PROPERTY (1ST SET OF CASES)

LEUNG YEE VS FRANK STRONG MACHINERY CO.

FACTS: In 1913, Compania Agricola Filipina (CAF) was indebted to two personalities: Leung Yee
and Frank L. Strong Machinery Co. CAF purchased some rice cleaning machines from Strong
Machinery. CAF installed the machines in a building. As security for the purchase price, CAF
executed a chattel mortgage on the rice cleaning machines including the building where the
machines were installed. CAF failed to pay Strong Machinery, hence the latter foreclosed the
mortgage the same was registered in the chattel mortgage registry. CAF also sold the land
(where the building was standing) to Strong Machinery. Strong Machinery took possession of the
building and the land.
On the other hand, Yee, another creditor of CAF who engaged in the construction of the building,
being the highest bidder in an auction conducted by the sheriff, purchased the same building
where the machines were installed. Apparently CAF also executed a chattel mortgage in favor
Yee. Yee registered the sale in the registry of land. Yee was however aware that prior to his
buying, the property has been sold in favor of Strong Machinery evidence is the chattel
mortgage already registered by Strong Machinery (constructive notice).
ISSUE: Who is the owner of the building?
HELD: The SC ruled that Strong Machinery has a better right to the contested property. Yee
cannot be regarded as a buyer in good faith as he was already aware of the fact that there was a
prior sale of the same property to Strong Machinery.
The SC also noted that the Chattel Mortgage Law expressly contemplates provisions for chattel
mortgages which only deal with personal properties. The fact that the parties dealt the building
as if its a personal property does not change the nature of the thing. It is still a real property. Its
inscription in the Chattel Mortgage registry does not modify its inscription the registry of real
property.
STANDARD OIL CO. OF NEW YORK VS JARAMILLO
FACTS: Gervasia dela Rosa executed a document in the form of a Chattel Mortgage purporting to
convey to Standard Oil Co. by way of mortgage both the leasehold interest of the land she leases
in Manila and the building which stands thereon.
The clauses in said document describe the property as personal including the right, title and
interest of the mortgagor in and to the contract of lease and also the building of the said
premises therein.
After said document had been duly acknowledge and delivered, the petitioner presented it to
Joaquin Jaramillo, as register of deeds of the City of Manila, for the purpose of having the same
recorded. The respondent opined that it was not a chattel mortgage for the interests mortgaged
did not appear to be personal property within the meaning of the Chattel Mortgage Law and
registration was refused on this ground only.
ISSUE:
1. Whether or not said property could be a subject for mortgage.
2. Whether the respondent is clothe with authority to determine such.
RULING:
The duties of a register of deeds in respect to the registration of chattel mortgages are of purely
1 | Page

