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G.R. No.

L-20329 March 16, 1923 and to the premises the subject of the
THE STANDARD OIL COMPANY OF NEW said lease;
YORK, petitioner, 
 (2) The building, property of the
vs.
 mortgagor, situated on the aforesaid
JOAQUIN JARAMILLO, as register of leased premises.
deeds of the City of Manila, respondent. After said document had been duly
Ross, Lawrence and Selph for petitioner.
 acknowledge and delivered, the petitioner
City Fiscal Revilla and Assistant City Fiscal caused the same to be presented to the
Rodas for respondent. respondent, Joaquin Jaramillo, as register of
STREET, J.: deeds of the City of Manila, for the purpose
of having the same recorded in the book of
This cause is before us upon demurrer record of chattel mortgages. Upon
interposed by the respondent, Joaquin examination of the instrument, the
Jaramillo, register of deeds of the City of respondent was of the opinion that it was
Manila, to an original petition of the not a chattel mortgage, for the reason that
Standard Oil Company of New York, seeking the interest therein mortgaged did not
a peremptory mandamus to compel the appear to be personal property, within the
respondent to record in the proper register a meaning of the Chattel Mortgage Law, and
document purporting to be a chattel registration was refused on this ground only.
mortgage executed in the City of Manila by
Gervasia de la Rosa, Vda. de Vera, in favor We are of the opinion that the position taken
of the Standard Oil Company of New York. by the respondent is untenable; and it is his
duty to accept the proper fee and place the
It appears from the petition that on instrument on record. The duties of a
November 27, 1922, Gervasia de la Rosa, register of deeds in respect to the
Vda. de Vera, was the lessee of a parcel of registration of chattel mortgage are of a
land situated in the City of Manila and owner purely ministerial character; and no
of the house of strong materials built provision of law can be cited which confers
thereon, upon which date she executed a upon him any judicial or quasi-judicial power
document in the form of a chattel mortgage, to determine the nature of any document of
purporting to convey to the petitioner by way which registration is sought as a chattel
of mortgage both the leasehold interest in mortgage.
said lot and the building which stands
thereon. The original provisions touching this matter
are contained in section 15 of the Chattel
The clauses in said document describing the Mortgage Law (Act No. 1508), as amended
property intended to be thus mortgage are by Act No. 2496; but these have been
expressed in the following words: transferred to section 198 of the
Now, therefore, the mortgagor hereby Administrative Code, where they are now
conveys and transfer to the mortgage, found. There is nothing in any of these
by way of mortgage, the following provisions conferring upon the register of
described personal property, situated deeds any authority whatever in respect to
in the City of Manila, and now in the "qualification," as the term is used in
possession of the mortgagor, to wit: Spanish law, of chattel mortgage. His duties
(1) All of the right, title, and interest of in respect to such instruments are
the mortgagor in and to the contract of ministerial only. The efficacy of the act of
lease hereinabove referred to, and in recording a chattel mortgage consists in the
fact that it operates as constructive notice of
the existence of the contract, and the legal deny the registration of a document
effects of the contract must be discovered in purporting to be a chattel mortgage
the instrument itself in relation with the fact and executed in the manner and form
of notice. Registration adds nothing to the prescribed by the Chattel Mortgage
instrument, considered as a source of title, Law.
and affects nobody's rights except as a Then, after quoting section 5 of the Chattel
specifies of notice. Mortgage Law (Act No. 1508), his Honor
Articles 334 and 335 of the Civil Code continued:
supply no absolute criterion for Based principally upon the provisions
discriminating between real property and of section quoted the Attorney-
personal property for purpose of the General of the Philippine Islands, in
application of the Chattel Mortgage Law. an opinion dated August 11, 1909,
Those articles state rules which, considered held that a register of deeds has no
as a general doctrine, are law in this authority to pass upon the capacity of
jurisdiction; but it must not be forgotten that the parties to a chattel mortgage
under given conditions property may have which is presented to him for
character different from that imputed to it in record. A fortiori a register of deeds
said articles. It is undeniable that the parties can have no authority to pass upon
to a contract may by agreement treat as the character of the property sought to
personal property that which by nature be encumbered by a chattel
would be real property; and it is a familiar mortgage. Of course, if the mortgaged
phenomenon to see things classed as real property is real instead of personal
property for purposes of taxation which on the chattel mortgage would no doubt
general principle might be considered be held ineffective as against third
personal property. Other situations are parties, but this is a question to be
constantly arising, and from time to time are determined by the courts of justice
presented to this court, in which the proper and not by the register of deeds.
classification of one thing or another as real
or personal property may be said to be In Leung Yee vs. Frank L. Strong Machinery
doubtful. Co. and Williamson (37 Phil., 644), this court
held that where the interest conveyed is of
The point submitted to us in this case was the nature of real, property, the placing of
determined on September 8, 1914, in an the document on record in the chattel
administrative ruling promulgated by the mortgage register is a futile act; but that
Honorable James A. Ostrand, now a Justice decision is not decisive of the question now
of this Court, but acting at that time in the before us, which has reference to the
capacity of Judge of the fourth branch of the function of the register of deeds in placing
Court of First Instance of the Ninth Judicial the document on record.
District, in the City of Manila; and little of
value can be here added to the observations In the light of what has been said it becomes
contained in said ruling. We accordingly unnecessary for us to pass upon the point
quote therefrom as follows: whether the interests conveyed in the
instrument now in question are real or
It is unnecessary here to determine personal; and we declare it to be the duty of
whether or not the property described the register of deeds to accept the estimate
in the document in question is real or placed upon the document by the petitioner
personal; the discussion may be and to register it, upon payment of the
confined to the point as to whether a proper fee.
register of deeds has authority to
The demurrer is overruled; and unless within Order, praying that the deputy sheriff be
the period of five days from the date of the enjoined "from seizing immobilized or other
notification hereof, the respondent shall real properties in (petitioners’) factory in
interpose a sufficient answer to the petition, Cainta, Rizal and to return to their original
the writ of mandamus will be issued, as place whatever immobilized machineries or
prayed, but without costs. So ordered. equipments he may have removed."9
Araullo, C.J., Malcolm, Avanceña, Ostrand, The Facts
Johns, and Romualdez, JJ., concur. The undisputed facts are summarized by the
Court of Appeals as follows:10
G.R. No. 137705 August 22, 2000 "On February 13, 1998, respondent PCI
Leasing and Finance, Inc. ("PCI Leasing" for
SERG'S PRODUCTS, INC., and SERGIO T. short) filed with the RTC-QC a complaint for
GOQUIOLAY, petitioners, 
 [a] sum of money (Annex ‘E’), with an
vs.
 application for a writ of replevin docketed as
PCI LEASING AND FINANCE, Civil Case No. Q-98-33500.
INC., respondent.
"On March 6, 1998, upon an ex-parte
DECISION application of PCI Leasing, respondent
PANGANIBAN, J.: judge issued a writ of replevin (Annex ‘B’)
After agreeing to a contract stipulating that a directing its sheriff to seize and deliver the
real or immovable property be considered machineries and equipment to PCI Leasing
as personal or movable, a party is estopped after 5 days and upon the payment of the
from subsequently claiming otherwise. necessary expenses.
Hence, such property is a proper subject of "On March 24, 1998, in implementation of
a writ of replevin obtained by the other said writ, the sheriff proceeded to
contracting party. petitioner’s factory, seized one machinery
The Case with [the] word that he [would] return for the
other machineries.
Before us is a Petition for Review on
Certiorari assailing the January 6, 1999 "On March 25, 1998, petitioners filed a
Decision1 of the Court of Appeals (CA)2in motion for special protective order (Annex
CA-GR SP No. 47332 and its February 26, ‘C’), invoking the power of the court to
1999 Resolution3 denying reconsideration. control the conduct of its officers and amend
The decretal portion of the CA Decision and control its processes, praying for a
reads as follows: directive for the sheriff to defer enforcement
of the writ of replevin.
"WHEREFORE, premises considered, the
assailed Order dated February 18, 1998 and "This motion was opposed by PCI Leasing
Resolution dated March 31, 1998 in Civil (Annex ‘F’), on the ground that the
Case No. Q-98-33500 are properties [were] still personal and therefore
hereby AFFIRMED. The writ of preliminary still subject to seizure and a writ of replevin.
injunction issued on June 15, 1998 is "In their Reply, petitioners asserted that the
hereby LIFTED."4 properties sought to be seized [were]
In its February 18, 1998 Order,5 the immovable as defined in Article 415 of the
Regional Trial Court (RTC) of Quezon City Civil Code, the parties’ agreement to the
(Branch 218)6 issued a Writ of Seizure.7 The contrary notwithstanding. They argued that
March 18, 1998 Resolution8 denied to give effect to the agreement would be
petitioners’ Motion for Special Protective prejudicial to innocent third parties. They
further stated that PCI Leasing [was] In their Memorandum, petitioners submit the
estopped from treating these machineries as following issues for our consideration:
personal because the contracts in which the "A. Whether or not the machineries
alleged agreement [were] embodied [were] purchased and imported by SERG’S
totally sham and farcical. became real property by virtue of
"On April 6, 1998, the sheriff again sought to immobilization.
enforce the writ of seizure and take B. Whether or not the contract between the
possession of the remaining properties. He parties is a loan or a lease."12
was able to take two more, but was
prevented by the workers from taking the In the main, the Court will resolve whether
rest. the said machines are personal, not
immovable, property which may be a proper
"On April 7, 1998, they went to [the CA] via subject of a writ of replevin. As a preliminary
an original action for certiorari." matter, the Court will also address briefly the
Ruling of the Court of Appeals procedural points raised by respondent.
Citing the Agreement of the parties, the The Court’s Ruling
appellate court held that the subject The Petition is not meritorious.
machines were personal property, and that
they had only been leased, not owned, by Preliminary Matter:Procedural Questions
petitioners. It also ruled that the "words of Respondent contends that the Petition failed
the contract are clear and leave no doubt to indicate expressly whether it was being
upon the true intention of the contracting filed under Rule 45 or Rule 65 of the Rules
parties." Observing that Petitioner Goquiolay of Court. It further alleges that the Petition
was an experienced businessman who was erroneously impleaded Judge Hilario Laqui
"not unfamiliar with the ways of the trade," it as respondent.
ruled that he "should have realized the There is no question that the present
import of the document he signed." The CA recourse is under Rule 45. This conclusion
further held: finds support in the very title of the Petition,
"Furthermore, to accord merit to this petition which is "Petition for Review on Certiorari."13
would be to preempt the trial court in ruling While Judge Laqui should not have been
upon the case below, since the merits of the impleaded as a respondent,14 substantial
whole matter are laid down before us via a justice requires that such lapse by itself
petition whose sole purpose is to inquire should not warrant the dismissal of the
upon the existence of a grave abuse of present Petition. In this light, the Court
discretion on the part of the [RTC] in issuing deems it proper to remove, motu proprio,
the assailed Order and Resolution. The the name of Judge Laqui from the caption of
issues raised herein are proper subjects of a the present case.
full-blown trial, necessitating presentation of
evidence by both parties. The contract is Main Issue: Nature of the Subject Machinery
being enforced by one, and [its] validity is Petitioners contend that the subject
attacked by the other – a matter x x x which machines used in their factory were not
respondent court is in the best position to proper subjects of the Writ issued by the
determine." RTC, because they were in fact real
Hence, this Petition.11 property. Serious policy considerations, they
argue, militate against a contrary
The Issues characterization.
Rule 60 of the Rules of Court provides that considered as personal.18After agreeing to
writs of replevin are issued for the recovery such stipulation, they are consequently
of personal property only.15Section 3 thereof estopped from claiming otherwise. Under
reads: the principle of estoppel, a party to a
"SEC. 3. Order. -- Upon the filing of such contract is ordinarily precluded from denying
affidavit and approval of the bond, the court the truth of any material fact found therein.
shall issue an order and the corresponding Hence, in Tumalad v. Vicencio,19 the Court
writ of replevin describing the personal upheld the intention of the parties to treat
property alleged to be wrongfully detained a house as a personal property because it
and requiring the sheriff forthwith to take had been made the subject of a chattel
such property into his custody." mortgage. The Court ruled:
On the other hand, Article 415 of the Civil "x x x. Although there is no specific
Code enumerates immovable or real statement referring to the subject house as
property as follows: personal property, yet by ceding, selling or
"ART. 415. The following are immovable transferring a property by way of chattel
property: mortgage defendants-appellants could only
have meant to convey the house as chattel,
xxx xxx xxx or at least, intended to treat the same as
(5) Machinery, receptacles, instruments or such, so that they should not now be
implements intended by the owner of the allowed to make an inconsistent stand by
tenement for an industry or works which claiming otherwise."
may be carried on in a building or on a piece Applying Tumalad, the Court in Makati
of land, and which tend directly to meet the Leasing and Finance Corp. v. Wearever
needs of the said industry or works; Textile Mills20 also held that the machinery
xxx xxx x x x" used in a factory and essential to the
In the present case, the machines that were industry, as in the present case, was a
the subjects of the Writ of Seizure were proper subject of a writ of replevin because
placed by petitioners in the factory built on it was treated as personal property in a
their own land. Indisputably, they were contract. Pertinent portions of the Court’s
essential and principal elements of their ruling are reproduced hereunder:
chocolate-making industry. Hence, although "x x x. If a house of strong materials, like
each of them was movable or personal what was involved in the above Tumalad
property on its own, all of them have case, may be considered as personal
become "immobilized by destination property for purposes of executing a chattel
because they are essential and principal mortgage thereon as long as the parties to
elements in the industry."16 In that sense, the contract so agree and no innocent third
petitioners are correct in arguing that the party will be prejudiced thereby, there is
said machines are real, not personal, absolutely no reason why a machinery,
property pursuant to Article 415 (5) of the which is movable in its nature and becomes
Civil Code.17 immobilized only by destination or purpose,
Be that as it may, we disagree with the may not be likewise treated as such. This is
submission of the petitioners that the said really because one who has so agreed is
machines are not proper subjects of the Writ estopped from denying the existence of the
of Seizure. chattel mortgage."
The Court has held that contracting parties In the present case, the Lease Agreement
may validly stipulate that a real property be clearly provides that the machines in
question are to be considered as personal merits of the case. Hence, they should be
property. Specifically, Section 12.1 of the threshed out in the trial, not in the
Agreement reads as follows:21 proceedings involving the issuance of the
"12.1 The PROPERTY is, and shall at all Writ of Seizure.
times be and remain, personal property Indeed, in La Tondeña Distillers v. CA,27 the
notwithstanding that the PROPERTY or any Court explained that the policy under Rule
part thereof may now be, or hereafter 60 was that questions involving title to the
become, in any manner affixed or attached subject property – questions which
to or embedded in, or permanently resting petitioners are now raising -- should be
upon, real property or any building thereon, determined in the trial. In that case, the
or attached in any manner to what is Court noted that the remedy of defendants
permanent." under Rule 60 was either to post a counter-
Clearly then, petitioners are estopped from bond or to question the sufficiency of the
denying the characterization of the subject plaintiff’s bond. They were not allowed,
machines as personal property. Under the however, to invoke the title to the subject
circumstances, they are proper subjects of property. The Court ruled:
the Writ of Seizure. "In other words, the law does not allow the
It should be stressed, however, that our defendant to file a motion to dissolve or
holding -- that the machines should be discharge the writ of seizure (or delivery) on
deemed personal property pursuant to the ground of insufficiency of the complaint or of
Lease Agreement – is good only insofar as the grounds relied upon therefor, as in
the contracting parties are concerned. proceedings on preliminary attachment or
22 Hence, while the parties are bound by the injunction, and thereby put at issue the
Agreement, third persons acting in good matter of the title or right of possession over
faith are not affected by its stipulation the specific chattel being replevied, the
characterizing the subject machinery as policy apparently being that said matter
personal.23 In any event, there is no showing should be ventilated and determined only at
that any specific third party would be the trial on the merits."28
adversely affected. Besides, these questions require a
Validity of the Lease Agreement determination of facts and a presentation of
evidence, both of which have no place in a
In their Memorandum, petitioners contend petition for certiorari in the CA under Rule 65
that the Agreement is a loan and not a or in a petition for review in this Court under
lease.24 Submitting documents supposedly Rule 45.29
showing that they own the subject
machines, petitioners also argue in their Reliance on the Lease Agreement
Petition that the Agreement suffers from It should be pointed out that the Court in this
"intrinsic ambiguity which places in serious case may rely on the Lease Agreement, for
doubt the intention of the parties and the nothing on record shows that it has been
validity of the lease agreement itself."25 In nullified or annulled. In fact, petitioners
their Reply to respondent’s Comment, they assailed it first only in the RTC proceedings,
further allege that the Agreement is invalid.26 which had ironically been instituted by
These arguments are unconvincing. The respondent. Accordingly, it must be
validity and the nature of the contract are presumed valid and binding as the law
the lis mota of the civil action pending before between the parties.
the RTC. A resolution of these questions, Makati Leasing and Finance Corporation30 is
therefore, is effectively a resolution of the also instructive on this point. In that case,
the Deed of Chattel Mortgage, which executed to the applicant, in double the
characterized the subject machinery as value of the property as stated in the
personal property, was also assailed applicant’s affidavit for the delivery thereof
because respondent had allegedly been to the applicant, if such delivery be
required "to sign a printed form of chattel adjudged, and for the payment of such sum
mortgage which was in a blank form at the to him as may be recovered against the
time of signing." The Court rejected the adverse party, and by serving a copy bond
argument and relied on the Deed, ruling as on the applicant."
follows: WHEREFORE, the Petition is DENIED and
"x x x. Moreover, even granting that the the assailed Decision of the Court of
charge is true, such fact alone does not Appeals AFFIRMED. Costs against
render a contract void ab initio, but can only petitioners.
be a ground for rendering said contract SO ORDERED.
voidable, or annullable pursuant to Article
1390 of the new Civil Code, by a proper Melo, (Chairman), Vitug, Purisima, and
action in court. There is nothing on record to Gonzaga-Reyes, JJ., concur.
show that the mortgage has been annulled.
Neither is it disclosed that steps were taken
to nullify the same. x x x" G.R. No. L-19468 October 30, 1964

Alleged Injustice Committed on the Part of SALVADOR PIANSAY and CLAUDIA V.


Petitioners VDA. DE UY KIM, plaintiffs-appellants, 

vs.

Petitioners contend that "if the Court allows CONRADO S. DAVID and MARCOS
these machineries to be seized, then its MANGUBAT, defendants-appellees.
workers would be out of work and thrown
into the streets."31 They also allege that the Santiago F. Alidio for plaintiffs-appellants. 

seizure would nullify all efforts to rehabilitate Marcos Mangubat in his own behalf and for
the corporation. co-defendant-appellee Conrado S. David.

Petitioners’ arguments do not preclude the CONCEPCION, J.:


