIA, VICENTE
CARRANZA, ELMER DALIDA, ROSALINDA DALIDA, NELSON
DULDULAO, LEA POCONG, ENRICO REYMUNDO, MARGIE
SERRANO, SUSAN SIERTE, JESSIE VILLANUEVA, NORBERTO
ABAD, MARIA ACEJO, ELVIRA ALANO, SUSANA BANUA,
CAROLINA BULACLAC, DANILO CABALLES, ECHELITA
CALMA, JESUSA CARAIG, CECILLA CASTILLO, ANACLETA
CORRALES, GLORIA CUEVAS, CONCORDIA DE GUZMAN,
ROWENA DEL ROSARIO, MATILDE DINGLE, ROSARIO
DULDULAO, CONRADA ENDRINA, LUZVIMINDA ESPINO,
VIRGILIO ESTRADA, DAMIAN FETIZANAN, DEMOCRITO
FLORES, ROSALIA GARCELINA, CORAZON GONZALES,
VIOLETA GUANIZO, SURENA GUNDRAN, HILARIA HALAGO,
NERISSA IGNACIO, LEONOR LACERNA, TERESITA
LAGUMBAY, TERESITA LAURENTE, CARMELITA LEGION,
LEONARDO LIMBO, EDGARDO LIWANAG, ERLINA
MAGALLANES, NEDA MAGSULIT, AMELITA MANGAHAS, GUIA
MORRIS, HIPOLITA NATIVIDAD, NATIVIDAD NEPOMUCENO,
ROSALINA NOCUM, MAXIMA NON, ESTELA PALILEO, ANA
PALMA, GLICERIA PANGINDIAN, MA. LUZ PEREZ, LYDIA
QUINTANA, LORENZA REAL, BERNARDITA RINO, CELIA
RONQUILLO, GLORIA SALVADOR, CATHERINE SAN AGUSTIN,
LIBERTY SISON, ERLINDA SOLAMO, ALMA TALAMANTE,
GINA TIMBAS, BENJAMIN VALBUENA, DONATO VALDEMORO,
ROSEMARIE VEDEJA, RIZALINA VICTORIO, MYRNA
VILLAMIN, FLORENDA VILLAREAL, WILSON PEREZ, ENRICO
PILANDE, JOSEPHINE PARMISANO, FELIPE ALACAR, JOSE
FETALVERO, JR., MYRNA BARLISO, CAROLINA COLIGADO,
ROLANDO CERBO and LORA CLEMENCIA, petitioners, vs. COURT
OF APPEALS, CIVIL SERVICE COMMISSION, and SECRETARY
OF EDUCATION CULTURE AND SPORTS, respondents.
D E C I S I O N
BELLOSILLO, J .:
These consolidated petitions
[1]
are among several petitions filed with this Court arising from
the much-publicized public school teachers' mass actions of September/October 1990.
Petitioners are public school teachers from various schools in Metro Manila who were
simultaneously charged, preventively suspended, and eventually dismissed in October 1990 by
then Secretary Isidro D. Cariio of the Department of Education, Culture and Sports (DECS), in
decisions issued by him which uniformly read -
This is a motu-propio administrative complaint separately filed by the Secretary of
Education, Culture and Sports against the following public school teachers x x x x
based on the report submitted by their respective school principals wherein it was
alleged that the above-named teachers participated in the mass action/illegal strike on
Sept. 19-21, 1990 and subsequently defied the return-to-work order dated September
17, 1990 issued by this Office, which acts constitute grave misconduct, gross neglect
of duty, gross violation of Civil Service Law, Rules and Regulations and reasonable
office regulations, refusal to perform official duty, gross insubordination, conduct
prejudicial to the best interest of the service and absence without official leave
(AWOL), in violation of Presidential Decree 807, otherwise known as the Civil
Service Decree of the Philippines.
Required to explain within a period of not less than 72 hours but not more than 5 days
from receipt of the complaint, respondents failed to submit the required answer within
the given time up to the present, and despite the denial of their request for extension
of 30 days within which to submit their answers dated September 25, 1990 filed by
their counsel, Atty. Gregorio Fabros, in a letter of this Office to him dated September
28, 1990, respondents failed to submit the same, which failure, is considered a waiver
on their part of their right to answer the charges and to controvert the same.
Wherefore, after a careful evaluation of the records, this Office finds the respondents
guilty as charged.
In accordance with Memorandum Circular 30 s. 1989 of the Civil Service
Commission on Guidelines in the Application of Penalty in Administrative Cases, the
herein respondents are dismissed from Office effective immediately.
The decisions dismissing petitioners were immediately implemented.
Petitioners appealed to the Merit Systems Protection Board (MSPB) and then to the Civil
Service Commission (CSC). In 1993 the CSC found petitioners guilty of conduct prejudicial to
the best interest of the service" for having participated in the mass actions and imposed upon
them the reduced penalty of six (6) months' suspension. However, in view of the length of time
that petitioners had been out of the service by reason of the immediate implementation of the
dismissal orders of Secretary Cario, the CSC likewise ordered petitioners' automatic
reinstatement in the service without back wages.
Petitioners were unhappy with the CSC decision. They initially filed petitions
for certiorari with this Court, docketed as G.R. Nos. 111998,
[2]
114435-5506,
[3]
and 116312-
19,
[4]
which were all referred to the Court of Appeals pursuant to Revised Administrative
Circular No. 1-95,
[5]
and there re-docketed as CA-G.R. SP No. 37620, CA-G.R. SP No. 37619
and CA-G.R. SP Nos. 37784, 37808-37014, respectively.
On 29 November 1995 the Special Third Division of the Court of Appeals
[6]
rendered a joint
decision in CA-G.R. SP Nos. 37619-20 dismissing the petitions for lack of merit.
[7]
The appellate
court ruled that the questioned resolutions of the Civil Service Commission finding petitioners
guilty of conduct prejudicial to the best interest of the service were based on reasonable and
justifiable grounds; that petitioners' perceived grievances were no excuse for them not to conduct
classes and defy the return-to-work order issued by their superiors; that the immediate execution
of the dismissal orders of Secretary Cario was sanctioned by Sec. 47, par. (2), of the
Administrative Code of 1987 (E.O. No. 292) as well as Sec. 37, par. (b), Art. IX of PD No.
807,
[8]
and Sec. 32, Rule XIV of the Omnibus Rules Implementing Book V of E.0. No. 292. Their
motion for reconsideration having been denied on 15 May 1997,
[9]
petitioners then appealed
by certiorari to this Court on 26 June 1997, docketed as G.R. No. 129221.
Meanwhile, on 24 April 1998 the Tenth Division of the Court of Appeals
[10]
rendered a joint
decision in CA-G.R. SP No. 37784 and Nos. 37808-14 likewise dismissing the petitions for lack
of merit.
[11]
The appellate court rejected petitioners' contention that they should not have been
penalized for participating in the September/October 1990 mass actions because they were
merely exercising their constitutional right to free assembly. In so ruling the Court of Appeals
cited Manila Public School Teachers Association v. Laguio, Jr.
[12]
wherein this Court ruled that
the public school teachers' mass actions of September/October 1990 were"to all intents and
purposes a strike x x x constitut[ing] a concealed and unauthorized stoppage of, or absence from,
work which it was the teachers' duty to perform, undertaken for essentially economic
reasons." Petitioners' contention that Secretary Cario's decision to dismiss them was not
supported by evidence was likewise rejected in view of petitioners' admissions and/or failure to
refute the factual finding that petitioners actually joined the mass actions based on the report of
absences submitted by their respective school principals. Their motion for reconsideration
having been denied in the resolution of 20 August 1996,
[13]
petitioners then filed a petition for
review on certiorari with this Court on 1 October 1996, docketed as G.R. No, 126183.
By resolution of 7 October 1997 we granted petitioners' motion for the consolidation of G.R.
Nos. 126183 and 129221 involving as they did common questions of fact and law.
Petitioners contend that the Court of Appeals grievously erred in affirming the CSC
resolutions finding them guilty of conduct prejudicial to the best interest of the service when
their only "offense" was to exercise their constitutional right to peaceably assemble and petition
the government for redress of their grievances. Moreover petitioners insist that the mass actions
of September/October 1990 were not "strikes" as there was no actual disruption of
classes. Petitioners therefore ask for exoneration or, in the alternative, award of back wages for
the period of three (3) years when they were not allowed to work while awaiting resolution of
their appeals by the MSPB and CSC, deducting the period of six (6) months' suspension
eventually meted them.
The petitions must be denied in view of previous rulings of this Court already settling all the
issues raised by petitioners. It is a very desirable and necessary judicial practice that when a
court has laid down a principle of law as applicable to a certain state of facts, it will adhere to
that principle and apply it to all future cases where the facts are substantially the same.
[14]
Stare
decisis et non quieta movere. Stand by the decisions and disturb not what is settled.
[15]

As early as 18 December 1990 we have categorically ruled in the consolidated cases
of Manila Public School Teachers Association v. Laguio Jr.
[16]
and Alliance of Concerned
Teachers v. Hon. Isidro Cario
[17]
that the mass actions of September/October 1990 staged by
Metro Manila public school teachers "amounted to a strike in every sense of the term,
constituting as they did, a concerted and unauthorized stoppage of or absence from work which
it was said teachers' sworn duty to perform, carried out for essentially economic reasons -- to
protest and pressure the Government to correct what, among other grievances, the
strikers perceived to be the unjust or prejudicial implementation of the salary standardization
law insofar as they were concerned, the non-payment or delay in payment of various fringe
benefits and allowances to which they were entitled, and the imposition of additional teaching
loads and longer teaching hours." In Rolando Gan v. Civil Service Commission,
[18]
we denied the
claim that the teachers were thereby denied their rights to peaceably assemble and petition the
government for redress of grievances reasoning that this constitutional liberty to be upheld, like
any other liberty, must be exercised within reasonable limits so as not to prejudice the public
welfare. But the public school teachers in the case of the 1990 mass actions did not exercise
their constitutional rights within reasonable limits. On the contrary, they committed acts
prejudicial to the best interest of the service by staging the mass protests on regular school days,
abandoning their classes and refusing to go back even after they had been ordered to do so.





EN BANC
[G.R. No. 126183. March 25, 1999]
LUZVIMINDA DE LA CRUZ, MERCY DE LEON, TERESITA EUGENIO,
CORAZON GOMEZ, ELENA GUEVARRA, ROSALINA JINGCO,
LOIDA IGNACIO, and EMERITA PIZARRO, petitioners vs., COURT
OF APPEALS, CIVIL SERVICE COMMISSION and THE
SECRETARY OF THE DEPARTMENT OF EDUCATION,
CULTURE AND SPORTS, respondents.
[G.R. No. 129221. March 25, 1999]
ROLANDO ALURA, CLARA ALVAREZ, PORFIRIO AUSTRIA, VICENTE
CARRANZA, ELMER DALIDA, ROSALINDA DALIDA, NELSON
DULDULAO, LEA POCONG, ENRICO REYMUNDO, MARGIE
SERRANO, SUSAN SIERTE, JESSIE VILLANUEVA, NORBERTO
ABAD, MARIA ACEJO, ELVIRA ALANO, SUSANA BANUA,
CAROLINA BULACLAC, DANILO CABALLES, ECHELITA
CALMA, JESUSA CARAIG, CECILLA CASTILLO, ANACLETA
CORRALES, GLORIA CUEVAS, CONCORDIA DE GUZMAN,
ROWENA DEL ROSARIO, MATILDE DINGLE, ROSARIO
DULDULAO, CONRADA ENDRINA, LUZVIMINDA ESPINO,
VIRGILIO ESTRADA, DAMIAN FETIZANAN, DEMOCRITO
FLORES, ROSALIA GARCELINA, CORAZON GONZALES,
VIOLETA GUANIZO, SURENA GUNDRAN, HILARIA HALAGO,
NERISSA IGNACIO, LEONOR LACERNA, TERESITA
LAGUMBAY, TERESITA LAURENTE, CARMELITA LEGION,
LEONARDO LIMBO, EDGARDO LIWANAG, ERLINA
MAGALLANES, NEDA MAGSULIT, AMELITA MANGAHAS, GUIA
MORRIS, HIPOLITA NATIVIDAD, NATIVIDAD NEPOMUCENO,
ROSALINA NOCUM, MAXIMA NON, ESTELA PALILEO, ANA
PALMA, GLICERIA PANGINDIAN, MA. LUZ PEREZ, LYDIA
QUINTANA, LORENZA REAL, BERNARDITA RINO, CELIA
RONQUILLO, GLORIA SALVADOR, CATHERINE SAN AGUSTIN,
LIBERTY SISON, ERLINDA SOLAMO, ALMA TALAMANTE,
GINA TIMBAS, BENJAMIN VALBUENA, DONATO VALDEMORO,
ROSEMARIE VEDEJA, RIZALINA VICTORIO, MYRNA
VILLAMIN, FLORENDA VILLAREAL, WILSON PEREZ, ENRICO
PILANDE, JOSEPHINE PARMISANO, FELIPE ALACAR, JOSE
FETALVERO, JR., MYRNA BARLISO, CAROLINA COLIGADO,
ROLANDO CERBO and LORA CLEMENCIA, petitioners, vs. COURT
OF APPEALS, CIVIL SERVICE COMMISSION, and SECRETARY
OF EDUCATION CULTURE AND SPORTS, respondents.
D E C I S I O N
BELLOSILLO, J .:
These consolidated petitions
[1]
are among several petitions filed with this Court arising from
the much-publicized public school teachers' mass actions of September/October 1990.
Petitioners are public school teachers from various schools in Metro Manila who were
simultaneously charged, preventively suspended, and eventually dismissed in October 1990 by
then Secretary Isidro D. Cariio of the Department of Education, Culture and Sports (DECS), in
decisions issued by him which uniformly read -
This is a motu-propio administrative complaint separately filed by the Secretary of
Education, Culture and Sports against the following public school teachers x x x x
based on the report submitted by their respective school principals wherein it was
alleged that the above-named teachers participated in the mass action/illegal strike on
Sept. 19-21, 1990 and subsequently defied the return-to-work order dated September
17, 1990 issued by this Office, which acts constitute grave misconduct, gross neglect
of duty, gross violation of Civil Service Law, Rules and Regulations and reasonable
office regulations, refusal to perform official duty, gross insubordination, conduct
prejudicial to the best interest of the service and absence without official leave
(AWOL), in violation of Presidential Decree 807, otherwise known as the Civil
Service Decree of the Philippines.
Required to explain within a period of not less than 72 hours but not more than 5 days
from receipt of the complaint, respondents failed to submit the required answer within
the given time up to the present, and despite the denial of their request for extension
of 30 days within which to submit their answers dated September 25, 1990 filed by
their counsel, Atty. Gregorio Fabros, in a letter of this Office to him dated September
28, 1990, respondents failed to submit the same, which failure, is considered a waiver
on their part of their right to answer the charges and to controvert the same.
Wherefore, after a careful evaluation of the records, this Office finds the respondents
guilty as charged.
In accordance with Memorandum Circular 30 s. 1989 of the Civil Service
Commission on Guidelines in the Application of Penalty in Administrative Cases, the
herein respondents are dismissed from Office effective immediately.
The decisions dismissing petitioners were immediately implemented.
Petitioners appealed to the Merit Systems Protection Board (MSPB) and then to the Civil
Service Commission (CSC). In 1993 the CSC found petitioners guilty of conduct prejudicial to
the best interest of the service" for having participated in the mass actions and imposed upon
them the reduced penalty of six (6) months' suspension. However, in view of the length of time
that petitioners had been out of the service by reason of the immediate implementation of the
dismissal orders of Secretary Cario, the CSC likewise ordered petitioners' automatic
reinstatement in the service without back wages.
Petitioners were unhappy with the CSC decision. They initially filed petitions
for certiorari with this Court, docketed as G.R. Nos. 111998,
[2]
114435-5506,
[3]
and 116312-
19,
[4]
which were all referred to the Court of Appeals pursuant to Revised Administrative
Circular No. 1-95,
[5]
and there re-docketed as CA-G.R. SP No. 37620, CA-G.R. SP No. 37619
and CA-G.R. SP Nos. 37784, 37808-37014, respectively.
On 29 November 1995 the Special Third Division of the Court of Appeals
[6]
rendered a joint
decision in CA-G.R. SP Nos. 37619-20 dismissing the petitions for lack of merit.
[7]
The appellate
court ruled that the questioned resolutions of the Civil Service Commission finding petitioners
guilty of conduct prejudicial to the best interest of the service were based on reasonable and
justifiable grounds; that petitioners' perceived grievances were no excuse for them not to conduct
classes and defy the return-to-work order issued by their superiors; that the immediate execution
of the dismissal orders of Secretary Cario was sanctioned by Sec. 47, par. (2), of the
Administrative Code of 1987 (E.O. No. 292) as well as Sec. 37, par. (b), Art. IX of PD No.
807,
[8]
and Sec. 32, Rule XIV of the Omnibus Rules Implementing Book V of E.0. No. 292. Their
motion for reconsideration having been denied on 15 May 1997,
[9]
petitioners then appealed
by certiorari to this Court on 26 June 1997, docketed as G.R. No. 129221.
Meanwhile, on 24 April 1998 the Tenth Division of the Court of Appeals
[10]
rendered a joint
decision in CA-G.R. SP No. 37784 and Nos. 37808-14 likewise dismissing the petitions for lack
of merit.
[11]
The appellate court rejected petitioners' contention that they should not have been
penalized for participating in the September/October 1990 mass actions because they were
merely exercising their constitutional right to free assembly. In so ruling the Court of Appeals
cited Manila Public School Teachers Association v. Laguio, Jr.
[12]
wherein this Court ruled that
the public school teachers' mass actions of September/October 1990 were"to all intents and
purposes a strike x x x constitut[ing] a concealed and unauthorized stoppage of, or absence from,
work which it was the teachers' duty to perform, undertaken for essentially economic
reasons." Petitioners' contention that Secretary Cario's decision to dismiss them was not
supported by evidence was likewise rejected in view of petitioners' admissions and/or failure to
refute the factual finding that petitioners actually joined the mass actions based on the report of
absences submitted by their respective school principals. Their motion for reconsideration
having been denied in the resolution of 20 August 1996,
[13]
petitioners then filed a petition for
review on certiorari with this Court on 1 October 1996, docketed as G.R. No, 126183.
By resolution of 7 October 1997 we granted petitioners' motion for the consolidation of G.R.
Nos. 126183 and 129221 involving as they did common questions of fact and law.
Petitioners contend that the Court of Appeals grievously erred in affirming the CSC
resolutions finding them guilty of conduct prejudicial to the best interest of the service when
their only "offense" was to exercise their constitutional right to peaceably assemble and petition
the government for redress of their grievances. Moreover petitioners insist that the mass actions
of September/October 1990 were not "strikes" as there was no actual disruption of
classes. Petitioners therefore ask for exoneration or, in the alternative, award of back wages for
the period of three (3) years when they were not allowed to work while awaiting resolution of
their appeals by the MSPB and CSC, deducting the period of six (6) months' suspension
eventually meted them.
The petitions must be denied in view of previous rulings of this Court already settling all the
issues raised by petitioners. It is a very desirable and necessary judicial practice that when a
court has laid down a principle of law as applicable to a certain state of facts, it will adhere to
that principle and apply it to all future cases where the facts are substantially the same.
[14]
Stare
decisis et non quieta movere. Stand by the decisions and disturb not what is settled.
[15]

As early as 18 December 1990 we have categorically ruled in the consolidated cases
of Manila Public School Teachers Association v. Laguio Jr.
[16]
and Alliance of Concerned
Teachers v. Hon. Isidro Cario
[17]
that the mass actions of September/October 1990 staged by
Metro Manila public school teachers "amounted to a strike in every sense of the term,
constituting as they did, a concerted and unauthorized stoppage of or absence from work which
it was said teachers' sworn duty to perform, carried out for essentially economic reasons -- to
protest and pressure the Government to correct what, among other grievances, the
strikers perceived to be the unjust or prejudicial implementation of the salary standardization
law insofar as they were concerned, the non-payment or delay in payment of various fringe
benefits and allowances to which they were entitled, and the imposition of additional teaching
loads and longer teaching hours." In Rolando Gan v. Civil Service Commission,
[18]
we denied the
claim that the teachers were thereby denied their rights to peaceably assemble and petition the
government for redress of grievances reasoning that this constitutional liberty to be upheld, like
any other liberty, must be exercised within reasonable limits so as not to prejudice the public
welfare. But the public school teachers in the case of the 1990 mass actions did not exercise
their constitutional rights within reasonable limits. On the contrary, they committed acts
prejudicial to the best interest of the service by staging the mass protests on regular school days,
abandoning their classes and refusing to go back even after they had been ordered to do so. Had
the teachers availed of their free time - recess, after classes, weekends or holidays - to dramatize
their grievances and to dialogue with the proper authorities within the bounds of law, no one -
not the DECS, the CSC or even the Supreme Court - could have held them liable for their
participation in the mass actions.
[19]

With respect to our ruling in PBM Employees Organization v. Philippine Blooming Mills
Co., Inc.,
[20]
invoked by petitioners, we have likewise already ruled in the Rolando
Gan case
[21]
that the PBM ruling - that the rights of free expression and assembly could not be
lightly disregarded as they occupy a preferred position in the hierarchy of civil liberties - was not
applicable to defend the validity of the 1990 mass actions because what were pitted therein
against the rights of free expression and of assembly were inferior property rights while the
higher consideration involved in the case of the striking teachers was the education of the youth
which must, at the very least, be equated with the freedom of assembly and to petition the
government for redress of grievances.
[22]

We affirmed the foregoing rulings in Bagana v. Court of Appeals
[23]
by denying a similar
petition filed by another group of teachers who participated in the 1990 mass actions but who
claimed to have been merely exercising their constitutional right to free assembly. We held
in Bagana that the Court of Appeals committed no reversible error in affirming the CSC
resolutions finding the teachers guilty of conduct prejudicial to the best interest of the service
and imposing penalties of six (6) months' suspension without pay. In Bangalisan v. Court of
Appeals
[24]
we added that the persistent refusal of the striking teachers to call the mass actions by
the conventional term "strike" did not erase the true nature of the mass actions as unauthorized
stoppages of work the purpose of which was to obtain a favorable response to the teachers'
economic grievances. We again stressed that the teachers were penalized not because
they exercised their right to peaceably assemble but because of the manner by which such right
was exercised, i.e., going on unauthorized and unilateral absences thus disrupting classes in
various schools in Metro Manila which produced adverse effects upon the students for whose
education the teachers were responsible. But herein petitioners contend that classes were not
actually disrupted because substitute teachers were immediately appointed by Secretary
Cario. Besides being a purely factual assertion which this Court cannot take cognizance of in a
petition for review, the fact that the prompt remedial action taken by Secretary Cario might
have partially deflected the adverse effects of the mass protests did not erase the administrative
liability of petitioners for the intended consequences thereof which were the very reason why
such prompt remedial action became necessary.
Considering the foregoing, we find that respondent Court of Appeals did not err in
sustaining the CSC resolutions finding petitioners guilty of conduct prejudicial to the best
interest of the service.
As an alternative prayer, petitioners ask that in the event their exoneration is not decreed
they be awarded back wages for the period when they were not allowed to work by reason of the
supposed unjustified immediate implementation of the dismissal orders of Secretary Cario
while awaiting resolution of their appeals by the MSPB and CSC.
The issue of whether back wages may be awarded to teachers ordered reinstated to the
service after the dismissal orders of Secretary Cario were commuted by the CSC to six (6)
months' suspension is already settled.
In Bangalisan v. Court of Appeals
[25]
we resolved the issue in the negative on the ground that
the teachers were neither exonerated nor unjustifiably suspended, two (2) circumstances
necessary for the grant of back wages in administrative disciplinary cases. Like herein
petitioners, those in Bangalisan were also teachers who participated in the 1990 mass actions for
which they were dismissed by Secretary Cario but ordered merely suspended for six (6) months
by the Civil Service Commission. On a plea that the immediate implementation of the dismissal
orders of Secretary Cario was unjustified, thus warranting an award of back wages the Court
said -
As to the immediate execution of the decision of the Secretary against petitioners, the
same is authorized by Section 47, paragraph (2), of Executive Order No. 292, thus:
"The Secretaries and heads of agencies and instrumentalities, provinces, cities and
municipalities shall have jurisdiction to investigate and decide matters involving
disciplinary action against officers and employees under their jurisdiction. Their
decision shall be final in case the penalty imposed is suspension for not more than
thirty days or fine in an amount not exceeding thirty days' salary. In case the decision
rendered by a bureau or office is appealable to the Commission, the same shall be
executory except when the penalty is removal, in which case the same shall be
executory only after confirmation by the Secretary concerned.
And since it was already the final dismissal orders of Secretary Cario which were being carried
out, immediate implementation even pending appeal was clearly sanctioned by the aforequoted
provision of the Administrative Code of 1987.
[26]
Hence, being legal, the immediate execution of
the dismissal orders could not be considered unjustified.
The cases cited by petitioners to support their prayer for back salaries, namely, Abellera v.
City of Baguio
[27]
and Bautista v. Peralta
[28]
being cases which involved the unjustified immediate
execution of the dismissal orders of the then Civil Service Commissioner pending appeal to the
Civil Service Board of Appeals are therefore not applicable to justify petitioners' prayer. Neither
could petitioners be considered to have been exonerated from the charges levelled against them
by Secretary Cario from the mere fact that they were found guilty only of conduct prejudicial to
the best interest of the service by the CSC. It must be remembered that Secretary Cario charged
petitioners with grave misconduct, gross neglect of duty, gross violation of civil service law,
rules and regulations, etc., for having participated in the 1990 illegal mass actions. On appeal the
CSC while affirming the factual finding that petitioners indeed participated in the mass actions
found them liable only for conduct prejudicial to the best interest of the service. Clearly the CSC
decision did not proceed from a finding that petitioners did not commit the acts complained of.
Having been found to have actually participated in the illegal mass actions although found
answerable for a lesser offense, petitioners could not be considered as fully innocent of the
charges against them.
[29]
Being found liable for a lesser offense is not equivalent to
exoneration.
[30]

Thus in Bangalisan we denied the claim for back wages of those teachers who were found to
have actually participated in the 1990 mass actions but granted the claim of one Rodolfo
Mariano who was absent only because he attended the wake and interment of his
grandmother. In Jacinto v. Court of Appeals
[31]
we again denied the claim for back wages of
teachers found to have given cause for their suspension, i.e., their unjustified abandonment of
classes to the prejudice of their students but granted the claim of Merlinda Jacinto who was
absent because of illness.
Petitioners do not deny, nay they even admit, having participated in the 1990 mass
actions. Thus having given cause for their supension, their prayer for back wages must be denied
conformably with settled rulings of this Court.
WHEREFORE, the petitions are DENIED and the assailed Decisions of the Court of
Appeals dated 29 November 1995 and 24 April 1996 are AFFIRMED. No costs.
SO ORDERED.
Davide, Jr., C.J., Romero, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban,
Quisumbing, Purisima, Pardo, Buena, and Gonzaga-Reyes, JJ., concur.
























Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. L40474 August 29, 1975
CEBU OXYGEN & ACETYLENE CO., INC., petitioner,
vs.
HON. PASCUAL A. BERCILLES Presiding Judge, Branch XV, 14th Judicial District, and JOSE
L. ESPELETA, Assistant Provincial Fiscal, Province of Cebu, representing the Solicitor
General's Office and the Bureau of Lands, respondents.
Jose Antonio R Conde for petitioner.
Office of the Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General Octavio R.
Ramirez and Trial Attorney David R. Hilario for respondents. .

CONCEPCION, Jr., J .:
This is a petition for the review of the order of the Court of First Instance of Cebu dismissing
petitioner's application for registration of title over a parcel of land situated in the City of Cebu.
The parcel of land sought to be registered was only a portion of M. Borces Street, Mabolo, Cebu
City. On September 23, 1968, the City Council of Cebu, through Resolution No. 2193, approved on
October 3, 1968, declared the terminal portion of M. Borces Street, Mabolo, Cebu City, as an
abandoned road, the same not being included in the City Development Plan.
1
Subsequently, on
December 19, 1968, the City Council of Cebu passed Resolution No. 2755, authorizing the Acting City
Mayor to sell the land through a public bidding.
2
Pursuant thereto, the lot was awarded to the herein
petitioner being the highest bidder and on March 3, 1969, the City of Cebu, through the Acting City
Mayor, executed a deed of absolute sale to the herein petitioner for a total consideration of
P10,800.00.
3
By virtue of the aforesaid deed of absolute sale, the petitioner filed an application with the
Court of First instance of Cebu to have its title to the land registered.
4

On June 26, 1974, the Assistant Provincial Fiscal of Cebu filed a motion to dismiss the application
on the ground that the property sought to be registered being a public road intended for public use is
considered part of the public domain and therefore outside the commerce of man. Consequently, it
cannot be subject to registration by any private individual.
5

After hearing the parties, on October 11, 1974 the trial court issued an order dismissing the
petitioner's application for registration of title.
6
Hence, the instant petition for review.
For the resolution of this case, the petitioner poses the following questions:
(1) Does the City Charter of Cebu City (Republic Act No. 3857) under Section 31,
paragraph 34, give the City of Cebu the valid right to declare a road as abandoned?
and
(2) Does the declaration of the road, as abandoned, make it the patrimonial property
of the City of Cebu which may be the object of a common contract?
(1) The pertinent portions of the Revised Charter of Cebu City provides:
Section 31. Legislative Powers. Any provision of law and executive order to the
contrary notwithstanding, the City Council shall have the following legislative powers:
xxx xxx xxx
(34) ...; to close any city road, street or alley, boulevard, avenue, park or square.
Property thus withdrawn from public servitude may be used or conveyed for any
purpose for which other real property belonging to the City may be lawfully used or
conveyed.
From the foregoing, it is undoubtedly clear that the City of Cebu is empowered to close a city road or
street. In the case of Favis vs. City of Baguio,
7
where the power of the city Council of Baguio City to
close city streets and to vacate or withdraw the same from public use was similarly assailed, this court
said:
5. So it is, that appellant may not challenge the city council's act of withdrawing a
strip of Lapu-Lapu Street at its dead end from public use and converting the
remainder thereof into an alley. These are acts well within the ambit of the power to
close a city street. The city council, it would seem to us, is the authority competent to
determine whether or not a certain property is still necessary for public use.
Such power to vacate a street or alley is discretionary. And the discretion will not
ordinarily be controlled or interfered with by the courts, absent a plain case of abuse
or fraud or collusion. Faithfulness to the public trust will be presumed. So the fact that
some private interests may be served incidentally will not invalidate the vacation
ordinance.
(2) Since that portion of the city street subject of petitioner's application for registration of title was
withdrawn from public use, it follows that such withdrawn portion becomes patrimonial property
which can be the object of an ordinary contract.
Article 422 of the Civil Code expressly provides that "Property of public dominion, when no longer
intended for public use or for public service, shall form part of the patrimonial property of the State."
Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and unequivocal
terms, states that: "Property thus withdrawn from public servitude may be used or conveyed for any
purpose for which other real property belonging to the City may be lawfully used or conveyed."
Accordingly, the withdrawal of the property in question from public use and its subsequent sale to
the petitioner is valid. Hence, the petitioner has a registerable title over the lot in question.
WHEREFORE, the order dated October 11, 1974, rendered by the respondent court in Land Reg.
Case No. N-948, LRC Rec. No. N-44531 is hereby set aside, and the respondent court is hereby
ordered to proceed with the hearing of the petitioner's application for registration of title.
SO ORDERED.
Makalintal, C.J, Fernando, Barredo and Aquino, JJ., concur.

Footnotes
1 Annex A, p. 11, rollo.
2 Annex B, p. 12, rollo.
3 Annex C, p. 13, rollo.
4 Annex D, p. 15, rollo.
5 Annex E. p. 18, rollo.
6 Annex F. P. 20, rollo.
7 G.R. No. L-29910, April 25, 1969; SCRA 1060.












Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-11964 April 28, 1962
REGISTER of DEEDS OF MANILA, petitioner-appellee,
vs.
CHINA BANKING CORPORATION, respondent-appellant.
Office of the Solicitor General for petitioner-appellee.
Sycip-Salazar, Luna and Associates for respondent-appellant.
Alfonso Ponce Enrile as Amicus Curiae.
DIZON, J .:
Appeal from a resolution of the Land Registration Commission holding "that the deed of transfer in
favor of an alien bank, subject of the present Consulta, is unregisterable for being in contravention of
the Constitution of the Philippines".
In an information filed on June 16, 1953 in the Court of First Instance of Manila (Criminal Case No.
22908) Alfonso Pangilinan and one Guillermo Chua were charged with qualified theft, the money
involved amounting to P275,000.00. On September 18, 1956, Pangilinan and his wife, Belen Sta.
Ana, executed a public instrument entitled DEED OF TRANSFER whereby, after admitting his civil
liability in favor of his employer, the China Banking Corporation, in relation to the offense aforesaid,
he ceded and transferred to the latter, in satisfaction thereof, a parcel of land located in the City of
Manila, registered in the name of "Belen Sta. Ana, married to Alfonso Pangilinan" (Transfer
Certificate of Title No. 32230). On October 24, 1956 the deed was presented for registration to the
Register of Deeds of the City of Manila, but because the transferee the China Banking
Corporation was alien-owned and, as such, barred from acquiring lands in the Philippines, in
accordance with the provisions of Section 5, Article XIII of the Constitution of the Philippines, said
officer submitted the matter of its registration to the Land Registration Commission for resolution.
After granting the parties concerned ample opportunity to submit their views upon the issue, the
Commission issued the resolution appealed from.
Plainly stated, the question before Us is whether appellant an alien-owned bank can acquire
ownership of the residential lot covered by Transfer Certificate of Title No. 32230 by virtue of the
deed of transfer mentioned heretofore (Vide pages 1-6 of the Record on Appeal).
Maintaining the affirmative, appellant argues that: (a) the temporary holding of land by an alien-
owned commercial bank under a public instrument such as the deed of transfer in question "bears
no reasonable connection with the constitutional purpose" underlying the provisions of Section 5,
Article XIII of the Constitution of the Philippines; hence, such holding or acquisition "was not within
the contemplation of the framers of the Constitution"; (b) by judicial as well as by executive-
administrative an legislative construction, the constitutional prohibition against alien landholding
does not preclude enjoyment by aliens of temporary rights and land; (c) under the provisions of
Section 25 of Republic Act No. 337 (General Banking Act) an alien or an alien-owned commercial
bank may acquire land in the Philippines subject to the obligation of disposing of it within 5 years
from the date of its acquisition. 1wph1.t
Upon the other hand, the argument supporting the appealed resolution is that the privilege of
acquiring real estate granted to commercial banks under the provisions of Section 25 of Republic Act
No. 337 was not intended as an amendment, much less as a nullification of the constitutional
prohibition against alien acquisition of lands in the Philippines, the same being merely an exception
to the general rule, under existing banking and corporation laws, that banks and corporations can
engage only in the particular business for which they were specifically created; that a mere statute,
like the republic act relied upon by, appellant, cannot amend the Constitution; that in connection with
the particular constitutional prohibition involved herein, it is the character and nature of the
possession whether in strict ownership or otherwise and not the length of possession that is
material, the result being that, if real property is to be held in ownership, an alien may not legally do
so even for a single day.
After considering the arguments adduced by appellant in its brief, jointly with those expounded in the
briefs submitted by Alfonso Ponce Enrile and William H. Quasha and Associates, as amici curiae, on
the one hand, and on the other, those relied upon in the brief submitted by the Office of the Solicitor
General on behalf of the Commission, we are inclined to uphold, as we do uphold, the appealed
resolution.
To support its view appellant relies particularly upon paragraphs (c) and (d), Section 25 of Republic
Act 337 which read as follows: .
SEC. 25. Any commercial bank may purchase, hold, and convey real estate for the following
purposes:
x x x x x x x x x
(c) Such shall be conveyed to it in satisfaction of debts previously contracted in the course of
its dealings; .
(d) Such as it shall purchase at sales under judgments, decrees, mortgages, or trust deeds
held by it and such as it shall purchase to secure debts due to it.
But no such bank shall hold the possession of any real estate under mortgage or trust deed,
or the title and possession of any real estate purchased to secure any debt due to it, for a
longer period than five years.
Assuming, arguendo, that under the provisions of the aforesaid Act any commercial bank, whether
alien-owned or controlled or not, may purchase and hold real estate for the specific purposes and in
the particular cases enumerated in Section 25 thereof, we find that the case before Us does not fall
under anyone of them.
Paragraph (c), Section 25 of Republic Act 337 allows a commercial bank to purchase and hold such
real estate as shall be conveyed to it in satisfaction of debts previously contracted in the course of its
dealings, We deem it quite clear and free from doubt that the "debts" referred to in this provision are
only those resulting from previous loans and other similar transactions made or entered into by a
commercial bank in the ordinary course of its business as such. Obviously, whatever "civil liability"
arising from the criminal offense of qualified theft was admitted in favor of appellant bank by its
former employee, Alfonso Pangilinan, was not a debt resulting from a loan or a similar transaction
had between the two parties in the ordinary course of banking business.
Neither do the provisions of paragraph (d) of the Same section apply to the present case because
the deed of transfer in question can in no sense be considered as a sale made by virtue of a
judgment, decree, mortgage, or trust deed held by appellant bank. In the same manner it cannot be
said that the real property in question was purchased by appellant "to secure debts due to it",
considering that, as stated heretofore, the term debt employed in the pertinent legal provision can
logically refer only to such debts as may become payable to appellant bank as a result of a banking
transaction.
That the constitutional prohibition under consideration has for its purpose the preservation of the
patrimony of the nation can not be denied, but appellant and the amici curiae claim that it should be
liberally construed so that the prohibition be limited to the permanent acquisition of real estate by
aliens whether natural or juridical persons. This, of course, would make legal the ownership
acquired by appellant bank by virtue of the deed of transfer mentioned heretofore, subject to its
obligation to dispose of it in accordance with law, within 5 years from the date of its acquisition. We
can not give assent to this contention, in view of the fact that the constitutional prohibition in question
is absolute in terms. We have so held in Ong Sui Si Temple vs. The Register of Deeds of Manila (G.
R. No. L-6776, prom. May 21, 1955) where we said, inter alia, the following:
We are of the opinion that the Court below has correctly held that in view of the absolute
terms of section 5, Title XIII, of the Constitution, the provisions of Act 271 of the old
Philippine Commission must be deemed repealed since the Constitution was enacted, in so
far as incompatible therewith. In providing that
Save in cases of hereditary succession no private agricultural land shall be
transferred or assigned except to individuals, corporations or associations qualified to
acquire or hold lands of the public domain in the Philippines.
the Constitution makes no exception in favor of religious associations. Neither is there any
such saving found in Sections 1 and 2 of Article XIII, restricting the acquisition of public
agricultural lands and other natural resources to "corporations or associations at least sixty
per centum of the capital of which is owned by such citizens" (of the Philippines). (Emphasis
ours) .
Even in the case of Smith Bell & Co. vs. Register of Deeds of Davao (50 O.G., 5239) where a lease
of a parcel of land for a total period of 50 years in favor of an alien corporation was held to be
registerable, the reason we gave for such ruling was that a lease unlike a sale does not involve
the transfer of dominion over the land, the clear implication from this being that transfer of ownership
over land, even for a limited period of time, is not permissible in view of the constitutional prohibition.
The reason for this is manifestly the desire and purpose of the Constitution to place and keep in the
hands of the people the ownership over private lands in order not to endanger the integrity of the
nation. Inasmuch as when an alien buys land he acquires and will naturally exercise ownership over
the same, either permanently or temporarily, to that extent his acquisition jeopardizes the purpose of
the Constitution.
Some may say that this construction is too narrow and unwise; to this we answer that it is not our
privilege to determine the wisdom or lack of wisdom of this constitutional mandate. It is, rather, Our
sworn duty to enforce it free from qualifications and distinctions that tend to render futile the
constitutional intent.
WHEREFORE, the resolution appealed from is hereby affirmed, with costs.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera and Paredes, JJ., concur.
Padilla and Labrador, JJ., took no part.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 73246 March 2, 1993
DIRECTOR OF LANDS AND DIRECTOR OF FOREST DEVELOPMENT, petitioners,
vs.
INTERMEDIATE APPELLATE COURT AND J. ANTONIO ARANETA, respondents.
The Solicitor General for petitioners.
Jimenez, Leynes & Associates for private respondent.

NOCON, J .:
For review before Us is the decision of the Court of Appeals in the land registration case entitled J.
Antonio Araneta v. The Director of Lands and Director of Forest Development, AC-G.R. CV. No.
00636,
1
affirming the lower court's approval of the application for registration of a parcel of land in favor
of applicant therein, J. Antonio Araneta.
Evidence show that the land involved is actually an island known as Tambac Island in Lingayen Gulf.
Situated in the Municipality of Bani, Pangasinan, the area consists of 187,288 square meters, more
or less. The initial application for registration was filed for Pacific Farms, Inc. under the provisions of
the Land Registration Act, Act No. 496, as amended.
The Republic of the Philippines, thru the Director of Lands opposed the application alleging that the
applicant, Pacific Farms, Inc. does not possess a fee simple title to the land nor did its predecessors
possess the land for at least thirty (30) years immediately preceding the filing of application. The
opposition likewise specifically alleged that the applicant is a private corporation disqualified under
the (1973) new Philippine Constitution from acquiring alienable lands of the public domain citing
Section 11, Article 14.
2

The Director of Forest Development also entered its opposition alleging that the land is within the
unclassified public land and, hence, inalienable. Other private parties also filed their oppositions, but
were subsequently withdrawn.
In an amended application, Pacific Farms, Inc. filed a manifestation-motion to change the applicant
from Pacific Farms, Inc. to J. Antonio Araneta. Despite the supposed amendment, there was no
republication.
Evidence presented by the applicant include the testimony of Placido Orlando, fishery guard of
Pacific Farms, Inc., who said he has known the disputed land since he attained the age of reason for
some forty (40) years now; that when he first came to know the property it was then owned by and in
the possession of Paulino Castelo, Juan Ambrosio and Julio Castelo, and later on the whole island
was bought by Atty. Vicente Castelo who in turn sold it to J. Antonio Araneta.
Deposition by oral examination of Araneta was also presented, together with documents of sale, tax
declarations and receipts, and survey of property. Applicant, however, failed to present the tracing
cloth plan and instead submitted to the court certified copies thereof.
While this case is pending here in Court, respondent filed an Omnibus Motion for Substitution of
private respondent.
3
Apparently, Antonio Araneta had assigned his rights to and interest in Tambac
Island to Amancio R. Garcia
4
who in turn assigned his rights and interest in the same property to Johnny
A. Khonghun whose nationality was not alleged in the pleadings.
On October 4, 1979, the trial court rendered a decision adjudicating the subject property to J.
Antonio Araneta. On appeal to the then Intermediate Appellate Court, the decision of the lower court
was affirmed on December 12, 1985.
Petitioners raised the following errors:
I. The lower court erred in adjudicating the lands subject of registration to applicant-
appellee despite his failure to present the original tracing cloth plan the submission of
which is a statutory requirement of mandatory character.
II. The lower court erred in not denying registration in favor of J. Antonio Araneta
since the amendment of the application was simply an attempt to avoid the
application of the constitutional provision disqualifying a private corporation the
Pacific Farms, Inc. in this case from acquiring lands of public domain.
III. The lower court erred in not declaring the land known as the "Tambac Island" not
subject of registration it being an island formed on the seas.
IV. The lower court erred in adjudicating the land to the applicant under the
provisions of Presidential Decree No. 1529, otherwise known as the Property
Registration Decree, despite absence of any specific invocation of this law in the
original and amended application.
V. The lower court erred in not granting the government's motion for reconsideration
at least to enable it to present proof of the status of the land as within the unclassified
public forest, and hence beyond the court's jurisdiction to adjudicate as private
property.
VI. The lower court erred in not declaring that the applicant has failed to overthrow
the presumption that the land is a portion of the public domain belonging to the
Republic of the Philippines.
From the foregoing it appears that the more important issues are: 1) whether the presentation of the
tracing cloth plan is necessary; and 2) whether the land known as "Tambac Island" can be subject to
registration.
By mere consideration of the first assignment of error, We can right away glean the merit of the
petition.
Respondent claims that the tracing cloth plan is with the files of the Land Registration Commission,
and the only evidence that can be presented to that fact is the request for the issuance of a certified
copy thereof and the certified copy issued pursuant to the request.
5
Respondent further argues that
failure of the petitioners to object to the presentation of the certified copy of the tracing cloth plan was the
basis of the trial court's denial of petitioner's motion for reconsideration.
In a very recent decision of this Court, entitled The Director of Lands v. The Honorable Intermediate
Appellate Court and Lino Anit,
6
We have ruled that the submission of the tracing cloth plan is a
mandatory requirement for registration. Reiterating Our ruling in Director of Lands v. Reyes,
7
We
asserted that failure to submit in evidence the original tracing cloth plan is fatal it being a statutory
requirement of mandatory character.
It is of no import that petitioner failed to object to the presentation of the certified copy of the said
plan. What is required is the original tracing cloth plan of the land applied for and objection to such
requirement cannot be waived either expressly or impliedly.
8
This case is no different from the case
of Director of Lands v. Reyes, supra wherein We said that if the original tracing cloth plan was indeed with
the Land Registration Commission, there is no reason why the applicant cannot easily retrieve the same
and submit it in evidence, it being an essential requirement for registration.
As to the second assignment of error, We are inclined to agree with petitioners that the amendment
of the application from the name of Pacific Farms Inc., as applicant, to the name of J. Antonio
Araneta Inc., was a mere attempt to evade disqualification. Our Constitution, whether the 1973
9
or
1987,
10
prohibits private corporations or associations from holding alienable lands of the public domain
except by lease. Apparently realizing such prohibition, respondent amended its application to conform
with the mandates of the law.
However, We cannot go along with petitioners' position that the absence of republication of an
amended application for registration is a jurisdictional flaw. We should distinguish. Amendments to
the application may be due to change in parties or substantial change in the boundaries or increase
in the area of the land applied for.
In the former case, neither the Land Registration Act, as amended, nor Presidential Decree No.
1529, otherwise known as the Property Registration Decree, requires republication and registration
may be allowed by the court at any stage of the proceeding upon just and reasonable terms.
11
On
the other hand, republication is required if the amendment is due to substantial change in the boundaries
or increase in the area of the land applied for.
As to the fourth assignment of error. We do not see any relevant dispute in the lower court's
application of Presidential Decree No. 1529, instead of Act No. 496, in adjudicating the land to the
then applicant, assuming that the land involved is registrable. Both laws are existing and can stand
together. P.D. 1529 was enacted to codify the various laws relative to registration of property, in
order to facilitate effective implementation of said laws.
12

The third, fifth and sixth assignment of errors are likewise meritorious and shall be discussed
forthwith together.
Respondent asserts that contrary to the allegation of petitioners, the reports of the District Land
Officer of Dagupan City, Land Inspector Perfecto Daroy and Supervising Land Examiner Teodoro P.
Nieva show that the subject property is an unclassified public land, not forest land. This claim is
rather misleading. The report of Supervising Land Examiner Nieva specifically states that the "land is
within the unclassified forest land" under the administrative jurisdiction of the then Bureau of Forest
Development.
13
This was based on the reports of Land Inspector Daroy and District Land Officer
Feliciano Liggayu.
Lands of the public domain are classified under three main categories, namely: Mineral, Forest and
Disposable or Alienable Lands.
14
Under the Commonwealth Constitution, only agricultural lands were
allowed to be alienated. Their disposition was provided for under Commonwealth Act No. 141 (Secs. 6-7),
which states that it is only the President, upon the recommendation of the proper department head, who
has the authority to classify the lands of the public domain into alienable or disposable, timber and
mineral lands. Mineral and Timber or forest lands are not subject to private ownership unless they are first
reclassified as agricultural lands and so released for alienation.
15
In the absence of such classification,
the land remains as unclassified land until released therefrom and rendered open to disposition. Courts
have no authority to do so.
16

This is in consonance with the Regalian doctrine that all lands of the public domain belong to the
State, and that the State is the source of any asserted right to ownership in land and charged with
the conservation of such patrimony. Under the Regalian Doctrine, all lands not otherwise appearing
to be clearly within private ownership are presumed to belong to the State. Hence, a positive act of
the government is needed to declassify a forest land into alienable or disposable land for agricultural
or other purposes.
17

The burden of proof in overcoming the presumption of state ownership of the lands of the public
domain is on the person applying for registration that the land subject of the application is alienable
or disposable.
18

Unless the applicant succeeds in showing by convincing evidence that the property involved was
acquired by him or his ancestors either by composition title from the Spanish Government or by
possessory information title, or any other means for the proper acquisition of public lands, the
property must be held to be part of the public domain. The applicant must present evidence and
persuasive proof to substantiate his claim.
19

In this particular case, respondent presented proof that as early as 1921, the subject property has
been declared for tax purposes with receipts attached, in the names of respondent's predecessors-
in-interest. Nevertheless, in that span of time there had been no attempt to register the same either
under Act 496 or under the Spanish Mortgage Law. It is also rather intriguing that Vicente Castelo
who acquired almost 90% of the property from Alejo Ambrosia, et al. on June 18, 1958 and from
Julio Castelo on June 19, 1958 immediately sold the same to applicant J. Antonio Araneta on 3 July
1958.
According to the report of Land Investigator Daroy, the land was declared for taxation purposes in
the name of Vicente Castelo only in 1958 and the purported old tax declarations are not on file with
the Provincial Assessor's Office.
In any case tax declarations and receipts are not conclusive evidence of ownership or of the right to
possess land when not supported by evidence.
20
The fact that the disputed property may have been
declared for taxation purposes in the names of the applicants or of their predecessors-in-interest way
back in 1921 does not necessarily prove ownership. They are merely indicia of a claim of ownership.
21

Respondent's contention that the BFD, LC Map No. 681, certified on August 8, 1927 which was the
basis of the report and recommendation of the Land Examiner, is too antiquated; that it cannot be
conclusively relied upon and was not even presented in evidence, is not well taken. As We have said
in the case of Director of Lands v. CA:
22

And the fact that BF Map LC No. 673 dated March 1, 1927 showing subject property
to be within unclassified region was not presented in evidence will not operate
against the State considering the stipulation between the parties and under the well-
settled rule that the State cannot be estopped by the omission, mistake or error of its
officials or agents, if omission there was, in fact.
Respondent even admitted that Tambac Island is still an unclassified public land as of 1927 and
remains to be unclassified.
Since the subject property is still unclassified, whatever possession
the applicant may have had and however long, cannot ripen into private ownership.
23
The conversion
of subject property does not automatically render the property as alienable and disposable.
In effect what the courts a quo have done is to release the subject property from the unclassified
category, which is beyond their competence and jurisdiction. We reiterate that the classification of
public lands is an exclusive prerogative of the Executive Department of the Government and not of
the Courts. In the absence of such classification, the land remains unclassified until released
therefrom and rendered open to disposition.
24

In fairness to respondent, the petitioners should seriously consider the matter of the reclassification
of the land in question. The attempt of people to have disposable lands they have been tilling for
generations titled in their name should not only be viewed with understanding attitude, but as a
matter of policy encouraged.
25

WHEREFORE, the petition is hereby GRANTED and the decisions of the courts a quo are
REVERSED.
SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Campos, Jr., JJ., concur.












FIRST DIVISION
[G.R. No. 113539. March 12, 1998]
CELSO R. HALILI and ARTHUR R. HALILI, petitioners, vs. COURT OF
APPEALS, HELEN MEYERS GUZMAN, DAVID REY GUZMAN and
EMILIANO CATANIAG, respondents.
D E C I S I O N
PANGANIBAN, J .:
The factual findings of a trial court, when affirmed by the Court of Appeals, may no
longer be reviewed and reversed by this Court in a petition for review under Rule 45 of
the Rules of Court. The transfer of an interest in a piece of land to an alien may no
longer be assailed on constitutional grounds after the entire parcel has been sold to a
qualified citizen.
The Case

These familiar and long-settled doctrines are applied by this Court in denying this
petition under Rule 45 to set aside the Decision
[1]
of the Court of Appeals
[2]
in CA-GR
CV No. 37829 promulgated on September 14, 1993, the dispositive portion of which
states:
[3]

WHEREFORE, and upon all the foregoing, the Decision of the court below
dated March 10, 1992 dismissing the complaint for lack of merit is AFFIRMED
without pronouncement as to costs.
The Facts

The factual antecedents, as narrated by Respondent Court, are not disputed by the
parties. We reproduce them in part, as follows:
Simeon de Guzman, an American citizen, died sometime in 1968,
leaving real properties in the Philippines. His forced heirs were his widow,
defendant appellee [herein private respondent] Helen Meyers Guzman,
and his son, defendant appellee [also herein private respondent] David
Rey Guzman, both of whom are also American citizens. On August 9,
1989, Helen executed a deed of quitclaim (Annex A-Complaint),
assigning[,] transferring and conveying to David Rey all her rights, titles
and interests in and over six parcels of land which the two of them
inherited from Simeon.
Among the said parcels of land is that now in litigation, x x
x situated in Bagbaguin, Sta. Maria, Bulacan, containing an area of 6,695
square meters, covered by Transfer Certificate of Title No. T-170514 of
the Registry of Deeds of Bulacan. The quitclaim having been registered,
TCT No. T-170514 was cancelled and TCT No. T-120259 was issued in
the name of appellee David Rey Guzman.
On February 5, 1991, David Rey Guzman sold said parcel of land to
defendant-appellee [also herein private respondent] Emiliano Cataniag, upon which
TCT No. T-120259 was cancelled and TCT No. T-130721(M) was issued in the
latters name.
[4]

Petitioners, who are owners of the adjoining lot, filed a complaint before the
Regional Trial Court of Malolos, Bulacan, questioning the constitutionality and validity of
the two conveyances -- between Helen Guzman and David Rey Guzman, and between
the latter and Emiliano Cataniag -- and claiming ownership thereto based on their right
of legal redemption under Art. 1621
[5]
of the Civil Code.
In its decision
[6]
dated March 10, 1992,
[7]
the trial court dismissed the complaint. It
ruled that Helen Guzmans waiver of her inheritance in favor of her son was not contrary
to the constitutional prohibition against the sale of land to an alien, since the purpose of
the waiver was simply to authorize David Rey Guzman to dispose of their properties in
accordance with the Constitution and the laws of the Philippines, and not to subvert
them. On the second issue, it held that the subject land was urban; hence, petitioners
had no reason to invoke their right of redemption under Art. 1621 of the Civil Code.
The Halilis sought a reversal from the Court of Appeals which, however, denied
their appeal. Respondent Court affirmed the factual finding of the trial court that the
subject land was urban. Citing Tejido vs. Zamacoma
[8]
and Yap vs. Grageda,
[9]
it further
held that, although the transfer of the land to David Rey may have been invalid for being
contrary to the Constitution, there was no more point in allowing herein petitioners to
recover the property, since it has passed on to and was thus already owned by a
qualified person.
Hence, this petition.
[10]

Issues

The petition submits the following assignment of errors:
x x x the Honorable Court of Appeals -
1. Erred in affirming the conclusion of the trial court that the land in question
is urban, not rural
2. Erred in denying petitioners right of redemption under Art. 1621 of the Civil
Code
3. Having considered the conveyance from Helen Meyers Guzman to her son
David Rey Guzman illegal, erred in not declaring the same null and void[.]
[11]

The Courts Ruling

The petition has no merit.
First Issue: The Land Is Urban;

Thus, No Right of Redemption

The first two errors assigned by petitioners being interrelated -- the determination of
the first being a prerequisite to the resolution of the second -- shall be discussed
together.
Subject Land Is Urban
Whether the land in dispute is rural or urban is a factual question which, as a rule, is
not reviewable by this Court.
[12]
Basic and long-settled is the doctrine that findings of fact
of a trial judge, when affirmed by the Court of Appeals, are binding upon the Supreme
Court. This admits of only a few exceptions, such as when the findings are grounded
entirely on speculation, surmises or conjectures; when an inference made by the
appellate court from its factual findings is manifestly mistaken, absurd or impossible;
when there is grave abuse of discretion in the appreciation of facts; when the findings of
the appellate court go beyond the issues of the case, run contrary to the admissions of
the parties to the case or fail to notice certain relevant facts which, if properly
considered, will justify a different conclusion; when there is a misappreciation of facts;
when the findings of fact are conclusions without mention of the specific evidence on
which they are based, are premised on the absence of evidence or are contradicted by
evidence on record.
[13]

The instant case does not fall within any of the aforecited exceptions. In fact, the
conclusion of the trial court -- that the subject property is urban land -- is based on clear
and convincing evidence, as shown in its decision which disposed thus:
x x x As observed by the court, almost all the roadsides along the national ghighway
[sic] of Bagbaguin, Sta. Maria, Bulacan, are lined up with residential, commercial or
industrial establishments. Lined up along the Bagbaguin Road are factories of feeds,
woodcrafts [sic] and garments, commercial stores for tires, upholstery materials, feeds
supply and spare parts. Located therein likewise were the Pepsi-Cola Warehouse, the
Cruz Hospital, three gasoline stations, apartment buildings for commercial purposes
and construction firms. There is no doubt, therefore, that the community is a
commercial area thriving in business activities. Only a short portion of said road [is]
vacant. It is to be noted that in the Tax Declaration in the name of Helen Meyers
Guzman[,] the subject land is termed agricultural[,] while in the letter addressed to
defendant Emiliano Cataniag, dated October 3, 1991, the Land Regulatory Board
attested that the subject property is commercial and the trend of development along the
road is commercial. The Boards classification is based on the present condition of the
property and the community thereat. Said classification is far more later [sic] than the
tax declaration.
[14]

No Ground to Invoke Right of Redemption
In view of the finding that the subject land is urban in character, petitioners have
indeed no right to invoke Art. 1621 of the Civil Code, which presupposes that the land
sought to be redeemed is rural. The provision is clearly worded and admits of no
ambiguity in construction:
ART. 1621. The owners of adjoining lands shall also have the right
of redemption when a piece of rural land, the area of which does not
exceed one hectare, is alienated, unless the grantee does not own any
rural land.
xxx xxx xxx
Under this article, both lands -- that sought to be redeemed and the adjacent lot
belonging to the person exercising the right of redemption -- must be rural. If one or
both are urban, the right cannot be invoked.
[15]
The purpose of this provision which is
limited in scope to rural lands not exceeding one hectare, is to favor agricultural
development.
[16]
The subject land not being rural and, therefore, not agricultural, this
purpose would not be served if petitioners are granted the right of redemption under Art.
1621. Plainly, under the circumstances, they cannot invoke it.
Second Issue: Sale to Cataniag Valid

Neither do we find any reversible error in the appellate courts holding that the sale
of the subject land to Private Respondent Cataniag renders moot any question on the
constitutionality of the prior transfer made by Helen Guzman to her son David Rey.
True, Helen Guzmans deed of quitclaim -- in which she assigned, transferred and
conveyed to David Rey all her rights, titles and interests over the property she had
inherited from her husband -- collided with the Constitution, Article XII, Section 7 of
which provides:
SEC. 7. Save in cases of hereditary succession, no private lands
shall be transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain.
The landmark case of Krivenko vs. Register of Deeds
[17]
settled the issue as to who
are qualified (and disqualified) to own public as well as private lands in the
Philippines. Following a long discourse maintaining that the public agricultural lands
mentioned in Section 1, Article XIII of the 1935 Constitution, include residential,
commercial and industrial lands, the Court then stated:
Under section 1 of Article XIII [now Sec. 2, Art. XII] of the Constitution,
natural resources, with the exception of public agricultural land,
shall not be alienated, and with respect to public agricultural lands, their
alienation is limited to Filipino citizens. But this constitutional purpose
conserving agricultural resources in the hands of Filipino citizens may
easily be defeated by the Filipino citizens themselves who may alienate
their agricultural lands in favor of aliens. It is partly to prevent this result
that section 5 is included in Article XIII, and it reads as follows:
Sec. 5. Save in cases of hereditary succession, no private agricultural
land will be transferred or assigned except to individuals, corporations or
associations qualified to acquire or hold lands of the public domain in the
Philippines.
This constitutional provision closes the only remaining avenue through which
agricultural resources may leak into aliens hands. It would certainly be futile to
prohibit the alienation of public agricultural lands to aliens if, after all, they may be
freely so alienated upon their becoming private agricultural lands in the hands of
Filipino citizens. Undoubtedly, as above indicated, section 5 [now Sec. 7] is
intended to insure the policy of nationalization contained in section 1 [now Sec.
2]. Both sections must, therefore, be read together for they have the same purpose
and the same subject matter. It must be noticed that the persons against whom the
prohibition is directed in section 5 [now Sec. 7] are the very same persons who
under section 1 [now Sec. 2] are disqualified to acquire or hold lands of the public
domain in the Philippines. And the subject matter of both sections is the same,
namely, the non transferability of agricultural land to aliens. x x x
[18]

The Krivenko rule was recently reiterated in Ong Ching Po vs. Court of
Appeals,
[19]
which involves a sale of land to a Chinese citizen. The Court said:
The capacity to acquire private land is made dependent upon the
capacity to acquire or hold lands of the public domain. Private land may
be transferred or conveyed only to individuals or entities qualified to
acquire lands of the public domain (II Bernas, The Constitution of the
Philippines 439-440 [1988 ed.]).
The 1935 Constitution reserved the right to participate in the disposition,
exploitation, development and utilization of all lands of the public domain and other
natural resources of the Philippines for Filipino citizens or corporations at least sixty
percent of the capital of which was owned by Filipinos. Aliens, whether individuals
or corporations, have been disqualified from acquiring public lands; hence, they
have also been disqualified from acquiring private lands.
[20]

In fine, non-Filipinos cannot acquire or hold title to private lands or to lands of the
public domain, except only by way of legal succession.
[21]

But what is the effect of a subsequent sale by the disqualified alien vendee to a
qualified Filipino citizen? This is not a novel question. Jurisprudence is consistent that
if land is invalidly transferred to an alien who subsequently becomes a citizen or
transfers it to a citizen, the flaw in the original transaction is considered cured and the
title of the transferee is rendered valid.
[22]

Thus, in United Church Board of World Ministries vs. Sebastian,
[23]
in which an alien
resident who owned properties in the Philippines devised to an American non-stock
corporation part of his shares of stock in a Filipino corporation that owned a tract of land
in Davao del Norte, the Court sustained the invalidity of such legacy. However, upon
proof that ownership of the American corporation has passed on to a 100 percent
Filipino corporation, the Court ruled that the defect in the will was rectified by the
subsequent transfer of the property.
The present case is similar to De Castro vs. Tan.
[24]
In that case, a residential lot
was sold to a Chinese. Upon his death, his widow and children executed an
extrajudicial settlement, whereby said lot was allotted to one of his sons who became a
naturalized Filipino. The Court did not allow the original vendor to have the sale
annulled and to recover the property, for the reason that the land has since become the
property of a naturalized Filipino citizen who is constitutionally qualified to own land.
Likewise, in the cases of Sarsosa vs. Cuenco,
[25]
Godinez vs. Pak Luen,
[26]
Vasquez
vs. Li Seng Giap
[27]
and Herrera vs. Luy Kim Guan,
[28]
which similarly involved the sale of
land to an alien who thereafter sold the same to a Filipino citizen, the Court again
applied the rule that the subsequent sale can no longer be impugned on the basis of the
invalidity of the initial transfer.
The rationale of this principle was explained in Vasquez vs. Li Seng Giap thus:
x x x [I]f the ban on aliens from acquiring not only agricultural but also urban lands, as
construed by this Court in the Krivenko case, is to preserve the nations lands for future
generations of Filipinos, that aim or purpose would not be thwarted but achieved by
making lawful the acquisition of real estate by aliens who became Filipino citizens by
naturalization.
[29]

Accordingly, since the disputed land is now owned by Private Respondent
Cataniag, a Filipino citizen, the prior invalid transfer can no longer be assailed. The
objective of the constitutional provision -- to keep our land in Filipino hands -- has been
served.
WHEREFORE, the petition is hereby DENIED. The challenged Decision is
AFFIRMED. Costs against petitioner.
SO ORDERED.
Davide, Jr. (Chairman), Bellosillo, Vitug and Quisumbing, JJ., concur.