ministerial character and no provision of law can be cited which confers upon him any judicial or
quasi-judicial power to determine the nature of any document of which registration is sought as a
chattel mortgage. The efficacy of the act of recording a chattel mortgage consists in the fact that
it operates as constructive notice of the existence of the contract, and the legal effects of the
contract must be discovered in the instrument itself in relation with the fact of notice.
Registration adds nothing to the instrument, considered as a source of title, and affects nobodys
rights except as a species of notice.
The parties to a contract may by agreement treat as personal property that which by nature
would be real property and 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.
It is unnecessary to determine whether or not the property described in the document is real or
personal. The issue is to be determined by the Court and not by the register of deeds.
SERG'S V. PCI LEASING
Facts: Respondent PCI Leasing and Finance, Inc, filed with the RTC-QC a complaint for a sum of
money with an application for a writ of replevin.
Respondent Judge issued a writ of replevin directing its sheriff to seize and deliver the
machineries and equipment to PCI after 5 days and upon the payment of the necessary
expenses.
In the implementation of the said writ, the sheriff proceeded to petitioners factory, seized one
machinery with word that he would return for the other.
Petitioners filed a motion for special protective order, invoking the power of the court to control
the conduct of its officers and amend and control its processes, praying for a directive for the
sheriff to defer enforcement of the writ of replevin.
The motion was opposed by PCI Leasing, on the ground that the properties were still personal
and therefore still subject to seizure and a writ of replevin.
The sheriff again sought to enforce the writ of seizure and take possession of the remaining
properties. He was able to take two more, but was prevented by the workers from taking the rest.
Issues:
1. Whether or not the machineries purchased and imported by Sergs became real property by
virtue of immobilization.
2. Whether or not the contract between the parties is valid.
Ruling:
The petition is not meritorious.
1.
No.
The machines that were subjects of the Writ of seizure were placed by petitioners in the factory
built on their own land. Indisputably, they were essential and principal elements of their
chocolate-making industry. Hence, although each of them was movable or personal property on
its own, all of them have become immobilized by destination because they are essential and
principal elements in the industry. In that sense petitioners are correct in arguing that the said
machines are real property pursuant to Article 415 (5) of the Civil Code. But the Court disagrees
with the submission of the petitioners that the said machines are not proper subject of the Writ of
Seizure.
The Court has held that contracting parties may validly stipulate that a real property be
considered as personal. After agreeing to such stipulation, they are consequently stopped from
claiming otherwise. Under the principle of estoppels, a party to a contract is ordinarily precluded
from denying the truth of any material fact found therein.
2 | Page

Clearly then, petitioners are stopped from denying the characterization of the subject machines
as personal property. Under circumstances, they are proper subjects of the Writ of Seizure.
It should be stressed, however, that the Courts holding-that the machines should be deemed
personal property pursuant to the Lease Agreement-is good only insofar as the contracting
parties are concerned. Hence, while the parties are bound by the Agreement, third persons
acting in good faith are not affected by its stipulation characterizing the subject machinery as
personal. In any event, there is no showing that any specific third party would be adversely
affected.
2.
Yes.
It should be pointed out that the Court may rely on the Lease Agreement, for nothing on the
record shows that it has been nullified or annulled. In fact, petitioners assailed it first only in the
RTC proceedings, which had ironically been instituted by respondent. Accordingly, it must be
presumed valid and binding as the law between the parties
PUNZALAN V. LACSAMANA
Buildings are always treated as immovable or real property under the Code even if it was dealt
with separately from the land upon which it stood
-- The caseinvolves a warehouse allegedly owned and constructed by the plaintiff on the land of
the defendant Philippine National Bank situated in the Municipality of Bamban, Province of Tarlac,
which warehouse is an immovable property pursuant to Article 415, No. 1 of the New Civil Code;
and, as such the action of the plaintiff is a real action affecting title to real property which, under
Section 2, Rule 4 of the New Rules of Court, must be tried in the province where the property or
any part thereof lies.
FACTS: Some land belonging to Antonio Punzalan was foreclosed by the Philippine National Bank
Tarlac, Branch in failure of the former to pay the mortgaged fee amounting to P10 grand. Since
PNB was the highest bidder, the land went to PNB.
Sometime 1974, while the property was still in the possession of Punzalan, Punzalan constructed
a warehouse on the said land by virtue of the permit secured from the Municipal Mayor of
Bamban, Tarlac. Subsequently, in 1978, a contract of sale was entered into by PNB and Remedios
Vda. De Lacsamana, whom in lieu of the said sale secured a title over the property involving the
warehouse allegedly owned and constructed by the plaintiff.
Punzalan filed a suit for annulment of the Deed of Sale with damages against PNB and
Lacsamana before the Court of First Instance of Rizal, Branch 31, impugning the validity of the
sale of the building, requesting the same to be declared null and void and that damages in the
total sum of P23, 200 more or less be awarded to him.
Respondent Lacsamana in his answer averred the affirmative defense of lack of cause of action
contending that she was a purchaser for value, while, PNB filed a Motion to Dismiss on the
ground of improper venue, invoking that the building was a real property under Article 415 of the
Civil Code, and therefore, Section 4 (a) of the Rules of Court should apply.
Punzalan filed a Motion for Reconsideration asserting that the action he filed is limited to the
annulment of sale and that, it does not involved ownership of or title to property but denied by
the court for lack of merit. A motion for pre-trial was also set by Punzalan but was also denied by
the court invoking that the case was already dismissed.