implementation of the Writ.1âwphi1 As This is an appeal from an order of the Court
earlier discussed, law and jurisprudence of First Instance of Manila in Civil Case No.
support its propriety. Verily, the above- 47664 thereof. The pertinent facts are set
mentioned consequences, if they come true, forth in said order from which we quote:
should not be blamed on this Court, but on It appears from the complaint that on
the petitioners for failing to avail themselves December 11, 1948, defendant herein
of the remedy under Section 5 of Rule 60, Conrado S. David received a loan of
which allows the filing of a counter-bond. P3,000 with interest at 12% per
The provision states: annum from Claudia B. Vda. de Uy
"SEC. 5. Return of property. -- If the adverse Kim, one of the plaintiffs, and to
party objects to the sufficiency of the secure the payment of the same,
applicant’s bond, or of the surety or sureties Conrado S. David executed a chattel
thereon, he cannot immediately require the mortgage on a house situated at 1259
return of the property, but if he does not so Sande Street, Tondo, Manila; that the
object, he may, at any time before the chattel mortgage was registered with
delivery of the property to the applicant, the Register of Deeds of Manila on
require the return thereof, by filing with the December 19, 1948; that on February
court where the action is pending a bond 10, 1953, the mortgaged house was
sold at public auction to satisfy the entitled Claudia B. Vda. de Uy Kim
indebtedness to Claudia B. Vda. de and Salvador Piansay versus Hon.
Uy Kim, and the house was sold to Judge Jesus Y. Perez, et al.; that
Claudia B. Vda. de Uy Kim in the said acting upon the said petition, the
foreclosure proceedings; that on Court of Appeals in its order of April
March 22, 1954, Claudia B. Vda. de 28, 1961, denied the petition to lift or
Uy Kim sold the said house to Marcos discharge the writ of execution.
Mangubat, and on March 1, 1956. Thereupon, or on July 31, 1961, Piansay
Marcos Mangubat filed a complaint and Mrs. Uy Kim, hereinafter referred to as
against Conrado S. David, Civil Case the plaintiffs, instituted the present action
No. 29078, in the Court of First which was docketed as Civil Case No.
Instance of Manila, for the collection 47664 of the Court of First Instance of
of the loan of P2,000; that on March Manila, against David and Mangubat,
24, 1956, the complaint was amended hereinafter referred to as the defendants. In
to include the plaintiffs herein their complaint, plaintiffs, after averring the
Salvador Piansay and Claudia B. Vda. foregoing facts, allege that, in the
de Uy Kim as party defendants and proceedings for the execution of the
praying that auction sale executed by decision in Civil Case No. 29078. David
the Sheriff on February 10, 1953, and demanded from Piansay the payment of
the deed of absolute sale executed by rentals for the use and occupation of the
Claudia B. Vda. de Uy Kim in favor of house aforementioned, which, Piansay
Salvador Piansay be annulled; that claims, is his property, and that the
decision was rendered in Civil Case defendants are threatening to cause said
No. 29078 ordering Conrado S. David house to be levied upon and sold at public
to pay the plaintiff the sum of P2,000, auction in violation of the alleged rights of
damages and attorney's fees, and the plaintiffs. Accordingly plaintiffs prayed
dismissing the complaint with respect that a writ of preliminary injunction to
to Claudia B. Vda. de Uy Kim, restrain said levy and sale at public auction
Leonardo Uy Kim and Salvador be issued and that, after appropriate
Piansay; that upon appeal, the Court proceedings, judgment be rendered
of Appeals affirmed the decision but declaring that Piansay is the true and lawful
setting aside the award of damages in owner of said house sentencing the
favor of Claudia B. Vda. de Uy Kim; defendants to pay damages and making the
that in the execution of Civil Case No. preliminary injunction permanent.
29078, which was affirmed by the
Court of Appeals in CA-G.R. No. Mangubat moved to dismiss said complaint,
21797-R, the house, which had been upon the theory that the same is barred by
bought by Uy Kim at the foreclosure the principle of res adjudicata and that
proceedings and sold by her to plaintiffs have no personality to bring this
Salvador Piansay, was levied upon at action or to question the levy upon the
the instance of the defendant Marcos house in question, because they have no
Mangubat; that to prevent the sale at interest therein. After due hearing the lower
public auction of the house here in court issued the order appealed from,
question, the plaintiffs herein filed a granting said motion and dismissing the
petition complaint, with costs against the plaintiffs. A
for certiorari and mandamus with reconsideration of said order having been
preliminary injunction in the Court of denied, plaintiffs interposed the present
Appeals, CA-G.R. No. 28974-R, appeal directly to this Court only questions
of law being raised in the appeal, namely: of the surety that it has
(1) applicability of the principle of res acquired ownership over the
adjudicata; and (2) validity of the chattel property in question by reason
mortgage constituted in favor of Mrs. Uy of the sale conducted by the
Kim. Provincial Sheriff of Rizal for as
With reference to the first question, it should this court has aptly pronounced:
be noted that in case CA-G.R. No. 21797-R, A mortgage creditor who
the Court of Appeals affirmed the decision in purchases real properties
Case No. 29078 of the Court of First at an extra-judicial
Instance of Manila stating: foreclosure sale thereof
In the case of Ladera, et al., vs. by virtue of a chattel
Hodges, et al. (CA-G.R. No. 8027-R, mortgage constituted in
promulgated Sept. 23, 1952) this his favor, which mortgage
Court, thru Justice J. B. L. Reyes, has been declared null
said, among others: and void with respect to
said real properties
Since it is a rule in our law that acquires no right thereto
buildings and constructions are by virtue of said sale. (De
regarded as mere accesories to la Riva vs. Ah Kee, 60
the land (following the Roman Phil. 899).
maxim omne quod solo
inaedificatur solo credit) it is Thus, Mrs. Uy Kim had no right to
logical that said accessories foreclose the alleged chattel
should partaked of the nature of mortgage constituted in her
the principal thing, which is the favor, because it was in reality a mere
land forming, as they do, but a contract of an unsecured loan. It
single object (res) with it in follows that the Sheriff was not
contemplation of law. authorized to sell the house as a
result of the foreclosure of such
... While it is true that said chattel mortgage. And as Mrs. Uy Kim
document was correspondingly could not have acquired the house
registered in the Chattel when the Sheriff sold it at public
Mortgage Register of Rizal, this auction, she could not, in the same
Act produced no effect token, it validly to Salvador Piansay.
whatsoever for where the Conceding that the contract of sale
interest conveyed is in the between Mrs. Uy Kim and Salvador
nature of real property, the Piansay was of no effect, we cannot
registration of the document in nevertheless set it aside upon
the registry of chattels is merely instance of Mangubat because, as the
a futile act. Thus the court below opined, he is not a party
registration of the chattel thereto nor has he any interest in the
mortgage of a building of strong subject matter therein, as it was never
materials produced no effect as sold or mortgaged to him (Emphasis
far as the building is concerned supplied);
(Leung Yee vs. Strong
Machinery Co., 37 Phil. 644). that, thereafter, the records of the case were
Nor can we give any remanded to the Court of First Instance of
consideration to that contention Manila, which caused the corresponding writ
of execution to be issued; that upon the
request of Mangubat, the house in question In other words, in Civil Case No. 29078 of
was levied upon; that Piansay filed with the the Court of First Instance of Manila,
trial court, presided over by Hon. Jesus Y. Piansay assailed the right of Mangubat to
Perez, Judge, a motion to set aside said levy execution upon the house in question
levy; that this motion was denied by said alleging that the same belongs to him, he
court, in an order dated February 4, 1961, having bought it from Mrs. Uy Kim, who had
upon the following ground: acquired it at the auction sale held in
Considering that the decision connection with the extrajudicial foreclosure
rendered by the Court of Appeals in of the chattel mortgage constituted in her
this case when the same was favor by David. This pretense was, however,
elevated to said Court recognizes overruled by Judge Perez, who presided at
that defendant Claudia B. de Uy Kim said court, in its order of February 4, 1961,
did not acquire the house of upon the theory that the chattel mortgage
defendant Conrado S. David and can and sale in favor of Mrs. Uy Kim had been
therefore be executed by the plaintiff annulled in the original decision in said
to satisfy the judgment rendered case, as affirmed by the Court of Appeals in
against said defendant David in favor CA-G.R. No. 21797-R. Regardless of
of the plaintiff. The mere fact that the whether this theory is accurate or not, the
dispositive part of the decision states fact is that said order became final and
that the complaint is dismissed with executory upon the denial of the petition for
respect to defendants Claudia B. de certiorari and mandamus, to annul the same
Uy Kim, Leonardo Uy Kim and in CA-G.R. No. 28974-R of the Court of
Salvador Piansay is of no moment Appeals. Hence, plaintiffs are now barred
because the chattel mortgage from asserting that the aforementioned
executed by David in favor of Claudia chattel mortgage and sale are valid.
B. de Uy Kim might not be annulled At any rate, regardless of the validity of a
but it did not transmit any right from contract constituting a chattel mortgage on a
defendant David to Claudia B. de Uy house, as between the parties to said
Kim. The house in question can contract (Standard Oil Co. of N. Y. vs.
therefore be levied upon because it Jaramillo, 44 Phil. 632-633), the same
had remained the property of cannot and does not bind third persons, who
defendant David (Emphasis supplied); are not parties to the aforementioned
that a reconsideration of this order of contract or their privies (Leung Yee vs.
February 4, 1961 having been denied by Strong Machinery Co., 37 Phil. 644;
Judge Perez, on February 25, 1961, Evangelista vs. Alto Surety, G.R. No.
plaintiffs instituted case CA-G.R. No. 28974- L-11139, April 23, 1958; Navarro vs. Pineda,
R of the Court of Appeals, for a writ G.R. No. L-18456, November 30, 1963). As
of certiorari and mandamus to annul said a consequence, the sale of the house in
orders of Judge Perez and to compel him to question in the proceedings for the
release said house from the aforementioned extrajudicial foreclosure of said chattel
levy; and that on March 3, 1961, the Court mortgage, is null and void insofar as
of Appeals denied said petition defendant Mangubat is concerned, and did
for certiorari and mandamus "insofar as it not confer upon Mrs. Uy Kim, as buyer in
prays that the order of respondent Judge said sale, any dominical right in and to said
denying the lifting and discharge of the writ house (De la Riva vs. Ah Yee, 60 Phil. 800),
of execution be set aside and revoked." so that she could not have transmitted to her
assignee, plaintiff Piansay any such right as
against defendant Mangubat. In short feet more or less, a few meters
plaintiffs have no cause of action against the away from the shed. This is
defendants herein. done to prevent conflagration
WHEREFORE, the others appealed from because gasoline and other
are hereby affirmed, with costs against combustible oil are very
plaintiffs Salvador Piansay and Claudia B. inflammable.
Vda. de Uy Kim. It is so ordered. This underground tank is
Bengzon, C.J., Bautista Angelo, Reyes, connected with a steel pipe to
J.B.L. Barrera, Paredes, Dizon Regala, the gasoline pump and the
Makalintal, Bengzon, J.P. and Zaldivar, gasoline pump is commonly
JJ., concur. placed or constructed under the
shed. The footing of the pump
is a cement pad and this
G.R. No. L-50466 May 31, 1982 cement pad is imbedded in the
pavement under the shed, and
CALTEX (PHILIPPINES) INC., petitioner, 
 evidence that the gasoline
vs.
 underground tank is attached
CENTRAL BOARD OF ASSESSMENT and connected to the shed or
APPEALS and CITY ASSESSOR OF building through the pipe to the
PASAY, respondents. pump and the pump is attached
and affixed to the cement pad
AQUINO, J.: and pavement covered by the
roof of the building or shed.
This case is about the realty tax on
machinery and equipment installed by The building or shed, the
Caltex (Philippines) Inc. in its gas stations elevated water tank, the car
located on leased land. hoist under a separate shed,
the air compressor, the
The machines and equipment consists of underground gasoline tank,
underground tanks, elevated tank, elevated neon lights signboard, concrete
water tanks, water tanks, gasoline pumps, fence and pavement and the lot
computing pumps, water pumps, car where they are all placed or
washer, car hoists, truck hoists, air erected, all of them used in the
compressors and tireflators. The city pursuance of the gasoline
assessor described the said equipment and service station business formed
machinery in this manner: the entire gasoline service-
A gasoline service station is a station.
piece of lot where a building or As to whether the subject
shed is erected, a water tank if properties are attached and
there is any is placed in one affixed to the tenement, it is
corner of the lot, car hoists are clear they are, for the tenement
placed in an adjacent shed, an we consider in this particular
air compressor is attached in case are (is) the pavement
the wall of the shed or at the covering the entire lot which
concrete wall fence. was constructed by the owner
The controversial underground of the gasoline station and the
tank, depository of gasoline or improvement which holds all
crude oil, is dug deep about six the properties under question,
they are attached and affixed to The Board, which was composed of
the pavement and to the Secretary of Finance Cesar Virata as
improvement. chairman, Acting Secretary of Justice
The pavement covering the Catalino Macaraig, Jr. and Secretary of
entire lot of the gasoline service Local Government and Community
station, as well as all the Development Jose Roño, held in its decision
improvements, machines, of June 3, 1977 that the said machines and
equipments and apparatus are equipment are real property within the
allowed by Caltex (Philippines) meaning of sections 3(k) & (m) and 38 of the
Inc. ... Real Property Tax Code, Presidential
Decree No. 464, which took effect on June
The underground gasoline tank 1, 1974, and that the definitions of real
is attached to the shed by the property and personal property in articles
steel pipe to the pump, so with 415 and 416 of the Civil Code are not
the water tank it is connected applicable to this case.
also by a steel pipe to the
pavement, then to the electric The decision was reiterated by the Board
motor which electric motor is (Minister Vicente Abad Santos took
placed under the shed. So to Macaraig's place) in its resolution of January
say that the gasoline pumps, 12, 1978, denying Caltex's motion for
water pumps and underground reconsideration, a copy of which was
tanks are outside of the service received by its lawyer on April 2, 1979.
station, and to consider only the On May 2, 1979 Caltex filed this certiorari
building as the service station is petition wherein it prayed for the setting
grossly erroneous. (pp. 58-60, aside of the Board's decision and for a
Rollo). declaration that t he said machines and
The said machines and equipment are equipment are personal property not subject
loaned by Caltex to gas station operators to realty tax (p. 16, Rollo).
under an appropriate lease agreement or The Solicitor General's contention that the
receipt. It is stipulated in the lease contract Court of Tax Appeals has exclusive
that the operators, upon demand, shall appellate jurisdiction over this case is not
return to Caltex the machines and correct. When Republic act No. 1125
equipment in good condition as when created the Tax Court in 1954, there was as
received, ordinary wear and tear excepted. yet no Central Board of Assessment
The lessor of the land, where the gas station Appeals. Section 7(3) of that law in
is located, does not become the owner of providing that the Tax Court had jurisdiction
the machines and equipment installed to review by appeal decisions of provincial
therein. Caltex retains the ownership thereof or city boards of assessment appeals had in
during the term of the lease. mind the local boards of assessment
appeals but not the Central Board of
The city assessor of Pasay City Assessment Appeals which under the Real
characterized the said items of gas station Property Tax Code has appellate jurisdiction
equipment and machinery as taxable realty. over decisions of the said local boards of
The realty tax on said equipment amounts to assessment appeals and is, therefore, in the
P4,541.10 annually (p. 52, Rollo). The city same category as the Tax Court.
board of tax appeals ruled that they are
personalty. The assessor appealed to the Section 36 of the Real Property Tax Code
Central Board of Assessment Appeals. provides that the decision of the Central
Board of Assessment Appeals shall become replacement of waste, costing
final and executory after the lapse of fifteen labor or capital and intended to
days from the receipt of its decision by the enhance its value, beauty or
appellant. Within that fifteen-day period, a utility or to adapt it for new or
petition for reconsideration may be filed. The further purposes.
Code does not provide for the review of the m) Machinery — shall embrace
Board's decision by this Court. machines, mechanical
Consequently, the only remedy available for contrivances, instruments,
seeking a review by this Court of the appliances and apparatus
decision of the Central Board of Assessment attached to the real estate. It
Appeals is the special civil action of includes the physical facilities
certiorari, the recourse resorted to herein by available for production, as well
Caltex (Philippines), Inc. as the installations and
The issue is whether the pieces of gas appurtenant service facilities,
station equipment and machinery already together with all other
enumerated are subject to realty tax. This equipment designed for or
issue has to be resolved primarily under the essential to its manufacturing,
provisions of the Assessment Law and the industrial or agricultural
Real Property Tax Code. purposes (See sec. 3[f],
Assessment Law).
Section 2 of the Assessment Law provides
that the realty tax is due "on real property, We hold that the said equipment and
including land, buildings, machinery, and machinery, as appurtenances to the gas
other improvements" not specifically station building or shed owned by Caltex (as
exempted in section 3 thereof. This to which it is subject to realty tax) and which
provision is reproduced with some fixtures are necessary to the operation of
modification in the Real Property Tax Code the gas station, for without them the gas
which provides: station would be useless, and which have
been attached or affixed permanently to the
SEC. 38. Incidence of Real gas station site or embedded therein, are
Property Tax.— There shall be taxable improvements and machinery within
levied, assessed and collected the meaning of the Assessment Law and the
in all provinces, cities and Real Property Tax Code.
municipalities an annual ad
valorem tax on real property, Caltex invokes the rule that machinery
such as land, buildings, which is movable in its nature only becomes
machinery and other immobilized when placed in a plant by the
improvements affixed or owner of the property or plant but not when
attached to real property not so placed by a tenant, a usufructuary, or any
hereinafter specifically person having only a temporary right, unless
exempted. such person acted as the agent of the owner
(Davao Saw Mill Co. vs. Castillo, 61 Phil
The Code contains the following definitions 709).
in its section 3:
That ruling is an interpretation of paragraph
k) Improvements — is a 5 of article 415 of the Civil Code regarding
valuable addition made to machinery that becomes real property by
property or an amelioration in destination. In the Davao Saw Mills case the
its condition, amounting to more question was whether the machinery
than mere repairs or
mounted on foundations of cement and The Central Board of Assessment Appeals
installed by the lessee on leased land did not commit a grave abuse of discretion
should be regarded as real property in upholding the city assessor's is imposition
for purposes of execution of a judgment of the realty tax on Caltex's gas station and
against the lessee. The sheriff treated the equipment.
machinery as personal property. This Court WHEREFORE, the questioned decision and
sustained the sheriff's action. (Compare with resolution of the Central Board of
Machinery & Engineering Supplies, Inc. vs. Assessment Appeals are affirmed. The
Court of Appeals, 96 Phil. 70, where in a petition for certiorari is dismissed for lack of
replevin case machinery was treated as merit. No costs.
realty).
SO ORDERED.
Here, the question is whether the gas
station equipment and machinery Barredo (Chairman), Guerrero, De Castro
permanently affixed by Caltex to its gas and Escolin, JJ., concur.
station and pavement (which are indubitably Concepcion, Jr. and Abad Santos, JJ., took
taxable realty) should be subject to the no part.
realty tax. This question is different from the
issue raised in the Davao Saw Mill case.
Improvements on land are commonly taxed G.R. No. L-41506 March 25, 1935
as realty even though for some purposes PHILIPPINE REFINING CO., INC., plaintiff-
they might be considered personalty (84 appellant, 

C.J.S. 181-2, Notes 40 and 41). "It is a vs.

familiar phenomenon to see things classed FRANCISCO JARQUE, JOSE
as real property for purposes of taxation COROMINAS, and ABOITIZ &
which on general principle might be CO., defendants. 

considered personal property" (Standard Oil JOSE COROMINAS, in his capacity as
Co. of New York vs. Jaramillo, 44 Phil. 630, assignee of the estate of the insolvent
633). Francisco Jarque, appellee.
This case is also easily distinguishable from Thos. G. Ingalls, Vicente Pelaez and DeWitt,
Board of Assessment Appeals vs. Manila Perkins and Brady for appellant.

