Civil Law Review - Property

Atty. Melissa Romana P. Suarez

Cases on Classification of Property

Art. 415 Immovable Property

BENGUET CORPORATION vs. CBAA
[GR 106041. January 29, 1993.]
EN BANC: CRUZ, J p:

Facts:
The CBAA imposed on Benguet Corporation's tailings dam and the land
thereunder realty tax amounting to P11M. Benguet paid over its protest.
CBAA ruled that:
For purposes of taxation the dam is considered as real property as it
comes within the object mentioned in Art. 415 [a & b] 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 Sec. 38 of the Real Property
Tax Code. (P.D. 464).
Benguet alleged 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.

Issue:
Should the tailings dam be classified as real property?

Held:
Yes. 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 Art. 415 of the Civil Code.
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.
Therefore, 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 Benguet's mine. Moreover, the immovable nature of the dam defines its
character as real property under Art. 415 of the Civil Code and thus makes it
taxable under Sec. 38 of the Real Property Tax Code.

Art. 415 Immovable Property

SERG'S PRODUCTS vs. PCI
[GR 137705. Aug 22, 2000.]
THIRD DIVISION: PANGANIBAN, J p:

Facts:
PCI Leasing and Finance filed a complaint for a sum of money with an
application for a writ of replevin against Sergs Products a chocolate
manufacturer.
The RTC issued a writ of replevin directing its sheriff to seize and deliver the
machineries and equipment to PCI Leasing after 5 days and upon the payment
of the necessary expenses.
In implementation of said writ, the sheriff proceeded to Sergs factory, seized
the machinery. Sergs Products asserted that the properties sought to be
seized [were] immovable as defined in Art. 415, the parties' agreement to
the contrary notwithstanding. They argued that to give effect to the
agreement would be prejudicial to innocent third parties. They further stated
that PCI Leasing [was] estopped from treating these machineries as personal
because the contracts in which the alleged agreement [were] embodied [were]
totally sham and farcical.

Issue:
W/N the machineries purchased and imported by SERG'S became real
property by virtue of immobilization.

Held:
Yes. The machines that were the subjects of the Writ of Seizure were placed
by Serg 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, Serg is correct in arguing that the said machines are real, not
personal, property pursuant to Art. 415 (5) of the Civil Code.

Issue:
Can the machinery be the subject of replevin?

Held:
Yes. We disagree with the submission of the Serg that the said machines are
not proper subjects of the Writ of Seizure. Rule 60 of the Rules of Court provides
that writs of replevin are issued for the recovery of personal property only.
Contracting parties may validly stipulate that a real property be considered
as personal. After agreeing to such stipulation, they are consequently estopped
from claiming otherwise. Under the principle of estoppel, a party to a contract
is ordinarily precluded from denying the truth of any material fact found
therein.
The Lease Agreement between PCI and Serg clearly provides that the
machines in question are to be considered as personal property.
Specifically, Section 12.1 of the Agreement reads as follows:
"12.1 The PROPERTY is, and shall at all times be and remain, personal
property notwithstanding that the PROPERTY or any part thereof may now be,
or hereafter become, in any manner affixed or attached to or embedded in, or
permanently resting upon, real property or any building thereon, or attached in
any manner to what is permanent."
Clearly then, Serg is estopped from denying the characterization of the
subject machines as personal property. Under the circumstances, they are
proper subjects of the Writ of Seizure.

Note:
It should be stressed, however, that our 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.