3 | Page

ISSUE: Whether or not the judgment rendered by the court is proper. (due if improper venue and
its a Real not Personal Action)
HELD: While it is true that the petitioner does not directly seek the recovery of the title or
possession of the property in question, his action for annulment of sale and his claim for
damages are closely intertwined with the issue of ownership of the building, which, under the
law, is considered immovable property, the recovery of which is petitioners primary objective.
The prevalent doctrine is that an action for the annulment or rescission of a sale of real property
does not operate to efface the objective and nature of the case, which is to recover said property.
It is a real action. Respondent Court did not err in dismissing the case on the ground of improper
venue under Section 12 Rule 4 which was timely raised under Section 1 Rule 16 of the Rules of
Court.
Personal Observation: The venue was improperly laid by the petitioner in the case at bar. Such
ground was sufficient to render dismissal of the case, as the same is one of the grounds provided
for under Rule 16 (c) of the Rules of Court.
The Denial of Motion to Dismiss rendered by the court in the instant case is appealable. If such
denial constitute grave abuse of discretion on the part of the court , Punzalan may file either
Prohibition or Certiorari under Rule 65 of the Rules of Court
DAVAO SAWMILL V. CASTILLO
--In the Davao Saw Mills case the question was whether the machinery mounted on foundations
of cement and installed by the lessee on leased land should be regarded as real property
forpurposes of execution of a judgment against the lessee. The sheriff treated the machinery as
personal property. This Court sustained the sheriff's action.
FACTS: Davao Sawmill Co., operated a sawmill. The land upon which the business was
conducted was leased from another person. On the land, Davao Sawmill erected a building which
housed the machinery it used. Some of the machines were mounted and placed on foundations
of cement. In the contract of lease, Davo Sawmill agreed to turn over free of charge all
improvements and buildings erected by it on the premises with the exception of machineries,
which shall remain with the Davao Sawmill. In an action brought by the Davao Light and Power
Co., judgment was rendered against Davao Sawmill. A writ of execution was issued and the
machineries placed on the sawmill were levied upon as personalty by the sheriff. Davao Light
and Power Co., proceeded to purchase the machinery and other properties auctioned by the
sheriff.
ISSUE: Are the machineries real or personal property?
HELD
Art.415 of the New Civil Code provides that Real Property consists of:
(1) Lands, buildings, roads and constructions of all kinds adhered to the soil;
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner pf the
tenement for an industry ot 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;