Electric Co., 119 Phil. 328, where Meralco's D.G. McVean and Vicente L. Faelnar for
steel towers were considered poles within appellee.
the meaning of paragraph 9 of its franchise MALCOLM, J.:
which exempts its poles from taxation. The
steel towers were considered personalty First of all the reason why the case has
because they were attached to square metal been decided by the court in banc needs
frames by means of bolts and could be explanation. A motion was presented by
moved from place to place when unscrewed counsel for the appellant in which it was
and dismantled. asked that the case be heard and
determined by the court sitting in
Nor are Caltex's gas station equipment and banc because the admiralty jurisdiction of
machinery the same as tools and equipment the court was involved, and this motion was
in the repair shop of a bus company which granted in regular course. On further
were held to be personal property not investigation it appears that this was error.
subject to realty tax (Mindanao Bus Co. vs. The mere mortgage of a ship is a contract
City Assessor, 116 Phil. 501). entered into by the parties to it without
reference to navigation or perils of the sea,
and does not, therefore, confer admiralty article 585.) Similarly under the common
jurisdiction. (Bogart vs. Steamboat John Jay law, vessels are personal property although
[1854], 17 How., 399.) occasionally referred to as a peculiar kind of
Coming now to the merits, it appears that on personal property. (Reynolds vs. Nielson
varying dates the Philippine Refining Co., [1903], 96 Am. Rep., 1000; Atlantic Maritime
Inc., and Francisco Jarque executed three Co vs. City of Gloucester [1917], 117 N. E.,
mortgages on the motor 924.) Since the term "personal property"
vessels Pandan and Zaragoza. These includes vessels, they are subject to
documents were recorded in the record of mortgage agreeably to the provisions of the
transfers and incumbrances of vessels for Chattel Mortgage Law. (Act No. 1508,
the port of Cebu and each was therein section 2.) Indeed, it has heretofore been
denominated a "chattel mortgage". Neither accepted without discussion that a mortgage
of the first two mortgages had appended an on a vessel is in nature a chattel mortgage.
affidavit of good faith. The third mortgage (McMicking vs. Banco Español-Filipino
contained such an affidavit, but this [1909], 13 Phil., 429; Arroyo vs. Yu de Sane
mortgage was not registered in the customs [1930], 54 Phil., 511.) The only difference
house until May 17, 1932, or within the between a chattel mortgage of a vessel and
period of thirty days prior to the a chattel mortgage of other personalty is
commencement of insolvency proceedings that it is not now necessary for a chattel
against Francisco Jarque; also, while the mortgage of a vessel to be noted n the
last mentioned mortgage was subscribed by registry of the register of deeds, but it is
Francisco Jarque and M. N. Brink, there was essential that a record of documents
nothing to disclose in what capacity the said affecting the title to a vessel be entered in
M. N. Brink signed. A fourth mortgage was the record of the Collector of Customs at the
executed by Francisco Jarque and Ramon port of entry. (Rubiso and Gelito vs. Rivera
Aboitiz on the motorship Zaragoza and was [1917], 37 Phil., 72; Arroyo vs. Yu de
entered in the chattel mortgage registry of Sane, supra.) Otherwise a mortgage on a
the register of deeds on May 12, 1932, or vessel is generally like other chattel
again within the thirty-day period before the mortgages as to its requisites and validity.
institution of insolvency proceedings. These (58 C.J., 92.)
proceedings were begun on June 2, 1932, The Chattell Mortgage Law in its section 5,
when a petition was filed with the Court of in describing what shall be deemed
First Instance of Cebu in which it was sufficient to constitute a good chattel
prayed that Francisco Jarque be declared mortgage, includes the requirement of an
an insolvent debtor, which soon thereafter affidavit of good faith appended to the
was granted, with the result that an mortgage and recorded therewith. The
assignment of all the properties of the absence of the affidavit vitiates a mortgage
insolvent was executed in favor of Jose as against creditors and subsequent
Corominas. encumbrancers. (Giberson vs. A. N.
On these facts, Judge Jose M. Hontiveros Jureidini Bros. [1922], 44 Phil., 216;
declined to order the foreclosure of the Benedicto de Tarrosa vs. F. M. Yap Tico &
mortgages, but on the contrary sustained Co. and Provincial Sheriff of Occidental
the special defenses of fatal defectiveness Negros [1923], 46 Phil., 753.) As a
of the mortgages. In so doing we believe consequence a chattel mortgage of a vessel
that the trial judge acted advisedly. wherein the affidavit of good faith required
by the Chattel Mortgage Law is lacking, is
Vessels are considered personal property unenforceable against third persons.
under the civil law. (Code of Commerce,
In effect appellant asks us to find that the virtue of a writ of execution issued by the
documents appearing in the record do not Court of First Instance of Pampanga,
constitute chattel mortgages or at least to attached and sold to the defendant Emiliano
gloss over the failure to include the affidavit J. Valdez the sugar cane planted by the
of good faith made a requisite for a good plaintiff and his tenants on seven parcels of
chattel mortgage by the Chattel Mortgage land described in the complaint in the third
Law. Counsel would further have us paragraph of the first cause of action; that
disregard article 585 of the Code of within one year from the date of the
Commerce, but no reason is shown for attachment and sale the plaintiff offered to
holding this article not in force. Counsel redeem said sugar cane and tendered to the
would further have us revise doctrines defendant Valdez the amount sufficient to
heretofore announced in a series of cases, cover the price paid by the latter, the interest
which it is not desirable to do since those thereon and any assessments or taxes
principles were confirmed after due which he may have paid thereon after the
liberation and constitute a part of the purchase, and the interest corresponding
commercial law of the Philippines. And thereto and that Valdez refused to accept
finally counsel would have us make rulings the money and to return the sugar cane to
on points entirely foreign to the issues of the the plaintiff.
case. As neither the facts nor the law As a second cause of action, the plaintiff
remains in doubt, the seven assigned errors alleged that the defendant Emiliano J.
will be overruled. Valdez was attempting to harvest the palay
Judgment affirmed, the costs of this planted in four of the seven parcels
instance to be paid by the appellant. mentioned in the first cause of action; that
Avanceña, C.J., Street, Villa-Real, Abad he had harvested and taken possession of
Santos, Hull, Vickers, Imperial, Butte, and the palay in one of said seven parcels and in
Goddard, JJ., concur. another parcel described in the second
cause of action, amounting to 300 cavans;
and that all of said palay belonged to the
G.R. No. L-26278 August 4, 1927 plaintiff.
LEON SIBAL , plaintiff-appellant, 
 Plaintiff prayed that a writ of preliminary
vs.
 injunction be issued against the defendant
EMILIANO J. VALDEZ ET AL., defendants. 
 Emiliano J. Valdez his attorneys and agents,
EMILIANO J. VALDEZ, appellee. restraining them (1) from distributing him in
the possession of the parcels of land
J. E. Blanco for appellant.
 described in the complaint; (2) from taking
Felix B. Bautista and Santos and Benitez for possession of, or harvesting the sugar cane
appellee. in question; and (3) from taking possession,
JOHNSON, J.: or harvesting the palay in said parcels of
The action was commenced in the Court of land. Plaintiff also prayed that a judgment be
First Instance of the Province of Tarlac on rendered in his favor and against the
the 14th day of December 1924. The facts defendants ordering them to consent to the
are about as conflicting as it is possible for redemption of the sugar cane in question,
facts to be, in the trial causes. and that the defendant Valdez be
condemned to pay to the plaintiff the sum of
As a first cause of action the plaintiff alleged P1,056 the value of palay harvested by him
that the defendant Vitaliano Mamawal, in the two parcels above-mentioned ,with
deputy sheriff of the Province of Tarlac, by interest and costs.
On December 27, 1924, the court, after as such, was not subject to
hearing both parties and upon approval of redemption;
the bond for P6,000 filed by the plaintiff, (2) Absolving the defendants from all
issued the writ of preliminary injunction liability under the complaint; and
prayed for in the complaint.
(3) Condemning the plaintiff and his
The defendant Emiliano J. Valdez, in his sureties Cenon de la Cruz, Juan
amended answer, denied generally and Sangalang and Marcos Sibal to jointly
specifically each and every allegation of the and severally pay to the defendant
complaint and step up the following Emiliano J. Valdez the sum of
defenses: P9,439.08 as follows:
(a) That the sugar cane in question (a) P6,757.40, the value of the
had the nature of personal property sugar cane;
and was not, therefore, subject to
redemption; (b) 1,435.68, the value of the
sugar-cane shoots;
(b) That he was the owner of parcels
1, 2 and 7 described in the first cause (c) 646.00, the value of palay
of action of the complaint; harvested by plaintiff;
(c) That he was the owner of the (d) 600.00, the value of 150
palay in parcels 1, 2 and 7; and cavans of palay which the
defendant was not able to raise
(d) That he never attempted to by reason of the injunction, at
harvest the palay in parcels 4 and 5. P4 cavan. 9,439.08 From that
The defendant Emiliano J. Valdez by way of judgment the plaintiff appealed
counterclaim, alleged that by reason of the and in his assignments of error
preliminary injunction he was unable to contends that the lower court
gather the sugar cane, sugar-cane shoots erred: (1) In holding that the
(puntas de cana dulce) palay in said parcels sugar cane in question was
of land, representing a loss to him of personal property and,
P8,375.20 and that, in addition thereto, he therefore, not subject to
suffered damages amounting to P3,458.56. redemption;
He prayed, for a judgment (1) absolving him (2) In holding that parcels 1 and 2 of
from all liability under the complaint; (2) the complaint belonged to Valdez, as
declaring him to be the absolute owner of well as parcels 7 and 8, and that the
the sugar cane in question and of the palay palay therein was planted by Valdez;
in parcels 1, 2 and 7; and (3) ordering the
plaintiff to pay to him the sum of P11,833.76, (3) In holding that Valdez, by reason
representing the value of the sugar cane of the preliminary injunction failed to
and palay in question, including damages. realized P6,757.40 from the sugar
cane and P1,435.68 from sugar-cane
Upon the issues thus presented by the shoots (puntas de cana dulce);
pleadings the cause was brought on for trial.
After hearing the evidence, and on April 28, (4) In holding that, for failure of
1926, the Honorable Cayetano Lukban, plaintiff to gather the sugar cane on
judge, rendered a judgment against the time, the defendant was unable to
plaintiff and in favor of the defendants — raise palay on the land, which would
have netted him the sum of P600;
(1) Holding that the sugar cane in and.
question was personal property and,
(5) In condemning the plaintiff and his day of September, 1923, the judgment
sureties to pay to the defendant the debtor, Leon Sibal, paid P2,000 to
sum of P9,439.08. Macondray & Co., Inc., for the
It appears from the record: account of the redemption price of
said parcels of land, without
(1) That on May 11, 1923, the deputy specifying the particular parcels to
sheriff of the Province of Tarlac, by which said amount was to applied.
virtue of writ of execution in civil case The redemption price said eight
No. 20203 of the Court of First parcels was reduced, by virtue of said
Instance of Manila (Macondray & Co., transaction, to P2,579.97 including
Inc. vs. Leon Sibal),levied an interest (Exhibit C and 2).
attachment on eight parcels of land
belonging to said Leon Sibal, situated The record further shows:
in the Province of Tarlac, designated (1) That on April 29, 1924, the
in the second of attachment as defendant Vitaliano Mamawal, deputy
parcels 1, 2, 3, 4, 5, 6, 7 and 8 sheriff of the Province of Tarlac, by
(Exhibit B, Exhibit 2-A). virtue of a writ of execution in civil
(2) That on July 30, 1923, Macondray case No. 1301 of the Province of
& Co., Inc., bought said eight parcels Pampanga (Emiliano J.
of land, at the auction held by the Valdez vs. Leon Sibal 1.º — the same
sheriff of the Province of Tarlac, for parties in the present case), attached
the sum to P4,273.93, having paid for the personal property of said Leon
the said parcels separately as follows Sibal located in Tarlac, among which
(Exhibit C, and 2-A): was included the sugar cane now in
question in the seven parcels of land
described in the complaint (Exhibit A).
Parcel
(2) That on May 9 and 10, 1924, said
1 ..............................................................
P1.00 deputy sheriff sold at public auction
.......
said personal properties of Leon
2 .............................................................. Sibal, including the sugar cane in
....... 2,000.00
question to Emilio J. Valdez, who paid
3 .............................................................. therefor the sum of P1,550, of which
120.93
.......
P600 was for the sugar cane (Exhibit
4 .............................................................. A).
1,000.00
.......
5 ..............................................................
(3) That on April 29,1924, said deputy
....... 1.00 sheriff, by virtue of said writ of
6 ..............................................................
execution, also attached the real
1.00 property of said Leon Sibal in Tarlac,
.......
7 with the house
including all of his rights, interest and
150.00 participation therein, which real
thereon ..........................
! property consisted of eleven parcels
8 .............................................................. 1,000.00
 of land and a house and camarin
....... ========= situated in one of said parcels (Exhibit
=
A).
4,273.93
(4) That on June 25, 1924, eight of
(3) That within one year from the sale said eleven parcels, including the
of said parcel of land, and on the 24th house and the camarin, were bought
by Emilio J. Valdez at the auction held (3) That on June 25, 1924, Emilio J.
by the sheriff for the sum of P12,200. Valdez acquired from Macondray &
Said eight parcels were designated in Co. all of its rights and interest in the
the certificate of sale as parcels 1, 3, said eight parcels of land.
4, 5, 6, 7, 10 and 11. The house and (4) That on June 25, 1924, Emilio J.
camarin were situated on parcel 7 Valdez also acquired all of the rights
(Exhibit A). and interest which Leon Sibal had or
(5) That the remaining three parcels, might have had on said eight parcels
indicated in the certificate of the by virtue of the P2,000 paid by the
sheriff as parcels 2, 12, and 13, were latter to Macondray.
released from the attachment by (5) That Emilio J. Valdez became the
virtue of claims presented by Agustin absolute owner of said eight parcels
Cuyugan and Domiciano Tizon of land.
(Exhibit A).
The first question raised by the appeal is,
(6) That on the same date, June 25, whether the sugar cane in question is
1924, Macondray & Co. sold and personal or real property. It is contended
conveyed to Emilio J. Valdez for that sugar cane comes under the
P2,579.97 all of its rights and interest classification of real property as "ungathered
in the eight parcels of land acquired products" in paragraph 2 of article 334 of the
by it at public auction held by the Civil Code. Said paragraph 2 of article 334
deputy sheriff of Tarlac in connection enumerates as real property the following:
with civil case No. 20203 of the Court Trees, plants, and ungathered products,
of First Instance of Manila, as stated while they are annexed to the land or form
above. Said amount represented the an integral part of any immovable property."
unpaid balance of the redemption That article, however, has received in recent
price of said eight parcels, after years an interpretation by the Tribunal
payment by Leon Sibal of P2,000 on Supremo de España, which holds that,
September 24, 1923, fro the account under certain conditions, growing crops may
of the redemption price, as stated be considered as personal property.
above. (Exhibit C and 2). (Decision of March 18, 1904, vol. 97, Civil
The foregoing statement of facts shows: Jurisprudence of Spain.)
(1) The Emilio J. Valdez bought the Manresa, the eminent commentator of the
sugar cane in question, located in the Spanish Civil Code, in discussing section
seven parcels of land described in the 334 of the Civil Code, in view of the recent
first cause of action of the complaint decisions of the supreme Court of Spain,
at public auction on May 9 and 10, admits that growing crops are sometimes
1924, for P600. considered and treated as personal
(2) That on July 30, 1923, Macondray property. He says:
& Co. became the owner of eight No creemos, sin embargo, que esto
parcels of land situated in the excluya la excepcionque muchos
Province of Tarlac belonging to Leon autores hacen tocante a la venta de
Sibal and that on September 24, toda cosecha o de parte de ella
1923, Leon Sibal paid to Macondray & cuando aun no esta cogida (cosa
Co. P2,000 for the account of the frecuente con la uvay y la naranja), y
redemption price of said parcels. a la de lenas, considerando ambas
como muebles. El Tribunal Supremo,
en sentencia de 18 de marzo de agricultural year, because said fruits did not
1904, al entender sobre un contrato go with the land but belonged separately to
de arrendamiento de un predio the lessee; and (3) that under the Spanish
rustico, resuelve que su terminacion Mortgage Law of 1909, as amended, the
por desahucio no extingue los mortgage of a piece of land does not include
derechos del arrendario, para the fruits and products existing thereon,
recolectar o percibir los frutos unless the contract expressly provides
correspondientes al año agricola, otherwise.
dentro del que nacieron aquellos An examination of the decisions of the
derechos, cuando el arrendor ha Supreme Court of Louisiana may give us
percibido a su vez el importe de la some light on the question which we are
renta integra correspondiente, aun discussing. Article 465 of the Civil Code of
cuando lo haya sido por precepto Louisiana, which corresponds to paragraph
legal durante el curso del juicio, 2 of article 334 of our Civil Code, provides:
fundandose para ello, no solo en que "Standing crops and the fruits of trees not
de otra suerte se daria al desahucio gathered, and trees before they are cut
un alcance que no tiene, sino en que, down, are likewise immovable, and are
y esto es lo interesante a nuestro considered as part of the land to which they
proposito, la consideracion de are attached."
inmuebles que el articulo 334 del
Codigo Civil atribuge a los frutos The Supreme Court of Louisiana having
pendientes, no les priva del caracter occasion to interpret that provision, held that
de productos pertenecientes, como in some cases "standing crops" may be
tales, a quienes a ellos tenga considered and dealt with as personal
derecho, Ilegado el momento de su property. In the case of Lumber Co. vs.
recoleccion. Sheriff and Tax Collector (106 La., 418) the
Supreme Court said: "True, by article 465 of
xxx xxx xxx the Civil Code it is provided that 'standing
Mas actualmente y por virtud de la crops and the fruits of trees not gathered
nueva edicion de la Ley Hipotecaria, and trees before they are cut down . . . are
publicada en 16 de diciembre de considered as part of the land to which they
1909, con las reformas introducidas are attached, but the immovability provided
por la de 21 de abril anterior, la for is only one in abstracto and without
hipoteca, salvo pacto expreso que reference to rights on or to the crop acquired
disponga lo contrario, y cualquiera by others than the owners of the property to
que sea la naturaleza y forma de la which the crop is attached. . . . The
obligacion que garantice, no existence of a right on the growing crop is a
comprende los frutos cualquiera que mobilization by anticipation, a gathering as it
sea la situacion en que se encuentre. were in advance, rendering the crop
(3 Manresa, 5. edicion, pags. 22, 23.) movable quoad the right acquired therein.
From the foregoing it appears (1) that, under Our jurisprudence recognizes the possible
Spanish authorities, pending fruits and mobilization of the growing crop." (Citizens'
ungathered products may be sold and Bank vs. Wiltz, 31 La. Ann., 244;
transferred as personal property; (2) that the Porche vs. Bodin, 28 La., Ann., 761;
Supreme Court of Spain, in a case of Sandel vs. Douglass, 27 La. Ann., 629;
ejectment of a lessee of an agricultural land, Lewis vs. Klotz, 39 La. Ann., 267.)
held that the lessee was entitled to gather "It is true," as the Supreme Court of
the products corresponding to the Louisiana said in the case of Porche vs.
Bodin (28 La. An., 761) that "article 465 of crops and the fruits of trees not
the Revised Code says that standing crops gathered and trees before they are
are considered as immovable and as part of cut down are likewise immovable and
the land to which they are attached, and are considered as part of the land to
article 466 declares that the fruits of an which they are attached;" but the
immovable gathered or produced while it is immovability provided for is only
under seizure are considered as making one in abstracto and without
part thereof, and incurred to the benefit of reference to rights on or to the crop
the person making the seizure. But the acquired by other than the owners of
evident meaning of these articles, is where the property to which the crop was
the crops belong to the owner of the attached. The immovability of a
plantation they form part of the immovable, growing crop is in the order of things
and where it is seized, the fruits gathered or temporary, for the crop passes from
produced inure to the benefit of the seizing the state of a growing to that of a
creditor. gathered one, from an immovable to a
A crop raised on leased premises in movable. The existence of a right on
no sense forms part of the the growing crop is a mobilization by
immovable. It belongs to the lessee, anticipation, a gathering as it were in
and may be sold by him, whether it be advance, rendering the crop
gathered or not, and it may be sold by movable quoad the right acquired
his judgment creditors. If it necessarily thereon. The provision of our Code is
forms part of the leased premises the identical with the Napoleon Code 520,
result would be that it could not be and we may therefore obtain light by
sold under execution separate and an examination of the jurisprudence of
apart from the land. If a lessee obtain France.
supplies to make his crop, the factor's The rule above announced, not only by
lien would not attach to the crop as a the Tribunal Supremo de España but by the
separate thing belonging to his debtor, Supreme Court of Louisiana, is followed in
but the land belonging to the lessor practically every state of the Union.
would be affected with the recorded From an examination of the reports and
privilege. The law cannot be codes of the State of California and other
construed so as to result in such states we find that the settle doctrine
absurd consequences. followed in said states in connection with the
In the case of Citizen's Bank vs. Wiltz (31 attachment of property and execution of
La. Ann., 244)the court said: judgment is, that growing crops raised by
If the crop quoad the pledge thereof yearly labor and cultivation are considered
under the act of 1874 was an personal property. (6 Corpuz Juris, p. 197;
immovable, it would be destructive of 17 Corpus Juris, p. 379; 23 Corpus Juris, p.
the very objects of the act, it would 329: Raventas vs. Green, 57 Cal., 254;
render the pledge of the crop objects Norris vs. Watson, 55 Am. Dec., 161;
of the act, it would render the pledge Whipple vs. Foot, 3 Am. Dec., 442; 1
of the crop impossible, for if the crop Benjamin on Sales, sec. 126;
was an inseparable part of the realty McKenzie vs. Lampley, 31 Ala., 526;
possession of the latter would be Crine vs. Tifts and Co., 65 Ga., 644;
necessary to that of the former; but Gillitt vs. Truax, 27 Minn., 528;
such is not the case. True, by article Preston vs. Ryan, 45 Mich., 174; Freeman
465 C. C. it is provided that "standing on Execution, vol. 1, p. 438; Drake on
Attachment, sec. 249; Mechem on Sales, 424) has held, without variation, that
sec. 200 and 763.) growing crops were personal property and
Mr. Mechem says that a valid sale may be subject to execution.
made of a thing, which though not yet Act No. 1508, the Chattel Mortgage Law,
actually in existence, is reasonably certain fully recognized that growing crops are
to come into existence as the natural personal property. Section 2 of said Act
increment or usual incident of something provides: "All personal property shall be
already in existence, and then belonging to subject to mortgage, agreeably to the
the vendor, and then title will vest in the provisions of this Act, and a mortgage
buyer the moment the thing comes into executed in pursuance thereof shall be
existence. (Emerson vs. European Railway termed a chattel mortgage." Section 7 in
Co., 67 Me., 387; Cutting vs. Packers part provides: "If growing crops be
Exchange, 21 Am. St. Rep., 63.) Things of mortgaged the mortgage may contain an
this nature are said to have a potential agreement stipulating that the mortgagor
existence. A man may sell property of which binds himself properly to tend, care for and
he is potentially and not actually possessed. protect the crop while growing.
He may make a valid sale of the wine that a It is clear from the foregoing provisions that
vineyard is expected to produce; or the gain Act No. 1508 was enacted on the
a field may grow in a given time; or the milk assumption that "growing crops" are
a cow may yield during the coming year; or personal property. This consideration tends
the wool that shall thereafter grow upon to support the conclusion hereinbefore
sheep; or what may be taken at the next stated, that paragraph 2 of article 334 of the
cast of a fisherman's net; or fruits to grow; or Civil Code has been modified by section 450
young animals not yet in existence; or the of Act No. 190 and by Act No. 1508 in the
good will of a trade and the like. The thing sense that "ungathered products" as
sold, however, must be specific and mentioned in said article of the Civil Code
identified. They must be also owned at the have the nature of personal property. In
time by the vendor. (Hull vs. Hull, 48 Conn., other words, the phrase "personal property"
250 [40 Am. Rep., 165].) should be understood to include
It is contended on the part of the appellee "ungathered products."
that paragraph 2 of article 334 of the Civil At common law, and generally in the
Code has been modified by section 450 of United States, all annual crops which
the Code of Civil Procedure as well as by are raised by yearly manurance and
Act No. 1508, the Chattel Mortgage Law. labor, and essentially owe their annual
Said section 450 enumerates the property of existence to cultivation by man, . may
a judgment debtor which may be subjected be levied on as personal
to execution. The pertinent portion of said property." (23 C. J., p. 329.) On this
section reads as follows: "All goods, question Freeman, in his treatise on
chattels, moneys, and other property, both the Law of Executions, says: "Crops,
real and personal, * * * shall be liable to whether growing or standing in the
execution. Said section 450 and most of the field ready to be harvested, are, when
other sections of the Code of Civil produced by annual cultivation, no
Procedure relating to the execution of part of the realty. They are, therefore,
judgment were taken from the Code of Civil liable to voluntary transfer as chattels.
Procedure of California. The Supreme Court It is equally well settled that they may
of California, under section 688 of the Code be seized and sold under execution.
of Civil Procedure of that state (Pomeroy, p. (Freeman on Executions, vol. p. 438.)
We may, therefore, conclude that paragraph hectareas poco mas o menos de
2 of article 334 of the Civil Code has been superficie.
modified by section 450 of the Code of Civil 2. La caña dulce sembrada por el
Procedure and by Act No. 1508, in the inquilino del ejecutado Leon Sibal 1.º,
sense that, for the purpose of attachment Ilamado Alejandro Policarpio, en una
and execution, and for the purposes of the parcela de terreno de la pertenencia
Chattel Mortgage Law, "ungathered del ejecutado, situada en Dalayap,
products" have the nature of personal Culubasa, Bamban, Tarlac de unas
property. The lower court, therefore, dos hectareas de superficie poco mas
committed no error in holding that the sugar o menos." The description of parcel 2
cane in question was personal property and, given in the certificate of sale (Exhibit
as such, was not subject to redemption. A) is as follows:
All the other assignments of error made by 2a. Terreno palayero situado en
the appellant, as above stated, relate to Culubasa, Bamban, Tarlac, de
questions of fact only. Before entering upon 177,090 metros cuadrados de
a discussion of said assignments of error, superficie, linda al N. con Canuto
we deem it opportune to take special notice Sibal, Esteban Lazatin and Alejandro
of the failure of the plaintiff to appear at the Dayrit; al E. con Francisco Dizon,
trial during the presentation of evidence by Felipe Mañu and others; al S. con
the defendant. His absence from the trial Alejandro Dayrit, Isidro Santos and
and his failure to cross-examine the Melecio Mañu; y al O. con Alejandro
defendant have lent considerable weight to Dayrit and Paulino Vergara. Tax No.
the evidence then presented for the 2854, vador amillarado P4,200 pesos.
defense.
On the other hand the evidence for the
Coming not to the ownership of parcels 1 defendant purported to show that parcels 1
and 2 described in the first cause of action and 2 of the complaint were included among
of the complaint, the plaintiff made a futile the parcels bought by Valdez from
attempt to show that said two parcels Macondray on June 25, 1924, and
belonged to Agustin Cuyugan and were the corresponded to parcel 4 in the deed of sale
identical parcel 2 which was excluded from (Exhibit B and 2), and were also included
the attachment and sale of real property of among the parcels bought by Valdez at the
Sibal to Valdez on June 25, 1924, as stated auction of the real property of Leon Sibal on
above. A comparison of the description of June 25, 1924, and corresponded to parcel
parcel 2 in the certificate of sale by the 3 in the certificate of sale made by the
sheriff (Exhibit A) and the description of sheriff (Exhibit A). The description of parcel
parcels 1 and 2 of the complaint will readily 4 (Exhibit 2) and parcel 3 (Exhibit A) is as
show that they are not the same. follows:
The description of the parcels in the Parcels No. 4. — Terreno palayero,
complaint is as follows: ubicado en el barrio de
1. La caña dulce sembrada por los Culubasa,Bamban, Tarlac, I. F. de
inquilinos del ejecutado Leon Sibal 1.º 145,000 metros cuadrados de
en una parcela de terreno de la superficie, lindante al Norte con Road
pertenencia del citado ejecutado, of the barrio of Culubasa that goes to
situada en Libutad, Culubasa, Concepcion; al Este con Juan Dizon;
Bamban, Tarlac, de unas dos al Sur con Lucio Maño y Canuto Sibal
y al Oeste con Esteban Lazatin, su
valor amillarado asciende a la suma executed by the sheriff in favor of Valdez
de P2,990. Tax No. 2856. (Exhibit A). Valdez is therefore the absolute
As will be noticed, there is hardly any owner of said parcel, having acquired the
relation between parcels 1 and 2 of the interest of both Macondray and Sibal
complaint and parcel 4 (Exhibit 2 and B) and therein.
parcel 3 (Exhibit A). But, inasmuch as the In this connection the following facts are
plaintiff did not care to appear at the trial worthy of mention:
when the defendant offered his evidence, Execution in favor of Macondray & Co., May
we are inclined to give more weight to the 11, 1923. Eight parcels of land were
evidence adduced by him that to the attached under said execution. Said parcels
evidence adduced by the plaintiff, with of land were sold to Macondray & Co. on the
respect to the ownership of parcels 1 and 2 30th day of July, 1923. Rice paid P4,273.93.
of the compliant. We, therefore, conclude On September 24, 1923, Leon Sibal paid to
that parcels 1 and 2 of the complaint belong Macondray & Co. P2,000 on the redemption
to the defendant, having acquired the same of said parcels of land. (See Exhibits B and
from Macondray & Co. on June 25, 1924, C ).
and from the plaintiff Leon Sibal on the
same date. Attachment, April 29, 1924, in favor of
Valdez. Personal property of Sibal was
It appears, however, that the plaintiff planted attached, including the sugar cane in
the palay in said parcels and harvested question. (Exhibit A) The said personal
therefrom 190 cavans. There being no property so attached, sold at public auction
evidence of bad faith on his part, he is May 9 and 10, 1924. April 29, 1924, the real
therefore entitled to one-half of the crop, or property was attached under the execution
95 cavans. He should therefore be in favor of Valdez (Exhibit A). June 25, 1924,
condemned to pay to the defendant for 95 said real property was sold and purchased
cavans only, at P3.40 a cavan, or the sum of by Valdez (Exhibit A).
P323, and not for the total of 190 cavans as
held by the lower court. June 25, 1924, Macondray & Co. sold all of
the land which they had purchased at public
As to the ownership of parcel 7 of the auction on the 30th day of July, 1923, to
complaint, the evidence shows that said Valdez.
parcel corresponds to parcel 1 of the deed
of sale of Macondray & Co, to Valdez As to the loss of the defendant in sugar
(Exhibit B and 2), and to parcel 4 in the cane by reason of the injunction, the
certificate of sale to Valdez of real property evidence shows that the sugar cane in
belonging to Sibal, executed by the sheriff question covered an area of 22 hectares
as above stated (Exhibit A). Valdez is and 60 ares (Exhibits 8, 8-b and 8-c); that
therefore the absolute owner of said parcel, said area would have yielded an average
having acquired the interest of both crop of 1039 picos and 60 cates; that one-
Macondray and Sibal in said parcel. half of the quantity, or 519 picos and 80
cates would have corresponded to the
With reference to the parcel of land in defendant, as owner; that during the season
Pacalcal, Tarlac, described in paragraph 3 of the sugar was selling at P13 a pico (Exhibit
the second cause of action, it appears from 5 and 5-A). Therefore, the defendant, as
the testimony of the plaintiff himself that said owner, would have netted P 6,757.40 from
parcel corresponds to parcel 8 of the deed the sugar cane in question. The evidence
of sale of Macondray to Valdez (Exhibit B also shows that the defendant could have
and 2) and to parcel 10 in the deed of sale taken from the sugar cane 1,017,000 sugar-
cane shoots (puntas de cana) and not In all other respects, the judgment appealed
1,170,000 as computed by the lower court. from is hereby affirmed, with costs. So
During the season the shoots were selling at ordered.
P1.20 a thousand (Exhibits 6 and 7). The Street, Malcolm, Villamor, Romualdez and
defendant therefore would have netted Villa-Real., JJ., concur.
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 G.R. No. L-5013 March 11, 1909
parcels 1 and 2 of the complaint, amounting JEREMIAH J. HARTY, Roman Catholic
to 190 cavans, one-half of said quantity Archbishop of Manila, plaintiff-appellee, 

should belong to the plaintiff, as stated vs.

above, and the other half to the defendant. THE MUNICIPALITY OF VICTORIA,
The court erred in awarding the whole crop Province of Tarlac, defendant-appellant.
to the defendant. The plaintiff should
therefore pay the defendant for 95 cavans F. Buencamino for appellant. 