Classification of Property
Art. 415 Immovable Property
MARCELO SORIANO vs. SPOUSES GALIT
[G.R. No. 156295. September 23, 2003.]
1st DIVISION: YNARES-SANTIAGO, J p:

Facts:
Ricardo Galit contracted a loan from Marcelo Soriano. This loan was secured
by a real estate mortgage. After Galit failed to pay his obligation, Soriano filed a
complaint for sum of money against Galit with the RTC. RTC rendered judgment
in favor of Soriano
The judgment became final and executory. RTC issued a writ of execution in
due course, by virtue of which, Deputy Sheriff Renato Robles levied on the
following real properties of Galit:
1. A parcel of land - OCT T-569;
2. STORE/HOUSE CONSTRUCTED on Lot 1103 [30 sqm] (constructed on TCT
T40785);
3. BODEGA constructed on Lot 1103, [42.75 sqm]

At the sale of the properties at public auction, Soriano was the highest and
only bidder. Accordingly, the Sheriff issued a Certificate of Sale of Execution of
Real Property. Later, Soriano 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 the Sheriff:
OCT T-40785
A parcel of land (Lot 1103), with the improvements thereon, containing an area
of 134 SQM.

Later Soriano moved for the issuance of a writ of possession.

RTC issued a writ of possession in Soriano's favor, which stated:
WHEREFORE, you are hereby commanded to place Soriano in possession of the
property more particularly described as:
1. STORE HOUSE constructed on Lot 1103 covered by TCT No. 40785;
2. BODEGA constructed on Lot 1103
3. OCT 40785 with an area of 134 sqm [Lot No. 1103]

Galit assailed the inclusion of Lot 1103 covered by TCT T-40785 among the
list of real properties in the writ of possession. He argued that Lot 1101 was not
among those sold on execution by the Sheriff s as reflected in the Certificate of
Sale on Execution of Real Property.

Issue:
W/N the writ of possession is a nullity considering that it includes real
property not expressly mentioned in the Certificate of Sale of Real Property.

Held:
Yes.
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.
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 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. Art. 415 of the Civil Code
enumerates land and buildings separately. This can only mean that a building
is, by itself, considered immovable.
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.
Considering that what was sold by virtue of the writ of execution issued by
the RTC was merely the storehouse and bodega constructed on the
parcel of land covered by TCT-40785, which by themselves are real
properties of Galit, the same should be regarded as separate and
distinct from the conveyance of the lot on which they stand.

Art. 420 Property in Relation to whom it Belongs

DOMALSIN v. VALENCIANO
[GR 158687. Jan 25, 2006.]
1st DIVISION: CHICO-NAZARIO

Facts:
The subject property is a parcel of land [part of Kennon road] in Baguio.
Frisco Domalsin claims to be the lawful owner and possessor of said land since
1979 up to the present. He declared it for taxation purposes. He introduced
improvements and other agricultural plants of economic value. He was in
continuous, adverse possession in the concept of an owner for 19 years.
On Aug 1, 1998, Spouses Juanito and Amalia Valenciano allegedly entered
the premises to construct a building made of cement and strong materials,
without the authority and consent of Dolmasin, by means of force and strategy.
Domalsin protested and demanded that Valenciano halt construction, but the
latter refused to do so. Hence, he filed a case for forcible entry against
Valenciano.

Issue:
What kind of property is the subject land?

Held:
Property of public dominion.
The subject land is a portion of the road-right-of way of Kennon Road which
is located in front of a parcel of land that Domalsin bought by way of Deed of
Waiver and Quitclaim from Binay-an. The admission of Domalsin that
Valenciano started constructing a building within the Kennon Road road-right-
of-way belies his claim that the lot in question is his.
It is clear that neither the Domalsin nor the Valenciano can own nor possess
the subject property the same being part of the public dominion. Property of
public dominion is defined as follows:
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 other of
similar character.x x x

As the land in controversy is a portion of Kennon Road which is for the use
of the people, there can be no dispute that same is part of public dominion.
Therefore, parties cannot appropriate the land for themselves. Thus, they
cannot claim any right of possession over it.
 This is clear from Art. 530 of the Civil Code which provides: Only things
and rights which are susceptible of being appropriated may be the object of
possession.
This Court also finds that the lower courts to be in error when they
respectively declared that Domalsin and Valenciano to be entitled to the
possession of the land in dispute. The parties should not be permitted to take
possession of the land, much more, claim ownership thereof as said lot is part
of the public dominion.
WHEREFORE, there being a finding that the subject property is a part of the
public dominion, of which neither party is entitled to own nor possess,
Valenciano are ordered to remove their structure on the subject land within and
to vacate and deliver the physical possession to the DPWH.