4 | Page

Appellant should have registered its protest before or at the time of the sale of the property.
While not conclusive, the appellant's characterization of the property as chattels is indicative of
intention and impresses upon the property the character determined by the parties.
Machinery is naturally movable. However, machinery may be immobilized by destination or
purpose under the following conditions:
General Rule: The machinery only becomes immobilized if placed in a plant by the owner of the
property or plant.
Immobilization cannot be made by a tenant, a usufructuary, or any person having only a
temporary right.
Exception: The tenant, usufructuary, or temporary possessor acted as agent of the owner of the
premises; or he intended to permanently give away the property in favor of the owner.
As a rule, therefore, the machinery should be considered as Personal Property, since it was not
placed on the land by the owner of the said land.
US V. CARLOS
FACTS: Mr Carlos stole about 2273 kilowatts of electricity worth 909 pesos from Meralco through
Jumper. The court issued warrant for arrest. Mr. Carlos demurred and refused to enter a plea.
He claimed that what he did failed to constitute an offense. His counsel further asserted that the
crime of larceny applied only to tangibles, chattels and objects that can be taken into possession
and spirited away.
Deliberation quickly followed at the court which subsequently sentenced him to over a year in
jail. Mr. Carlos contested saying that electrical energy cant be stolen (how can one steal an
incorporeal thing?). He filed an appeal on such grounds and the court of first instance affirmed
the decision. The case reached the supreme court.
ISSUE: Whether or not theft can be committed against an intangible such as electricity. YES.
HELD: Yes, larceny of incorporeal objects is possible. The right of ownership of electrical current
was secured by
Art 517 and 518 of the Penal Code which applies to gas.
Analogically, electricity can be considered as gas which can be stolen. However, the true test of
what constitutes the proper subject of larceny is not whether the subject is corporeal or
incorporeal, but whether is is capable of appropriation by another other than the owner. It is a
valuable article of merchandise, a force of nature brought under the control of science. Mr. Carlos
secretly and with intent to deprive the company of its rightful property, used jumper cables to
appropriate the same for his own use. This constitutes larceny.
-- While electric current is not a uid, still its manifestations and effects like those of gas may be
seen and felt. The true test of what may be stolen is not whether it is corporeal or incorporeal,
but whether, being possessed of value, a person other than the owner, may appropriate the
same. Electricity, like gas, is valuable merchandise, and may thus be stolen.
MINDANAO BUS CO. VS. CITY ASSESSOR
-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
5 | Page

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.
Facts: Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioners
equipment in its repair or service shop. 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. The Court of Tax Appeals having sustained the respondent city
assessors ruling, and having denied a motion for reconsideration, petitioner brought the case to
this Court.
Issue: Whether 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.
Held: Yes. Movable equipments, to be immobilized in contemplation of Article 415 of the Civil
Code, must be the essential and principal elements of an industry or works which are carried on
in a building or on a piece of land. Thus, where the business is one of transportation, which is
carried on without a repair or service shop, and its rolling equipment is repaired or serviced in a
shop belonging to another, the tools and equipments in its repair shop which appear movable are
merely incidentals and may not be considered immovables, and, hence, not subject to
assessment as real estate for purposes of the real estate tax.
Similarly, the tool and equipment in question in this instant case are, by their nature, not
essential and principal elements of petitioners 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 equipment, 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.
Article 415 of the Civil Code requires that the industry or works be carried on in a building or on a
piece of land. 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 equipment may not, therefore, be deemed as real
property.
BOARD OF ASSESMENT APPEALS VS MANILA ELECTRIC CO.
Facts: In 1902, 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, the
terms and conditions of which were embodied in Ordinance No. 44 in 1903.
In 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 CTA which rendered a decision on December
29, 1958, ordering the cancellation of the said tax declarations and the petitioner City Treasurer
6 | Page

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.
Issue: Whether the aforesaid steel towers is a real property, making petitioners liable for real
property tax. NO.
Ruling: 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.
Even if steel supports or towers in question are not embraced within the term poles, the logical
question posted 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 neither does it fall in
any of the definitions of real property in Art. 415 of the Civil Code.
(1)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.
(3) 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.
(5)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.
CALTEX VS CENTRAL BOARD OF ASSESSMENT APPEALS
--This case is about the realty tax on machinery and equipment installed by Caltex (Philippines)
Inc., in its gas stations located on leased land.
FACTS: Caltex loaned machines and equipment to gas station operators under an appropriate
lease agreement or receipt. The lease contract stipulated that upon demand, the operators shall
return to Caltex the machines and equipment in good condition as when received, ordinary wear
and tear excepted.
The lessor of the land, where the gas station is located, does not become the owner of the
machines and equipment installed therein. Caltex retains the ownership thereof during the term
of the lease.
The City Assessor of Pasay City characterized the said items of gas station equipment and
machinery as taxable realty. However, the City Board of Tax Appeals ruled that they are
personalty. The Assessor appealed to the Central Board of Assessment Appeals.
The Board held on June 3, 1977 that the said machines are real property within the meaning of
Ses. 3(k) & (m) and 38 of the Real Property Tax Code, PD 464, and that the Civil Code definitions
of real and personal property in Articles 415 and 416 are not applicable in this case.
7 | Page