only, at P3.40 a cavan, or P323 instead of Hartigan and Rohde for appellee.
P646 as allowed by the lower court. TORRES, J.:
The evidence also shows that the defendant On January 17, 1908, the representative of
was prevented by the acts of the plaintiff Mgr. Jeremiah J. Harty, archbishop of the
from cultivating about 10 hectares of the Roman Catholic Church, as the legal
land involved in the litigation. He expected administrator of all the properties and rights
to have raised about 600 cavans of palay, of the Catholic Church within the
300 cavans of which would have archbishopric of Manila, filed a written
corresponded to him as owner. The lower complaint in the Court of First Instance of
court has wisely reduced his share to 150 Tarlac against the municipality of Victoria,
cavans only. At P4 a cavan, the palay would alleging that the parish of the said town had
have netted him P600. been and was then the owner of a parcel of
In view of the foregoing, the judgment land within the said municipality, known as
appealed from is hereby modified. The theplaza of the church of Victoria; that it had
plaintiff and his sureties Cenon de la Cruz, acquired said parcel of land more than sixty
Juan Sangalang and Marcos Sibal are years previously, and had continued to
hereby ordered to pay to the defendant possess the same ever since up to 1901, in
jointly and severally the sum of P8,900.80, which year the defendant municipality
instead of P9,439.08 allowed by the lower unlawfully and forcibly seized the said
court, as follows: property, claiming to be entitled thereto and
retaining it to the present day. For the
P6,757.40 for the sugar cane; purposes of the complaint, a description of
1,220.40 for the sugar cane shoots; the meters and bounds of the land in
for the palay harvested by plaintiff question was set forth in the writing, and
323.00 plaintiff prayed that, in view of what was
in parcels 1 and 2;
for the palay which defendant therein set forth, judgment be entered
600.00 holding that the said land was the property
could have raised.
! of the parish of Victoria, of the Roman
8,900.80
 Catholic Apostolic Church, and that the
======== defendant be ordered to vacate the same
====
and to pay the costs of the action.
The defendant municipality answered the that has arisen between the contending
complaint through its attorney and offered a parties consists only in determining who is
general denial of all the facts stated therein, the owner and proprietor of the parcel of
especially of those numbered 4, 5, 6, and 7; land that surrounds the parish church of the
in special defense it alleged that said town, and which is called the
the plaza described in No. 4 of the complaint public plazaof the same.
was founded when the sitio denominated Article 339 of the Civil Code reads:
Canarum, a barrio of the town of Tarlac, was
converted into a civil town in 1855; that the Property of public ownership is:
parish of Tarlac was established many years 1. That destined to the public use,
after the civil town, and that therefore, it such as roads, canals, rivers, torrents,
neither had then, nor has now any title to ports, and bridges constructed by the
the plaza claimed, and that the complaint State, and banks, shores, roadsteads,
injured the defendant, and for this reason it and that of a similar character.
prayed that judgment be entered absolving Article 344 of said code also reads:
the defendant of the complaint with costs
and damages against the plaintiff. Property for public use in provinces
and in towns comprises the provincial
Evidence was adduced by both parties, and and town roads, the squares, streets,
the documents exhibited, to one of which fountains, and public waters, the
the plaintiff objected, were made of record; promenades, and public works of
the trial court rendered judgment on the 15th general service supported by the said
of June, 1908, holding that the parish of towns or provinces.
Victoria of the Roman Catholic Apostolic
Church, had a better right to the possession From the evidence presented by both
of the land described in the complaint, and parties it appears that the town of Victoria,
sentenced the defendant to vacate the same which was formerly only a barrio of the town
and to pay the costs. To said judgment the of Tarlac and known as Canarum, was
representative of the defendant excepted converted into a town in 1855, and named
and moved for a new trial on the ground that Victoria; to this end they must have laid out
it was contrary to the weight of the evidence, the streets and the plaza of the town, in the
and he notified the court that, if his motion center of which were situated the church
were overruled, he would appeal to the and parish house from the commencement,
Supreme Court. The motion for a new trial and at the expiration of about twelve years
was overruled; the defendant excepted, and the parish of said town was constituted and
presented the corresponding bill of the parish who was to perform the office of
exceptions which, after receipt of a copy had curate was appointed; that from the very
been acknowledged by the adverse party, beginning, the large tract of land that
was approved. On the 1st of September surrounds the church and the parish house
last, the appellant was ordered to furnish was known as a public plaza, destined to
bond in the sum of P1,000 to insure the the use of all the residents of the recently
fulfillment of the judgment in the event that it founded town; public performances and
should be totally or partially affirmed. To said religious processions were held thereon
order the defendant excepted, but furnished without hindrance either on the part of the
the bond as directed by the court. local authorities or of the curate of said
town.
In view of the nature of the action brought by
the plaintiff against the municipality of It must be assumed that the principal
Victoria, Province of Tarlac, the question residents of the old barrio, being interested
in the conversion of the barrio into a civil present day, all the residents, including the
town, arranged in such a way that the barrio, curate of said town, have enjoyed the free
as the center of the future town which was use of said plaza; it has not been
subsequently called Victoria, should have satisfactorily shown that the municipality or
streets and a public plaza with its church theprincipales of the town of Victoria had
and parish house, and also a tribunal or donated the whole of said land to the curate
building destined for the use of the of Victoria or to the Catholic Church, as
municipality and the local official at that time alleged, nor could it have been so donated,
called the gobernadorcillo and later it being a public plaza destined to public use
on capitán municipal, as has occurred in the and was not of private ownership, or
foundation of all the towns in these Islands, patrimony of the town of Victoria, or of the
under the old administrative laws. Province of Tarlac.
It may be true that the father of the witness It should be noted that, among other
Casimiro Tañedo, who owned the space of things, plazas destined to the public use are
land where the church and parish house not subject to prescription. (Art. 1936, Civil
were erected, had voluntarily donated it to Code.)
the Catholic Church, the only one known at That both the curates and
the time, but proper proof is lacking that the the gobernadorcillos of the said town
donation affirmed by the said Tañedo procured fruit trees and plants to be set out
comprehended the whole of the large tract in theplaza, does not constitute an act of
which at the present time constitute private ownership, but evidences the public
the plaza of the town. use thereof, or perhaps the intention to
It was a custom observed by all the towns improve and embellish the said plaza for the
established administratively in these Islands benefit of the townspeople.
under the old Laws of the Indies, that on Certain it is that the plaintiff has not proven
their creation, a certain amount of land was that the Catholic Church or the parish of
always reserved for plazas, commons, and Victoria was the owner or proprietor of the
special and communal property, and as it is said extensive piece of land which now
unquestionable that the said large space of forms the public plaza of said town, nor that
land was left vacant in the center of the town it was in possession thereof under the form
of Victoria when it was constituted as a civil and conditions required by law, inasmuch as
town, more than twelve years prior to the it has been fully proven that saidplaza has
appointment of a permanent curate therein, been used without let or hindrance by the
there are good grounds to suppose that the public and the residents of the town of
late Vicente Tañedo donated the land now Victoria ever since its creation. For the
occupied by the church and the parish above reasons it is our opinion that the
house in said municipality for religious judgment appealed from should be
purposes, or to the church, but not to the reversed, and that it should be held, as we
parish curate because at the time there was do hereby hold, that the whole of the land
no curate at the new town of Victoria. not occupied by the church of the town of
Even though all the remaining space of land Victoria and its parish house, is a
which now forms the great plaza of the town public plaza of the said town, of public use,
of Victoria had been owned by the said and that in consequence thereof, the
Tañedo, it must be presumed that he waived defendant is absolved of the complaint
his right thereto for the benefit of the without any special ruling as to the costs of
townspeople, since from the creation or both instances.
establishment of the town, down to the
Arellano, C. J., Mapa, Johnson, Carson, and that the Local Government Code of 1991
Willard, JJ., concur. withdrew the exemption from real estate tax
granted to MIAA under Section 21 of the
MIAA Charter. Thus, MIAA negotiated with
G.R. No. 155650 July 20, 2006 respondent City of Parañaque to pay the
MANILA INTERNATIONAL AIRPORT real estate tax imposed by the City. MIAA
AUTHORITY, petitioner, 
 then paid some of the real estate tax already
vs.
 due.
COURT OF APPEALS, CITY OF On 28 June 2001, MIAA received Final
PARAÑAQUE, CITY MAYOR OF Notices of Real Estate Tax Delinquency
PARAÑAQUE, SANGGUNIANG from the City of Parañaque for the taxable
PANGLUNGSOD NG PARAÑAQUE, CITY years 1992 to 2001. MIAA's real estate tax
ASSESSOR OF PARAÑAQUE, and CITY delinquency is broken down as follows:
TREASURER OF
TAX
PARAÑAQUE, respondents. DECLA TAXAB TAX PENAL
LE TOTAL
RATIO DUE TY
DECISION N YEAR
CARPIO, J.: E-016-0 1992-2 19,558, 11,201, 30,789,
1370 001 160.00 083.20 243.20
The Antecedents
E-016-0 1992-2 111,689 68,149, 179,838
Petitioner Manila International Airport 1374 001 ,424.90 479.59 ,904.49
Authority (MIAA) operates the Ninoy Aquino
E-016-0 1992-2 20,276, 12,371, 32,647,
International Airport (NAIA) Complex in 1375 001 058.00 832.00 890.00
Parañaque City under Executive Order No.
E-016-0 1992-2 58,144, 35,477, 93,621,
903, otherwise known as the Revised 1376 001 028.00 712.00 740.00
Charter of the Manila International Airport
E-016-0 1992-2 18,134, 11,065, 29,199,
Authority ("MIAA Charter"). Executive Order 1377 001 614.65 188.59 803.24
No. 903 was issued on 21 July 1983 by then
E-016-0 1992-2 111,107 67,794, 178,902
President Ferdinand E. Marcos. 1378 001 ,950.40 681.59 ,631.99
Subsequently, Executive Order Nos.
E-016-0 1992-2 4,322,3 2,637,3 6,959,7
9091 and 2982 amended the MIAA Charter. 1379 001 40.00 60.00 00.00
As operator of the international airport, MIAA E-016-0 1992-2 7,776,4 4,744,9 12,521,
administers the land, improvements and 1380 001 36.00 44.00 380.00
equipment within the NAIA Complex. The *E-016- 1998-2 6,444,8 2,900,1 9,344,9
MIAA Charter transferred to MIAA 013-85 001 10.00 64.50 74.50
approximately 600 hectares of land, *E-016- 1998-2 34,876, 5,694,5 50,571,
3 including the runways and buildings 01387 001 800.00 60.00 360.00
("Airport Lands and Buildings") then under *E-016- 1998-2 75,240. 33,858. 109,098
the Bureau of Air Transportation.4 The MIAA 01396 001 00 00 .00
Charter further provides that no portion of GRAND P392,4 P232,0 P 624,5
the land transferred to MIAA shall be TOTAL 35,861. 70,863. 06,725.
95 47 42
disposed of through sale or any other mode
unless specifically approved by the 1992-1997 RPT was paid on Dec. 24,
President of the Philippines.5 1997 as per O.R.#9476102 for
On 21 March 1997, the Office of the P4,207,028.75
Government Corporate Counsel (OGCC) #9476101 for P28,676,480.00
issued Opinion No. 061. The OGCC opined
#9476103 for P49,115.006
On 17 July 2001, the City of Parañaque, of general circulation in the Philippines. The
through its City Treasurer, issued notices of notices announced the public auction sale of
levy and warrants of levy on the Airport the Airport Lands and Buildings to the
Lands and Buildings. The Mayor of the City highest bidder on 7 February 2003, 10:00
of Parañaque threatened to sell at public a.m., at the Legislative Session Hall Building
auction the Airport Lands and Buildings of Parañaque City.
should MIAA fail to pay the real estate tax A day before the public auction, or on 6
delinquency. MIAA thus sought a February 2003, at 5:10 p.m., MIAA filed
clarification of OGCC Opinion No. 061. before this Court an Urgent Ex-Parte and
On 9 August 2001, the OGCC issued Reiteratory Motion for the Issuance of a
Opinion No. 147 clarifying OGCC Opinion Temporary Restraining Order. The motion
No. 061. The OGCC pointed out that sought to restrain respondents — the City of
Section 206 of the Local Government Code Parañaque, City Mayor of
requires persons exempt from real estate Parañaque, Sangguniang Panglungsod ng
tax to show proof of exemption. The OGCC Parañaque, City Treasurer of Parañaque,
opined that Section 21 of the MIAA Charter and the City Assessor of Parañaque
is the proof that MIAA is exempt from real ("respondents") — from auctioning the
estate tax. Airport Lands and Buildings.
On 1 October 2001, MIAA filed with the On 7 February 2003, this Court issued a
Court of Appeals an original petition for temporary restraining order (TRO) effective
prohibition and injunction, with prayer for immediately. The Court ordered
preliminary injunction or temporary respondents to cease and desist from
restraining order. The petition sought to selling at public auction the Airport Lands
restrain the City of Parañaque from and Buildings. Respondents received the
imposing real estate tax on, levying against, TRO on the same day that the Court issued
and auctioning for public sale the Airport it. However, respondents received the TRO
Lands and Buildings. The petition was only at 1:25 p.m. or three hours after the
docketed as CA-G.R. SP No. 66878. conclusion of the public auction.
On 5 October 2001, the Court of Appeals On 10 February 2003, this Court issued a
dismissed the petition because MIAA filed it Resolution confirming nunc pro tunc the
beyond the 60-day reglementary period. The TRO.
Court of Appeals also denied on 27 On 29 March 2005, the Court heard the
September 2002 MIAA's motion for parties in oral arguments. In compliance
reconsideration and supplemental motion for with the directive issued during the hearing,
reconsideration. Hence, MIAA filed on 5 MIAA, respondent City of Parañaque, and
December 2002 the present petition for the Solicitor General subsequently
review.7 submitted their respective Memoranda.
Meanwhile, in January 2003, the City of MIAA admits that the MIAA Charter has
Parañaque posted notices of auction sale at placed the title to the Airport Lands and
the Barangay Halls of Barangays Vitalez, Buildings in the name of MIAA. However,
Sto. Niño, and Tambo, Parañaque City; in MIAA points out that it cannot claim
the public market of Barangay La Huerta; ownership over these properties since the
and in the main lobby of the Parañaque City real owner of the Airport Lands and
Hall. The City of Parañaque published the Buildings is the Republic of the Philippines.
notices in the 3 and 10 January 2003 issues The MIAA Charter mandates MIAA to devote
of the Philippine Daily Inquirer, a newspaper the Airport Lands and Buildings for the
benefit of the general public. Since the The Issue
Airport Lands and Buildings are devoted to This petition raises the threshold issue of
public use and public service, the ownership whether the Airport Lands and Buildings of
of these properties remains with the State. MIAA are exempt from real estate tax under
The Airport Lands and Buildings are thus existing laws. If so exempt, then the real
inalienable and are not subject to real estate estate tax assessments issued by the City of
tax by local governments. Parañaque, and all proceedings taken
MIAA also points out that Section 21 of the pursuant to such assessments, are void. In
MIAA Charter specifically exempts MIAA such event, the other issues raised in this
from the payment of real estate tax. MIAA petition become moot.
insists that it is also exempt from real estate The Court's Ruling
tax under Section 234 of the Local
Government Code because the Airport We rule that MIAA's Airport Lands and
Lands and Buildings are owned by the Buildings are exempt from real estate tax
Republic. To justify the exemption, MIAA imposed by local governments.
invokes the principle that the government First, MIAA is not a government-owned or
cannot tax itself. MIAA points out that the controlled corporation but
reason for tax exemption of public property an instrumentality of the National
is that its taxation would not inure to any Government and thus exempt from local
public advantage, since in such a case the taxation. Second, the real properties of
tax debtor is also the tax creditor. MIAA are owned by the Republic of the
Respondents invoke Section 193 of the Philippines and thus exempt from real estate
Local Government Code, which expressly tax.
withdrew the tax exemption privileges of 1. MIAA is Not a Government-Owned or
"government-owned and-controlled Controlled Corporation
corporations" upon the effectivity of the Respondents argue that MIAA, being a
Local Government Code. Respondents also government-owned or controlled
argue that a basic rule of statutory corporation, is not exempt from real estate
construction is that the express mention of tax. Respondents claim that the deletion of
one person, thing, or act excludes all others. the phrase "any government-owned or
An international airport is not among the controlled so exempt by its charter" in
exceptions mentioned in Section 193 of the Section 234(e) of the Local Government
Local Government Code. Thus, respondents Code withdrew the real estate tax exemption
assert that MIAA cannot claim that the of government-owned or controlled
Airport Lands and Buildings are exempt corporations. The deleted phrase appeared
from real estate tax. in Section 40(a) of the 1974 Real Property
Respondents also cite the ruling of this Tax Code enumerating the entities exempt
Court in Mactan International Airport v. from real estate tax.
Marcos8 where we held that the Local There is no dispute that a government-
Government Code has withdrawn the owned or controlled corporation is not
exemption from real estate tax granted to exempt from real estate tax. However, MIAA
international airports. Respondents further is not a government-owned or controlled
argue that since MIAA has already paid corporation. Section 2(13) of the
some of the real estate tax assessments, it Introductory Provisions of the Administrative
is now estopped from claiming that the Code of 1987 defines a government-owned
Airport Lands and Buildings are exempt or controlled corporation as follows:
from real estate tax.
SEC. 2. General Terms Defined. – x x loans and other liabilities of the
xx Authority at the time of the takeover of
(13) Government-owned or controlled the assets and other properties;
corporation refers to any (b) That the amount of P605 million as
agency organized as a stock or of December 31, 1986 representing
non-stock corporation, vested with about seventy percentum (70%) of the
functions relating to public needs unremitted share of the National
whether governmental or proprietary Government from 1983 to 1986 to be
in nature, and owned by the remitted to the National Treasury as
Government directly or through its provided for in Section 11 of E. O. No.
instrumentalities either wholly, or, 903 as amended, shall be converted
where applicable as in the case of into the equity of the National
stock corporations, to the extent of at Government in the Authority.
least fifty-one (51) percent of its Thereafter, the Government
capital stock: x x x. (Emphasis contribution to the capital of the
supplied) Authority shall be provided in the
A government-owned or controlled General Appropriations Act.
corporation must be "organized as a stock Clearly, under its Charter, MIAA does not
or non-stock corporation." MIAA is not have capital stock that is divided into
organized as a stock or non-stock shares.
corporation. MIAA is not a stock corporation Section 3 of the Corporation Code10 defines
because it has no capital stock divided a stock corporation as one whose "capital
into shares. MIAA has no stockholders or stock is divided into shares and x x x
voting shares. Section 10 of the MIAA authorized to distribute to the holders of
Charter9 provides: such shares dividends x x x." MIAA has
SECTION 10. Capital. — The capital capital but it is not divided into shares of
of the Authority to be contributed by stock. MIAA has no stockholders or voting
the National Government shall be shares. Hence, MIAA is not a stock
increased from Two and One-half corporation.
Billion (P2,500,000,000.00) Pesos to MIAA is also not a non-stock corporation
Ten Billion (P10,000,000,000.00) because it has no members. Section 87 of
Pesos to consist of: the Corporation Code defines a non-stock
(a) The value of fixed assets including corporation as "one where no part of its
airport facilities, runways and income is distributable as dividends to its
equipment and such other properties, members, trustees or officers." A non-stock
movable and immovable[,] which may corporation must have members. Even if we
be contributed by the National assume that the Government is considered
Government or transferred by it from as the sole member of MIAA, this will not
any of its agencies, the valuation of make MIAA a non-stock corporation. Non-
which shall be determined jointly with stock corporations cannot distribute any part
the Department of Budget and of their income to their members. Section 11
Management and the Commission on of the MIAA Charter mandates MIAA to remit
Audit on the date of such contribution 20% of its annual gross operating income to
or transfer after making due the National Treasury.11 This prevents MIAA
allowances for depreciation and other from qualifying as a non-stock corporation.
deductions taking into account the
Section 88 of the Corporation Code provides powers. Thus, MIAA exercises the
that non-stock corporations are "organized governmental powers of eminent domain,
for charitable, religious, educational, 12 police authority13 and the levying of fees