[1]
Rollo, pp. 19-30.
[2]
Ninth Division, composed of JJ. Cezar D. Francisco, ponente; Gloria C. Paras (chairman) and
Buenaventura J. Guerrero, concurring.
[3]
Assailed Decision, p. 12; Rollo, p. 30.
[4]
Assailed Decision, p. 2; Rollo, p. 20.
[5]
ART. 1621. The owners of adjoining lands shall also have the right of redemption when a piece of
rural land, the area of which does not exceed one hectare, is alienated, unless the grantee does not own
any rural land.
This right is not applicable to adjacent lands which are separated by brooks, drains, ravines, roads and
other apparent servitudes for the benefit of other estates.
If two or more adjoining owners desire to exercise the right of redemption at the same time, the owner of
the adjoining land of smaller area shall be preferred; and should both lands have the same area, the one
who first requested the redemption.
[6]
CA Rollo, pp. 29-31.
[7]
Penned by Judge Valentin R. Cruz.
[8]
138 SCRA 78, August 7, 1985.
[9]
121 SCRA 244, March 28, 1983.
[10]
This case was considered submitted for resolution upon receipt by this Court of petitioners
memorandum on November 8, 1996.
[11]
Petition, p. 6; Rollo, p. 12.
[12]
First Philippine International Bank vs. Court of Appeals, 252 SCRA 259, January 24, 1996.
[13]
Fuentes vs. Court of Appeals, 268 SCRA 703, February 26, 1997; Geronimo vs. Court of Appeals, 224
SCRA 494, July 5, 1993. See also Lacanilao vs. Court of Appeals, 262 SCRA 486, September 26, 1996;
Verendia vs.Court of Appeals, 217 SCRA 417, January 22, 1993.
[14]
RTC decision, p. 3; CA Rollo, p. 31.
[15]
Tolentino, Ibid.; Cortes vs. Flores, 47 Phil 992, September 6, 1924.
[16]
Tolentino, Civil Code of the Philippines, 1992 ed., Vol. V, p. 182; Del Pilar vs. Catindig, 35 Phil 263,
November 4, 1916.
[17]
79 Phil 461, November 15, 1947, per Moran, CJ.
[18]
Ibid., pp. 473-474.
[19]
239 SCRA 341, December 20, 1994, per Quiason, J.
[20]
At p. 346.
[21]
Cf. Ramirez vs. Vda. de Ramirez, 111 SCRA 704, February 15, 1982.
[22]
United Church Board of World Ministries vs. Sebastian, 159 SCRA 446, 451-452, March 30, 1988; per
Cruz, J. See also Tejido vs. Zamacoma, 138 SCRA 78, August 7, 1985; Sarsosa vda. de
Barsobia vs. Cuenco, 113 SCRA 547, April 16, 1982; Godinez vs. Fong Pak Luen, 120 SCRA 223,
January 27, 1983; Yap vs. Maravillas, 121 SCRA 244, March 28, 1983; De Castro vs. Tan, 129 SCRA 85,
April 30, 1984.
[23]
Ibid.
[24]
Supra.
[25]
Supra.
[26]
Supra.
[27]
96 Phil 447, January 31, 1955, per Padilla, J.
[28]
1 SCRA 406, January 31, 1961, per Barrera, J.
[29]
Supra, p. 453.














Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-630 November 15, 1947
ALEXANDER A. KRIVENKO, petitioner-appellant,
vs.
THE REGISTER OF DEEDS, CITY OF MANILA, respondent and appellee.
Gibbs, Gibbs, Chuidian and Quasha of petitioner-appellant.
First Assistant Solicitor General Reyes and Solicitor Carreon for respondent-appellee.
Marcelino Lontok appeared as amicus curies.
MORAN, C.J .:
Alenxander A. Kriventor alien, bought a residential lot from the Magdalena Estate, Inc., in December
of 1941, the registration of which was interrupted by the war. In May, 1945, he sought to accomplish
said registration but was denied by the register of deeds of Manila on the ground that, being an
alien, he cannot acquire land in this jurisdiction. Krivenko then brought the case to the fourth branch
of the Court of First Instance of Manila by means of a consulta, and that court rendered judgment
sustaining the refusal of the register of deeds, from which Krivenko appealed to this Court.
There is no dispute as to these facts. The real point in issue is whether or not an alien under our
Constitution may acquire residential land.
It is said that the decision of the case on the merits is unnecessary, there being a motion to withdraw
the appeal which should have been granted outright, and reference is made to the ruling laid down
by this Court in another case to the effect that a court should not pass upon a constitutional question
if its judgment may be made to rest upon other grounds. There is, we believe, a confusion of ideas in
this reasoning. It cannot be denied that the constitutional question is unavoidable if we choose to
decide this case upon the merits. Our judgment cannot to be made to rest upon other grounds if we
have to render any judgment at all. And we cannot avoid our judgment simply because we have to
avoid a constitutional question. We cannot, for instance, grant the motion withdrawing the appeal
only because we wish to evade the constitutional; issue. Whether the motion should be, or should
not be, granted, is a question involving different considerations now to be stated.
According to Rule 52, section 4, of the Rules of Court, it is discretionary upon this Court to grant a
withdrawal of appeal after the briefs have been presented. At the time the motion for withdrawal was
filed in this case, not only had the briefs been prensented, but the case had already been voted and
the majority decision was being prepared. The motion for withdrawal stated no reason whatsoever,
and the Solicitor General was agreeable to it. While the motion was pending in this Court, came the
new circular of the Department of Justice, instructing all register of deeds to accept for registration all
transfers of residential lots to aliens. The herein respondent-appellee was naturally one of the
registers of deeds to obey the new circular, as against his own stand in this case which had been
maintained by the trial court and firmly defended in this Court by the Solicitor General. If we grant the
withdrawal, the the result would be that petitioner-appellant Alexander A. Krivenko wins his case, not
by a decision of this Court, but by the decision or circular of the Department of Justice, issued while
this case was pending before this Court. Whether or not this is the reason why appellant seeks the
withdrawal of his appeal and why the Solicitor General readily agrees to that withdrawal, is now
immaterial. What is material and indeed very important, is whether or not we should allow
interference with the regular and complete exercise by this Court of its constitutional functions, and
whether or not after having held long deliberations and after having reached a clear and positive
conviction as to what the constitutional mandate is, we may still allow our conviction to be silenced,
and the constitutional mandate to be ignored or misconceived, with all the harmful consequences
that might be brought upon the national patromony. For it is but natural that the new circular be
taken full advantage of by many, with the circumstance that perhaps the constitutional question may
never come up again before this court, because both vendors and vendees will have no interest but
to uphold the validity of their transactions, and very unlikely will the register of deeds venture to
disobey the orders of their superior. Thus, the possibility for this court to voice its conviction in a
future case may be remote, with the result that our indifference of today might signify a permanent
offense to the Constitution.
All thse circumstances were thoroughly considered and weighted by this Court for a number of days
and the legal result of the last vote was a denial of the motion withdrawing the appeal. We are thus
confronted, at this stage of the proceedings, with our duty, the constitutional question becomes
unavoidable. We shall then proceed to decide that question.
Article XIII, section 1, of the Constitutional is as follows:
Article XIII. Conservation and utilization of natural resources.
SECTION 1. All agricultural, timber, and mineral lands of the public domain, water, minerals,
coal, petroleum, and other mineral oils, all forces of potential energy, and other natural
resources of the Philippines belong to the State, and their disposition, exploitation,
development, or utilization shall be limited to citizens of the Philippines, or to corporations or
associations at least sixty per centum of the capital of which is owned by such citizens,
subject to any existing right, grant, lease, or concession at the time of the inaguration of the
Government established uunder this Constitution. Natural resources, with the exception of
public agricultural land, shall not be alienated, and no licence, concession, or lease for the
exploitation, development, or utilization of any of the natural resources shall be granted for a
period exceeding twenty-five years, renewable for another twenty-five years, except as to
water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water "power" in which cases beneficial use may be the measure and the
limit of the grant.
The scope of this constitutional provision, according to its heading and its language, embraces all
lands of any kind of the public domain, its purpose being to establish a permanent and fundamental
policy for the conservation and utilization of all natural resources of the Nation. When, therefore, this
provision, with reference to lands of the public domain, makes mention of only agricultural, timber
and mineral lands, it means that all lands of the public domain are classified into said three groups,
namely, agricultural, timber and mineral. And this classification finds corroboration in the
circumstance that at the time of the adoption of the Constitution, that was the basic classification
existing in the public laws and judicial decisions in the Philippines, and the term "public agricultural
lands" under said classification had then acquired a technical meaning that was well-known to the
members of the Constitutional Convention who were mostly members of the legal profession.
As early as 1908, in the case of Mapa vs. Insular Government (10 Phil., 175, 182), this Court said
that the phrase "agricultural public lands" as defined in the Act of Congress of July 1, 1902, which
phrase is also to be found in several sections of the Public Land Act (No. 926), means "those public
lands acquired from Spain which are neither mineral for timber lands." This definition has been
followed in long line of decisions of this Court. (SeeMontano vs. Insular Government, 12 Phil., 593;
Ibaez de Aldecoa vs. Insular Government, 13 Phil., 159; Ramosvs. Director of Lands, 39 Phil., 175;
Jocson vs. Director of Forestry, 39 Phil., 560; Ankron vs. Government of the Philippines, 40 Phil.,
10.) And with respect to residential lands, it has been held that since they are neither mineral nor
timber lands, of necessity they must be classified as agricultural. In Ibaez de Aldecoa vs. Insular
Government (13 Phil., 159, 163), this Court said:
Hence, any parcel of land or building lot is susceptible of cultivation, and may be converted
into a field, and planted with all kinds of vegetation; for this reason, where land is not mining
or forestal in its nature, it must necessarily be included within the classification of agricultural
land, not because it is actually used for the purposes of agriculture, but because it was
originally agricultural and may again become so under other circumstances; besides, the Act
of Congress contains only three classification, and makes no special provision with respect
to building lots or urban lands that have ceased to be agricultural land.
In other words, the Court ruled that in determining whether a parcel of land is agricultural, the test is
not only whether it is actually agricultural, but also its susceptibility to cultivation for agricultural
purposes. But whatever the test might be, the fact remains that at the time the Constitution was
adopted, lands of the public domain were classified in our laws and jurisprudence into agricultural,
mineral, and timber, and that the term "public agricultural lands" was construed as referring to those
lands that were not timber or mineral, and as including residential lands. It may safely be presumed,
therefore, that what the members of the Constitutional Convention had in mind when they drafted the
Constitution was this well-known classification and its technical meaning then prevailing.
Certain expressions which appear in Constitutions, . . . are obviously technical; and where
such words have been in use prior to the adoption of a Constitution, it is presumed that its
framers and the people who ratified it have used such expressions in accordance with their
technical meaning. (11 Am. Jur., sec. 66, p. 683.) Also Calder vs. Bull, 3 Dall. [U.S.], 386; 1
Law. ed., 648; Bronson vs. Syverson, 88 Wash., 264; 152 P., 1039.)
It is a fundamental rule that, in construing constitutions, terms employed therein shall be
given the meaning which had been put upon them, and which they possessed, at the time of
the framing and adoption of the instrument. If a word has acquired a fixed, technical meaning
in legal and constitutional history, it will be presumed to have been employed in that sense in
a written Constitution. (McKinney vs. Barker, 180 Ky., 526; 203 S.W., 303; L.R.A., 1918 E,
581.)
Where words have been long used in a technical sense and have been judicially construed
to have a certain meaning, and have been adopted by the legislature as having a certain
meaning prior to a particular statute in which they are used, the rule of construction requires
that the words used in such statute should be construed according to the sense in which they
have been so previously used, although the sense may vary from strict literal meaning of the
words. (II Sutherland, Statutory Construction, p. 758.)
Therefore, the phrase "public agricultural lands" appearing in section 1 of Article XIII of the
Constitution must be construed as including residential lands, and this is in conformity with a
legislative interpretation given after the adoption of the Constitution. Well known is the rule that
"where the Legislature has revised a statute after a Constitution has been adopted, such a revision
is to be regarded as a legislative construction that the statute so revised conforms to the
Constitution." (59 C.J., 1102.) Soon after the Constitution was adopted, the National Assembly
revised the Public Land Law and passed Commonwealth Act No. 141, and sections 58, 59 and 60
thereof permit the sale of residential lots to Filipino citizens or to associations or corporations
controlled by such citizens, which is equivalent to a solemn declaration that residential lots are
considered as agricultural lands, for, under the Constitution, only agricultural lands may be alienated.
It is true that in section 9 of said Commonwealth Act No. 141, "alienable or disposable public lands"
which are the same "public agriculture lands" under the Constitution, are classified into agricultural,
residential, commercial, industrial and for other puposes. This simply means that the term "public
agricultural lands" has both a broad and a particular meaning. Under its broad or general meaning,
as used in the Constitution, it embraces all lands that are neither timber nor mineral. This broad
meaning is particularized in section 9 of Commonwealth Act No. 141 which classifies "public
agricultural lands" for purposes of alienation or disposition, into lands that are stricly agricultural or
actually devoted to cultivation for agricultural puposes; lands that are residential; commercial;
industrial; or lands for other purposes. The fact that these lands are made alienable or disposable
under Commonwealth Act No. 141, in favor of Filipino citizens, is a conclusive indication of their
character as public agricultural lands under said statute and under the Constitution.
It must be observed, in this connection that prior to the Constitution, under section 24 of Public Land
Act No. 2874, aliens could acquire public agricultural lands used for industrial or residential puposes,
but after the Constitution and under section 23 of Commonwealth Act No. 141, the right of aliens to
acquire such kind of lands is completely stricken out, undoubtedly in pursuance of the constitutional
limitation. And, again, prior to the Constitution, under section 57 of Public Land Act No. 2874, land of
the public domain suitable for residence or industrial purposes could be sold or leased to aliens, but
after the Constitution and under section 60 of Commonwealth Act No. 141, such land may only be
leased, but not sold, to aliens, and the lease granted shall only be valid while the land is used for the
purposes referred to. The exclusion of sale in the new Act is undoubtedly in pursuance of the
constitutional limitation, and this again is another legislative construction that the term "public
agricultural land" includes land for residence purposes.
Such legislative interpretation is also in harmony with the interpretation given by the Executive
Department of the Government. Way back in 1939, Secretary of Justice Jose Abad Santos, in
answer to a query as to "whether or not the phrase 'public agricultural lands' in section 1 of Article XII
(now XIII) of the Constitution may be interpreted to include residential, commercial, and industrial
lands for purposes of their disposition," rendered the following short, sharp and crystal-clear opinion:
Section 1, Article XII (now XIII) of the Constitution classifies lands of the public domain in the
Philippines into agricultural, timber and mineral. This is the basic classification adopted since
the enactment of the Act of Congress of July 1, 1902, known as the Philippine Bill. At the
time of the adoption of the Constitution of the Philippines, the term 'agricultural public lands'
and, therefore, acquired a technical meaning in our public laws. The Supreme Court of the
Philippines in the leading case of Mapa vs. Insular Government, 10 Phil., 175, held that the
phrase 'agricultural public lands' means those public lands acquired from Spain which are
neither timber nor mineral lands. This definition has been followed by our Supreme Court in
many subsequent case. . . .
Residential commercial, or industrial lots forming part of the public domain must have to be
included in one or more of these classes. Clearly, they are neither timber nor mineral, of
necessity, therefore, they must be classified as agricultural.
Viewed from another angle, it has been held that in determining whether lands are
agricultural or not, the character of the land is the test (Odell vs. Durant, 62 N.W., 524;
Lorch vs. Missoula Brick and Tile Co., 123 p.25). In other words, it is the susceptibility of the
land to cultivation for agricultural purposes by ordinary farming methods which determines
whether it is agricultural or not (State vs. Stewart, 190 p. 129).
Furthermore, as said by the Director of Lands, no reason is seen why a piece of land, which
may be sold to a person if he is to devote it to agricultural, cannot be sold to him if he intends
to use it as a site for his home.
This opinion is important not alone because it comes from a Secratary of Justice who later became
the Chief Justice of this Court, but also because it was rendered by a member of the cabinet of the
late President Quezon who actively participated in the drafting of the constitutional provision under
consideration. (2 Aruego, Framing of the Philippine Constitution, p. 598.) And the opinion of the
Quezon administration was reiterated by the Secretary of Justice under the Osmea administration,
and it was firmly maintained in this Court by the Solicitor General of both administrations.
It is thus clear that the three great departments of the Government judicial, legislative and
executive have always maintained that lands of the public domain are classified into agricultural,
mineral and timber, and that agricultural lands include residential lots.
Under section 1 of Article XIII of the Constitution, "natural resources, with the exception of public
agricultural land, shall not be aliented," and with respect to public agricultural lands, their alienation
is limited to Filipino citizens. But this constitutional purpose conserving agricultural resources in the
hands of Filipino citizens may easily be defeated by the Filipino citizens themselves who may
alienate their agricultural lands in favor of aliens. It is partly to prevent this result that section 5 is
included in Article XIII, and it reads as follows:
Sec. 5. Save in cases of hereditary succession, no private agricultural land will be transferred
or assigned except to individuals, corporations, or associations qualified to acquire or hold
lands of the public domain in the Philippines.
This constitutional provision closes the only remaining avenue through which agricultural resources
may leak into aliens' hands. It would certainly be futile to prohibit the alienation of public agricultural
lands to aliens if, after all, they may be freely so alienated upon their becoming private agricultural
lands in the hands of Filipino citizens. Undoubtedly, as above indicated, section 5 is intended to
insure the policy of nationalization contained in section 1. Both sections must, therefore, be read
together for they have the same purpose and the same subject matter. It must be noticed that the
persons against whom the prohibition is directed in section 5 are the very same persons who under
section 1 are disqualified "to acquire or hold lands of the public domain in the Philippines." And the
subject matter of both sections is the same, namely, the non-transferability of "agricultural land" to
aliens. Since "agricultural land" under section 1 includes residential lots, the same technical meaning
should be attached to "agricultural land under section 5. It is a rule of statutory construction that "a
word or phrase repeated in a statute will bear the same meaning throughout the statute, unless a
different intention appears." (II Sutherland, Statutory Construction, p. 758.) The only difference
between "agricultural land" under section 5, is that the former is public and the latter private. But
such difference refers to ownership and not to the class of land. The lands are the same in both
sections, and, for the conservation of the national patrimony, what is important is the nature or class
of the property regardless of whether it is owned by the State or by its citizens.
Reference is made to an opinion rendered on September 19, 1941, by the Hon. Teofilo Sison, then
Secretary of Justice, to the effect that residential lands of the public domain may be considered as
agricultural lands, whereas residential lands of private ownership cannot be so considered. No
reason whatsoever is given in the opinion for such a distinction, and no valid reason can be adduced
for such a discriminatory view, particularly having in mind that the purpose of the constitutional
provision is the conservation of the national patrimony, and private residential lands are as much an
integral part of the national patrimony as the residential lands of the public domain. Specially is this
so where, as indicated above, the prohibition as to the alienable of public residential lots would
become superflous if the same prohibition is not equally applied to private residential lots. Indeed,
the prohibition as to private residential lands will eventually become more important, for time will
come when, in view of the constant disposition of public lands in favor of private individuals, almost
all, if not all, the residential lands of the public domain shall have become private residential lands.
It is maintained that in the first draft of section 5, the words "no land of private ownership" were used
and later changed into "no agricultural land of private ownership," and lastly into "no private
agricultural land" and from these changes it is argued that the word "agricultural" introduced in the
second and final drafts was intended to limit the meaning of the word "land" to land actually used for
agricultural purposes. The implication is not accurate. The wording of the first draft was amended for
no other purpose than to clarify concepts and avoid uncertainties. The words "no land" of the first
draft, unqualified by the word "agricultural," may be mistaken to include timber and mineral lands,
and since under section 1, this kind of lands can never be private, the prohibition to transfer the
same would be superfluous. Upon the other hand, section 5 had to be drafted in harmony with
section 1 to which it is supplementary, as above indicated. Inasmuch as under section 1, timber and
mineral lands can never be private, and the only lands that may become private are agricultural
lands, the words "no land of private ownership" of the first draft can have no other meaning than
"private agricultural land." And thus the change in the final draft is merely one of words in order to
make its subject matter more specific with a view to avoiding the possible confusion of ideas that
could have arisen from the first draft.
If the term "private agricultural lands" is to be construed as not including residential lots or lands not
strictly agricultural, the result would be that "aliens may freely acquire and possess not only
residential lots and houses for themselves but entire subdivisions, and whole towns and cities," and
that "they may validly buy and hold in their names lands of any area for building homes, factories,
industrial plants, fisheries, hatcheries, schools, health and vacation resorts, markets, golf courses,
playgrounds, airfields, and a host of other uses and purposes that are not, in appellant's words,
strictly agricultural." (Solicitor General's Brief, p. 6.) That this is obnoxious to the conservative spirit
of the Constitution is beyond question.
One of the fundamental principles underlying the provision of Article XIII of the Constitution and
which was embodied in the report of the Committee on Nationalization and Preservation of Lands
and other Natural Resources of the Constitutional Convention, is "that lands, minerals, forests, and
other natural resources constitute the exclusive heritage of the Filipino nation. They should,
therefore, be preserved for those under the sovereign authority of that nation and for their posterity."
(2 Aruego, Framing of the Filipino Constitution, p. 595.) Delegate Ledesma, Chairman of the
Committee on Agricultural Development of the Constitutional Convention, in a speech delivered in
connection with the national policy on agricultural lands, said: "The exclusion of aliens from the
privilege of acquiring public agricultural lands and of owning real estate is a necessary part of the
Public Land Laws of the Philippines to keep pace with the idea of preserving the Philippines for the
Filipinos." (Emphasis ours.) And, of the same tenor was the speech of Delegate Montilla who
said: "With the complete nationalization of our lands and natural resources it is to be understood that
our God-given birthright should be one hundred per cent in Filipino hands . . .. Lands and natural
resources are immovables and as such can be compared to the vital organs of a person's body, the
lack of possession of which may cause instant death or the shortening of life. If we do not completely
antionalize these two of our most important belongings, I am afraid that the time will come when we
shall be sorry for the time we were born. Our independence will be just a mockery, for what kind of
independence are we going to have if a part of our country is not in our hands but in those of
foreigners?" (Emphasis ours.) Professor Aruego says that since the opening days of the
Constitutional Convention one of its fixed and dominating objectives was the conservation and
nationalization of the natural resources of the country. (2 Aruego, Framing of the Philippine
Constitution, p 592.) This is ratified by the members of the Constitutional Convention who are now
members of this Court, namely, Mr. Justice Perfecto, Mr. Justice Briones, and Mr. Justice
Hontiveros. And, indeed, if under Article XIV, section 8, of the Constitution, an alien may not even
operate a small jitney for hire, it is certainly not hard to understand that neither is he allowed to own
a pieace of land.
This constitutional intent is made more patent and is strongly implemented by an act of the National
Assembly passed soon after the Constitution was approved. We are referring again to
Commonwealth Act No. 141. Prior to the Constitution, there were in the Public Land Act No. 2874
sections 120 and 121 which granted aliens the right to acquire private only by way of reciprocity.
Said section reads as follows:
SEC. 120. No land originally acquired in any manner under the provisions of this Act, nor any
permanent improvement on such land, shall be encumbered, alienated, or transferred,
except to persons, corporations, associations, or partnerships who may acquire lands of the
public domain under this Act; to corporations organized in the Philippine Islands authorized
therefor by their charters, and, upon express authorization by the Philippine Legislature, to
citizens of countries the laws of which grant to citizens of the Philippine Islands the same
right to acquire, hold, lease, encumber, dispose of, or alienate land, or permanent
improvements thereon, or any interest therein, as to their own citizens, only in the manner
and to the extent specified in such laws, and while the same are in force but not thereafter.
SEC. 121. No land originally acquired in any manner under the provisions of the former
Public Land Act or of any other Act, ordinance, royal order, royal decree, or any other
provision of law formerly in force in the Philippine Islands with regard to public
lands, terrenos baldios y realengos, or lands of any other denomination that were actually or
presumptively of the public domain or by royal grant or in any other form, nor any permanent
improvement on such land, shall be encumbered, alienated, or conveyed, except to persons,
corporations, or associations who may acquire land of the public domain under this Act; to
corporate bodies organized in the Philippine Islands whose charters may authorize them to
do so, and, upon express authorization by the Philippine Legislature, to citizens of the
countries the laws of which grant to citizens of the Philippine Islands the same right to
acquire, hold, lease, encumber, dispose of, or alienate land or pemanent improvements
thereon or any interest therein, as to their own citizens, and only in the manner and to the
extent specified in such laws, and while the same are in force, but not thereafter:Provided,
however, That this prohibition shall not be applicable to the conveyance or acquisition by
reason of hereditary succession duly acknowledged and legalized by competent courts, nor
to lands and improvements acquired or held for industrial or residence purposes, while used
for such purposes:Provided, further, That in the event of the ownership of the lands and
improvements mentioned in this section and in the last preceding section being transferred
by judicial decree to persons,corporations or associations not legally capacitated to acquire
the same under the provisions of this Act, such persons, corporations, or associations shall
be obliged to alienate said lands or improvements to others so capacitated within the precise
period of five years, under the penalty of such property reverting to the Government in the
contrary case." (Public Land Act, No. 2874.)
It is to be observed that the pharase "no land" used in these section refers to all private lands,
whether strictly agricultural, residential or otherwise, there being practically no private land which
had not been acquired by any of the means provided in said two sections. Therefore, the prohibition
contained in these two provisions was, in effect, that no private land could be transferred to aliens
except "upon express authorization by the Philippine Legislature, to citizens of Philippine Islands the
same right to acquire, hold, lease, encumber, dispose of, or alienate land." In other words, aliens
were granted the right to acquire private land merely by way of reciprocity. Then came the
Constitution and Commonwealth Act No. 141 was passed, sections 122 and 123 of which read as
follows:
SEC. 122. No land originally acquired in any manner under the provisions of this Act, nor any
permanent improvement on such land, shall be encumbered, alienated, or transferred,
except to persons, corporations, associations, or partnerships who may acquire lands of the
public domain under this Act or to corporations organized in the Philippines authorized
thereof by their charters.
SEC. 123. No land originally acquired in any manner under the provisions of any previous
Act, ordinance, royal order, royal decree, or any other provision of law formerly in force in the
Philippines with regard to public lands terrenos baldios y realengos, or lands of any other
denomination that were actually or presumptively of the public domain, or by royal grant or in
any other form, nor any permanent improvement on such land, shall be encumbered,
alienated, or conveyed, except to persons, corporations or associations who may acquire
land of the public domain under this Act or to corporate bodies organized in the Philippines
whose charters authorize them to do so: Provided, however, That this prohibition shall not be
applicable to the conveyance or acquisition by reason of hereditary succession duly
acknowledged and legalized by competent courts: Provided, further, That in the event of the
ownership of the lands and improvements mentioned in this section and in the last preceding
section being transferred by judicial decree to persons, corporations or associations not
legally capacitated to acquire the same under the provisions of this Act, such persons,
corporations, or associations shall be obliged to alienate said lands or improvements to
others so capacitated within the precise period of five years; otherwise, such property shall
revert to the Government.
These two sections are almost literally the same as sections 120 and 121 of Act No. 2874, the only
difference being that in the new provisions, the right to reciprocity granted to aliens is completely
stricken out. This, undoubtedly, is to conform to the absolute policy contained in section 5 of Article
XIII of the Constitution which, in prohibiting the alienation of private agricultural lands to aliens,
grants them no right of reciprocity. This legislative construction carries exceptional weight, for
prominent members of the National Assembly who approved the new Act had been members of the
Constitutional Convention.
It is said that the lot question does not come within the purview of sections 122 and 123 of
Commonwealth Act No. 141, there being no proof that the same had been acquired by one of the
means provided in said provisions. We are not, however, diciding the instant case under the
provisions of the Public Land Act, which have to refer to land that had been formerly of the public
domain, otherwise their constitutionality may be doubtful. We are deciding the instant case under
section 5 of Article XIII of the Constitution which is more comprehensive and more absolute in the
sense that it prohibits the transfer to alien of any private agricultural land including residential land
whatever its origin might have been.
And, finally, on June 14, 1947, the Congress approved Republic Act No. 133 which allows mortgage
of "private real property" of any kind in favor of aliens but with a qualification consisting of expressly
prohibiting aliens to bid or take part in any sale of such real property as a consequence of the
mortgage. This prohibition makes no distinction between private lands that are strictly agricultural
and private lands that are residental or commercial. The prohibition embraces the sale of private
lands of any kind in favor of aliens, which is again a clear implementation and a legislative
interpretation of the constitutional prohibition. Had the Congress been of opinion that private
residential lands may be sold to aliens under the Constitution, no legislative measure would have
been found necessary to authorize mortgage which would have been deemed also permissible
under the Constitution. But clearly it was the opinion of the Congress that such sale is forbidden by
the Constitution and it was such opinion that prompted the legislative measure intended to clarify
that mortgage is not within the constitutional prohibition.
It is well to note at this juncture that in the present case we have no choice. We are construing the
Constitution as it is and not as we may desire it to be. Perhaps the effect of our construction is to
preclude aliens, admitted freely into the Philippines from owning sites where they may build their
homes. But if this is the solemn mandate of the Constitution, we will not attempt to compromise it
even in the name of amity or equity. We are satisfied, however, that aliens are not completely
excluded by the Constitution from the use of lands for residential purposes. Since their residence in
the Philippines is temporary, they may be granted temporary rights such as a lease contract which is
not forbidden by the Constitution. Should they desire to remain here forever and share our fortunes
and misfortunes, Filipino citizenship is not impossible to acquire.
For all the foregoing, we hold that under the Constitution aliens may not acquire private or public
agricultural lands, including residential lands, and, accordingly, judgment is affirmed, without costs.
Feria, Pablo, Perfecto, Hilado, and Briones, JJ., concur.


Separate Opinion
PERFECTO, J ., concurring:
Today, which is the day set for the promulgation of this Court's decision might be remembered by
future generations always with joy, with gratitude, with pride. The failure of the highest tribunal of the
land to do its duty in this case would have amounted to a national disaster. We would have refused
to share the responsibility of causing it by, wittingly or unwittingly, allowing ourselves to act as tools
in a conspiracy to sabotage the most important safeguard of the age-long patrimony of our people,
the land which destiny of Providence has set aside to be the permanent abode of our race for
unending generations. We who have children and grandchildren, and who expect to leave long and
ramifying dendriform lines of descendants, could not bear the thought of the curse they may fling at
us should the day arrive when our people will be foreigners in their fatherland, because in the crucial
moment of our history , when the vision of judicial statemanship demanded on us the resolution and
boldness to affirm and withhold the letter and spirit of the Constitution, we faltered. We would have
prefered heroic defeat to inglorious desertion. Rather than abandon the sacred folds of the banner of
our convictions for truth, for justice, for racial survival. We are happy to record that this Supreme
Court turned an impending failure to a glorious success, saving our people from a looming
catastrophe.
On July 3, 1946, the case of Oh Cho vs. Director of Lands, (43 Off. Gaz., 866), was submitted for
our decision. The case was initiated in the Court of First Instance of Tayabas on January 17, 1940,
when an alien, Oh Cho, a citizen of China, applied for title and registration of a parcel of land located
in the residential district of Guinayangan, Tayabas, with a house thereon. The Director of Lands
opposed the application, one of the main grounds being that "the applicant, being a Chinese, is not
qualified to acquire public or private agricultural lands under the provisions of the Constitution."
On August 15, 1940, Judge P. Magsalin rendered decision granting the application. The Director of
Lands appealed. In the brief filed by Solicitor General Roman Ozaeta, afterwards Associate Justice
of the Supreme Court and now Secretary of Justice, and Assistant Solicitor General Rafael Amparo,
appellant made only two assignments of error, although both raised but one question, the legal one
stated in the first assignment of error as follows:
The lower court erred in declaring the registration of the land in question in favor of the
applicant who, according to his own voluntary admission is a citizen of the Chinese Republic.
The brief was accompanied, as Appendix A, by the opinion of Secretary of Justice Jose A. Santos
who, while Chief Justice of the Supreme Court, suffered heroic martyrdom at the hands of the
Japanese addressed to the Secretary of Agriculture and Commerce on July 15, 1939, supporting
the same theory as the one advanced by the Director of Lands. The same legal question raised by
appellant is discussed, not only in the brief for the appellee, but also in the briefs of the several amici
curiae allowed by the Supreme Court to appear in the case.
As a matter of fact, the case has been submitted for final decision of the Supreme Court since July
of 1941, that is, six years ago. It remained undecided when the Pacific War broke out in December,
1941. After the Supreme Court was recognized in the middle of 1945, it was found that the case was
among those which were destroyed in February, 1945, during the battle for the liberation of Manila.
The case had to be reconstituted upon motion of the office of the Solicitor General, filed with this
Court on January 14, 1946, in which it was also prayed that, after being reconstituted, the case be
submitted for final adjudication. The case was for the second time submitted for decision on July 3,
1946.
After the last submission, it took the Supreme Court many days to deliberate on the case, especially
on the legal question as to whether an alien may, under the Constitution, acquire private urban
lands. An overwhelming majority answered no. But when the decision was promulgated on August
31, 1946, a majority resolved to ignore the question, notwithstanding our efforts to have the
question, which is vital, pressing and far-reaching, decided once and for all, to dispel definitely the
uncertainty gnawing the conscience of the people. It has been out lot to be alone in expressing in
unmistakable terms our opinion and decision on the main legal question raised by the appellant. The
constitutional question was by-passed by the majority because they were of opinion that it was not
necessary to be decided, notwithstanding the fact that it was the main and only legal question upon
which appellant Director of Lands relied in his appeal, and the question has been almost
exhaustively argued in four printed briefs filed by the parties and the amici curiae. Assurance was,
nevertheless, given that in the next case in which the same constitutional question is raised, the
majority shall make known their stand on the question.
The next case came when the present one submitted to us for decision on February 3, 1947. Again,
we deliberated on the constitutional question for several days.
On February 24, 1947, the case was submitted for final vote, and the result was that the
constitutional question was decided against petitioner. The majority was also overwhelming. There
were eight of us, more than two-thirds of the Supreme Court. Only three Justices dissented.
While the decision was being drafted, somehow, the way the majority had voted must have leaked
out. On July 10, 1947, appellant Krivenko filed a motion for withdrawal of his appeal, for the evident
purpose of preventing the rendering of the majority decision, which would settle once and for all the
all-important constitutional question as to whether aliens may acquire urban lots in the Philippines.
Appellant chose to keep silent as to his reason for filing the motion. The Solicitor General's office
gave its conformity to the withdrawal of the appeal. This surprising assent was given without
expressing any ground at all. Would the Supreme Court permit itself to be cheated of its decision
voted since February 24, 1947?
Discussion immediately ensued as to whether the motion should be granted or denied, that is,
whether this Court should abstain from promulgating the decision in accordance with the result of the
vote taken on February 24, 1947, as if, after more than six years during which the question has been
submitted for the decision of the highest tribunal of the land, the same has failed to form a definite
opinion.
After a two-day deliberation, the Chief Justice, Mr. Justice Paras, Mr. Justice Hontiveros, Mr. Justice
Padilla and and Mr. Justice Tuason voted to grant the motion for withdrawal. Those who voted to
deny the motion were Mr. Justice Feria, Mr. Justice Pablo, ourselves, Mr. Justice Hilado and Mr.
Justice Bengzon. The vote thus resulted in a tie, 5-5. The deadlock resulting from the tie should
have the effect of denying the motion, as provided by section 2 of Rule 56 to the effect that "where
the Court in banc is equally divided in opinion . . . on all incidental matters, the petition or motion
shall be denied." And we proposed that the rule be complied with, and the denial be promulgated.
Notwithstanding this, as Mr. Justice Briones was then absent, our brethren resolved to give him the
opportunity of casting his vote on the question, although we insisted that it was unnecessary. Days
later, when all the members of the Court were already present, a new vote was taken. Mr. Justice
Briones voted for the denial of the motion, and his vote would have resulted, as must be expected, in
6 votes for the denial against 5 for granting. But the final result was different. Seven votes were cast
for granting the motion and only four were cast for its denial.
But then, by providential design or simply by a happy stroke of luck or fate, on the occasion of the
registration by the register of deeds of Manila of land purchases of two aliens, a heated public
polemic flared up in one section of the press, followed by controversial speeches, broadcast by
radio, and culminating in the issuance on August 12, 1947, of Circular No. 128 of the Secretary of
Justice which reads as follows:
TO ALL REGISTER OF DEEDS:
Paragraph 5 of Circular No. 14, dated August 25, 1945, is hereby amended so as to read as follows:
5"(a). Instruments by which private real property is mortgaged in favor of any individual,
corporation, or association for a period not exceeding five years, renewable for another five
years, may be accepted for registration. (Section 1, Republic Act No. 138.)
"(b). Deeds or documents by which private residential, commercial, industrial or other
classes of urban lands, or any right, title or interest therein is transferred, assigned or
encumbered to an alien, who is not an enemy national, may be registered. Such classes of
land are not deemed included within the purview of the prohibition contained in section 5,
Article XIII of the Constitution against the acquisition or holding of "private agricultural
land" by those who are not qualified to hold or acquire lands of the public domain. This is in
conformity with Opinion No. 284, series of 1941, of the Secretary of Justice and with the
practice consistently followed for nearly ten years since the Constitution took effect on
November 15, 1935.
"(c). During the effectivity of the Executive Agreement entered into between the Republic of
the Philippines and the Government of the United States on July 4, 1946, in pursuance of the
so-called Parity Amendment to the Constitution, citizens of the United States and
corporations or associations owned or controlled by such citizens are deemed to have the
same rights as citizens of the Philippines and corporations or associations owned or
controlled by such are deemed to have the same rights as citizens of the Philippines and
corporations or associations owned or controlled by citizens of the Philippines in the
acquisition of all classes of lands in the Philippines, whether of private ownership or
pertaining to the public domain."
ROMAN OZAETA
Secretary of Justice
Paragraph 5 of Circular No. 14 dated August 25, 1945, amended by the above is as follows:
Deeds or other documents by which a real property, or a right, or title thereto, or an interest
therein, is transferred, assigned or encumbered to an alien, who is not enemy national, may
be entered in the primary entry book; but, the registration of said deeds or other documents
shall be denied unless and/or until otherwise specifically directed by a final decision or
order of a competent court and the party in interest shall be advised of such denial, so
that he could avail himself of the right to appeal therefrom, under the provisions of section
200 of the Revised Administrative Code. The denial of registration of shall be predicated
upon the prohibition contained in section 5, Article XIII (formerly Article XII) of the
Constitution of the Philippines, and sections 122 and 123 of Commonwealth Act No. 141, the
former as amended by the Commonwealth Act No. 615.
The polemic found echo even in the Olympic serenity of a cloistered Supreme Court and the final
result of long and tense deliberation which ensued is concisely recorded in the following resolution
adopted on August 29, 1947:
In Krivenko vs. Register of Deeds, City of Manila, L-630, a case already submitted for
decision, the appellant filed a motion to withdraw his appeal with the conformity of the
adverse party. After full discussion of the matter specially in relation to the Court's discretion
(Rule 52, section 4, and Rule 58), Mr. Justice Paras, Mr. Justice Hilado, Mr. Justice
Bengzon, Mr. Justice Padilla and Mr. Justice Tuazon voted to grant, while the Chief Justice,
Mr. Justice Feria, Mr,. Justice Pablo, Mr. Justice Perfecto and Mr. Justice Briones voted to
deny it. A redeliberation was consequently had, with the same result. Thereupon Mr. Justice
Paras proposed that Mr. Justice Hontiveros be asked to sit and break the tie; but in view of
the latter's absence due to illness and petition for retirement, the Court by a vote of seven to
three did not approve the proposition. Therefore, under Rule 56, section 2, the motion to
withdraw is considered denied.
Mr. Justice Padilla states that in his opinion the tie could not have the effect of overruling the
previous vote of seven against four in favor of the motion to withdraw.
Mr. Justice Paras states: Justice Hontiveros is aware of and conversant with the controversy.
He has voted once on the motion to withdraw the appeal. He is still a member of the Court
and, on a moment's notice, can be present at any session of the Court. Last month, when all
the members were present, the votes on the motion stood 7 to 4. Now, in the absence of one
member, on reconsideration, another changed his vote resulting in a tie. Section 2 of Rule 56
requires that all efforts be exerted to break a deadlock in the votes. I deplore the inability of
the majority to agree to my proposition that Mr. Justice Hontiveros be asked to participate in
the resolution of the motion for withdrawal. I hold it to be fundamental and necessary that the
votes of all the members be taken in cases like this.
Mr. Justice Perfecto stated, for purposes of completeness of the narration of facts, that when
the petition to withdraw the appeal was submitted for resolution of this Court two days after
this petition was filed, five justices voted to grant and five others voted to deny, and
expressed the opinion that since then, according to the rules, the petition should have been
considered denied. Said first vote took place many days before the one alluded to by Mr.
Justice Padilla.
Mr. Justice Tuason states: The motion to withdraw the appeal was first voted upon with the
result that 5 were granting and 5 for denial. Mr. Justice Briones was absent and it was
decided to wait for him. Some time later, the same subject was deliberated upon and a new
voting was had, on which occasion all the 11 justices were present. The voting stood 7 for
allowing the dismissal of the appeal and 4 against. Mr. Justice Perfecto and Mr. Justice
Briones expressed the intention to put in writing their dissents. Before these dissents were
filed, about one month afterwards, without any previous notice the matter was brought up
again and re-voted upon; the result was 5 to 5. Mr. Justice Hontiveros, who was ill but might
have been able to attend if advised of the necessity of his presence, was absent. As the
voting thus stood, Mr. Justice Hontiveros' vote would have changed its result unless he
changed his mind, a fact of which no one is aware. My opinion is that since there was no
formal motion for reconsideration nor a previous notice that this matter would be taken up
once more, and since Mr. Justice Hontiveros had every reason to believe that the matter was
over as far as he was concerned, this Justice's vote in the penultimate voting should, if he
was not to be given an opportunity to recast his vote, be counted in favor of the vote for the
allowance of the motion to withdraw. Above all, that opportunity should not have been denied
on grounds of pure technicality never invoked before. I counted that the proceeding was
arbitrary and illegal.
The resolution does not recite all the reasons why Mr. Justice Hontiveros did not participate in that
last two votings and why it became unnecessary to wait for him any further to attend the sessions of
the Court and to cast his vote on the question.
Appellant Krivenko moved for the reconsideration of the denial of his withdrawal of appeal, alleging
that it became moot in view of the ruling made by the Secretary of Justice in circular No. 128, thus
giving us a hint that the latter, wittingly or unwittingly, had the effect of trying to take away from the
Supreme Court the decision of an important constitutional question, submitted to us in a pending
litigation. We denied the motion for reconsideration. We did not want to entertain any obstruction to
the promulgation of our decision.
If the processes had in this case had been given the publicity suggested by us for all the official
actuations of this Supreme Court, it should have been known by the whole world that since July,
1946, that is, more than a year ago, the opinion of the members of this Court had already been
crystallized to the effect that under the Constitution, aliens are forbidded from acquiring urban lands
in the Philippines, and it must have known that in this case a great majority had voted in that sense
on February 24, 1947.
The constitutional question involved in this case cannot be left undecided without jeopardizing public
interest. The uncertainty in the public mind should be dispelled without further delay. While the doubt
among the people as to what is the correct answer to the question remains to be dissipated, there
will be uneasiness, undermining public morale and leading to evils of unpredictable extent. This
Supreme Tribunal, by overwhelming majority, already knows what the correct answer is, and should
not withhold and keep it for itself with the same zealousness with which the ancient families of the
Eumolpides and Keryces were keeping the Eleusinian mysteries. The oracle of Delphus must speak
so that the people may know for their guidance what destiny has in store for them.
The great question as to whether the land bequeathed to us by our forefathers should remain as one
of the most cherished treasures of our people and transmitted by inheritance to unending
generations of our race, is not a new one. The long chain of land-grabbing invasions, conquests,
depredations, and colonial imperialism recorded in the darkest and bloodiest pages of history from
the bellicose enterprises of the Hittites in the plains of old Assyria, irrigated by the waters of the
Tigris and Euphrates, and the invasion of Egypt by the Hyksos, up to the conquests of Hernan
Cortes and Pizarro, the achievements of Cecil Rhodes, and the formation of the Spanish,
Portuguese, Dutch, French and German colonial empires, had many of its iron links forged in our soil
since Magellan, the greatest navigator of all history, had set foot at Limasawa and paid, for his
daring enterprises, with his life at the hands of Lapulapu's men in the battle of Mactan.
Since then, almost four centuries ago, our people have continuously been engaged in an
unrelentless struggle to defend the national patrimony against the aggressive onslaughts of
foreigners bent on grabbing our lands. First came the Spanish encomenderos and other gratuitous
concessioners who were granted by the Spanish crown immense areas of land. Immediately came
the friars and other religious corporations who, notwithstanding their sacred vow of poverty, felt their
greed whetted by the bountiful opportunities for easy and unscrupulous enrichment. Taking
advantage of the uncontrollable religious leadership, on one side, and of the Christian virtues of
obedience, resignation, humility, and credulity of a people who, after conversion to Catholicism,
embraced with tacit faith all its tenets and practiced them with the loyalty and fidelity of persons still
immune from the disappointments and bitterness caused by the vices of modern civilization, the
foreign religious orders set aside all compunction to acquire by foul means many large estates.
Through the practice of confession and other means of moral intimidation, mostly based on the
eternal tortures of hell, they were able to obtain by donation or by will the lands of many simple and
credulous Catholics who, in order to conquer the eternal bliss of heaven, renounced all their property
in favor of religious orders and priests, many under the guise of chaplaincies or other apparently
religious purposes, leaving in destitute their decendants and relatives. Thus big religious landed
estates were formed, and under the system unbearable iniquities were committed. The case of the
family of Rizal is just an index of the situation, which, under the moral leadership of the hero, finally
drove our people into a national revolution not only against the Spanish sovereignty under which the
social cancer had grown to unlimited proportions.
Profiting from the lessons of history, the Delegates to our Constitutional Convention felt it their duty
to insert in the fundamental law effective guarantees for conserving the national patrimony, the
wisdom of which cannot be disputed in a world divided into nations and nationalities. In the same
way that scientists and technicians resorted to radar, sonars, thermistors and other long range
detection devices to stave off far-away enemy attacks in war, said Delegates set the guarantees to
ward off open inroads or devious incursions into the national patrimony as a means of insuring racial
safety and survival.
When the ideal of one world should have been translated into reality, those guarantees might not be
needed and our people may eliminate them. But in the meantime, it is our inescapable devoir, as the
ultimate guardians of the Constitution, never to neglect the enforcement of its provisions whenever
our action is called upon in a case, like the one now before us.
One of the fundamental purposes of the government established by our Constitution is, in its very
words, that it "shall conserve and develop the patrimony of the nation." That mandate is addressed
to all departments and branches of our government, without excluding this Supreme Court. To make
more specific the mandate, Article XIII has been inserted so as to avoid all doubt that all the natural
resources of the country are reserved to Filipino citizens. Our land is the most important of our
natural resources. That land should be kept in the hands of our people until, by constitutional
amendment, they should decide to renounce that age-long patrimony. Save by hereditary
succession the only exception allowed by the Constitution no foreigner may by any means
acquire any land, any kind of land, in the Philippines. That was the overwhelming sentiment
prevailing in the Constitutional Convention, that was the overpowering desire of the great majority of
the Delegates, that was the dominating thought that was intended to be expressed in the great
document, that was what the Committee on Style the drafter of the final text has written in the
Constitution, and that was what was solemnly ratified in the plebiscite by our people, who then were
rankling by the sore spot of illegally Japanized Davao.
The urgency of settling once and forever the constitutional question raised in this case
cannot be overemphasized. If we should decide this question after many urban lots have
been transferred to and registered in the name of alien purchasers, a situation may be
created in which it will be hard to nullify the transfers and the nullification may create
complications and problems highly distasteful to solve. The Georgia case is an objective
lesson upon which we can mirror ourselves. From pages 22 and 23 of the book of Charless
P. Curtiss, Jr. entitled "Lions Under the Throne," we quote the following:
It is of interest that it seems to have happened chiefly in important cases. Fletcher vs. Peck,
in 1810, is the stock example. That was the first case in which the Court held a state statute
void. It involved a national scandal. The 1795 legislature of Georgia sold its western lands,
most of Alabama and Mississippi, to speculators. Perhaps it was the greatest real estate
steal in our history. The purchase price was only half a million dollars. The next legislature
repealed the statute for fraud, the bribery of legislator, but not before the land companies had
completed the deal and unloaded. By that time, and increasingly soon afterwards, more and
more people had bought, and their title was in issue. Eleven million of the acres had been
bought for eleven cents an acre by leading citizens of Boston. How could they clear their
title? Alexander Hamilton gave an opinion, that the repeal of the grant was void under the
Constitution as an impairment of the obligation of a contract.
But could they not get a decision from the Supreme Court? Robert Fletcher of Anhirst, New
Hampshire, had bought fifteen thousand acres from John Peck of Boston. He sued Peck,
and he won. Fletcher appealed. Plainly it was a friendly suit. Marshall was nobody's fool. He
told Cranch that the Court was reluctant to decide the case "as it appeared manifestly made
up for the purpose of getting the Court's judgment." John Quincy Adams so reports in his
diary. Yet Marshall decided it, and he held the repeal void, just as Hamilton said it was. "The
fact that Marshall rendered an opinion, under the circumstances," says Beveridge, "is one of
the finest proofs of his greatness. A weaker man than John Marshall, and one less wise and
courageous, would have dismissed the appeal." That may be, but it was the act of a
stateman, not of a judge. The Court has always been able to overcome its judicial diffidence
on state occasions.
We see from the above how millions of acres of land were stolen from the people of Georgia and
due to legal technicalities the people were unable to recover the stolen property. But in the case of
Georgia, the lands had fallen into American hands and although the scandal was of gigantic
proportions, no national disaster ensued. In our case if our lands should fall into foreign hands,
although there may not be any scandal at all, the catastrophe sought to be avoided by the Delegates
to our Constitutional Convention will surely be in no remote offing.
We conclude that, under the provisions of the Constitution, aliens are not allowed to acquire the
ownership of urban or residential lands in the Philippines and, as consequence, all acquisitions
made in contravention of the prohibitions since the fundamental law became effective are null and
void per se and ab initio. As all public officials have sworn, and are duty bound, to obey and defend
the Constitution, all those who, by their functions, are in charge of enforcing the prohibition as laid
down and interpreted in the decision in this case, should spare no efforts so that any and all
violations which may have taken place should be corrected.
We decide, therefore, that, upon the above premises, appellant Alexander A. Krivenko, not being a
Filipino citizen, could not acquire by purchase the urban or residential lot here in question, the sale
made in his favor by the Magdalena Estate, Inc. being null and void ab initio, and that the lower court
acted correctly in rendering the appealed decision, which we affirm.
HILADO, J ., concurring:
Upon appellant's motion to withdraw his appeal herein with the conformity of the Solicitor General in
behalf of appellee, indulging, at that time, all possible intendments in favor of another department, I
ultimately voted to grant the motion after the matter was finally deliberated and voted upon. But the
votes of the ten Justices participating were evenly divided, and under Rule 52, section 4, in relation,
with Rule 56, section 2, the motion was denied. The resolution to deny was adopted in the exercise
of the court's discretion under Rule 52, section 4, by virtue of which it has discretion to deny the
withdrawal of the appeal even though both appellant and appellee agree upon the withdrawal, when
appellee's brief has been filed. Under the principle that where the necessary number have concurred
in an opinion or resolution, the decision or determination rendered is the decision or determination of
the court (2 C.J.S., 296), the resolution denying the motion to withdraw the appeal was the resolution
of the court. Pursuant to Rule 56, section 2, where the court in banc is equally divided in opinion,
such a motion "shall be denied." As a necessary consequence, the court as to decide the case upon
the merits.
After all, a consistent advocate and defender of the principle of separation of powers in a
government like ours that I have always been, I think that under the circumstances it is well for all
concerned that the Court should go ahead and decide the constitutional question presented. The
very doctrine that the three coordinate, co-equal and independent departments should be
maintained supreme in their respective legitimate spheres, makes it at once the right and duty of
each to defend and uphold its own peculiar powers and authority. Public respect for and confidence
in each department must be striven for and kept, for any lowering of the respect and diminution of
that confidence will in the same measure take away from the very usefulness of the respective
department to the people. For this reason, I believe that we should avert and avoid any tendency in
this direction with respect to this Court.
I am one of those who presume that Circular No. 128, dated August 12, 1947, of the Secretary of
Justice, was issued in good faith. But at the same time, that declaration in sub-paragraph (b) of
paragraph 5 of Circular No. 14, which was already amended, to the effect that private residential,
commercial, industrial or other classes of urban lands "are not deemed included within the purview
of the prohibition contained in section 5, Article XIII, of the Constitution", made at a time when the
self-same question was pending decision of this Court, gives rise to the serious danger that should
this Court refrain from deciding said question and giving its own interpretation of the constitutional
mandate, the people may see in such an attitude an abandonment by this Court of a bounden duty,
peculiarly its own, to decide a question of such a momentous transcedence, in view of an opinion,
given in advance of its own decision, by an officer of another department. This will naturally detract
in no small degree from public respect and confidence towards the highest Court of land. Of course,
none of us the other governmental departments included would desire such a situation to
ensue.
I have distinctively noticed that the decision of the majority is confined to the constitutional question
here presented, namely, "whether or not an alien under our Constitution may acquire residential
land." (Opinion, p. 2) Leases of residential lands, or acquisition, ownership or lease of a house or
building thereon, for example, are not covered by the decision.
With these preliminary remarks and the statement of my concurrence in the opinion ably written by
the Chief Justice, I have signed said decision.
BRIONES, M., conforme:
Estoy conforme en un todo con la ponencia, a la cual no e puede aadir ni quitar nada, tal es su
acabada y compacta elaboracion. Escribo, sin embargo, esta opinion separada nada mas que para
unas observaciones, particularmente sobre ciertas fases extraordinarias de este asunto harto
singular y extraordinario.
I. Conforme se relata en la concurrencia del Magistrado Sr. Perfecto, despues de laboriosas
deliberaciones este asunto se puso finalmente a votacion el 24 de Febrero de este ao,
confirmandose la sentencia apelada por una buena mayoria. En algunos comentarios adelantados
por cierta parte de la prensa impaciencia que solo puede hallar explicacion en un nervioso y
excesivo celo en la vigilancia de los intereses publicos, maxime tratandose, como se trata, de la
conservacion del patrimonio nacional se ha hecho la pregunta de por que se ha demorado la
promulgacion de la sentencia, habiendose votado el asunto todavia desde case comienzos del ao.
A simple vista, la pregunta tiene justificacion; pero bien considerados los hechos se vera que no ha
habido demora en el presente caso, mucho menos una demora desusada, alarmante, que autorice
y justifique una critica contra los metodos de trabajo de esta corte. El curso seguido por el asunto ha
sido normal, bajo las circunstancias. En realidad, no yan en esta Corte ahora, sino aun en el
pasado, antes de la guerra, hubo mas lentitud en casos no tan dificiles ni tan complicados como el
que nos ocupa, en que las cuestiones planteadas y discutidas no tenian la densidad constitucional y
juridica de las que se discuten en el presente caso. Hay que tener en cuenta que desde el 24 de
Febrero en que se voto finalmente el asunto hasta el 1.0 de Abril en que comenzaron las
vacaciones judiciales, no habian transcurrido mas que 34 dias; y cuando se reanudaron
formalmente las sesiones de esta Corte en Julio se suscito un incidente de lo mas extraordinario
incidente que practicamente vino a impedir, a paralizar la pronta promulgacion de la sentencia. Me
refiero a la mocion que el 10 de Julio persentaron los abogados del apelante pidiendo permiso para
retirar su apelacion. Lo sorpredente de esta mocion es que viene redactada escuetamente, sin
explicar el por que de la retirada, ni expresar ningun fundamento. Pero lo mas sorpredente todavia
es la conformidad dada por el Procurador General, tambien escueta e inceremoniosamente.
Digo que es sorprendente la retirada de la apelacion porque pocos casos he visto que hayan sido
arguidos con tanta energiaa, tanto interes y tanto celo por la parte apelante como este que nos
ocupa. Los abogados del apelante no solo presentaron un alegato concienzudo de 34 paginas, sino
que cuando se llamo a vista el asunto informaron verbalmente ante esta Corte argumentando
vigorosa y extensamente sobre el caso. El Procurador General, por su parte, ha presentado un
alegato igualmente denso, de 31 paginas, en que se discuten acabadamente, hasta el punto
maximo de saturacion y agotamiento, todos los angulos de la formidable cuestion constitutional
objeto de este asunto. Tambien informo el Procurador General verbalmente ante esta Corte,
entablando fuerte lid con los abogados del apelante.
Con la mocion de retirada de la apelacion se hubo de retardar necesariamente la promulgacion de
la sentencia, pues trabajosas deliberaciones fueron necesarias para resolver la cuestion,
dividiendose casi por igual los miembros de la Corte sobre si debia o no permitirse la retirada. Habia
unanimidad en que bajo la regla 52, seccion 4, del Reglamento de los Tribunales teniamos absoluta
discrecion para conceder o denegar la mocion, toda vez que los alegatos estaban sometidos desde
hacia tiempo, el asunto estaba votado y no faltaba mas que la firma y promulgacion de la decision
juntamente con las disidencias. Sin embargo, algunos Magistrados opinaban que la discrecion debia
ejercitarse en favor de la retirada en virtud de la practica de evitar la aplicacion de la Constitucion a
la solucion de un litigio siempre que se puede sentenciarlo de otra manera. (Entre los Magistrados
que pensaban de esta manera se incluian algunos que en el fundo del asunto estaban a favor de la
confirmacion de la sentencia apelada, es decir, creian que la Constitucion prohibe a los extranjeros
la adquisicion a titulo dominical de todo genero de propiedad inmueble, sin excluir los solares
residenciales, comerciales e industriales.) Pero otros Magistrados opinaban que en el estado tan
avanzado en que se hallaba el asunto los dictados del interes publico y de la sana discrecion
requerian imperiosamente que la cuestion se atacase y decidiese frontalmente; que si una mayoria
de esta Corte estaba convencida, como al parecer lo estaba, de que existia esa interdiccion
constitucional contra la facultad adquisitiva de los extranjeros, nuestro claro deber era apresurarnos
a dar pleno y positivo cumplimiento a la Constitucion al presentarse la primera oportunidad; que el
meollo del asunto, la lis mota era eso la interdiccion constitucional ; por tanto, no habia otra
manera de decidirlo mas que aplicando la Constitucion; obrar de otra manera seria desercion,
abandono de un deber jurado.
Asi estaban las deliberaciones cuando ocurre otro incidente mucho mas extraordinario y
sorprendente todavia que la retirada no explicada de la apelacion con la insolita conformidad del
Procurador General; algo asi como si de un cielo sereno, sin nubes, cayera de pronto un bolido en
medio de nosotros, en medio de la Corte: me refiero a la circular num. 128 del Secretario de Justicia
expedida el 12 de Agosto proximo pasado, esto es, 32 dias despues de presentada la mocion de
retirada de la apelacion. Esa circular se cita comprensivamente en la ponencia y su texto se copia
integramente en la concurrencia del Magistrado Sr. Perfecto; asi que me creo excusado de
transcibirla in toto. En breves terminos, la circular reforma el parrafo 5 de la circular num. 14 del
mismo Departamento de Justicia de fecha 25 de Agosto, 1945, y levanta la prohibicion o interdiccion
sobre el registro e inscripcion en el registro de la propiedad de las "escrituras o documentos en
virtud de los cuales terrenos privados residencias, comerciales, industriales u otras clases de
terrenos urbanos, o cualquier derecho, titulo o interes en ellos, se transfieren, ceden o gravan a un
extranjero que no es nacional enemigo." En otras palabras, el Secretario de Justicia, por medio de
esta circular dejaba sin efecto la prohibicion contenida en lacircular num. 14 del mismo
Departamento la prohibicion que precisamente ataca el apelante Krivenko en el asunto que
tenemos ante Nos y authorizaba y ordenaba a todoslos Registradores de Titulos en Filipinas para
que inscribiesen las escrituras o documentos de venta, hipoteca o cualquier otro gravamen a favor
de extranjeros, siempre que no se tratase de terrenos publicos o de "terrenos privados agricolas," es
decir, siempre que los terrenos objeto de la escritura fuesen "residenciales, comerciales e
industriales."
La comparacion de esa circular con un bolido caido subitamenteen medio de la Corte no es un
simple tropo, no esuna mera imagen retorica; refleja una verdadera realidad.Esa circular, al derogar
la prohibicion decretada en elparrafo 5 de la circular num. 14 prohibicion que, comoqueda dicho,
es precisamente el objeto del presente asunto venia practicamente a escamotear la cuestion
discutida, lacuestion sub judice sustrayendola de la jurisdiccion de lostribunales. Dicho crudamente,
el Departamento de Justiciavenia a arrebatar el asunto de nuestras manos, delas manos de esta
Corte, anticipandose a resolverlo por simismo y dando efectividad y vigor inmediatos a su
resolucionmediante la correspondiente autorizacion a los Registradoresde Titulos.
A la luz de esa circular queda perfectamente explicadala mocion de retirada de la apelacion
consentida insolitamentepor el Procurador General. Para que esperar ladecision de la Corte
Suprema que acaso podria ser adversa? No estaba ya esa circular bajo la cual podian
registrarseahora la ventas de terrenos residenciales, comerciales oindustriales a extranjeros? Por
eso no es extrao quelos abogados del apelante Krivenko, en su mocion de 1.0 de Septiembre,
1947, pidiendo la reconsideracion de nuestroauto denegando la retirada de la apelacion, dijeran
porprimera vez como fundamento que la cuestion ya era simplemente academica ("question is now
moot") en vista deesa circular y de la conformidad del Procurador Generalcon la retirada de la
apelacion. He aqui las propias palabras de la mocion del apelante Krivenko:
In view of Circular No. 128 of the Department of Justice, dated August 12, 1947, which
amends Circular No. 14 by expressly authorizing the registration of the sale of urban lands to
aliens, and in view of the fact that the Solicitor General has joined in the motion for
withdrawal of the appeal, there is no longer a controversy between the parties and the
question is now moot. For this reason the court no longer has jurisdiction to act on the case.
1