Art. 420 Property of Public Dominion

SPOUSES MORANDARTE & FEBRERA vs. CA
[G.R. No. 123586. August 12, 2004.]
2nd DIVISION:AUSTRIA-MARTINEZ

Facts:
Morandarte filed an application for free patent, dated December 5, 1972,
before the Bureau of Lands (BOL), covering a parcel of land with an area of
4.5499 hectares and described as a portion of Lot 1038 of Dipolog Cadastre.
On July 27, 1976, the District Land Officer of the BOL approved the free
patent application of Morandarte and directed the issuance of a free patent in
his favor. Accordingly, Free Patent 785 was issued in the name of Morandarte.
On Sep 20, 1976, the ROD issued the corresponding OCT 5954.
More than ten years after the issuance of the OCT in Morandarte's name, or
on March 19, 1987, the State filed before the RTC a Complaint for Annulment of
Title and Reversion against the Morandarte.
The State alleged that the BOL found that the subject land includes a
portion of the Miputak River which cannot be validly awarded as it is outside
the commerce of man and beyond the authority of the BOL to dispose of.
Morandarte denied the allegations of the complaint and claimed that they
were able to secure the title in accordance and in compliance with the
requirements of the law. They alleged that the land is a portion of inherited
property from Antonio Morandarte whose ownership thereof is covered by Tax
Declaration 2296.

Issue:
Can the property be reverted back to the State?

Held:
Yes.
Property of the public domain is incapable of registration and its inclusion in
a title nullifies that title.
 The present controversy involves a portion of the public domain that was
merely erroneously included in the free patent. Accordingly, 2,162-sqm
portion traversed by the Miputak River Should be reconveyed back to the State.
The Morandarte spouses cannot seek refuge in their claim that their
predecessor-in-interest, was already the owner of that portion of Lot 1038 when
the fishpond application of Aguido Realiza was approved in 1948 because Lot
1038 was still part of the public domain then. It was only in 1972, through
Forestry Administrative Order No. 4-1257, which was approved August 14,
1972, when Lot 1038 was declared alienable or disposable property of the
State.
It is a settled rule that 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. Hence, Morandartes
occupation thereof, however long, cannot ripen into private ownership.

Art. 420 Property of the Public Dominion

MIAA v. CA
[G.R. No. 155650. July 20, 2006.]
EN BANC: CARPIO, J p:

Facts:
Manila International Airport Authority (MIAA) operates the NAIA Complex in
Paraaque. As operator of NAIA, it administers the land, improvements and
equipment within the NAIA Complex. The MIAA Charter transferred to MIAA
approximately 600 hectares of land, including the runways and buildings, then
under the Bureau of Air Transportation. On 28 Jun 2001, MIAA received Final
Notices of Real Estate Tax Delinquency from the City of Paraaque for the years
1992 to 2001.
On 17 July 2001, the City of Paraaque, issued notices of levy and warrants
of levy on the Airport Lands and Buildings. The Mayor threatened to sell at
public auction the Airport Lands and Buildings should MIAA fail to pay the real
estate tax delinquency.

Issue:
What kind of property are the Airport Lands and Buildings?

Held:
Property of public dominion and therefore owned by the State.
No one can dispute that properties of public dominion mentioned in Art. 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. Therefore, the MIAA Airport Lands and Buildings are
properties of public dominion and thus owned by the State.
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 charging of fees to the public does not determine the character of the
property whether it is of public dominion or not. 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.
As properties of public dominion, the Airport Lands and Buildings are
outside the commerce of man. 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 the Airport Lands and Buildings, the President
must first withdraw from public use the Airport Lands and Buildings.
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.