professional, cultural, recreational, fraternal, and charges.14 At the same time, MIAA
literary, scientific, social, civil service, or exercises "all the powers of a corporation
similar purposes, like trade, industry, under the Corporation Law, insofar as these
agriculture and like chambers." MIAA is not powers are not inconsistent with the
organized for any of these purposes. MIAA, provisions of this Executive Order."15
a public utility, is organized to operate an Likewise, when the law makes a
international and domestic airport for public government instrumentality operationally
use. autonomous, the instrumentality remains
Since MIAA is neither a stock nor a non- part of the National Government machinery
stock corporation, MIAA does not qualify as although not integrated with the department
a government-owned or controlled framework. The MIAA Charter expressly
corporation. What then is the legal status of states that transforming MIAA into a
MIAA within the National Government? "separate and autonomous body"16 will
MIAA is a government make its operation more "financially
instrumentality vested with corporate viable."17
powers to perform efficiently its Many government instrumentalities are
governmental functions. MIAA is like any vested with corporate powers but they do
other government instrumentality, the only not become stock or non-stock corporations,
difference is that MIAA is vested with which is a necessary condition before an
corporate powers. Section 2(10) of the agency or instrumentality is deemed a
Introductory Provisions of the Administrative government-owned or controlled
Code defines a government corporation. Examples are the Mactan
"instrumentality" as follows: International Airport Authority, the Philippine
SEC. 2. General Terms Defined. –– x Ports Authority, the University of the
xxx Philippines and Bangko Sentral ng Pilipinas.
All these government instrumentalities
(10) Instrumentality refers to any exercise corporate powers but they are not
agency of the National Government, organized as stock or non-stock
not integrated within the department corporations as required by Section 2(13) of
framework, vested with special the Introductory Provisions of the
functions or jurisdiction by Administrative Code. These government
law, endowed with some if not all instrumentalities are sometimes loosely
corporate powers, administering called government corporate entities.
special funds, and enjoying However, they are not government-owned or
operational autonomy, usually through controlled corporations in the strict sense as
a charter. x x x (Emphasis supplied) understood under the Administrative Code,
When the law vests in a government which is the governing law defining the legal
instrumentality corporate powers, the relationship and status of government
instrumentality does not become a entities.
corporation. Unless the government A government instrumentality like MIAA
instrumentality is organized as a stock or falls under Section 133(o) of the Local
non-stock corporation, it remains a Government Code, which states:
government instrumentality exercising not
only governmental but also corporate
SEC. 133. Common Limitations on The reason for the rule does not apply
the Taxing Powers of Local in the case of exemptions running to
Government Units. – Unless the benefit of the government itself or
otherwise provided herein, the its agencies. In such case the
exercise of the taxing powers of practical effect of an exemption is
provinces, cities, municipalities, merely to reduce the amount of
and barangays shall not extend to money that has to be handled by
the levy of the following: government in the course of its
xxxx operations. For these reasons,
provisions granting exemptions to
(o) Taxes, fees or charges of any government agencies may be
kind on the National Government, construed liberally, in favor of non tax-
its agencies and liability of such agencies.19
instrumentalitiesand local
government units.(Emphasis and There is, moreover, no point in national and
underscoring supplied) local governments taxing each other, unless
a sound and compelling policy requires such
Section 133(o) recognizes the basic transfer of public funds from one
principle that local governments cannot tax government pocket to another.
the national government, which historically
merely delegated to local governments the There is also no reason for local
power to tax. While the 1987 Constitution governments to tax national government
now includes taxation as one of the powers instrumentalities for rendering essential
of local governments, local governments public services to inhabitants of local
may only exercise such power "subject to governments. The only exception is when
such guidelines and limitations as the the legislature clearly intended to tax
Congress may provide."18 government instrumentalities for the
delivery of essential public services for
When local governments invoke the power sound and compelling policy
to tax on national government considerations. There must be express
instrumentalities, such power is construed language in the law empowering local
strictly against local governments. The rule governments to tax national government
is that a tax is never presumed and there instrumentalities. Any doubt whether such
must be clear language in the law imposing power exists is resolved against local
the tax. Any doubt whether a person, article governments.
or activity is taxable is resolved against
taxation. This rule applies with greater force Thus, Section 133 of the Local Government
when local governments seek to tax national Code states that "unless otherwise
government instrumentalities. provided" in the Code, local governments
cannot tax national government
Another rule is that a tax exemption is instrumentalities. As this Court held
strictly construed against the taxpayer in Basco v. Philippine Amusements and
claiming the exemption. However, when Gaming Corporation:
Congress grants an exemption to a national
government instrumentality from local The states have no power by
taxation, such exemption is construed taxation or otherwise, to retard,
liberally in favor of the national government impede, burden or in any
instrumentality. As this Court declared manner control the operation of
in Maceda v. Macaraig, Jr.: constitutional laws enacted by
Congress to carry into
execution the powers vested in The Airport Lands and Buildings of MIAA are
the federal government. (MC property of public dominion and therefore
Culloch v. Maryland, 4 Wheat owned by the State or the Republic of the
316, 4 L Ed. 579) Philippines. The Civil Code provides:
This doctrine emanates from the ARTICLE 419. Property is either of
"supremacy" of the National public dominion or of private
Government over local governments. ownership.
"Justice Holmes, speaking for ARTICLE 420. The following things
the Supreme Court, made are property of public dominion:
reference to the entire absence (1) Those intended for public use,
of power on the part of the such as roads, canals, rivers,
States to touch, in that way torrents, ports and bridges
(taxation) at least, the constructed by the State, banks,
instrumentalities of the United shores, roadsteads, and others of
States (Johnson v. Maryland, similar character;
254 US 51) and it can be
agreed that no state or political (2) Those which belong to the State,
subdivision can regulate a without being for public use, and are
federal instrumentality in such a intended for some public service or for
way as to prevent it from the development of the national
consummating its federal wealth. (Emphasis supplied)
responsibilities, or even to ARTICLE 421. All other property of
seriously burden it in the the State, which is not of the
accomplishment of character stated in the preceding
them." (Antieau, Modern article, is patrimonial property.
Constitutional Law, Vol. 2, p. ARTICLE 422. Property of public
140, emphasis supplied) dominion, when no longer intended
Otherwise, mere creatures of the for public use or for public service,
State can defeat National policies thru shall form part of the patrimonial
extermination of what local authorities property of the State.
may perceive to be undesirable No one can dispute that properties of public
activities or enterprise using the dominion mentioned in Article 420 of the
power to tax as "a tool for Civil Code, like "roads, canals, rivers,
regulation" (U.S. v. Sanchez, 340 US torrents, ports and bridges constructed
42). by the State," are owned by the State. The
The power to tax which was called by term "ports" includes seaports and
Justice Marshall as the "power to airports. The MIAA Airport Lands and
destroy" (Mc Culloch v. Maryland, Buildings constitute a "port" constructed by
supra) cannot be allowed to defeat an the State. Under Article 420 of the Civil
instrumentality or creation of the very Code, the MIAA Airport Lands and Buildings
entity which has the inherent power to are properties of public dominion and thus
wield it. 20 owned by the State or the Republic of the
2. Airport Lands and Buildings of MIAA Philippines.
are Owned by the Republic The Airport Lands and Buildings are devoted
a. Airport Lands and Buildings are of to public use because they are used by the
Public Dominion public for international and domestic
travel and transportation. The fact that the of the Philippines for both international and
MIAA collects terminal fees and other domestic air traffic,"22 are properties of
charges from the public does not remove public dominion because they are intended
the character of the Airport Lands and for public use. As properties of public
Buildings as properties for public use. The dominion, they indisputably belong to
operation by the government of a tollway the State or the Republic of the
does not change the character of the road Philippines.
as one for public use. Someone must pay b. Airport Lands and Buildings are
for the maintenance of the road, either the Outside the Commerce of Man
public indirectly through the taxes they pay
the government, or only those among the The Airport Lands and Buildings of MIAA are
public who actually use the road through the devoted to public use and thus are
toll fees they pay upon using the road. The properties of public dominion. As
tollway system is even a more efficient and properties of public dominion, the Airport
equitable manner of taxing the public for the Lands and Buildings are outside the
maintenance of public roads. commerce of man. The Court has ruled
repeatedly that properties of public dominion
The charging of fees to the public does not are outside the commerce of man. As early
determine the character of the property as 1915, this Court already ruled
whether it is of public dominion or not. in Municipality of Cavite v. Rojas that
Article 420 of the Civil Code defines properties devoted to public use are outside
property of public dominion as one the commerce of man, thus:
"intended for public use." Even if the
government collects toll fees, the road is still According to article 344 of the Civil
"intended for public use" if anyone can use Code: "Property for public use in
the road under the same terms and provinces and in towns comprises the
conditions as the rest of the public. The provincial and town roads, the
charging of fees, the limitation on the kind of squares, streets, fountains, and public
vehicles that can use the road, the speed waters, the promenades, and public
restrictions and other conditions for the use works of general service supported by
of the road do not affect the public character said towns or provinces."
of the road. The said Plaza Soledad being a
The terminal fees MIAA charges to promenade for public use, the
passengers, as well as the landing fees municipal council of Cavite could not
MIAA charges to airlines, constitute the bulk in 1907 withdraw or exclude from
of the income that maintains the operations public use a portion thereof in order to
of MIAA. The collection of such fees does lease it for the sole benefit of the
not change the character of MIAA as an defendant Hilaria Rojas. In leasing a
airport for public use. Such fees are often portion of said plaza or public place to
termed user's tax. This means taxing those the defendant for private use the
among the public who actually use a public plaintiff municipality exceeded its
facility instead of taxing all the public authority in the exercise of its powers
including those who never use the particular by executing a contract over a thing of
public facility. A user's tax is more equitable which it could not dispose, nor is it
— a principle of taxation mandated in the empowered so to do.
1987 Constitution.21 The Civil Code, article 1271,
The Airport Lands and Buildings of MIAA, prescribes that everything which is not
which its Charter calls the "principal airport outside the commerce of man may be
the object of a contract, and plazas stop if properties of public dominion are
and streets are outside of this subject to encumbrances, foreclosures and
commerce, as was decided by the auction sale. This will happen if the City of
supreme court of Spain in its decision Parañaque can foreclose and compel the
of February 12, 1895, which says: auction sale of the 600-hectare runway of
"Communal things that cannot be the MIAA for non-payment of real estate tax.
sold because they are by their very Before MIAA can encumber26 the Airport
nature outside of commerce are Lands and Buildings, the President must
those for public use, such as the first withdraw from public usethe Airport
plazas, streets, common lands, Lands and Buildings. Sections 83 and 88 of
rivers, fountains, etc." (Emphasis the Public Land Law or Commonwealth Act
supplied) 23 No. 141, which "remains to this day the
Again in Espiritu v. Municipal Council, the existing general law governing the
Court declared that properties of public classification and disposition of lands of the
dominion are outside the commerce of man: public domain other than timber and mineral
xxx Town plazas are properties of lands,"27 provide:
public dominion, to be devoted to SECTION 83. Upon the
public use and to be made available recommendation of the Secretary of
to the public in general. They Agriculture and Natural Resources,
are outside the commerce of the President may designate by
man and cannot be disposed of or proclamation any tract or tracts of
even leased by the municipality to land of the public domain as
private parties. While in case of war or reservations for the use of the
during an emergency, town plazas Republic of the Philippines or of any
may be occupied temporarily by of its branches, or of the inhabitants
private individuals, as was done and thereof, in accordance with
as was tolerated by the Municipality of regulations prescribed for this
Pozorrubio, when the emergency has purposes, or for quasi-public uses or
ceased, said temporary occupation or purposes when the public interest
use must also cease, and the town requires it, including reservations for
officials should see to it that the town highways, rights of way for railroads,
plazas should ever be kept open to hydraulic power sites, irrigation
the public and free from systems, communal pastures or
encumbrances or illegal private lequas communales, public parks,
constructions.24 (Emphasis supplied) public quarries, public fishponds,
The Court has also ruled that property of working men's village and other
public dominion, being outside the improvements for the public benefit.
commerce of man, cannot be the subject of SECTION 88. The tract or tracts of
an auction sale.25 land reserved under the provisions
Properties of public dominion, being for of Section eighty-three shall
public use, are not subject to levy, be non-alienable and shall not be
encumbrance or disposition through public subject to occupation, entry, sale,
or private sale. Any encumbrance, levy on lease, or other disposition until
execution or auction sale of any property of again declared alienable under the
public dominion is void for being contrary to provisions of this Act or by
public policy. Essential public services will proclamation of the President.
(Emphasis and underscoring instrumentalities like MIAA to hold title to
supplied) real properties owned by the Republic,
Thus, unless the President issues a thus:
proclamation withdrawing the Airport Lands SEC. 48. Official Authorized to
and Buildings from public use, these Convey Real Property. — Whenever
properties remain properties of public real property of the Government is
dominion and are inalienable. Since the authorized by law to be conveyed, the
Airport Lands and Buildings are inalienable deed of conveyance shall be
in their present status as properties of public executed in behalf of the government
dominion, they are not subject to levy on by the following:
execution or foreclosure sale. As long as the (1) For property belonging to and
Airport Lands and Buildings are reserved for titled in the name of the Republic of
public use, their ownership remains with the the Philippines, by the President,
State or the Republic of the Philippines. unless the authority therefor is
The authority of the President to reserve expressly vested by law in another
lands of the public domain for public use, officer.
and to withdraw such public use, is (2) For property belonging to the
reiterated in Section 14, Chapter 4, Title I, Republic of the Philippines but
Book III of the Administrative Code of 1987, titled in the name of any political
which states: subdivision or of any corporate
SEC. 14. Power to Reserve Lands of agency or instrumentality, by the
the Public and Private Domain of the executive head of the agency or
Government. — (1) The President instrumentality. (Emphasis supplied)
shall have the power to reserve for In MIAA's case, its status as a mere trustee
settlement or public use, and for of the Airport Lands and Buildings is clearer
specific public purposes, any of because even its executive head cannot
the lands of the public domain, the sign the deed of conveyance on behalf of
use of which is not otherwise the Republic. Only the President of the
directed by law. The reserved land Republic can sign such deed of
shall thereafter remain subject to conveyance.28
the specific public purpose
indicated until otherwise provided d. Transfer to MIAA was Meant to
by law or proclamation; Implement a Reorganization
x x x x. (Emphasis supplied) The MIAA Charter, which is a law,
transferred to MIAA the title to the Airport
There is no question, therefore, that unless Lands and Buildings from the Bureau of Air
the Airport Lands and Buildings are Transportation of the Department of
withdrawn by law or presidential Transportation and Communications. The
proclamation from public use, they are MIAA Charter provides:
properties of public dominion, owned by the
Republic and outside the commerce of man. SECTION 3. Creation of the Manila
International Airport Authority. — x x x
c. MIAA is a Mere Trustee of the Republic x
MIAA is merely holding title to the Airport The land where the Airport is
Lands and Buildings in trust for the presently located as well as the
Republic. Section 48, Chapter 12, Book I surrounding land area of
of the Administrative Code allows approximately six hundred
hectares, are hereby transferred, The whereas clauses of the MIAA Charter
conveyed and assigned to the explain the rationale for the transfer of the
ownership and administration of Airport Lands and Buildings to MIAA, thus:
the Authority, subject to existing WHEREAS, the Manila International
rights, if any. The Bureau of Lands Airport as the principal airport of the
and other appropriate government Philippines for both international and
agencies shall undertake an actual domestic air traffic, is required to
survey of the area transferred within provide standards of airport
one year from the promulgation of this accommodation and service
Executive Order and the comparable with the best airports in
corresponding title to be issued in the the world;
name of the Authority. Any portion
thereof shall not be disposed WHEREAS, domestic and other
through sale or through any other terminals, general aviation and other
mode unless specifically approved facilities, have to be upgraded to meet
by the President of the Philippines. the current and future air traffic and
(Emphasis supplied) other demands of aviation in Metro
Manila;
SECTION 22. Transfer of Existing
Facilities and Intangible Assets. — All WHEREAS, a management and
existing public airport facilities, organization study has indicated
runways, lands, buildings and that the objectives of providing
other property, movable or high standards of accommodation
immovable, belonging to the Airport, and service within the context of a
and all assets, powers, rights, financially viable operation, will
interests and privileges belonging to best be achieved by a separate and
the Bureau of Air autonomous body; and
Transportation relating to airport WHEREAS, under Presidential
works or air operations, including all Decree No. 1416, as amended by
equipment which are necessary for Presidential Decree No. 1772, the
the operation of crash fire and rescue President of the Philippines is given
facilities, are hereby transferred to the continuing authority to reorganize
Authority. (Emphasis supplied) the National Government, which
SECTION 25. Abolition of the Manila authority includes the creation of
International Airport as a Division in new entities, agencies and
the Bureau of Air Transportation and instrumentalities of the
Transitory Provisions. — The Manila Government[.] (Emphasis supplied)
International Airport including the The transfer of the Airport Lands and
Manila Domestic Airport as a division Buildings from the Bureau of Air
under the Bureau of Air Transportation Transportation to MIAA was not meant to
is hereby abolished. transfer beneficial ownership of these assets
x x x x. from the Republic to MIAA. The purpose
was merely to reorganize a division in the
The MIAA Charter transferred the Airport Bureau of Air Transportation into a
Lands and Buildings to MIAA without the separate and autonomous body. The
Republic receiving cash, promissory notes Republic remains the beneficial owner of the
or even stock since MIAA is not a stock Airport Lands and Buildings. MIAA itself is
corporation. owned solely by the Republic. No party
claims any ownership rights over MIAA's kind on the National Government, its
assets adverse to the Republic. agencies and instrumentalitiesx x x." The
The MIAA Charter expressly provides that real properties owned by the Republic are
the Airport Lands and Buildings "shall not titled either in the name of the Republic itself
be disposed through sale or through any or in the name of agencies or
other mode unless specifically approved instrumentalities of the National
by the President of the Philippines." This Government. The Administrative Code
only means that the Republic retained the allows real property owned by the Republic
beneficial ownership of the Airport Lands to be titled in the name of agencies or
and Buildings because under Article 428 of instrumentalities of the national government.
the Civil Code, only the "owner has the right Such real properties remain owned by the
to x x x dispose of a thing." Since MIAA Republic and continue to be exempt from
cannot dispose of the Airport Lands and real estate tax.
Buildings, MIAA does not own the Airport The Republic may grant the beneficial use
Lands and Buildings. of its real property to an agency or
At any time, the President can transfer back instrumentality of the national government.
to the Republic title to the Airport Lands and This happens when title of the real property
Buildings without the Republic paying MIAA is transferred to an agency or instrumentality
any consideration. Under Section 3 of the even as the Republic remains the owner of
MIAA Charter, the President is the only one the real property. Such arrangement does
who can authorize the sale or disposition of not result in the loss of the tax exemption.
the Airport Lands and Buildings. This only Section 234(a) of the Local Government
confirms that the Airport Lands and Code states that real property owned by the
Buildings belong to the Republic. Republic loses its tax exemption only if the
"beneficial use thereof has been granted, for
e. Real Property Owned by the Republic consideration or otherwise, to a taxable
is Not Taxable person." MIAA, as a government
Section 234(a) of the Local Government instrumentality, is not a taxable person
Code exempts from real estate tax any under Section 133(o) of the Local
"[r]eal property owned by the Republic of the Government Code. Thus, even if we
Philippines." Section 234(a) provides: assume that the Republic has granted to
SEC. 234. Exemptions from Real MIAA the beneficial use of the Airport Lands
Property Tax. — The following are and Buildings, such fact does not make
exempted from payment of the real these real properties subject to real estate
property tax: tax.
(a) Real property owned by the However, portions of the Airport Lands and
Republic of the Philippines or any Buildings that MIAA leases to private entities
of its political subdivisions except are not exempt from real estate tax. For
when the beneficial use thereof has example, the land area occupied by hangars
been granted, for consideration or that MIAA leases to private corporations is
otherwise, to a taxable person; subject to real estate tax. In such a case,
MIAA has granted the beneficial use of such
x x x. (Emphasis supplied) land area for a consideration to a taxable
This exemption should be read in relation person and therefore such land area is
with Section 133(o) of the same Code, subject to real estate tax. In Lung Center of
which prohibits local governments from the Philippines v. Quezon City, the Court
imposing "[t]axes, fees or charges of any ruled:
Accordingly, we hold that the portions withdrawal of realty tax exemption
of the land leased to private entities applies to all persons. The reference
as well as those parts of the hospital to or the inclusion of GOCCs is only
leased to private individuals are not clarificatory or illustrative of the
exempt from such taxes. On the other explicit provision.
hand, the portions of the land The term "All persons"
occupied by the hospital and portions encompasses the two classes of
of the hospital used for its patients, persons recognized under our
whether paying or non-paying, are laws, natural and juridical persons.
exempt from real property taxes.29 Obviously, MIAA is not a natural
3. Refutation of Arguments of Minority person. Thus, the determinative
The minority asserts that the MIAA is not test is not just whether MIAA is a
exempt from real estate tax because GOCC, but whether MIAA is a
Section 193 of the Local Government Code juridical person at all. (Emphasis
of 1991 withdrew the tax exemption of "all and underscoring in the original)
persons, whether natural or juridical" The minority posits that the "determinative
upon the effectivity of the Code. Section 193 test" whether MIAA is exempt from local
provides: taxation is its status — whether MIAA is a
SEC. 193. Withdrawal of Tax juridical person or not. The minority also
Exemption Privileges – Unless insists that "Sections 193 and 234 may be
otherwise provided in this Code, examined in isolation from Section 133(o) to
tax exemptions or incentives granted ascertain MIAA's claim of exemption."
to, or presently enjoyed by all The argument of the minority is fatally
persons, whether natural or flawed. Section 193 of the Local
juridical, including government- Government Code expressly withdrew the
owned or controlled corporations, tax exemption of all juridical persons
except local water districts, "[u]nless otherwise provided in this
cooperatives duly registered under Code." Now, Section 133(o) of the Local
R.A. No. 6938, non-stock and non- Government Code expressly provides
profit hospitals and educational otherwise, specifically prohibiting local
institutions are hereby withdrawn governments from imposing any kind of tax
upon effectivity of this Code. on national government instrumentalities.
(Emphasis supplied) Section 133(o) states:
The minority states that MIAA is indisputably SEC. 133. Common Limitations on
a juridical person. The minority argues that the Taxing Powers of Local
since the Local Government Code withdrew Government Units. – Unless
the tax exemption of all juridical persons, otherwise provided herein, the
then MIAA is not exempt from real estate exercise of the taxing powers of
tax. Thus, the minority declares: provinces, cities, municipalities, and
It is evident from the quoted barangays shall not extend to the levy
provisions of the Local of the following:
Government Code that the xxxx
withdrawn exemptions from realty (o) Taxes, fees or charges of any
tax cover not just GOCCs, but all kinds on the National Government, its
persons. To repeat, the provisions lay agencies and instrumentalities, and
down the explicit proposition that the
local government units. (Emphasis local tax, and not only real estate tax, on the
and underscoring supplied) national government.
By express mandate of the Local Under the minority's theory, many national
Government Code, local governments government instrumentalities with juridical
cannot impose any kind of tax on national personalities will also be subject to any kind
government instrumentalities like the MIAA. of local tax, and not only real estate tax.
Local governments are devoid of power to Some of the national government
tax the national government, its agencies instrumentalities vested by law with juridical
and instrumentalities. The taxing powers of personalities are: Bangko Sentral ng
local governments do not extend to the Pilipinas,30 Philippine Rice Research
national government, its agencies and Institute,31Laguna Lake
instrumentalities, "[u]nless otherwise Development Authority,32 Fisheries
provided in this Code" as stated in the Development Authority,33 Bases Conversion
saving clause of Section 133. The saving Development Authority,34Philippine Ports
clause refers to Section 234(a) on the Authority,35 Cagayan de Oro Port Authority,
exception to the exemption from real estate 36 San Fernando Port Authority,37 Cebu Port
tax of real property owned by the Republic. Authority,38 and Philippine National
The minority, however, theorizes that unless Railways.39
exempted in Section 193 itself, all juridical The minority's theory violates Section 133(o)
persons are subject to tax by local of the Local Government Code which
governments. The minority insists that the expressly prohibits local governments from
juridical persons exempt from local taxation imposing any kind of tax on national
are limited to the three classes of entities government instrumentalities. Section
specifically enumerated as exempt in 133(o) does not distinguish between
Section 193. Thus, the minority states: national government instrumentalities with
x x x Under Section 193, the or without juridical personalities. Where the
exemption is limited to (a) local water law does not distinguish, courts should not
districts; (b) cooperatives duly distinguish. Thus, Section 133(o) applies to
registered under Republic Act No. all national government instrumentalities,
6938; and (c) non-stock and non-profit with or without juridical personalities. The
hospitals and educational institutions. determinative test whether MIAA is exempt
It would be belaboring the obvious from local taxation is not whether MIAA is a
why the MIAA does not fall within any juridical person, but whether it is a national
of the exempt entities under Section government instrumentality under Section
193. (Emphasis supplied) 133(o) of the Local Government Code.
The minority's theory directly contradicts Section 133(o) is the specific provision of
and completely negates Section 133(o) of law prohibiting local governments from
the Local Government Code. This theory will imposing any kind of tax on the national
result in gross absurdities. It will make the government, its agencies and
national government, which itself is a instrumentalities.
juridical person, subject to tax by local Section 133 of the Local Government Code
governments since the national government starts with the saving clause "[u]nless
is not included in the enumeration of exempt otherwise provided in this Code." This
entities in Section 193. Under this theory, means that unless the Local Government
local governments can impose any kind of Code grants an express authorization, local
governments have no power to tax the
national government, its agencies and The minority also argues that since Section
instrumentalities. Clearly, the rule is local 133 precedes Section 193 and 234 of the
governments have no power to tax the Local Government Code, the later
national government, its agencies and provisions prevail over Section 133. Thus,
instrumentalities. As an exception to this the minority asserts:
rule, local governments may tax the national x x x Moreover, sequentially Section
government, its agencies and 133 antecedes Section 193 and 234.
instrumentalities only if the Local Following an accepted rule of
Government Code expressly so provides. construction, in case of conflict the
The saving clause in Section 133 refers to subsequent provisions should prevail.
the exception to the exemption in Section Therefore, MIAA, as a juridical
234(a) of the Code, which makes the person, is subject to real property
national government subject to real estate taxes, the general exemptions
tax when it gives the beneficial use of its attaching to instrumentalities under
real properties to a taxable entity. Section Section 133(o) of the Local
234(a) of the Local Government Code Government Code being qualified by
provides: Sections 193 and 234 of the same
SEC. 234. Exemptions from Real law. (Emphasis supplied)
Property Tax – The following are The minority assumes that there is an
exempted from payment of the real irreconcilable conflict between Section 133
property tax: on one hand, and Sections 193 and 234 on
(a) Real property owned by the the other. No one has urged that there is
Republic of the Philippines or any of such a conflict, much less has any one
its political subdivisions except when presenteda persuasive argument that there
the beneficial use thereof has been is such a conflict. The minority's assumption
granted, for consideration or of an irreconcilable conflict in the statutory
otherwise, to a taxable person. provisions is an egregious error for two
reasons.
x x x. (Emphasis supplied)
First, there is no conflict whatsoever
Under Section 234(a), real property owned between Sections 133 and 193 because
by the Republic is exempt from real estate Section 193 expressly admits its
tax. The exception to this exemption is when subordination to other provisions of the
the government gives the beneficial use of Code when Section 193 states "[u]nless
the real property to a taxable entity. otherwise provided in this Code." By its own
The exception to the exemption in Section words, Section 193 admits the superiority of
234(a) is the only instance when the other provisions of the Local Government
national government, its agencies and Code that limit the exercise of the taxing
instrumentalities are subject to any kind of power in Section 193. When a provision of
tax by local governments. The exception to law grants a power but withholds such
the exemption applies only to real estate tax power on certain matters, there is no conflict
and not to any other tax. The justification for between the grant of power and the
the exception to the exemption is that the withholding of power. The grantee of the
real property, although owned by the power simply cannot exercise the power on
Republic, is not devoted to public use or matters withheld from its power.
public service but devoted to the private Second, Section 133 is entitled "Common
gain of a taxable person. Limitations on the Taxing Powers of Local
Government Units." Section 133 limits the admits that its definitions are not controlling
grant to local governments of the power to when it provides:
tax, and not merely the exercise of a SEC. 2. General Terms Defined. —
delegated power to tax. Section 133 states Unless the specific words of the text,
that the taxing powers of local governments or the context as a whole, or a
"shall not extend to the levy" of any kind of particular statute, shall require a
tax on the national government, its agencies different meaning:
and instrumentalities. There is no clearer
limitation on the taxing power than this. xxxx
Since Section 133 prescribes the "common The minority then concludes that reliance on
limitations" on the taxing powers of local the Administrative Code definition is
governments, Section 133 logically prevails "flawed."
over Section 193 which grants local The minority's argument is a non sequitur.
governments such taxing powers. By their True, Section 2 of the Administrative Code
very meaning and purpose, the "common recognizes that a statute may require a
limitations" on the taxing power prevail over different meaning than that defined in the
the grant or exercise of the taxing power. If Administrative Code. However, this does not
the taxing power of local governments in automatically mean that the definition in the
Section 193 prevails over the limitations on Administrative Code does not apply to the
such taxing power in Section 133, then local Local Government Code. Section 2 of the
governments can impose any kind of tax on Administrative Code clearly states that
the national government, its agencies and "unless the specific words x x x of a
instrumentalities — a gross absurdity. particular statute shall require a different
Local governments have no power to tax the meaning," the definition in Section 2 of the
national government, its agencies and Administrative Code shall apply. Thus,
instrumentalities, except as otherwise unless there is specific language in the
provided in the Local Government Code Local Government Code defining the phrase
pursuant to the saving clause in Section 133 "government-owned or controlled
stating "[u]nless otherwise provided in this corporation" differently from the definition in
Code." This exception — which is an the Administrative Code, the definition in the
exception to the exemption of the Republic Administrative Code prevails.
from real estate tax imposed by local The minority does not point to any provision
governments — refers to Section 234(a) of in the Local Government Code defining the
the Code. The exception to the exemption in phrase "government-owned or controlled
Section 234(a) subjects real property owned corporation" differently from the definition in
by the Republic, whether titled in the name the Administrative Code. Indeed, there is
of the national government, its agencies or none. The Local Government Code is silent
instrumentalities, to real estate tax if the on the definition of the phrase "government-
beneficial use of such property is given to a owned or controlled corporation." The
taxable entity. Administrative Code, however, expressly
The minority also claims that the definition in defines the phrase "government-owned or
the Administrative Code of the phrase controlled corporation." The inescapable
"government-owned or controlled conclusion is that the Administrative Code
corporation" is not controlling. The minority definition of the phrase "government-owned
points out that Section 2 of the Introductory or controlled corporation" applies to the
Provisions of the Administrative Code Local Government Code.
The third whereas clause of the Constitution and existing legislations. It will
Administrative Code states that the Code also result in gross absurdities.
"incorporates in a unified document the First, the Administrative Code definition of
major structural, functional and procedural the phrase "government-owned or controlled
principles and rules of governance." Thus, corporation" does not distinguish between
the Administrative Code is the governing law one incorporated under the Corporation
defining the status and relationship of Code or under a special charter. Where the
government departments, bureaus, offices, law does not distinguish, courts should not
agencies and instrumentalities. Unless a distinguish.
statute expressly provides for a different
status and relationship for a specific Second, Congress has created through
government unit or entity, the provisions of special charters several government-owned
the Administrative Code prevail. corporations organized as stock
corporations. Prime examples are the Land
The minority also contends that the phrase Bank of the Philippines and the
"government-owned or controlled Development Bank of the Philippines. The
corporation" should apply only to special charter40 of the Land Bank of the
corporations organized under the Philippines provides:
Corporation Code, the general incorporation
law, and not to corporations created by SECTION 81. Capital. — The
special charters. The minority sees no authorized capital stock of the Bank
reason why government corporations with shall be nine billion pesos, divided
special charters should have a capital stock. into seven hundred and eighty million
Thus, the minority declares: common shares with a par value of
ten pesos each, which shall be fully
I submit that the definition of subscribed by the Government, and
"government-owned or controlled one hundred and twenty million
corporations" under the Administrative preferred shares with a par value of
Code refer to those corporations ten pesos each, which shall be issued
owned by the government or its in accordance with the provisions of
instrumentalities which are created Sections seventy-seven and eighty-
not by legislative enactment, but three of this Code. (Emphasis
formed and organized under the supplied)
Corporation Code through registration
with the Securities and Exchange Likewise, the special charter41 of the
Commission. In short, these are Development Bank of the Philippines
GOCCs without original charters. provides:
xxxx SECTION 7. Authorized Capital Stock
– Par value. — The capital stock of
It might as well be worth pointing out the Bank shall be Five Billion Pesos to
that there is no point in requiring a be divided into Fifty Million common
capital structure for GOCCs whose shares with par value of P100 per
full ownership is limited by its charter share. These shares are available for
to the State or Republic. Such subscription by the National
GOCCs are not empowered to Government. Upon the effectivity of
declare dividends or alienate their this Charter, the National Government
capital shares. shall subscribe to Twenty-Five Million
The contention of the minority is seriously common shares of stock worth Two
flawed. It is not in accord with the Billion Five Hundred Million which
shall be deemed paid for by the The Constitution expressly authorizes the
Government with the net asset values legislature to create "government-owned or
of the Bank remaining after the controlled corporations" through special
transfer of assets and liabilities as charters only if these entities are required to
provided in Section 30 hereof. meet the twin conditions of common good
(Emphasis supplied) and economic viability. In other words,
Other government-owned corporations Congress has no power to create
organized as stock corporations under their government-owned or controlled
special charters are the Philippine Crop corporations with special charters unless
Insurance Corporation,42 Philippine they are made to comply with the two
International Trading Corporation,43 and the conditions of common good and economic
Philippine National Bank44 before it was viability. The test of economic viability
reorganized as a stock corporation under applies only to government-owned or
the Corporation Code. All these controlled corporations that perform
government-owned corporations organized economic or commercial activities and need
under special charters as stock corporations to compete in the market place. Being
are subject to real estate tax on real essentially economic vehicles of the State
properties owned by them. To rule that they for the common good — meaning for
are not government-owned or controlled economic development purposes — these
corporations because they are not government-owned or controlled
registered with the Securities and Exchange corporations with special charters are
Commission would remove them from the usually organized as stock corporations just
reach of Section 234 of the Local like ordinary private corporations.
Government Code, thus exempting them In contrast, government instrumentalities
from real estate tax. vested with corporate powers and
Third, the government-owned or controlled performing governmental or public functions
corporations created through special need not meet the test of economic viability.
charters are those that meet the two These instrumentalities perform essential
conditions prescribed in Section 16, Article public services for the common good,
XII of the Constitution. The first condition is services that every modern State must
that the government-owned or controlled provide its citizens. These instrumentalities
corporation must be established for the need not be economically viable since the
common good. The second condition is that government may even subsidize their entire
the government-owned or controlled operations. These instrumentalities are not
corporation must meet the test of economic the "government-owned or controlled
viability. Section 16, Article XII of the 1987 corporations" referred to in Section 16,
Constitution provides: Article XII of the 1987 Constitution.
SEC. 16. The Congress shall not, Thus, the Constitution imposes no limitation
except by general law, provide for the when the legislature creates government
formation, organization, or regulation instrumentalities vested with corporate
of private corporations. Government- powers but performing essential
owned or controlled corporations may governmental or public functions. Congress
be created or established by special has plenary authority to create government
charters in the interest of the common instrumentalities vested with corporate
good and subject to the test of powers provided these instrumentalities
economic viability. (Emphasis and perform essential government functions or
underscoring supplied) public services. However, when the
legislature creates through special charters underpaid public employees. And yet
corporations that perform economic or this is all going down the drain.
commercial activities, such entities — Therefore, when we insert the phrase
known as "government-owned or controlled "ECONOMIC VIABILITY" together
corporations" — must meet the test of with the "common good," this
economic viability because they compete in becomes a restraint on future
the market place. enthusiasts for state capitalism to
This is the situation of the Land Bank of the excuse themselves from the
Philippines and the Development Bank of responsibility of meeting the market
the Philippines and similar government- test so that they become viable. And
owned or controlled corporations, which so, Madam President, I reiterate, for
derive their income to meet operating the committee's consideration and I
expenses solely from commercial am glad that I am joined in this
transactions in competition with the private proposal by Commissioner Foz, the
sector. The intent of the Constitution is to insertion of the standard of
prevent the creation of government-owned "ECONOMIC VIABILITY OR THE
or controlled corporations that cannot ECONOMIC TEST," together with the
survive on their own in the market place and common good.45
thus merely drain the public coffers. Father Joaquin G. Bernas, a leading
Commissioner Blas F. Ople, proponent of member of the Constitutional Commission,
the test of economic viability, explained to explains in his textbook The 1987
the Constitutional Commission the purpose Constitution of the Republic of the
of this test, as follows: Philippines: A Commentary:
MR. OPLE: Madam President, the The second sentence was added by
reason for this concern is really that the 1986 Constitutional Commission.
when the government creates a The significant addition, however, is
corporation, there is a sense in which the phrase "in the interest of the
this corporation becomes exempt common good and subject to the test
from the test of economic of economic viability." The addition
performance. We know what includes the ideas that they must
happened in the past. If a government show capacity to function efficiently in
corporation loses, then it makes its business and that they should not go
claim upon the taxpayers' money into activities which the private sector
through new equity infusions from the can do better. Moreover, economic
government and what is always viability is more than financial viability
invoked is the common good. That is but also includes capability to make
the reason why this year, out of a profit and generate benefits not
budget of P115 billion for the entire quantifiable in financial terms.
government, about P28 billion of this 46(Emphasis supplied)