Lo menos que se puede decir de esa accion del Departamentode Justicia atravesandose en el
camino de los tribunalesmientras un asunto esta sub judice, es que ello no tieneprecedentes, que yo
sepa, en los anales de la administracionde justicia en Filipinas en cerca de medio siglo que
llevamosde existencia bajo un gobierno constitucional y sustancialmente republicano. Ni aun en los
llamados dias del Imperio, cuando la soberania americana era mas propensa a manejar el baston
grueso y afirmar vigorosamente losfueros de su poder y autoridad, se vio jamas a un departamento
de Justicia o a alguna de sus dependencias entrometerseen el ejercicio ordenado por los tribunales
de sujurisdiccion y competencia. Era una tradicion firmamenteestablecida en las esfersas del Poder
Ejecutivo tradicioninviolada e inviolable maxime en el Departamento de Justicia y en la
Fiscalia General, el inhibirse de expresar algunaopinion sobre un asunto ya sometido a los
tribunales, excepto cuando venian llamados a hacerlo, en representaciondel gobierno, en los
tramites de un litigio, civil o criminal,propiamente planteado ante dichos tribunales. Fuera deestos
casos, la inhibicion era tradicionalmente absoluta,observada con la devocion y la escrupulosidad de
un rito.Y la razon era muy sencilla: hamas se queria estorbar nientorpecer la funcion de los
tribunales de justicia, loscuales, bajo la carta organica y las leyes, tenian absolutoderecho a actuar
con maximo desembarazo, libres de todaingerencia extraa. Esto se hizo bajo la Ley Cooper;
estose hizo bajo la Ley Jones; y esto se hizo bajo la Ley Tydings-McDuffie, la ley organica del
Commonwealth. Creo que el pueblo filipino tiene derecho a que eso mismo se haga bajo el gobierno
de la Republica, que es suyo, que es de su propia hechura. No faltaba mas que los hombres de su
propia raza le nieguen lo que no le negaron gobernantesde otra raza!
No se niega la facultad de supervision que tiene el Departamento de Justicia sobre las oficinas y
dependenciasque caen bajo su jurisdiccion, entre ellas las varias oficinasde registro de la propiedad
en Manila y en las provincias.Tampoco se niega la facultad que tiene dicho Departamentopara
expedir circulares, ya de caracter puramente administrativo,ya de caracter semijudicial, dando
instrucciones,vgr., a los registradores acerca de como deben desempenarsus funciones. De hecho
la circular num. 14 de 25 deAgosto, 1945, es de esta ultima naturaleza: en ella seinstruye y ordena
a los registradores de titulos que noregistren ni inscriban ventas de propiedad inmueble
aextranjeros, asi sean terrenos residenciales, comerciales oindustriales. Pero la facultad llega solo
hasta alli; fuerade esas fronteras el campo ya es pura y exclusivamentejudicial. Cuando una
determinada circular del Departamentoa los registradores es combatida o puesta en telade juicio
ante los tribunales, ora por fundamentosconstitucionales, ora por razones meramente legales, ya no
esel Departamento el que tiene que determinar o resolverla disputa, sino que eso compete en
absoluto a los tribunalesde justicia. Asi lo dispone terminantemente el articulo200 del Codigo
Administrativo. Segun este articulo, elasunto o disputa debe elevarse en forma de consulta a la Sala
Cuarta del Juzgado de Primera Instancia de Manila.La ley no confiere ninguna facultad al
Departamento deJusticia para enjuiciar y decidir el caso. Y cuando unaparte no estuviere conforme
con la decision de la SalaCuarta, ella puede alzarse de la sentencia para ante laCorte Suprema. He
aqui el texto integro del articulo 200 del Codigo Administrativo:
SEC. 200. Reference of doubtful matter to judge of fourth branch of Court of First Instance at
Manila. When the register of deeds is in doubt with regard to the proper step to be taken
or memorandum to be made in pursuance of any deed, mortgage, or other instrument
presented for registration or where any party in interest does not agree with the register of
deeds with reference to any such matter, the question shall be referred to the judge of the
fourth branch of the Court of First Instance of the Ninth Judicial District either on the
certificate of the register of deeds stating the question upon which he is in doubt or upon the
suggestion in writing of the party in interest; and thereupon said judge, upon consideration of
the matter as shown by the record certified to him, and in case of registered lands, after
notice to the parties and hearing, shall enter an order prescribing the step to be taken or
memorandum to be made.
Tal es lo que ha ocurrido en el presente caso. Krivenkopresento su escritura de compraventa al
Registrador de laPropiedad de Manila. Este denego la inscripcion solicitadaen virtud de la
prohibicion contenida en la circular num.14. Que hizo Krivenko entonces? Elevo acaso el asuntoal
Departamento de Justicia? No. Lo que hicieron susabogados entonces fue presentar una demanda
el 23 de Noviembre, 1945, contra el Registrador de Titulos ante laSala Cuarta del Juzgado de
Primera Instancia de Manila,numerandose dicha demanda como consulta num. 1289; ycuando esta
Sala decidio el asunto confirmando la acciondel Registrador, Krivenko trajo a esta Corte la
apelacionque estamos considerando. Tan elemental es esto que enla misma circular num. 14 se
dice que la prohibicion quedadecretada hasta que los tribunales resuelvan lo contrario. He aqui la
fraseologia pertinente de dicha circularnum. 14:
. . . the registration of said deeds or other documents shall be denied, unless and /or until
otherwise specifically directed by a final decision or order of a competent court and the
party in interest shall be advised of such denial, so that he could avail himself of the right to
appeal therefrom, under the provisions of section 200 of the Revised Administrative Code.
La posicion de la Corte Suprema ante este caso claro ypositivo de intromision (interference) en sus
funciones esde lo mas peculiar. Tenemos en el Reglamento de losTribunales algunas disposiciones
que proveen sancion pordesacato para ciertos actos de intromision en el ejercicio de lasfunciones
judiciales.
2
Pero se preguntara naturalmente;son aplicables estas disposiciones cuando la
intromisionprocede de un ramo del poder ejecutivo, el cual, como sesabe, en la mecanica de los
poderes del Estado, es usandoun anglicismo-coigual y coordinado con el poder judicial,maxime
si esa intromision se ha realizado so capa de unacto oficial? Cualquiera, pues, puede imaginarse la
situaciontremendamente embarazosa, inclusive angustiosa enque esta Corte ha quedado colocada
con motivo de esa intromision departamental, exponiendose a chocar con otropoder del Estado. En
casos recientes en que estaban envueltos otros poderes, esta Corte, estimando dudosa suposicion
constitucional, prefirio adoptar una actitud deelegante inhibicion, de "manos fuera" (hands-off), si
bienhay que hacer constar que con la fuerte disidencia dealgunos Magistrados, entre ellos el
opinante.
3
Tenemos, portanto, un caso de verdadera intromision en que siendo, porlo menos,
dudosa la facultad de esta Corte para imponeruna sancion por desacato de acuerdo con el
Reglamento delos Tribunales, le queda el unico recurso decente, ordenado:registrar su excepcion
sin ambages ni eufemismos contrala intromision, y reafirmar con todo vigor, con toda firmezasu
independencia.
Se arguye con tenaz persitencia que debiamos de haberconcedido la mocion de retirada de la
apelacion, por dosrazones: (a) porque el Procurador General estaba conformecon dicha retirada; (b)
para evitar la resolucion delpunto constitucional envuelto, en virtud de la practica,segun se dice, de
soslayar toda cuestion constitucionalsiempre que se pueda. Respecto de la primera razon
serasuficiente decir que el Procurador General es libre de entraren cualquiera transaccion sobre un
asunto en que interviene,pero es evidente que su accion no ata no obliga aesta Corte en el ejercicio
de la discrecion que le confierela regla, 52, seccion 4, del Reglamento de los Tribunales,que reza
como sigue:
Rule 52, SEC. 4 An appeal may be withdrawn as of right at any time before the filing of
appelle's brief.After that brief is filed the withdrawal may be allowed by the court in its
discretion. . . . (Las cursivas son nuestras.)
Como se ve, nuestra discrecion es absoluta:no estacondicionada por la conformidad o
disconformidad de una delas partes. Y la incondicionalidad de esa discrecion es masabsoluta e
imperativa alli donde el litigio versa sobre unamateria queno afecta solo a un interes privado, sino
quees de interes publico, como el caso presente en que el Procurador General ha transigido no
sobre un asunto suyopersonal o de un cliente particular, sino de un cliente demucha mayor monta y
significacion el pueblo filipino ysiendo materia del litigio la propiedad del suelo, parte, vitalisima
del patrimonio nacional que nuestro pueblo hacolocado bajo la salvaguardia de la Constitucion.
Respecto del segundo fundamento, o se que debiamospermitir la retirada dela apelacion para no
tener queresolver la cuestion constitucional disputada, bastara decirque la practica, prinsipio o
doctrina que se invoca, llevaconsigo una salvedad o cualificacion y es que el litigio se pueda
resolver de otra maera. Podemos soslayar elpunto constitucional discutido en el pleito que nos
ocupa? Podemos decidirlo bajo otra ratio decidendi, esto es, queno sea la constitucionalidad o
inconstitucionalidad de laventa del inmueble al apelante Krivenko, en virtud desucondicion de
extranjero? Indudablemente que no: la lis mota, la unica, es la misma constitucionalidad de la
compraventa de que se trata. Para decidir si al recurrido apelado, Registrador de Titulos de la
Ciudad de Manila,le asiste o no razon para denegar la inscripcion solicitada por el recurrente y
apelante, Krivenko, la unica disposicionlegal que se puede aplicar es el articulo XIII, seccion 5, dela
Constitucion de Filipinas, invocado por el Registrador como defensa e inserto en el parrafo 5 de la
circular num.14 como fundamento de la prohibicion o interdiccion contrael registro de las ventas de
terreno a extranjeros. Nohay otra ley para el caso.
El caso de Oh Cho contra el Director de Terrenos43 Gac. Of., No. 3 pag. 866), que se cita en unade
las disidencias, es completamente diferente. Es verdadque alli se planteo tambien la cuestion
constitucional de quese trata, por cierto que el que lo planteaba en nombre delGobierno era el
actual Secretario de Justicia que entoncesera Procurador General, y lo pleantaba en un sentido
absolumente concorde con la circular num. 14. Pero esta Corte, con la disidencia de algunos
Magistrados, opto porsoslayar el punot constitucional denegando el registro solicitadopor Oh Cho,
por fundamento de que bajo la LeyNo. 2874 sobre terrenos de dominio publico los extranjerosestan
excluidos de dichos terrenos; es decir, que el terrenosolicitado se considero como terreno publico.
Podemos hacer la misma evasion en el presente caso, acogiendonosa la ley No. 2874 o a cualquier
otra ley? Indudablemente que no porque ningun Magistrado de esta Corte, muchomenos los
disidentes, consideran el terreno reclamado por Krivenko como terreno publico. Luego todos los
caminosestan bloqueados para nosotros, menos el camino constitucional.Luego el segundo
fundamento alegado paracubrir la evasiva tambien debe descartarse totalmente.
Se insinua que no debiamos darnos prisa en resolver constitucionalmente el presente asunto,
puesto que puedenpresentarse otros de igual naturaleza en tiempo no remoto,y en efecto se cita el
caso de Rellosa contraGaw Chee Hun(49 Off. Gaz., 4345), en que los alegatos de ambas partesya
estan sometidos y se halla ahora pendiente de decision.Es evidente que esto tampoco arguye en
favor de la evasiva,en primer lugar, porque cuando se le somete el deber de iraveriguando en su
Escribania si hay casos de igual naturaleza, sino que los casos se someten por orden de prelaciony
prioridad de tiempo a medida que esten preparados paracaso debe decidirse por sus propios
meritos y conforme ala ley pertinente. La salvedad o cualificacion de la doctrinao practica que se
invoca no dice: "hay qoe soslayar la cuestionconstitucional siempre que se pueda resolver
de otramanera, reservando dicha cuestion constitucional para otro caso; la salvedad es dentro del
mismo caso. De otro modono seria un simple soslayo legal, sino que seria unsub terfugio impropio,
indebido, ilegal. En el presente caso no ha habido ninguna prisa, excesivo celo, como se
insinua;desde luego no mayor prisa que en otros asuntos. Elcurso, el ritmo de los tramites ha sido
normal; en realidad,si ha habido algo, ha sido un poco de parsimonia, lentitud.
Habia justificacion para demorar el pronto, rapido pronunciamento de nuestro veredicto sobre la
formidablecuestion constitucional debatida, por lo menos, tan pronto como fuese posible? Habia
alguna razon de interespublico para justificar una evasiva? Absolutamenteninguna. Por el contrario,
nuestro deber ineludible, imperioso,era formular y promulgar inmediatamente ese veredicto. Lo
debiamos a nuestras conciencias; lo debiamos, sobretodo, al pais para la tranquilidad y
conveniencia de todos del pueblo filipino y de los extranjeros residentes o quetuvieren voluntad
de residir o negociar en estas Islas. Asicada cual podria hacer su composicion de lugar,
podriaorientarse sin zozobras ni miedo a la incertidumbre. Tantonacionales como extranjeros
sabrian donde invertir sudinero. Todo lo que necesitabamos era tener dentro de esta Corte una
provee la interdiccion de que se trata. Tuvimosesa mayoria cunado se voto por primera vez este
asuntoen Febrero de este ao (8 contra 3); la tuvimos cuandodespues de laboriosas deliberaciones
quedo denegada lamocion de retirada de la mayoria haya cambiado de opinionsobre el fondo de la
cuestion; la tenemos ahora naturalmente.Por tanto, nada hace falta ya para que se de lasenal de
"luz verde" a la promulgacion de la sentencia.Toda evasiva seira neglignecia, desidia. Es mas:
seriaabandono de un deber jurado, como digo en otra parte deesta concurrencia; y la Corte
Suprema naturalmente npha de permitir que se la pueda proferir el cargo de queha abandonado su
puesto privilegiado de vigia, de centinela avanzado de la Constitucion.
No es que la Corte Suprema, con esto, pretenda tener"un monopolio de la virtud de sostener y
poner en vigor,o de suplir una deficiencia en la Constitucion," o que segobierno, como se insinua en
una de las disidencias. Nohay tal cosa. El principio de la supremacia judicial no esuna pretension ni
mucho menos un ademan de inmodestiao arrogancia, sino que es una parte vital de
nuestrasinstutuciones, una condicion peculiarisima de nuestro sistema de gobierno en que la
judicatura, como uno de lostres poderes del Estado, corresponde la facultad exclusivade disponer
de los asuntos judiciales. Con respecto a losasuntos de registro particularmente esa facultad
exclusivano solo se infiere del principio de la supremacia judicial, sino que, como ya se ha dicho en
otra parte de esta concurrencia,se halla especificamente estutuida en el articulo 200del Codigo
Administrativo transcrito arriba. Este articuloconfiere jurisdiccion exclusiva a los tribunales de
justiciapara decidir las cuestiones sobre registro, y esto lo ha reconocido el mismo Departamento de
Justicia en su circularnum. 14 al referir tales cuestiones a la determinacion oarbitrio judicial en casos
de duda o litigio.
Es injustificada la insinuacion de que, al parecer, la mayoria denego la retirada de la apelacion no
tanto para resolver el asunto en su fondo o por sus meritos, como paraenrvar los efectos de la
circular num. !28 del Departamentode Justicia, pues Krivenko, el apelante, habriaganado entonces
su pleito no en virtud de una sentenciajudicial, sino pasando por la puerta trasera abierta por
esacircular. Tampoco hay tal cosa. Ya repetidas veces seha dicho que el presente asunto se habia
votado muchoantes de que se expidiese esa circular. Lo que mascorrectamente podria decirse es
que antes de la expedicion deesa desafortunada circular poderosas razones de interespublico
aconsejaban que se denegase la retirada de la apelacion y se diese fin al asunto mediante una
sentencia enel fondo, despues de la expidicion esas razones quedaroncentuplicadas. La explicacion
es sencilla: nuestra aquiescenciaa la reirada hubiera podico interpretarse entoncescomo que
nuestra jurisdiccion. Es mas: hubiera podidointerpretarse como una abyecta rendicion en la pugna
porsostener los fueros de cada ramocoigual y coordinado del gobierno.
Es todavia mas injustificada la insinuacion de que ladenegacion de la retirada de la apelacion
equivale "a asumir queel solicitante-apelante y el Procurador General sehan confabulado con el
Departamento de Justicia no solopara ingerirse en las funciones de esta Corte, sino paraenajenar el
patrimonio nacional a los extranjeros." Estoes inconcebible. La corte presume que todos han
obradode buena fe, de acuerdo con los dictados de su conciencia.Se ha denegado la retirada de la
apelacion por razonespuramente juridicas y objectivas, sin consideracion a losmotivos de nadie.
Por ultimo, estimo que debe rectificarse la asercion de queel Magistrado Hontiveros fue excluido de
la votacion queculmino en un emmpate y que determino el rechazamientode la retirada de la
apelacion, a tenor de la regla 56, seccion2, Reglamento de los Tribunales. El Magistrado
Hontiverosno estaba presente en la sesion por estar enfermo;pero estaban presentes 10
Magistrados, es decir, mas queel numero necesario para formar quorum y para despacharlos
asuntos. La rueda de la justicia en la Corte Supremajamas ha dejado de rodar por la ausencia de
uno o dosmiembros, siempre que hubiese quorum. A la votacionprecedieron muy laboriosas y vivas
deliberaciones. Ningun Magistrado Ilamo la atencion de la Corte hacia la ausencia del Sr.
Hontiveros. Ningun Magistrado pidio que se leesperase o llamase al Sr. Hontiveros. Todos se
conformaroncon que se efectuase la votacion, no obstante la ausencia del Sr. Hontiveros. En
efecto, se hace la votaciony resulta un empate, es decir, 5 contra 5. De acuerdo conla regla 56,
quedaba naturalmente denegrada la mocion deretirada. Donde esta, pues, la "ilegalidad", donde
la"arbitrariedad"?
Algunos dias despues se presento una mocion de reconsideracion,la misma en que ya se alegaba
como ndamentoel hecho de que la cuestion era simplemente academica (moot question) por la
conformidad del Procurador Generalcon la retirada y por la circular num. !28 del Departamento de
Justicia. Tampoco estaba presente el Sr. Hontiverosal someterse la mocion, la cual fue de nuevo
denegada.Pregunto otra vez: donde esta la "arbitrariedad"? Queculpa tenia la Corte de que el Sr.
Hontiveros no pudieraestar presente por estar enfermo? Iba a detenerse larueda de la justicia por
eso? Conviene, sin embargo, hacerconstar que sobre el fondo de la cuestion el Sr. Hontiverosera
uno de los 8 que habian votado en favor de la confirmacion de la sentencia apelada, es decir, en
favor delveredicto de que la Contitucion excluye a los extrajerosde la propiedad de bienes raices en
Filipinas.
II. No queda casi nada decir sobre el fondo de lacuestion. Todos los angulos y fases de la misma
estanacabadamente tratados y discutidos en la ponencia. Melimitare, por tanto, a hacer unas
cuantas observaciones,unas sobre hermeneutica legal, y otra sobre historia
nacionalcontemporanea, aprovachando en este ultimo respectomis reminiscencias y mi experiencia
como humilde miembroque fui de la Asamblea Constituyente que redacto y arobola Constitucion de
Filipinas.
Toda la cuestion, a mi juicio, se reduce a determinar einterpretar la palabra "agricola" (agricultural)
usada enel articulo XIII, seccion 5, de la Constitucion. He aqui eltexto completo de la seccion:
SEC. 5. Save in cases of hereditary succession, no private agricultural land shall be
transferred or assigned except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain in the Philippines.
Incluye la palabra "agricultural" aqui empleada los terrenosresidenciales, comerciales e
industriales? Tal es lacuestion: la mayoria de esta Corte que si; los disidentesdicen que no.
Es indudable que por razones sanas de hermenuetica legalel articulo XIII de que se trata debe
interpretarse como untodo homogeneo, simetrico. En otras palabras, los cocablosalli empleados
deben interpretarse en el sentido de quetienen un mismo significado. Es absurdo pensar o
suponerque en el texto de una ley, sobre todo dentro del estrechomarco de un articulo, un vocablo
tenga dos o mas significadosdistintos, a menos que la misma ley asi to diga expresamente.
Lapresuncion es que el legislador sigue y seatiene a las reglas literarias elementales.
Ahora bien: el articulo XIII consta de dos partes laprimera, que trata de los terrenos agricolas de
dominiopublico, y la segunda, que se a los terrenos agricolaprivados o partuculares.
La primera parte se compone de las secciones 1 y 2que vinculanla propiedad de los terrenos
publicos enel Estado y disponen que solo se pueden enajenar a favorde ciudadanos filipinos, o de
corporaciones o asociacionesen que el 60 por ciento del cacital, por lo menos, pertenecea tales
ciudadanos. En secciones se emplea literalmentela frase "public agricultural land."
La segunda parte la componen las secciones 3 y 5: laseccion 3 perceptua que "the Congress may
determine bylaw the size of private agricultural land which individuals,coporations, or associations
may acquire and hold, subjectto rights existing prior to the enactment of such law"
4
;y la seccion 5 es
la que queda transcrita mas arriba y esobjeto del presente litigio. En ambas secciones se
emplealiteralmente la frase "private agricultural land."
No hay ninguna cuestion de que la frase "public agriculturalland" empleada en la primera parte
comprende terrenosresidenciales, comerciales e industriales; lo admitenlos mismos abogados del
apelante y los Sres. Magistradosdisidentes. Y por que lo admiten? Sera porque en laConstitucion
se define la palabra "agricultural" aplicadaa terrenos publicos, en el sentido de incluir
solaresresidenciales, comerciales e industriales? Indudablementeque no, porque en ninguna parte
de la Constitucion se datal definicion. Lo admiten porque en esta jurisdicciontenemos una serie
consistente de sentencias de esta CorteSuprema en que es jurisprudencia firmamente establecidala
doctrina de que la palabra "agricultural" usada en laLey del Congreso de los Estados Unidos de
1902 (LeyCooper) y en nuestras leyes de terrenos publicos comprendey abarca solares
residenciales, comerciales, industriales yqualquier otra clase de terrenos, excepto forestales
yminerales.
5
Es decir, que se aplica a la actual Constitucion deFilipinas una interpretacion clasica,
tradicional, embebidaen nuestra jurisprudencia de cerca de medio siglo.
Ahora bien, pregunto: si la palabra "agricultural" empleadaen la primera parte del articulo XIII tiene
talsignificado y lo tiene porque la Constitucion no da otrodiferente por que esa misma palabra
empleada en lasegunda parte, unas cuantas lineas mas adelante, no hade tener el mismo
significado? Da acaso la Constitucionuna definicion de la palabra "agricultural" cuandose refiere a
terreno privado? Donde esta esa definicion? O es que se pretende que la diferenciacion opera no
envirtud de la palabra "agricultural", sino en virtud delvocablo "public" o "private", segun que se trate
de terrenopublico o privado?
Si la intencion de la Asemblea Constituyente fuera eldar a la palabra "agricultural" aplicada a terreno
privadoun significado distinto de cuando se refiere a terreno publico, lo hubiese hecho constar asi
expresamente en elmismo texto de la Constitucion Si, como se admite, laAsemblea opto por no
definir la palabra "agricultural"aplicada a terreno poblico porque contaba para ello con ladefinicion
clasica establecida en la jurisprudencia, cuandola misma Asemblea tampoco definio la palabra con
relaciona terreno privado, es logico inferir que tuvo la mismaintencion, esto es, aplicar la definicion
de la jurisprudenciaa ambos tipos de terreno el publico y el privado. Pensarde otra manera podria
ser ofensivo, insultante; podriaequivaler a decir que aquella Asemblea estaba compuestade
miembros ignorantes, desconocederos de las reglas elementalesen la tecnica de redaccion
legislativa.
Tuve el honor de partenecer a aquella Asemblea comouno de los Delegados por Cebu. Tambien me
cupo elhonor de partenecer al llamado Comite de Siete elcomite encargado finalmente de
redactar la ponencia dela Constitucion. No digo que aquella Asemblea estabacompuesta de sabios,
pero indudablemente no era inferiora ninguna otra de su tipo en cualquiera otra partedel mundo. Alli
habia un plantel de buenos abogados,algunos versados y especialistas en derecho
constitucional.Alli estaba el Presidente de la Universidad de FilipinasDr. Rafael Palma; alli estaba el
propio Presidentede la Asemblea Constituyente Hon. Claro M. Recto, conlos prestigios de su
reconocida cultura juridica y humanista; alli estaba tambien el Dr. Jose P. Laurel, considerado
comouna de las primeras autoridades en derecho constitucionaly politico en nuestro pais. En el
Comite de Siete o dePonencia figuraban el actual Presidente de Filipinas Hon.Manuel Roxas; el ex-
Senador de Cebu Hon. Filemon Sotto;el Hon. Vicente Singson Encarnacion, lider de la minoria en la
primera Asemblea Filipina, ex-miembro de la Comisionde FIlipinas, ex-Senador y ex-Secretario de
Gabinete;el ex-Magistrado de la Corte Suprema Hon. NorbertoRomualdez; el actual Secretario de
Hacienda Hon. MiguelCuaderno; y el ex-Decano del Colegio de Artes Liberalesde la Universidad de
Filipinas, Hon. Conrado Benitez.
No se puede concebir como bajo la inspiracion y guiade estas personas pudiera redactarse el texto
de un articuloenque un vocablo el vocablo "agricultural" tuviera dosacepciones diferentes: una,
aplicada a terrenos publicos;y otra, aplicada a terrenos privados. Menos se concibeque, si fuese
esta la intencion, se incurriese en una comisionimperdonable: la omision de una definicion
especifica, diferenciadora, que evitase caos y confusion en la mente delos abogados y del publico.
Teniendo en cuenta la innegablecompetencia de los Delegados a la Asemblea Constituyentey de
sus liders, lo mas logico pensar es que alno definir la palabra "agricultural" y al no diferenciarsu
aplicacion entre terrenos publicos y privados, lo hicierondeliberamente, esto es, conla manifiesta
intencion dedejar enteramente la interpretacion de la palabra a la luzde una sola comun definicin
la establecida en la jurisprudenciadel asunto tipico de Mapa contra Gobierno Insular y otrossimilares
(supra); es decir, que la palabra "agricultural",aplicada a terrenos privados, incluye tambien
solaresresidenciales, comerciales, e industriales.
A word or phrase repeated in a statute will bear the same meaning throughout the statute,
unless a different intention appears. . . . Where words have been long used in a technical
sense and have been judicially construed to have a certain meaning, and have been adopted
by the legislature as having a certain meaning prior to a particular statute in which they are
used, the rule of construction requires that the words used in such statute should be
construed according to the sense in which they have been so previously used, although that
sense may vary from the strict literal meaning of the words." (II Sutherland, Stat.
Construction, p. 758.)
Pero acaso se diga que la Asemblea Constituyente hadejado sin definir la palabra "agricultural"
referente aterreno particular, dando a entendar con su silencio queendosaba la definicion al
diccionario o a la usanza popular.La suposicion es igualmente insostenible. ?Por queen un caso se
entrega la definicion a la jurisprudencia,y por que en otro al diccionario, o al habla popular?Aparte
de que los miembros y dirigentes de la AsembleaConstituyente sabian muy bien que esto causaria
unatremenda confusion. Ni los diccionarios, ni mucho menosel lenguaje popular, ofrecen apoyo
seguro para una fiely autorizada interpretacion. Si el texto mismo de la ley,con definiciones
especificas y casuisticas, todavia ofrecedudas a veces como no el lexico vulgar, con su
infinitavariedad de matices e idiotismos?
Ahora mismo no estamos presenciando una confusionn,una perplejidad? Hay acaso uniformidad
en la definicionde lo que es un terreno privado agricola? No; cadacual lo define a su manera. Uno
de los disidentesel Magistrado Sr. Tuason toma su definicion de la palabra "agricultural " del
Diccionario Internacional de Webster que dice . . . "of or pertaining to agricultural connected with, or
engaged in, tillage; as the agricultural class; agricultural implements, wages etc." Tambien
hacereferncia el mismo Magistrado al concepto popular. Otrodisidente el Magistrado Sr. Padilla dice
que "the termprivate agricultural land means lands privately owneddevoted to cultivation, to the
raising of agriculturalproducts." El Magistrado Sr Paras no da ninguna definicion;da por definida la
palabra "agricultural", al parecer, segunel concepto popular.
Pero, sobre todo, los abogados del apelante definen elvocablo de una manera distinta. Segun ellos,
"land spoken of as `agricultural' naturally refers to land not only susceptible of agricultural or
cultivation but more valuable for such than for another purpose, say residential,commercial or
educational. . . . The criterion is notmere susceptibility of conversion into a farm but its
greater value when devoted to one or the other purpose." Demode que, segun esta definicion, lo que
determina la calidaddel terreno es su valor relativo, segun que se dedique alcultivo, o a residencia, o
al comercio, o a la industria.Los autores de esta definicion indudablemente tienen encuenta el
hecho de que en las afueras de las ciudades existenterrenos immensos que desde tiempo
inmemorial se handedicado a la agricultura, pero que se han convertido ensubdivisiones
multiplicandose su valor en mil por cientosi no mas. De hecho esos terrenos son agricolas;
comoque todavia se ven alli los pilapiles y ciertas partes estancultivadas; pero en virtud de su mayor
valor para residencia,comercio e industria se les aquiere colocar fuera dela prohibicion
constitucional. En verdad, el criterio nopuede ser mas elastico y convencional, y denota cuanincierta
y cuan confusa es la situacion a que da lugar latesis del apelante y de los que le sostienen.
Si hubieramos de hacer depender la definicion de loque es un terreno agricola del concepto popular
y de losdiccionarios, asi sean los mejores y mas cientificamente elaborados que normas claras,
concretas y definitivasde diferenciacion podrian establecerse? Podrian trazarsefronteras
inconfundibles entre lo que es agricola y lo quees residencial, comercial e industrial? Podria
hacerseuna clasificacion que no fuese arbitraria? Indudablementeque no. El patron mas usual de
diferenciacion es lanaturaleza urbana o rural del terreno; se considera comoresidencial, comercial e
industrial todo lo que esta dentrode una urbe, ciudad o poblacion. Pero resolveria esto la
dificultad? Proporcionaria un patron exacto, cientifico,no arbitrario? Tampoco. Por que dentro de
una ciudado poblacio puede haber y hay terrenos agricolas. Comodijo muy bien el Magistrado Sr.
Willard en el asunto clasico de Mapa contra Gobierno Insular, "uno de los inconvenientes de la
adopcion de este criterio es que es tanvago e indeterminado, que seria muy dificil aplicarlo enla
practica. Que terrenos son agricolas por naturaleza? l mismo Fiscal General, en su alegato
presentado en este asunto, dice: 'La montaa mas pedregosa y el suelo mas pobre son susceptible
de cultivo mediante la mano del hombre'" (Mapa contra Insular, 10 Jur. Fil.,183). Y Luego el Sr.
Willard aade las siguietes observacionessumamente petinentes e ilustratives para una correctare
solucion del asunto que nos ocupa, a saber:
. . . Tales terrenos (agricolas, quiere decir) se pueden encontrar dentro de los limites de
cualquier ciudad. Hay dentrode la ciudad de Manila, y en la parte densamente poblada de
lamisma, una granja experimental. Esta es por su naturaleza agricola. Contigua a la Luneta,
en la misma ciudad, hay una gran extension de terreno denominado Camp Wallace,
destinada a sports. El terreno que circuda los muros de la ciudad de Manila, situado entre
estos y el paseo del Malecon por el Sur y Este contiene muchas hectareas de extension y es
de naturaleza agricola. La Luneta misma podria en cualquier tiempo destinarse al cultivo.
La dificultad es mayor tratanndose de diferenciar unterreno agricola de un terreno industrial. En este
respectoes preciso tener en cuenta que un terreno industiralno tienee que ser necesariamente
urbano; en realidad,la tendencia moderna es a situar las industrias fuera deas ciudades en vastas
zonas rurales. Verbigracia; anpredor de la famosa cascada de Maria Cristina en Lanao existen
grandes extensiones de terreno agricola, algunasde propiedad particular. Cuando, se industrialice
aquellaformidable fuerza hidraulica bajo el llamado Plan Beyster que normas segfuras se podrian
establecer para poner envigor la prohibicion constitucional fuese burlada enajenandosetierras
agricolas de propiedad privada a favorde extranjeros, ya sean individuos, ya sean corporacioneso
asociaciones, so pretexto de ser industriales?
Resulta evidence de lo expueto que los redactores denuetra Constitucion no pudienron haber tenido
la idea deque el articulo XIII fuera interpretado a la luz de ese criterio vago e indeterminado que
llama el Sr. Willard. Es mas logico pensar que el criterio que ellos tenian enla mente era el criterio
establicido en la jurisprudencia sentada en el asunto clasico de Mapa contra Gobierno y otros
asuntos concomitantes citados criterio mas frime, mas seguro, menos expuesto a confusion y
arbitrariedad, y sobre todo, "que ofrece menos inconvenientes", parafraseando otra vez al
Magistrado Sr. Willard, (supra, p. 185).
Otro serio inconveniente, La seccion 3, articulo XIIIde;la Constitucion, dispone que "el Congreso
puedo determinarpor ley l;a eextension superficial del terrenoprivado agricola que los individous,
corporaciones o asociaciones pueden adquirir y poseer, sujeto a los derechos existentes antes de la
aprobacion de dicha ley." Si seinterpretase que la frase "private agricultural land" noincluye terrenos
residenciales, comerciales e industriales,entonces estas ultimas clases de yterreno quedarian
excluidas de la facultad reguladora concedida por la Constitucion al Congreso mediante dicha
seccion 3. Entoncesun individuo o una corporacion podrian ser dueos de todoslos terrenos de una
ciudad; no habria limite a las adquisicionesy posesiones en lo tocante a terrenos
residenciales,comerciales e industriles. Esto parece absurdo, peroseria obligada consecuencia de la
tesis sustentada por elapelante.
Se hace hincapie en el argumento de que el el procesode tamizacion del articulo XIII durante las
deliberacionesde la Asamblea Constituyente y de los Comites de Ponnnnenciay de estilo al principio
no figuraba el adjetivo "agricola"en la seccion 5, diciendose solo "terreno privado" y quesolo mas
trade se aadio la palabra calificativa agricola"private agricultural land" De este se quiere inferir
quela adicion de la palabra "agricultural" debio de ser poralgun motivo y este no podia ser mas que
el de que sequiso excluir los terrenos residenciales comerciales e industriales, limitandose el
precepto a los propia o estrictamenteagricolas.
La deduccion es incorrecta y sin fundamento. No cabedecir que la adicion de la plabra "agricultural"
en estecaso equivale a excuir los terrenos residenciales, comercialese industriales, por la sencilla
razon de que la Constitucion no solo no define lo que es residencial comercial e industrial, comercial
e industrial. En cambio ya hemosvisto que la palabra "agricultral" tiene una
significaciontradicionalmente bien establecida en nuestra jurisprudenciay en nuestro vocabulario
juridico: incluye no solo terrenoscultivados o susceptibles fe cultivo, sino tambien
residencialescomerciales e industriales. Se admite por todo elmundo que la palabra tiene tal
significacion en el articuloXIII, seccion 5, de la Constitucion, en cuanto se refierea terreno publico.
Ahora bien; que diferencia hay, despuesde todo, entire un terreno publico agricolo y uno sea a la
calidad de agricola, absolutamente ninguna.Uno no es mas menois agricola que el otro. La
unicadiferencia se refiere a la propiedad, al titulo dominical en que el uno es del Estado y el otro
es de un particular.
En realidad, creo que la diferencia es mas bien psicologica,subjetiva en que vulgarmente
hablando pareceque los conceptos de "agricola" y "residencial" se repelen.No se debe
menospreciar la influencia del vulgo en algunascosas; en la misma literatura el vulgo juega su
papel; digasi no la formacion popular del romancero. Pero es indudable que cietas cosas estan por
encima del conceptovulgar una de estae la interpretacion de la leyes, lahermeneutica legal. Esto
no es exagerar la importancia de la tecnica sino que es simplemente colocar las cosasensu
verdadero lugar. La interpretacion de la ley es unafuncion de minoria los abogados. Si no fuera
asi paraque los abogados? Y para que las escuelas de dercho,y para que los exmenes, cada vez
mas rigidos, para de purar el alma de la toga, que dijo un gran abogado espaol?
6
Asi que cuando
decimos que el precepto constitucional en cuestion debe interpretatarse tecnicamente, a la luz de la
jurisprudencia, por ser ello el metodo mas seguro para hallar la verdad judicial, no importa que ello
repugne al concepto vulgar a simple vista, no ponemos,en realidad, nionguna pica en Flandes, sino
que propugnamos una cosa harto elememntal por lo sabida.
Por tanto no es necesario especular o devanarse lossesos tratando de inquirir por que en la
tamizacion delprecepto se aadio el adjetivo 'agricultural" a las palabras"private land" en vez de
dejarlas solas sin cualificacion.Algunos diran que fue por razon de simentria para hacer"pendant
diran que fue por razon de simetria para hacer"pendant" con la frase "public agricultural land"
puestamas arriba. Pero esto np tiene ninguna importancia. Loimportante es saber que la aadidura,
tal como esta jurisdiccion, de la palbra "agricultural" empleada en dicho texto. Eso es todo; lo demas
creo que es puro bizantinis mo.
III. Cero que una examen de los documentos y debatesde la Asamblea Constituyente para ver de
inquirir la motivacion y finalidad del precepto constitucional que nos ocupapuede ayudar
grandemente y arrojar no poca luz en lainterpretacion de la letra y espiritu de dicho precepto.Este
genero de inquisicion es perfectamente propio y permisible en hermeneutica constitucional, y se ha
hechosiempre, segun las majores autoridades sobre la materia. Cooley, en su authorizado tratado
sobre Limitaciones Constitucionales (Constitutional Limitations) dice a este efectolo sigiuente:
When the inquiry is directedto ascertaining the mischief designed to be remedied, or
the purpose sought to be accomplished by a particular provision, it may be proper to
examine the proceedings of the convention which framed the instrument. Where the
proceedings clearly point out the purpose of the provision, the aid will be valuable and
satisfactory; but where the question is one of abstract meaning, it will be difficult to derive
from this source much reliable assistance in interpretation. (1 Cooley on Constitutional
Limitations [8th ed.], p. 142.)
Que atmosfera prevalecia en la Asamblea sobre elproblema de la tierra en general sobre el
problema capitalismo de los terrenos naturales? Cual era la tendenciapredominante entre los
Delegados? Y como era tambienel giro de la opinion, del sentimiento publico es decir comoera el
pulso del pueblo mismo del cual la Asamblea despuesde todo no era mas que organo e interprete?
Varios discursos sobre el particular se pronounciaronen la Asamblea Constituyente. El tono
predomionante entodos ellos era un fuerte, profundo nacionalismo. Tanto dentro como fuera de la
Asamblea Constituyente era evidente, acusado, el afan unanime y decidido de conservar el
patrimonio nacional no solo para las presentes generaciones filipinas, sino tambien para la
posteridad. Y patrimonio nacional tenia, en la mente de todos un significadocategorio e indubitable;
significion de si es dedominio publico o privado. Muestras tipicas y representativas de este tono
pecular y dominantes de la ideologiaconstituyente son ciertas m,anifestaciones que constanen el
diario de serines has en el curso de los debateso en el proceso de la redaccion del proyecto
constitucionalpor Delegados de palabra autorizadam bien por su significacion personal bein por el
papel particula que desempeaban en las treas constituyentes. Por ejemplo el Delegado Montilla
por Negros Occidental, conspicuo representante del agro, usando del privilegio de madia
horaparlamentaria dijo en parte lo siguinte:
. . . Con la completa nacionnalization de nuestras tierras y recursos natural debe entenderse
que nuetro patrimonio nacional debe estar vinculado 100 por 100 en manos
filipinas. Tierras y recursos naturales son inm,uebles y como tales pueden compararse con
los organos vitales del cuerpo de una persona: la falta de posesion de los mismo puede
caussar la muete instantannea o el abreviamiento de la vida (Diario de Sesiones Asamblea
Constituyente, inedita, "Framing of the Constitution," tit. 2 0 pag. 592 Libro del Profesor
Aruego).
Como se ve el Delegado Montilla habla de tierras sin adjetivacion, es decir sin difenciar entre
propiedad publica y privada.
El Delgado Ledesma, por Iloilo, otro conspicuo representante del agro presidente del comte de
agricultura de la Asamblea que los extramnjeros no podian ser mismas palabras:
La exclusion de los extranjeros del privilegio de adquirir terrenos publicos agricolas y de
poder se dueos de propiedades inmuebles (real estate) es una parte necesaria de las leyes
de terrenos publicos de Filipinas para mantener firme la idea de conservar Filipinaspara los
filipos' (Diario de Sesiones, id.; Libro de Aruego, supra, pag. 593.)
Es harto significtativo que en el informe del Colite de Nacionalizacion y Conservacion de Recursos
Naturales de la Asamblea Constituyente la plabra tierra (land) se usa generricamente sin
cualificacion de publica o privada. Dice el Comite:
Que la tierra, los minerales los bosques y otros recursos naturalesconstituyen la herencia
exclusiva de la nacion filipina. Deben,por tanto, ser conservados para aquellos que se halian
bajo la autoridad soberana de esa nacion y para su posteridad. (Libro de
Aruego, supra, pag. 595.)
La conservacion y fomento del patrimonio nacional fue una verdadera obsesion en la Asamblea
Constituyente. Sus mienbros que todavia viven recordaran l;a infinita paciencia, el esmero de orfe
breria con que se trabajo el preambulo de la Constitucion. Cada frase, cada concepto se sometio a
un rigido proceso de seleccion y las gemas resultans es la labor benedictina una de las gemas redel
patrimonio nacional. He aqui el preambulo:
The Filipino people, imploring the aid of Divene Providence,in order to establish a
government that shall enbody their ideals, conserve and develop the patrimony of the nation,
promote the general welfare, and secure to themslves and their posterity the blessings of
independence under a regime of justice, liberty, and democracy, do ordain and promulgate
this Constitution.
El espiritu fuertemente nacionalista que saturaba la Asamblea Constituyente con respecto a la tierre
y recursosnaturales es de facil explicacion. Estabamos escribiendouna Constitucion no solo para el
Commonwealth, sino tambien para la republica que advendria despues de10 aos. Querianos,
puesd asegurar firmemente las basesde nuestra nacionalidad. Que cosa major para ello quebildar
por los cuatro costrados el cuerpo dela mnacion delcual parodiando al Delegado Montilla la
tierra y losresoursos naturales son como organos vitales cuya perdidapuede causar la muerte
instantanea o el abreviamiento dela vida?
Para aprociar el pulso de la nacion en aquel memontohistorico es preciso tener en cuenta las
cirucmstancias.Nos debamos perfecta cuenta de nuetra posicion geografica,asi como tambien de
nuestras limitaciones demograficas.Se trataba, por ciento de una conciencia
agudamenteatormentadora y alarmante. Estabamos roodeadosde enormes mesas humanas
centenares de milliones economica y biologicamente agresivas, avidad de desbordarsepor tadas
partes, poir las areas del Pafico particularmente,en busca de espacio vitales. China, Japon-Japon,
sobretodo que estaba entonces en el apogeo de su delirio deengrandecimiento economico y
militarista. Teniamos apantadoal mismo corazon, como espada rutilante de Samurrai,el pavoroso
problema de Davao, donde, por errores incialesdel Gobierno, Japon tenia el control de la tierra,
instituyendos alli una especie de Japon en miniatura, con todaslas amenasas y peligros que ello
implicaba para la integridadde nuestra existancia nacional. Como que Davaoya se llamaba popular
y sarcasticamente Davaoko, entragica rima con Manchuko.
Tambien nos obsesionaban otras lecciones dolorosas dehistoria contemporanea. Texas, Mejico,
Cuba y otraspaises del Mar Caribe y de la America Latina que todaviaexpiaban, como una terrible
maldicion el error de susgobernantes al permitir la enajenacion del suelo a extranjeros.
Con el commercio y la industria principalmente en manosno-filipinas, los Delegados a la
Constituyente se haciancargo tambien de la vitalisima necesidad de, por lo menos,vincular el
apatrimonio nacional, entre otras cosas la tierra, en manos de los filipinos.
Que de extrao habia, pues, que en semejante atmosfera y tales circumstancias se aprobase un
articulo rigidamentenacionalismta como es el Article XIII? La motivacion y finalidad, como ya se ha
dicho, era triple: (a)consetvar el patrimonio nacional para las presentes yfuturas generaciones
filipinas; (b) vincular, por lo menos,la propiedad de la tierra y de los recursos naturales en manos
filipinas como la mejor manera de mantener elequilibrio de un sistema economico dominado
principalmente por extranjeros en virtud de su tecnica (know-how) superior y de su abudancia de
capitales: (c) prefictos y complicaciones internacionales.
No se concibe que los Delegados tuvieran la intercionde excluir del precepto los terrenos
residenciales comercialese industrial, pues sabian muy bien que los finesque se trataban de
conseguir y los peligros quie se trataban de evitar con la politica de nacionalizacion y
conservacionrezaban tanto para una clase de terrenos como para otra. Por que se iba a temer,
verbigracia, el dominio extranjero sobre un terreno estrictamente, agricola, sujeto a cultivo, y no
sobre el terreno en que estuviera instalada unaformidable industria o fabrica?
Otro detalle significativo. Era tan vigoroso el sentimiento nacionalista en la Asamblea Constituyente
que, noobstante el natural sentimiento de gratitud que nos obligabaa favor de los americanos., a
estos no se les concedioningun privilegio en relacion con la tierra y demas recusosnaturales, sino
que se les coloco en el mismo plano que alos otros extranjeros. Como que ha habido necesidad
deuna reforma constitucional la llmada reforma sobre laparidad para equipararlos a los
filipinos.
The mere literal construction of a section in a statute ought not to prevail if it is opposed to
the intention of the legislature apparent by the statute; and if the words are sufficiently
flexible to admit of some other construction it is to be adopted to effectuate that
intention. The intent prevails over the letter, and the latter will, if possible, be so read as to
conform to the spirit of the act. While the intention of the legislature must be ascertained from
the words used to express it, the manifest reason and the obvious purpose of the law should
not be sacrificed to a literal interpretation of such words. (II Sutherland, Stat. Construction,
pp. 721, 722.)
IV. Se insinua que no debieramos declarar que laConstitucion excluye a loc extranjeros de la
propiedadsobre terrenos residenciales e industriales,porque ello imposibilitaria toda accion
legislativa en sentidocontrario para el caso de que el Congreso Ilegagealguna vez a pensar que
semejante interdiccio debialevantarse. Se dice que es majes y mas conveniente dejaresta cuestion
en manos del Congreso para que haya maselasticidad en las soluciones de los diferentes
problemassobre la tierra.
Cometeriamos un grave error si esto hicieramos. Estaes una cuestion constitucional por excelencia.
Solamenteel pueblo puede disponer del patrimonio nacional. Ni el Congreso, ni mucho menos los
tribunales, pueden disponerde ese patrimonio. Lo mas que puede hecer el Congreso es proponer
una reforma constitucional mediante los votosde tres cuartas (3/4) de sus miembros; y el pueblo
tienela ultima palabra que se expresara en una eleccion oplebiscito convocado al efecto.
El argumento de que esto costaria dinero es insostenible. Seria una economia mal entendida. Si no
se escatiman gastos para celebrar elctiones ordinarias periodicamente como ha del pueblo en un
asunto tan vital como es la disposicion del patrimonio nacional, base de su mismaexistencia? para
reformar la Constitucion, apoyado portres cuartas (3/4) del Congreso, por lo menos.
En el entretanto el articulo XIII de la Constitucion debequedar tal como es, e interpretarse en la
forma como lo interpretamos en nuestra decision.
Se confirma la sentencia.