Art. 420 Property of Public Dominion

RP vs. CA, JOSEFINA L. MORATO
[GR 100709. Nov 14, 1997.]
THIRD DIVISION: PANGANIBAN, J p:

Facts:
In December 1972 Josefina Morato filed a Free Patent Application on a parcel
of land with an area of 1,265 square meters situated at Calauag, Quezon.
On Jan 16, 1974 - the patent was approved and on Feb 4, 1974, the ROD
issued on OCT P-17789. Thereafter, it was established that the subject land is a
portion of the Calauag Bay, 5 to 6 feet deep under water during high tide and
2 feet deep at low tide, and not suitable to vegetation.
On Nov 5, 1978, RP through the Director of Lands filed a complaint against
Morato and the ROD for the cancellation of title and reversion of a parcel of
land to the public domain, subject of a free patent in favor of Morato, on the
grounds that the land is a foreshore land.

Issue:
Should such property revert to the State once it is invaded by the sea and
thus becomes foreshore land?
Held:
Yes. Foreshore land has been defined as: '. . . that part of (the
land) which is between high and low water and left dry by the flux and
reflux of the tides
Morato cannot own foreshore land:
"Through the encroachment or erosion by the ebb and flow of the tide, a
portion of the subject land was invaded by the waves and sea advances. During
high tide, at least half of the land (632.5 sqm) is 6 feet deep under water and 3
feet deep during low tide. The Calauag Bay shore has extended up to a portion
of the questioned land.
While at the time of the grant of free patent to Morato, the land was not
reached by the water, however, due to gradual sinking of the land caused by
natural calamities, the sea advances had permanently invaded a portion of
subject land. As disclosed at the trial, the land was under water during high tide
in the month of Aug 1978. The water margin covers half of the property, but
during low tide, the water is about a kilometer.
Also, in 1974, after the grant of the patent, the land was covered with
vegetation, but it disappeared in 1978 when the land was reached by the tides.
In fact, the erosion of the land was caused by natural calamities that struck the
place in 1977.
Josefina argues that it is "unfair and unjust if she will be deprived of the
whole property just because a portion thereof was immersed in water for
reasons not her own doing."
The application for a free patent was made in 1972. However, the land has
since become foreshore. Accordingly, it can no longer be subject of a free
patent under the Public Land Act.
Art. 420 specifically provides that: 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

When the sea moved towards the estate and the tide invaded it, the
invaded property became foreshore land and passed to the realm of the public
domain. The subject land in this case, being foreshore land, should therefore be
returned to the public domain.

Art. 420 Property of Public Dominion

RP v. AMANDA LAT VDA. DE CASTILLO
GR L-69002. June 30, 1988
2nd Division: Paras, J p:

Facts:
Sometime in 1951, the late Modesto Castillo applied for the registration of
two parcels of land, Lots 1 and 2, located in Banadero, Tanauan, Batangas,
described in Plan Psu-119166, with a total area of 39,755 square meters.
 In a decision dated August 31, 1951, Castillo, was declared the true and
absolute owner of the land with the improvements thereon, for which OCT 0-
665 was issued to him by the Register of Deeds, on February 7, 1952.
RP filed a Civil Case with the lower court for the annulment of the
certificates of title issued to Amanda Lat Vda. de Castillo, et al., as
heirs/successors of Modesto, and for the reversion of the lands covered thereby
(Lots 1 and 2) to the State.
It was alleged that said lands had always formed part of the Taal Lake,
washed and inundated by the waters thereof, and being of public ownership, it
could not be the subject of registration as private property.
Amanda, alleged that the Government's action was already barred by the
decision of the registration court; that the action has prescribed; and that the
government was estopped from questioning her ownership and possession.

Issue:
W/N the subject property belongs to the public domain.