ISSUE: WON the pieces of gas station equipment and machinery permanently affixed by Caltex
to its gas station and pavement should be subject to realty tax. -> YES.
HELD: Sec.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 Sec.3 thereof.
Sec.3 of the Real Property Tax Code provides the following definitions:
k) Improvements a valuable addition made to property or an amelioration in its
conditionmore than mere repairs or replacement of wasteintended to enhance its
value, beauty, or utility
m) Machinery machines, mechanical contrivances, instruments, appliances, and
apparatus attached to the real estateincludes the physical facilities available for
productioninstallation and appurtenant service facilities.
The subject machines and equipment are taxable improvement and machinery within the
meaning of the Assessment Law and the Real Property Tax Code, because the same are
necessary to the operation of the gas station and have been attached/affixed/embedded
permanently to the gas station site.
Improvements on land are commonly taxed as realty even though they might be
considered personalty. It is a familiar phenomenon to see things classified as real property
for purposes of taxation which on general principle might be considered personal property
(Standard Oil Co., vs Jaramillo, 44 PHIL 630).
This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co.,
(119 Phil. 328) where Meralco's steel towers were exempted from taxation. The steel towers
were considered personalty because they were attached to square metal frames by means of
bolts and could be moved from place to place when unscrewed and dismantled.
Nor are Caltex's gas station equipment and machinery the same as the tools and equipment in
the repair shop of a bus company which were held to be personal property not subject to realty
tax (Mindanao Bus Co. vs. City Assessor, 116 Phil. 501).
LAUREL VS. GARCIA
Doctrine: A property continues to be part of the public domain, not available for private
appropriation or ownership until there is a formal declaration on the part of the government to
withdraw it from being such.
Facts: The subject Roppongi property is one of the four properties in Japan acquired by the
Philippine government under the Reparations Agreement entered into with Japan on 9 May 1956,
the other lots being the Nampeidai Property (site of Philippine Embassy Chancery), the Kobe
Commercial Property (Commercial lot used as warehouse and parking lot of consulate staff), and
the Kobe Residential Property (a vacant residential lot).
The properties and the capital goods and services procured from the Japanese government for
national development projects are part of the indemnification to the Filipino people for their
losses in life and property and their suffering during World War II.
The Reparations Agreement provides that reparations valued at $550 million would be payable in
20 years in accordance with annual schedules of procurements to be fixed by the Philippine and
Japanese governments (Article 2, Reparations Agreement).
The Roppongi property was acquired from the Japanese government under the Second Year
Schedule and listed under the heading Government Sector, through Reparations Contract 300
8 | Page