PARAS, J ., dissenting:
Section 5 of Article XIII of the Constitution provides that "save in cases of hereditary succession, no
private agricultural land shall be transferred or assigned except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain in the Philippines." The important
question that arises is whether private residential land is included in the terms "private agricultural
land."
There is no doubt that under section 1 of Article XIII of the Constitution, quoted in the majority
opinion, lands of the public domain are classified into agricultural, timber,or mineral. There can be no
doubt, also, that public lands suitable or actually used for residential purposes, must of necessity
come under any of the three classes.
But may it be reasonably supposed that lands already of private ownership at the time of the
approval of the Constitution, have the same classification? An affirmative answer will lead to the
conclusion which is at once absurd and anomalous that private timber and mineral lands may
be transferred or assigned to aliens by a mode other than hereditary succession. It is, however,
contended that timber and mineral lands can never be private, and reliance is placed on section 1,
Article XIII, of the Constitution providing that "all agricultural, timber and mineral lands of the public
domain . . . belong to the State," and limiting the alienation of natural resources only to public
agricultural land. The contention is obviously untenable. This constitutional provision, far from stating
that all timber and mineral lands existing at the time of its approval belong to the State, merely
proclaims ownership by the Government of all such lands as are then of the public domain; and
although, after the approval of the Constitution, no public timber or mineral land may be alienated, it
does not follow that timber or mineral lands theretofore already of private ownership also became
part of the public domain. We have held, quite recently, that lands in the possession of occupants
and their predecessors in interest since time immemorial do not belong to the Government, for such
possession justifies the presumption that said lands had been private properties even before the
Spanish conquest. (Oh Cho vs. Director of Lands, 43 Off. Gaz., 866.) This gives effect to the
pronouncement in Cario vs. Insular Government (212 U.S., 446; 53 Law. ed., 594), that it could not
be supposed that "every native who had not a paper title is a trespasser." It is easy to imagine that
some of such lands may be timber or mineral. However, if there are absolutely no private timber or
mineral. However, if there are absolutely no private timber or mineral lands, why did the framers of
the Constitution bother about speaking of "private agricultural land" in sections 3 and 5 of Article XIII,
and merely of "lands" in section 4?
SEC. 3. The Congress may determine by law the size of private agricultural land which
individuals, corporations, or associations may acquire and hold, subject to rights existing
prior to the enactmentof such law.
SEC. 4. The Congress may authorize, upon payment of just compensation, the expropriation
of lands to be subdivided into small lots and conveyed at cost to individuals.
SEC. 5. Save in cases of hereditary succession, no private agricultural land shall be
transferred or assigned except to individuals, corporations, or associations qualified to
acquire or hold lands of the public domain in the Philippines.
Under section 3, the Congress may determine by law the size of private agricultural land which
individuals, corporations, or associations may acquire and hold, subbject to rights existing prior to
the enactment of such law, and under section 4 it may authorize, upon payment of just
compensation, the expropriation of lands to be subdivided into small lots and conveyed at cost to
individuals. The latter section clearly negatives the idea that private lands can only be agricultural. If
the exclusive classification of public lands contained in section 1 is held applicable to private lands,
and , as we have shown, there may be private timber and mineral lands, there would be neither
sense nor justification in authorizing the Congress to determine the size of private agricultural land
only, and in not extending the prohibition of section 5 to timber and mineral lands.
In may opinion, private lands are not contemplated or controlled by the classification of public lands,
and the term "agricultural" appearing in section 5 was used as it is commonly understood, namely,
as denoting lands devoted to agricultural. In other words, residential or urban lots are not embraced
within the inhibition established in said provision. It is noteworthy that the original draft referred
merely to "private land." This certainty would have been comprehensive enough to included any kind
of land. The insertion of the adjective "agricultural " is therefore significant. If the Constitution
prohibits the alienation to foreigners of private lands of and kind, no legislation can ever be enacted
with a view to permitting limited areas of land for residential, commercial, or industrial use, and said
prohibition may readily affect any effort towards the attainment of rapid progress in Philippine
economy. On the other hand, should any danger arise from the absence of such constitutional
prohibition, a law may be passed to remedy the situation, thereby enabling the Government to adopt
such elastic policy as may from time to time be necessary, unhampered by any inconveniences or
difficulties in amending the Constitution. The power of expropriation is, furthermore, a handy
safeguard against undersirable effects of unrestricted alienation to, or ownership by, aliens of urban
properties. The majority argue that the original draft in which the more general terms "private land"
was used, was amended in the same that the adjective "agricultural" was inserted in order merely "to
clarify concepts and avoid uncertainties" and because, as under section 1, timber and mineral lands
can never be private, "the prohibition to transfer the same, would be superfluous." In answer, it may
be stated that section 4 of Article XIII, referring to the right of expropriation, uses "lands" without any
qualification, and it is logical to believe that the use was made knowingly in contradistinctions with
the limited term "private agricultural land" in section 3 and 5. Following the line of reasoning of the
majority, "lands" in section 4 necessarily implies that what may be expropriated is not only private
agricultural land but also private timber and mineral lands, as well, of course, as private residential
lands. This of course tears apart the majority's contention that there cannot be any private timber or
mineral land.
Any doubt in the matter will be removed when it is, borne in mind that no less than Honorable
Filemon Sotto, Chairman of the Sponsorship Committee of the Constitutional Convention, in
supporting section 3 of the Article XIII, explained that the same refers to agricultural land, and not to
urban properties, and such explanation is somewhat confirmed by the statement of another member
of the Convention (delegate Sevilla) to the effect that said section "is discriminatory and unjust with
regard to the agriculturists."
Sr. SOTTO (F) Seor Presidente: "Que hay caballeros de laConvencion en el fondo de esta
cuestion al parecer inocente yordinaria para que tanto revuelo haya metido tanto en la
sesion de ayer como en la de hoy? Que hay de misterios en el fondo de este problem, para
que politicos del volumen del caballero por Iloilo y del caballero por Batangas, tomen con
gran interes una macion para reconsiderar lo acordado ayer? Voy a ser frio, seores. Parece
que es meyor tratar estas cuestiones con calma y no apasionamiento. He prestado atencion,
como siempre suelo hacer a todos los argumentos aqui en contra del precepto contenido en
el draft y a favor ahora de la reconsideracion y siento decir lo siguiente; todos son
argumentos muy buenos a posteriori. Cuando la Asamble Nacional se haya reunido, sera la
ocasion de ver si procede o no expropiar terrenos o latifundios existentes ahorao existentes
despues. En el presente, yo me limito a invitar la atencion de la Convencion al hecho de que
el procepto no tome las medidas necesarias en tiempo oportuno, cuando el problema del
latifundismo se haya presentado con caracterres tales que el beinestar, interes y orden
publico lo requieran. Permitame la Convencion que lo discuta en globo las dos pates del
articulo 9. Hay tal engranaje en los dos mandatos que tiene dicho precepto, hay tral eslabon
en una u otra parte que es imposible, que es dificil que quitaramos deslindes si nos
limitasemos a considerar una sola parte. La primera parte autoriza a la legislatura para fijar
el limite maximo de propiedad agricola que los ciudadanos particulares puede tener. Parece
que es un punto que ha pasado desapercibido. No se trata aqui ahora de propiedades
urbanas, sino de propiedades agricolas, y es por la razon de que con mucha especialidad en
las regiones agricolas, en las zones rusticas es donde el latifundismo se extiende con
facilidad, y desde alli los pequeos propietariou precisamente para ahogarles y para
intilizarles. Esta pues, a salvo completamente la cuestion de las propiedades urbans. Cietos
grandes soleres de nuestras ciudaes que con pretexto de tener cietos eficios, que en
realidad no necesitan de tales extensos solares para su existencia ni para su
mantenimineto, puedan dormir transquilos. No Vamos contra esas propiedades. Por una
causa o por otra el pasado nos legardo ese lastre doloroso. Pero la region agricola, la region
menos explotada por nuetro pueblo, la region que necesitamos si queremos vivir cuenta
propia la region que es el mayor incentivo no para solo para los grandes capitalistas de
fuera merece todos los ciudados del gobierno.
Voy a pasar ahora a la relacion que tiene la seggunda parte de la enmiendad con la primera.
Una vez demostrado ante la Lehgislatura, una vez convencida la Asamblea Nacional de que
existe un latifundismo y que este laitifundismo puede producir males e esta produciendo
daos a la comunidad, es cuando entonces la Legislatura puede acordar la expropiacion de
los latifundios. Donde esta el mal que los opositores a este es un postulado que todos
conocen. Bien, voy a admitir para los propositos del argumento que hoy no existen
laifundios, y si los opostores al precepto quieren mas vamos a convenir en que no existrian
en el futuro. Pues, entonces, donde este el temor de que el hijo de tal no pueda recibir la
herencia de cual? Por lo demas el ejemplo repetidas veces presentado ayer yhoy en cuanto
al herdero y al causahabiente no es completamente exacto. Vamos a suponer que
efectivamente un padre de familia posee un numero tal de hectareas de terreno, superior o
exedente a lo que fija la ley. Creen los Caballeros, creen los opositorees al precepto que la
Legislatura, la Asamblea Nacional va a ser tan imprudente, tan loca que inmediatemente
disponga por ley que aquella porcion excedente del terreno que ha de recibir un hijo de su
padre no podra poseerlo, no podra tenerlo o recibirlo el heredero.
Esa es una materia para la Asamblea Nacional. La asamblea Nacional sabe que no puede
dictar leyes o medidas imposibles de cumplir. Fijara el plazo, fijara la proporcion de acuedo
con las circunstancias del tiempo entonces en que vivamos. Es posible que ahora un
numero determinado de hectereas sea excesivo; es posible que por desenvolvimientos
economics del paius ese numero de hectareas puede ser elevado o reducido. Es por esto
porque el Comite precisamente no ha querido fijar desde ahora el numero de hectareas
presamente no ha querido fijar desde ahora el numero de hectareas, prefireindo dejar a la
sabiduria, a la prudencia, al patriotismo y a la justicia de la Asambela Nacional el fijar ese
numero.
Lomismo digo de la expropiacion. Se habla de que el gobierno no tendra dinero; se hablqa
de que no podra revender las propieedades. Pero, Caballeros de la Convencion, caballeros
opositores del precepto; si la Legislatura, si la AsambleaNacional estuviera convencida de
que el gobierno no puede hecer una exporpiacion, va a hecerlo? La Asamblea Nacional
dictara una ley autorizando la expropiacion de tal a cual latifundio cuando este convencida,
primero, de que la existencia de ese latifundio es amenazante para el publico; y segundo,
cuando la asamblea Nacional este convencida de que el gobierno esta disposicion para
disponer la expropiacion.
Visto, pues, desde este punto el asunto, no es malo autorizar,fijar los limites, ni macho
menos es malo autorizar a la Legislatura para dictar leyes de expropiacion.
Pero voy a molestaros por un minuto mas. Se ha mentado aquicon algun exito esta maana
y digo con exito porque he oidoalgunos aplausos se ha mentado la posibilidad de que
los comunistas hagan unissue de esta disposicion que existe en el draft; podran los
comunistas pedir los votos del electorado para ser elloslos que dicten las leyes fijando el
limite del terreno y ordenen la expropriacion? Que argumento mas bonito si tuviera base! Lo
mas natural, creo yo, es que el pueblo, el electorado, al ver queno es una Asamblea
Constituyente comunista la que ha puestoesta disposicion, otorgue sus votors a esta misma
Asamblea Nacional, o a esos condidatos no comunistas. Quien esta en disposicion de
terminar mejor una obra aquel que trazado y puesto los primeros pilares, o aquel que viene
de gorra al final de la obra para decir: "Aqui estoy poner el tejado?"
Es sensible, sin embargo, que una cuetion de importancia tannacional como este,
pretendamos ligarla a los votos de los comulites de terreno; no ha de venir porque nosotros
fijemos loslimites de terreno; no ha de venir porque prohibamos los latifundiosmediante
expropiacion forzosa, no; ha de venir precisamentepor causa de los grandes propietarios de
terreno, y ha de venir,queramoslo o no, porque el mundo esta evolucionando y se va
aconvencer de que la vida no es solamente para unos cuantos sinopara todos , porque Dios
no la dio, con la libertad, el aire, la luz,la tierra para vivir (Grandes Aplausosz), y por algo se
ha dichoque en los comienzos de la vida himana debio haber sido fusilado,matado, a aquel
primero que puso un cerco a un pedazo de tierrareclamando ser suya a propiedad.
Por estas razones, seor Presidente, y sintiendo que mi tiempoesta para terminar, voy a dar
fin a mi discurso agradeciendo a la Convencion. (Speech of Delegate Sotto.)
I would further add, Mr. President, that this precept by limiting private individuals to holding
and acquiring lands, private agricultural lands . . . is discriminatory and unjust with regard to
the agriculturists. Why not, Mr. President, extend this provision also to those who are
engaged in commerce and industries? Both elements amass wealth. If the purpose of the
Committee, Mr. President, is to distribute the wealth in such a manner that it will no breed
discontent, I see no reason for the discrimination against the agricultural. In view of these
reasons, Mr. President, I do not want to speak further and I submit this amendment because
many reasons have been given already yesterday and this morning. (Speech of Delegate
Sevilla.)
Delegate Sotto was not interpellated, much less contradicted, on the observation that section 3 of
Article XIII does not embrace private urban lands. There is of course every reason to believe that the
sense in which the terms "private agricultural lands" were employed in section 3 must be the same
as that in section 5, if consistency is to be attributed to the framers of the Constitution.
We should not be concluded by te remarks, cited in the majority opinion, made by Delegate
Ledesma to the effect that "the exclusion of aleins from the private of acquiring public agricultural
lands and of owning real estate is a necessary part of the Public Land Laws," and of the statement of
Delegate Montilla regarding "the complete nationalization of our lands and natural resources,"
because (1) the remarks of Delegate Ledesma expressly mentions "public agricultural lands" and the
terms "real estate" must undoubtedly carry the same meaning as the preceding words "public
agricultural lands", under the principle of "ejusdem generis"; (2) Delegate Ledesma must have in
mind purely "agricultural" lands, sicne he was the Chairman of the Committee on Agricultural
Development and his speech was made in connection with the national policy on agricultural lands;
(3) the general nature of the explanations of both Delegate Ledesma and Delegate Montilla, cannot
control the more specific clarification of Delegate Sotto that agricultural lands in section 3 do not
include urban propeties. Neither are we bound to give reater force to the view (apparently based on
mere mental recollections) of the Justices who were members of the Constitutional Convention than
tot he specific recorded manifestation of Delegate Sotto.
The decision in the case of Mapa vs. Insular Government (10 Phil., 175), invoked by the majority, is
surely not controlling, because, first, it dealt with "agricultural public lands" and, secondly, in that
case it was expressly held that the phrase "agricultural land" as used in Act No. 926 "means
those public lands acquired from Spain which are not timber or mineral lands," the definition held
to be found in section 13 of the Act of Congress of July 1, 1902.
We hold that there is to found in the act of Congress a definition of the phrase "agricultural
public lands," and after a carefully consideration of the question we are satisfied that the only
definition which exists in said act is the definition adopted by the court below. Section 13
says that the Government shall "make rules and regulations for the lease, sale or other
disposition of the public lands other than timber or mineral lands." To our minds that is the
only definition that can be said to be given to agricultural lands. In other words, that the
phrase "agricultural land" as used in Act No. 926 means those public lands accquired from
Spain which are not timber or mineral lands. (Mapa vs. Insular Government, 10 Phil., 182.)
The majority, in support of their construction, invoke Commonwealth Act No. 141, enected after the
approval of the Constitution, which prohibits the alienation to foreigners of "land originally acquired in
any manner under the provisions of this Act," (section 122) or "land originally acquired in any manner
under the provisions of any previous Act, ordinance, royal order, royal decree, or any other provision
of law formerly in force in the Philippines with regard to public lands, terrenos baldios realengos, or
lands of any other denomination that were actually or presumptively of the public domain." (Section
123.) They hold that the constitutional intent "is made more patent and is strongly implemented by
said Act." The majority have evidently overlooked the fact that the prohibition contained in said
sections refer to lands originally acquired under said sections referto land originally acqured under
said Act or otherlegal provisions lands, which of course do not include lands not originally of the
public domain. The lands that may be acquired under Act No. 141 necessarily have to be public
agricultural lands, since they are the only kinds that are subject to alienation or disposition under the
Constitution. Hence, even if they become private, said lands retained their original agricultural
character and may not therefore be alienated to foreigners. It is only in this sense, I think, that act
No. 141 seeks to carry out and implement the constitutional objective. In the case before us,
however, there is no pretense that the land bought by the appellant was originally acquired under
said Act or other legal provisions contemplated therein.
The majority is also mistaken in arguing that "prior to the Constitution, under section 24 of the Public
Land Act No. 2874 aliens could acquire public agricultural lands used for industrial or residential
purposes, but after the Constitution and under section 23 of Commonwealth Act No. 141, the right of
aliens to acquire such kind of lands is completely stricken out, undoubtedly in pursuanceof the
Constitutional limitation," and that "prior to the Constitution, under section 57 of the Public Land Act
No.2874, land of the public domain suitable for residence or industrial purposes could
be sold or leased to aliens, but after the Constitution and under section 60 of Commonwealth Act
No. 141, such land may only be leased, but not sold, to aliens, and the lease granted shall only be
valid while the land is used for the purpose referred to." Section 1 of article XIII of the Constitution
speaks of "public agricultural lands" and quite logically, Commonwealth Act No. 141, enacted after
the approval of the Constitution, has to limit the alienation of its subject matter (public agricultural
land, which includes public residential or industrial land) to Filipino citizens. But it is not correct to
consider said Act as a legislation on, or a limitation against, the right of aliens to acquire residential
land that was already of private ownership prior to the approval of the Constitution.
The sweeping assertion of the majority that "the three great departments of the Government
Judicial, Legislative and Executive have always maintained that lands of the public domain are
classified into agricultural, mineral and timber, and that agricultural lands include residential lots," is
rather misleading and not inconsistent, with our position. While the construction mistakenly invoked
by the majority refers exclusively to lands of the public domain, our view is that private residential
lands are not embraced within the terms "private agricultural land" in section 5 of Article XIII. Let us
particularize in somewhat chronological order. We have already pointed out that the leading case
of Mapa vs. Insular Government, supra, only held that agricultural public lands are those public
landsacquired from Spain which are neither timber nor mineral lands. The opinion of the Secretary of
Justice dated July 15, 1939, quoted in the majority opinion, limited itself in affirming that "residential,
commercial or industrial lotsforming part of the public domain . . . must be classified as agricultural."
Indeed, the limited scope of said opinion is clearly pointed out in the following subsequent opinion of
the Secretary of Justice dated September 25, 1941, expressly hoding that "in cases involving the
prohibition in section 5 of Article XIII (formerly Article XII) regarding transfer or assignment of private
agricultural lands to foreigners, the opinion that residential lots are not agricultural lands is
applicable."
This is with reference to your first indorsement dated July 30, 1941, forwarding the request of
the Register of Deeds of Oriental Misamis for an opinion as to whether Opinion No. 130,
dated July 15, 1939, of this Department quoted in its Circular No. 28, dated May 13, 1941,
holding among others, that the phrase "public agricultural land" in section 1, Article XIII
(formerly article XII) of the Constitution of the Philippines, includes residential, commercial or
industrial lots for purposes of their disposition, amends or supersedeas a decision or order of
the fourth branch of the Court of First Instance of the City of Manila rendered pursuant to
section 200 of the Administrative Code which holds that a residential lot is not an agricultural
land, and therefore, the prohibition in section 5, Article XIII (formerly Article XII) of the
Constitution of the Philippines does not apply.
There is no conflict between the two opinions.
Section 1, Artcile XIII (formerly article XII of the Constitution of the Philippines, speaks
of public agricultural lands while section 5 of the same article treats of private agricultural
lands. A holding, therefore, that a residential lot is not private agricultural land within the
meaning of that phrase as found in section 5 of Article XIII (formerly Article XII) does not
conflict with an opinion that residential, commercial or industrial lots forming part of the public
domain are included within the phrase "public agricultural land" found in section 1, Article XIII
(formerly Article XII) of the Constitution of the Philippines. In cases involving the prohibition in
section 5 of Article XIII (formerly Article XII) regarding transfer or assignment of private
agricultural lands to foreigners, the opinion that residential lots are not agricultural lands is
applicable. In cases involving the prohibition in section 1 of Article XIII (formerly Article XII)
regarding disposition in favor of, and exploitation, development or utilization by foreigners
of public agricultural lands, the opinion that residential, commercial or industrial lots forming
part of the public domain are included within the phrase "public agricultural land" found in
said section 1 of the Article XIII (formerly Article XII) governs.
Commonwealth Act No. 141, passed after the approval of the Constitution limited its restriction
against transfers in favor of alien to public agricultural lands or to lands originally acquired under said
Act or other legal provisions formerly in force in the Philippines with regard to public lands. On
November 29, 1943, the Court of Appeals rendered a decision affirming that of the Court of First
rendered a decision affirming that of the Court of First Instance of Tarlac in a case in which it was
held that private residential lots are not included in the prohibition in section 5 of Article XIII. (CA-G.
R. No. 29.) During theJapanese occupation, the Constitution of the then Republic of the Philippines
contained an almost verbatim reproduction of said section 5 of Article XIII; and the then National
Assembly passed an Act providing that "no natural or juridical person who is not a Filipino citizen
shall acquire directly or indirectly any title to private lands (which are not agricultural lands) including
buildings and other improvements thereon or leasehold rights on said lands, except by legal
succession of proper cases, unless authorized by the President of the Republic of the Philippines."
(Off. Gaz., Vol. I, p. 497, February,1944.) It is true that the Secretary of Justice in 1945 appears to
have rendered an opinion on the matter, but it cannot have any persuasive force because it merely
suspended the effect of the previous opinion of his Department pending judicial determination of the
question. Very recently, the Secretary of Justice issued a circular adopting in effect the opinion of his
Department rendered in1941. Last but not least, since the approval of the Constitution, numerous
transactions involving transfers of private residential lots to aliens had been allowed to be registered
without any opposition on the part of the Government. It will thus be seen that, contrary to what the
majority believe, our Government has constantly adopted the view that private residential lands do
not fall under the limitation contained in section 5 of Article XIII of the Constitution.
I do not question or doubt the nationalistic spirit permeating the Constitution, but I will not permit
myself to be blinded by any sentimental feeling or conjectural considerations to such a degree as to
attribute to any of its provisions a construction not justified by or beyond what the plain written words
purport to convey. We need not express any unnecessary concern over the possibility that entire
towns and cities may come to the hands of aliens, as long as we have faith in our independence and
in our power to supply any deficiency in the Constitution either by its amendment or by
Congressional action.
There should really have been no occasion for writing this dissent, because the appellant, with the
conformity of the appellee, had filed a motion for the withdrawal of the appeal and the same should
have been granted outright. In Co Chiong vs. Dinglasan (p. 122, ante),decided only a few days ago,
we reiterated the well-settled rule that "a court should not pass upon a constitutional question and
decide a law to be unconstitutional or invalid unless such question is raised by the the parties, and
that when it is raised, if the record also presents some other ground upon which the court may rest
its judgment, that course will be adopted and the constitutional question will be left for consideration
until a case arises in which a decision upon such question will be unavoidable." In other words, a
court will always avoid a constitutional question, if possible. In the present case, that course of action
was not only possible but absolutely imperative. If appellant's motion for withdrawal had been
opposed by the appellee, there might be some reasons for its denial, in view of section 4 of Rule 52
which provides that after the filing of appellee's brief, "the withdrawal may be allowed by the court in
its discretion." At any rate, this discretion should always be exercised in favor of a withdrawal where
a constitutional question will thereby be avoided.
In this connection, let us describe the proceedings (called "arbitrary and illegal" by Mr. Justice
Tuason) that led to teh denial of the motion for withdrawal. During the deliberation in which all the
eleven members were present, seven voted to allow and four to deny. Subsequently, without any
previous notice and when Mr. Justice Hontiveros was absent, the matter was again submitted to a
vote, and one Justice (who previously was in favor of the withdrawal) reversed his stand, with the
result that the votes were five to five. This result was officially released and the motion denied under
the technicality provided in Rule of Court No. 56, section 2. It is very interesting to observe that Mr.
Justice Hontiveros, who was still a member of the Court and could have attended the later
deliberation, if notified and requested, previously voted for the granting of the motion. The real
explanation for excluding Mr. Justice Hontiveros, against my objection, and for the reversal of the
vote of one Justice who originally was in favor of the withdrawal is found in the confession made in
the majority opinion to the effect that the circular of the Department of Justice instructing all registers
of deeds to accept for registration transfers of residential lots to aliens, was an "interference with the
regular and complete exercise by this Court of its constitutional functions," and that "if we grant the
withdrawal, the result is that petitioner-appellant Alexander A. Krivenko wins his case, not by a
decision of this Court, but by the decision or circular of the Department of Justice issued while this
case was pending before this Court." The zealousness thus shown in denying the motion for
wuthdrawal is open to question. The denial of course is another way of assuming that the petitioner-
appellant and the Solicitor General had connived with the Department of Justice in a scheme not
only to interfere with the functions of this Court but to dispose of the national patrimony in favor of
aliens.
In the absence of any injunction from this Court, we should recognize tha right of the Department of
Justice to issue any circular it may deem legal and proper on any subject, and the corollary right of
the appellant to take advantage thereof. What is most regrettable is the implication that the
Department of Justice, as a part of the Executive Department, cannot be as patriotic and able as this
Court in defending the Constitution. If the circular in question is objectionable, the same can be said
of the opinion of the Secretary of Justice in 1945 in effect prohibiting the registration of transfers of
private residential lots in favor of aliens, notwithstanding the pendency in this Court of the case of Oh
Cho vs. Director of Lands (43 Off. Gaz., 866), wherin according to the appellant, the only question
raised was whether, or not "an alien can acquire a residential lot and register it in his name," and
notwithstanding the fact that in said case the appealed decision was in favor of the alien applicant
and that, as hereinbefore stated, the Court of Appeals in another case (CA-G.R. No. 29) had renderd
in 1943 a decision holding that private residential lots are not included in the prohibition in section 5
of Article XIII of the Constitution. And yet this Court, failing to consider said opinion as an
"interference," chose to evade the only issue raised by the appellant and squarely met by the
appellee in the Oh Cho case which already required a decision on the constitutional question
resolved in the case at bar against, so to say, the will of the parties litigant. In other words, the
majority did not allow the withdrawal of the present appeal not so much as to dispose of it on the
merits, but to annul the circular of the Department of Justice which is, needless to say, not involved
in this case. I cannot accept the shallow excuse of the majority that the denial of the motion for
withdrawal was promted by the fear that "our indifference of today might signify a permanent offense
to the Constitution," because it carries the rather immodest implication that this Court has a
monopoly of the virtue of upholding and enforcing, or supplying any deficiency in, the Constitution.
Indeed, the fallacy of the impliation is made glaring when Senator Franscisco lost no time in
introducing a bill that would clarify the constitutional provision in question in the sense desired by the
majority. Upon the other hand, the majority should not worry about the remoteness of the opportunity
that will enable this Court to pass upon this constitutional question, because we can take advance
notice of the fact that in Rellosa vs. Gaw Chee Hun (49 Off. Gaz., 4345), in which the parties have
already presented. But even disregarding said case, I am sure that, in view of the recent newspaper
discussion which naturally reached the length and breadth of the country, there will be those who will
dispute their sales of residential lots in favor of aliens and invoke the constitutional prohibition.
BENGZON, J ., dissenting:
It is unnecessary to deliver at this time any opinion about the extent of the constitutional prohibition.
Both parties having agreed to writer finis to the litigation, there is no obligation to hold forth on the
issue. It is not our mission to give advice to other person who might be interested to give advice to
other persons who might be interested to know the validity or invalidity of their sales or purchases.
That is the work of lawyers and juriscounsults.
There is much to what Mr. Justice Padilla explains regarding any eagerness to solve the
constitutional problem. It must be remembered that the other departments of the Government are
not prevented from passing on constitutional question arising in the exercise of their official powers.
(Cooley, Constitutional Limitations, 8th ed., p. 101.) This Tribunal was not established, nor is it
expected to play the role of an overseer to supervise the other Government departments, with the
obligation to seize any opportunity to correct what we may believe to be erroneous application of the
constitutional mandate. I cannot agree to the suggestion that the way the incumbent Secretary of
Justice has interpreted the fundamental law, no case will ever arise before the court, because the
registers of deeds under his command, will transfer on thier books all sales to aliens. It is easy to
perceive several probabilities: (1) a new secretary may entertain opposite views; (2) parties legally
affected like heirs or or creditors of the seller may wish to avoid the conveyance to aliens,
invoking the constitutional inhibition. Then, in a truly contested case, with opposing litigants actively
arguing their sides we shall be in a position to do full justice. It is not enough that briefs as in this
case have been filed; it is desirable, perhaps essential, to make sure that in a motion for
reconsideration, or in a re-hearing in case of tie, our attention shall be invited to points inadequately
touched or improperly considered.
It is stated that sales to aliens of residential lots are currently being effected. No matter. Those sales
will be subject to the final decision we shall reach in a properly submitted litigation. To spell
necessity out of the existence of such conveyances, might amount to begging the issue with the
assumption that such transfers are obviously barred by the Organic Law. And yet sales to foreigners
of residential lots have taken place since our Constitution was approved in 1935, and no one
questioned their validity in Court until nine years later in 1945, after the Japanese authorities had
shown distaste for such transfers.
The Court should have, I submit, ample time to discuss this all-important point, and reflect upon the
conflicting politico-economic philosophies of those who advocate national isolation against
international cooperation, and vice-versa. We could also delve into several aspects necessarily
involved, to wit:
(a) Whether the prohibition in the Constitution operated to curtail the freedom to dispose
of landowners at the time of its adoption; or whether it merely affected the rights of those who should
become landowners after the approval of the Constitution;
7

(b) What consequences would a ruling adverse to aliens have upon our position and commitments in
the United Nations Organization, and upon our treaty-making negotiations with other nations of the
worlds; and
(c) When in 1941 Krivenko acquired this land he was a Russian citizen. Under the treaties between
the United States and Russia, were Russian nationals allowed to acquire residential lots in places
under the jurisdiction of the United States? If so, did our Constitution have the effect of modifying
such treaty during the existence of the Commonwealth Government?
The foregoing view and doubts induced me to vote for dismissal of the appeal as requested by the
parties, and for withholding of any ruling on the constitutional prohibition. However, I am now ready
to cast my vote. I am convinced that the organic law bans the sales of agricultural lands as they are
popularly understood not including residential, commercial, industrial or urban lots. This belief is
founded on the reasons ably expounded by Mr. Justice Paras, Mr. Justice Padilla and Mr. Justice
Tuason. I am particularly moved by the consideration that a restricted interpretation of the
prohibition, if erroneous or contrary to the poeple's desire, may be remedied by legislation amplifying
it; whereas a liberal and wide application, if erroneous, would need the cumbersome and highly
expensive process of a constitutional amendment.
PADILLA, J ., dissenting:
The question submitted for decision is whether a parcel of land of private ownership suitable or
intended for residence may be alienated or sold to an alien.
Section 5, Article XIII, of the Constitution provides:
Save in cases of hereditary succession, no private agricultural land shall be transferred or
assigned except to individuals, corporations, or associations qualified to acquire or hold
lands of the public domain in the Philippines.
The majority holds that a parcel of land of privateownership suitable or intended or used for
residence is included in the term "private agricultural land" and comes within the prohibition of the
Constitution. In support of the opinion that lands of private ownership suitable for residence are
included in the term "private agricultural land" and cannot be alienated or sold to aliens, the majority
invokes the decision of this Court in Mapa vs. Insular Government (10 Phil., 175), which holds that
urban lands of the public domain are included in the term "public agricultural land." But the opinion of
the majority overlooks the fact that the inclusion by this Court of public lands suitable for residence in
the term "public agricultural land" was due to the classification made by the Congress of the United
States in the Act of 1 July 1902, commonly known as the Philippine Bill. In said Act, lands of the
public domain were classified into agricultural, timber and mineral. The only alienable or disposable
lands of the public domain were those belonging to the first class. Hence a parcel of land of the
public domain suitable for residence, which was neither timber nor mineral, could not be disposed of
or alienated unless classified as public agricultural land. The susceptibility of a residential lot of the
public domain of being cultivated is not the real reason for the inclusion of such lot in the
classification of public agricultural land, for there are lands, such as foreshore lands, which would
hardly be susceptible of cultivation (Ibaez de Aldecoa vs. Insular Government, 13 Phil., 159, 167-
168), and yet the same come under the classification of public agricultural land. The fact, therefore,
that parcels of land of the public domain suitable for residence are included in the classification of
public agricultural land, is not a safe guide or index of what the framers of the Constitution intended
to mean by the term "private agricultural land." It is contrary to the rules of statutory construction to
attach technical meaning to terms or phrases that have a common or ordinary meaning as
understood by he average citizen.
At the time of the adoption of the Constitution (8 February 1935), the Public Land Act in force was
Act No. 2874. Under this Act, only citizens of the Philippine Islands or of the United States and
corporations or associations described in section 23 thereof, and citizens of countries the laws of
which grant to citizens of the Philippine Islands the same right to acquire the public land as to their
own citizens, could acquire by purchase agricultural land of the public domain (section 23, Act No.
2874). This was the general rule. There was an exception. Section 24of the Act provides:
No person, corporation, association or partnership other than those mentioned in the last
preceding section may acquire or own agricultural public land or land of any other
denomination or classification, not used for industrial or residence purposes, that is at the
time or was originally, really or presumptively, of the public domain, or any permanent
improvement thereon, or any real right on such land and improvement: Provided, however,
That persons, corporations, associations, or partnerships which at the date upon which this
Act shall take effect, hold agricultural public lands or land of any other denomination not used
for industrial or residence purposes, that belonged originally, really or presumptively, to the
public domain, or permanent improvements on such lands, or a real right upon such lands
and improvements, having acquired the same under the laws and regulations in force at the
date of such acquisition, shall be authorized to continue holding the same as if such persons,
corporations, associations, or partnerships were qualified under the last preceding section;
but they shall not encumber, convey, or alienate the same to persons, corporations,
associations or partnerships not included in section twenty-three of this Act, except by
reason of hereditary succession, duly legalized and acknowledged by competent Courts.
(Emphasis supplied.)
Section 57 of the Act, dealing with lands of the public domain suitable for residential, commercial,
industrial, or other productive purposes other than agricultural, provides:
Any tract of land comprised under this title may be leased or sold, as the case may be, to
any person, corporation, or association authorized to purchase or lease public lands for
agricultural purposes. . . .Provided further, That any person, corporation, association, or
partnership disqualified from purchasing public land for agricultural purposes under the
provisions of this Act, may purchase or lease land included under this title suitable for
industrial or residence purposes, but the title or lease granted shall only be valid while such
land issued for the purposes referred to. (Emphasis supplied.)
Section 121 of the Act provides:
No land originally acquired in any manner under the provisions of the former Public Land Act
or of any other Act, ordinance, royal order, royal decree, or any other provision of law
formerly in force in the Philippine Islands with regard to public lands, terrenos baldios y
realengos, or lands of any other denomination that were actually or presumptively of the
public domain, or by royal grant or in any other form, nor any permanent improvement on
such land, shall be encumbered, alienated, or conveyed, except to persons, corporations, or
associations who may acquire land of the public domain under this Act; . . . Provided,
however, That this prohibition shall not be applicable to the conveyance or acquisition by
reason of hereditary succession duly acknowledged and legalized by competent Courts, nor
to lands and improvements acquired or held for industrial or residence purposes, while used
for such purposes: . . . (Emphasis supplied.)
Under and pursuant to the above quoted provisions of Act No. 2874, lands of the public domain, that
were neither timber nor mineral, held for industrial or residence purposes, could be acquired by
aliens disqualified from acquiring by purchase or lease public agricultural lands (sections 24, 57,
121, Act No. 2874). The delegates to the Constituent Assembly were familiar with the provisions of
the Public Land Act referred to. The prohibition to alienate public agricultural lands to disqualified
persons, corporations or associations did not apply to "lands and improvements acquired or held for
industrial or residence purposes, while used for such purposes." Even under the provisions of Act
No. 926, the first Public Land Act, lots for townsites could be acquired by any person irrespective of
citizenship, pursuant to section 47 of the said Act. In spite of the nationalistic spirit that pervades all
the provisions of Act No. 2874, the Philippine Legislature did not deem it necessary to exclude aliens
from acquiring and owning lands of the public domain suitable for industrial or residence purposes. It
adopted the policy of excluding aliens from acquiring agricultural lands of the public domain not
"suitable for residential, commercial, industrial, or other productive purposes," which, together with
timber, mineral and private agricultural lands, constitute the mainstay of the nation. Act No. 2874
was in force for nearly sixteen years from 1919 to 1935. There is nothing recorded in the journals
of proceedings of the Constituent Assembly regarding the matter which would have justified a
departure from the policy theretofore adopted.
If under the law in force at the time of the adoption of the Constitution, aliens could acquire by
purchase or lease lands of the public domain, that were neither timber nor mineral, held for industrial
or residence purposes, how can it be presumed that the framers of the Constitution intended to
exclude such aliens from acquiring by purchase private lands suitable for industrial or residence
purposes? If pursuant to the law in force at the time of the adoption of the Constitution, lands of the
public domain and improvements thereon acquired or held for industrial or residence purposes were
not included in the prohibition found in section 121 of ActNo. 2874, there is every reason for
believing that the framers of the Constitution, who were familiar with the law then in force, did not
have the intention of applying the prohibition contained in section 5, Article XIII, of the Constitution to
lands of private ownership suitable or intended or used for residence, there being nothing recorded
in the journals of proceedings of the Constituent Assembly regarding the matter which, as above
stated, would have justified a departure from the policy then existing. If the term "private agricultural
land" comprehends lands of private ownership suitable or intended or used for residence, as held by
the majority, there was no need of implementing a self-executory prohibition found in the
Constitution. The prohibition to alienate such lands found in section 123 of Commonwealth Act No.
141 is a clear indication and proof that section 5, Article XIII, of the Constitution does not apply to
lands of private ownership suitable or intended or used for residence. The term "private agricultural
land" means privately owned lands devoted to cultivation, to the raising of agricultural products, and
does not include urban lands of private ownership suitable for industrial or residence purposes. The
use of the adjective "agricultural" has the effect of excluding all other private lands that are not
agricultural. Timber and mineral ands are not, however, included among the excluded, because
these lands could not and can never become private lands. From the land grants known
as caballerias and peonias under the Laws of Indies down to those under the Royal Decrees of 25
June 1880 and 13 February 1894, the Philippine Bill, Act No. 926, the Jones Law, Act No. 2874, the
Constitution, and Commonwealth Act No. 141, timber and mineral lands have always been excluded
from alienation. The repeal by sections 23, 60, 123 of Commonwealth Act No. 141 of the exception
provided for in sections 24, 57, 121 of Act No. 2874, did not change the meaning of the term "private
agricultural land," as intended by the framers of the Constitution and understood by the people that
adopted it.
The next question is whether the court below was justified under the in confirming the refusal of the
Register of Deeds of Manila to record the sale of the private land for residence purposes to the
appellant who is an alien.
There is no evidence to show the kind of land, the deed of sale of which is sought to be recorded by
the appellant whether it is one of those described in section 123 of Commonwealth Act No. 141;
or a private land that had never been a part of the public domain (Carino vs. Insular Government,
212 U.S., 449; Oh Cho vs. Director of Lands, 43 Off. Gaz., 866). If it is the latter, the prohibition of
section 123 of Commonwealth Act No. 141 does not apply. If it is the former, section 123 of
Commonwealth Act No. 141, which providesthat
No land originally acquired in any manner under the provisions of any previous Act,
ordinance, royal order, royal decree, or any other provision of law formerly in force in the
Philippines with regard to public lands,terrenos baldios y realengos, or lands of any other
denomination that were actually or presumptively of the public domain, or by royal grant or in
any other form, nor any permanent improvement on such land, shall be encumbered,
alienated, or conveyed, except to persons, corporations or associations who may acquire
land of the public domain under this Act or to corporate bodies organized in the Philippines
whose charters authorize them to do so: . . .
is similar in nature to section 121 of Act No. 2874. This Court held the last mentioned section
unconstitutional, for it violates section 3 of the Act of Congress of 29 August 1916, commonly known
as the Jones Law (Central Capizvs. Ramirez, 40 Phil., 883). Section 123 of Commonwealth Act No.
141, following the rule laid down in the aforecited case, must also be declared unconstitutional, for it
violates section 21 (1), Article VI, of the Constitution, which is exactly the same as the one infringed
upon by section 121 of Act No. 2874. This does not mean that a law may not be passed by
Congress to prohibit alienation to foreigners of urban lands of private ownership; but in so doing, it
must avoid offending against the constitutional provision referred to above.
Before closing, I cannot help but comment on the action taken by the Court in considering the merits
of the case, despite the withdrawal of the appeal by the appellants, consented to by the appellee. If
discretion was to be exercised, this Court did not exercise it wisely. Courts of last resort generally
avoid passing upon constitutional questions if the case where such questions are raised may be
decided on other grounds. Courts of last resort do not express their opinion on a consitutional
question except when it is the very lis mota (Yangco vs. Board of Public Utility Commissioners, 36
Phil., 116, 120; Co Chiong vs. Dinglasan, p. 122, ante). Moreover, the interpretation of the provisions
of the Constitution is no exclusive of the courts. The other coordinate branches of the government
may interpret such provisions acting on matters coming within their jurisdiction. And although such
interpretation is only persuasive and not binding upon the courts, nevertheless they cannot be
deprived of such power. Of course, the final say on what is the correct interpretation of a
constitutional provision must come from and be made by this Court in an appropriate action
submitted to it for decision. The correct interpretation of a constitutional provision is that which gives
effect to the intent of its framers and primarily to the understanding of such provision by the poeple
that adopted it. This Court is only an interpreter of the instrument which embodies what its framers
had in mind and especially what the people understood it to be when they adopted it. The eagerness
of this Court to express its opinion on the constitutional provision involved in this case,
notwithstanding of the withdrawal of the appeal, is unusualf or a Court of last resort. It seems as if it
were afraid to be deprived by the other coordinate branches of the government of its prerogative to
pass upon the constitutional question herein involved. If all the members of the Court were
unanimous in the interpretation of the constitutional provision under scrutiny, that eagerness might
be justified, but when some members of the Court do not agree to the interpretation placed upon
such provision, that eagerness becomes recklessness. The interpretation thus placed by the majority
of the Court upon the constitutional provision referred to will be binding upon the other coordinate
branches of the government. If, in the course of time, such opinion should turn out to be erroneous
and against the welfare of the country,an amendment to the Constitution a costly process
would have to be proposed and adopted. But, if the Court had granted the motion for the withdrawal
of the appeal, it would not have to express its opinion upon the constitutional provision in question. It
would let the other coordinate branches of the Government act according to their wisdom, foresight
and patriotism. They, too, possess those qualities and virtues. These are not of the exclusive
possession of the members of this Court. The end sought to be accomplished by the decision of this
Court may be carried out by the enactment of a law. And if the law should turn out to be against the
well-being of the people, its amendment or repeal would not be as costly a process as a
constitutional amendment.
In view of the denial by this Court of the motion to dismiss the appeal, as prayed for by the appellant
and consented to by the appellee, I am constrained to record my opinion, that, for the reasons
hereinbefore set forth, the judgment under review should be reversed.


TUASON, J ., dissenting:
The decision concludes with the assertion that there is no choice. "We are construing" it says, "the
Constitution as we see it and not as we may wish it to be. If this is the solemn mandate of the
Constitution, we cannot compromise it even in the name of equity." We wish deep in our heart that
we were given the light to see as the majority do and could share their opinion. As it is, we perceive
things the other way around. As we see it, the decision by-passed what according to our humble
understanding is the plain intent of the Constitution and groped out of its way in search of the ideal
result. The denial by this Court of the motion to withdraw the appeal to which the Solicitor General
gave his conformity collides with the professed sorrow that the decision cannot be helped.
Section 5, Article XIII, of the Constitution reads:
5. Save in cases of hereditary succession, no private agricultural land shall be transferred or
assigned except to individuals, corporations, or associations qualified to acquire or hold
lands of the public domain in the Philippines.
The sole and simple question at issue is, what is the meaning of the term "agricultural land" as used
in this section? Before answering the question, it is convenient to refresh our memory of the
pertinent rule in the interpretation of constitutions as expounded in decisions of courts of last resort
and by law authors.
It is a cardinal rule in the interpretation of constitutions that the instrument must be a
construed so to give effect to the intention of the people who adopted it. This intention is to
be sought in the constitution itself, and the apparent meaning of the words employed is to be
taken as expressing it, except in cases where the assumption would lead to absurdity,
ambiguity, or contradiction. Black on Interpretation of Laws, 2nd ed., p. 20.)
Every word employed in the constitution is to be expounded in its plain, obvious, and
common sense, unless the context furnishes some ground to control, qualify, or enlarge it.
Constitutions are not designed for metaphysical or logical subtleties, for niceties of
expression, for critical propriety, for elaborate shades of meaning, or for the exercise of
philosophical acuteness or judicial research. They are instruments of a practical nature
founded on the common business of human life adapted to common wants, designed for
common use, and fitted for common understandings. The people make them, the people
adopt them, the people must be supposed to read them with the help of common sense, and
cannot be presumed to admit in them any recondite meaningor any extraordinary gloss. (1
Story, Const. sec. 451.)
Marshall , Ch. J., says:
The framers of the Constitution, and the people who adopted it, "must be understood to have
employed words in their natural sense, and to have intended what they have said."
(Gibbons vs. Ogdon, 9 Wheat, 1, 188; 6 Law. ed., 23).
Questions as to the wisdom, expediency, or justice of constitutional provisions afford no
basis for construction where the intent to adopt such provisions is expressed in clear and
unmistakable terms. Nor can construction read into the provisions of a constitution some
unexpressed general policy or spirit, supposed to underline and pervade the instrument and
to render it consonant to the genius of the institutions of the state. The courts are not at
liberty to declare an act void because they deem it opposed to the spirit of the Constitution.
(12 C.J., 702-703.)
There is no obscurity or ambiguity in the section of the Constitution above quoted, nor does a literal
interpretation of the words "agricultural land" lead to any un-the majority opinion, the phrase has no
technical meaning, and the same could not have been used in any sense other than that in which it
is understood by the men in the street.
That there are lands of private ownership will not be denied, inspite of the fiction tha all lands
proceed from the sovereign. And, that lands of private ownership are known as agricultural,
residential, commercial and industrial, is another truth which no one can successfully dispute. In
prohibiting the alienation of private agricultural land to aliens, the Constitution, by necessary
implication, authorizes the alienation of other kinds of private property. The express mention of one
thing excludes all others of the same kind.
Let us then ascertain the meaning of the word "agricultural" so that by process of elimination we can
see what lands do not fall within the purview of the constitutional inhibition. Webster's New
international Dictionary defines this word as "of or pertaining to agriculture connected with, or
engaged in, tillage; as, the agricultural class; agricultural implements, wages, etc." According to this
definition and according to the popular conception of the word, lands in cities and towns intended or
used for buildings or other kinds of structure are never understood to mean agricultural lands. They
are either residential, commercial, or industrial lands. In all city plannings, communities are divided
into residential, commercial and industrial sections. It would be extremely out of the ordinary, not to
say ridiculous, to imagine that the Constitutional Convention considered a lot on the Escolta with its
improvement as agricultural land.
If extrinsic evidence is needed, a reference to the history of the constitutional provision under
consideration will dispel all doubts that urban lands were in the minds of the framers of the
Constitution as properties that may be assigned to foreigners.
Dean Aruego, himself a member of the Constitutional Convention, is authority for the statement that
the committee on nationalization and preservation of lands and other natural resources in its report
recommended the incorporation into the Constitution of the following provision:
SEC. 4. Save in cases of hereditary succession, no land of private ownership shall be
transferred or assigned by the owner thereof except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain in the Philippine Islands;
and the Government shall regulate the transfer or assignment of land now owned by
persons, or corporations,or associations not qualified under the provisions of this
Constitution to acquire or hold lands in the Philippine Islands.
In Article XIII, entitled "General Provisions," of the first draft of the Constitution, the sub-committee of
seven embodied the following provision which had been recommended in the reports of the
committee on agricultural development, national defense, industry, and nationalization and
preservation of lands and other natural resources:
SEC. 16. Save in cases of hereditary succession, no land of private ownership shall be
transferred or assigned by the owner thereof except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain in the Philippines.
But on January 22, 1935, the sub-committee of seven submitted to the Convention a revised draft of
the articleo n General Provisions of the first draft, which revised draft had been prepared by the
committee in consultation with President Quezon. The revised draft as it touches private lands
provides as follows:
Save in cases of hereditary succession, no agricultural land of private ownership shall be
transferred or assigned by the owner thereof except to individuals, corporations, or
associations qualified to acquire or hold lands, of the public domain in the Philippine Islands.
(2 The Framing of the Philippine Constitution, Aruego, 595-599.)
The last-quoted proposal became section 5 of Article XIII of the Constitution in its final form with
sligh alteration in the phraseology.
It will thus be seen that two committees in their reports and the sub-committee of seven in its first
draft of the Constitution all proposed to prescribe the transfer to non-Filipino citizens of any land of
private ownership without regard to its nature or use, but that the last mentioned sub-committee later
amended that proposal by putting the word "agricultural" before the word "land." What are we to
conclude from this modification? Its self-evident purpose was to confine the prohibition to agricultural
lands, allowing the ownership by foreigners of private lands that do not partake of agricultural
character. The insertion of the word "agricultural" was studied and deliberated, thereby eliminating
any possibility that its implication was not comprehended.
In the following paragraphs we shall, in our inadequate way, attempt to show that the conclusions in
this Court's decision are erroneous either because the premises are wrong or because the
conclusions do not follow the premises.
According to the decision, the insertion of the word "agricultural" was not intended to change the
scope of the provision. It says that "the wording of the first draft was amended for no other purpose
than to clarify concepts and avoid uncertainties."
If this was the intention of the Constitutional Assembly, that could not have devised a better way of
messing up and obscuring the meaning of the provision than what it did. If the purpose was "to
clarify concepts and avoid uncertainties," the insertion of the word "agricultural" before the word
"land" produced the exact opposite of the result which the change was expected to accomplish as
witness the present sharp and bitter controversy which would not have arisen had they let well
enough alone.
But the assumption is untenable. To brush aside the introduction of the word "agricultural" into the
final draft as "merely one of words" is utterly unsupported by evidence, by the text of the
Constitution, or by sound principles of construction. There is absolutely no warrant or the statement
that the Constitutional Convention, which was guided by wise men, men of ability and experience in
different fields of endeavor, used the termafter mature deliberation and reflection and after
consultation with the President, without intending to give it its natural signification and connotation.
"We are not at liberty to presume that the framers of the Constitution, or the people who adopted it,
did not understand the force of language." (People vs. Rathbone, 32 N.Y.S., 108.) The Constitution
will be scanned in vain for any reasonable indication that its authors made the change with intention
that it should not operate according to the rules of grammar and the ordinary process of drawing
logical inferences. The theory is against the presumption, based on human experience, that the
framers of a constitution "have expressed themselves in careful and measured terms, corresponding
with the immense importance of the powers delegated, leaving as little as possible to implication." (1
Cooley's Constitutional Limitations, 8th ed., 128, 129.) "As men, whose intention require no
concealment, generally employ the words which most directly and aptly express the ideas they
intend to convey, the enlightened patriots who framed our constitution, and the people who adopted
it, must be understood to have employed words in their natural sense and to have intended what
they have said." (Gibbons vs. Ogden, ante.)
When instead of prohibiting the acquisition of private land of any kind by foreigners, as originally
proposed, the prohibition was changed to private agricultural lands, the average man's faculty of
reasoning tells him that other lands may be acquired. The elementary rules of speech with which
men of average intelligence, and, above all, the members of the Constitutional Assembly were
familiar, inform us that the object of a descriptive adjective is to specify a thing as distinct from
another. It is from this process of reasoning that the maxim expressio unius est exclusio
alterius stems; a familiar rule of interpretation often quoted, and admitted as agreeable to natural
reason.
If then a foreigner may acquire private lands that are not agricultural, what lands are they? Timber
land or mineral land, or both? As the decision itself says these lands are not susceptible of private
ownership, the answer can only be residential, commercial, industrial or other lands that are not
agricultural. Whether a property is more suitable and profitable to the owners as residential,
commercial or industrial than if he devotes it to the cultivation of crops is a matter that has to be
decided according to the value of the property, its size, and other attending circumstances.
The main burden of this Court's argument is that, as lands of the public domain which are suitable
for home building are considered agricultural land, the Constitution intended that private residential,
commercial or industrial lands should be considered also agricultural lands. The Court says that
"what the members of the Constitutional Convention had in mind when they drafted the Constitution
was this well-known classification (timber, mineral and agricultural) and its technical meaning then
prevailing."
As far as private lands are concerned, there is no factual or legal basis for this assumption. The
classification of public lands was used for one purpose not contemplated in the classification of
private lands. At the outset, it should be distinctively made clear that it was this Court's previous
decisions and not an Act of Congress which declared that public lands which were not forest or
mineral were agricultural lands. Little reflection on the background of this Court's decisions and the
nature of the question presented in relation to the peculia rprovisions of the enactments which came
up for construction, will bring into relief the error of applying to private lands the classification of
public lands.
In the first place, we cannot classify private lands in the same manner as public lands for the very
simple and manifest reason that only lands pertaining to one of the three groups of public lands
agricultural can find their way into the hands of private persons. Forest lands and mineral lands
are preserved by the State for itself and for posterity. Granting what is possible, that there are here
and there forest lands and mineral lands to which private persons have obtained patents or titles, it
would be pointless to suppose that such properties are the ones which section 5 of Article XIII of the
Constitution wants to distinguish from private agricultural lands as lienable. The majority themselves
will not admit that the Constitution which forbids the alienation or private agricultural lands allows the
conveyance of private forests and mines.
In the second place, public lands are classified under special conditions and with a different object in
view. Classification of public lands was and is made for purposes of administration; for the purpose
principally of segregating lands that may be sold from lands that should be conserved. The Act of
July 1, 1902, of the United States Congress designated what lands of the public domain might be
alienated and what should be kept by the State. Public lands are divided into three classes to the
end that natural resources may be used without waste. Subject to some exceptions and limitation,
agricultural lands may be disposed of by the Government. Preservation of forest and mineral lands
was and is a dominant preoccupation. These are important parts of the country's natural resources.
Private non-agricultural land does not come within the category of natural resources. Natural
resources are defined in Webster's Standard Dictionary as materials supplied or produced by nature.
The United States Congress evinced very little if any concern with private lands.
It should also be distinctively kept in mind that the Act of Congress of the United States above
mentioned was an organic law and dealt with vast tracts of untouched public lands. It was enacted
by a Congress whose members were not closely familiar with local conditions affecting lands. Under
the circumstances, it was natural that the Congress employed "words in a comprehensive sense as
expressive of general ideas rather than of finer shades of thought or of narrow distinctions. "The
United States Congress was content with laying down a broad outline governing the administration,
exploitation, and disposition of the public wealth, leaving the details to be worked out by the local
authorities and courts entrusted with the enforcement and interpretation of the law.
It was a result of this broad classification that questions crept for a definition of the status of
scattered small parcels of public lands that were neither forest, mineral, nor agricultural, and with
which the Congress had not bothered itself to mention separately or specifically. This Court, forced
by nature of its duty to decide legal controversies, ruled that public lands that were fit for residential
purposes, public swamps and other public lands that were neither forest nor mineral, were to be
regarded as agricultural lands. In other words, there was an apparent void, often inevitable in a law
or constitution, and this Court merely filled that void. It should be noted that this Court did not say
that agricultural lands and residential lands are the same or alike in their character and use. It merely
said that for the purpose of judging their alienability, residential, commercial or industrial lands
should be brought under the class of agricultural lands.
On the other hand, section 5 of Article XIII of the Constitution treats of private lands with a different
aim. This Court is not now confronted with any problem for which there is no specific provision, such
as faced it when the question of determining the character of public residential land came up for
decision. This Court is not called to rule whether a private residential land is forest, mineral or
agricultural. This Court is not, in regard to private lands, in the position where it found itself with
reference to public lands, compelled by the limited field of its choice for a name to call public
residential lands, agricultural lands. When it comes to determining the character of private non-
agricultural lands, the Court's task is not to compare it with forests, mines and agricultural lands, to
see which of these bears the closest resembrance to the land in question. Since there are no private
timber nor mineral lands, and if there were, they could not be transferred to foreigners, and since the
object of section 5 of Article XIII of the Constitution is radically at variance withthat of the laws
covering public lands, we have to have different standards of comparison and have to look of the
intent of this constitutional provision from a different angle and perspective. When a private non-
agricultural land demands to know where it stands, we do not acquire, is it mineral, forest or
agricultural? We only ask, is it agricultural? To ascertain whether it is within the inhibition of section 5
of Article XIII.
The last question in turn resolves itself into what is understood by agricultural land. Stripped of the
special considerations which dictated the classification of public lands into three general groups,
there is no alternative but to take the term "agricultural land" in its natural and popular signification;
and thus regarded, it imports a distinct connotation which involves no absurdity and no contradiction
between different parts of the organic law. Its meaning is that agricultural land is specified in section
5 of Article XIII to differentiate it from lands that are used or are more suitable for purposes other
than agriculture.
It would profit us to take notice of the admonition of two of the most revered writers on constitutional
law, Justice Story and Professor Cooley:
"As a general thing, it is to be supposed that the same word is used in the same sense wherever it
occurs in a constitution. Here again, however, great caution must be observed in applying an
arbitrary rule; for, as Mr. Justice Story has well observed; `It does not follow, either logically or
grammatically, that because a word is found in one connection in the Constitution with a definite
sense, therefore the same is to be adopted in every other connection in which it occurs. This would
be to suppose that the framers weighed only the force of single words, as philologists or critics, and
not whole clauses and objects, as statesmen and practical reasoners. And yet nothing has been
more common than to subject the Constitution to this narrow and mischievous criticism. Men of
ingenious and subtle minds, who seek for symmetry and harmony in language, having found in the
Constitution a word used in some sense which falls in with their favorite theory of interpreting it, have
made that the standard by which to measure its use in every other part of the instrument. They have
thus stretched it, as it were, on the bed of Procrustes, lopping off its meaning when it seemed too
large for their purposes, and extending it, when it seemed too short. They have thus distorted it to
the most unnatural shapes, and crippled where they have sought only to adjust its proportions
according to their own opinions? And he gives many instances where, in the National Constitution, it
is very manifest the same word is employed in different meanings. So that, while the rule may be
sound as one of presumption merely, its force is but slight, and it must readily give way to a different
intent appearing in the instrument." (1 Cooley's Constitutional Limitations, 8th ed., 135.)
As to the proposition that the words "agricultural lands" have been given a technical meaning and
that the Constitution has employed them in that sense, it can only be accepted in reference to public
lands. If a technical import has been affixed to the term, it can not be extended to private lands if we
are not to be led to an absurdity and if we are avoid the charge that we are resorting to subtle and
ingenious refinement to force from the Constitution a meaning which its framers never held. While in
the construction of a constitution words must be given the technical meaning which they have
acquired, the rule is limited to the "well-understood meaning" "which the people must be supposed to
have had in view in adopting them." To give an example. "When the constitution speaks of an ex
post facto law, it means a law technically known by that designation; the meaning of the phrase
having become definite in the history of constitutional law, and being so familiar to the people that it
is not necessary to employ language of a more popular character to designate it." In reality, this is
not a departure from the general rule that the language used is to be taken in the sense it conveys to
the popular mind, "for the technical sense in these cases is the sense popularly understood,
because that is the sense fixed upon the words in legal and constitutional history where they have
been employed for the protection of popular rights." (1 Cooley's Constitutional Limitations, 8th ed.,
132-133.) Viewed from this angle, "agricultural land" does not possess the quality of a technical
term. Even as applied to public lands, and even among lawyers and judges, how many are familiar
with the decisions of this Court which hold that public swamps and public lands more appropriate for
buildings and other structures than for agriculture are agricultural lands? The same can be truthfully
said of members of the Constitutional Assembly.
The speeches of delegates Montilla and Ledesma cannot serve as a means of interpretation. The
sentiments expressed in those speeches, like the first drafts of section 5 of Article XIII, may have
reflected the sentiments of the Convention in the first stages of the deliberation or down to its close.
If they were, those sentiments were relaxed and not given full sway for reasons on which we need
not speculate. Speeches in support of a project can be a valuable criterion for judging the intention
of a law or constitution only if no changes were afterward affected. If anything, the change in section
5 of Article XIII wrought in the face of a strong advocacy for complete and absolute nationalization of
all lands, without exception, offers itself as the best proof that to the framers of the Constitution the
change was not "merely one of words" but represented something real and substantial. Firm and
resolute convictions are expressed in a document in strong, unequivocal and unqualified language.
This is specially true when the instrument is a constitution, "the most solemn and deliberate of
human writings, always carefully drawn, and calculated for permanent endurance."
The decision quotes from the Framing of the Constitution by Dean Aruego a sentence which says
that one of the principles underlying the provision of Article XIII of the Constitution is "that lands,
minerals, forests and other natural resources constitute the exclusive heritage of the Filipino Nation."
In underlying the word lands the Court wants to insinuate that all lands without exceptions are
included. This is nothing to be enthusiastic over. It is hyperbole, "a figure of speech in which the
statement expresses more than the truth" but "is accepted as a legal form of expression." It is an
expression that "lies but does not deceive." When we say men must fight we do not mean all men,
and every one knows we don't.
The decision says:
It is true that in section 9 of said Commonwealth Act No. 141,"alienable or disposable public
lands" which are the same as "public agricultural lands" under the Constitution, are classified
into agricultural, residential, commercial, industrial and for other purposes. This simply
means that the term "public agricultural lands" has both a broad and a particular meaning.
Under its broad or general meaning, as used in the Constitution, it embraces all lands that
are neither timber nor mineral. This broad meaning is particularized in section 9 of
Commonwealth Act No. 141 which classifies "public agricultural lands" for purposes of
alienation or disposition, into lands that are strictly agricultural or actually devoted to
cultivation for agricultural purposes; lands that are residential; commercial; industrial; or
lands for other purposes. The fact that these lands are made alienable or disposable under
Commonwealth Act No. 141, in favor of Filipino Citizen, is a conclusive indication of their
character as public agricultural lands under said statute and under the Constitution."
If I am not mistaken in my understanding of the line of reasoning in the foregoing passage, my
humble opinion is that there is no logical connection between the premise and the conclusion. What
to me seems clearly to emerge from it is that Commonwealth Act No. 141, so far from sustaining that
Court's theory, actually pulls down its case which it has built upon the foundation of parallel
classification of public and private lands into forest, mineral and agricultural lands, and the
inexistence of such things as residential, industrial or commercial lands. It is to be noted that Act No.
141, section 9, classifies disposable lands into agricultural, industrial, residential, commercial, etc.
And these are lands of the public domain.
The fact that the provisions regarding alienation of private lands happens to be included in Article
XIII, which is entitled "Conservation and Utilization of Natural Resources," is no ground for treating
public lands and private lands on the same footing. The inference should rather be the exact
reverse. Agricultural lands, whether public or private, are natural resources. But residential,
commercial, and industrial lands, as we have seen, are not natural resources either in the sense
these words convey to the popular mind or as defined in the dictionary. This fact may have been one
factor which prompted the elimination of private non-agricultural lands from the range of the
prohibition, along with reasons, of foreign policy, economics and politics.
From the opinion of Secretary of Justice Jose A. Santos in 1939, the majority can not derive any
comfort unless we cling to the serious argument that as public lands go so go private lands. In that
opinion the question propounded was whether a piece of public land which was more profitable as a
homesite might not be sold and considered as agricultural. The illustrious Secretary answered yes,
which was correct. But the classification of private lands was not directly or indirectly involved. It is
the opinion of the present Secretary of Justice that is to the point. If the construction placed by the
law-officer of the government on a constitutional provision may properly be invoked, as the majority
say but which I doubt, as representing the true intent of the instrument, this Court, if it is to be
consistent, should adopt Secretary Ozaeta's view. If the Solicitor General's attitude as interested
counsel for the government in a judicial action is as the decision also suggests but which, I think,
is still more incorrect both in theory and in practice then this Court should have given heed to the
motion for withdrawal of the present appeal, which had been concurred in by the Solicitor General in
line presumably with the opinion of the head of his department.
The Court fears that "this constitutional purpose of conserving agricultural resources in the hands of
Filipino citizens may easily be defeated by the Filipino citizens themselves who may alienate their
agricultural lands in favor of aliens." It reasons that "it would certainly be futile to prohibit the
alienation of public agricultural lands to aliens if, after all, they may be freely so alienated upon their
becoming private agricultural lands in the hands of Filipino citizens." Sections122 and 123 of Act No.
141 should banish this fear. These sections, quoted and relied upon in the majority opinion, prevent
private lands that have been acquired under any of the public land laws from falling into alien
possession in fee simple. Without this law, the fear would be well-founded if we adopt the majority's
theory, which we precisely reject, that agricultural and residential lands are synonymous, be they
public or private. The fear would not materialize under our theory, that only lands which are not
agricultural may be owned by persons other than FIlipino citizens.
Act No. 141, by the way, supplies the best argument against the majority's interpretation of section 5
of Article XIII. Prohibiting the acquisition by foreigners of any lands originally acquired in any manner
under its provisions or under the provisions of any previous law, ordinace, royal order, royal decree,
or any other law formerly enforced in the Philippines with regard to public lands, etc., it is a mute
eloquent testimony that in the minds of the legislature, whose interpretation the majority correctly say
should be looked to as authoritative, the Constitution did not carry such prohibition. For if the
Constitution already barred the alienation of lands of any kind in favor of aliens, the provisions of
sections 122 and 123 of Commonwealth Act No. 141 would have been superfluous.
The decision says that "if under Article XIV section 8, of the Constitution, an alien may not even
operate a small jeepney for hire, it is certainly not hard to understand that neither is he allowed to
own a piece of land." There is no similitude between owning a lot for a home or a factory or a store
and operating a jeepney for hire. It is not the ownership of a jeepney that is forbidden; it is the use of
it for public service that is not allowed. A foreigner is not barred from owning the costliest motor cars,
steamships or airplanes in any number, for his private use or that of his friends and relatives. He can
not use a jeepney for hire because the operation of public utilities is reserved to Filipino nationals,
and the operation of a jeepney happens to be within this policy. The use of a jeepney for hire maybe
insignificant in itself but it falls within a class of industry that performs a vital function in the country's
economic life, closely associated with its advancing civilization, supplying needs so fundamental for
communal living and for the development of the country's economy, that the government finds need
of subjecting them to some measure of control and the Constitution deems it necessary to limit their
operation by Filipino citizens. The importance of using a jeepney for hire cannot be sneered at or
minimized just as a vote for public office by a single foreign citizen can not be looked at with a shrug
of the shoulder on the theory that it would not cause a ripple in the political complexion or scene of
the nation.
This Court quotes with approval from the Solicitor General's brief this passage: "If the term `private
agricultural lands' is to be construed as not including residential lots or lands of similar nature, the
result will be that aliens may freely acquire and possess not only residential lots and houses for
themselves but entire subdivisions and whole towns and cities, and that they may validly buy and
hold in their names lands of any area for building homes, factories, industrial plants, fisheries,
hatcheries, schools, health and vacation resorts, markets, golf courses, playgrounds, airfields and
a host of other uses and purposes that are not, in appellant's words, strictly agricultural." Arguments
like this have no place where there is no ambiguity in the constitution or law. The courts are not at
liberty to disregard a provision that is clear and certain simply because its enforcement would work
inconvenience or hardship or lead to what they believe pernicious results. Courts have nothing to do
with inconvenience or consequences. This role is founded on sound principles of constitutional
government and is so well known as to make citations of authorities presumptuous.
Granting the possibility or probability of the consequences which this Court and the Solicitor General
dread, we should not overlook the fact that there is the Congress standing guard to curtail or stop
such excesses or abuses if and when the menace should show its head. The fact that the
Constitution has not prohibited, as we contend, the transfer of private non-agricultural lands to aliens
does not prevent the Congress from passing legislation to regulate or prohibit such transfer, to
define the size of private lands a foreigner may possess in fee simple, or to specify the uses for
which lands may be dedicated, in order to prevent aliens from conducting fisheries, hatcheries,
vacation resorts, markets, golf-courses, cemeteries. The Congress could, if it wants, go so far as to
exclude foreigners from entering the country or settling here. If I may be permitted to guess, the
alteration in the original draft of section 5 of Article XIII may have been prompted precisely by the
thought that it is the better policy to leave to the political departments of the Government the
regulation or absolute prohibition of all land ownership by foreigners, as the changed, changing and
ever-changing conditions demand. The Commonwealth Legislature did that with respect to lands
that were originally public lands, through Commonwealth Act No. 141, and the Legislative Assembly
during the Japanese occupation extended the prohibition to all private lands, as Mr. Justice Paras
has pointed out. In the present Congress, at least two bills have been introduced proposing
Congressional legislation in the same direction. All of which is an infallible sign that the Constitution
does not carry such prohibition, in the opinion of three legislatures, an opinion which, we entirely
agree with the majority, should be given serious consideration by the courts (if needed there were
any doubt), both as a matter of policy, and also because it may be presumed to represent the true
intent of the instrument. (12 C.J., 714.) In truth, the decision lays special emphasis on the fact that
"many members of the National Assembly who approved the new Act (No. 141) had been members
of the Constitutional Convention." May I add that Senator Francisco, who is the author of one of the
bills I have referred to, in the Senate, was a leading, active and influential member of the
Constitutional Convention?