Held:
It has long been settled that portions of the foreshore or of the territorial
waters and beaches cannot be registered. Their inclusion in a certificate of title
does not convert the same into properties of private ownership or confer title
upon the registrant.
But an important bone of contention is the nature of the lands involved in
this case. It has been satisfactorily established, that the properties in question
were the shorelands of Taal Lake during the cadastral survey of 1923.
Lakeshore land or lands adjacent to the lake, like the lands in question must
be differentiated from foreshore land or that part of the land adjacent to the
sea which is alternately covered and left dry by the ordinary flow of the tides.
Such distinction draws importance from the fact that:
1. Accretions on the bank of a lake, like Laguna de Bay belong to the owners
of the estate to which they have been added, while
2. Accretion on a sea bank still belongs to the public domain, and is not
available for private ownership until formally declared by the government to
be no longer needed for public use.

But said distinction will not help Castillo because there is no accretion
shown to exist. On the contrary, it was established that the occupants of the
lots who were engaged in duck raising filled up the area with shells and sand to
make it habitable.
The defense of long possession is likewise not available in this case
because, as already ruled by this Court, mere possession of land does not by
itself automatically divest the land of its public character.

Art. 420 Property of Public Dominion

TEOFILO VILLARICO vs. VIVENCIO SARMIENTO
[GR 136438. Nov 11, 2004.]
THIRD DIVISION: SANDOVAL-GUTIERREZ, J p:
Facts:
Teofilo Villarico is the owner of a lot in La Huerta, Paraaque City covered by
TCT 95453.
Villarico's lot is separated from the Ninoy Aquino Avenue (highway) by a
strip of land belonging to the government. As this highway was elevated by 4
meters and therefore higher than the adjoining areas, the DPWH constructed
stairways at several portions of this strip of public land to enable the people to
have access to the highway.
Sometime in 1991, Vivencio Sarmiento had a building constructed on a
portion of said government land.
Villarico filed with the RTC, a complaint for accion publiciana against
Sarmiento, et al. He alleged that Sarmientos structures on the government
land closed his "right of way" to the Ninoy Aquino Avenue.
Sarmiento specifically denied Villarico's allegations, claiming that Villarico
has no right over the subject property as it belongs to the government.

Issue:
Villarico claims that Sarmiento, by constructing their buildings on the lot in
question, deprived him of his "right of way."

Held:
It is not disputed that the lot on which Villarico's alleged "right of way"
exists belongs to the state or property of public dominion. Property of public
dominion is defined by Art. 420.
Public use is "use that is not confined to privileged individuals, but is open
to the indefinite public." Records show that the lot on which the stairways were
built is for the use of the people as passageway to the highway. Consequently,
it is a property of public dominion.
Property of public dominion is outside the commerce of man and hence it:
1. cannot be alienated or leased or otherwise be the subject matter of
contracts;
2. cannot be acquired by prescription against the State;
3. is not subject to attachment and execution; and
4. cannot be burdened by any voluntary easement.

Considering that the lot on which the stairways were constructed is a

property of public dominion, it can not be burdened by a voluntary easement of
right of way in favor of herein Villarico. In fact, its use by the public is by mere
tolerance of the government through the DPWH. Villarico cannot appropriate it
for himself. Verily, he cannot claim any right of possession over it. This is clear
from Art. 530 which provides: Only things and rights which are susceptible of
being appropriated may be the object of possession."