will go into equity infusions to support Clearly, the test of economic viability does
a few government financial not apply to government entities vested with
institutions. And this is all taxpayers' corporate powers and performing essential
money which could have been public services. The State is obligated to
relocated to agrarian reform, to social render essential public services regardless
services like health and education, to of the economic viability of providing such
augment the salaries of grossly service. The non-economic viability of
rendering such essential public service does 4. The Department of Agriculture, to
not excuse the State from withholding such enforce measures against the spread
essential services from the public. of plant and animal diseases into the
However, government-owned or controlled country;
corporations with special charters, 5. The Aviation Security Command of
organized essentially for economic or the Philippine National Police, to
commercial objectives, must meet the test of prevent the entry of terrorists and the
economic viability. These are the escape of criminals, as well as to
government-owned or controlled secure the airport premises from
corporations that are usually organized terrorist attack or seizure;
under their special charters as stock 6. The Air Traffic Office of the
corporations, like the Land Bank of the Department of Transportation and
Philippines and the Development Bank of Communications, to authorize aircraft
the Philippines. These are the government- to enter or leave Philippine airspace,
owned or controlled corporations, along with as well as to land on, or take off from,
government-owned or controlled the airport; and
corporations organized under the
Corporation Code, that fall under the 7. The MIAA, to provide the proper
definition of "government-owned or premises — such as runway and
controlled corporations" in Section 2(10) of buildings — for the government
the Administrative Code. personnel, passengers, and airlines,
and to manage the airport operations.
The MIAA need not meet the test of
economic viability because the legislature All these agencies of government perform
did not create MIAA to compete in the government functions essential to the
market place. MIAA does not compete in the operation of an international airport.
market place because there is no competing MIAA performs an essential public service
international airport operated by the private that every modern State must provide its
sector. MIAA performs an essential public citizens. MIAA derives its revenues
service as the primary domestic and principally from the mandatory fees and
international airport of the Philippines. The charges MIAA imposes on passengers and
operation of an international airport requires airlines. The terminal fees that MIAA
the presence of personnel from the following charges every passenger are regulatory or
government agencies: administrative fees47 and not income from
1. The Bureau of Immigration and commercial transactions.
Deportation, to document the arrival MIAA falls under the definition of a
and departure of passengers, government instrumentality under Section
screening out those without visas or 2(10) of the Introductory Provisions of the
travel documents, or those with hold Administrative Code, which provides:
departure orders; SEC. 2. General Terms Defined. – x x
2. The Bureau of Customs, to collect xx
import duties or enforce the ban on (10) Instrumentality refers to any
prohibited importations; agency of the National Government,
3. The quarantine office of the not integrated within the department
Department of Health, to enforce framework, vested with special
health measures against the spread functions or jurisdiction by law,
of infectious diseases into the country; endowed with some if not all
corporate powers, administering Section 133(o) of the Local Government
special funds, and enjoying Code. The exception to the exemption in
operational autonomy, usually through Section 234(a) does not apply to MIAA
a charter. x x x (Emphasis supplied) because MIAA is not a taxable entity under
The fact alone that MIAA is endowed with the Local Government Code. Such
corporate powers does not make MIAA a exception applies only if the beneficial use
government-owned or controlled of real property owned by the Republic is
corporation. Without a change in its capital given to a taxable entity.
structure, MIAA remains a government Finally, the Airport Lands and Buildings of
instrumentality under Section 2(10) of the MIAA are properties devoted to public use
Introductory Provisions of the Administrative and thus are properties of public dominion.
Code. More importantly, as long as MIAA Properties of public dominion are owned by
renders essential public services, it need not the State or the Republic. Article 420 of the
comply with the test of economic viability. Civil Code provides:
Thus, MIAA is outside the scope of the Art. 420. The following things are
phrase "government-owned or controlled property of public dominion:
corporations" under Section 16, Article XII of
the 1987 Constitution. (1) Those intended for public use,
such as roads, canals, rivers, torrents,
The minority belittles the use in the Local ports and bridges constructed by the
Government Code of the phrase State, banks, shores, roadsteads, and
"government-owned or controlled others of similar character;
corporation" as merely "clarificatory or
illustrative." This is fatal. The 1987 (2) Those which belong to the State,
Constitution prescribes explicit conditions for without being for public use, and are
the creation of "government-owned or intended for some public service or for
controlled corporations." The Administrative the development of the national
Code defines what constitutes a wealth. (Emphasis supplied)
"government-owned or controlled The term "ports x x x constructed by the
corporation." To belittle this phrase as State" includes airports and seaports. The
"clarificatory or illustrative" is grave error. Airport Lands and Buildings of MIAA are
To summarize, MIAA is not a government- intended for public use, and at the very least
owned or controlled corporation under intended for public service. Whether
Section 2(13) of the Introductory Provisions intended for public use or public service, the
of the Administrative Code because it is not Airport Lands and Buildings are properties
organized as a stock or non-stock of public dominion. As properties of public
corporation. Neither is MIAA a government- dominion, the Airport Lands and Buildings
owned or controlled corporation under are owned by the Republic and thus exempt
Section 16, Article XII of the 1987 from real estate tax under Section 234(a) of
Constitution because MIAA is not required to the Local Government Code.
meet the test of economic viability. MIAA is a 4. Conclusion
government instrumentality vested with Under Section 2(10) and (13) of the
corporate powers and performing essential Introductory Provisions of the Administrative
public services pursuant to Section 2(10) of Code, which governs the legal relation and
the Introductory Provisions of the status of government units, agencies and
Administrative Code. As a government offices within the entire government
instrumentality, MIAA is not subject to any machinery, MIAA is a government
kind of tax by local governments under
instrumentality and not a government-owned Manila International Airport Authority has
or controlled corporation. Under Section leased to private parties. We also
133(o) of the Local Government Code, MIAA declare VOID the assailed auction sale, and
as a government instrumentality is not a all its effects, of the Airport Lands and
taxable person because it is not subject to Buildings of the Manila International Airport
"[t]axes, fees or charges of any kind" by Authority.
local governments. The only exception is No costs.
when MIAA leases its real property to a
"taxable person" as provided in Section SO ORDERED.
234(a) of the Local Government Code, in Panganiban, C.J., Puno, Quisumbing,
which case the specific real property leased Ynares-Santiago, Sandoval-Gutierrez,
becomes subject to real estate tax. Thus, Austria-Martinez, Corona, Carpio Morales,
only portions of the Airport Lands and Callejo, Sr., Azcuna, Tinga, Chico-Nazario,
Buildings leased to taxable persons like Garcia, Velasco, Jr., J.J., concur.
private parties are subject to real estate tax
by the City of Parañaque.
Under Article 420 of the Civil Code, the EN BANC

Airport Lands and Buildings of MIAA, being 

devoted to public use, are properties of [G.R. No. L-23481. June 29, 1972.]

public dominion and thus owned by the 

State or the Republic of the Philippines. BISHOP OF CALBAYOG, Mons. Miguel F.
Article 420 specifically mentions "ports x x x Acebedo, Applicant-Appellant, v. THE
constructed by the State," which includes DIRECTOR OF LANDS and THE
public airports and seaports, as properties of MUNICIPALITY OF CATARMAN,
public dominion and owned by the Republic. SAMAR, Oppositors-Appellees.

As properties of public dominion owned by 

the Republic, there is no doubt whatsoever Padilla Law Office for applicant-
that the Airport Lands and Buildings are appellant.

expressly exempt from real estate tax under 

Section 234(a) of the Local Government Provincial Fiscal Eliseo de Veyra and
Code. This Court has also repeatedly ruled Assistant Provincial Fiscal Esprudion R.
that properties of public dominion are not Lim of Samar for oppositors-appellees.
subject to execution or foreclosure sale. 


WHEREFORE, we GRANT the petition. SYLLABUS


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. 1. LAND REGISTRATION; PUBLIC
66878. We DECLARE the Airport Lands and PROPERTY CANNOT BE THE SUBJECT
Buildings of the Manila International Airport OF REGISTRATION. — Where the
Authority EXEMPT from the real estate tax evidence on record shows that Lot 2, called
imposed by the City of Parañaque. We the "town plaza" by oppositor, is a public
declare VOID all the real estate tax plaza and that Nalazon St., traversing Lot 1
assessments, including the final notices of and Lot 2, is a public thoroughfare, said Lot
real estate tax delinquencies, issued by the 2 and Nalazon St. should be excluded from
City of Parañaque on the Airport Lands and the application for registration filed by the
Buildings of the Manila International Airport church.

Authority, except for the portions that the 

2. ID.; USE OF LAND AS PUBLIC PLAZA; thoroughfares, respectively, and hence not
PRESUMPTION. — Since neither the subject to registration.

Church nor the municipality could present 

positive proof of ownership or exclusive The petition for registration was filed by the
possession for an appreciable period of time Bishop of Calbayog, as a corporation sole,
and the only indubitable fact is the free and on March 27, 1953, alleging open,
continuous use of Lot 2 by the residents of continuous, exclusive and notorious
Catarman coupled with the fact that the possession, since the Spanish regime, of
town has no public plaza to speak of other three parcels of land known as Lot 1 and 2
than this disputed parcel of land, there is a in the survey plan Exhibit D, dated
strong presumption that the same was September 14-15, 1951, and Lot 3 in the
segregated as a public plaza upon the survey plan Exhibit E, the first two lots
founding of the municipality of Catarman.
 situated in the poblacion of Catarman,

 Samar, and the third in barrio Cawayan.

3. ID; LAND USED BY CHURCH FOR 

RELIGIOUS FUNCTIONS; REGISTRABLE Opposition to the application was filed by
BY CHURCH. — Where there is no the Director of Lands with respect to the
evidence that the municipality uses Lot 1 for three lots on October 1, 1953, and by the
its official activities to support its claim that Municipality of Catarman with respect to Lot
this lot is a municipal plaza but the applicant 2 during the survey thereof.

for registration, on the other hand, was able 

to prove that this lot was used for religious On October 15, 1955 the lower court issued
functions without permit from the an order of general default except as
municipality and a religious statue has been against the aforementioned oppositors. In
enthroned therein since 1927, the title of the the same order the Municipality of Catarman
church-applicant to said lot should be was given 5 days from notice within which to
confirmed. submit in proper form its opposition with

 respect to Lot 2. Copy of the order of
general default was received by the
DECISION municipal secretary on October 18, 1955,

 and on October 21 the Municipality of
Catarman filed its formal opposition as
MAKALINTAL, J.: ordered. On November 28, 1956 it filed an

 amended opposition, including therein the
eastern portion of Lot 1 and portions of
This is an appeal from the decision of the Nalazon street and Anunciacion street
Court of First Instance of Samar in Land traversing said Lot 1. A second amended
Registration Case No. 3448 involving three opposition was filed on June 15, 1957,
parcels of land located in Catarman, Samar particularly describing Lot 1 and Lot 2 and
(denominated as Lots 1, 2 and 3), titles to alleging that the eastern portion of Lot 1,
which were sought to be confirmed and being a municipal plaza, was registrable in
registered in favor of the Bishop of favor of the municipality.

Calbayog. The lower court adjudicated Lot 2 

in favor of the Municipality of Catarman and After initial hearing the lower court, in an
declared the eastern portion of Lot 1, and order dated June 15, 1957, denied the
the portions of Nalazon street and amendment on the ground that the proper
Anunciacion street traversing said Lot 1 and procedure, which was by means of petition
Lot 2, as public plaza and public for relief from the order of general default,
had not been resorted to.
 by the witnesses for both parties, Nalazon

 St., which traverses the entire length of the
After trial on the merits the lower court poblacion from south to north, crosses
rendered its decision on April 18, 1964 (1) Jacinto and Real streets and cuts across Lot
ordering the applicant to segregate from Lot 1 from Bonifacio St. to Rizal St., passing
1 Nalazon street and Anunciacion street as immediately in front of the church and the
public thoroughfares and the eastern portion convent. It extends across Lot 2 along its
of Lot 1, beginning from Nalazon street up to eastern boundary from Rizal St. to
Mendiola street, as public plaza of the Blumentrit St. Thus, from actual observation
Municipality of Catarman; (2) confirming the Lot 2 appears bounded on the east by
imperfect title of the applicant over the Nalazon St. and not by the municipal lot as
remaining portion of Lot 1, with all the described in the survey plan. With respect to
improvements existing thereon, and Lot 1, Nalazon St. divides the lot into the
ordering that the same be registered in the western portion, which forms about 2/3 of
name of the Bishop of Calbayog as a the entire area, and the eastern portion
corporation sole; (3) adjudicating Lot 2, which comprises the other 1/3. All the
together with all the improvements existing permanent improvements on Lot 1, which
thereon, except the portion of Nalazon street include the Roman Catholic church, the
along the eastern boundary of the lot, in belfry and convent, the St. Michael Academy
favor of the Municipality of Catarman; and building and a nun’s residence, are found on
(4) confirming the applicant’s title over Lot 3 the western portion. Lot 2 has no permanent
and ordering that the same be registered in improvements. The eastern portion of Lot 1,
the name of the Bishop of Calbayog.
 the area in contention, is an empty space

 except for concrete benches along the
The Bishop of Calbayog appealed.
 perimeter. A partly cemented path runs

 across this lot from east to west leading up
The evidence discloses the following to the front or entrance of the church and
pertinent facts: The survey plan presented appears to be an extension, of Anunciacion
by the applicant as Exhibit D, which was St., which runs from the bank of the
executed on September 14-15, 1951, shows Catarman river up to Mendiola St. In the
that the entire area of Lot 1 is 17,571 square middle of this path, half-way between
meters, more or less. It is bounded on the Mendiola St. and the church, is a statue of
north by a provincial road (now Rizal St.), on the Sacred Heart of Jesus.

the east by Mendiola St., on the south by 

Bonifacio St., and on the west by a national The Roman Catholic Church relies on the
road (Trece Martires del 1900 St.). Opposite testimony of its witnesses to prove its
Lot 1 to the northwest is Lot 2, which has an ownership. Mariano Singzon, 59 years old
area of approximately 4,707 square meters. and one-time municipal councilor of
It is bounded by the provincial road (Rizal Catarman and also counsel in this case for
St.) on the south, on the west by the the applicant, was the principal witness. The
national road (Trece Martires del 1900 St.), following is his testimony: Prior to 1910 the
on the north by Blumentrit St. and on the portions of Nalazon and Anunciacion streets
east by a municipal lot.
 traversing Lot 1 and Lot 2 were merely trails

 used by the parishioners in going to and
The survey plan does not contain any other from the church. A retracing (Exhibit M) of a
information or markings. But from the survey plan of the poblacion of Catarman
undisputed actual observation by the lower executed in 1909 shows that Anunciacion
court as well as from the description given St. stopped at Calle Garfil (now Mendiola
St.) and that there was no other street lower right hand corner of Exhibit G, which
traversing Lot 1. According to Atty. Singzon, reads "cont. negative" is the handwriting of
Nalazon St. was opened and improved by the Bishop and was meant to impart an
the municipality sometime in 1910 or 1911. order that the request contained in the
Anunciacion St. was opened only about 2 resolution be denied. In 1949 Mayor
years before the trial of the case. In 1920, Eusebio Moore of Catarman and Fr. Ortega
the municipality planted acacia trees on both asked him, Atty. Singzon, to draft a contract
sides of Nalazon St. inside Lot 1 and along of exchange between Lot 2 and a lot owned
Mendiola St. bordering Lot 1, but these trees by the municipality, but the exchange did not
were recently cut down upon order of the materialize because the lot intended to be
priest, Fr. Ricalde, and all that remain are bartered by the municipality had no title,
stumps. The statue of the Sacred Heart although he (the witness) found a copy of a
found in the middle of Anunciacion St. was tax declaration (Exhibit F) for Lot 2 dated
put up in 1927, but the base of the statue May 8, 1948 in the name of the Roman
had been standing on that site even before Catholic Church. This tax declaration
1905. The Roman Catholic Church had describes Lot 2 as being bounded by Trece
made no improvements on this eastern Martires del 1900 on the west, Nalazon St.
portion of Lot 1, which at present is being (instead of the municipal lot as described in
used as a public playground, although a Exhibit D) on the east, Blumentrit St. on the
bandstand stood there for about three years north and Rizal St. on the south.

after it was constructed in 1926 by the 

members of an orchestra which was The testimony of Atty. Singzon was
organized by a Fr. Ranera and which used corroborated by Candido Franzuela, a 63
to give musical performances on the year-old resident of Catarman and brother of
bandstand. On the feast of Corpus Christi Fr. Franzuela of the same municipality as
the parishioners would construct an altar on well as Salvadora Olmedo, an 82 year-old
this lot and hold the procession there.
 local resident, who died after giving her

 direct testimony. Franzuela confirmed the
With respect to Lot 2, although the Church existence on Lot 2 of camarins used as
had made no improvements thereon, around stables for the cattle owned by the church.
the turn of the century there were camarins He remembered that sometime in 1927 a
on this lot which were used as stables for group of Chinese asked permission from the
the horses and cows owned by a Fr. parish priest to use the lot as a football
Troquillo. In 1933 the municipal council ground, which they did for 2 years. On
passed a resolution (Exhibit G) asking the cross-examination he admitted that before
Bishop of Calbayog, then Mons. Hacbang, Nalazon St. was extended there was no
to donate a small portion of this lot for the visible boundary between Lot 2 claimed by
construction of a monument in honor of the the Church and the municipal lot on which a
Trece Martires del 1900, but this request public school building used to stand.
was denied by the Bishop. (Gonzalo Salvadora Olmedo also testified that when
Olmedo, the municipal secretary of she was yet schooling a certain Fr. Troquillo
Catarman in 1933 whose signature appears had camarins on Lot 2 which he used as
on Exhibit G, testified as to the authenticity stables for his cows and horses and that
of the resolution and even pointed to the whenever she and her classmates wanted
western portion of Lot 2 as the subject- to gather flowers on this lot they asked
matter of the request. Mons. Desoloc, who permission from the priest.

acted as private secretary to the Bishop at 

that time, testified that the writing on the The case for oppositors was presented by
the following witnesses:chanrob1es virtual the lot declared for taxation purposes. The
1aw library
 tax declaration (Exhibit 5) covers the entire

 area of Lot 2 claimed by the applicant as
1. Martin Evangelista, 65 years old and well as the uncontested municipal lot, from
former municipal treasurer of Catarman, Trece Martires del 1900 on the west to
declared that as property custodian of the Mendiola St. on the east, Blumentrit St. on
municipality before his retirement, he knew the north and Rizal St. on the south. This tax
that Lot 2 was owned by the municipality. declaration was marked on the reverse side
This lot was fenced by the municipality first as newly issued because according to him
with bamboos and then with barbed wire the old tax declaration could not be located
because the municipal prisoners were as the public records had been destroyed
planting camotes on this lot. On February during the war. Mayor Moore denied the
21, 1952 Fr. Franquela personally handed to authenticity of Resolution No. 19 (Exh. G)
him a letter (Exhibit 1) asking that he be sent by the municipal council to the Bishop
allowed to use a portion of Lot 2 as in 1933 on the ground that the document is
playground for the students of St. Michael in Spanish, a language not spoken either by
Academy. He endorsed the letter to the the municipal secretary who certified as to
municipal council of Catarman, which the correctness of the resolution or by the
passed Resolution No. 19 (Exhibit 3), municipal president, who supposedly
declaring Lot 2 as temporary public dictated its text. The witness produced the
playground until such time that the affidavits of Pelayo Saldo, municipal
municipality was ready to construct a councilor in 1933 and one of those listed as
permanent improvement thereon.
 present when the resolution was taken up,

 to the effect that Lot 2 is owned by the
2. Eusebio Moore, 54, mayor of Catarman municipality He also produced a similar
since 1948, declared that Lot 2 was owned affidavit executed by Antonio Oladive, a
by the municipality because when he was in former municipal president of Catarman. To
the elementary grades he attended classes further buttress the municipality’s position
in a public school building located on the the mayor produced a letter dated February
municipal lot next to Lot 2 and did school 29, 1952 by Matias Rodriguez, representing
gardening on Lot 2. When he was in Grade the Northern Samar Academy, requesting
6, as leader of the school football team he that Lot 2 be used as playground for the
invited the Chinese team to play and he was school. The mayor disclosed that he knew
the one who asked permission from the Rodriguez personally as he, the mayor, had
municipal president to use Lot 2 as their been president of the Northern Samar
football ground. When he assumed office in Academy.