Footnotes
1
En vista de la circular num. 128 del Departamento de Justicia fechada el 12 de Agosto,
1947, la cual enmienda la circular num. 14 en el sentido de autorizar el registro de la venta
de terrenos urbanos a extranjeros, y en vista del hecho de que el Procurador General se ha
unido a la mocion para la retirada de la apelacion, ya no existe ninguna controversia entre
las partes y la cuestion es ahora academica. Por esta razon, la Corte ya no tiene jurisdiccion
sobre el caso (Traduccion; las cursivas son nuestras).
2
Vease regla 64, seccion 3, incisos c y d, Reglamento de los Tribunales.
3
Vease el asunto de Vera contra Avelino (77 Phil., 192); vease tambien el asunto de
Mabanag contraLopez Vito (78 Phil., 1).
4
El Congreso puede determinar por ley la extencion del terreno privado agricola que los
individuos, corporaciones, o asociaciones pueden adquirir y poseer, sujeto alos derechos
existentes antes de la promulgacion de dicha ley.
5
Vease los siguientes asuntos: Mapa contra Gobierno Insular, 10 Jur. Fil., 178;
Montano contra Gobierno Insular, 12 Jur. Fil., 592; Santiago contra Gobierno Insular, 12 Jur.
Fil., 615; Ibaez de Aldecoa contraGobierno Insular, 13 Jur. Fil., 163; Ramos contra Director
de Terrenos, 39 Jur. Fil., 184; y Jocson contraDirector de Montes, 39 Jur. Fil., 569;
Ankron contra Gobierno de Filipinas, 40 Jur. Fil., 10.
6
Osorio y Gallardo.
7
Cf. Buchanan vs. Worley, 245 U.S. 60, 38 S. Ct. 16.






Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-27952 February 15, 1982
TESTATE ESTATE OF JOSE EUGENIO RAMIREZ, MARIA LUISA PALACIOS,
Administratrix, petitioner-appellee,
vs.
MARCELLE D. VDA. DE RAMIREZ, ET AL., oppositors, JORGE and ROBERTO
RAMIREZ, legatees, oppositors- appellants.

ABAD SANTOS, J .:
The main issue in this appeal is the manner of partitioning the testate estate of Jose Eugenio
Ramirez among the principal beneficiaries, namely: his widow Marcelle Demoron de Ramirez; his
two grandnephews Roberto and Jorge Ramirez; and his companion Wanda de Wrobleski.
The task is not trouble-free because the widow Marcelle is a French who lives in Paris, while the
companion Wanda is an Austrian who lives in Spain. Moreover, the testator provided for
substitutions.
Jose Eugenio Ramirez, a Filipino national, died in Spain on December 11, 1964, with only his widow
as compulsory heir. His will was admitted to probate by the Court of First Instance of Manila, Branch
X, on July 27, 1965. Maria Luisa Palacios was appointed administratrix of the estate. In due time she
submitted an inventory of the estate as follows:
INVENTARIO
Una sexta parte (1/6) proindiviso de un te
rreno, con sus mejoras y edificaciones, situadoen
la Escolta, Manila............................................................. P500,000.00
Una sexta parte (1/6) proindiviso de dos
parcelas de terreno situadas en Antipolo, Rizal................... 658.34
Cuatrocientos noventa y uno (491) acciones
de la 'Central Azucarera de la Carlota a P17.00
por accion ................................................................................8,347.00
Diez mil ochocientos seize (10,806) acciones
de la 'Central Luzon Milling Co.', disuelta y en
liquidacion a P0.15 por accion ..............................................1,620.90
Cuenta de Ahorros en el Philippine Trust
Co.............................................................................................. 2,350.73
TOTAL.............................................................. P512,976.97
MENOS:
Deuda al Banco de las Islas Filipinas, garan-
tizada con prenda de las acciones de La Carlota ......... P 5,000,00
VALOR LIQUIDO........................................... P507,976.97
The testamentary dispositions are as follows:
A.En nuda propiedad, a D. Roberto y D. Jorge Ramirez, ambas menores de edad,
residentes en Manila, I.F., calle 'Alright, No. 1818, Malate, hijos de su sobrino D.
Jose Ma. Ramirez, con sustitucion vulgar a favor de sus respectivos descendientes,
y, en su defecto, con sustitucion vulgar reciprocal entre ambos.
El precedente legado en nuda propiedad de la participacion indivisa de la finca
Santa Cruz Building, lo ordena el testador a favor de los legatarios nombrados, en
atencion a que dicha propiedad fue creacion del querido padre del otorgante y por
ser aquellos continuadores del apellido Ramirez,
B.Y en usufructo a saber:
a. En cuanto a una tercera parte, a favor de la esposa del testador, Da. Marcelle
Ramirez, domiciliada en IE PECO, calle del General Gallieni No. 33, Seine Francia,
con sustitucion vulgar u fideicomisaria a favor de Da. Wanda de Wrobleski, de Palma
de Mallorca, Son Rapina Avenida de los Reyes 13,
b.Y en cuanto a las dos terceras partes restantes, a favor de la nombrada Da.
Wanda de Nrobleski con sustitucion vulgar v fideicomisaria a saber:
En cuanto a la mitad de dichas dos terceras partes, a favor de D. Juan Pablo
Jankowski, de Son Rapina Palma de Mallorca; y encuanto a la mitad restante, a
favor de su sobrino, D. Horace V. Ramirez, San Luis Building, Florida St. Ermita,
Manila, I.F.
A pesar de las sustituciones fideiconiisarias precedentemente ordinadas, las
usufiructuarias nombradas conjuntamente con los nudo propietarios, podran en
cualquier memento vender a tercero los bienes objeto delegado, sin intervencion
alguna de los titulares fideicomisaarios.
On June 23, 1966, the administratrix submitted a project of partition as follows: the property of the
deceased is to be divided into two parts. One part shall go to the widow 'en pleno dominio" in
satisfaction of her legitime; the other part or "free portion" shall go to Jorge and Roberto Ramirez "en
nuda propriedad." Furthermore, one third (1/3) of the free portion is charged with the widow's
usufruct and the remaining two-thirds (2/3) with a usufruct in favor of Wanda.
Jorge and Roberto opposed the project of partition on the grounds: (a) that the provisions for vulgar
substitution in favor of Wanda de Wrobleski with respect to the widow's usufruct and in favor of Juan
Pablo Jankowski and Horacio V. Ramirez, with respect to Wanda's usufruct are invalid because the
first heirs Marcelle and Wanda) survived the testator; (b) that the provisions for fideicommissary
substitutions are also invalid because the first heirs are not related to the second heirs or substitutes
within the first degree, as provided in Article 863 of the Civil Code; (c) that the grant of a usufruct
over real property in the Philippines in favor of Wanda Wrobleski, who is an alien, violates Section 5,
Article III of the Philippine Constitution; and that (d) the proposed partition of the testator's interest in
the Santa Cruz (Escolta) Building between the widow Marcelle and the appellants, violates the
testator's express win to give this property to them Nonetheless, the lower court approved the project
of partition in its order dated May 3, 1967. It is this order which Jorge and Roberto have appealed to
this Court.
1. The widow's legitime.
The appellant's do not question the legality of giving Marcelle one-half of the estate in full ownership.
They admit that the testator's dispositions impaired his widow's legitime. Indeed, under Art. 900 of
the Civil Code "If the only survivor is the widow or widower, she or he shall be entitled to one-half of
the hereditary estate." And since Marcelle alone survived the deceased, she is entitled to one-half of
his estate over which he could impose no burden, encumbrance, condition or substitution of any kind
whatsoever. (Art. 904, par. 2, Civil Code.)
It is the one-third usufruct over the free portion which the appellants question and justifiably so. It
appears that the court a quo approved the usufruct in favor of Marcelle because the testament
provides for a usufruct in her favor of one-third of the estate. The court a quo erred for Marcelle who
is entitled to one-half of the estate "en pleno dominio" as her legitime and which is more than what
she is given under the will is not entitled to have any additional share in the estate. To give Marcelle
more than her legitime will run counter to the testator's intention for as stated above his dispositions
even impaired her legitime and tended to favor Wanda.
2. The substitutions.
It may be useful to recall that "Substitution is the appoint- judgment of another heir so that he may
enter into the inheritance in default of the heir originally instituted." (Art. 857, Civil Code. And that
there are several kinds of substitutions, namely: simple or common, brief or compendious,
reciprocal, and fideicommissary (Art. 858, Civil Code.) According to Tolentino, "Although the Code
enumerates four classes, there are really only two principal classes of substitutions: the simple and
the fideicommissary. The others are merely variations of these two." (111 Civil Code, p. 185 [1973].)
The simple or vulgar is that provided in Art. 859 of the Civil Code which reads:
ART. 859. The testator may designate one or more persons to substitute the heir or
heirs instituted in case such heir or heirs should die before him, or should not wish,
or should be incapacitated to accept the inheritance.
A simple substitution, without a statement of the cases to which it refers, shall
comprise the three mentioned in the preceding paragraph, unless the testator has
otherwise provided.
The fideicommissary substitution is described in the Civil Code as follows:
ART. 863. A fideicommissary substitution by virtue of which the fiduciary or first heir
instituted is entrusted with the obligation to preserve and to transmit to a second heir
the whole or part of inheritance, shall be valid and shall take effect, provided such
substitution does not go beyond one degree from the heir originally instituted, and
provided further that the fiduciary or first heir and the second heir are living at time of
the death of the testator.
It will be noted that the testator provided for a vulgar substitution in respect of the legacies of
Roberto and Jorge Ramirez, the appellants, thus: con sustitucion vulgar a favor de sus respectivos
descendientes, y, en su defecto, con substitution vulgar reciprocal entre ambos.
The appellants do not question the legality of the substitution so provided. The appellants question
the sustitucion vulgar y fideicomisaria a favor de Da. Wanda de Wrobleski" in connection with the
one-third usufruct over the estate given to the widow Marcelle However, this question has become
moot because as We have ruled above, the widow is not entitled to any usufruct.
The appellants also question the sustitucion vulgar y fideicomisaria in connection with Wanda's
usufruct over two thirds of the estate in favor of Juan Pablo Jankowski and Horace v. Ramirez.
They allege that the substitution in its vulgar aspect as void because Wanda survived the testator or
stated differently because she did not predecease the testator. But dying before the testator is not
the only case for vulgar substitution for it also includes refusal or incapacity to accept the inheritance
as provided in Art. 859 of the Civil Code, supra. Hence, the vulgar substitution is valid.
As regards the substitution in its fideicommissary aspect, the appellants are correct in their claim that
it is void for the following reasons:
(a) The substitutes (Juan Pablo Jankowski and Horace V. Ramirez) are not related to Wanda, the
heir originally instituted. Art. 863 of the Civil Code validates a fideicommissary substitution "provided
such substitution does not go beyond one degree from the heir originally instituted."
What is meant by "one degree" from the first heir is explained by Tolentino as follows:
Scaevola Maura, and Traviesas construe "degree" as designation, substitution, or
transmission. The Supreme Court of Spain has decidedly adopted this construction.
From this point of view, there can be only one tranmission or substitution, and the
substitute need not be related to the first heir. Manresa, Morell and Sanchez Roman,
however, construe the word "degree" as generation, and the present Code has
obviously followed this interpretation. by providing that the substitution shall not go
beyond one degree "from the heir originally instituted." The Code thus clearly
indicates that the second heir must be related to and be one generation from the first
heir.
From this, it follows that the fideicommissary can only be either a child or a parent of
the first heir. These are the only relatives who are one generation or degree from the
fiduciary (Op. cit., pp. 193-194.)
(b) There is no absolute duty imposed on Wanda to transmit the usufruct to the substitutes as
required by Arts. 865 and 867 of the Civil Code. In fact, the appellee admits "that the testator
contradicts the establishment of a fideicommissary substitution when he permits the properties
subject of the usufruct to be sold upon mutual agreement of the usufructuaries and the naked
owners." (Brief, p. 26.)
3. The usufruct of Wanda.
The appellants claim that the usufruct over real properties of the estate in favor of Wanda is void
because it violates the constitutional prohibition against the acquisition of lands by aliens.
The 1935 Constitution which is controlling provides as follows:
SEC. 5. Save in cases of hereditary succession, no private agricultural land shall be
transferred or assigned except to individuals, corporations, or associations qualified
to acquire or hold lands of the public domain in the Philippines. (Art. XIII.)
The court a quo upheld the validity of the usufruct given to Wanda on the ground that the
Constitution covers not only succession by operation of law but also testamentary succession. We
are of the opinion that the Constitutional provision which enables aliens to acquire private lands does
not extend to testamentary succession for otherwise the prohibition will be for naught and
meaningless. Any alien would be able to circumvent the prohibition by paying money to a Philippine
landowner in exchange for a devise of a piece of land.
This opinion notwithstanding, We uphold the usufruct in favor of Wanda because a usufruct, albeit a
real right, does not vest title to the land in the usufructuary and it is the vesting of title to land in favor
of aliens which is proscribed by the Constitution.
IN VIEW OF THE FOREGOING, the estate of Jose Eugenio Ramirez is hereby ordered distributed
as follows:
One-half (1/2) thereof to his widow as her legitime;
One-half (1/2) thereof which is the free portion to Roberto and Jorge Ramirez in naked ownership
and the usufruct to Wanda de Wrobleski with a simple substitution in favor of Juan Pablo Jankowski
and Horace V. Ramirez.
The distribution herein ordered supersedes that of the court a quo. No special pronouncement as to
costs.
SO ORDERED.
Barredo (Chairman), Concepcion, Jr., De Castro, Ericta and Escolin, JJ., concur.
Aquino J., took no part.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 134971 March 25, 2004
HERMINIO TAYAG, petitioner,
vs.
AMANCIA LACSON, ROSENDO LACSON, ANTONIO LACSON, JUAN LACSON, TEODISIA
LACSON-ESPINOSA and THE COURT OF APPEALS, respondents.
D E C I S I O N
CALLEJO, SR., J .:
Before us is a petition for review on certiorari of the Decision
1
and the Resolution
2
of respondent
Court of Appeals in CA-G.R. SP No. 44883.
The Case for the Petitioner
Respondents Angelica Tiotuyco Vda. de Lacson,
3
and her children Amancia, Antonio, Juan, and
Teodosia, all surnamed Lacson, were the registered owners of three parcels of land located in
Mabalacat, Pampanga, covered by Transfer Certificates of Title (TCT) Nos. 35922-R, 35923-R, and
35925-R, registered in the Register of Deeds of San Fernando, Pampanga. The properties, which
were tenanted agricultural lands,
4
were administered by Renato Espinosa for the owner.
On March 17, 1996, a group of original farmers/tillers, namely, Julio Tiamson, Renato Gozun, Rosita
Hernandez, Bienvenido Tongol, Alfonso Flores, Norma Quiambao, Rosita Tolentino, Jose Sosa,
Francisco Tolentino, Sr., Emiliano Laxamana, Ruben Torres, Meliton Allanigue, Dominga Laxamana,
Felicencia de Leon, Emiliano Ramos, and another group, namely, Felino G. Tolentino, Rica Gozun,
Perla Gozun, Benigno Tolentino, Rodolfo Quiambao, Roman Laxamana, Eddie San Luis, Ricardo
Hernandez, Nicenciana Miranda, Jose Gozun, Alfredo Sosa, Jose Tiamson, Augusto Tolentino,
Sixto Hernandez, Alex Quiambao, Isidro Tolentino, Ceferino de Leon, Alberto Hernandez, Orlando
Flores, and Aurelio Flores,
5
individually executed in favor of the petitioner separate Deeds of
Assignment
6
in which the assignees assigned to the petitioner their respective rights as
tenants/tillers of the landholdings possessed and tilled by them for and in consideration of P50.00
per square meter. The said amount was made payable "when the legal impediments to the sale of
the property to the petitioner no longer existed." The petitioner was also granted the exclusive right
to buy the property if and when the respondents, with the concurrence of the defendants-tenants,
agreed to sell the property. In the interim, the petitioner gave varied sums of money to the tenants as
partial payments, and the latter issued receipts for the said amounts.
On July 24, 1996, the petitioner called a meeting of the defendants-tenants to work out the
implementation of the terms of their separate agreements.
7
However, on August 8, 1996, the
defendants-tenants, through Joven Mariano, wrote the petitioner stating that they were not attending
the meeting and instead gave notice of their collective decision to sell all their rights and interests, as
tenants/lessees, over the landholding to the respondents.
8
Explaining their reasons for their
collective decision, they wrote as follows:
Kami ay nagtiwala sa inyo, naging tapat at nanindigan sa lahat ng ating napagkasunduan, hindi
tumanggap ng ibang buyer o ahente, pero sinira ninyo ang aming pagtitiwala sa pamamagitan ng
demanda ninyo at pagbibigay ng problema sa amin na hindi naman nagbenta ng lupa.
Kaya kami ay nagpulong at nagpasya na ibenta na lang ang aming karapatan o ang aming lupang
sinasaka sa landowner o sa mga pamilyang Lacson, dahil ayaw naming magkaroon ng problema.
Kaya kung ang sasabihin ninyong itoy katangahan, lalo sigurong magiging katangahan kung
ibebenta pa namin sa inyo ang aming lupang sinasaka, kaya pasensya na lang Mister Tayag. Dahil
sinira ninyo ang aming pagtitiwala at katapatan.
9

On August 19, 1996, the petitioner filed a complaint with the Regional Trial Court of San Fernando,
Pampanga, Branch 44, against the defendants-tenants, as well as the respondents, for the court to
fix a period within which to pay the agreed purchase price of P50.00 per square meter to the
defendants, as provided for in the Deeds of Assignment. The petitioner also prayed for a writ of
preliminary injunction against the defendants and the respondents therein.
10
The case was docketed
as Civil Case No. 10910.
In his complaint, the petitioner alleged, inter alia, the following:
4. That defendants Julio Tiamson, Renato Gozun, Rosita Hernandez, Bienvenido Tongol,
Alfonso Flores, Norma Quiambao, Rosita Tolentino, Jose Sosa, Francisco Tolentino, Sr.,
Emiliano Laxamana, Ruben Torres, Meliton Allanigue, Dominga Laxamana, Felicencia de
Leon, Emiliano Ramos are original farmers or direct tillers of landholdings over parcels of
lands covered by Transfer Certificate of Title Nos. 35922-R, 35923-R and 35925-R which are
registered in the names of defendants LACSONS; while defendants Felino G. Tolentino,
Rica Gozun, Perla Gozun, Benigno Tolentino, Rodolfo Quiambao, Roman Laxamana, Eddie
San Luis, Alfredo Gozun, Jose Tiamson, Augusto Tolentino, Sixto Hernandez, Alex
Quiambao, Isidro Tolentino, Ceferino de Leon, Alberto Hernandez, and Aurelio Flores are
sub-tenants over the same parcel of land.
5. That on March 17, 1996 the defendants TIAMSON, et al., entered into Deeds of
Assignment with the plaintiff by which the defendants assigned all their rights and interests
on their landholdings to the plaintiff and that on the same date (March 17, 1996), the
defendants received from the plaintiff partial payments in the amounts corresponding to their
names. Subsequent payments were also received:

1st
PAYMENT
2nd
PAYMENT
CHECK
NO.
TOTAL
1.Julio Tiamson - - - - - - P 20,000 P 10,621.54 231281
P
30,621.54
2. Renato Gozun - - - - - -
[son of Felix Gozun
(deceased)]
P 10,000 96,000 106,000.00
3. Rosita Hernandez - - - - P 5,000 14,374.24 231274
P
19,374.24
4. Bienvenido Tongol - - -
[Son of Abundio Tongol
(deceased)]
P 10,000 14,465.90 231285 24,465.90
5. Alfonso Flores - - - - - - P 30,000 26,648.40 231271 56,648.40

6. Norma Quiambao - - - - P 10,000 41,501.10 231279 51,501.10

7. Rosita Tolentino - - - - - P 10,000 22,126.08 231284 32,126.08

8. Jose Sosa - - - - - - - - - P 10,000 14,861.31 231291 24,861.31

9. Francisco Tolentino, Sr. P 10,000 24,237.62 231283 34,237.62

10. Emiliano Laxamana - - P 10,000 ------ ------ ------

11. Ruben Torres - - - - - -
[Son of Mariano Torres
(deceased)]
P 10,000 P 33,587.31 ------
P
43,587.31

12. Meliton Allanigue P 10,000 12,944.77 231269
P
22,944.77

13. Dominga Laxamana P 5,000 22,269.02 231275 27,269.02

14. Felicencia de Leon 10,000 ------ ------ ------

15. Emiliano Ramos 5,000 18,869.60 231280 23,869.60

16. Felino G. Tolentino 10,000 ------ ------ ------

17. Rica Gozun 5,000 ------ ------ ------

18. Perla Gozun 10,000 ------ ------ ------

19. Benigno Tolentino 10,000 ------ ------ ------

20. Rodolfo Quiambao 10,000 ------ ------ ------

21. Roman Laxamana 10,000 ------ ------ ------

22. Eddie San Luis 10,000 ------ ------ ------

23. Ricardo Hernandez 10,000 ------ ------ ------

24. Nicenciana Miranda 10,000 ------ ------ ------

25. Jose Gozun 10,000 ------ ------ ------

26. Alfredo Sosa 5,000 ------ ------ ------

27. Jose Tiamson 10,000 ------ ------ ------

28. Augusto Tolentino 5,000 ------ ------ ------

29. Sixto Hernandez 10,000 ------ ------ ------

30. Alex Quiambao 10,000 ------ ------ ------

31. Isidro Tolentino 10,000 ------ ------ ------

32. Ceferino de Leon ------ 11,378.70 231270 ------

33. Alberto Hernandez 10,000 ------ ------ ------

34. Orlando Florez 10,000 ------ ------ ------

35. Aurelio Flores 10,000 ------ ------ ------

6. That on July 24, 1996, the plaintiff wrote the defendants TIAMSON, et al., inviting them for
a meeting regarding the negotiations/implementations of the terms of their Deeds of
Assignment;
7. That on August 8, 1996, the defendants TIAMSON, et al., through Joven Mariano, replied
that they are no longer willing to pursue with the negotiations, and instead they gave notice
to the plaintiff that they will sell all their rights and interests to the registered owners
(defendants LACSONS).
A copy of the letter is hereto attached as Annex "A" etc.;
8. That the defendants TIAMSON, et. al., have no right to deal with the defendants LACSON
or with any third persons while their contracts with the plaintiff are subsisting; defendants
LACSONS are inducing or have induced the defendants TIAMSON, et. al., to violate their
contracts with the plaintiff;
9. That by reason of the malicious acts of all the defendants, plaintiff suffered moral
damages in the forms of mental anguish, mental torture and serious anxiety which in the sum
of P500,000.00 for which defendants should be held liable jointly and severally.
11

In support of his plea for injunctive relief, the petitioner, as plaintiff, also alleged the following
in his complaint:
11. That to maintain the status quo, the defendants TIAMSON, et al., should be restrained
from rescinding their contracts with the plaintiff, and the defendants LACSONS should also
be restrained from accepting any offer of sale or alienation with the defendants TIAMSON, et
al., in whatever form, the latters rights and interests in the properties mentioned in
paragraph 4 hereof; further, the LACSONS should be restrained from
encumbering/alienating the subject properties covered by TCT No. 35922-R, 35923-R and
TCT No. 35925-R, Registry of Deeds of San Fernando, Pampanga;
12. That the defendants TIAMSON, et al., threaten to rescind their contracts with the plaintiff
and are also bent on selling/alienating their rights and interests over the subject properties to
their co-defendants (LACSONS) or any other persons to the damage and prejudice of the
plaintiff who already invested much money, efforts and time in the said transactions;
13. That the plaintiff is entitled to the reliefs being demanded in the complaint;
14. That to prevent irreparable damages and prejudice to the plaintiff, as the latter has no
speedy and adequate remedy under the ordinary course of law, it is essential that a Writ of
Preliminary Injunction be issued enjoining and restraining the defendants TIAMSON, et al.,
from rescinding their contracts with the plaintiff and from selling/alienating their properties to
the LACSONS or other persons;
15. That the plaintiff is willing and able to put up a reasonable bond to answer for the
damages which the defendants would suffer should the injunction prayed for and granted be
found without basis.
12

The petitioner prayed, that after the proceedings, judgment be rendered as follows:
1. Pending the hearing, a Writ of Preliminary Injunction be issued prohibiting, enjoining and
restraining defendants Julio Tiamson, Renato Gozun, Rosita Hernandez, Bienvenido Tongol,
Alfonso Flores, Norma Quiambao, Rosita Tolentino, Jose Sosa, Francisco Tolentino Sr.,
Emiliano Laxamana, Ruben Torres, Meliton Allanigue, Dominga Laxamana, Felicencia de
Leon, Emiliano Ramos, Felino G. Tolentino, Rica Gozun, Perla Gozun, Benigno Tolentino,
Rodolfo Quiambao, Roman Laxamana, Eddie San Luis, Ricardo Hernandez, Nicenciana
Miranda, Jose Gozun, Alfredo Sosa, Jose Tiamson, Augusto Tolentino, Ceferino de Leon,
Alberto Hernandez, Orlando Flores, and Aurelio Flores from rescinding their contracts with
the plaintiff and from alienating their rights and interest over the aforementioned properties in
favor of defendants LACSONS or any other third persons; and prohibiting the defendants
LACSONS from encumbering/alienating TCT Nos. 35922-R, 35923-R and 35925-R of the
Registry of Deeds of San Fernando, Pampanga.
2. And pending the hearing of the Prayer for a Writ of Preliminary Injunction, it is prayed that
a restraining order be issued restraining the aforementioned defendants (TIAMSON, et al.)
from rescinding their contracts with the plaintiff and from alienating the subject properties to
the defendants LACSONS or any third persons; further, restraining and enjoining the
defendants LACSONS from encumbering/selling the properties covered by TCT Nos. 35922-
R, 35923-R, and 35925-R of the Registry of Deeds of San Fernando, Pampanga.
3. Fixing the period within which plaintiff shall pay the balance of the purchase price to the
defendants TIAMSON, et al., after the lapse of legal impediment, if any.
4. Making the Writ of Preliminary Injunction permanent;
5. Ordering the defendants to pay the plaintiff the sum of P500,000.00 as moral damages;
6. Ordering the defendants to pay the plaintiff attorneys fees in the sum of P100,000.00 plus
litigation expenses of P50,000.00;
Plaintiff prays for such other relief as may be just and equitable under the premises.
13

In their answer to the complaint, the respondents as defendants asserted that (a) the defendant
Angelica Vda. de Lacson had died on April 24, 1993; (b) twelve of the defendants were
tenants/lessees of respondents, but the tenancy status of the rest of the defendants was uncertain;
(c) they never induced the defendants Tiamson to violate their contracts with the petitioner; and, (d)
being merely tenants-tillers, the defendants-tenants had no right to enter into any transactions
involving their properties without their knowledge and consent. They also averred that the transfers
or assignments of leasehold rights made by the defendants-tenants to the petitioner is contrary to
Presidential Decree (P.D.) No. 27 and Republic Act No. 6657, the Comprehensive Agrarian Reform
Program (CARP).
14
The respondents interposed counterclaims for damages against the petitioner as
plaintiff.
The defendants-tenants Tiamson, et al., alleged in their answer with counterclaim for damages, that
the money each of them received from the petitioner were in the form of loans, and that they were
deceived into signing the deeds of assignment:
a) That all the foregoing allegations in the Answer are hereby repleaded and incorporated in
so far as they are material and relevant herein;
b) That the defendants Tiamson, et al., in so far as the Deeds of Assignment are concern[ed]
never knew that what they did sign is a Deed of Assignment. What they knew was that they
were made to sign a document that will serve as a receipt for the loan granted [to] them by
the plaintiff;
c) That the Deeds of Assignment were signed through the employment of fraud, deceit and
false pretenses of plaintiff and made the defendants believe that what they sign[ed] was a
mere receipt for amounts received by way of loans;
d) That the documents signed in blank were filled up and completed after the defendants
Tiamson, et al., signed the documents and their completion and accomplishment was done
in the absence of said defendants and, worst of all, defendants were not provided a copy
thereof;
e) That as completed, the Deeds of Assignment reflected that the defendants Tiamson, et
al., did assign all their rights and interests in the properties or landholdings they were tilling in
favor of the plaintiff. That if this is so, assuming arguendo that the documents were
voluntarily executed, the defendants Tiamson, et al., do not have any right to transfer their
interest in the landholdings they are tilling as they have no right whatsoever in the
landholdings, the landholdings belong to their co-defendants, Lacson, et al., and therefore,
the contract is null and void;
f) That while it is admitted that the defendants Tiamson, et al., received sums of money from
plaintiffs, the same were received as approved loans granted by plaintiff to the defendants
Tiamson, et al., and not as part consideration of the alleged Deeds of Assignment; and by
way of:
15

At the hearing of the petitioners plea for a writ of preliminary injunction, the respondents counsel
failed to appear. In support of his plea for a writ of preliminary injunction, the petitioner adduced in
evidence the Deeds of Assignment,
16
the receipts
17
issued by the defendants-tenants for the
amounts they received from him; and the letter
18
the petitioner received from the defendants-tenants.
The petitioner then rested his case.
The respondents, thereafter, filed a Comment/Motion to dismiss/deny the petitioners plea for
injunctive relief on the following grounds: (a) the Deeds of Assignment executed by the defendants-
tenants were contrary to public policy and P.D. No. 27 and Rep. Act No. 6657; (b) the petitioner
failed to prove that the respondents induced the defendants-tenants to renege on their obligations
under the "Deeds of Assignment;" (c) not being privy to the said deeds, the respondents are not
bound by the said deeds; and, (d) the respondents had the absolute right to sell and dispose of their
property and to encumber the same and cannot be enjoined from doing so by the trial court.
The petitioner opposed the motion, contending that it was premature for the trial court to resolve his
plea for injunctive relief, before the respondents and the defendants-tenants adduced evidence in
opposition thereto, to afford the petitioner a chance to adduce rebuttal evidence and prove his
entitlement to a writ of preliminary injunction. The respondents replied that it was the burden of the
petitioner to establish the requisites of a writ of preliminary injunction without any evidence on their
part, and that they were not bound to adduce any evidence in opposition to the petitioners plea for a
writ of preliminary injunction.
On February 13, 1997, the court issued an Order
19
denying the motion of the respondents for being
premature. It directed the hearing to proceed for the respondents to adduce their evidence. The
court ruled that the petitioner, on the basis of the material allegations of the complaint, was entitled
to injunctive relief. It also held that before the court could resolve the petitioners plea for injunctive
relief, there was need for a hearing to enable the respondents and the defendants-tenants to adduce
evidence to controvert that of the petitioner. The respondents filed a motion for reconsideration,
which the court denied in its Order dated April 16, 1997. The trial court ruled that on the face of the
averments of the complaint, the pleadings of the parties and the evidence adduced by the petitioner,
the latter was entitled to injunctive relief unless the respondents and the defendants-tenants
adduced controverting evidence.
The respondents, the petitioners therein, filed a petition for certiorari in the Court of Appeals for the
nullification of the February 13, 1997 and April 16, 1997 Orders of the trial court. The case was
docketed as CA-G.R. SP No. 44883. The petitioners therein prayed in their petition that:
1. An order be issued declaring the orders of respondent court dated February 13, 1997 and
April 16, 1997 as null and void;
2. An order be issued directing the respondent court to issue an order denying the
application of respondent Herminio Tayag for the issuance of a Writ of Preliminary Injunction
and/or restraining order.
3. In the meantime, a Writ of Preliminary Injunction be issued against the respondent court,
prohibiting it from issuing its own writ of injunction against Petitioners, and thereafter making
said injunction to be issued by this Court permanent.
Such other orders as may be deemed just & equitable under the premises also prayed for.
20

The respondents asserted that the Deeds of Assignment executed by the assignees in favor of the
petitioner were contrary to paragraph 13 of P.D. No. 27 and the second paragraph of Section 70 of
Rep. Act No. 6657, and, as such, could not be enforced by the petitioner for being null and void. The
respondents also claimed that the enforcement of the deeds of assignment was subject to a
supervening condition:
3. That this exclusive and absolute right given to the assignee shall be exercised only when no legal
impediments exist to the lot to effect the smooth transfer of lawful ownership of the lot/property in the
name of the ASSIGNEE.
21

The respondents argued that until such condition took place, the petitioner would not acquire any
right to enforce the deeds by injunctive relief. Furthermore, the petitioners plea in his complaint
before the trial court, to fix a period within which to pay the balance of the amounts due to the
tenants under said deeds after the "lapse" of any legal impediment, assumed that the deeds were
valid, when, in fact and in law, they were not. According to the respondents, they were not parties to
the deeds of assignment; hence, they were not bound by the said deeds. The issuance of a writ of
preliminary injunction would restrict and impede the exercise of their right to dispose of their
property, as provided for in Article 428 of the New Civil Code. They asserted that the petitioner had
no cause of action against them and the defendants-tenants.
On April 17, 1998, the Court of Appeals rendered its decision against the petitioner, annulling and
setting aside the assailed orders of the trial court; and permanently enjoining the said trial court from
proceeding with Civil Case No. 10901. The decretal portion of the decision reads as follows:
However, even if private respondent is denied of the injunctive relief he demands in the lower court
still he could avail of other course of action in order to protect his interest such as the institution of a
simple civil case of collection of money against TIAMSON, et al.
For all the foregoing considerations, the orders dated 13 February 1997 and 16 April 1997 are
hereby NULLIFIED and ordered SET ASIDE for having been issued with grave abuse of discretion
amounting to lack or excess of jurisdiction. Accordingly, public respondent is permanently enjoined
from proceeding with the case designated as Civil Case No. 10901.
22

The CA ruled that the respondents could not be enjoined from alienating or even encumbering their
property, especially so since they were not privies to the deeds of assignment executed by the
defendants-tenants. The defendants-tenants were not yet owners of the portions of the landholdings
respectively tilled by them; as such, they had nothing to assign to the petitioner. Finally, the CA ruled
that the deeds of assignment executed by the defendants-tenants were contrary to P.D. No. 27 and
Rep. Act No. 6657.
On August 4, 1998, the CA issued a Resolution denying the petitioners motion for reconsideration.
23

Hence, the petitioner filed his petition for review on certiorari before this Court, contending as
follows:
I
A MERE ALLEGATION IN THE ANSWER OF THE TENANTS COULD NOT BE USED AS
EVIDENCE OR BASIS FOR ANY CONCLUSION, AS THIS ALLEGATION, IS STILL THE SUBJECT
OF TRIAL IN THE LOWER COURT (RTC).
24

II
THE COURT OF APPEALS CANNOT ENJOIN THE HEARING OF A PETITION FOR
PRELIMINARY INJUNCTION AT A TIME WHEN THE LOWER COURT (RTC) IS STILL
RECEIVING EVIDENCE PRECISELY TO DETERMINE WHETHER OR NOT THE WRIT OF
PRELIMINARY INJUNCTION BEING PRAYED FOR BY TAYAG SHOULD BE GRANTED OR
NOT.
25

III
THE COURT OF APPEALS CANNOT USE "FACTS" NOT IN EVIDENCE, TO SUPPORT ITS
CONCLUSION THAT THE TENANTS ARE NOT YET "AWARDEES OF THE LAND REFORM.
26

IV
THE COURT OF APPEALS CANNOT CAUSE THE PERMANENT STOPPAGE OF THE ENTIRE
PROCEEDINGS BELOW INCLUDING THE TRIAL ON THE MERITS OF THE CASE
CONSIDERING THAT THE ISSUE INVOLVED ONLY THE PROPRIETY OF MAINTAINING THE
STATUS QUO.
27

V
THE COURT OF APPEALS CANNOT INCLUDE IN ITS DECISION THE CASE OF THE OTHER 35
TENANTS WHO DO NOT QUESTION THE JURISDICTION OF THE LOWER COURT (RTC) OVER
THE CASE AND WHO ARE IN FACT STILL PRESENTING THEIR EVIDENCE TO OPPOSE THE
INJUNCTION PRAYED FOR, AND TO PROVE AT THE SAME TIME THE COUNTER-CLAIMS
THEY FILED AGAINST THE PETITIONER.
28

VI
THE LOWER COURT (RTC) HAS JURISDICTION OVER THE CASE FILED BY TAYAG FOR
"FIXING OF PERIOD" UNDER ART. 1197 OF THE NEW CIVIL CODE AND FOR "DAMAGES"
AGAINST THE LACSONS UNDER ART. 1314 OF THE SAME CODE. THIS CASE CANNOT BE
SUPPRESSED OR RENDERED NUGATORY UNCEREMONIOUSLY.
29

The petitioner faults the Court of Appeals for permanently enjoining the trial court from proceeding
with Civil Case No. 10910. He opines that the same was too drastic, tantamount to a dismissal of the
case. He argues that at that stage, it was premature for the appellate court to determine the merits of
the case since no evidentiary hearing thereon was conducted by the trial court. This, the Court of
Appeals cannot do, since neither party moved for the dismissal of Civil Case No. 10910. The
petitioner points out that the Court of Appeals, in making its findings, went beyond the issue raised
by the private respondents, namely, whether or not the trial court committed a grave abuse of
discretion amounting to excess or lack of jurisdiction when it denied the respondents motion for the
denial/dismissal of the petitioners plea for a writ of preliminary injunction. He, likewise, points out
that the appellate court erroneously presumed that the leaseholders were not DAR awardees and
that the deeds of assignment were contrary to law. He contends that leasehold tenants are not
prohibited from conveying or waiving their leasehold rights in his favor. He insists that there is
nothing illegal with his contracts with the leaseholders, since the same shall be effected only when
there are no more "legal impediments."
At bottom, the petitioner contends that, at that stage, it was premature for the appellate court to
determine the merits of his case since no evidentiary hearing on the merits of his complaint had yet
been conducted by the trial court.
The Comment/Motion of the
Respondents to Dismiss/Deny
Petitioners Plea for a Writ
of Preliminary Injunction
Was Not Premature.
Contrary to the ruling of the trial court, the motion of the respondents to dismiss/deny the petitioners
plea for a writ of preliminary injunction after the petitioner had adduced his evidence, testimonial and
documentary, and had rested his case on the incident, was proper and timely. It bears stressing that
the petitioner had the burden to prove his right to a writ of preliminary injunction. He may rely solely
on the material allegations of his complaint or adduce evidence in support thereof. The petitioner
adduced his evidence to support his plea for a writ of preliminary injunction against the respondents
and the defendants-tenants and rested his case on the said incident. The respondents then had
three options: (a) file a motion to deny/dismiss the motion on the ground that the petitioner failed to
discharge his burden to prove the factual and legal basis for his plea for a writ of preliminary
injunction and, if the trial court denies his motion, for them to adduce evidence in opposition to the
petitioners plea; (b) forgo their motion and adduce testimonial and/or documentary evidence in
opposition to the petitioners plea for a writ of preliminary injunction; or, (c) waive their right to
adduce evidence and submit the incident for consideration on the basis of the pleadings of the
parties and the evidence of the petitioner. The respondents opted not to adduce any evidence, and
instead filed a motion to deny or dismiss the petitioners plea for a writ of preliminary injunction
against them, on their claim that the petitioner failed to prove his entitlement thereto. The trial court
cannot compel the respondents to adduce evidence in opposition to the petitioners plea if the
respondents opt to waive their right to adduce such evidence. Thus, the trial court should have
resolved the respondents motion even without the latters opposition and the presentation of
evidence thereon.
The RTC Committed a Grave
Abuse of Discretion Amounting
to Excess or Lack of Jurisdiction
in Issuing its February 13, 1997
and April 16, 1997 Orders
In its February 13, 1997 Order, the trial court ruled that the petitioner was entitled to a writ of
preliminary injunction against the respondents on the basis of the material averments of the
complaint. In its April 16, 1997 Order, the trial court denied the respondents motion for
reconsideration of the previous order, on its finding that the petitioner was entitled to a writ of
preliminary injunction based on the material allegations of his complaint, the evidence on record, the
pleadings of the parties, as well as the applicable laws:
For the record, the Court denied the LACSONS COMMENT/MOTION on the basis of the facts
culled from the evidence presented, the pleadings and the law applicable unswayed by the partisan
or personal interests, public opinion or fear of criticism (Canon 3, Rule 3.02, Code of Judicial
Ethics).
30

Section 3, Rule 58 of the Rules of Court, as amended, enumerates the grounds for the issuance of a
writ of preliminary injunction, thus:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief
consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained of
during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is
procuring or suffering to be done, some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding, and tending to render the
judgment ineffectual.
A preliminary injunction is an extraordinary event calculated to preserve or maintain the status quo of
things ante litem and is generally availed of to prevent actual or threatened acts, until the merits of
the case can be heard. Injunction is accepted as the strong arm of equity or a transcendent
remedy.
31
While generally the grant of a writ of preliminary injunction rests on the sound discretion of
the trial court taking cognizance of the case, extreme caution must be observed in the exercise of
such discretion.
32
Indeed, in Olalia v. Hizon,
33
we held:
It has been consistently held that there is no power the exercise of which is more delicate, which
requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case,
than the issuance of an injunction. It is the strong arm of equity that should never be extended
unless to cases of great injury, where courts of law cannot afford an adequate or commensurate
remedy in damages.
Every court should remember that an injunction is a limitation upon the freedom of action of the
defendant and should not be granted lightly or precipitately. It should be granted only when the court
is fully satisfied that the law permits it and the emergency demands it.
34

The very foundation of the jurisdiction to issue writ of injunction rests in the existence of a cause of
action and in the probability of irreparable injury, inadequacy of pecuniary compensation and the
prevention of the multiplicity of suits. Where facts are not shown to bring the case within these
conditions, the relief of injunction should be refused.
35

For the court to issue a writ of preliminary injunction, the petitioner was burdened to establish the
following: (1) a right in esse or a clear and unmistakable right to be protected; (2) a violation of that
right; (3) that there is an urgent and permanent act and urgent necessity for the writ to prevent
serious damage.
36
Thus, in the absence of a clear legal right, the issuance of the injunctive writ
constitutes a grave abuse of discretion. Where the complainants right is doubtful or disputed,
injunction is not proper. Injunction is a preservative remedy aimed at protecting substantial rights
and interests. It is not designed to protect contingent or future rights. The possibility of irreparable
damage without proof of adequate existing rights is not a ground for injunction.
37

We have reviewed the pleadings of the parties and found that, as contended by the respondents, the
petitioner failed to establish the essential requisites for the issuance of a writ of preliminary
injunction. Hence, the trial court committed a grave abuse of its discretion amounting to excess or
lack of jurisdiction in denying the respondents comment/motion as well as their motion for
reconsideration.
First. The trial court cannot enjoin the respondents, at the instance of the petitioner, from selling,
disposing of and encumbering their property. As the registered owners of the property, the
respondents have the right to enjoy and dispose of their property without any other limitations than
those established by law, in accordance with Article 428 of the Civil Code. The right to dispose of the
property is the power of the owner to sell, encumber, transfer, and even destroy the property.
Ownership also includes the right to recover the possession of the property from any other person to
whom the owner has not transmitted such property, by the appropriate action for restitution, with the
fruits, and for indemnification for damages.
38
The right of ownership of the respondents is not, of
course, absolute. It is limited by those set forth by law, such as the agrarian reform laws. Under
Article 1306 of the New Civil Code, the respondents may enter into contracts covering their property
with another under such terms and conditions as they may deem beneficial provided they are not
contrary to law, morals, good conduct, public order or public policy.
The respondents cannot be enjoined from selling or encumbering their property simply and merely
because they had executed Deeds of Assignment in favor of the petitioner, obliging themselves to
assign and transfer their rights or interests as agricultural farmers/laborers/sub-tenants over the
landholding, and granting the petitioner the exclusive right to buy the property subject to the
occurrence of certain conditions. The respondents were not parties to the said deeds. There is no
evidence that the respondents agreed, expressly or impliedly, to the said deeds or to the terms and
conditions set forth therein. Indeed, they assailed the validity of the said deeds on their claim that the
same were contrary to the letter and spirit of P.D. No. 27 and Rep. Act No. 6657. The petitioner even
admitted when he testified that he did not know any of the respondents, and that he had not met any
of them before he filed his complaint in the RTC. He did not even know that one of those whom he
had impleaded as defendant, Angelica Vda. de Lacson, was already dead.
Q: But you have not met any of these Lacsons?
A: Not yet, sir.
Q: Do you know that two (2) of the defendants are residents of the United States?
A: I do not know, sir.
Q: You do not know also that Angela Tiotuvie (sic) Vda. de Lacson had already been dead?
A: I am aware of that, sir.
39

We are one with the Court of Appeals in its ruling that:
We cannot see our way clear on how or why injunction should lie against petitioners. As owners of
the lands being tilled by TIAMSON, et al., petitioners, under the law, have the right to enjoy and
dispose of the same. Thus, they have the right to possess the lands, as well as the right to
encumber or alienate them. This principle of law notwithstanding, private respondent in the lower
court sought to restrain the petitioners from encumbering and/or alienating the properties covered by
TCT No. 35922-R, 35923-R and TCT No. 35925-R of the Registry of Deeds of San Fernando,
Pampanga. This cannot be allowed to prosper since it would constitute a limitation or restriction, not
otherwise established by law on their right of ownership, more so considering that petitioners were
not even privy to the alleged transaction between private respondent and TIAMSON, et al.
40

Second. A reading the averments of the complaint will show that the petitioner clearly has no cause
of action against the respondents for the principal relief prayed for therein, for the trial court to fix a
period within which to pay to each of the defendants-tenants the balance of the P50.00 per square
meter, the consideration under the Deeds of Assignment executed by the defendants-tenants. The
respondents are not parties or privies to the deeds of assignment. The matter of the period for the
petitioner to pay the balance of the said amount to each of the defendants-tenants is an issue
between them, the parties to the deed.
Third. On the face of the complaint, the action of the petitioner against the respondents and the
defendants-tenants has no legal basis. Under the Deeds of Assignment, the obligation of the
petitioner to pay to each of the defendants-tenants the balance of the purchase price was
conditioned on the occurrence of the following events: (a) the respondents agree to sell their
property to the petitioner; (b) the legal impediments to the sale of the landholding to the petitioner no
longer exist; and, (c) the petitioner decides to buy the property. When he testified, the petitioner
admitted that the legal impediments referred to in the deeds were (a) the respondents refusal to sell
their property; and, (b) the lack of approval of the Department of Agrarian Reform:
Q : There is no specific agreement prior to the execution of those documents as when they
will pay?
A : We agreed to that, that I will pay them when there are no legal impediment, sir.
Q : Many of the documents are unlattered (sic) and you want to convey to this Honorable
Court that prior to the execution of these documents you have those tentative agreement for
instance that the amount or the cost of the price is to be paid when there are no legal
impediment, you are using the word "legal impediment," do you know the meaning of that?
A : When there are (sic) no more legal impediment exist, sir.
Q : Did you make how (sic) to the effect that the meaning of that phrase that you used the
unlettered defendants?
A : We have agreed to that, sir.
ATTY. OCAMPO:
May I ask, Your Honor, that the witness please answer my question not to answer in the way
he wanted it.
COURT:
Just answer the question, Mr. Tayag.
WITNESS:
Yes, Your Honor.
ATTY. OCAMPO:
Q : Did you explain to them?
A : Yes, sir.
Q : What did you tell them?
A : I explain[ed] to them, sir, that the legal impediment then especially if the Lacsons will not
agree to sell their shares to me or to us it would be hard to (sic) me to pay them in full. And
those covered by DAR. I explain[ed] to them and it was clearly stated in the title that there is
[a] prohibited period of time before you can sell the property. I explained every detail to
them.
41

It is only upon the occurrence of the foregoing conditions that the petitioner would be obliged to pay
to the defendants-tenants the balance of the P50.00 per square meter under the deeds of
assignment. Thus:
2. That in case the ASSIGNOR and LANDOWNER will mutually agree to sell the said lot to
the ASSIGNEE, who is given an exclusive and absolute right to buy the lot, the ASSIGNOR
shall receive the sum of FIFTY PESOS (P50.00) per square meter as consideration of the
total area actually tilled and possessed by the ASSIGNOR, less whatever amount received
by the ASSIGNOR including commissions, taxes and all allowable deductions relative to the
sale of the subject properties.
3. That this exclusive and absolute right given to the ASSIGNEE shall be exercised only
when no legal impediments exist to the lot to effect the smooth transfer of lawful ownership
of the lot/property in the name of the ASSIGNEE;
4. That the ASSIGNOR will remain in peaceful possession over the said property and shall
enjoy the fruits/earnings and/or harvest of the said lot until such time that full payment of the
agreed purchase price had been made by the ASSIGNEE.
42

There is no showing in the petitioners complaint that the respondents had agreed to sell their
property, and that the legal impediments to the agreement no longer existed. The petitioner and the
defendants-tenants had yet to submit the Deeds of Assignment to the Department of Agrarian
Reform which, in turn, had to act on and approve or disapprove the same. In fact, as alleged by the
petitioner in his complaint, he was yet to meet with the defendants-tenants to discuss the
implementation of the deeds of assignment. Unless and until the Department of Agrarian Reform
approved the said deeds, if at all, the petitioner had no right to enforce the same in a court of law by
asking the trial court to fix a period within which to pay the balance of the purchase price and praying
for injunctive relief.
We do not agree with the contention of the petitioner that the deeds of assignment executed by the
defendants-tenants are perfected option contracts.
43
An option is a contract by which the owner of
the property agrees with another person that he shall have the right to buy his property at a fixed
price within a certain time. It is a condition offered or contract by which the owner stipulates with
another that the latter shall have the right to buy the property at a fixed price within a certain time, or
under, or in compliance with certain terms and conditions, or which gives to the owner of the
property the right to sell or demand a sale. It imposes no binding obligation on the person holding
the option, aside from the consideration for the offer. Until accepted, it is not, properly speaking,
treated as a contract.
44
The second party gets in praesenti, not lands, not an agreement that he shall
have the lands, but the right to call for and receive lands if he elects.
45
An option contract is a
separate and distinct contract from which the parties may enter into upon the conjunction of the
option.
46

In this case, the defendants-tenants-subtenants, under the deeds of assignment, granted to the
petitioner not only an option but the exclusive right to buy the landholding. But the grantors were
merely the defendants-tenants, and not the respondents, the registered owners of the property. Not
being the registered owners of the property, the defendants-tenants could not legally grant to the
petitioner the option, much less the "exclusive right" to buy the property. As the Latin saying goes,
"NEMO DAT QUOD NON HABET."
Fourth. The petitioner impleaded the respondents as parties-defendants solely on his allegation that
the latter induced or are inducing the defendants-tenants to violate the deeds of assignment,
contrary to the provisions of Article 1314 of the New Civil Code which reads:
Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to
the other contracting party.
In So Ping Bun v. Court of Appeals,
47
we held that for the said law to apply, the pleader is burdened
to prove the following: (1) the existence of a valid contract; (2) knowledge by the third person of the
existence of the contract; and (3) interference by the third person in the contractual relation without
legal justification.
Where there was no malice in the interference of a contract, and the impulse behind ones conduct
lies in a proper business interest rather than in wrongful motives, a party cannot be a malicious
interferer. Where the alleged interferer is financially interested, and such interest motivates his
conduct, it cannot be said that he is an officious or malicious intermeddler.
48

In fine, one who is not a party to a contract and who interferes thereon is not necessarily an officious
or malicious intermeddler. The only evidence adduced by the petitioner to prove his claim is the
letter from the defendants-tenants informing him that they had decided to sell their rights and
interests over the landholding to the respondents, instead of honoring their obligation under the
deeds of assignment because, according to them, the petitioner harassed those tenants who did not
want to execute deeds of assignment in his favor, and because the said defendants-tenants did not
want to have any problem with the respondents who could cause their eviction for executing with the
petitioner the deeds of assignment as the said deeds are in violation of P.D. No. 27 and Rep. Act
No. 6657.
49
The defendants-tenants did not allege therein that the respondents induced them to
breach their contracts with the petitioner. The petitioner himself admitted when he testified that his
claim that the respondents induced the defendants-assignees to violate contracts with him was
based merely on what "he heard," thus:
Q: Going to your last statement that the Lacsons induces (sic) the defendants, did you see
that the Lacsons were inducing the defendants?
A: I heard and sometime in [the] first week of August, sir, they went in the barrio (sic). As a
matter of fact, that is the reason why they sent me letter that they will sell it to the Lacsons.
Q: Incidentally, do you knew (sic) these Lacsons individually?
A: No, sir, it was only Mr. Espinosa who I knew (sic) personally, the alleged negotiator and
has the authority to sell the property.
50

Even if the respondents received an offer from the defendants-tenants to assign and transfer their
rights and interests on the landholding, the respondents cannot be enjoined from entertaining the
said offer, or even negotiating with the defendants-tenants. The respondents could not even be
expected to warn the defendants-tenants for executing the said deeds in violation of P.D. No. 27 and
Rep. Act No. 6657. Under Section 22 of the latter law, beneficiaries under P.D. No. 27 who have
culpably sold, disposed of, or abandoned their land, are disqualified from becoming beneficiaries.
From the pleadings of the petitioner, it is quite evident that his purpose in having the defendants-
tenants execute the Deeds of Assignment in his favor was to acquire the landholding without any
tenants thereon, in the event that the respondents agreed to sell the property to him. The petitioner
knew that under Section 11 of Rep. Act No. 3844, if the respondents agreed to sell the property, the
defendants-tenants shall have preferential right to buy the same under reasonable terms and
conditions:
SECTION 11. Lessees Right of Pre-emption. In case the agricultural lessor desires to sell the
landholding, the agricultural lessee shall have the preferential right to buy the same under
reasonable terms and conditions: Provided, That the entire landholding offered for sale must be pre-
empted by the Land Authority if the landowner so desires, unless the majority of the lessees object
to such acquisition: Provided, further, That where there are two or more agricultural lessees, each
shall be entitled to said preferential right only to the extent of the area actually cultivated by him.
51

Under Section 12 of the law, if the property was sold to a third person without the knowledge of the
tenants thereon, the latter shall have the right to redeem the same at a reasonable price and
consideration. By assigning their rights and interests on the landholding under the deeds of
assignment in favor of the petitioner, the defendants-tenants thereby waived, in favor of the
petitioner, who is not a beneficiary under Section 22 of Rep. Act No. 6657, their rights of preemption
or redemption under Rep. Act No. 3844. The defendants-tenants would then have to vacate the
property in favor of the petitioner upon full payment of the purchase price. Instead of acquiring
ownership of the portions of the landholding respectively tilled by them, the defendants-tenants
would again become landless for a measly sum of P50.00 per square meter. The petitioners
scheme is subversive, not only of public policy, but also of the letter and spirit of the agrarian laws.
That the scheme of the petitioner had yet to take effect in the future or ten years hence is not a
justification. The respondents may well argue that the agrarian laws had been violated by the
defendants-tenants and the petitioner by the mere execution of the deeds of assignment. In fact, the
petitioner has implemented the deeds by paying the defendants-tenants amounts of money and
even sought their immediate implementation by setting a meeting with the defendants-tenants. In
fine, the petitioner would not wait for ten years to evict the defendants-tenants. For him, time is of the
essence.
The Appellate Court Erred
In Permanently Enjoining
The Regional Trial Court
From Continuing with the
Proceedings in Civil Case No. 10910.
We agree with the petitioners contention that the appellate court erred when it permanently enjoined
the RTC from continuing with the proceedings in Civil Case No. 10910. The only issue before the
appellate court was whether or not the trial court committed a grave abuse of discretion amounting
to excess or lack of jurisdiction in denying the respondents motion to deny or dismiss the petitioners
plea for a writ of preliminary injunction. Not one of the parties prayed to permanently enjoin the trial
court from further proceeding with Civil Case No. 10910 or to dismiss the complaint. It bears
stressing that the petitioner may still amend his complaint, and the respondents and the defendants-
tenants may file motions to dismiss the complaint. By permanently enjoining the trial court from
proceeding with Civil Case No. 10910, the appellate court acted arbitrarily and effectively dismissed
the complaint motu proprio, including the counterclaims of the respondents and that of the
defendants-tenants. The defendants-tenants were even deprived of their right to prove their special
and affirmative defenses.
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of the
Court of Appeals nullifying the February 13, 1996 and April 16, 1997 Orders of the RTC is
AFFIRMED. The writ of injunction issued by the Court of Appeals permanently enjoining the RTC
from further proceeding with Civil Case No. 10910 is hereby LIFTED and SET ASIDE. The Regional
Trial Court of Mabalacat, Pampanga, Branch 44, is ORDERED to continue with the proceedings in
Civil Case No. 10910 as provided for by the Rules of Court, as amended.
SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.