Art. 420 and 422

FRANCISCO CHAVEZ vs. PEA and AMARI
[GR 133250. July 9, 2002.]
EN BANC: CARPIO, J p:
Facts:
On Feb 4, 1977, President Marcos issued PD 1084 creating PEA. PD 1084
tasked PEA "to reclaim land, including foreshore and submerged areas,"
and "to develop, improve, acquire, lease and sell any and all kinds of
lands."
On Jan 19, 1988, President Aquino issued Special Patent 3517, granting and
transferring to PEA "the parcels of land so reclaimed under the Manila-Cavite
Coastal Road and Reclamation Project (MCCRRP) containing a total area of
1,915,894 sqm."
Subsequently, on April 9, 1988, the Register of Deeds issued TCT 7309,
7311, and 7312, in the name of PEA, covering the three reclaimed islands
known as the "Freedom Islands." The Freedom Islands have a total land area of
157.841 hectares.
On Apr 25, 1995, PEA entered into a Joint Venture Agreement (JVA) with
AMARI, a private corporation, to develop the Freedom Islands. PEA and AMARI
entered into the JVA through negotiation without public bidding.
On April 28, 1995, the BOD of PEA, in its Resolution 1245, confirmed the
JVA. On June 8, 1995, President Ramos approved the JVA.
On Nov 29, 1996, then Senate President Ernesto Maceda delivered a
privilege speech in the Senate and denounced the JVA as the "grandmother of
all scams." As a result, the Senate conducted an investigation. The Senate
reported the results of their investigation in Senate Committee Report 560
dated Sep 16, 1997. Among the conclusions of their report are:
1. the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands
of the public domain which the government has not classified as alienable
lands and therefore PEA cannot alienate these lands;
2. the certificates of title covering the Freedom Islands are thus void, and
3. the JVA itself is illegal.

On Dec 5, 1997, then President Ramos issued AO 365 creating a Legal Task
Force to conduct a study on the legality of the JVA in view of Senate Committee
Report 560. The Legal Task Force upheld the legality of the JVA, contrary to the
conclusions reached by the Senate Committees.
On April 27, 1998, Frank Chavez, as a taxpayer, filed the instant Petition.
Chavez assails the sale to AMARI of lands of the public domain as a blatant
violation of Sec.3, Article XII of the 1987 Constitution prohibiting the sale of
alienable lands of the public domain to private corporations.
On March 30, 1999, PEA and AMARI signed the Amended JVA. On May 28,
1999, President Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President,
Chavez now prays that on "constitutional and statutory grounds the
renegotiated contract be declared null and void."
Indisputably, under the Amended JVA, AMARI will acquire and own a
maximum of 367.5 hectares of reclaimed land which will be titled in its name.

Issue:
W/N AMARI, a private corporation, can acquire and own under the Amended
JVA 367.5 hectares of reclaimed foreshore and submerged areas in Manila Bay.
Held:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands,
now covered by certificates of title in the name of PEA, are alienable lands of
the public domain. PEA may lease these lands to private corporations but may
not sell or transfer ownership of these lands to private corporations. PEA may
only sell these lands to Philippine citizens, subject to the ownership limitations
in the 1987 Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable
natural resources of the public domain until classified as alienable or disposable
lands open to disposition and declared no longer needed for public service. The
government can make such classification and declaration only after PEA has
reclaimed these submerged areas. Only then can these lands qualify as
agricultural lands of the public domain, which are the only natural resources
the government can alienate. In their present state, the 592.15 hectares of
submerged areas are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation,
ownership of 77.34 hectares of the Freedom Islands, such transfer is void for
being contrary to Sec 3, Art XII of the 1987 Constitution which prohibits private
corporations from acquiring any kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of
290.156 hectares of still submerged areas of Manila Bay, such transfer is void
for being contrary to Sec. 2, Art XII of the 1987 Constitution which prohibits the
alienation of natural resources other than agricultural lands of the public
domain. PEA may reclaim these submerged areas. Thereafter, the government
can classify the reclaimed lands as alienable or disposable, and further declare
them no longer needed for public service. Still, the transfer of such reclaimed
alienable lands of the public domain to AMARI will be void in view of Sec 3, Art
XII of the 1987 Constitution which prohibits private corporations from acquiring
any kind of alienable land of the public domain.

Clearly the Amended JVA violates glaringly Sec 2 and 3, Art XII of the 1987
Constitution. Under Article 1409 of the Civil Code, contracts whose "object or
purpose is contrary to law," or whose "object is outside the commerce of men,"
are "inexistent and void from the beginning." The Court must perform its duty
to defend and uphold the Constitution, and therefore declares the Amended JVA
null and void ab initio.