1948 he had the lot fenced and planted to 

fruit trees and during fiestas temporary Nalazon St. and Anunciacion St., according
sheds would be put up for rent to itinerant to Mayor Moore, are cleaned and
merchants. It was Fr. Ortega who went to maintained by the municipality. With respect
see him in 1949 regarding the fencing of Lot to the eastern portion of Lot 1 the same had
2 by the municipality and together they always been regarded as owned by the
discussed the matter with Atty. Singzon, the municipality because the municipal building
lawyer for the Church, and the latter used to face this lot, although when he
suggested to him that Lot 2 be exchanged assumed the office of Mayor he had the
with another lot owned by the municipality backyard of the municipal building improved
and he replied that it was up to the and the stairway transferred there.

municipal council to decide. In 1950 he had 

3. Gaudencio Camposano, a 75 year-old to the public school and the general hospital
resident of Catarman, testified that a north of Lot 1.

bandstand was constructed on the eastern 

portion of Lot 1 in 1905 and it was not only With respect to Lot 2, there is no evidence
the orchestra organized by Fr. Ranera that that either the Church or the municipality
used to play there but also the municipal exercised clear acts of ownership or of
band. He also testified that when he was exclusive possession over this lot. It is true
attending school in 1905 the school garden that there were witnesses who testified that
was located inside Lot 2, which he believed around the turn of the century there were
to be in the possession of the municipality camarins inside this lot used as stables for
because nobody anode it and when he the horses and cows owned by a Fr.
became acting mayor he required the Troquillo. But these witnesses likewise
prisoners to clear Lot 2 and had it planted to testified that this lot had been used also as a
camotes and bananas.
 playground as well as a school garden by

 the students of the public school located on
The conclusion that may be drawn from the the adjoining municipal lot. This lot still
evidence on record is that Lot 2, called the serves as a public playground up to the
"town plaza" by oppositor, is a public plaza present. The municipality also makes use of
and that Nalazon St., traversing Lot 1 and this lot during town fiestas by constructing
Lot 2, is a public thoroughfare and should temporary sheds which are rented to
therefore be excluded from the application itinerant vendors. In 1949 the municipality
for registration filed by the Church.
 constructed a fence around this lot because

 the prisoners planted it to camotes. The
Admittedly Nalazon St. was originally merely Church, however, objected to the putting up
a trail used by the parishioners in going to of the fence.

and from the church. But since 1910, when 

it was opened and improved as a public All these facts only show that neither the
thoroughfare by the municipality, it had been Church nor the municipality possessed Lot 2
continuously used as such by the exclusively. While it may be true that as late
townspeople of Catarman without objection as 1933 the municipality acknowledged the
from the Church authorities. The acacia ownership of the Church over Lot 2 and in
trees along both sides of the street were 1949 the Church declared this lot for tax
planted by the municipality in 1920, although purposes, the continuous use thereof
these trees were cut down recently upon enjoyed by the residents of Catarman is
order of the priest. There is no proof that the admitted by all the witnesses. Thus, even
Church merely tolerated and limited the use the witnesses for the applicant testified that
of this street for the benefit of its the Church had made no improvements on
parishioners, considering that the street Lot 2 and that the same had been used
traverses the entire length of the poblacion primarily as playground for schoolchildren.
from south to north and that Lot 1, on which The municipality stands on the same footing
the church stands, is located almost at the as the Church. The tax declaration in its
center of the poblacion. The street does not name was issued only in 1950, when the
stop on Lot 1 but extends north toward the present dispute was already imminent. The
sea, passing along the lot occupied by the letters of Fr. Franzuela and Mr. Matias
Central Elementary School and the Northern Rodriguez asking permission to use this lot
Samar General Hospital. Thus it is clear that as a playground are not proof of municipal
Nalazon St. inside Lot 1 is used by the ownership, since after all the municipal
residents not only in going to the church but government may be considered the
administrator of public property, that is, Since neither the Church nor the
property for public use.
 municipality could present positive proof of

 ownership or exclusive possession for an
In the case of Harty v. Municipality of appreciable period of time and the only
Victoria, 13 Phil. 152, involving the question indubitable fact is the free and continuous
as to the ownership of a parcel of land which use of Lot 2 by the residents of Catarman,
surrounded the parish church of the town, coupled with the fact that the town has no
this Court said:jgc:chanrobles.com.ph
 public plaza to speak of other than this

 disputed parcel of land, there is a strong
"Even though all the remaining space of presumption that the same was segregated
land which now forms the great plaza of the as a public plaza upon the founding of the
town of Victoria had been owned by the said municipality of Catarman.

Tañedo, it must be presumed that he waived 

his right thereto for the benefit of the The municipality, as has been heretofore
townspeople, since from the creation or noted, was declared in default with respect
establishment of the town, down to the to Lot 1, and the default was never lifted.
present day, all the residents, including the Indeed the amended opposition of the
curate of said town, have enjoyed the free municipality which purported to include the
use of said plaza. eastern portion of said lot, was denied by
the lower court. In any event, the
x x x municipality failed to establish its allegation

 with respect to the said portion of Lot 1 and

 to the portion of Anunciacion St. within this
That both the curates and the lot. This portion is only a path which is
gobernadorcillos of said town procured fruit cemented from the corner of Mendiola St. to
trees and plants to be set out in the plaza, the monument of the Sacred Heart, and
does not constitute an act of private asphalted from the monument to the front of
ownership, but evidences the public use the church. There is no evidence that this
thereof, or perhaps the intention to improve path was planted to acacia trees, unlike
or embellish the said plaza for the benefit of Nalazon St. and Mendiola St., where acacia
the townspeople. stumps were observed by the lower court.
The explanation offered by Mayor Moore as
x x x to the presence of this religious monument

 in the middle of a public thoroughfare — that

 the residents of Catarman are religious — is
Certain it is that the plaintiff has not proven not convincing. The statue was enthroned
that the Catholic Church or the parish of only in 1927, when the separation of church
Victoria was the owner or proprietor of the and state was already a confirmed legal
said extensive piece of land which now principle. The statue was even recently
forms the public plaza, of said town, nor that improved with the construction of a platform
it was in possession thereof under the form beneath it. Its location shows that the path
and conditions required by law, inasmuch as leading to it and to the front of the church is
it has been fully proven that said plaza has not an extension of Anunciacion St. but was
been used without let or hindrance by the opened mainly for the benefit of the
public and the residents of the town of parishioners. The eastern portion of Lot 1
Victoria ever since its creation."cralaw itself is used for religious functions, such as
virtua1aw library
 the feast of Corpus Christi and the

 procession held on the occasion. It is
admitted by the municipality that the Church on
does not ask for a permit whenever it uses ,
this lot for such activities.
 - versus - AUSTRIA-MARTINEZ,

 CORONA,*
On the other hand, there is no evidence that NACH
the municipality uses this lot for its official URA, and
activities to support its claim that this lot is a REYES, JJ.
municipal plaza. The circumstance that the REPUBLIC OF THE
municipal band used to perform weekly on PHILIPPINES, represented Promulgated:
the "kiosko" found on this lot sometime in by the Director of Lands,
1927 does not constitute an act of exclusive Respondent. February 4,
possession which could be the basis of a 2008
title. Moreover, the "kiosko" stood only for
three years and the municipality has not x-------------------------------
adduced any evidence that it continued to -------------------x
use the lot after the "kiosko" was
demolished.
 DECISION

For the foregoing reasons, the appealed
decision is hereby modified in the sense that REYES, R.T., J.:
Lot 2, being a public plaza, and Nalazon St.,
traversing Lot 1 and Lot 2, being a public
thoroughfare, are not subject to registration; FOREST lands are outside the
and that the title of the Bishop of Calbayog commerce of man and unsusceptible of
with respect to the entire area of Lot 1, private appropriation in any form.[1]
except the portion covered by Nalazon St.,
and to Lot 3, is confirmed and ordered
registered in his name, as corporation sole. It is well settled that a certificate of
In all other respects the decision appealed title is void when it covers property of public
from is affirmed. No pronouncement as to domain classified as forest, timber or
costs.
 mineral lands. Any title issued covering non-

Concepcion, C.J., Reyes, J.B.L., Zaldivar, disposable lots even in the hands of an
Castro, Fernando, Teehankee, Barredo, alleged innocent purchaser for value shall
Makasiar and Antonio, JJ., concur. be cancelled.[2] The rule must stand no
matter how harsh it may seem. Dura lex sed
lex.[3] Ang batas ay maaaring mahigpit
subalit ito ang mananaig.
LAND BANK OF THE G.R. No. 150824
PHILIPPINES,
Petitioner, Present: Before Us is a petition for review
YNARES-SANTIAGO, J., on certiorari under Rule 45 filed by petitioner
Ch Land Bank of the Philippines (LBP)
air appealing the: (1) Decision[4] of the Court of
pe
r s Appeals (CA), dated August 23, 2001, in
CA-G.R. CV No. 64121 entitled Republic of
the Philippines, represented by the Director of Title (TCTs) replaced it, all in the name of
of Lands v. Angelito Bugayong, et al.; and Bugayong.
(2) Resolution [5] of the same Court,
dated November 12, 2001, denying LBPs Bugayong sold all of the four lots to
motion for reconsideration. different persons. Lot No. 4159-A, which
was then under TCT No. T-32769, was sold
The CA affirmed the Decision[6] of the to spouses Lourdes and Candido
Regional Trial Court (RTC), dated July 9, Du.Accordingly, said TCT was cancelled and
1996, declaring null and void Original replaced by TCT No. T-42166 in the name of
Certificate of Title (OCT) No. P-2823, as well spouses Du.[11]
as other titles originating from it, on the
ground that at the time it was issued, the Afterwards, the spouses Du further
land covered was still within the forest zone. caused the subdivision of the land covered
[7] by their TCT No. T-42166 into two (2)
lots. They sold one of said lots to spouses
The Facts Felix and Guadalupe Dayola, who were
issued TCT No. T-45586. The other
OCT No. P-2823 was issued remaining lot, registered under TCT No.
on September 26, 1969 in favor of one T-45587, was retained by and registered in
Angelito C. Bugayong. Said mother title the names of spouses Du.[12]
emanated from Sales Patent No. 4576
issued in Bugayongs name on September Subsequently, Du spouses TCT No.
22, 1969.[8] It covered a parcel of land T-45587 was cancelled and was replaced
located in Bocana, Kabacan, Davao City, by TCT No. T-57348 registered in the name
with an area of 41,276 square meters. It was of Lourdes Farms, Inc. subject of this case.
originally identified and surveyed as Lot No. [13] Lourdes Farms, Inc. mortgaged this

4159 under Plan SI-(VIII-1), 328-D. Marshy property to petitioner LBP on April 14, 1980.
and under water during high tide, it used to [14]

be a portion of a dry river bed near the


mouth of Davao River.[9] The validity of OCT No. P-2823, as
well as its derivative TCTs, remained
undisturbed until some residents of the land
it covered, particularly those along Bolton
The land was initially subdivided into Diversion Road, filed a formal petition before
four lots, viz.: Lot Nos. 4159-A, 4159-B, the Bureau of Lands on July 15, 1981.[15]
4159-C and 4159-D under Subdivision Plan
(LRC) Psd-139511 approved by the
Commissioner of Land Registration on April
23, 1971.[10] Consequently, OCT No. P-2823 Investigation and ocular inspection
was cancelled and new Transfer Certificates were conducted by the Bureau of Lands to
check the legitimacy of OCT No. by the court, Lourdes Farms, Inc. should be
P-2823. They found out that: (1) at the time ordered to pay its outstanding obligations to
Sales Patent No. 4576 was issued to LBP or to provide a new collateral security.
Bugayong, the land it covered was still [22]

within the forest zone, classified under


Project No. 1, LC-47 dated August 6, 1923; RTC Judgment
it was released as alienable and disposable
land only on March 25, 1981, pursuant Eventually, the RTC rendered its
to BFD Administrative Order No. 4-1585 and judgment[23] on July 9, 1996 determining
to the provisions of Section 13, Presidential that:
Decree (P.D.) No. 705;[16] (2) the land was
marshy and covered by sea water during x x x The mistakes and
high tide; and (3) Bugayong was never in the flaws in the granting of the
title were made by the Bureau
actual possession of the land.[17] of Lands personnel more
particularly the Director of
In view of the foregoing findings, the Lands who is the Officer
Bureau of Lands resolved that the sales charged with the following the
patent in favor of Bugayong was improperly provisions of the Public Land
Law. x x x.
and illegally issued and that the Director of
Lands had no jurisdiction to dispose of the It is clear that the mother
subject land.[18] Title, OCTP-2823 in the name
of defendant Bugayong was
Upon recommendation of the Bureau issued at a time when the area
was not yet released by the
of Lands, the Republic of the Philippines Bureau of Forestry to the
represented by the Director of Lands, Bureau of Lands.
through the Office of the Solicitor General
(OSG), instituted a complaint[19] before The area covered by
the RTC in Davao, Branch 15, for the OCT No. P. 2823 was not yet
declared by the Bureau of
cancellation of title/patent and reversion of Lands alienable and disposable
the land covered by OCT No. P-2823 into when the said OCT was
the mass of public domain. The complaint, issued. The subdivision of the
as amended,[20] was filed against Bugayong lot covered by OCT P-2823 into
and other present owners and mortgagees 4 lots covered by TCT Nos.
T-32768, 32769, 32756 and
of the land, such as Lourdes Farms, Inc. 32771 did not cure the defect. x
and the latters mortgagee, petitioner LBP. x x.[24]

In its answer with cross-claim,[21] LBP The RTC explained that titles issued
claimed that it is a mortgagee in good faith to private parties by the Bureau of Lands are
and for value. It prayed that should TCT No. void ab initio if the land covered by it is a
T-57348 of Lourdes Farms, Inc. be annulled forest land.[25] It went further by stating that if
the mother title is void, all titles arising from w i t h
the mother title are also void.[26] It thus ruled defendant
in favor of the Republic with a fallo reading: Allied Bank.

E. TCT Nos.
IN VIEW 68154 and
WHEREOF, judgment is hereby 32768 in the
rendered declaring Original names of
Certificate of Title No. P-2823 defendants/
issued in the name of s p o u s e s
defendant Angelito Bugayong M a g l a n a
null and void. The following Santamaria.
Transfer Certificate of Titles
which were originally part of the 2. All private
lot covered by O.C.T. No. defendants
P-2823 are likewise declared shall give to
void: the Davao
City Register
1.A. TCT No. of Deeds their
57348 in the titles, who
name of shall cancel
defendant Lou the Transfer
rdes Farms Certificate of
mortgaged to T i t l e s
defendant mentioned in
Land Bank. paragraph
number one.
B. TCT No. 84749
in the name of 3. Lot No. 4159,
defendants Plan SI
Johnny and (VIII-1) 328-D
Catherine Du covered by
mortgaged to O.C.T. P-2823
defendant is hereby
Development REVERTED
Bank of to the mass of
the Philippine public domain.
s.
SO ORDERED.
C. TCT No. 37386 [27] (Underscori
in the name of ng supplied)
defendants
s p o u s e s Disagreeing with the RTC judgment, LBP
Pahamotang
mortgaged to appealed to the CA on October 31, 1996. It
defendant asserted in its appellants brief[28] that it
Lourdes Du validly acquired mortgage interest or lien
mortgaged over the subject property because it was an
innocent mortgagee for value and in good credited to the 30-year
faith.[29] It also emphasized that it is a requirement (now, since June
government financial institution. 12, 1945) under Section 48(b)
of the Public Land Act. It is only
from that date that the period of
CA Disposition occupancy for purposes of
confirmation of imperfect or
In a Decision[30] dated August 23, incomplete title may be
2001, the CA ruled against the appellants, counted. Since the subject land
[31] disposing thus: was declared as alienable and
disposable only on March 25,
1981, appellants and their
WHEREFORE, premises predecessors-in-interest could
considered, the present not claim any vested right
appeals are hereby thereon prior to its release from
DISMISSED and the Decision public forest zone.
of the trial court in Civil Case
No. 17516 is hereby The inclusion of forest
AFFIRMED.[32] land in a title, whether title be
issued during the Spanish
The CA confirmed that the evidence regime or under
for the plaintiff clearly established that the the Torrens system, nullifies the
land covered by OCT No. P-2823 issued title. It is, of course, a well-
recognized principle that the
pursuant to a sales patent granted to Director of Lands (now Land
defendant Angelito C. Bugayong was still Management Bureau) is bereft
within the forestal zone at the time of the of any jurisdiction over public
grant of the said patent.[33] It explained: forest or any lands not capable
of registration. It is the Bureau
of Forestry that has jurisdiction
Forest lands or forest and authority over the
reserves, are incapable of demarcation, protection,
private appropriation and management, reproduction,
possession thereof, however occupancy and use of all public
long, cannot convert them into forests and forest reservations
private properties. This is and over the granting of
premised on the Regalian licenses for the taking of
Doctrine enshrined not only in products therefrom. And where
the 1935 and 1973 Constitution the land applied for is part of
s but also in the public forest, the land
the 1987 Constitution. Our registration court acquires no
Supreme Court has upheld this jurisdiction over the land, which
rule consistently even in earlier is not yet alienable and
cases. It has also been held disposable.
that whatever possession of the
land prior to the date of release Thus, notwithstanding the
of forested land as alienable issuance of a sales patent over
and disposable cannot be the subject parcel of land, the
State may still take action to When LBPs motion for
have the same land reverted to reconsideration was denied, it resorted to
the mass of public domain and the petition at bar.
the certificate of title covering
said forest land declared null
and void for having been Issues
improperly and illegally
issued. Titles issued over non- LBP seeks the reversal of the CA
alienable public lands have disposition on the following grounds
been held as void ab initio.The
defense of indefeasibility of title
issued pursuant to such patent A.
does not lie against the THE COURT OF APPEALS
State. Public land fraudulently ERRED IN NOT FINDING
included in patents or T H AT THE
certificates of title may be PETITIONER LAND BANK OF
recovered or reverted to the THE PHILIPPINES MORTGAG
State in accordance with E RIGHT AND INTEREST AS
Section 101 of the Public Land AN INNOCENT
Act. In such cases, prescription PURCHASER (MORTGAGEE)
does not lie against the FOR VALUE AND IN GOOD
State. Likewise, the FAITH OVER
government is not estopped by THE SUBJECT LAND COVER
such fraudulent or wrongful ED BY TCT NO. T-57348 IS
issuance of a patent over public VALID AND SUBSISTING IN
forest land inasmuch as the ACCORDANCE WITH THE
principle of estoppel does not LAW AND EXISTING
operate against the JURISPRUDENCE IN OUR
Government for the acts of its COUNTRY.
agents. x x x.[34] (Citations
omitted) B.
THE COURT OF APPEALS
ERRED IN NOT FINDING
With respect to LBPs contention[35] that it PETITIONER LAND BANK OF
was a mortgagee in good faith and for value, THE PHILIPPINES MORTGAG
the CA declared, citing Republic v. E RIGHT AND INTEREST
R e y e s[36] t h a t : m o r t g a g e e s o f n o n - OVER THE
SUBJECT LAND AS
disposable lands where titles thereto were VA L I D A N D S U B S I S T I N G
erroneously 
 UNDER THE
issued acquire no protection under the land C O N S T I T U T I O N A L
registration law. Appellants-mortgagees GUARANTEE OF NON-
proper recourse therefore is to pursue their IMPAIRMENT OF OBLIGATION
OF CONTRACTS.
claims against their respective mortgagors
and debtors.[37] C.
THE COURT OF APPEALS
ERRED IN NOT AWARDING
T O int
PETITIONER LAND BANK OF e r
THE PHILIPPINES THE es
R E L I E F P R AY E D F O R t
UNDER ITS CROSS- ov
CLAIM AGAINST CO- e r
DEFENDANT LOURDES t h
FA R M S , I N C . , T H AT I S , e
ORDERING SAID CO- l a
DEFENDANT LOURDES nd
FARMS, INC. TO PAY ITS co
OUTSTANDING OBLIGATION ve
TO THE LANDBANK r e
COVERED BY THE d
S U P P O S E D by
NULL AND VOID TCT NO. T
T-57348, OR TO PROVIDE A CT
SUBSTITUTE COLLATERAL IN N
LIEU OF SAID TCT NO. o .
T- 5 7 3 4 8 . [ 3 8 ] ( U n d e r s c o r i n g T -
supplied) 57
34
8.

It has been established and admitted by


Our Ruling LBP that: (1) the subject land mortgaged to
it by Lourdes Farms, Inc. is covered
LB by TCT No. T-57348; and (2) the said TCT is
P derived from OCT No. P-2823 issued to
ha Bugayong.[39]
s
no It was further ascertained by the courts
va
lid below that at the time OCT No. P-2823 was
an issued to Bugayong on September 26,
d 1969, the land it covered was still within the
su forest zone. It was declared as alienable
bs and disposable only on March 25, 1981.[40]
ist
i n
g Despite these established facts, LBP argues
m that its alleged interest as mortgagee of the
ort subject land covered by TCT No. T-57348
ga must be respected. It avers that TCT No.
ge
es T-57348 is a Torrens title which has no
written indications of defect or vice affecting
the ownership of Lourdes Farms, period of thirty (30) years required under
Inc. Hence, it posits that it was not and Section 48(b) of Commonwealth Act No.
could not have been required to explore or 141, as amended.[43] Hence, LBP acquired
go beyond what the title indicates or to no rights over the land.
search for defects not indicated in it.
Under Article 2085 of the Civil Code, it
LBP cites cases where the Court ruled that is essential that the mortgagor be the
a party is not required to explore further than absolute owner of the thing mortgaged, to
what the Torrens title upon its face indicates wit:
in quest of any hidden defect of an inchoate
right that may subsequently defeat his right ARTICLE 2085. The
to it; and that a bank is not required before following requisites are essential
accepting a mortgage to make an to the contracts of pledge and
mortgage:
investigation of the title of the property being
given as security. LBP submits that its right (1) That they be
as a mortgagee is binding against the whole constituted to secure the
world and may not be disregarded. [41] fulfillment of a principal
obligation;

(2) That the pledgor or


It further argues that review or mortgagor be the absolute
reopening of registration is proscribed, as owner of the thing pledged or
the title has become incontrovertible mortgaged;
pursuant to Section 32 of P.D. No. 1529;
(3) That the persons
and that its mortgage rights and interest constituting the pledge or
over the subject land is protected by the mortgage have the free disposal
constitutional guarantee of non-impairment of their property, and in the
of contracts.[42] absence thereof, that they be
legally authorized for the
purpose. (Emphasis ours)
The contention that LBP has an
interest over the subject land as a Since Lourdes Farms, Inc. is not the
mortgagee has no merit. The mortgagor, owner of the land, it does not have the
Lourdes Farms, Inc. from which LBP capacity to mortgage it to LBP. In De la Cruz
supposedly obtained its alleged interest has v. Court of Appeals,[44] the Court declared:
never been the owner of the mortgaged
land. Acquisition of the subject land by While it is true that the
Lourdes Farms, Inc. is legally impossible as mortgagees, having entered
the land was released as alienable and into a contract with petitioner as
disposable only on March 25, 1981. Even at mortgagor, are estopped from
present, no one could have possessed the questioning the latters
ownership of the mortgaged
same under a claim of ownership for the
property and his concomitant certificate of title is void when it covers
capacity to alienate or property of public domain classified as forest
encumber the same, it must be or timber or mineral land. Any title issued
considered that, in the first
place, petitioner did not covering non-disposable lots even in the
possess such capacity to hands of an alleged innocent purchaser for
encumber the land at the time value shall be cancelled.[47]
for the stark reason that it had
been classified as a forest land
and remained a part of the Moreover, the Court has already
patrimonial property of the addressed the same issue in its Resolution
State. Assuming, without of November 14, 2001 on the petition filed
admitting, that the mortgagees by the Philippine National Bank (PNB) in G.
cannot subsequently question
the fact of ownership of R. No. 149568 entitled Philippine National
petitioner after having dealt with Bank v. Republic of
him in that capacity, still, the Philippines represented by the Director
petitioner was never vested of Lands, 

with the proprietary power to which also appealed the subject CA
encumber the property. In fact,
even if the mortgagees decision. PNB, like LBP, is also a mortgagee
continued to acknowledge of another derivative TCT of the same OCT
petitioner as the owner of the No. 2823. Said resolution reads:
disputed land, in the eyes of the
law, the latter can never be On September 22, 1969,
presumed to be owner. Angelito C. Bugayong was
issued a sales patent covering
As correctly pointed out by the OSG, a 41,276 square meter parcel of
mortgagees of non-disposable lands, titles land in Bocana, Barrio
Kabacan, Davao City by the
to which were erroneously issued, acquire Bureau of Lands. On the basis
no protection under the Land Registration of the sales patent, the Register
Law.[45] of Deeds of Davao City issued
OCT No. P-2823 to Bugayong.
Bugayong later subdivided the
Even assuming that LBP was able to land into four lots, one of which
obtain its own TCT over the property by (Lot No. 4159-B covered
means of its mortgage contract with Lourdes by TCT No. T-32770) was sold
Farms, Inc., the title must also be cancelled by him to the spouses
Reynaldo Rogacion and
as it was derived from OCT No. P-2823 Corazon Pahamotang. After
which was not validly issued to obtaining TCT No. T-37786 in
Bugayong. Forest lands cannot be owned their names, the spouses
by private persons. It is not registerable mortgaged the lot to the
whether the title is a Spanish title or Philippine National Bank
(PNB). As they defaulted in the
a Torrens title.[46] It is well settled that a payment of their loan,
the PNB foreclosed the on TCT No. T-37786 showing
property and purchased it at the the mortgagors Reynaldo
foreclosure sale as the highest Rogacion and Corazon
bidder. E v e n t u a l l y, Pahamotangs ownership of the
the PNB consolidated its title. property.