Footnotes
1
Penned by Associate Justice Demetrio G. Demetria with Associate Justices Minerva P.
Gonzaga-Reyes, later a member of the Supreme Court, now retired, and Ramon A.
Barcelona, retired, concurring.
2
CA Rollo, p. 142.
3
Also referred to as Angela or Angelina Tiotuyco Vda. de Lacson.
4
Rollo, pp. 34, 56.
5
The petitioner alleged in his complaint that the other group are sub-tenants but the
respondents specifically denied allegation in their answer to the complaint.
6
Herein is a sample of such deed of assignment similarly signed by the thirty-five
defendants-tenants
...
WHEREAS, the ASSIGNOR is one of the agricultural lessee of a certain real
property covered under Transfer Certificate of Title No. 35925-R registered in the
names of the following persons:
1. ANGELA TIOTUYCO VDA. DE LACSON
2. AMANCIA LACSON
3. ANTONIO LACSON
4. JUAN LACSON
5. TEODOSIA LACSON
situated at ANGELES CITY, MABALACAT and MAGALANG, PAMPANGA.
WHEREAS, the said property is being administered by MR. RENATO ESPINOSA
with postal address at Chateau de Bai Condominium, Roxas Boulevard cor. Airport
Road, Baclaran, Paraaque, Metro Manila;
WHEREAS, the ASSIGNOR offered to assign his rights as tenant/lessee over the
portion of the aforecited land actually tilled and possessed by him and the
ASSIGNEE has agreed and accepted such offer under the following terms and
conditions to wit:
1. That the consideration of the said DEED OF ASSIGNMENT is the sum of
TEN THOUSAND (P10,000.00) Philippine Currency receipt of which is
hereby acknowledged by, ASSIGNOR;
2. That in case the ASSIGNOR and LANDOWNER will mutually agree to sell
said lot to the ASSIGNEE, who is given an exclusive and absolute right to
buy the lot, the ASSIGNOR shall receive the sum of FIFTY PESOS (P50.00)
per square meter as consideration of the total area actually tilled and
possessed by ASSIGNOR, less whatever amount received by the
ASSIGNOR including commissions, taxes & all allowable deductions relative
to the sale of the subject properties.
3. That this exclusive and absolute right given to the ASSIGNEE shall be
exercised only when no legal impediments exist to the lot to effect the
smooth transfer of lawful ownership of the lot/property in the name of the
ASSIGNEE;
4. That the ASSIGNOR will remain in peaceful possession over the said
property and shall enjoy the fruits/earnings and/or harvest of the said lot until
such time that full payment of the agreed purchase price had been made by
the ASSIGNEE.
7
The petitioner claims that aside from the said deed, the defendants-tenants executed
Memoranda of Agreement and Supplemental Deeds of Assignment.
[7] CA Rollo, p. 33.
8
Id. at 31.
9
Id. at 31.
10
Rollo, p. 33.
11
CA Rollo, pp. 23-25.
12
Id. at 26-27.
13
Id. at 27-29.
14
Id. at 41.
15
Id. at 34-35.
16
Exhibits "A" to "HH."
17
Exhibits "I" to "II-18."
18
Exhibit "JJ."
19
CA Rollo, p. 62.
20
Id. at 20.
21
Id. at 14.
22
Id. at 97.
23
Id. at 142
24
Rollo, p. 16.
25
Id. at 17.
26
Id. at 19.
27
Id. at 21.
28
Id.
29
Id. at 22.
30
CA Rollo, p. 74.
31
Cagayan de Oro City Landless Residents Asso., Inc. v. Court of Appeals, 254 SCRA 220
(1996).
32
Ong Ching Kian Chuan v. Court of Appeals, 363 SCRA 145 (2001).
33
196 SCRA 665 (1991).
34
Id. at 672-673.
35
Id., citing Golding v. Balatbat, 36 Phil. 941 (1917).
36
Crystal v. Cebu International School, 356 SCRA 296 (2001); Verzosa v. Court of Appeals,
299 SCRA 100 (1998).
37
Arcegas v. Court of Appeals, 275 SCRA 176 (1997); Idolor v. Court of Appeals, 351 SCRA
399 (2001).
38
Tolentino, Civil Code of the Philippines, Vol. II, 1963 ed., p. 41.
39
CA Rollo, p. 50.
40
Rollo, p. 30.
41
Id. at 61-62.
42
Id. at 43.
43
Id. at 21.
44
Adelfa Properties, Inc. v. Court of Appeals, 240 SCRA 565 (1995).
45
Litonjua v. L & R Corporation, 328 SCRA 796 (2000).
46
Laforteza v. Machuca, 333 SCRA 643 (2000).
47
314 SCRA 751 (1999).
48
Id., citing Gilchrist v. Cuddy, 29 Phil. 542 (1915).
49
Exhibit "JJ."
50
CA Rollo, pp. 51-52.
51
Supra.













SECOND DIVISION

ROSS RICA SALES CENTER, G.R. No. 132197
INC. and JUANITO KING &
SONS, INC., Present:
Petitioners,
PUNO, J.,
Chairman,
AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.

SPOUSES GERRY ONG and
ELIZABETH ONG, Promulgated:
Respondents.
August 16, 2005

x-------------------------------------------------------------------x


D E C I S I O N

TINGA, J.:

In a Decision
[1]
dated 6 January 1998, the Former First
Division of the Court of Appeals overturned the decisions of the
Municipal Trial Court (MTC) and the Regional Trial Court (RTC) of
Mandaue City, ruling instead that the MTC had no jurisdiction over
the subject complaint for unlawful detainer. This petition for review
prays for the reversal of the aforesaid Court of Appeals Decision.

The case originated from a complaint for ejectment filed by
petitioners against respondents, docketed as Civil Case No. 2376,
before the MTC of Mandaue City, Branch I. In the complaint,
petitioners alleged the fact of their ownership of three (3) parcels of
land covered by Transfer Certificates of Title (TCT) Nos. 36466,
36467 and 36468. Petitioners likewise acknowledged respondent
Elizabeth Ongs ownership of the lots previous to theirs. On 26
January 1995, Atty. Joseph M. Baduel, representing Mandaue
Prime Estate Realty, wrote respondents informing them of its intent
to use the lots and asking them to vacate within thirty (30) days
from receipt of the letter. But respondents refused to vacate,
thereby unlawfully withholding possession of said lots, so
petitioners alleged.

Ross Rica Sales Center, Inc. and Juanito King and Sons, Inc.
(petitioners) had acquired the lands from Mandaue Prime Estate
Realty through a sale made on 23 March 1995. In turn, it appears
that Mandaue Prime Estate Realty had acquired the properties from
the respondents through a Deed of Absolute Sale dated 14 July
1994. However, this latter deed of sale and the transfers of title
consequential thereto were subsequently sought to be annulled by
respondents in a complaint filed on 13 February 1995 before the
Mandaue RTC against Mandaue Prime Estate Realty.
[2]
Per record,
this case is still pending resolution.

Meanwhile, the MYC resolved the ejectment case on 24 April
1996, with the decision ordering respondents to vacate the
premises in question and to peacefully turn over possession thereof
to petitioners.

On appeal, the RTC rendered on 1 March 1997 a judgment
affirming the MTCs decision in its entirety.

On 8 May 1997, respondents filed a notice of appeal.
However, on the following day, they filed a motion for
reconsideration.

On 23 June 1997, the RTC issued an Order which
concurrently gave due course to respondents notice of appeal filed
on 8 May 1997; denied their motion for reconsideration dated 9 May
1997,
[3]
and granted petitioners motion for immediate execution
pending appeal.

In a Petition for Certiorari with Injunction filed with the Court of
Appeals and treated as a Petition for Review, the appellate court
ruled that the MTC had no jurisdiction over said case as there was
no contract between the parties, express or implied, as would
qualify the same as one for unlawful detainer. Thus, the
assailed Orders of the MTC and RTC were set aside.

Petitioners then took this recourse via Petition for
Review under Rule 45 of the Rules of Court. The principal issues
raised before this Court are: (i) whether the RTC decision has
already become final and executory at the time the petition for
review was filed; (ii) whether the allegations in the complaint
constitute a case for unlawful detainer properly cognizable by the
MTC; and, (iii) whether petitioners, as registered owners, are
entitled to the possession of the subject premises.

We resolve the first argument to be without merit.

The following sequence of events is undisputed:

(1) On 1 March 1997, the RTC rendered the
questioned decision affirming the judgment of the MTC.
(2) On 28 April 1997, respondents received a copy of
the aforementioned decision.
(3) On 8 May 1997, respondents filed a Notice of
Appeal with the RTC.
(4) On 9 May 1997, respondents filed likewise with
the RTC a Motion for Reconsideration of the
aforementioned 1 March 1997 decision.
(5) On 23 June 1997, the RTC of Mandaue issued
an Order denying respondents Motion for
Reconsideration.
(6) On 9 July 1997, respondents received a copy of
the aforementioned 23 June 1997 Order.
(7) On 24 July 1997, respondents filed with the Court
of Appeals their motion for an additional period of ten
(10) days within which to file their Petition for Review.
(8) On 30 July 1997, respondents filed with the Court
of Appeals their Petition for Review.

Petitioners assert that the Petition for Review was filed beyond
the fifteen (15)-day period for appeal. They theorize that the period
started running on 28 April 1995, the date of receipt of the RTC
decision, and ended on 13 May 1997. According to them, this
reglementary period could not have been interrupted by the filing
on 9 May 1997 of the Motion for Reconsideration because of the
filing one day earlier of the Notice of Appeal. This Notice of
Appeal dated 8 May 1997, albeit the wrong mode of appeal,
expressly manifested their intention to file a petition for review to
either the Court of Appeals or the Supreme Court.
[4]



Petitioners further argue that respondents, after having filed
the Notice of Appeal which was given due course by the RTC, cannot
take an inconsistent stand such as filing a Motion for
Reconsideration. Such filing, therefore, did not toll the fifteen (15)-
day period which started running from the date of receipt of the
RTC decision on 28 April 1997 and ended on 13 May 1997.

Respondents, in their Comment,
[5]
submit that the filing of
the Notice of Appeal dated 8 May 1997 was improper, and as such
did not produce any legal effect. Therefore, the filing of the Motion
for Reconsideration immediately on the following day cured this
defect. The RTC refused to subscribe respondents position. It
justified the denial of the Motion for Reconsideration on the ground
that the respondents had already filed a Notice of Appeal.
The Order dated 23 June 1997 stated:

On record is a Notice of Appeal by Certiorari filed by Defendants on
May 8, 1997.

Likewise filed by Defendants on May 9, 1997 is a Motion for
Reconsideration.

Considering the Notice of Appeal filed earlier which the court
hereby approves, the Motion for Reconsideration is DENIED.

The Motion for Immediate Execution Pending Appeal being
meritorious, is GRANTED.
[6]
(Emphasis in the original.)







Strangely enough, the Court of Appeals passed no comment on
this point when it took cognizance of respondents position and
reversed the RTC. But does this necessarily mean that the RTC was
correct when it declared that the Motion for Reconsideration was
barred by the filing of the Notice of Appeal, no matter how erroneous
the latter mode was?

Rule 42 governs the mode of appeal applicable in this case.
Sec. 1 provides:

Section 1. How appeal taken; time for filing. -- A party desiring to appeal
from a decision of the RTC rendered in the exercise of its appellate
jurisdiction may file a verified petition for review with the Court of
Appeals, paying at the same time to the clerk of said court the
corresponding docket and other lawful fees, depositing the amount
of P500.00 for costs, and furnishing the Regional Trial Court and the
adverse party with a copy of the petition. The petition shall be filed and
served within fifteen (15) days from notice of the decision sought to be
reviewed or of the denial of petitioners motion for new trial or
reconsideration filed in due time after judgment. Upon proper motion
and the payment of the full amount of the docket and other lawful fees
and the deposit for costs before the expiration of the reglementary period,
the Court of Appeals may grant an additional period of fifteen (15) days
only within which to file the petition for review. No further extension
shall be granted except for the most compelling reason and in no case to
exceed fifteen (15) days.


Since the unlawful detainer case was filed with the MTC and
affirmed by the RTC, petitioners should have filed a Petition for
Review with the Court of Appeals and not a Notice of Appeal with
the RTC. However, we consider this to have been remedied by the
timely filing of theMotion for Reconsideration on the following day.
Section 3, Rule 50 of the Rules of Court allows the withdrawal of
appeal at any time, as a matter of right, before the filing of the
appellees brief. Applying this rule contextually, the filing of
the Motion for Reconsideration may be deemed as an effective
withdrawal of the defective Notice of Appeal.

Perforce, the period of appeal was tolled by the Motion for
Reconsideration and started to run again from the receipt of the
order denying the Motion for Reconsideration. A Motion for
Additional Time to File the Petition was likewise filed with the Court
of Appeals. Counting fifteen (15) days from receipt of the denial of
the Motion for Reconsideration and the ten (10)-day request for
additional period, it is clear that respondents filed their Petition for
Review on time.

Petitioners invoke to the ruling in People v. De la Cruz
[7]
that
once a notice of appeal is filed, it cannot be validly withdrawn to
give way to a motion for reconsideration. The factual circumstances
in the two cases are different.

De la Cruz is a criminal case, governed by criminal procedure.
Section 3, Rule 122 of the Rules of Court provides that the proper
mode of appeal from a decision of the RTC is a notice of appeal and
an appeal is deemed perfected upon filing of the notice of appeal.



In the case at bar, a petition for review before the Court of
Appeals is the proper mode of appeal from a decision of the RTC.
Since the filing of the notice of appeal is erroneous, it is considered
as if no appeal was interposed.


Now on the second and more important issue raised by
petitioners: whether the Complaint satisfies the jurisdictional
requirements for a case of unlawful detainer properly cognizable by
the MTC.


The MTC considered itself as having jurisdiction over the
ejectment complaint and disposed of the same in favor of
petitioners. Said ruling was affirmed by the RTC. The Court of
Appeals reversed the lower courts and found the complaint to be
one not for unlawful detainer based on two (2) grounds, namely:
that the allegations fail to show that petitioners were deprived of
possession by force, intimidation, threat, strategy or stealth; and
that there is no contract, express or implied, between the parties as
would qualify the case as one of unlawful detainer.

We disagree with the Court of Appeals.

The complaint for unlawful detainer contained the following
material allegations:

. . . .
3. That plaintiffs are the owners of Lot No. 2, which is covered by T.C.T.
No. 36466 of the Register of Deeds of Mandaue City, Lot No. 1-A which is
covered by T.C.T. No. 36467 of the Register of Deeds of Mandaue City
and Lot No. 86-A which is covered by T.C.T. No. 36468 of the Register of
Deeds of Mandaue City, all situated in the City of Mandaue. Copies of
said Transfer Certificate of Titles are hereto attached as Annexes A, B,
and C respectively and made an integral part hereof;
4. That defendant Elizabeth Ong is the previous registered owner of
said lots;
5. That as the previous registered owner of said lots, defendant
Elizabeth Ong and her husband and co-defendant Jerry Ong have been
living in the house constructed on said lots;
6. That on May 6, 1995, plaintiffs, through the undersigned counsel,
wrote defendants a letter informing them or their intent to use said lots
and demanded of them to vacate said lots within 30 days from receipt of
said letter. Copy of said letter is hereto attached as Annex D and made
an integral part thereof;
7. That despite demand to vacate, the defendants have refused and still
refuse to vacate said lots, thus, unlawfully withholding possession of said
lots from plaintiffs and depriving plaintiffs of the use of their lots;
8. That in unlawfully withholding the possession of said lots from the
plaintiffs, plaintiffs have suffered damages in the form of unearned
rentals in the amount of P10,000.00 a month

. . . .
[8]


Well-settled is the rule that what determines the nature of an
action as well as which court has jurisdiction over it are the
allegations of the complaint and the character of the relief sought.
[9]





Respondents contend that the complaint did not allege that
petitioners possession was originally lawful but had ceased to be so
due to the expiration of the right to possess by virtue of any express
or implied contract.


The emphasis placed by the Court of Appeals on the presence
of a contract as a requisite to qualify the case as one of unlawful
detainer contradicts the various jurisprudence dealing on the
matter.


In Javelosa v. Court of the Appeals,
[10]
it was held that the
allegation in the complaint that there was unlawful withholding of
possession is sufficient to make out a case for unlawful detainer. It
is equally settled that in an action for unlawful detainer, an
allegation that the defendant is unlawfully withholding possession
from the plaintiff is deemed sufficient, without necessarily
employing the terminology of the law.
[11]



Hence, the phrase "unlawful withholding" has been held to
imply possession on the part of defendant, which was legal in the
beginning, having no other source than a contract, express or
implied, and which later expired as a right and is being withheld by
defendant.
[12]
InRosanna B. Barba v. Court of Appeals,
[13]
we held
that a simple allegation

that the defendant is unlawfully withholding possession from
plaintiff is sufficient.

Based on this premise, the allegation in the Complaint that:

. . . . despite demand to vacate, the defendants have refused and still
refuse to vacate said lots, thus, unlawfully withholding possession of said
lots from plaintiffs and depriving plaintiffs of the use of their lots;
[14]


is already sufficient to constitute an unlawful detainer case.

In the subject complaint, petitioners alleged that they are the
registered owners of the lots covered by TCT Nos. 36466, 36467 and
36468. By their implied tolerance, they have allowed respondents,
the former owners of the properties, to remain therein.
Nonetheless, they eventually sent a letter to respondents asking
that the latter vacate the said lots. Respondents refused, thereby
depriving petitioners of possession of the lots. Clearly, the
complaint establishes the basic elements of an unlawful detainer
case, certainly sufficient for the purpose of vesting jurisdiction over
it in the MTC.

Respondents would like to capitalize on the requisites as cited
in the case of Raymundo dela Paz v. Panis.
[15]
But the citation is a
mere reiteration of Sec. 1, Rule 70
[16]
of the Rules of Court. The
case doesid not provide for rigid standards in the drafting of the
ejectment complaint. The case of Co Tiamco v. Diaz
[17]
justifies a
more liberal approach, thus:

. . . The principle underlying the brevity and simplicity of pleadings in
forcible entry and unlawful detainer cases rests upon considerations of
public policy. Cases of forcible entry and detainer are summary in
nature, for they involve perturbation of social order which must be
restored as promptly as possible and, accordingly, technicalities or
details of procedure should be carefully avoided.
[18]



Moreover, petitioners fail to mention any of the incidents of the
pending case involving the annulment of deed of sale and title over
said property. Petitioners know better than to question this in an
ejectment proceeding, which brings us to the nature of the action in
this case.

Respondents insist that the RTC, and not the MTC, had
jurisdiction over the action, it being an accion
reivindicatoria according to them, on the ground that petitioners
were constantly claiming ownership over the lands in the guise of
filing an action for ejectment. In theirComment,
[19]
respondents
maintain that they occupy the subject lots as the legal owners.
Petitioners, on the other hand, are seeking recovery of possession
under a claim of ownership which is tantamount to recovery of
possession based on alleged title to the lands, and therefore is
within the original jurisdiction of the RTC, so respondents conclude.

This contention is not tenable.

The issue involved in accion reivindicatoria is the recovery of
ownership of real property. This differs from accion
publiciana where the issue is the better right of possession or
possession de jure, and accion interdictal where the issue is material
possession or possession de facto. In an action for unlawful
detainer, the question of possession is primordial while the issue of
ownership is generally unessential.
[20]





Neither the allegation in petitioners complaint for ejectment
nor the defenses thereto raised by respondents sufficiently convert
this case into an accion reivindicatoria which is beyond the province
of the MTC to decide. Petitioners did not institute the complaint for
ejectment as a means of claiming or obtaining ownership of the
properties. The acknowledgment in their pleadings of the fact of
prior ownership by respondents does not constitute a recognition of
respondents present ownership. This is meant only to establish
one of the necessary elements for a case of unlawful detainer,
specifically the unlawful withholding of possession. Petitioners, in
all their pleadings, only sought to recover physical possession of the
subject property. The mere fact that they claim ownership over the
parcels of land as well did not deprive the MTC of jurisdiction to try
the ejectment case.

Even if respondents claim ownership as a defense to the
complaint for ejectment, the conclusion would be the same for mere
assertion of ownership by the defendant in an ejectment case will
not therefore oust the municipal court of its summary
jurisdiction.
[21]
This Court inGanadin

v. Ramos
[22]
stated that if what is prayed for is ejectment or recovery
of possession, it does not matter if ownership is claimed by either
party. Therefore, the pending actions for declaration of nullity of
deed of sale and Transfer Certificates of Title and quieting of title in
Civil Case No. MAN-2356 will not abate the ejectment case.


In Drilon v. Gaurana,
[23]
this Court ruled that the filing of an
action for reconveyance of title over the same property or for
annulment of the deed of sale over the land does not divest the MTC
of its jurisdiction to try the forcible entry or unlawful detainer case
before it, the rationale being that, while there may be identity of
parties and subject matter in the forcible entry case and the suit for
annulment of title and/or reconveyance, the rights asserted and the
relief prayed for are not the same.
[24]


In Oronce v. Court of Appeals,
[25]
this Court held that the fact
that respondents had previously filed a separate action for the
reformation of a deed of absolute sale into one of pacto de retro sale
or equitable mortgage in the same

Court of First Instance is not a valid reason to frustrate the
summary remedy of ejectment afforded by law to the plaintiff.
Consequently, an adjudication made in an ejectment proceeding
regarding the issue of ownership should be regarded as merely
provisional and, therefore, would not bar or prejudice an action
between the same parties involving title to the land. The foregoing
doctrine is a necessary consequence of the nature of forcible entry
and unlawful detainer cases where the only issue to be settled is
the physical or material possession over the real property, that is,
possession de facto and not possession de jure.

The Court reiterated this in the case of Tecson v.
Gutierrez
[26]
when it ruled:

We must stress, however, that before us is only the initial
determination of ownership over the lot in dispute, for the purpose of
settling the issue of possession, although the issue of ownership is
inseparably linked thereto. As such, the lower court's adjudication of
ownership in the ejectment case is merely provisional, and our
affirmance of the trial courts' decisions as well, would not bar or
prejudice an action between the same parties involving title to the
property, if and when such action is brought seasonably before the
proper forum.







The long settled rule is that the issue of ownership cannot be
subject of a collateral attack.


In Apostol v. Court of Appeals,
[27]
this Court had the occasion
to clarify this:

. . . Under Section 48 of Presidential Decree No. 1529, a certificate of title
shall not be subject to collateral attack. It cannot be altered, modified or
cancelled, except in a direct proceeding for that purpose in accordance
with law. The issue of the validity of the title of the respondents can only
be assailed in an action expressly instituted for that purpose. Whether or
not the petitioners have the right to claim ownership over the property is
beyond the power of the court a quo to determine in an action for
unlawful detainer.
[28]



With the conclusion of the second issue in favor of petitioners,
there is no need to discuss the third assignment of error which is
related to the second issue.


WHEREFORE, the Petition is GRANTED. The Decision of the
Court of Appeals dated 6 January 1998 is REVERSED and SET
ASIDE and the Decision dated 24


April 1996 of the Municipal Trial Court of Mandaue City
REINSTATED and AFFIRMED. Costs against respondents.

SO ORDERED.



DANTE O.
TINGA Associate Justice

WE CONCUR:




REYNATO S. PUNO
Associate Justice
Chairman





MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice





MINITA V. CHICO-NAZARIO
Associate Justice







ATTESTATION


I attest that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.





REYNATO S. PUNO
Associate Justice
Chairman, Second Division



CERTIFICATION


Pursuant to Section 13, Article VIII of the Constitution, and
the Division Chairmans Attestation, it is hereby certified that the
conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the
Courts Division.




HILARIO G. DAVIDE, JR.
Chief Justice




[1]
Rollo, pp. 24-32; Penned by Acting Presiding Justice Fidel P. Purisima, (later named
Associate Justice of the Supreme Court), concurred in by Associate Justices Ricardo P. Galvez
and B.A. Adefuin-De la Cruz.

[2]
Docketed as Civil Case No. MAN-2356 for Declaration of Deed of Sale and Transfer
Certificates of Titles as Null and Void ab initio and Quieting of Title, Damages and Attorneys
Fees.

[3]
A motion for execution pending appeal was also granted in the same Order. Rollo, p.
13.


[4]
Id. at 12.

[5]
Id. at 61-84.

[6]
Id. at 12-13.

[7]
312 Phil. 158 (1995).

[8]
Id. at 86-88.

[9]
Caniza v. Court of Appeals, 335 Phil. 1107 (1997); Ten Forty Realty and Development
Corp. v. Cruz, G.R. No. 151212, 410 SCRA 484, 10 September 2003.


[10]
333 Phil. 331 (1996).

[11]
Sumulong v. Court of Appeals, G.R. No. 108817, 10 May 1994, 232 SCRA 372;
Pangilinan v. Aguilar, 150 Phil. 166 (1972); Virgilio v. Jimenez, 394 Phil. 877 (2000).


[12]
Javelosa v. Court of Appeals, supra note 9 at 339.

[13]
426 Phil. 598 (2002).

[14]
Rollo, p. 87.

[15]
315 Phil. 238 (1995).

[16]
SECTION 1. Who may institute proceedings, and when. Subject to the provisions of
the next succeeding section, a person deprived of the possession of any land or building by
force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person
against whom the possession of any land or building is unlawfully withheld after the expiration
or termination of the right to hold possession, by virtue of any contract, express or implied, or
the legal representatives or assigns of any such lessor, vendor, vendee or other person, may, at
any time within one (1) year after such unlawful deprivation or withholding of possession, bring
an action in the proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming under them, for the
restitution of such possession, together with damages and costs.

[17]
75 Phil. 672 (1946).

[18]
Id. at 686.

[19]
Rollo, p. 73.

[20]
Fige v. Court of Appeals, G.R. No. 107951, 30 June 1994, 233 SCRA 586.

[21]
Ching v. Malaya, G.R. No. L-56449, 31 August 1987, 153 SCRA 412.

[22]
L-23547, 11 September 1980, 99 SCRA 613.

[23]
G.R. No. L-35482 30 April 1987, 149 SCRA 342.

[24]
Feliciano v. Court of Appeals, 336 Phil. 499 (1998).

[25]
331 Phil. 616 (1998).


[26]
G.R. No. 152978, 4 March 2005, citing Balanon-Anicete v. Balanon, G.R. Nos.
150820-21, 30 April 2003, 402 SCRA 514; Co v. Militar, G.R. No. 149912, 29 January 2004,
421 SCRA 455.


[27]
G.R. No. 125375, 17 June 2004, 432 SCRA 351.

[28]
Id. at 359.









Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 76217 September 14, 1989
GERMAN MANAGEMENT & SERVICES, INC., petitioner,
vs.
HON. COURT OF APPEALS and ERNESTO VILLEZA, respondents.
G.R. No. L-76216 September 14, 1989
GERMAN MANAGEMENT & SERVICES, INC., petitioner,
vs.
HON. COURT OF APPEALS and ORLANDO GERNALE, respondents.
Alam, Verano & Associates for petitioner.
Francisco D. Lozano for private respondents.

FERNAN, C.J .:
Spouses Cynthia Cuyegkeng Jose and Manuel Rene Jose, residents of Pennsylvania, Philadelphia,
USA are the owners of a parcel of land situated in Sitio Inarawan, San Isidro, Antipolo, Rizal, with an
area of 232,942 square meters and covered by TCT No. 50023 of the Register of Deeds of the
province of Rizal issued on September 11, 1980 which canceled TCT No. 56762/ T-560. The land
was originally registered on August 5, 1948 in the Office of the Register of Deeds of Rizal as OCT
No. 19, pursuant to a Homestead Patent granted by the President of the Philippines on July 27,
1948, under Act No. 141.
On February 26, 1982, the spouses Jose executed a special power of attorney authorizing petitioner
German Management Services to develop their property covered by TCT No. 50023 into a
residential subdivision. Consequently, petitioner on February 9,1983 obtained Development Permit
No. 00424 from the Human Settlements Regulatory Commission for said development. Finding that
part of the property was occupied by private respondents and twenty other persons, petitioner
advised the occupants to vacate the premises but the latter refused. Nevertheless, petitioner
proceeded with the development of the subject property which included the portions occupied and
cultivated by private respondents.
Private respondents filed an action for forcible entry against petitioner before the Municipal Trial
Court of Antipolo, Rizal, alleging that they are mountainside farmers of Sitio Inarawan, San Isidro,
Antipolo, Rizal and members of the Concerned Citizens of Farmer's Association; that they have
occupied and tilled their farmholdings some twelve to fifteen years prior to the promulgation of P.D.
No. 27; that during the first week of August 1983, petitioner, under a permit from the Office of the
Provincial Governor of Rizal, was allowed to improve the Barangay Road at Sitio Inarawan, San
Isidro, Antipolo, Rizal at its expense, subject to the condition that it shag secure the needed right of
way from the owners of the lot to be affected; that on August 15, 1983 and thereafter, petitioner
deprived private respondents of their property without due process of law by: (1) forcibly removing
and destroying the barbed wire fence enclosing their farmholdings without notice; (2) bulldozing the
rice, corn fruit bearing trees and other crops of private respondents by means of force, violence and
intimidation, in violation of P.D. 1038 and (3) trespassing, coercing and threatening to harass,
remove and eject private respondents from their respective farmholdings in violation of P.D. Nos.
316, 583, 815, and 1028.
1

On January 7,1985, the Municipal Trial Court dismissed private respondents' complaint for forcible
entry.
2
On appeal, the Regional Trial Court of Antipolo, Rizal, Branch LXXI sustained the dismissal by
the Municipal Trial Court.
3

Private respondents then filed a petition for review with the Court of Appeals. On July 24,1986, said
court gave due course to their petition and reversed the decisions of the Municipal Trial Court and
the Regional Trial Court.
4

The Appellate Court held that since private respondents were in actual possession of the property at
the time they were forcibly ejected by petitioner, private respondents have a right to commence an
action for forcible entry regardless of the legality or illegality of possession.
5
Petitioner moved to
reconsider but the same was denied by the Appellate Court in its resolution dated September 26, 1986.
6

Hence, this recourse.
The issue in this case is whether or not the Court of Appeals denied due process to petitioner when
it reversed the decision of the court a quo without giving petitioner the opportunity to file its answer
and whether or not private respondents are entitled to file a forcible entry case against petitioner.
7

We affirm. The Court of Appeals need not require petitioner to file an answer for due process to
exist. The comment filed by petitioner on February 26, 1986 has sufficiently addressed the issues
presented in the petition for review filed by private respondents before the Court of Appeals. Having
heard both parties, the Appellate Court need not await or require any other additional pleading.
Moreover, the fact that petitioner was heard by the Court of Appeals on its motion for reconsideration
negates any violation of due process.
Notwithstanding petitioner's claim that it was duly authorized by the owners to develop the subject
property, private respondents, as actual possessors, can commence a forcible entry case against
petitioner because ownership is not in issue. Forcible entry is merely a quieting process and never
determines the actual title to an estate. Title is not involved.
8

In the case at bar, it is undisputed that at the time petitioner entered the property, private
respondents were already in possession thereof . There is no evidence that the spouses Jose were
ever in possession of the subject property. On the contrary, private respondents' peaceable
possession was manifested by the fact that they even planted rice, corn and fruit bearing trees
twelve to fifteen years prior to petitioner's act of destroying their crops.
Although admittedly petitioner may validly claim ownership based on the muniments of title it
presented, such evidence does not responsively address the issue of prior actual possession raised
in a forcible entry case. It must be stated that regardless of the actual condition of the title to the
property, the party in peaceable quiet possession shall not be turned out by a strong hand, violence
or terror.
9
Thus, a party who can prove prior possession can recover such possession even against the
owner himself. Whatever may be the character of his prior possession, if he has in his favor priority in
time, he has the security that entitles him to remain on the property until he is lawfully ejected by a person
having a better right by accion publiciana or accion reivindicatoria.
10

Both the Municipal Trial Court and the Regional Trial Court have rationalized petitioner's drastic
action of bulldozing and destroying the crops of private respondents on the basis of the doctrine of
self-help enunciated in Article 429 of the New Civil Code.
11
Such justification is unavailing because the
doctrine of self-help can only be exercised at the time of actual or threatened dispossession which is
absent in the case at bar. When possession has already been lost, the owner must resort to judicial
process for the recovery of property. This is clear from Article 536 of the Civil Code which states, "(I)n no
case may possession be acquired through force or intimidation as long as there is a possessor who
objects thereto. He who believes that he has an action or right to deprive another of the holding of a thing,
must invoke the aid of the competent court, if the holder should refuse to deliver the thing."
WHEREFORE, the Court resolved to DENY the instant petition. The decision of the Court of Appeals
dated July 24,1986 is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Bidin and Cortes, JJ., concur.
Gutierrez, Jr., J., concurs in the result.
Feliciano, J., is on leave.















Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-48250 December 28, 1979
GRAND UNION SUPERMARKET, INC. and NELIA SANTOS FANDINO, petitioners,
vs.
JOSE J. ESPINO JR., and THE HONORABLE COURT OF APPEALS, respondents.

GUERRERO, J .
This is a petition tor certiorari by way of appeal from the decision of the Court of Appeals
1
dated
September 26, 1977 rendered in CA-G.R. No. 55186-R entitled "Jose J. Espino, Jr., plaintiff-appellant.
versus Grand Union Supermarket, Inc. and Nelia Santos-Fandino, defendants-appellees," the dispositive
portion of which states;
WHEREFORE, the appealed judgment is hereby reversed and set aside. Defendants
are ordered to pay plaintiff-jointly and severally, the sum of Seventy-Five Thousand
Pesos (P75,000.00) by way of moral damages. Twenty-Five Thousand Pesos
(P25,000.00) as exemplary damages, and Five Thousand Pesos (P5,000.00) as
attorney's fee, Costs of both instances shall be taxed against the defendant
defendants.
The facts of the case are as stated in the decision of the respondent court to wit:
"Upon the evidence, and from the findings of the lower court, it appears that in the morning of August
22, 1970, plaintiff Jose J. Espino. Jr., a civil engineer and an executive of Procter and Gamble
Philippines, Inc., and his wife and their two daughters went to shop at the defendants' South
Supermarket in Makati. While his wife was shopping at the groceries section, plaintiff browsed
around the other parts of the market. Finding a cylindrical "rat tail" file which he needed in his hobby
and had been wanting to buy, plaintiff picked up that item from one of the shelves. He held it in his
hand thinking that it might be lost, because of its tiny size, if he put it in his wife's grocery cart. In the
course of their shopping, plaintiff and his wife saw the maid of plaintiff's aunt. While talking to this
maid, plaintiff stuck the file into the front breast pocket of his shirt with a good part of the
merchandise exposed.
"At the check-out counter, the plaintiff paid for his wife's purchases which amounted to P77.00, but
he forgot to pay for the file. As he was leaving by the exit of the supermarket on his way to his car,
carrying two bags of groceries and accompanied by his wife and two daughter, plaintiff was
approached by a uniformed guard of the supermarket who said: "Excuse me, Mr., I think you have
something in your pocket which you have not paid for." (p. 5, tsn, Aug. 13, 1971), pointing to his left
front breast pocket. Suddenly reminded of the file, plaintiff apologized thus: "I am sorry," and he
turned back toward the cashier to pay for the file. But the guard stopped him and led him instead
toward the rear of the supermarket. The plaintiff protested but the guard was firm saying: "No, Mr.,
please come with me. It is the procedure of the supermarket to bring people that we apprehend to
the back of the supermarket" (p. 8, Ibid). The time was between 9 and 10 o'clock. A crowd of
customers on their way into the supermarket saw the plaintiff being stopped and led by a uniformed
guard toward the rear of the supermarket. Plaintiff acquiesced and signaled to his wife and
daughters to wait.
"Into a cubicle which was immediately adjacent to the area where deliveries to the supermarket were
being made, the plaintiff was ushered. The guard directed him to a table and gave the file to the man
seated at the desk. Another man stood beside the plaintiff. The man at the desk looked at the
plaintiff and the latter immediately explained the circumstances that led to the finding of the file in his
possession. The man at the desk pulled out a sheet of paper and began to ask plaintiff's name, age,
residence and other personal data. Plaintiff was asked to make a brief statement, and on the sheet
of paper or "Incident Report" he wrote down the following: "While talking to my aunt's maid with my
wife, I put this item in my shirt pocket. I forgot to check it out with my wife's items" (Exhibit A).
Meanwhile, the plaintiff's wife joined him and asked what had taken him so long.
"The guard who had accosted plaintiff took him back inside the supermarket in the company of his
wife. Plaintiff and his wife were directed across the main entrance to the shopping area, down the
line of check-out counters, to a desk beside the first checkout counter. To the woman seated at the
desk, who turned out to be defendant Nelia Santos-Fandino, the guard presented the incident report
and the file, Exhibit B. Defendant Fandino read the report and addressing the guard remarked: "Ano,
nakaw na naman ito" (p. 22, Id.). Plaintiff explained and narrated the incident that led to the finding of
the file in his pocket, telling Fandino that he was going to pay for the file because he needed it. But
this defendant replied: "That is all they say, the people whom we cause not paying for the goods
say... They all intended to pay for the things that are found to them." (p. 23, Id). Plaintiff objected and
said that he was a regular customer of the supermarket.
"Extracting a P5.00 bill from his pocket, plaintiff told Fandino that he was paying for the file whose
cost was P3.85. Fandino reached over and took the P5.00 bill from plaintiff with these words: "We
are fining you P5.00. That is your the fine." Plaintiff was shocked. He and his wife objected
vigorously that he was not a common criminal, and they wanted to get back the P5.00. But Fandino
told them that the money would be given as an incentive to the guards who apprehend pilferers.
People were milling around them and staring at the plaintiff. Plaintiff gave up the discussion. He
drew a P50.00 bill and took back the file. Fandino directed him to the nearest check-out counter
where he had to fall in line. The people who heard the exchange of words between Fandino and
plaintiff continued to stare at him. At the trial, plaintiff expressed his embarrassment and humiliation
thus: " I felt as though I wanted to disappear into a hole on the ground" (p. 34, Id.). After paying for
the file, plaintiff and his wife walked as fast as they could out of the supermarket. His first impulse
was to go back to the supermarket that night to throw rocks at its glass windows. But reason
prevailed over passion and he thought that justice should take its due course.
"Plaintiff was certain during the trial that when he signed the incident report, Exhibit A, inside the
cubicle at the back of the supermarket only his brief statement of the facts (Exhibit A-2), aside from
his name and personal circumstances, was written thereon. He swore that the following were not in
the incident report at, the time he signed it:
Exhibit A-I which says opposite the stenciled word SUBJECT "Shoplifting"
Exhibit A-3 which says opposite the stenciled words Action Taken: Released by Mrs.
Fandino after paying the item.
Exhibit A-4 which says opposite the stenciled words Remarks Noted: "Grd. Ebreo
requested Grd. Paunil to apprehend subject shoplifter.
Private respondent's complaint filed on October 8, 1970 is founded on Article 21 in relation to Article
2219 of the New Civil Code and prays for moral damages, exemplary damages, attorney s fees and
'expenses of litigation, costs of the suit and the return of the P5.00 fine. After trial, the Court of First
Instance of Pasig, Rizal, Branch XIX dismissed the complaint, Interposing the appeal to the Court of
Appeals, the latter reversed and set aside the appealed judgment, granting and damages as earlier
stated.
Not satisfied with the decision of the respondent court, petitioners instituted the present petition and
submits the following grounds and/or assignment of errors, to wit:
I
Respondent Court of Appeals erred in awarding moral and exemplary damages to
the respondent Espino under Articles 19 and 21 in relation to Article 2219 of the Civil
Code, considering that
A. Respondent Espino was guilty of theft;
B. Petitioners legitimately exercised their right of defense of property within the
context of Article 429 of the Civil Code negating the application of Articles 19 and 21
of the same Code;
C. Petitioners acted upon probable cause in stopping and investigating respondent
Espino for shoplifting and as held in various decisions in the United States on
shoplifting, a merchant who acts upon probable cause should not be held liable in
damages by the suspected shoplifter;
D. Petitioners did not exercise their right maliciously, wilfully or in bad faith; and/or
E. The proximate cause of respondent Espino's alleged injury or suffering was his
own negligence or forgetfulness; petitioners acted in good faith.
II
Assuming arguendo that petitioners are hable for moral and exemplary damages, the
award of P75,000.00 for moral damages and P25,000.00 for exemplary damages by
the respondent Court of Appeals is not legally justified and/or is grossly excessive in
the premises.
III
The award of P5,000.00 for attorney's fees by the respondent Court of Appeals is
unjustified and unwarranted under Article 2199 of the Civil Code.
We agree with the holding of the respondent appellate court that "the evidence sustains the court's
finding that the plaintiff had absolutely no intention to steal the file." The totality of the facts and
circumstances as found by the Court of Appeals unerringly points to the conclusion that private
respondent did not intend to steal the file and that is act of picking up the file from the open shelf was
not criminal nor done with malice or criminal intent for on the contrary, he took the item with the
intention of buying and paying for it.
This Court needs only to stress the following undisputed facts which strongly and convincingly
uphold the conclusion that private respondent was not "shoplifting." Thus, the facts that private
respondent after picking the cylindrical "rat-tail" file costing P3.85 had placed it inside his left front
breast pocket with a good portion of the item exposed to view and that he did not conceal it in his
person or hid it from sight as well as the fact that he paid the purchases of his wife amounting to
P77.00 at the checkout counter of the Supermarket, owed that he was not acting suspiciously or
furtively. And the circumstance that he was with his family consisting of his wife Mrs. Caridad Jayme
Espino, and their two daughters at the time negated any criminal intent on his part to steal.
Moreover, when private respondent was approached by the guard of the Supermarket as he was
leaving by the exit to his car who told him, "Excuse me, Mr., I think you have something in your
pocket which you have not paid for," Espino, immediately apologized and answered, "I am sorry,"
which indicated his sincere apology or regrets. He turned back towards the cashier to pay for the file
which proved his honesty sincerity and good faith in buying the item, and not to shoplift the same.
His brief statement on the sheet of paper called the Incident Report where private respondent wrote
the following: "While talking to my aunt's maid with my wife, I put this item in in my shirt pocket. I
forgot to check it out with my wife's item," was an instant and contemporaneous explanation of the
incident.
Considering further the personal circumstances of the private respondent. his education, position
and character showing that he is a graduate Mechanical Engineer from U.P. Class 1950, employed
as an executive of Proctor & Gamble Phils., Inc., a corporate manager incharge of motoring and
warehousing therein; honorably discharged from the Philippine Army in 1946; a Philippine
government pensionado of the United States for six months; member of the Philippine veterans
Legion; author of articles published in the Manila Sunday Times and Philippines Free Press;
member of the Knights of Columbus, Council No. 3713; son of the late Jose Maria Espino, retired
Minister, Department of Foreign Affairs at the Philippine Embassy Washington, We are fully
convinced, as the trial and appellate courts were, that private respondent did not intend to steal the
article costing P3.85. Nothing in the records intimates or hints whatsoever that private respondent
has had any police record of any sort much less suspicion of stealing or shoplifting.
We do not lay down here any hard-and-fast rule as to what act or combination of acts constitute the
crime of shoplifting for it must be stressed that each case must be considered and adjudged on a
case-to-case basis and that in the determination of whether a person suspected of shoplifting has in
truth and in fact committed the same, all the attendant facts and circumstances should be
considered in their entirety and not from any single fact or circumstance from which to impute the
stigma of shoplifting on any person suspected and apprehended therefor.
We likewise concur with the Court of Appeals that "(u)pon the facts and under the law, plaintiff has
clearly made the cause of action for damages against the defendants. Defendants wilfully caused
loss or injury to plaintiff in a manner that was contrary to morals, good customs or public policy,
making them amenable to damages under Articles 19 and 21 in relation to Article 2219 of the Civil
Code."
2

That private respondent was falsely accused of shoplifting is evident. The Incident Report (Exhibit A)
with the entries thereon under Exhibit A-1 which says opposite the stenciled word SUBJECT:
"Shoplifting," Exhibit A-3 which says opposite the stenciled words Action Taken: Relesed by Mrs.
Fandino after paying the item," Exhibit A-4 which says opposite the stenciled words Remarks Noted:
Grd. Ebreo requested Grd. Paunil to apprehend subject shoplifter," established the opinion,
judgment or thinking of the management of petitioner's supermarket upon private respondent's act of
picking up the file. ln plain words, private respondent was regarded and pronounced a shoplifter and
had committed "shoplifting."
We also affirm the Court of Appeals' finding that petitioner Nelia Santos Fandino, after reading the
incident report, remarked the following: "Ano, nakaw na naman ito". Such a remark made in the
presence of private respondent and with reference to the incident report with its entries, was
offensive to private respondent's dignity and defamatory to his character and honesty. When Espino
explained that he was going to pay the file but simply forgot to do so, Fandino doubted the
explanation. saying: "That is all what they say, the people whom we caught not paying for the goods
say... they all intended to pay for the things that are found to them." Private respondent objected and
said that he was a regular customer of the Supermarket.
The admission of Fandino that she required private respondent to pay a fine of P5.00 and did in fact
take the P5.00 bill of private respondent tendered by the latter to pay for the file, as a fine which
would be given as an incentive to the guards who apprehend pilferers clearly proved that Fandino
branded private respondent as a thief which was not right nor justified.
The testimony of the guard that management instructed them to bring the suspected customers to
the public area for the people to see those kind of customers in order that they may be embarassed
(p. 26, tsn, Sept. 30, 1971); that management wanted "the customers to be embarrassed in public so
that they will not repeat the stealing again" (p. 2, tsn, Dec. 10, 1971); that the management asked
the guards "to bring these customers to different cashiers in order that they will know that they are
pilferers" (p. 2, Ibid.) may indicate the manner or pattern whereby a confirmed or self-confessed
shoplifter is treated by the Supermarket management but in the case at bar, there is no showing that
such procedure was taken in the case of the private respondent who denied strongly and
vehemently the charge of shoplifting.
Nonetheless, the false accusation charged against the private respondent after detaining and
interrogating him by the uniformed guards and the mode and manner in which he was subjected,
shouting at him, imposing upon him a fine, threatening to call the police and in the presence and
hearing of many people at the Supermarket which brought and caused him humiliation and
embarrassment, sufficiently rendered the petitioners liable for damages under Articles 19 and 21 in
relation to Article 2219 of the Civil Code. We rule that under the facts of the case at bar, petitioners
wilfully caused loss or injury to private respondent in a manner that was contrary to morals, good
customs or public policy. It is against morals, good customs and public policy to humiliate,
embarrass and degrade the dignity of a person. Everyone must respect the dignity, personality,
privacy and peace of mind of his neighbors and other persons (Article 26, Civil Code). And one must
act with justice, give everyone his due and observe honesty and good faith (Article 19, Civil Code).
Private respondent is entitled to damages but We hold that the award of Seventy-Five Thousand
Pesos (P75,000.00) for moral damages and Twenty-Five Thousand Pesos (P25,000.00, for
exemplary damages is unconscionable and excessive.
While no proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or
exemplary damages may be adjudicated, the assessment of such damages, except liquidated ones,
is left to the discretion of the court, according to the circumstances of each case (Art. 2216, New
Civil Code). In the case at bar, there is no question that the whole incident that befell respondent had
arisen in such a manner that was created unwittingly by his own act of forgetting to pay for the file. It
was his forgetfullness in checking out the item and paying for it that started the chain of events which
led to his embarassment and humiliation thereby causing him mental anguish, wounded feelings and
serious anxiety. Yet, private respondent's act of omission contributed to the occurrence of his injury
or loss and such contributory negligence is a factor which may reduce the damages that private
respondent may recover (Art. 2214, New Civil Code). Moreover, that many people were present and
they saw and heard the ensuing interrogation and altercation appears to be simply a matter of
coincidence in a supermarket which is a public place and the crowd of onlookers, hearers or
bystanders was not deliberately sought or called by management to witness private respondent's
predicament. We do not believe that private respondent was intentionally paraded in order to
humiliate or embarrass him because petitioner's business depended for its success and patronage
the good will of the buying public which can only be preserved and promoted by good public
relations.
As succinctly expressed by Mr. Justice J. B. L. Reyes in his concurring and dissenting opinion in
Pangasinan Transportation Company, Inc, vs. Legaspi, 12 SCRA 598, the purpose of moral
damages is essentially indemnity or reparation, both punishment or correction. Moral damages are
emphatically not intended to enrich a complainant at the expense of a defendant; they are awarded
only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate
the moral suffering he has undergone, by reason of the defendant's culpable action. In other words,
the award of moral damages is aimed at a restoration, within the limits of the possible, of the
spiritual status quo ante and, it must be proportionate to the suffering inflicted.
In Our considered estimation and assessment, moral damages in the amount of Five Thousand
Pesos (P5,000.00) is reasonable and just to award to private respondent.
The grant of Twenty-Five Thousand Pesos (P25,000.00) as exemplary damages is unjustified.
Exemplary or corrective damages are imposed by way of example or correction for the public good,
in addition to the moral, temperate, liquidated or compensatory damages (Art. 2229, New Civil
Code). Exemplary damages cannot be recovered as a matter of right; the court will decide whether
or not they could be adjudicated (Art. 2223, New Civil Code). Considering that exemplary damages
are awarded for wanton acts, that they are penal in character granted not by way of compensation
but as a punishment to the offender and as a warning to others as a sort of deterrent, We hold that
the facts and circumstances of the case at bar do not warrant the grant of exemplary damages.
Petitioners acted in good faith in trying to protect and recover their property, a right which the law
accords to them. Under Article 429, New Civil Code, the owner or lawful possessor of a thing has a
right to exclude any person from the enjoyment and disposal thereof and for this purpose, he may
use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful
physical invasion or usurpation of his property. And since a person who acts in the fulfillment of a
duty or in the lawful exercise of a right or office exempts him from civil or criminal liability, petitioner
may not be punished by imposing exemplary damages against him. We agree that petitioners acted
upon probable cause in stopping and investigating private respondent for taking the file without
paying for it, hence, the imposition of exemplary damages as a warning to others by way of a
deterrent is without legal basis. We, therefore, eliminate the grant of exemplary damages to the
private respondent.
In the light of the reduction of the damages, We hereby likewise reduce the original award of Five
Thousand Pesos (P5,000.00) as attorney's fees to Two Thousand Pesos (P2,000.00).
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is hereby
modified. Petitioners are hereby ordered to pay, jointly and severally, to private respondent moral
damages in the sum of Five Thousand Pesos (P5,000.00) and the amount of Two Thousand Pesos
(P2,000.00) as and for attorney's fees; and further, to return the P5.00 fine to private respondent. No
costs.
SO ORDERED.
Makasiar, Fernandez, De Castro and Melencio-Herrera, JJ., concur,
Teehankee (Chairman), took no part.
