dated 27 June 1958. The Roponggi property consists of the land and building for the Chancery of
the Philippine Embassy. As intended, it became the site of the Philippine Embassy until the latter
was transferred to Nampeidai on 22 July 1976 when the Roppongi building needed major repairs.
Due to the failure of our government to provide necessary funds, the Roppongi property has
remained undeveloped since that time.
During the incumbency of President Aquino, a proposal was made by former Philippine
Ambassador to Japan, Carlos J. Valdez, to lease the subject property to Kajima Corporation, a
Japanese firm, in exchange of the construction of 2 buildings in Roppongi, 1 building in
Nampeidai, and the renovation of the Philippine Chancery in Nampeidai. The Government did not
act favorably to said proposal, but instead, on 11 August 1986, President Aquino created a
committee to study the disposition or utilization of Philippine government properties in Tokyo and
Kobe though AO-3, and AO 3-A to 3-D. On 25 July 1987, the President issued EO 296 entitling
non-Filipino citizens or entities to avail of reparations capital goods and services in the event of
sale, lease or disposition. The four properties in Japan including the Roppongi were specifically
mentioned in the first Whereas clause. Amidst opposition by various sectors, the Executive
branch of the government has been pushing, with great vigor, its decision to sell the reparations
properties starting with the Roppongi lot.
Two petitions for prohibition were filed seeking to enjoin respondents, their representatives and
agents from proceeding with the bidding for the sale of the 3,179 sq. m. of land at 306
Ropponggi, 5-Chome Minato-ku, Tokyo, Japan scheduled on 21 February 1990; the temporary
restaining order of which was granted by the court on 20 February 1990. In G.R. No. 92047, a
writ of mandamus was prayed for to compel the respondents to fully disclose to the public the
basis of their decision to push through with the sale of the Roppongi property inspite of strong
public opposition and to explain the proceedings which effectively prevent the participation of
Filipino citizens and entities in the bidding process.
Issues: Can the Roppongi property and others of its kind be alienated by the Philippine
Government?
Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the
Roppongi property?
Held: No. The Roppongi property was acquired together with the other properties through
reparation agreements. They were assigned to the government sector and that the Roppongi
property was specifically designated under the agreement to house the Philippine embassy. It is
of public dominion unless it is convincingly shown that the property has become patrimonial. The
respondents have failed to do so.
As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be
alienated. Its ownership is a special collective ownership for general use and payment, in
application to the satisfaction of collective needs, and resides in the social group. The purpose is
not to serve the State as the juridical person but the citizens; it is intended for the common and
public welfare and cannot be the object of appropriation.
The fact that the Roppongi site has not been used for a long time for actual Embassy service
doesnt automatically convert it to patrimonial property. Any such conversion happens only if the
property is withdrawn from public use. A property continues to be part of the public domain, not
available for private appropriation or ownership until there is a formal declaration on the part of
the government to withdraw it from being such.
CHAVES VS PUBLIC ESTATES AUTHORITY

9 | Page

FACTS: President Marcos through a presidential decree created PEA, which was tasked with the
development, improvement, and acquisition, lease, and sale of all kinds of lands. The then president
also transferred to PEA the foreshore and offshore lands of Manila Bay under the Manila-Cavite Coastal
Road and Reclamation Project.
Thereafter, PEA was granted patent to the reclaimed areas of land and then, years later, PEA
entered into a JVA with AMARI for the development of the Freedom Islands. These two entered into a
joint venture in the absence of any public bidding.
Later, a privilege speech was given by Senator President Maceda denouncing the JVA as the
grandmother of all scams. An investigation was conducted and it was concluded that the lands that PEA
was conveying to AMARI were lands of the public domain; the certificates of title over the
Freedom Islands were void; and the JVA itself was illegal. This prompted Ramos to form an investigatory
committee on the legality of the JVA.
Petitioner now comes and contends that the government stands to lose billions by the conveyance
or sale of the reclaimed areas to AMARI. He also asked for the full disclosure of the renegotiations
happening between the parties.
ISSUE: W/N stipulations in the amended JVA for the transfer to AMARI of the lands, reclaimed or to
be reclaimed, violate the Constitution.
HELD: The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian
doctrine, which holds that the State owns all lands and waters of the public domain.
The 1987 Constitution recognizes the Regalian doctrine. It declares that all natural resources are owned
by the State and except for alienable agricultural lands of the public domain, natural resources
cannot be alienated.
The Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the 750 hectare
reclamation project have been reclaimed, and the rest of the area are still submerged areas forming part of
Manila Bay. Further, it is provided that AMARI will reimburse the actual costs in reclaiming the areas
of land and it will shoulder the other reclamation costs to be incurred.
The foreshore and submerged areas of Manila Bay are part of the lands of the public domain, waters and
other natural resources and consequently owned by the State. As such, foreshore and submerged areas
shall not be alienable unless they are classified as agricultural lands of the public domain. The mere
reclamation of these areas by the PEA doesnt convert these inalienable natural resources of the State
into alienable and disposable lands of the public domain. There must be a law or presidential
proclamation officially classifying these reclaimed lands as alienable and disposable if the law has
reserved them for some public or quasi-public use.

10 | P a g e