SECOND DIVISION
[G.R. NO. 142668 : August 31, 2004]
UNITED COCONUT PLANTERS BANK and LUIS MA.
ONGSIAPCO, Petitioners, v.RUBEN E. BASCO, Respondent.
D E C I S I O N
CALLEJO, SR., J.:
This is a Petition for Review on Certiorari assailing the Decision
1
of
the Court of Appeals dated March 30, 2000, affirming, with
modifications, the Decision
2
of the Regional Trial Court (RTC),
Makati City, Branch 146, which found the petitioner bank liable for
payment of damages and attorney's fees.
The Case for the Respondent
Respondent Ruben E. Basco had been employed with the petitioner
United Coconut Planters Bank (UCPB) for seventeen (17) years.
3
He
was also a stockholder thereof and owned 804 common shares of
stock at the par value of P1.00.
4
He likewise maintained a checking
account with the bank at its Las Pias Branch under Account No.
117-001520-6.
5
Aside from his employment with the bank, the
respondent also worked as an underwriter at the United Coconut
Planters Life Association (Coco Life), a subsidiary of UCPB since
December, 1992.
6
The respondent also solicited insurance policies
from UCPB employees.
On June 19, 1995, the respondent received a letter from the UCPB
informing him of the termination of his employment with the bank
for grave abuse of discretion and authority, and breach of trust in
the conduct of his job as Bank Operations Manager of its Olongapo
Branch. The respondent thereafter filed a complaint for illegal
dismissal, non-payment of salaries, and damages against the bank
in the National Labor Relations Commission (NLRC), docketed as
NLRC Cases Nos. 00-09-05354-92 and 00-09-05354-93. However,
the respondent still frequented the UCPB main office in Makati City
to solicit insurance policies from the employees thereat. He also
discussed the complaint he filed against the bank with the said
employees.
7

The respondent was also employed by All-Asia Life Insurance
Company as an underwriter. At one time, the lawyers of the UCPB
had an informal conference with him at the head office of the bank,
during which the respondent was offered money so that the case
could be amicably settled. The respondent revealed the incident to
some of the bank employees.
8

On November 15, 1995, Luis Ma. Ongsiapco, UCPB First Vice-
President, Human Resource Division, issued a Memorandum to
Jesus Belanio, the Vice-President of the Security Department,
informing him that the respondent's employment had been
terminated as of June 19, 1995, that the latter filed charges against
the bank and that the case was still on-going. Ongsiapco instructed
Belanio not to allow the respondent access to all bank
premises.
9
Attached to the Memorandum was a passport-size
picture of the respondent. The next day, the security guards on duty
were directed to strictly impose the security procedure in conformity
with Ongsiapco's Memorandum.
10

On December 7, 1995, the respondent, through counsel, wrote
Ongsiapco, requesting that such Memorandum be reconsidered, and
that he be allowed entry into the bank premises.
11
His counsel
emphasized that -
In the meantime, we are more concerned with your denying Mr.
Basco "access to all bank premises." As you may know, he is
currently connected with Cocolife as insurance agent. Given his 17-
year tenure with your bank, he has established good relationships
with many UCPB employees, who comprise the main source of his
solicitations. In thecourse of his work as insurance agent, he needs
free access to your bank premises, within reason, to add the
unnecessary. Your memorandum has effectively curtailed his
livelihood and he is once again becoming a victim of another "illegal
termination," so to speak. And Shakespeare said: "You take his life
when you do take the means whereby he lives."
Mr. Basco's work as an insurance agent directly benefits UCPB,
Cocolife's mother company. He performs his work in your premises
peacefully without causing any disruption of bank operations. To
deny him access to your premises for no reason except the
pendency of the labor case, the outcome of which is still in doubt -
his liability, if any, certainly has not been proven - is a clear abuse
of right in violation of our client's rights. Denying him access to the
bank, which is of a quasi-public nature, is an undue restriction on
his freedom of movement and right to make a livelihood, comprising
gross violations of his basic human rights. (This is Human Rights
Week, ironically).
We understand that Mr. Basco has been a stockholder of record of
804 common shares of the capital stock of UCPB since July 1983. As
such, he certainly deserves better treatment than the one he has
been receiving from your office regarding property he partly owns.
He is a particle of corporate sovereignty. We doubt that you can
impose the functional equivalent of the penalty ofdestierro on our
client who really wishes only to keep his small place in the sun, to
survive and breathe. No activity can be more legitimate than to toil
for a living. Let us live and let live.
12

In his reply dated December 12, 1995, Ongsiapco informed the
respondent that his request could not be granted:
As you understand, we are a banking institution; and as such, we
deal with matters involving confidences of clients. This is among the
many reasons why we, as a matter of policy, do not allow non-
employees to have free access to areas where our employees work.
Of course, there are places where visitors may meet our officers and
employees to discuss business matters; unfortunately, we have
limited areas where our officers and employees can entertain non-
official matters.
Furthermore, in keeping with good business practices, the Bank
prohibits solicitation, peddling and selling of goods, service and
other commodities within its premises as it disrupts the efficient
performance and function of the employees.
Please be assured that it is farthest from our intention to
discriminate against your client. In the same vein, it is highly
improper for us to carve exceptions to our policies simply to
accommodate your client's business ventures.
13

The respondent was undaunted. At 5:30 p.m. of December 21,
1995, he went to the office of Junne Cacay, the Assistant Manager
of the Makati Branch. Cacay was then having a conference with
Bong Braganza, an officer of the UCPB Sucat Branch. Cacay
entertained the respondent although the latter did have an
appointment. Cacay even informed him that he had a friend who
wanted to procure an insurance policy.
14
Momentarily, a security
guard of the bank approached the respondent and told him that it
was already past office hours. He was also reminded not to stay
longer than he should in the bank premises.
15
Cacay told the guard
that the respondent would be leaving shortly.
16
The respondent was
embarrassed and told Cacay that he was already leaving.
17

At 1:30 p.m. of January 31, 1996, the respondent went to the UCPB
Makati Branch to receive a check from Rene Jolo, a bank employee,
and to deposit money with the bank for a friend.
18
He seated
himself on a sofa fronting the teller's booth
19
where other people
were also seated.
20
Meanwhile, two security guards approached the
respondent. The guards showed him the Ongsiapco's Memorandum
and told him to leave the bank premises. The respondent pleaded
that he be allowed to finish his transaction before leaving. One of
the security guards contacted the management and was told to
allow the respondent to finish his transaction with the bank.
Momentarily, Jose Regino Casil, an employee of the bank who was
in the 7
th
floor of the building, was asked by Rene Jolo to bring a
check to the respondent, who was waiting in the lobby in front of
the teller's booth.
21
Casil agreed and went down to the ground floor
of the building, through the elevator. He was standing in the
working area near the Automated Teller Machine (ATM) Section
22
in
the ground floor when he saw the respondent standing near the
sofa
23
near the two security guards.
24
He motioned the respondent
to come and get the check, but the security guard tapped the
respondent on the shoulder and prevented the latter from
approaching Casil. The latter then walked towards the respondent
and handed him the check from Jolo.
Before leaving, the respondent requested the security guard to log
his presence in the logbook. The guard did as requested and the
respondent's presence was recorded in the logbook.
25

On March 11, 1996, the respondent filed a complaint for damages
against the petitioners UCPB and Ongsiapco in the RTC of Manila,
alleging inter alia, that -
12. It is readily apparent from this exchange of correspondence that
defendant bank'' acknowledged reason for barring plaintiff from its
premises - the pending labor case - is a mere pretense for its real
vindictive and invidious intent: to prevent plaintiff, and plaintiff
alone, from carrying out his trade as an insurance agent among
defendant bank's employees, a practice openly and commonly
allowed and tolerated (encouraged even, for some favored
proverbial sacred cows) in the bank premises, now being unjustly
denied to plaintiff on spurious grounds.
13. Defendants, to this day, have refused to act on plaintiff's claim
to be allowed even in only the "limited areas where [the bank's]
officers and employees can entertain non-official matters" and have
maintained the policy banning plaintiff from all bank premises. As he
had dared exercised his legal right to question his dismissal, he is
being penalized with a variation ofdestierro, available in criminal
cases where the standard however, after proper hearing, is much
more stringent and based on more noble grounds than mere pique
or vindictiveness.
14. This appallingly discriminatory policy resulted in an incident on
January 31, 1996 at 1:30 p.m. at defendant bank's branch located
at its head office, which caused plaintiff tremendous undeserved
humiliation, embarrassment, and loss of face.
26

15. Defendants' memorandum and the consequent acts of
defendants' security guards, together with defendant Ongsiapco's
disingenuous letter of December 12, 1995, are suggestive of malice
and bad faith in derogation of plaintiff's right and dignity as a
human being and citizen of this country, which acts have caused
him considerable undeserved embarrassment. Even if defendants,
for the sake of argument, may be acting within their rights, they
cannot exercise same abusively, as they must, always, act with
justice and in good faith, and give plaintiff his due.
27

The respondent prayed that, after trial, judgment be rendered in his
favor, as follows:
WHEREFORE, it is respectfully prayed that judgment issue ordering
defendants:
1. To rescind the directive to its agents barring plaintiff from all
bank premises as embodied in the memorandum of November 15,
1995, and allow plaintiff access to the premises of defendant bank,
including all its branches, which are open to members of the general
public, during reasonable hours, to be able to conduct lawful
business without being subject to invidious discrimination; andcralawlibrary
2. To pay plaintiff P100,000.00 as moral damages, P100,000.00 as
exemplary damages, and P50,000.00 by way of attorney's fees.
Plaintiff likewise prays for costs, interest, the disbursements of this
action, and such other further relief as may be deemed just and
equitable in the premises.
28

In their Answer to the complaint, the petitioners interposed the
following affirmative defenses:
9. Plaintiff had been employed as Branch Operations Officer,
Olongapo Branch, of defendant United Coconut Planters Bank.
In or about the period May to June 1992, he was, together with
other fellow officers and employees, investigated by the bank in
connection with various anomalies. As a result of the investigation,
plaintiff was recommended terminated on findings of fraud and
abuse of discretion in the performance of his work. He was found by
the bank's Committee on Employee Discipline to have been guilty of
committing or taking part in the commission of the following:
A. Abuse of discretion in connection with actions taken beyond or
outside the limits of his authority.
b. Borrowing money from a bank client.
c. Gross negligence or dereliction of duty in the implementation of
bank policies or valid orders from management.
d. Direct refusal or willful failure to perform, or delay in performing,
an assigned task.
e. Fraud or willful breach of trust in the conduct of his work.
f. Falsification or forgery of bank records/documents.
10. Plaintiff thereafter decided to contest his termination by filing an
action for illegal dismissal against the bank.
Despite the pendency of this litigation, plaintiff was reported visiting
employees of the bank in their place of work during work hours, and
circulating false information concerning the status of his case
against the bank, including alleged offers by management of a
monetary settlement for his "illegal dismissal."
11. Defendants acted to protect the bank's interest by preventing
plaintiff's access to the bank's offices, and at the same time
informing him of that decision.
Plaintiff purported to insist on seeing and talking to the bank's
employees despite this decision, claiming he needed to do this in
connection with his insurance solicitation activities, but the bank has
not reconsidered.
12. The complaint states, and plaintiff has, no cause of action
against defendants.
29

The petitioners likewise interposed compulsory counterclaims for
damages.
The Case for the Petitioners
The petitioners adduced evidence that a day or so before November
15, 1995, petitioner Ongsiapco was at the 10
th
floor of the main
office of the bank where the training room of the Management
Development Training Office was located. Some of the bank's
management employees were then undergoing training. The bank
also kept important records in the said floor. When Ongsiapco
passed by, he saw the respondent talking to some of the trainees.
Ongsiapco was surprised because non-participants in the training
were not supposed to be in the premises.
30
Besides, the respondent
had been dismissed and had filed complaints against the bank with
the NLRC. Ongsiapco was worried that bank records could be
purloined and employees could be hurt.
The next day, Ongsiapco contacted the training supervisor and
inquired why the respondent was in the training room the day
before. The supervisor replied that he did not know why.
31
Thus, on
November 15, 1995, Ongsiapco issued a Memorandum to Belanio,
the Vice-President for Security Services, directing the latter not to
allow the respondent access to the bank premises near the working
area.
32
The said Memorandum was circulated by the Chief of
Security to the security guards and bank employees.
At about 12:30 p.m. on January 31, 1996, Security Guard Raul
Caspe, a substitute for the regular guard who was on leave, noticed
the respondent seated on the sofa in front of the teller's
booth.
33
Caspe notified his superior of the respondent's presence,
and was instructed not to confront the respondent if the latter was
going to make a deposit or withdrawal.
34
Caspe was also instructed
not to allow the respondent to go to the upper floors of the
building.
35
The respondent went to the teller's booth and, after a
while, seated himself anew on the sofa. Momentarily, Caspe noticed
Casil, another employee of the bank who was at the working section
of the Deposit Service Department (DSD), motioning to the
respondent to get the check. The latter stood up and proceeded in
the direction of Casil's workstation. After the respondent had taken
about six to seven paces from the sofa, Caspe and the company
guard approached him. The guards politely showed Ongsiapco's
Memorandum to the respondent and told the latter that he was not
allowed to enter the DSD working area; it was lunch break and no
outsider was allowed in that area.
36
The respondent looked at the
Memorandum and complied.
On May 29, 1998, the trial court rendered judgment in favor of the
respondent. The fallo of the decision reads:
WHEREFORE, premises considered, defendants are hereby adjudged
liable to plaintiff and orders them to rescind and set-aside the
Memorandum of November 15, 1995 and orders them to pay
plaintiff the following:
1) the amount of P100,000.00 as moral damages;
2) the amount of P50,000.00 as exemplary damages;
3) P50,000.00 for and as attorney's fees;
4) Cost of suit.
Defendants' counterclaim is dismissed for lack of merit.
SO ORDERED.
37

The trial court held that the petitioners abused their right; hence,
were liable to the respondent for damages under Article 19 of the
New Civil Code.
The petitioners appealed the decision to the Court of Appeals and
raised the following issues:
4.1 Did the appellants abuse their right when they issued the
Memorandum?chanroblesvi rtualawl ibrary
4.2 Did the appellants abuse their right when Basco was asked to
leave the bank premises, in implementation of the Memorandum, on
21 December 1995?chanroblesvi rtualawlibrary
4.3. Did the appellants abuse their right when Basco was asked to
leave the bank premises, in implementation of the Memorandum, on
31 January 1995?chanroblesvirtualawl ibrary
4.4. Is Basco entitled to moral and exemplary damages and
attorney's fees?chanroblesvirtualawl ibrary
4.5. Are the appellants entitled to their counterclaim?
38

The CA rendered a Decision on March 30, 2000, affirming the
decision of the RTC with modifications. The CA deleted the awards
for moral and exemplary damages, but ordered the petitioner bank
to pay nominal damages on its finding that latter abused its right
when its security guards stopped the respondent from proceeding to
the working area near the ATM section to get the check from Casil.
The decretal portion of the decision reads:
WHEREFORE, the Decision of the Regional Trial Court dated May 29,
1998 is hereby MODIFIED as follows:
1. The awards for moral and exemplary damages are deleted;
2. The award for attorney's fees is deleted;
3. The order rescinding Memorandum dated November 15, 1995 is
set aside; andcralawlibrary
4. UCPB is ordered to pay nominal damages in the amount
of P25,000.00 to plaintiff-appellee.
Costs de oficio.
39

The Present Petition
The petitioners now raise the following issues before this Court:
I. Whether or not the appellate court erred when it found that UCPB
excessively exercised its right to self-help to the detriment of Basco
as a depositor, when on January 31, 1996, its security personnel
stopped respondent from proceeding to the area restricted to
UCPB's employees.
II. Whether or not the appellate court erred when it ruled that
respondent is entitled to nominal damages.
III. Whether or not the appellate court erred when it did not award
the petitioners' valid and lawful counterclaim.
40

The core issues are the following: (a) whether or not the petitioner
bank abused its right when it issued, through petitioner Ongsiapco,
the Memorandum barring the respondent access to all bank
premises; (b) whether or not petitioner bank is liable for nominal
damages in view of the incident involving its security guard Caspe,
who stopped the respondent from proceeding to the working area of
the ATM section to get the check from Casil; and (c) whether or not
the petitioner bank is entitled to damages on its counterclaim.
The Ruling of the Court
On the first issue, the petitioners aver that the petitioner bank has
the right to prohibit the respondent from access to all bank
premises under Article 429 of the New Civil Code, which provides
that:
Art. 429. The owner or lawful possessor of a thing has the right to
exclude any person from the enjoyment and disposal thereof. For
this purpose, he may use such force as may be reasonably
necessary to repel or prevent an actual or threatened unlawful
physical invasion or usurpation of his property.
The petitioners contend that the provision which enunciates the
principle of self-help applies when there is a legitimate necessity to
personally or through another, prevent not only an unlawful, actual,
but also a threatened unlawful aggression or usurpation of its
properties and records, and its personnel and customers/clients who
are in its premises. The petitioners assert that petitioner Ongsiapco
issued his Memorandum dated November 15, 1995 because the
respondent had been dismissed from his employment for varied
grave offenses; hence, his presence in the premises of the bank
posed a threat to the integrity of its records and to the persons of
its personnel. Besides, the petitioners contend, the respondent,
while in the bank premises, conversed with bank employees about
his complaint for illegal dismissal against the petitioner bank then
pending before the Labor Arbiter, including negotiations with the
petitioner bank's counsels for an amicable settlement of the said
case.
The respondent, for his part, avers that Article 429 of the New Civil
Code does not give to the petitioner bank the absolute right to
exclude him, a stockholder and a depositor, from having access to
the bank premises, absent any clear and convincing evidence that
his presence therein posed an imminent threat or peril to its
property and records, and the persons of its customers/clients.
We agree with the respondent bank that it has the right to exclude
certain individuals from its premises or to limit their access thereto
as to time, to protect, not only its premises and records, but also
the persons of its personnel and its customers/clients while in the
premises. After all, by its very nature, the business of the petitioner
bank is so impressed with public trust; banks are mandated to
exercise a higher degree of diligence in the handling of its affairs
than that expected of an ordinary business enterprise.
41
Banks
handle transactions involving millions of pesos and properties worth
considerable sums of money. The banking business will thrive only
as long as it maintains the trust and confidence of its
customers/clients. Indeed, the very nature of their work, the degree
of responsibility, care and trustworthiness expected of officials and
employees of the bank is far greater than those of ordinary officers
and employees in the other business firms.
42
Hence, no effort must
be spared by banks and their officers and employees to ensure and
preserve the trust and confidence of the general public and its
customers/clients, as well as the integrity of its records and the
safety and well being of its customers/clients while in its premises.
For the said purpose, banks may impose reasonable conditions or
limitations to access by non-employees to its premises and records,
such as the exclusion of non-employees from the working areas for
employees, even absent any imminent or actual unlawful aggression
on or an invasion of its properties or usurpation thereof, provided
that such limitations are not contrary to the law.
43

It bears stressing that property rights must be considered, for many
purposes, not as absolute, unrestricted dominions but as an
aggregation of qualified privileges, the limits of which are prescribed
by the equality of rights, and the correlation of rights and
obligations necessary for the highest enjoyment of property by the
entire community of proprietors.
44
Indeed, in Rellosa v.
Pellosis ,
45
we held that:
Petitioner might verily be the owner of the land, with the right to
enjoy and to exclude any person from the enjoyment and disposal
thereof, but the exercise of these rights is not without limitations.
The abuse of rights rule established in Article 19 of the Civil Code
requires every person to act with justice, to give everyone his due;
and to observe honesty and good faith. When right is exercised in a
manner which discards these norms resulting in damage to another,
a legal wrong is committed for which the actor can be held
accountable.
Rights of property, like all other social and conventional rights, are
subject to such reasonable limitations in their enjoyment and to
such reasonable restraints established by law.
46

In this case, the Memorandum of the petitioner Ongsiapco dated
November 15, 1995, reads as follows:
MEMO TO : MR. JESUS M. BELANIO
Vice President
Security Department
D A T E : 15 November 1995
R E : MR. RUBEN E. BASCO
Please be advised that Mr. Ruben E. Basco was terminated for a
cause by the Bank on 19 June 1992. He filed charges against the
bank and the case is still on-going.
In view of this, he should not be allowed access to all bank
premises.
(Sgd.) LUIS MA. ONGSIAPCO
First Vice President
Human Resource Division
16 November 1995
TO: ALL GUARDS
ON DUTY
Strictly adhere/impose Security Procedure RE: Admission to Bank
premises.
For your compliance.
(Signature) 11/16/95
JOSE G. TORIAGA
47

On its face, the Memorandum barred the respondent, a stockholder
of the petitioner bank and one of its depositors, from gaining access
to all bank premises under all circumstances. The said Memorandum
is all-embracing and admits of no exceptions whatsoever. Moreover,
the security guards were enjoined to strictly implement the same.
We agree that the petitioner may prohibit non-employees from
entering the working area of the ATM section. However, under the
said Memorandum, even if the respondent wished to go to the bank
to encash a check drawn and issued to him by a depositor of the
petitioner bank in payment of an obligation, or to withdraw from his
account therein, or to transact business with the said bank and
exercise his right as a depositor, he could not do so as he was
barred from entry into the bank. Even if the respondent wanted to
go to the petitioner bank to confer with the corporate secretary in
connection with his shares of stock therein, he could not do so,
since as stated in the Memorandum of petitioner Ongsiapco, he
would not be allowed access to all the bank premises. The said
Memorandum, as worded, violates the right of the respondent as a
stockholder or a depositor of the petitioner bank, for being
capricious and arbitrary.
The Memorandum even contravenes Article XII, paragraph 4 (4.1
and 4.2) of the Code of Ethics issued by the petitioner bank itself,
which provides that one whose employment had been terminated by
the petitioner bank may, nevertheless, be allowed access to bank
premises, thus:
4.1 As a client of the Bank in the transaction of a regular bank-client
activity.
4.2 When the offending party is on official business concerning his
employment with the Bank with the prior approval and supervision
of the Head of HRD or of the Division Head, or of the Branch Head
in case of branches.
48

For another, the Memorandum, as worded, is contrary to the
intention of the petitioners. Evidently, the petitioners did not intend
to bar the respondent from access to all bank premises under all
circumstances. When he testified, petitioner Ongsiapco admitted
that a bank employee whose services had been terminated may be
allowed to see an employee of the bank and may be allowed access
to the bank premises under certain conditions, viz:
ATTY. R. ALIKPALA
Q So the permission you are referring to is merely a permission
to be granted by the security guard?chanroblesvi rtualawl ibrary
A No, sir, not the security guard. The security will call the office
where they are going. Because this is the same procedure they do
for visitors. Anybody who wants to see anybody in the bank before
they are allowed access or entry, they call up the department or the
division.
Q So I want to clarify, Mr. Witness. Former bank employees are
not allowed within the bank premises until after the security guard
call, which ever department they are headed for, and that they give
the permission and they tell the security guard to allow the
person?chanroblesvi rtualawlibrary
A Yes, Sir, that is the usual procedure.
Q If an employee resigned from the bank, same treatment?chanroblesvirtualawl ibrary
A Yes, Sir.
Q If an employee was terminated by the bank for cause, same
treatment?chanroblesvi rtualawlibrary
A Yes, Sir.
Q Outsiders who are not employees or who were never
employees of the bank also must ask permission?chanroblesvirtualawli brary
A Yes, Sir. Because there is a security control at the lobby.
Q You mentioned that this is a general rule?chanroblesvi rtualawlibrary
A Yes, Sir.
Q Is this rule written down in black and white anywhere?chanroblesvirtualawl ibrary
A I think this is more of a security procedure.
Q But being a huge financial institution, we expect Cocobank
has its procedure written down in black and white?chanroblesvi rtualawlibrary
ATTY. A. BATUHAN
Your Honor, objection. Argumentative, Your Honor.
There is no question posed at all, Your Honor.
C O U R T
Answer. Is there any guideline?chanroblesvi rtualawlibrary
A There must be a guideline of the security.
Q But you are not very familiar about the security
procedures?chanroblesvirtualawl ibrary
A Yes, Sir.
ATTY. R. ALIKPALA
Q Mr. Ongsiapco, the agency that you hired follows certain
procedures?chanroblesvirtualawl ibrary
A Yes, Sir.
Q Which of course are under the direct control and supervision
of the bank?chanroblesvirtualawl ibrary
A Yes, Sir.
Q And did the security agency have any of this procedure
written down?chanroblesvirtualawl ibrary
A It will be given to them by the Security Department, because
they are under the Security Department.
Q But if an employee is only entering the ground floor bank
area, where customers of the bank are normally allowed, whether
depositors or not, they don't need to ask for express permission, is
that correct?chanroblesvirtualawl ibrary
A Yes, if they are client.
Q Even if they are not client, but let us say they have to encash
a check paid to them by someone?chanroblesvi rtualawlibrary
A He is a client then.
Q But he is not yet a client when he enters the bank premises.
He only becomes - you know because you do not all these people,
you do not know every client of the bank so you just allow them
inside the bank?chanroblesvirtualawli brary
A Yes, the premises.
49

Petitioner Ongsiapco also testified that a former employee who is a
customer/client of the petitioner bank also has access to the bank
premises, except those areas reserved for its officers and
employees, such as the working areas:
ATTY. R. ALIKPALA
Q So Mr. Witness, just for the sake of clarity. The ground floor
area is where the regular consumer banking services are held? What
do you call this portion?chanroblesvirtualawl ibrary
A That is the Deposit Servicing Department.
Q Where the - .
A Where the people transact business.
ATTY. R. ALIKAPALA
Q They are freely allowed in this area?chanroblesvi rtualawlibrary
A Yes, Sir.
Q This is the area where there are counters, Teller, where a
person would normally go to let us say open a bank account or to
request for manager's check, is that correct?chanroblesvi rtualawlibrary
A Yes, Sir.
Q So, in this portion, no, I mean beyond this portion, meaning
the working areas and second floor up, outsiders will have to ask
express permission from the security guard?chanroblesvi rtualawlibrary
A Yes, Sir.
Q And you say that the security guards are instructed to verify
the purpose of every person who goes into this area?chanroblesvirtualawl ibrary
A As far as I know, sir.
50

It behooved the petitioners to revise such Memorandum to conform
to its Code of Ethics and their intentions when it was issued, absent
facts and circumstances that occurredpendente lite which warrant
the retention of the Memorandum as presently worded.
On the second issue, the Court of Appeals ruled that the petitioner
bank is liable for nominal damages to the respondent despite its
finding that the petitioners had the right to issue the Memorandum.
The CA ratiocinated that the petitioner bank should have allowed
the respondent to walk towards the restricted area of the ATM
section until they were sure that he had entered such area, and only
then could the guards enforce the Memorandum of petitioner
Ongsiapco. The Court of Appeals ruled that for such failure of the
security guards, the petitioner bank thereby abused its right of self-
help and violated the respondent's right as one of its depositors:
With respect, however, to the second incident on January 31, 1996,
it appears that although according to UCPB security personnel they
tried to stop plaintiff-appellee from proceeding to the stairs leading
to the upper floors, which were limited to bank personnel only (TSN,
pp. 6-9, June 4, 1997), the said act exposed plaintiff-appellee to
humiliation considering that it was done in full view of other bank
customers. UCPB security personnel should have waited until they
were sure that plaintiff-appellee had entered the restricted areas
and then implemented the memorandum order by asking him to
leave the premises. Technically, plaintiff-appellee was still in the
depositing area when UCPB security personnel approached him. In
this case, UCPB's exercise of its right to self-help was in excess and
abusive to the detriment of the right of plaintiff-appellee as
depositor of said Bank, hence, warranting the award of nominal
damages in favor of plaintiff-appellee. Nominal damages are
adjudicated in order that a right of a plaintiff, which has been
violated or invaded by the defendant, may be vindicated or
recognized and not for the purpose of indemnifying any loss
suffered by him (Japan Airlines v. Court of Appeals, 294 SCRA
19).
51

The petitioners contend that the respondent is not entitled to
nominal damages and that the appellate court erred in so ruling for
the following reasons: (a) the respondent failed to prove that the
petitioner bank violated any of his rights; (b) the respondent did not
suffer any humiliation because of the overt acts of the security
guards; (c) even if the respondent did suffer humiliation, there was
no breach of duty committed by the petitioner bank since its
security guards politely asked the respondent not to proceed to the
working area of the ATM section because they merely acted
pursuant to the Memorandum of petitioner Ongsiapco, and
accordingly, under Article 429 of the New Civil Code, this is a case
of damnum absque injuria;
52
and (d) the respondent staged the
whole incident so that he could create evidence to file suit against
the petitioners.
We rule in favor of the petitioners.
The evidence on record shows that Casil was in the working area of
the ATM section on the ground floor when he motioned the
respondent to approach him and receive the check. The respondent
then stood up and walked towards the direction of Casil.
Indubitably, the respondent was set to enter the working area,
where non-employees were prohibited entry; from there, the
respondent could go up to the upper floors of the bank's premises
through the elevator or the stairway. Caspe and the company guard
had no other recourse but prevent the respondent from going to
and entering such working area. The security guards need not have
waited for the respondent to actually commence entering the
working area before stopping the latter. Indeed, it would have been
more embarrassing for the respondent to have started walking to
the working area only to be halted by two uniformed security
guards and disallowed entry, in full view of bank customers. It bears
stressing that the security guards were polite to the respondent and
even apologized for any inconvenience caused him. The respondent
could have just motioned to Casil to give him the check at the lobby
near the teller's booth, instead of proceeding to and entering the
working area himself, which the respondent knew to be an area off-
limits to non-employees. He did not.
The respondent failed to adduce evidence other than his testimony
that people in the ground floor of the petitioner bank saw him being
stopped from proceeding to the working area of the bank. Evidently,
the respondent did not suffer embarrassment, inconvenience or
discomfort which, however, partakes of the nature of damnum
absque injuria, i.e. damage without injury or damage inflicted
without injustice, or loss or damage without violation of legal rights,
or a wrong due to a pain for which the law provides no
remedy.
53
Hence, the award of nominal damages by the Court of
Appeals should be deleted.
On the third issue, we now hold that the petitioner bank is not
entitled to damages and attorney's fees as its counterclaim. There is
no evidence on record that the respondent acted in bad faith or with
malice in filing his complaint against the petitioners. Well-settled is
the rule that the commencement of an action does not per se make
the action wrongful and subject the action to damages, for the law
could not have meant to impose a penalty on the right to litigate.
We reiterate case law that if damages result from a party's exercise
of a right, it isdamnum absque injuria.
54

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The
assailed Decision of the Court of Appeals is REVERSED and SET
ASIDE. The complaint of the respondent in the trial court and the
counterclaims of the petitioners are DISMISSED.
No costs.
SO ORDERED.
Austria-Martinez, (Acting Chairman), TINGA, and Chico-
Nazario, JJ., concur.
Puno, (Chairman), J., on official leave.








Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-4160 July 29, 1952
ANITA TAN, plaintiff-appellant,
vs.
STANDARD VACUUM OIL CO., JULITO STO DOMINGO, IGMIDIO RICO, and RURAL TRANSIT
CO.,defendants-appellees.
Alberto R. de Joya for appellant.
Ross, Selph, Carrascoso and Janda for appellees Standard Vacuum Oil Company, Sto. Domingo
and Rico.
Arnaldo J. Guzman for appellee Rural Transit Co.
BAUTISTA ANGELO, J .:
Anita Tan is the owner of the house of strong materials based in the City of Manila, Philippines. On
May 3, 1949, the Standard Vacuum Oil Company ordered the delivery to the Rural Transit Company
at its garage at Rizal Avenue Extension, City of Manila, of 1,925 gallons of gasoline using a gasoline
tank-truck trailer. The truck was driven by Julito Sto. Domingo, who was helped Igmidio Rico. While
the gasoline was being discharged to the underground tank, it caught fire, whereupon Julito Sto.
Domingo drove the truck across the Rizal Avenue Extension and upon reaching the middle of the
street he abondoned the truck with continued moving to the opposite side of the first street causing
the buildings on that side to be burned and detroyed. The house of Anita Tan was among those
destroyed and for its repair she spent P12,000.
As an aftermath of the fire, Julito Sto. Domingo and Imigidio Rico were charged with arson through
reckless imprudence in the Court of First Instance of Manila where, after trial, both were acquitted,
the court holding that their negligence was not proven and the fire was due to an unfortunate
accident.
Anita Tan then brought the action against the Standard Vacuum Oil Company and the Rural Transit
Company;, including the two employees, seeking to recover the damages she has suffered for the
destruction of her house.
Defendants filed separate motions to dismiss alleging in substance that (a) plaintiff's action is barred
by prior judgment and (b) plaintiff's complaint states no cause of action; and this motion having been
sustained, plaintiff elevated the case to this Court imputing eight errors to the court a quo.
The record discloses that the lower court dismissed this case in view of the acquittal of the two
employees of defendant Standard Vacuum Oil Company who were charged with arson through
reckless imprudence in the Court of First Instance of Manila. In concluding that accused were not
guilty of the acts charged because of the fire was accidental, the court made the following findings:
"the accused Imigidio Rico cannot in any manner be held responsible for the fire to the three houses
and goods therein above mentioned. He was not the cause of it, and he took all the necessary
precautions against such contingency as he was confronted with. The evidence throws no light on
the cause of fire. The witnesses for the prosecution and for the defense testified that they did not
know what caused the fire. It was unfortunate accident for which the accused Iigmidio Rico cannot
be held responsible." And a similar finding was made with respect to the other accused that the
information filed against the accused by the Fiscal contains an itemized statement of the damages
suffered by the victims, including the one suffered by Anita Tan, thereby indicating the intention of
the prosecution to demand indemnity from the accused in the same action, but that notwithstanding
this statement with respect to damages, Anita Tan did not make any reservation of her right to file a
separate civil action against the accused as required by the Rules of Court Rule 107, section 1-(a).
As Anita Tan failed to make reservation, and the accused were acquitted, the lower court ruled that
she is now barred from filing this action against the defendants.
This ruling is so far as defendants Julio Sto. Domingo and Imigidio Rico are concerned is correct.
The rule is that "extinction of the penal action does not carry with it extinction of the civil, unless the
extinction proceeds from the declaration in a final judgment that the fact from which the civil might
arise did not exist" (Rule 107, section 1-d, Rules of Court). This provision means that the acquittal of
the accused from the criminal charge will not necessarily extinguish the civil liability unless the court
declares in the judgment that the fact from which the civil liability might arise and did not exist. Here
it is true that Julito Sto. Domingo and Igmidio Rico were acquitted, the court holding that they were
not responsible for the fire that destroyed the house of the plaintiff,which as a rule will not
necessarily extinguish their civil liability,but the court went further by stating that the evidence
throws no light on the cause of fire and that it was an unfortunate accident for which the accused
cannot be held responsible. In our opinion, this declaration fits well into the exception of the rule
which exempts the two accused from civil liability. When the court acquitted the accused because
the fire was due to an unfortunate accident it actually said that the fire was due to a fortuitous event
for which the accused are not to blame. It actually exonerated them from civil liability.
But the case takes a different aspect with respect to the other defendants. For one thing, the
principle of res judicata cannot apply to them for the simple reason that they were not included as
co-accused in the criminal case. Not having been included in the criminal case they cannot enjoy the
benefit resulting from the acquittal of the accused. This benefit can only be claimed by the accused if
a subsequent action is later taken against them under the Revised Penal Code. And this action can
only be maintained if proper reservation is made and there is no express declaration that the basis of
the civil action has not existed. It is, therefore, an error for the lower court to dismiss the case
against these two defendants more so when their civil liability is predicated or facts other than those
attributed to the two employees in the criminal case.
Take, for instance, of the Standard Vacuum Oil Company. this company is sued not precisely
because of supposed negligent acts of its two employees Julito Sto. Domingo and Igmidio Rico but
because of acts of its own which might have contributed to the fire that destroyed the house of the
plaintiff. The complaint contains definite allegations of negligent acts properly attributable to the
company which proven and not refuted may serve as basis of its civil liability. Thus, in paragraph 5
of the first cause of action, it is expressly alleged that this company, through its employees, failed to
take the necessary precautions or measures to insure safety and avoid harm to person and damage
to property as well as to observe that degree of care, precaution and vigilance which the
circumstances justly demanded, thereby causing the gasoline they were unloading to catch fire. the
precautions or measures which this company has allegedly failed to take to prevent fire are not
clearly stated, but they are matters of evidence which need not now be determined. Suffice it to say
that such allegation furnishes enough basis for a cause of action against this company. There is no
need for the plaintiff to make a reservation of her right to file a separate civil action, for as this court
already held in a number of cases, such reservation is not necessary when the civil action
contemplated is not derived from the criminal liability but one based on culpa aquiliana under the Old
Civil Code (articles 1902 to 1910). These two acts are separate and distinct and should not be
confused one with the other. Plaintiff can choose either (Asuncion Parker vs. Hon. A.J Panlilio supra,
p. 1.)
The case of the Rural Transit Co. is even more different as it is predicated on a special provisions of
the Revised Penal Code. Thus, article 101, Rule 2, of said Code provides:
Art. 101. Rules regarding civil liability in certain cases. The exemption from criminal
liability established in subdivisions 1, 2, 3, 5 and 6 of article 12 and in subdivision 4 of article
11 of this Code does not include exemption from civil liability, which shall be enforced to the
following rules:
x x x x x x x x x
Second. In cases falling within subdivision 4 of article 11, the persons for whose benefit the
harm has been prevented shall be civilly liable in proportion to the benefit which they have
received.
And on this point, the complaint contains the following averments:
3. That after the corresponding trial the said defendants were acquitted and defendant Julio
Sto. Domingo was acquitted, on the ground that he so acted causing damage to another in
order to avoid a greater evil or injury, under article 11, paragraph 4 of the Revised Penal
Code, as shown by the pertinent portion of the decision of this Honorable Court in said case,
dated October 28, 1949, which reads as follows:
Under the foregoing facts, there can be no doubt that had the accused Julito Sto. Domingo
not taken the gasoline tank-truck trailer out in the street, a bigger conflagration would have
occurred in Rizal Avenue Extension, and, perhaps, there might have been several deaths
and bearing in mind the provisions of Article 11, paragraph 4 of the Revised Penal Code the
accused Julito Sto. Domingo incurred no criminal liability.
4. That it was consequently the defendant Rural Transit Co., from whose premises the
burning gasoline tank-truck trailer was driven out by defendant Julito Sto. Domingo in order
to avoid a greater evil or injury, for whose benefit the harm has been prevented under article
101, second subsection of the Revised Penal Code.
Considering the above quoted law and facts, the cause of action against the Rural Transit Company
can hardly be disputed, it appearing that the damage caused to the plaintiff was brought about
mainly because of the desire of driver Julito Sto. Domingo to avoid greater evil or harm, which would
have been the case had he not brought the tank-truck trailer to the middle of the street, for then the
fire would have caused the explosion of the gasoline deposit of the company which would have
resulted in a conflagration of much greater proportion and consequences to the houses nearby or
surrounding it. It cannot be denied that this company is one of those for whose benefit a greater
harm has been prevented, and as such it comes within the purview of said penal provision. The
acquittal of the accused cannot, therefore, be deemed a bar to a civil action against this company
because its civil liability is completely divorced from the criminal liability of the accused. The rule
regarding reservation of the right to file a separate civil action does not apply to it.
Wherefore, the order appealed from is hereby modified as follows: it is affirmed with regard to
defendants Julito Sto. Domingo and Igmidio Rico; but it is reserved with regard to defendants
Standard Vacuum Oil Company and Rural Transit Company, with costs.
Pablo, Bengzon, Padilla, Tuason, and Labrador, JJ., concur.
Paras, C.J., concurs in the result.


THIRD DIVISION

CORNELIO DEL FIERRO,
GREGORIO DEL FIERRO,
ILDEFONSO DEL FIERRO,
ASUNCION DEL FIERRO,
CIPRIANO DEL FIERRO,
MANUELA DEL FIERRO, and
FRANCISCO DEL FIERRO
Petitioners,


-versus-


RENE SEGUIRAN,
Respondent.
G.R. No. 152141

Present:

CARPIO,

*
J.,
VELASCO, JR., J., Chairperson,
BRION,
**

PERALTA, and
SERENO,
***
JJ.


Promulgated:

August 8, 2011
x-----------------------------------------------------------------------------------------x


D E C I S I O N


PERALTA, J .:


This is a petition for review on certiorari of the Decision of the Court of
Appeals dated October 2, 2001, and its Resolution dated February 11, 2002 in CA-
G.R. CV No. 60520.

The Court of Appeals affirmed the decision of the Regional Trial Court
(RTC) of Iba, Zambales, Branch 71, in Civil Case No. RTC-233-1, dismissing
petitioners complaint for reconveyance of property and cancellation of titles for
insufficiency of evidence as to the identity of the properties sought to be
recovered.

The factual background of this case, as stated by the Court of Appeals, is as
follows:

The subject of this case are two parcels of agricultural land, Lot Nos. 1625
and 1626 with an area of 72,326 square meters and 116,598 square meters,
respectively. Both lots are situated in Locloc, Palauig, Zambales. The cadastral
survey of these lots were conducted sometime in December 1962 (Cad. 364-D,
Palauiag Cadastre, Zambales).
[1]
The records of the Lands Management Bureau,
RLO III, San Fernando, Pampanga show that the claimants of Lot No. 1625
was Lodelfo Marcial
[2]
versus Miguel del Fierro, while the claimants of Lot No.
1626 were Lodelfo Marcial versus Francisco Santos and Narciso Marcial.
[3]


On April 29, 1965, Francisco Santos filed an application for free patent over
Lot No. 1626 with the Bureau of Lands, District Land Office No. 40 at Olongapo,
Zambales. The application remained pending until the commencement of this
litigation in 1985.
[4]
Francisco Santos died on December 9, 1978.

Meanwhile, on August 21, 1964, the heirs of Miguel del Fierro, led by his
widow Generosa Jimenez Vda. del Fierro, filed an ejectment case (forcible entry)
against Lodelfo Marcial and Narciso Marcial before the Municipal Trial Court of
Palauig, Zambales.
[5]
On October 31, 1972, the municipal court rendered a
decision in favor of the Del Fierros.
[6]
On appeal, the Court of First Instance (CFI) of
Zambales, Branch II-Iba, in a Decision
[7]
dated August 1, 1973, sustained the right
of the Del Fierros to the possession of the subject premises and ordered the
Marcials to vacate the premises.

On June 29, 1964, Lodelfo Marcial mortgaged to the Rural Bank of San
Marcelino, Inc. a parcel of land covered by Tax Declaration No. 21492 with an
area of 140,000 square meters.
[8]
The property is more particularly described as:

A parcel of land suitable for cultivation, upland rice, riceland and nipa land,
situated in Marala, Palauig, Zambales, containing an area of 140,000, sq. m., the
improvements consists of mango trees in the possession of the mortgagor; bounded on
the North by River; on the South by China Sea; on the East by heirs of Miguel del Fierro
and on the West by River; this property has been declared under Tax Declaration No.
21492 and assessed at P1,550.00 in the name of the mortgagor; the visible limits at
simple sight on the North and East are Rivers; on the South by China Sea and fence on
the East.
[9]


On December 26, 1972, the bank extrajudicially foreclosed the real estate
mortgage and was the highest bidder in the sale of the property per the
Certificate of Sale issued by the Provincial Sheriff.
[10]
On April 22, 1982, the Rural
Bank of San Marcelino, Inc. consolidated its ownership over the property.
[11]


On October 28, 1981, Lodelfo Marcial executed in favor of respondent Rene
Seguiran a Deed of Absolute Sale over a parcel of swampland designated as Lot
Nos. 1625 and 1626, Palauig Cadastre with Free Patent Application No. L-4-201
applied for by Marcial in 1967 and covered by Tax Declaration No. 3250 for the
year 1974.
[12]
Marcial had Lot Nos. 1625 and 1626 surveyed by a private surveyor
on October 19, 1969.
[13]
On November 9, 1981, respondent Rene Seguiran
purchased Marcials foreclosed property from the Rural Bank of San Marcelino
Inc.
[14]
Respondent then filed an application for free patent over Lot Nos. 1625
and 1626, which was approved by the Bureau of Lands. On July 11, 1983, Free
Patent Nos. 598462 (Lot No. 1625) and 598461 (Lot No. 1626) were issued in
respondents name. On July 29, 1983, the Register of Deeds of Zambales issued in
the name of respondent Original Certificate of Title (OCT) Nos. P-7013 and P-7014
covering Lot Nos. 1625 and 1626, respectively.
[15]
On September 21, 1983,
respondent had Lot Nos. 1625 and 1626 surveyed by a private surveyor.
[16]
He
also paid the real property taxes and declared the property in his name beginning
the year 1985.
[17]
On August 26, 1983, petitioner petitioned the RTC of Iba,
Zambales to conduct a relocation survey of Lot Nos. 1625 and 1626, which
petition was approved by the court. However, on February 16, 1985, the heirs of
Miguel and Generosa del Fierro filed a Motion to Quash Order of
Execution,
[18]
claiming they are in actual physical possession of Lot Nos. 1625 and
1626, and that prior to the sale of the said lots to respondent, the vendor, Lodelfo
Marcial no longer had any right over the properity, since he lost in Civil Case No.
706-1 for ejectment filed by the Del Fierros. In an Order
[19]
dated March 20, 1985,
the RTC of lba, Zambales, Branch LXX held in abeyance the implementation of its
earlier orders regarding the relocation survey of the lots subject of the petition
filed by petitioners.

On September 13, 1985, the heirs of Miguel and Generosa del Fierro,
namely, Cornelio, Gregorio, Ildefonso, Asuncion, Cipriano, Manuela and
Francisco, all surnamed Del Fierro, petitioners herein, filed a Complaint
for reconveyance and cancellation of titles against defendant Rene Seguiran,
respondent herein, before the RTC of Iba, Zambales, Branch 71 (trial court).

The Complaint
[20]
alleged that plaintiffs (petitioners) were the owners and
possessors of a parcel of land identified as Lot Nos. 1625 and 1626, formerly part
of Lot No. 1197, situated at Barangay Locloc, Palauig, Zambales. On July 26,
1964, Lodelfo and Narciso Marcial unlawfully entered the land occupied by
plaintiffs. Plaintiffs sued them for forcible entry
[21]
before the Municipal Court of
Palauig. The municipal court ruled in favor of plaintiffs, which decision was
affirmed on appeal by the CFI of Iba, Zambales, Branch II on August 1, 1973.
Consequently, Lodelfo and Narciso Marcial were ejected from the premises.
Meanwhile, on June 29, 1964, Marcial had mortgaged the lots to the Rural Bank
of San Marcelino, Inc., which foreclosed the real estate mortgage on December 26,
1972, and consolidated ownership over the lots on April 22, 1982. On October 28,
1981, defendant Rene S. Seguiran purchased from Lodelfo Marcial (deceased) the
subject lots. On November 9, 1981, defendant purchased the subject lots again
from the Rural Bank of San Marcelino, Inc.

Moreover, plaintiffs alleged that Lodelfo Marcial, predecessor-in-interest of
defendant, had no legal right to convey the said lots to plantiffs, since he was
merely a deforciant in the said lots. Further, defendant, with evident bad faith,
fraudulently applied with the Bureau of Lands for a free patent over the said lots,
alleging that he was the actual possessor thereof, which constitutes a false
statement, since the plaintiffs were the ones in actual possession. Despite knowing
that the said lots were the subject of legal controversy before the CFI of Iba,
Zambales, Branch II, defendant fraudulently secured a certification from the Court
of Olongapo to prove that the said parcels of land were not subject of any court
action. As a consequence of the foregoing illegal and fraudulent acts, defendant
was able to secure OCT Nos. P-7013 and P-7014 for Lot Nos. 1625 and 1626,
respectively.

Plaintiffs prayed that after trial, judgment be rendered: (1) ordering
defendant to reconvey the parcels of land covered by OCT Nos. P-7013 and P-
7014 to them (plaintiffs); (2) ordering the Register of Deeds of lba, Zambales to
cancel the said titles and issue a new one in favor of plaintiffs; and (3) ordering
defendant to pay plaintiffs P40,000.00 as actual and consequential
damages; P50,000.00 as moral damages; and P10,000.00 as exemplary damages.
[22]


Defendant was declared in default for failure to file an Answer, and
plaintiffs were allowed to present evidence ex parte.
[23]
On October 13, 1986, after
the completion of the testimonial evidence of the plaintiffs, the case was submitted
for decision.
[24]


Meanwhile, on December 9, 1986, the heirs of Francisco Santos, who
intervened in the case, filed a protest
[25]
with the Bureau of Lands, questioning the
award of free patent in favor of respondent Rene Seguiran over Lot No. 1626 when
they were the actual owners and possessors of the said lot, since their father was
the registered claimant and applicant of the said lot, while respondent had never set
foot on the lot. The Director of Lands directed Land Investigator Alfredo S.
Mendoza of the Bureau of Lands District Office in Iba, Zambales to investigate the
matter.
[26]


On February 26, 1981, the heirs of Francisco Santos, represented by their
attorney-in-fact Olivia C. Olaivar, filed a Motion for Leave to File a Complaint-in-
Intervention, which was granted by the trial court.
[27]
Intervenors claimed
ownership and possession of Lot No. 1626, being the heirs of the late Francisco
Santos who was the registered claimant of the said lot under the Cadastral Survey
Notification Card in 1962. The intervenors prayed that after hearing, the trial court
render judgment (1) annulling the Free Patent Application No (III-4) (1) 467-A
(Patent No. 598461) issued to defendant Rene Seguiran; (2) declaring the
intervenors the true and lawful owners of Lot No. 1626, since they are the legal
heirs of the late Francisco Santos; and (3) requiring defendant to pay to the
intervenors P5,000.00 as attorneys fees.
[28]


In their Answer to [the] Complaint-in-Intervention,
[29]
plaintiffs denied that
the intervenors were the owners and possessors of Lot No. 1626; hence, the
intervenors had no cause of action against them. Plaintiffs prayed that the
complaint-in-intervention be dismissed.

On May 20, 1988, defendant filed his Answer,
[30]
claiming that when he
bought the land in dispute on October, 28, 1981, Lodelfo Marcial was no longer its
owner, but the Rural Bank of San Marcelino, Inc., since Marcial failed to redeem
the land within the one-year period of redemption. His only purpose for buying the
land from the mortgagor, Lodelfo Marcial in November 1981 was for the peaceful
turn-over of the property to him by Marcial. Defendant denied any fraud, illegality
or bad faith in securing OCT Nos. P-7013 and P-7014. He asserted that when he
secured a certification from the RTC on June 6, 1983, there was in truth no
pending case involving the subject properties in any court in Zambales; hence, no
bad faith could be attributed to him. Defendant prayed that judgment be rendered
by the trial court dismissing the complaint and ordering plaintiffs to pay him
actual, moral and exemplary damages as well as attorneys fees and the expenses
of litigation.

On August 2, 1988, defendant also filed his Answer to the Complaint-in-
Intervention
[31]
with the same defenses and counterclaim. On motion of defendant,
the earlier order declaring him in default was set aside, and the trial court granted
defendants counsel the right to cross-examine the witnesses who had testified
during the proceedings already conducted.
[32]


At the pre-trial conference held on October 20, 1988, only the plaintiffs and
intervenors admitted that Lot No. 1625 was actually being occupied by the
plaintiffs (Del Fierros), while Lot No. 1626 was being occupied by the
intervenors (the heirs of Francisco Santos). Defendant did not admit the said
facts.
[33]


On October 13, 1995, intervenors filed a Motion to Hold the Proceedings in
Abeyance,
[34]
since their pending administrative protest, which involved the same
lots, had been scheduled for pre-trial conference on October 3, 1995 by the Bureau
of Lands.

In an Order
[35]
dated January 8, 1996, the trial court directed that the
proceedings be held in abeyance until after the resolution of the administrative
case. However, after plaintiffs sought reconsideration of the Order, the trial court
continued the proceedings in the interest of justice because the administrative case
for cancellation of title had yet to commence the reception of evidence, while
in this case, the intervenors (the complainants in the administrative case) had
already presented witnesses and marked evidences on their behalf; and the
suspension of this case would prove to be more expensive for all party
litigants.
[36]
The intervenors motion for whole or partial reconsideration of the said
order of reversal was denied by the trial court for lack of merit.
[37]


On April 23, 1998, the trial court rendered judgment in favor of defendant,
respondent herein, the dispositive portion of which reads:
WHEREFORE, premises considered, the complaint dated September 12,
1985 is dismissed for insufficiency of evidence as to the identity of the properties
sought to be recovered. The complaint-in-intervention dated February 24, 1987 is
dismissed for prematurity and insufficiency of evidence.
[38]


The trial court held that plaintiffs (petitioners) failed to prove the identity
of the property sought to be recovered. The numerous documents they presented
to prove ownership of Lot Nos. 1625 and 1626 showed that the properties
covered by sale or pacto de retro are located at Liozon,
[39]
Palauig, Zambales, while
Lot Nos. 1625 and 1626 are located at Locloc, Palauig, Zambales; and there is no
clear showing that parts of Liozon became Locloc. Moreover, although the Del
Fierros were declared as the possessors of the property in the ejectment case
(forcible entry)
[40]
filed by Generosa del Fierro against Lodelfo and Narciso
Marcial, the property concerned in the said case is Lot No. 1197. There was no
evidence as to the original size of Lot No. 1197 and no proof that Lot Nos. 1625
and 1626 formed part of Lot No. 1197. Based on the foregoing, the trial court
dismissed plaintiffs complaint.

The trial court also dismissed the complaint of intervenors on the ground of
non-exhaustion of administrative remedies as the protest filed earlier by
them against defendant (respondent) with the Bureau of Lands was still pending.

Both plaintiffs (petitioners) and intervenors appealed the decision of the trial
court to the Court of Appeals.

On October 2, 2001, the Court of Appeals upheld the decision of the trial
court. The dispositive portion of the appellate courts decision reads:



WHEREFORE, premises considered, the present appeals are hereby
DISMISSED and the appealed Decision in Civil case No. RTC-233-1 is hereby
AFFIRMED and UPHELD.
[41]


The Court of Appeals held that petitioners are not entitled to reconveyance
of Lot Nos. 1625 and 1626, since they failed to prove the identity of the parcels of
land over which they claim ownership. The evidence they adduced to prove their
ownership of the said lots showed that the Spanish deeds of conveyance involved
properties that were located in Barrio Liozon and not in Locloc, Palauig, Zambales,
which is the actual location of Lot Nos. 1625 and 1626.

Moreover, the Court of Appeals stated that the fact that Lodelfo Marcial was
defeated in the forcible entry case filed by petitioners prior to the purchase by
respondent of the foreclosed property from Marcial and from the mortgagee bank
in 1973 could not serve as the basis for petitioners right of ownership or title over
Lot Nos. 1625 and 1626 as only Lot No. 1197 was involved in the ejectment case
and only the issues of possession thereof was adjudicated therein. The appellate
court stated that the said court decision could have buttressed petitioners claim of
ownership over Lot Nos. 1625 and 1626 if petitioners were able to establish in this
case that the said lots indeed formed part of Lot No. 1197.

In addition, the Court of Appeals held that petitioners failed to prove by
clear and convincing evidence that the issuance of the certificates of title in favor
of respondent was attended by fraud.

The Court of Appeals declared as unmeritorious the argument of intervenors
that this case is not covered by the rule on exhaustion of administrative
remedies. It citedGarcia v. Aportadera,
[42]
wherein it was held that where a party
seeks for the cancellation of a free patent with the Bureau of Lands, he must pursue
his action in the proper Department and a review by the court will not be permitted
unless the administrative remedies are first exhausted. Further, an applicant for a
free patent may not file an
action for reconveyance for that is the remedy of an owner whose land has been
erroneously registered in the name of another.
[43]


Petitioners motion for reconsideration was denied for lack of merit by the
Court of Appeals in a Resolution
[44]
dated February 11, 2002.

Petitioners filed this petition, raising the following issues:

I
THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION
OF THE REGIONAL TRIAL COURT ON THE BASIS OF ISSUES NOT
RAISED BY RESPONDENT IN THE TRIAL COURT.

II
THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION
OF THE REGIONAL TRIAL COURT VIS--VIS THE JUDICIAL
ADMISSION OF RESPONDENT ON THE RIGHT OF THE PETITIONERS TO
THE PROPERTY.

III
THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION
OF THE REGIONAL TRIAL COURT DESPITE THE FACT THAT THE
CONCLUSIONS OF LAW RUN COUNTER AND ARE DIAMETRICALLY
OPPOSED TO (THE) SUMMARY OF THE EVIDENCE GIVEN BY THE
REGIONAL TRIAL COURT.

The main issues are whether petitioners are entitled to reconveyance of Lot
Nos. 1625 and 1626, and whether the certificates of title of respondent to the said
lots should be cancelled.

The requisites of reconveyance are provided for in Article 434 of the Civil
Code, thus:

Art. 434. In an action to recover, the property must be identified, and the
plaintiff must rely on the strength of his title and not on the weakness of the
defendants claim.

Article 434 of the Civil Code provides that to successfully maintain an action
to recover the ownership of a real property, the person who claims a better right
to it must prove two (2) things: first, the identity of the land claimed; and second,
his title thereto.
[45]


In regard to the first requisite, in an accion reinvindicatoria, the person who
claims that he has a better right to the property must first fix the identity of the
land he is claiming by describing the location, area and boundaries
thereof.
[46]
Anent the second requisite, i.e., the claimant's title over the disputed
area, the rule is that a party can claim a right of ownership only over the parcel of
land that was the object of the deed.
[47]


In this case, petitioners failed to prove the identity of the parcels of
land sought to be recovered and their title thereto. Petitioners contend that they are
the owners of Lot Nos. 1625 and 1626 by virtue of the decision of the Municipal
Court of Palauig, Zambales in the ejectment case (forcible entry)
[48]
against
Lodelfo and Narciso Marcial, declaring them (petitioners) as the ones in possession
of the property, which decision was affirmed on appeal. However, as stated by the
trial court and the Court of Appeals, the property involved in the ejectment case
was Lot No. 1197, and it was never mentioned in the respective decisions
[49]
of the
Municipal Court of Palauig, Zambales and the CFI of Zambales, Branch II-Iba that
the portion intruded upon was Lot Nos. 1625 and 1626. Moreover, petitioners
failed to adduce in evidence the technical description of Lot No. 1197 and failed to
prove that Lot Nos. 1625 and 1626 were part of or used to be part of Lot No.
1197.

Further, the documents presented by petitioners to prove their title over Lot
Nos. 1625 and 1626 showed that the properties covered therein were located
in Barrio Liozon, Palauig, Zambales, while Lot Nos. 1625 and 1626 are located
in Barrio Locloc, Palauig, Zambales. In addition, petitioners failed to establish
which of the deeds of sale, donation or documents evidencing transfer of properties
to their father, Miguel del Fierro, which were adduced in evidence, covered Lot
Nos. 1625 and 1626. The Court of Appeals stated:

In support of their claim of ownership over Lot Nos. 1625 and 1626,
plaintiffs-appellants (petitioners) submitted in evidence various Spanish
documents or deeds of purchase: (1) a Spanish document dated June 1927,
"Venta Real de Terreno executed by J.L. Faranal in favor of Miguel del Fierro,
over a parcel of land situated in Marala, Barrio Liozon, Palauig, Zambales; (2) a
Spanish document dated December 18, 1939 executed by Justo Apostol in favor
of Miguel del Fierro, for the sale of a riceland situated in Barrio Liozon, Palauig,
Zambales (1,350 sq.m.); (3) Escritura de Compra Venta dated June 1, 1918
executed by Alejandro Abaga in favor of Feliciana Frase over a parcel of land
situated in Marala, Barrio Lioson, Palauig, Zambales; (4) Renuncia De Derecho
(Waiver of Rights) dated September 6, 1928 executed by Juan Saclolo in favor of
Miguel del Fierro over a riceland situated in Marala, Barrio Lioson, Palauig,
Zambales; (5) "Venta Con Pacto de Retro de Terrenos dated April 8, 1927
executed by Faustino Barrentos in favor of Don Miguel del Fierro over a coconut
plantation located at Sitio Sasa, Barrio Liozon, Palauig, Zambales; (6) Venta
Real de Terrenos" dated July 24, 1926 executed by Jose Trinidad and Ursula
Villanueva in favor of Miguel de1 Fierro over a riceland situated in Barrio
Liozon, Palauig, Zambales (25,610 sq. ms.); (7) "Escritura de Cancelacion de
Hipoteca de Bienes Inmuebles" (Contract of Cancellation of Mortgage of Real
Estate Property) executed by Pedro Redona in favor of Ursula Villanueva over a
riceland situated in Barrio Lioson, Palauig, Zambales; (8) "Declaracion Jurada"
(Sworn Statement) dated January 11, 1928 executed by Demetrio Sison, Aurea
Sison and Severino Anguac affirming the contract of sale dated September 25,
1925 signed by their deceased mother in favor of Miguel del Fierro over a
riceland situated in Barrio Lioson, Palauig, Zambales (15,660 sq. ms.); (9)
"Escritura de Compra Venta" dated September 25, 1925 executed by Justa
Romero and Aurea Sison in favor of Don Miguel del Fierro over a piece of land
situated in [Sitio] Sasa, Barrio Lioson, Palauig, Zambales (1 hectare, 56 ares and
60 centares); (10) "Escritura de Compra Venta" dated August 29, 1921 executed
by Juan Sison in favor of Miguel del Fierro over a parcel of coconut land (83 ares
and 70 centares) situated in Barrio Lioson, Palauig, Zambales; (11) Venta Real
de Terrenos" dated September 16, 1925 executed by Agustin Abaga in favor of
Miguel del Fierro over a parcel of land situated in [Sitio] Sasa, Barrio Lioson,
Palauig, Zambales (7,200 sq. ms.); and (12) "Escritura de Donacion" (Deed of
Gift or Pure Donation) executed by Eugenio del Fierro in favor of his son, Miguel
del Fierro of a land situated in Marala, Barrio Lioson, Paiauig, Zambales (12
hectares, 77 ares and 90 centares). In addition to the foregoing documents,
plaintiffs-appellants presented various tax declarations for the years 1944
(Miguel del Fierro), 1952, 1968, 1974, 1977, 1980, 1985 and 1987 (Heirs of
Miguel del Fierro). These tax declarations pertain to lots situated in Locloc,
Palauig, Zambales but the designation of Lots 1625 and 1626 (as part of Lot
1197) was made only in TD Nos. 11-0099 and 11-0100 for 1984 and
1987, respectively.
A perusal of these documents would readily show that the lots indicated in
the Spanish deeds of conveyence were located in Barrio Lioson and not in Locloc,
Palauig, Zambales, the actual location of the Lot Nos. 1625 and 1626. As to the
tax declarations, the real properties declared therein, although situated in Locloc,
Palauig, Zambales were not designated as Lot Nos. 1625 and 1626 until the year
1985, the same year the said lots were titled in the name of defendant-
appellee. And even without such designation of Lot Nos. 1625 and 1626,
plaintiffs-appellants failed to show that the separate lots which their predecessor-
in-interest, Don Miguel del Fierro, had acquired in the 1920s, were the very same
land (or included therein) which have been designated as Lot Nos. 1625 and 1626,
or which was covered by the land supposedly donated by their grandfather to Don
Miguel del Fierro. In other words, the identity of the land being claimed by
plaintiffs-appellants could not be clearly established on the basis of either the
Spanish deeds of purchase and donation or the old tax declarations presented by
plaintiffs-appellants.
[50]


Based on the foregoing, petitioners failed to prove the identity of the
properties sought to be recovered and their title thereto.

Petitioners argue that the issue of identity of the subject parcels of lands was
not among those raised during pre-trial or even during the trial. They contend that
the findings of the trial court, which were affirmed by the Court of Appeals, on the
issue of supposed insufficiency of evidence as to the identity of the properties not
only surprised them, but caused them manifest injustice. They assert that issues not
raised in the trial court cannot be raised for the first time on appeal.

Petitioners argument is unmeritorious.

Petitioners filed an action for reconveyance and cancellation of titles. Hence,
it was incumbent on petitioners to prove the requisites of reconveyance, one of
which is to establish the identity of the parcels of land petitioners are claiming. To
reiterate, in an accion reinvindicatoria, the person who claims that he has a better
right to the property must first fix the identity of the land he is claiming by
describing the location, area and boundaries thereof.
[51]
Petitioners failure to
present sufficient evidence on the identity of the properties sought to be recovered
and their title thereto resulted in the dismissal of their complaint.

As regards the second issue raised, petitioners contend that the Partial Pre-
Trial Order stated that during the pre-trial conference the following facts were
stipulated on:

1) By the plaintiffs and intervenor that Lot 1625 is actually occupied by
the Del Fierros, while Lot 1626, Cad. Lot 364-D of the Palauig is occupied by the
heirs of Francisco Santos, who is already deceased. The defendant did not admit
this fact.

2) The plaintiffs and defendantsthat there exists a decision rendered by
the then Court of First Instance of Zambales thru Honorable Judge Pedro Cenzon
in favor of the plaintiffs in this case, affirming the decision of the Municipal Trial
Court of Palauig, Zambales where it was stated that the plaintiffs are the ones in
possession of Lots 1625 and 1626, which is docketed as Civil Case No. 706-I
entitled Generosa Jimenez Vda. de Del Fierro, et al. versus Leodolfo Marcial, et
al. The intervenor did not admit this fact.
[52]


Petitioners contend that the said judicial admission is binding and conclusive
on the respondent and it cannot just be ignored by the trial court without doing
violence to Section 4, Rule 129 of the Rules of Evidence.
[53]
Petitioners also
contend that the decision of the appellate court in the ejectment case (Civil Case
No. 706-I), filed by petitioners against Lodelfo Marcial, respondents predecessor-
in-interest, is conclusive as to petitioners possession of Lot Nos. 1625 and 1626.
Since petitioners are in possession, respondent fraudulently applied for and
procured free patents, as the consideration in qualifying as a patentee is that the
applicant is in actual possession of the land applied for. Moreover, the undisputed
possession of petitioners and their predecessors of the land as early as 1920s had
long converted the parcels of land to private land and no longer part of the public
domain.


Petitioners contention does not persuade.

As stated by the trial court and the Court of Appeals, the ejectment
case entitled Generosa Jimenez Vda. de Del Fierro, et al. v. Leodolfo Marcial, et
al. involved Lot No. 1197, and there was no mention of Lot Nos. 1625 and 1626
therein. The land involved in the ejectment case was described by the plaintiffs
(petitioners) in their Complaint
[54]
as follows:

Consisting of 21.3196 hectares, more or less, and bounded on the North by
Leoncia Apostol, Heirs of P. Lesaca, Justa Ponce and P. Artiquera; East by Hrs.
of Potenciano Lesaca, M. Abdon, P. Artiquera, David Abdon and D. Abdon;
South by P. Garcia, Barrio Road and Maximo Abdon and West by River and
Beach. It is designated as Lot No. 1197 of the Palauig Cadastre and declared
for taxation purposes in the name of the Heirs of Miguel del Fierro under Tax
Declaration No. 18324 and assessed at P5,330.00.
[55]


Moreover, in this case, petitioners failed to prove that Lot Nos. 1625 and
1626 were part of Lot No. 1197. The Survey Map
[56]
of Lot 1626 showed that Lot
Nos. 1197, 1625, and 1626 are distinct lots. The cadastral survey of Lot Nos. 1625
and 1626 was conducted sometime in 1962.
[57]
The ejectment case was filed in
1964, after the cadastral survey of Lot Nos. 1625 and 1626, yet petitioners did not
mention in their complaint that the ejectment case involved Lot Nos. 1625 and
1626.

In view of the foregoing, the Partial Pre-trial Order
[58]
mistakenly stated that
petitioners were declared as the ones in possession of Lot Nos. 1625 and 1626 in
the ejectment case. Even the trial court stated during the pre-trial conference held
on October 28, 1988 that there was no mention of Lot Nos. 1625 and 1626 in the
decision
[59]
of the CFI of Zambales, Branch II-Iba in the ejectment case (Civil Case
No. 706-I).
[60]
Moreover, contrary to the contention of petitioners, respondent did
not admit that petitioners and the intervenors were in possession of Lot Nos. 1625
and 1626, respectively, which fact was clearly stated in the Partial Pre-trial Order.

As regards the third issue raised, petitioners cited their testimonial evidence
as narrated by the trial court, and contend that the identity of the land and their
possession thereof were established as shown by the decision of the trial court.
They contend that they seek reconveyance because the free patent titles were
issued to respondent on false representation as they (petitioners) were in possession
of the land.

The contention lacks merit.

The testimonial evidence of petitioners showed that they did not know the
land area of Lot Nos. 1625 and 1626;
[61]
they had no tax declaration specifically
for Lot Nos. 1625 and 1626;
[62]
they did not know who was residing in Lot No.
1626; they could not identify which of the documents evidencing transfer of
properties to their father, Miguel del Fierro, covered Lot Nos. 1625 and
1626;
[63]
and they had no survey plan of the property over which they were
claiming ownership. However, Ildefonso del Fierro testified that he has a
fishpond and an approximately two-hectare riceland in Lot No. 1625;
[64]
hence, he
did not allow the relocation survey by respondent of Lot Nos. 1625 and 1626,
because it would pass through his fishpond and it would be
disturbed.
[65]
Nevertheless, petitioners failed to identify the specific area of Lot No.
1625 or of Lot No. 1626 where the fishpond, riceland or houses of petitioners are
located. Instead, they claim possession of the entire area of Lot Nos. 1625 and
1626, but not one of their documents showing transfer of properties in the name of
their father, Miguel del Fierro, specifically states that it covers Lot No. 1625 or Lot
No. 1626, and petitioner could not identify which documents referred to Lot Nos.
1625 and 1626. Thus, petitioners erred in claiming that their testimonial evidence
established the identity of the parcels of land sought to be recovered and their title
thereto.
The Court notes that the trial court did not discuss the merits of the
testimonial evidence of petitioners, but the Court of Appeals did, stating thus:

x x x [T]he testimonies of plaintiffs witnesses did not serve to clarify the matter
of identity of the subject properties as they even failed to indicate the precise
boundaries or areas of Lot Nos. 1625 and 1626, and likewise admitted they have
no tax declaration specifically for Lot Nos. 1625 and 1526 even after the cadastral
survey in 1962. Failing in their duty to clearly identify the lands sought to be
recovered by them, plaintiffs-appellants action for reconveyance must
necessarily fail. To reiterate, in order that an action to recover ownership of real
property may prosper, the person who claims he has a better right to it must prove
not only his ownership of the same but also satisfactorily prove the identity
thereof. x x x
[66]


In fine, petitioners failed to prove the identity of the properties over which
they claimed ownership and sought to be reconveyed to them, and they also failed
to prove their title over Lot Nos. 1625 and 1626; hence, the Court of Appeals did
not err in affirming the decision of the trial court, which dismissed petitioners
Complaint.

WHEREFORE, the petition is DENIED. The Court of Appeals
Decision dated October 2, 2001 and its Resolution dated February 11, 2002 in
CA-G.R. CV No. 60520 are hereby AFFIRMED.

No costs.

SO ORDERED.

DIOSDADO M.
PERALTA
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice




PRESBITERO J. VELASCO, JR. ARTURO D. BRION
Associate Justice Associate Justice
Chairperson



MARIA LOURDES P. A. SERENO
Associate Justice




ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.



PRESBITERO J. VELASCO, JR.
Associate Justice
Third Division, Chairperson



CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.




RENATO C. CORONA
Chief Justice





*
Designated as an additional member in lieu of Associate Justice Roberto A. Abad, per Special Order No.
1059 dated August 1, 2011.
**
Designated as an additional member in lieu of Associate Justice Jose Catral Mendoza, per Special Order
No. 1056, dated July 27, 2011.
***
Designated as an additional member, per Special Order No. 1028 dated June 21, 2011.
[1]
Exhibit O, (Intervenors), records, vol. I, pp. 290-293.
[2]
Also referred to as Leodolfo.
[3]
Records, vol. I, p. 290-A.
[4]
Exhibits J to M, (Intervenors), records, vol. I, pp. 283-286.
[5]
Docketed as Civil Case No. 365 (Forcible entry with preliminary mandatory injunction).
[6]
Exhibit R, (Plaintiffs), records, vol. II, p. 434.
[7]
Exhibit F, records, vol. I, p. 57.
[8]
Exhibits 5 and 6, (Defendant), records, vol. II, pp. 620-622.
[9]
Exhibit 10, records, vol. II, p. 626.
[10]
Exhibit 9 (Defendant), records, vol. II, pp. 624-627.
[11]
Exhibit 8 (Defendant), records, vol. II, p. 632.
[12]
Exhibits 7 and 11, records, vol. II, pp. 623, 628-629.
[13]
Exhibit 21-A (Defendant), records, vol. II, p. 633.
[14]
Exhibit 7, (Defendant), records, vol. II, p. 630.
[15]
Exhibits 3, 4, 20 to 24 (Defendant), records, vol. II, pp. 616-619, 636-641.
[16]
Exhibit 25 (Defendant), records, vol. II, p. 642.
[17]
Exhibits 15, and 16, (Defendant), records, vol. II, pp. 634-635.
[18]
Exhibit V (Plaintiffs), records, vol. II, p. 455.
[19]
Exhibit W, (Plaintiffs), records, vol. II, p. 458.
[20]
Records, vol. I, p. 2.
[21]
Civil Case No. 365, entitled Generosa Jimenez Vda. de Del Fierro, et al. v. Leodolfo Marcial, et al.
[22]
Records, vol. I, p. 5.
[23]
Id. at 42.
[24]
Id. at 43.
[25]
Exhibit D, id. at 122.
[26]
Exhibit E, (Intervenors), id. at. 124.
[27]
Records, vol. I, pp. 104-105, 118-119.
[28]
Id. at 106-108.
[29]
Id. at 141.
[30]
Id. at 185.
[31]
Id. at 201.

[32]
Id. at 206.
[33]
Id. at 278.
[34]
Records, vol. II, p. 765.
[35]
Id. at 783.
[36]
Id. at 795-797.
[37]
Id. at 815-816.
[38]
Rollo, pp. 87-88.
[39]
Also spelled as Lioson.
[40]
Exhibit R, records, vol. II, p. 434; exhibit F, records, vol. I, p. 57.
[41]
Rollo, p. 43.
[42]
No. L-34122, August 29, 1988, 164 SCRA 705.
[43]
Id.
[44]
Rollo, p. 52.
[45]
Hutchinson v. Buscas, 498 Phil. 257, 262 (2005).
[46]
Id. at 220.
[47]
Id.
[48]
Civil Case No. 365, records, vol. II, p. 434.
[49]
Records, vol. II, p. 434; exhibit F, records, vol. I, p. 57.
[50]
Rollo, pp. 40-41.
[51]
Hutchinson v. Buscas, supra note 45, at 220.
[52]
Records, vol. I, p. 278.
[53]
Sec. 4. Judicial admissions.An admission, verbal or written, made by a party in the course of the
proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it
was made through palpable mistake or that no such admission was made.
[54]
Records, vol. II, p. 422.
[55]
RTC Decision, records, vol. III, p. 970 (Emphasis supplied.); Complaint, id. at. 422.
[56]
Exhibit I, records, vol. III, p. 887.
[57]
Supra note 1.
[58]
Records, vol. I, p. 278.
[59]
Exhibit F, id. at. 57.
[60]
TSN, October 28, 1988, id. at. 322-323.
[61]
TSN, October 13, 1986, p. 35 (Moises Leal); TSN, November 25, 1988, p. 27 (Gregorio del Fierro).
[62]
TSN, October 13, 1986, p. 35.
[63]
TSN, February 27, 1989, p. 35.
[64]
TSN, March 16, 1990, p. 19.
[65]
Id. at. 24-25.
[66]
Rollo, p. 42.























Republic of the Philippines
Supreme Court
Manila


THIRD DIVISION


DATU KIRAM SAMPACO,
substituted by HADJI SORAYA S.
MACABANDO,
Petitioner,



- versus -



HADJI SERAD MINGCA
LANTUD,
Respondent.
G.R. No. 163551

Present:

CARPIO,
*
J.,
VELASCO, JR., J., Chairperson,
PERALTA,
ABAD, and
MENDOZA, JJ.


Promulgated:

July 18, 2011
x-----------------------------------------------------------------------------------------x


D E C I S I O N


PERALTA, J .:


This is a petition for review on certiorari of the Court of Appeals Decision
dated August 15, 2003 in CA-G.R. CV No. 63801 and its Resolution dated May
13, 2004, denying petitioners motion for reconsideration.

The facts, as stated by the Court of Appeals, are as follows:
On September 14, 1984, respondent Hadji Serad Mingca Lantud, the
plaintiff in the lower court, filed an action to quiet title with damages
[1]
with the
Regional Trial Court (RTC) of Lanao del Sur, Branch 8, Marawi City (trial court),
against petitioner Datu Kiram Sampaco (deceased), the defendant in the lower
court, who has been substituted by his heirs, represented by Hadji Soraya
Sampaco-Macabando.
[2]


Respondent alleged in his Complaint
[3]
that he is the owner in fee simple of
a parcel of residential lot located at Marinaut, Marawi City, with an area of 897
square meters covered by Original Certificate of Title (OCT) No. P-658. On
August 25, 1984, petitioner Datu Kiram Sampaco, through his daughter Soraya
Sampaco-Macabando with several armed men, forcibly and unlawfully entered his
property and destroyed the nursery buildings, cabbage seedlings and other
improvements therein worth P10,000.00. On August 30, 1984, Barangay Captain
Hadji Hassan Abato and his councilmen prepared and issued a decision
[4]
in
writing stating that petitioner Datu Kiram Sampaco is the owner of the subject
parcel of land. Respondent stated that the acts of petitioner and the said decision
of the Barangay Captain may cast a cloud over or otherwise prejudice his
title. Respondent stated that he and his predecessors-in-interest have been in open,
public and exclusive possession of the subject property. He prayed that the acts of
petitioner and the decision of Barangay Captain Hadji Hassan Abato and his
councilmen be declared invalid, and that petitioner be ordered to pay respondent
damages in the amount of P10,000.00 and attorneys fees.

In his Answer,
[5]
defendant Datu Kiram Sampaco, petitioner herein, denied
the material allegations of the Complaint. Petitioner asserted that he and his
predecessors-in-interest are the ones who had been in open, public, continuous, and
exclusive possession of the property in dispute. Petitioner alleged that OCT No. P-
658 was secured in violation of laws and through fraud, deception and
misrepresentation, considering that the subject parcel of land is a residential
lot and the title issued is a free patent. Moreover, respondent and his
predecessors-in-interest had never taken actual possession or occupied the land
under litigation. On the contrary, petitioner has all the evidence of actual
possession and ownership of permanent improvements and other plants on the land
in dispute.

Petitioner filed a counterclaim for actual and moral damages, and attorney's
fees for the unfounded complaint and prayed for its dismissal. He also sought the
cancellation of respondents OCT No. P-658 and the reconveyance of the subject
parcel of land.

During the trial, respondent Hadji Lantud testified that he acquired the
subject lot from his grandmother, Intumo Pagsidan, a portion thereof from his
grandmothers helper, Totop Malacop, pursuant to a court decision after litigating
with him.
[6]
Respondent had been residing on the lot for more than 30 years,
applied for a title thereto and was issued OCT No. P-658.
[7]
He paid the
corresponding real estate taxes for the land.
[8]
He planted assorted trees and plants
on the lot like bananas, jackfruits, coconuts and others.
[9]
He testified that he was
not aware of the alleged litigation over the lot before Barangay Captain Hadji
Hassan Abato, although he was furnished a copy of the decision.
[10]


On the other hand, petitioner Datu Kiram Sampaco testified that the land
under litigation is only a portion of the 1,800 square meters of land that he
inherited in 1952 from his father, Datu Sampaco Gubat.
[11]
Since then, he had been
in adverse possession and ownership of the subject lot, cultivating and planting
trees and plants through his caretaker Hadji Mustapha Macawadib.
[12]
In 1962, he
mortgaged the land (1,800 square meters) with the Development Bank of
the Philippines, Ozamis branch.
[13]
He declared the land (1,800 square meters) for
taxation purposes
[14]
and paid real estate taxes, and adduced in evidence the latest
Tax Receipt No. 1756386 dated September 15, 19[9]3.
[15]
Petitioner presented four
corroborating witnesses as regards his possession of the subject property.

After trial on the merits, the trial court rendered a Decision on March 31,
1999 in favor of petitioner, the dispositive portion of which reads:

WHEREFORE, premises considered the court is of the opinion
and so holds that the preponderance of evidence is in favor of the
defendant and against the plaintiff. Judgment is hereby rendered as
follows:

1. Dismissing plaintiffs complaint for lack of merit;
2. Declaring Original Certificate of Title No. P-658 (Exh. A)
null and void and of no legal effect;
3. Declaring the defendant the absolute or true owner and
possessor of the land in dispute; and
4. Ordering the plaintiff to pay the defendant the sum
of P10,000.00 for attorneys fees plus P500.00 per
appearance.
[16]



The trial court held that the issuance of respondents title, OCT No. P-658,
was tainted with fraud and irregularities and the title is, therefore, spurious; hence,
it is null and void, and without any probative value. The finding of fraud was based
on: (1) the Certification issued by Datu Samra Andam, A/Adm. Assistant II,
Natural Resources District No. XII-3, Marawi City, stating that the data contained
in respondents title were verified and had no record in the said office; (2) the said
Certification was not refuted or rebutted by respondent; (3) while free patents are
normally issued for agricultural lands, respondents title is a free patent title issued
over a residential land as the lot is described in the Complaint as a residential lot;
and (4) Yusoph Lumampa, an employee of the local Bureau of Lands, to whom
respondent allegedly entrusted the paperwork of the land titling, was not presented
as a witness.

Moreover, the trial court stated that respondent failed to establish with
competent and credible evidence that he was in prior possession of the subject
property. No corroborative witness was presented to further prove his prior
possession.

On the other hand, the trial court stated that petitioner offered documentary
evidence, consisting of a contract of real estate mortgage of the subject property,
tax declarations, an official tax receipt, and testimonial evidence to prove that he
had been in open, public, continuous, and lawful possession of the subject property
in the concept of owner.

Respondent appealed the decision of the trial court to the Court of Appeals.

On August 15, 2003, the Court of Appeals rendered a Decision reversing the
decision of the trial court, the dispositive portion of which reads:

WHEREFORE:
1. The appeal is granted and the appealed judgment is hereby totally
REVERSED.
2. To quiet his title, plaintiff-appelant Hadji Serad Mingca Lantud is confirmed
the owner of the parcel of land covered by Original Certificate of Title No. P-
658;
3. The defendant-appellee is ordered to pay P50,000.00 as attorneys fees to the
plaintiff-appellant; and
4. Costs against the defendant-appellee.
[17]

Petitioners motion for reconsideration was denied by the Court of Appeals
in its Resolution
[18]
dated May 13, 2004.

The Court of Appeals held that there is no controversy that respondent is a
holder of a Torrens title; hence, he is the owner of the subject property. The
appellate court stressed that Section 47
[19]
of the Land Registration Act (Act No.
496) provides that the certificate of title covering registered land shall be received
as evidence in all courts of thePhilippines and shall be conclusive as to all matters
stated therein.

The Court of Appeals stated that the Torrens title has three attributes: (1) a
Torrens title is the best evidence of ownership over registered land and, unless
annulled in an appropriate proceeding, the title is conclusive on the issue of
ownership; (2) a Torrens title is incontrovertible and indefeasible upon the
expiration of one year from the date of the entry of the decree of
registration;
[20]
and (3) a Torrens title is not subject to collateral attack.
[21]


The Court of Appeals held that petitioners counterclaim filed on October
15, 1984 for cancellation of respondents original certificate of title issued on May
22, 1981 was filed beyond the statutory one-year period; hence, petitioners title
had become indefeasible, and cannot be affected by the decision made by
Barangay Captain Hadji Hassan Abato and his councilmen. Moreover, the
appellate court held that petitioners prayer for the cancellation of respondents
title, OCT No. P-658, through a counterclaim included in his Answer is a collateral
attack, which the law does not allow, citing Cimafranca v. Court of
Appeals
[22]
and Natalia Realty Corporation v. Valdez.
[23]


The allegation of fraud in securing OCT No. P-658 on the ground that the
property in dispute is a residential lot and not subject of a free patent was not given
weight by the appellate court as it was supported only by testimonial evidence that
did not show how (by metes and bounds) and why the property in dispute could not
have been the subject of a free patent. The appellate court stated that a mere
preponderance of evidence is not adequate to prove fraud;
[24]
it must be established
by clear and convincing evidence.

The Court of Appeals also noted that petitioner claimed that the subject
property is only part of his larger property. Although petitioner introduced proof of
payment of the real estate taxes of the said property, as well as a previous
mortgage of the property, petitioner did not show that the disputed property is part
of his larger property. Hence, the appellate court stated that under such
circumstances, it cannot rule that petitioner owned the land under litigation, since
petitioner failed to show that it is part of his larger property.

The Court of Appeals did not award actual and moral damages, because
respondent failed to prove the amount of any actual damages sustained, and the
instances enumerated under Article 2219 of the Civil Code warranting the award of
moral damages were not present.


However, the Court of Appeals awarded attorney's fees in the amount
of P50,000.00, considering that respondent was forced to incur expenses to protect
his right through the action to quiet title.

Petitioner filed this petition raising the following issues:

I
THE COURT OF APPEALS MISERABLY FAILED TO CONSIDER
THE FACT THAT THE TORRENS TITLE INVOLVED HEREIN WAS
ISSUED PURSUANT TO A FREE PATENT WHICH COULD NOT BE
VALIDLY ISSUED OVER A PRIVATE LAND.

II
THE COURT OF APPEALS ERRED IN DISREGARDING THE FACT
THAT AS CERTIFIED TO BY THE BUREAU OF LANDS ITSELF NO SUCH
FREE PATENT OVER THESUBJECT LAND WAS ISSUED BY IT; HENCE,
SAID FREE PATENT IS SPURIOUS.

III
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION
OF THE TRIAL COURT THAT THE SUBJECT LOT HAD LONG BEEN
OWNED, POSSESSED AND CULTIVATED BY THE DEFENDANT
(PETITIONER HEREIN) OR HIS PREDECESSORS-IN-INTEREST SINCE
TIME IMMEMORIAL IN THE CONCEPT OF AN OWNER.

IV
THE COURT OF APPEALS ERRED IN RULING THAT THE
PETITIONERS COUNTERCLAIM FOR CANCELLATION OF
RESPONDENTS TITLE IS BARRED.

V
THE COURT OF APPEALS ERRED IN RULING THAT THE
COUNTERCLAIM IN THE INSTANT CASE IS A
COLLATERAL ATTACK ON RESPONDENT-PLAINTIFFS TITLE.

VI
THE COURT OF APPEALS ERRED IN DENYING PETITIONERS
MOTION FOR RECONSIDERATION.
[25]




The main issue is whether or not the Court of Appeals erred in sustaining the
validity of OCT No. P-658 and confirming respondent as owner of the property in
dispute.

Petitioner contends that the Court of Appeals erred in disregarding the fact
that the Torrens title was issued to respondent by virtue of a free patent covering a
residential lot that is private land as it has been acquired by petitioner
through open, public, continuous and lawful possession of the land in the concept
of owner. Petitioner thus prayed for the cancellation of respondents title and the
reconveyance of the subject property. Hence, the Court of Appeals erred in
declaring that the subject lot belongs to respondent.

The contention is without merit.

The Torrens title is conclusive evidence with respect to the ownership of the
land described therein, and other matters which can be litigated and decided in land
registration proceedings.
[26]
Tax declarations and tax receipts cannot prevail over a
certificate of title which is an incontrovertible proof of ownership.
[27]
An original
certificate of title issued by the Register of Deeds under an administrative
proceeding is as indefeasible as a certificate of title issued under judicial
proceedings.
[28]
However, the Court has ruled that indefeasibility of title does not
attach to titles secured by fraud and misrepresentation.
[29]


In this case, petitioner alleged in his Answer to respondents Complaint in
the trial court that respondents title, OCT No. P-658, was secured in violation of
the law and through fraud, deception and misrepresentation, because the subject
parcel of land is a residential lot, which cannot be subject of a free patent, since
only agricultural lands are subject of a free patent.

The trial court found that [t]he lot under litigation as clearly described in
the complaint is a residential lot and a free patent title thereto cannot validly be
issued. This finding was one of the bases for the trial courts declaration that the
issuance of OCT was tainted with fraud and irregularities and is, therefore,
spurious; thus, OCT No. P-658 is null and void.
It should be pointed out that the allegation in the Complaint that the land is
residential was made only by respondent, but the true classification of the disputed
land as residential was not shown to have been made by the President, upon
recommendation by the Secretary of Environment and Natural Resources, pursuant
to Section 9 of Commonwealth Act No. 141, otherwise known as The Public Land
Act.
[30]
Hence, the trial court erred in concluding that there was fraud in the
issuance of respondents free patent title on the ground that it covered residential
land based only on the Complaint which stated that the property was residential
land when it was not shown that it was the President who classified the disputed
property as residential, and OCT No. P-658 itself stated that the free patent title
covered agricultural land. It has been stated that at present,not only agricultural
lands, but also residential lands, have been made available by recent legislation for
acquisition by free patent by any natural born Filipino citizen.
[31]
Nevertheless, the
fact is that in this case, the free patent title was granted over agricultural land as
stated in OCT No. P-658.

Moreover, petitioner contends in his petition that the
Certification
[32]
dated July 24, 1987 issued by Datu Samra I. Andam, A/Adm.
Assistant II, Natural Resources District No. XII-3, Bureau of Lands, Marawi City,
certifying that the data contained in OCT No. P-658 in respondents name had no
records in the said office, showed that respondentsTorrens title was spurious.

The Court holds that the certification, by itself, is insufficient to prove the
alleged fraud. Fraud and misrepresentation, as grounds for cancellation of patent
and annulment of title, should never be presumed, but must be proved by clear and
convincing evidence, mere preponderance of evidence not being
adequate.
[33]
Fraud is a question of fact which must be proved.
[34]
The signatory of
the certification, Datu Samra Andam, A/Adm. Assistant II, Natural Resources
District No. XII-3, Marawi City, was not presented in court to testify on the due
issuance of the certification, and to testify on the details of his certification,
particularly the reason why the said office had no records of the data contained in
OCT No. P-658 or to testify on the fact of fraud, if any.

Thus, the Court holds that the evidence on record is insufficient to prove that
fraud was committed in the issuance of respondents Torrens title. Hence,
respondentsTorrens title is a valid evidence of his ownership of the land in
dispute.

On the other hand, petitioner claims ownership of the subject lot, which is
merely a portion of a larger property (1,800 square meters) that he allegedly
inherited from his father in 1952, by virtue of open, public and continuous
possession of the land in the concept of owner making it petitioners private
property. Hence, petitioner prays for reconveyance of the said property.

Article 434 of the Civil Code governs an action for reconveyance, thus:

Art. 434. In an action to recover, the property must be identified, and the
plaintiff must rely on the strength of his title and not on the weakness of the
defendants claim.


Under Article 434 of the Civil Code, to successfully maintain an action to
recover the ownership of a real property, the person who claims a better right to it
must prove two (2) things: first, the identity of the land claimed; and second, his
title thereto.
[35]


In regard to the first requisite, in an accion reinvindicatoria, the person who
claims that he has a better right to the property must first fix the identity of the land
he is claiming by describing the location, area and boundaries thereof.
[36]


In this case, petitioner claims that the property in dispute is part of his larger
property. However, petitioner failed to identify his larger property by providing
evidence of the metes and bounds thereof, so that the same may be compared with
the technical description contained in the title of respondent, which would have
shown whether the disputed property really formed part of petitioners larger
property. The appellate court correctly held in its Resolution dated May 13, 2004
that petitioners claim is solely supported by testimonial evidence, which did not
conclusively show the metes and bounds of petitioners larger property in relation
to the metes and bounds of the disputed property; thus, there is no sufficient
evidence on record to support petitioners claim that the disputed property is part
of his larger property.

In regard to the second requisite of title to property, both petitioner and
respondent separately claim that they are entitled to ownership of the property by
virtue of open, public, continuous and exclusive possession of the same in the
concept of owner. Petitioner claims that he inherited the subject property from his
father in 1952, while respondent claims that he acquired the property from his
grandmother Intumo Pagsidan, a portion thereof from his grandmothers helper
Totop Malacop pursuant to a court decision after litigating with
him.
[37]
Respondent has OCT No. P-658 to prove his title to the subject property,
while petitioner merely claims that the property is already his private land by virtue
of his open, public, continuous possession of the same in the concept of owner.

The Court holds that petitioner failed to prove the requisites of reconveyance
as he failed to prove the identity of his larger property in relation to the disputed
property, and his claim of title by virtue of open, public and continuous possession
of the disputed property in the concept of owner is nebulous in the light of a
similar claim by respondent who holds a free patent title over the subject property.
As stated in Ybaez v. I ntermediate Appellate Court,
[38]
it is relatively easy to
declare and claim that one owns and possesses public agricultural land, but it is
entirely a different matter to affirmatively declare and to prove before a court of
law that one actually possessed and cultivated the entire area to the exclusion of
other claimants who stand on equal footing under the Public Land
Act (Commonwealth Act No. 141, as amended) as any other pioneering
claimants.
Further, petitioner contends that the Court of Appeals erred in ruling that
petitioners counterclaim is time-barred, since the one-year prescriptive period
does not apply when the person seeking annulment of title or reconveyance is in
possession of the lot, citing Heirs of Simplicio Santiago v. Heirs of Mariano E.
Santiago.
[39]
Petitioner also contends that the Court of Appeals erred in ruling that
the counterclaim in this case is a collateral attack on respondents title,
citing Cimafranca v. I ntermediate Appellate Court.
[40]
Petitioner cites the case
of Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago,
[41]
which held
that a counterclaim can be considered a direct attack on the title.

The Court notes that the case of Cimafranca v. I ntermediate Appellate
Court,
[42]
cited by the Court of Appeals to support its ruling that the prayer for
the cancellation of respondents title through a counterclaim included in
petitioners Answer is a collateral attack on the said title, is inapplicable to this
case. In Cimafranca, petitioners therein filed a complaint for Partition and
Damages, and respondents therein indirectly attacked the validity of the title
involved in their counterclaim. Hence, the Court ruled that a Torrenstitle cannot be
attacked collaterally, and the issue on its validity can be raised only in an action
expressly instituted for that purpose.

Here, the case cited by petitioner, Heirs of Simplicio Santiago v. Heirs of
Mariano E. Santiago, declared that the one-year prescriptive period does not apply
when the party seeking annulment of title or reconveyance is in possession of the
lot, as well as distinguished a collateral attack under Section 48 of PD No. 1529
from a direct attack, and held that a counterclaim may be considered as a complaint
or an independent action and can be considered a direct attack on the title, thus:
The one-year prescriptive period, however, does not apply when the
person seeking annulment of title or reconveyance is in possession of the lot.
This is because the action partakes of a suit to quiet title which is imprescriptible.
In David v. Malay, we held that a person in actual possession of a piece of land
under claim of ownership may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right, and his undisturbed possession
gives him the continuing right to seek the aid of a court of equity to ascertain and
determine the nature of the adverse claim of a third party and its effect on his title.

x x x x

Section 48 of P.D. 1529, the Property Registration Decree, provides that a
certificate of title shall not be subject to collateral attack and cannot be altered,
modified, or canceled except in a direct proceeding. An action is an attack on
a title when the object of the action is to nullify the title, and thus challenge
the judgment or proceeding pursuant to which the title was decreed. The
attack is direct when the object of an action is to annul or set aside such
judgment, or enjoin its enforcement. On the other hand, the attack is indirect or
collateral when, in an action to obtain a different relief, an attack on the judgment
or proceeding is nevertheless made as an incident thereof.

x x x A counterclaim can be considered a direct attack on the title.
In Development Bank of the Philippines v. Court Appeals, we ruled on the validity
of a certificate of title despite the fact that the nullity thereof was raised only as a
counterclaim. It was held that a counterclaim is considered a complaint, only
this time, it is the original defendant who becomes the plaintiff. It stands on
the same footing and is to be tested by the same rules as if it were an
independent action. x x x
[43]




The above ruling of the court on the definition of collateral attack under
Section 48 of P.D. No. 1529 was reiterated in Leyson v. Bontuyan,
[44]
Heirs of
Enrique Diaz v. Virata,
[45]
Arangote v. Maglunob,
[46]
and Catores v. Afidchao.
[47]



Based on the foregoing, the Court holds that petitioners counterclaim for
cancellation of respondents title is not a collateral attack, but a direct attack on
the Torrens title of petitioner. However, the counterclaim seeking for the
cancellation of title and reconveyance of the subject property has prescribed as
petitioner has not proven actual possession and ownership of the property due to
his failure to prove the identity of his larger property that would show that the
disputed property is a part thereof, and his claim of title to the subject property by
virtue of open, public and continuous possession in the concept of owner is
nebulous in the light of a similar claim by respondent who holds a Torrens title to
the subject property.

Respondents original certificate of title was issued on May 22, 1981, while
the counterclaim was filed by petitioner on October 15, 1984, which is clearly
beyond the one-year prescriptive period.

In fine, the Court of Appeals did not err in confirming that respondent is the
owner of the parcel of land covered by OCT No. P-658.

WHEREFORE, the petition is DENIED. The Court of Appeals
decision dated August 15, 2003, and its Resolution dated May 13, 2004 in CA-
G.R. CV No. 63801, are hereby AFFIRMED.

No costs.

SO ORDERED.



DIOSDADO M. PERALTA
Associate Justice


WE CONCUR:




ANTONIO T. CARPIO
Associate Justice





PRESBITERO J. VELASCO, JR. ROBERTO A. ABAD
Associate Justice Associate Justice
Chairperson




JOSE CATRAL MENDOZA
Associate Justice




ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.



PRESBITERO J. VELASCO, JR.
Associate Justice
Third Division, Chairperson



CERTIFICATION


Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.



RENATO C. CORONA
Chief Justice















Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

ROGELIO J. JAKOSALEM and
GODOFREDO B. DULFO
G.R. No. 175025
Petitioners, Present:

CORONA, C. J., Chairperson,
LEONARDO-DE CASTRO,
- versus- DEL CASTILLO,
PEREZ,

and
SERENO,

JJ.

ROBERTO S. BARANGAN, Promulgated:
Respondent. February 15, 2012
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

DEL CASTILLO, J.:

This case exemplifies the age-old rule that the one who holds a Torrens title over
a lot is the one entitled to its possession.
[1]


This Petition for Review on Certiorari
[2]
under Rule 45 of the Rules of Court assails
the Decision
[3]
dated August 3, 2006 and the Resolution
[4]
dated October 4, 2006 of the
Court of Appeals (CA) in CA-G.R. CV No. 79283.

Factual Antecedents

On August 13, 1966, respondent Col. Roberto S. Barangan (respondent
Barangan) entered into a Land Purchase Agreement
[5]
with Ireneo S. Labsilica of Citadel
Realty Corporation whereby respondent Barangan agreed to purchase on installment a
300 square meter parcel of land, covered by Transfer Certificate of Title (TCT) No.
165456,
[6]
located in Antipolo, Rizal.
[7]
Upon full payment of the purchase price, a Deed
of Absolute Sale
[8]
was executed on August 31, 1976 in his favor.
[9]
Consequently, the
old title, TCT No. 171453,
[10]
which was a transfer from TCT No. 165456,
[11]
was cancelled
and a new one, TCT No. N-10772,
[12]
was issued in his name.
[13]
Since then, he has been
dutifully paying real property taxes for the said property.
[14]
He was not, however, able
to physically occupy the subject property because as a member of the Philippine Air
Force, he was often assigned to various stations in the Philippines.
[15]


On December 23, 1993, when he was about to retire from the government
service, respondent Barangan went to visit his property, where he was planning to build
a retirement home. It was only then that he discovered that it was being occupied by
petitioner Godofredo Dulfo (petitioner Dulfo) and his family.
[16]


On February 4, 1994, respondent Barangan sent a letter
[17]
to petitioner Dulfo
demanding that he and his family vacate the subject property within 30 days. In reply,
petitioner Atty. Rogelio J. Jakosalem (petitioner Jakosalem), the son-in-law of petitioner
Dulfo, sent a letter
[18]
claiming ownership over the subject property.

On February 19, 1994, respondent Barangan filed with Barangay San Luis,
Antipolo, Rizal, a complaint for Violation of Presidential Decree No. 772 or the Anti-
Squatting Law against petitioners.
[19]
No settlement was reached; hence, the complaint
was filed before the Prosecutors Office of Rizal.
[20]
The case, however, was dismissed
because the issue of ownership must first be resolved in a civil action.
[21]


On May 28, 1994, respondent Barangan commissioned Geodetic Engineer Lope
C. Jonco (Engr. Jonco) of J. Surveying Services to conduct a relocation survey of the
subject property based on the technical description appearing on respondent
Barangans TCT.
[22]
The relocation survey revealed that the property occupied by
petitioner Dulfo and his family is the same property covered by respondent Barangans
title.
[23]


On November 17, 1994, respondent Barangan filed a Complaint
[24]
for Recovery
of Possession, docketed as Civil Case No. 94-3423, against petitioners Dulfo and
Jakosalem with the Regional Trial Court (RTC), Branch 73, Antipolo City. Respondent
Barangan prayed that petitioners Dulfo and Jakosalem be ordered to vacate the subject
property and pay a monthly rental ofP3,000.00 for the use and occupancy of the subject
property from May 1979 until the time the subject property is vacated, plus moral and
exemplary damages and cost of suit.
[25]


In their Answer with Counterclaim,
[26]
petitioners Dulfo and Jakosalem claimed
that the subject property was assigned to petitioner Jakosalem by Mr. Nicanor Samson
(Samson);
[27]
that they have been in possession of the subject property since May 8,
1979;
[28]
and that the property covered by respondent Barangans title is not the
property occupied by petitioner Dulfo and his family.
[29]

During the trial, respondent Barangan testified for himself and presented three
witnesses: (1) Gregorio Estardo (Estardo), the caretaker of Villa Editha Subdivision and
Rodville Subdivision
[30]
employed by Citadel Realty Corporation, who stated under oath
that petitioner Dulfo used to rent the lot owned by Dionisia Ordialez (Estardos Aunt)
and that when petitioner Dulfo could no longer pay the rent, he and his family squatted
on the property of respondent Barangan;
[31]
(2) Candida Lawis, a representative of the
Municipal Assessor of Antipolo, Rizal, who confirmed that respondent Barangan is
included in the list of registered owners of lots in Villa Editha Subdivision III and Rodville
Subdivision
[32]
and; (3) Engr. Jonco, who testified that the property occupied by
petitioner Dulfo and his family and the property owned by respondent Barangan are
one and the same.
[33]


The defense moved for the dismissal of the case on demurrer to evidence but
was denied by the RTC.
[34]
Thus, the defense presented petitioner Jakosalem who
maintained that he acquired the subject property by assignment from its previous
owner, Samson.
[35]
The defense likewise requested an ocular inspection of the subject
property to show that it is not the property covered by respondent Barangans
title.
[36]
However, instead of granting the request, the RTC issued an Order
[37]
dated
September 15, 2000 directing Engr. Romulo Unciano of the Department of Environment
and Natural Resources (DENR) Antipolo City to conduct a resurvey or replotting of land
based on the title of respondent Barangan and to submit a report within 15 days.
[38]
The
resurvey, however, did not push through because the defense in an Omnibus
Motion
[39]
dated September 20, 2000 abandoned its request for an ocular inspection
claiming that it was no longer necessary.
[40]

Ruling of the Regional Trial Court

On March 19, 2003, the RTC rendered a Decision
[41]
against respondent Barangan
for failure to present sufficient evidence to prove his claim.
[42]
The RTC further said that
even if the subject property is owned by respondent Barangan, prescription and laches
have already set in; thus, respondent Barangan may no longer recover the same.
[43]
The
dispositive portion reads:

WHEREFORE, premises considered, for insufficiency of evidence judgment is hereby
rendered in favor of the defendant and against the plaintiff. By way of counterclaim, the plaintiff
is hereby ordered to pay defendant Jakosalem the following amounts:

a. P100,000 for moral damages;
b. P50,000 as actual damages;
c. P25,000 as exemplary damages;
d. P20,000 for litigation expenses; and
e. Costs of suit.

SO ORDERED.
[44]



Ruling of the Court of Appeals

On appeal, the CA reversed the findings of the RTC. It found respondent
Barangan entitled to recover possession of the subject property because he was able to
sufficiently prove the identity of the subject property and that the same is owned by
him, as evidenced by TCT No. N-10772.
[45]
And since respondent Barangan was
deprived of possession of the subject property, the CA ruled that he is entitled to
reasonable compensation for the use of the property with interest, as well as the
payment of moral, temperate or moderate damages, and attorneys fees,
[46]
to wit:

WHEREFORE, premises considered, the appeal is GRANTED. The Decision dated 19
March 2003 of the Regional Trial Court of Antipolo City, Branch 73 in Civil Case No. 94-3423 is
hereby REVERSED AND SET ASIDE and a new one is rendered declaring, as follows:

1. Appellant Roberto S. Barangan is entitled to the possession of the subject
property-Lot 11, Block 5, of the subdivision plan (LRC) Psd-60846 situated in Rodville Subdivision,
Barangay San Luis, Antipolo, Rizal, covered by Transfer Certificate of Title No. N-10772 of the
Registry of Deeds for the Province of Rizal;

2. Appellees and all persons deriving rights under them who are occupants of the
subject property are ordered to vacate the subject property and surrender peaceful possession
thereof to appellant;

3. Appellees and all persons deriving rights under them who are occupants of the
subject property are ordered to pay to appellant reasonable compensation for the use of the
subject property in the amount of Php3,000.00 per month from 17 November 1994 until they
vacate the subject property and turn over the possession to appellant, plus legal interest of 12%
per annum, from the date of promulgation of this Decision until full payment of all said
reasonable compensation; and

4. Appellees are ordered to pay to appellant the amount of Php100,000.00 as moral
damages, Php50,000.00 as temperate or moderate damages, and Php50,000.00 as attorneys
fees.

Cost against appellees.

SO ORDERED.
[47]



Issues

Hence, the instant petition with the following issues:

1. WHETHER X X X [BARANGAN] WAS ABLE TO IDENTIFY THE EXACT LOCATION OF HIS
PROPERTY DESCRIBED UNDER TCT NO. N-10772 [AND WHETHER] THE PROPERTY
OCCUPIED BY DULFO [IS] THE SAME PROPERTY CLAIMED BY [BARANGAN];

2. WHETHER X X X [BARANGAN] HAS FULLY SATISFIED THE REQUIREMENTS OF
ARTICLE 434 OF THE CIVIL CODE X X X;

3. WHETHER X X X THE AMOUNT OF PHP3,000.00 AS MONTHLY LEASE RENTAL OR
COMPENSATION FOR THE USE OF THE PROPERTY IS REASONABLE;

4. WHETHER X X X THE GRANT OF XXX MORAL, TEMPERATE OR MODERATE
[DAMAGES] AND ATTORNEYS FEES, X X X IS IN ACCORDANCE WITH EVIDENCE AND
LAW;

5. WHETHER X X X LACHES AND PRESCRIPTION [HAVE] BARRED THE FILING OF THIS
CASE.
[48]



Petitioners Arguments

Petitioners Dulfo and Jakosalem contend that the CA erred in reversing the
findings of the RTC as respondent Barangans property was not properly
identified.
[49]
They claim that the relocation survey conducted by Engr. Jonco violated
the agreement they made before the Barangay that the survey should be conducted in
the presence of both parties.
[50]
They also claim that the title number stated in the Land
Purchase Agreement is not the same number found in the Deed of Absolute
Sale.
[51]
They likewise insist that laches and prescription barred respondent Barangan
from filing the instant case.
[52]
Lastly, they contend that the damages ordered by the CA
are exorbitant, excessive and without factual and legal bases.
[53]


Respondents Arguments

Respondent Barangan, on the other hand, argues that being the registered owner
of the subject property, he is entitled to its possession.
[54]
He maintains that
his Torrens title prevails over the Assignment of a Right
[55]
presented by
petitioners.
[56]
Moreover, laches and prescription do not apply against him as there was
no delay on his part to assert his right to the property.
[57]


Our Ruling

The petition lacks merit.

Respondent Barangan is entitled to recover
the subject property


Article 434 of the Civil Code provides that [i]n an action to recover, the property
must be identified, and the plaintiff must rely on the strength of his title and not on the
weakness of the defendants claim. In other words, in order to recover possession, a
person must prove (1) the identity of the land claimed, and (2) his title.
[58]


In this case, respondent Barangan was able to prove the identity of the property
and his title. To prove his title to the property, he presented in evidence the following
documents: (1) Land Purchase Agreement;
[59]
(2) Deed of Absolute Sale;
[60]
(3) and
a Torrens title registered under his name, TCT No. N-10772.
[61]
To prove the identity of
the property, he offered the testimonies of Engr. Jonco, who conducted the relocation
survey,
[62]
and Estardo, the caretaker of the subdivision, who showed respondent
Barangan the exact location of the subject property.
[63]
He likewise submitted as
evidence the Verification Survey Plan of Lot 11, Block 5, (LRC) Psd-60846, which was
plotted based on the technical description appearing on respondent Barangans title.
[64]


Petitioners contention that the relocation survey was done in violation of their
agreement deserves scant consideration. Petitioners were informed
[65]
beforehand of
the scheduled relocation survey on May 29, 1994 but they opted not to attend. In fact,
as testified by respondent Barangan and Engr. Jonco, the relocation survey had to be
postponed several times because petitioners refused to participate.
[66]
By refusing to
attend and participate in the relocation survey, they are now estopped from
questioning the results of the relocation survey.
[67]


Records also show that during the trial, the RTC ordered the DENR to conduct a
resurvey of the subject property; but petitioners moved that the same be abandoned
claiming that the resurvey would only delay the proceedings.
[68]
To us, the persistent
refusal of petitioners to participate in the relocation survey does not speak well of their
claim that they are not occupying respondent Barangans property. In fact, their
unjustified refusal only shows either of two things: (1) that they know for a fact that the
result would be detrimental to their case; or (2) that they have doubts that the result
would be in their favor.

Neither is there any discrepancy between the title number stated in the Land
Purchase Agreement and the Deed of Absolute Sale. As correctly found by the CA,
TCT No. 171453, the title stated in the Deed of Absolute Sale, is a transfer from TCT
No. 165456, the title stated in the Land Purchase Agreement.
[69]
Hence, both TCTs
pertain to the same property.

Respondent Barangan is entitled to actual and
moral damages as well as attorneys fees


Since respondent Barangan was deprived of possession of the subject property,
he is entitled to reasonable compensation in the amount of P3,000.00
[70]
per month
from November 17, 1994, the date of judicial demand, up to the time petitioners vacate
the subject property. The legal interest of which shall be at the rate of 6% per annum
from November 17, 1994 and at the rate of 12% per annum from the time the
judgment of this Court becomes final and executory until the obligation is fully
satisfied.
[71]


The award of temperate damages in the amount of P50,000.00, representing the
expenses for the relocation survey, however, must be deleted as these expenses were
not alleged in the complaint.
[72]


For the mental anguish, sleepless nights, and serious anxiety suffered by
respondent Barangan, he is entitled to moral damages under Article 2217
[73]
of the Civil
Code but in the reduced amount of P50,000.00, which is the amount prayed for in the
complaint.
[74]


Although not alleged in the complaint, we sustain the CAs award of P50,000.00
as attorneys fees because it is sanctioned by law, specifically, paragraphs 2 and 11 of
Article 2208
[75]
of the Civil Code.
[76]


Laches and prescription do not apply

Finally, as to the issue of laches and prescription, we agree with the CA that these
do not apply in the instant case. Jurisprudence consistently holds that prescription and
laches can not apply to registered land covered by the Torrens system because under
the Property Registration Decree, no title to registered land in derogation to that of the
registered owner shall be acquired by prescription or adverse possession.
[77]


WHEREFORE, the petition is hereby DENIED. The assailed Decision dated August
3, 2006 and the Resolution dated October 4, 2006 of the Court of Appeals in CA-G.R. CV
No. 79283 are hereby AFFIRMED with MODIFICATIONS. The award of moral damages
is REDUCED to P50,000.00 while the award of temperate damages is DELETED. The
reasonable monthly rental of P3,000.00 shall earn legal interest of six percent (6%) per
annum from November 17, 1994, and at the rate of twelve percent (12%) per annum
from the finality of this judgment until the obligation is fully satisfied.

SO ORDERED.


MARIANO C. DEL CASTILLO
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson



TERESITA J. LEONARDO-DE CASTRO
Associate Justice
JOSE PORTUGAL PEREZ
Associate Justice



MARIA LOURDES P. A. SERENO
Associate Justice



C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.



RENATO C. CORONA
Chief Justice

Per raffle dated September 7, 2011.

In lieu of Associate Justice Estela M. Perlas-Bernabe, per Special Order o, 1193 dated February 10, 2012.
[1]
Esmaquel v. Coprada, G.R. No. 152423, December 15, 2010, 638 SCRA 428, 438.
[2]
Rollo, pp. 76-470 with Annexes A to J inclusive.
[3]
Id. at 109-146; penned by Associate Justice Celia C. Librea-Leagogo and concurred in by Associate Justices Martin S.
Villarama, Jr. and Lucas P. Bersamin.
[4]
Id. at 148-150.
[5]
Id. at 249 (Land Purchase Agreement dated August 15, 1966).
[6]
Id. at 382-383.
[7]
Id. at 110.
[8]
Id. at 379-380.
[9]
Id. at 110-111.
[10]
Id. at 252.
[11]
Id. at 382-383.
[12]
Id. at 268.
[13]
Id. at 111.
[14]
Id.
[15]
Id.
[16]
Id.
[17]
Id. at 258.
[18]
Id. at 259.
[19]
Id. at 111.
[20]
Id.
[21]
Id. at 283.
[22]
Id. at 112.
[23]
Id.
[24]
Id. at 168-172.
[25]
Id. at 170.
[26]
Id. at 175-179.
[27]
Id. at 177.
[28]
Id.
[29]
Id. at 178.
[30]
The subdivision where the property is located; Id. at 169.
[31]
Id. at 119-120.
[32]
Id. at 119.
[33]
Id. at 120-121.
[34]
Id. at 125-126.
[35]
Id. at 126-127.
[36]
Records, p. 176.
[37]
Id.
[38]
Id.
[39]
Id. at 177-178.
[40]
Id. at 177.
[41]
Rollo, pp. 181-185.
[42]
Id. at 185.
[43]
Id. at 184-185; penned by Judge Mauricio M. Rivera.
[44]
Id. at 185.
[45]
Id. at 139.
[46]
Id. at 142-143.
[47]
Id. at 143-144.
[48]
Id. at 593-594.
[49]
Id. at 594-599.
[50]
Id. at 589-590.
[51]
Id. at 590.
[52]
Id. at 603-604.
[53]
Id. at 600-603.
[54]
Id. at 553.
[55]
Id. at 273.
[56]
Id. at 553.
[57]
Id. at 547-548.
[58]
Spouses Hutchison v. Buscas, 498 Phil. 257, 262 (2005).
[59]
Rollo, p. 249.
[60]
Id. at 379-380.
[61]
Id. at 268.
[62]
Id. at 120-122.
[63]
Id. at 119-120.
[64]
Id. at 134.
[65]
Id. at 281.
[66]
Id. at 116-121.
[67]
Director of Lands v. Court of Appeals, G.R. No. L-45168, January 27, 1981, 102 SCRA 370, 443.
[68]
Rollo, pp. 127-128.
[69]
Id. at 133.
[70]
The amount alleged in the complaint filed by respondent Barangan; id at 170.
[71]
Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95-97.
[72]
TSN dated November 8, 1996, Direct Examination of respondent Barangan, pp. 4-5.
[73]
Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's
wrongful act or omission.
[74]
Rollo, p. 170.
[75]
Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs,
cannot be recovered, except:
x x x x
(2) When the defendants act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest;
x x x x
(11) In any other case where the court deems it just and equitable that attorneys fees and expenses of
litigation should be recovered.
In all cases, the attorneys fees and expenses of litigation must be reasonable.
[76]
Micro Sales Operation Network v. National Labor Relations Commission, 509 Phil. 313, 322 (2005).
[77]
Velez, Sr. v. Rev. Demetrio, 436 Phil. 1, 9 (2002).