Sometime in 1981, upon The contention is without


the petition of the residents of merit. It is well settled that a
the land, the Bureau of Lands certificate of title is void when it
conducted an investigation into covers property of public
the sales patent issued in favor domain classified as forest or
of Angelito C. Bugayong and timber or mineral lands. Any
found the sales patent to have title issued covering non-
been illegally issued because disposable lots even in the
(1) the land was released as hands of an alleged innocent
alienable and disposable only purchaser for value shall be
on March 25, 1981; previous to c a n c e l l e d ( R e p u b l i c v.
that, the land was within the Reyes, 155 SCRA 313 (1987)).
forest zone; (2) the land is
covered by sea water during (Republic v. Court of
high tide; and (3) the patentee, Appeals, 148 SCRA 480
Angelito C. Bugayong, had (1987)). In this case, petitioner
never been in actual does not dispute that its
possession of the land. predecessor-in-interest,
Angelito C. Bugayong, had the
Based on this subject property registered in
investigation, the government his name when it was forest
instituted the present suit in land. Indeed, even if the subject
1987 for cancellation of title/ property had been eventually
patent and reversion of the segregated from the forest
parcel of land against Angelito zone, neither petitioner nor its
C. Bugayong, the Rogacion predecessors-in-

spouses, and the PNB, among interest could have possessed
others. the same under claim of
ownership for the requisite
On July 6, 1996, the trial period of thirty (30) years
court rendered a decision because it was released as
declaring OCT No. P-2823 and alienable and disposable only
all titles derived therefrom null on March 25, 1981.
and void and ordering reversion
of the subject property to the Second. Petitioners
mass of the public domain. On contention that respondents
appeal, the Court of Appeals action for reversion is barred by
affirmed the trial courts prescription for having been
decision. Hence, this petition. filed nearly two decades after
the issuance of Bugayongs
First. Petitioner contends sales patent is likewise without
that it had a right to rely merit. Prescription does not lie
against the State for reversion W
of property which is part of the h e n
public forest or of a forest t h e
reservation registered in favor govern
of any party. Public land ment
registered under the Land is the
Registration Act may be r e a l
recovered by the State at any party
time (Republic v. Court of i n
Appeals, 258 SCRA 223 interes
(1996)).[48] t, and
i s
Contrary to the argument of LBP, procee
since the title is void, it could not have d i n g
mainly
become incontrovertible. Even prescription t o
may not be used as a defense against the assert
Republic. On this aspect, the Court in Reyes its own
v. Court of Appeals,[49] citing Republic v. rights
Court of Appeals,[50] held: a n d
recove
r its
Petitioners contention o w n
that the government is now proper
estopped from questioning the t y ,
validity of OCT No. 727 issued there
to them, considering that it took can be
the government 45 years to n o
assail the same, is defens
erroneous. We have ruled in a e on
host of cases that prescription t h e
does not run against the ground
government. In point is the case o f
of Republic v. Court of Appeals, laches
wherein we declared: o r
limitati
And in so far on x x
as the timeliness of x.
the action of the
Government is Pu
concerned, it is b l i c
basic that l a n d
prescription does fraudul
not run against the ently
State x x x. The includ
case law has also ed in
been: patent
s or
certific t h e
ates of State
title is not
m a y barred
b e b y
recove prescri
red or ption. (
reverte Emph
d to a s i s
t h e ours)
State
i n Th
accord e r
ance e
w i t h i s
Sectio no
n 101 im
of the pa
Public i r
Land m
Act. Pr en
escript t
i o n o f
does co
not lie ntr
agains ac
t the t
State bu
i n t a
such va
cases lid
for the ex
Statut e r
e of c i
Limitat se
i o n s o f
does po
not run lic
agains e
t the po
State. we
T h e r
right of o f
reversi t h
on or e
reconv St
eyanc
e to
a t erosion results. With erosion
e. come the dreaded floods that
wreak havoc and destruction to
The constitutional guarantee of non- property crops, livestock,
impairment of contracts may not likewise be houses and highways not to
mention precious human
used by LBP to validate its interest over the lives. Indeed, the foregoing
land as mortgagee. The States restraint observations should be written
upon the right to have an interest or down in a lumbermans
ownership over forest lands does not violate decalogue.
the constitutional guarantee of non-
Because of the
impairment of contracts. Said restraint is a importance of forests to the
valid exercise of the police power of the nation, the States police power
State. As explained by the Court in Director has been wielded to regulate
of Forestry v. Muoz:[51] the use and occupancy of forest
and forest reserves.
The view this Court takes To be sure, the validity of
of the cases at bar is but in the exercise of police power in
adherence to public policy that the name of the general welfare
should be followed with respect cannot be seriously attacked.
to forest lands. Many have Our government had definite
written much, and many more instructions from the
have spoken, and quite often, Constitutions preamble to
about the pressing need for promote the general
forest preservation, welfare. Jurisprudence has time
conservation, protection, and again upheld the police
development and reforestation. power over individual rights,
Not without justification. For, because of the general
forests constitute a vital welfare. Five decades ago, Mr.
segment of any country's Justice Malcolm made it clear
natural resources. It is of that the right of the individual is
common knowledge by now necessarily subject to
that absence of the necessary reasonable restraint by general
green cover on our lands law for the common good and
produces a number of adverse that the liberty of the citizen
or ill effects of serious may be restrained in the
proportions.Without the trees, interest of public health, or of
watersheds dry up; rivers and the public order and safety, or
lakes which they supply are otherwise within the proper
emptied of their contents. The scope of the police power. Mr.
fish disappear. Denuded areas Justice Laurel, about twenty
become dust bowls. As years later, affirmed the precept
waterfalls cease to function, so when he declared that the state
will hydroelectric plants. With in order to promote the general
the rains, the fertile topsoil is welfare may interfere with
washed away; geological personal liberty, with property,
and with business and under the police power is not only proper but
occupations and that [p]ersons necessary.[55]
and property may be subjected
to all kinds of restraints and
burdens, in order to secure the Preservation of our forest lands could
general comfort, health, and entail intrusion upon contractual rights as in
prosperity of the this case but it is justified by the Latin
state. Recently, we quoted from maxims Salus populi est suprema
leading American case, which lex and Sic utere tuo ut alienum non laedas,
pronounced that neither
property rights nor contract which call for the subordination of individual
rights are absolute; for interests to the benefit of the greater
government cannot exist if the number.[56]
citizen may at will use his
property to the detriment of his While We sympathize with petitioner,
fellows, or exercise his freedom
of contract to work them harm, We nonetheless cannot, in this instance,
and that, therefore, [e]qually yield to compassion and equity. The rule
fundamental with the private must stand no matter how harsh it may
right is that of the public to seem.[57]
regulate it in the common
interest. (Emphasis ours and
citations omitted)
W
In Edu v. Ericta,[52] the Court defined e
ca
police power as the authority of the state to nn
enact legislation that may interfere with o t
personal liberty or property in order to r e
promote the general welfare. It is the power so
to prescribe regulations to promote the l v
e
health, morals, peace, education, good t h
order or safety, and general welfare of the e
people. It is that inherent and plenary power c r
of the State which enables it to prohibit all os
things hurtful to the comfort, safety and s -
c l
welfare of society.[53] It extends to all the a i
great public needs and is described as the m
most pervasive, the least limitable and the for
most demanding of the three inherent l a
powers of the State, far outpacing taxation ck
o f
and eminent domain.[54] It is a ubiquitous f a
and often unwelcome intrusion. Even so, as c t
long as the activity or the property has some ua
relevance to the public welfare, its regulation l
ba the RTC to file an answer to the cross-
s i claim. Likewise, Lourdes Farms, Inc. was
s . not notified of the proceedings before the
Th
e CA. It was not also made a party to this
c r petition.
os
s - LPB now contends that the CA erred
c l in not granting its cross-claim against
a i
m Lourdes Farms, Inc. We are thus confronted
m with the question: Should We now order
us Lourdes Farms, Inc. to comply with the
t demand of LBP?
be
r e
m We rule in the negative. It may be true that
an Lourdes Farms, Inc. still has an obligation to
de LBP but We cannot make a ruling regarding
d the same for lack of factual basis. There is
t o no evidence-taking on the cross-
t h
e claim. No evidence was adduced before
RT the RTC or the CA regarding it. No factual
Cf finding or ruling was made by the RTC or
or the CA about it.
fur
t h
e r It bears stressing that in a petition for
pr review on certiorari, the scope of this Court's
oc judicial review of decisions of the CA is
ee generally confined only to errors of
d i law. Questions of fact are not entertained.[59]
ng
s.
Moreover, the failure to make a ruling
LBP filed a cross-claim against on the cross-claim by the RTC was not
Lourdes Farms, Inc. before the RTC.[58] The assigned as an error in LBPs appellants
cross-claim is for the payment of cross- brief[60] before the CA. Hence, the CA
defendant Lourdes Farms, Inc.s alleged cannot be faulted for not making a ruling on
obligation to LBP or its submission of a it.
substitute collateral security in lieu of the
property covered by TCT No. T-57348. As held in De Liano v. Court of
Appeals,[61] appellant has to specify in what
However, the records do not show aspect of the law or the facts the trial court
that Lourdes Farms, Inc. was required by erred. The conclusion, therefore, is that
appellant must carefully formulate his same, it recommended that LBP pursue its
assignment of errors. Its importance cannot claim against Lourdes Farms, Inc.
be underestimated, as Section 8, Rule 51 of 

the Rules of Court will attest:

Questions that may be All told, although the relationship


decided. No error which does between LBP and Lourdes Farms, Inc. as
not affect the jurisdiction over mortgagee and mortgagor was established,
the subject matter or the validity the cross-claim of LBP against Lourdes
of the judgment appealed from Farms, Inc. was left unresolved.
or the proceedings therein will
be considered unless stated in
the assignment of errors, or The Court is not in a position to
closely related to or dependent resolve the cross-claim based on the
on an assigned error and records. In order for the cross-claim to be
properly argued in the brief, equitably decided, the Court, not being a
save as the court may pass
upon plain errors and clerical trier of facts, is constrained to remand the
errors. case to the RTC for further
Apparently, the cross-claim was taken proceedings. Remand of the case for further
for granted not only by the RTC but also by proceedings is proper due to absence of a
LBP. The cross-claim was not included as a definitive factual determination regarding the
subject or issue in the pre-trial order and cross-claim.[64]
instead of asking that the same be heard,
LBP filed a motion[62] to submit the main WHEREFORE, the appealed Decision of the
case for resolution. The main case was thus Court of Appeals is hereby AFFIRMED with
resolved by the RTC without touching on the the MODIFICATION that the cross-claim
merits of the cross-claim. of petitioner Land Bank of
the Philippines against Lourdes Farms, Inc.
On the other hand, while the CA did is REMANDED to the Regional Trial Court,
not make a categorical ruling on LBPs Branch 15, Davao City, for further
cross-claim, it pointed out that: (1) as found proceedings.
by the RTC, there is a mortgage contract
between LBP and Lourdes Farms, Inc., with SO ORDERED.
LBP as mortgagee and Lourdes Farms, Inc.
as mortgagor; and (2) LBPs proper recourse
is to pursue its claim against Lourdes
Farms, Inc.[63] [G.R. No. 144057. January 17, 2005]

The CA thus impliedly ruled that LBPs


cross-claim should not be included in this REPUBLIC OF THE
PHILIPPINES, petitioner, vs. THE
case. Instead of making a ruling on the
HONORABLE COURT OF APPEALS
and CORAZON The evidence on record reveals that the
NAGUIT, respondents. subject parcel of land was originally
declared for taxation purposes in the name
DECISION of Ramon Urbano (Urbano) in 1945 under
TINGA, J.: Tax Declaration No. 3888 until 1991.[4] On
July 9, 1992, Urbano executed a Deed of
This is a Petition for Review on Quitclaim in favor of the heirs of Honorato
Certiorari under Rule 45 of the 1997 Rules Maming (Maming), wherein he renounced
of Civil Procedure, seeking to review the all his rights to the subject property and
Decision[1] of the Sixth Division of the Court confirmed the sale made by his father to
of Appeals dated July 12, 2000 in CA-G.R. Maming sometime in 1955 or 1956.
[5] Subsequently, the heirs of Maming
SP No. 51921. The appellate court affirmed
the decisions of both the Regional Trial executed a deed of absolute sale in favor of
Court (RTC),[2] Branch 8, of Kalibo, Aklan respondent Naguit who thereupon started
dated February 26, 1999, and the occupying the same. She constituted
7thMunicipal Circuit Trial Court (MCTC)[3] of Manuel Blanco, Jr. as her attorney-in-fact
Ibajay-Nabas, Aklan dated February 18, and administrator. The administrator
1998, which granted the application for introduced improvements, planted trees,
registration of a parcel of land of Corazon such as mahogany, coconut and gemelina
Naguit (Naguit), the respondent herein. trees in addition to existing coconut trees
which were then 50 to 60 years old, and
The facts are as follows: paid the corresponding taxes due on the
On January 5, 1993, Naguit, a Filipino subject land. At present, there are parcels of
citizen, of legal age and married to Manolito land surrounding the subject land which
S. Naguit, filed with the MCTC of Ibajay- have been issued titles by virtue of judicial
Nabas, Aklan, a petition for registration of decrees. Naguit and her predecessors-in-
title of a parcel of land situated in Brgy. interest have occupied the land openly and
Union, Nabas, Aklan. The parcel of land is in the concept of owner without any
designated as Lot No. 10049, Cad. 758-D, objection from any private person or even
Nabas Cadastre, AP 060414-014779, and the government until she filed her
contains an area of 31,374 square meters. application for registration.
The application seeks judicial confirmation After the presentation of evidence for
of respondents imperfect title over the Naguit, the public prosecutor manifested
aforesaid land. that the government did not intend to
On February 20, 1995, the court held present any evidence while oppositor Jose
initial hearing on the application. The public Angeles, as representative of the heirs of
prosecutor, appearing for the government, Rustico Angeles, failed to appear during the
and Jose Angeles, representing the heirs of trial despite notice. On September 27, 1997,
Rustico Angeles, opposed the petition. On a the MCTC rendered a decision ordering that
later date, however, the heirs of Rustico the subject parcel be brought under the
Angeles filed a formal opposition to the operation of the Property Registration
petition. Also on February 20, 1995, the Decree or Presidential Decree (P.D.) No.
court issued an order of general default 1529 and that the title thereto registered and
against the whole world except as to the confirmed in the name of Naguit.[6]
heirs of Rustico Angeles and the The Republic of the Philippines
government. (Republic), thru the Office of the Solicitor
General (OSG), filed a motion for
reconsideration. The OSG stressed that the in open, continuous and exclusive
land applied for was declared alienable and possession must first be alienable. Since the
disposable only on October 15, 1980, per subject land was declared alienable only on
the certification from Regional Executive October 15, 1980, Naguit could not have
Director Raoul T. Geollegue of the maintained a bona fide claim of ownership
Department of Environment and Natural since June 12, 1945, as required by Section
Resources, Region VI.[7] However, the court 14 of the Property Registration Decree,
denied the motion for reconsideration in an since prior to 1980, the land was not
order dated February 18, 1998.[8] alienable or disposable, the OSG argues.
Thereafter, the Republic appealed the Section 14 of the Property Registration
decision and the order of the MCTC to the Decree, governing original registration
RTC, Kalibo, Aklan, Branch 8. On February proceedings, bears close examination. It
26, 1999, the RTC rendered its decision, expressly provides:
dismissing the appeal.[9]
SECTION 14. Who may apply. The following
Undaunted, the Republic elevated the persons may file in the proper Court of First
case to the Court of Appeals via Rule 42 of Instance an application for registration of
the 1997 Rules of Civil Procedure. On July title to land, whether personally or through
12, 2000, the appellate court rendered a their duly authorized representatives:
decision dismissing the petition filed by the (1) those who by themselves or
Republic and affirmed in toto the assailed through their predecessors-
decision of the RTC. in-interest have been in
Hence, the present petition for review open, continuous, exclusive
raising a pure question of law was filed by and notorious possession
the Republic on September 4, 2000.[10] and occupation of alienable
and disposable lands of the
The OSG assails the decision of the public domain under a bona
Court of Appeals contending that the fide claim of ownership since
appellate court gravely erred in holding that June 12, 1945, or earlier.
there is no need for the governments prior
release of the subject lot from the public (2) Those who have acquired
domain before it can be considered ownership over private lands
alienable or disposable within the meaning by prescription under the
of P.D. No. 1529, and that Naguit had been provisions of existing laws.
in possession of Lot No. 10049 in the ....
concept of owner for the required period.[11]
There are three obvious requisites for
Hence, the central question for the filing of an application for registration of
resolution is whether is necessary under title under Section 14(1) that the property in
Section 14(1) of the Property Registration question is alienable and disposable land of
Decree that the subject land be first the public domain; that the applicants by
classified as alienable and disposable themselves or through their predecessors-
before the applicants possession under in-interest have been in open, continuous,
a bona fide claim of ownership could even exclusive and notorious possession and
start. occupation, and; that such possession is
The OSG invokes our holding in Director under a bona fide claim of ownership since
of Lands v. Intermediate Appellate June 12, 1945 or earlier.
Court[12] in arguing that the property which is
Petitioner suggests an interpretation that the property has already been classified as
the alienable and disposable character of alienable and disposable, as it is in this
the land should have already been case, then there is already an intention on
established since June 12, 1945 or earlier. the part of the State to abdicate its exclusive
This is not borne out by the plain meaning of prerogative over the property.
Section 14(1). Since June 12, 1945, as used
This reading aligns conformably with our
in the provision, qualifies its antecedent
holding in Republic v. Court of Appeals.
phrase under a bonafide claim of ownership. [14] Therein, the Court noted that to prove
Generally speaking, qualifying words restrict
that the land subject of an application for
or modify only the words or phrases to
registration is alienable, an applicant must
which they are immediately associated, and
establish the existence of a positive act of
not those distantly or remotely located.[13] Ad
the government such as a presidential
proximum antecedents fiat relation nisi
proclamation or an executive order; an
impediatur sentencia.
administrative action; investigation reports of
Besides, we are mindful of the absurdity Bureau of Lands investigators; and a
that would result if we adopt petitioners legislative act or a statute.[15] In that case,
position. Absent a legislative amendment, the subject land had been certified by the
the rule would be, adopting the OSGs view, DENR as alienable and disposable in 1980,
that all lands of the public domain which thus the Court concluded that the alienable
were not declared alienable or disposable status of the land, compounded by the
before June 12, 1945 would not be established fact that therein respondents
susceptible to original registration, no matter had occupied the land even before 1927,
the length of unchallenged possession by sufficed to allow the application for
the occupant. Such interpretation renders registration of the said property. In the case
paragraph (1) of Section 14 virtually at bar, even the petitioner admits that the
inoperative and even precludes the subject property was released and certified
government from giving it effect even as it as within alienable and disposable zone in
decides to reclassify public agricultural lands 1980 by the DENR.[16]
as alienable and disposable. The
This case is distinguishable
unreasonableness of the situation would
from Bracewell v. Court of Appeals,
even be aggravated considering that before [17] wherein the Court noted that while the
June 12, 1945, the Philippines was not yet
claimant had been in possession since
even considered an independent state.
1908, it was only in 1972 that the lands in
Instead, the more reasonable question were classified as alienable and
interpretation of Section 14(1) is that it disposable. Thus, the bid at registration
merely requires the property sought to be therein did not succeed. In Bracewell, the
registered as already alienable and claimant had filed his application in 1963, or
disposable at the time the application for nine (9) years before the property was
registration of title is filed. If the State, at the declared alienable and disposable. Thus, in
time the application is made, has not yet this case, where the application was made
deemed it proper to release the property for years after the property had been certified
alienation or disposition, the presumption is as alienable and disposable,
that the government is still reserving the the Bracewell ruling does not apply.
right to utilize the property; hence, the need
A different rule obtains for forest lands,
to preserve its ownership in the State [18]
such as those which form part of a
irrespective of the length of adverse
reservation for provincial park
possession even if in good faith. However, if
purposes[19] the possession of which cannot fide claim of acquisition of ownership, for at
ripen into ownership.[20] It is elementary in least thirty years immediately preceding the
the law governing natural resources that filing of the application for confirmation of
forest land cannot be owned by private title except when prevented by war or force
persons. As held in Palomo v. Court of majeure. These shall be conclusively
Appeals,[21] forest land is not registrable and presumed to have performed all the
possession thereof, no matter how lengthy, conditions essential to a Government grant
cannot convert it into private property, and shall be entitled to a certificate of title
unless such lands are reclassified and under the provisions of this chapter.
considered disposable and alienable.[22] In
When the Public Land Act was first
the case at bar, the property in question was
promulgated in 1936, the period of
undisputedly classified as disposable and
possession deemed necessary to vest the
alienable; hence, the ruling in Palomo is
right to register their title to agricultural lands
inapplicable, as correctly held by the Court
of the public domain commenced from July
of Appeals.[23]
26, 1894. However, this period was
It must be noted that the present case amended by R.A. No. 1942, which provided
was decided by the lower courts on the that the bona fide claim of ownership must
basis of Section 14(1) of the Property have been for at least thirty (30) years. Then
Registration Decree, which pertains to in 1977, Section 48(b) of the Public Land Act
original registration through ordinary was again amended, this time by P.D. No.
registration proceedings. The right to file the 1073, which pegged the reckoning date at
application for registration derives from June 12, 1945. This new starting point is
a bona fide claim of ownership going back to concordant with Section 14(1) of the
June 12, 1945 or earlier, by reason of the Property Registration Decree.
claimants open, continuous, exclusive and
Indeed, there are no material differences
notorious possession of alienable and
between Section 14(1) of the Property
disposable lands of the public domain.
Registration Decree and Section 48(b) of
A similar right is given under Section the Public Land Act, as amended. True, the
48(b) of the Public Land Act, which reads: Public Land Act does refer to agricultural
lands of the public domain, while the
Sec. 48. The following described citizens of
Property Registration Decree uses the term
the Philippines, occupying lands of the
alienable and disposable lands of the public
public domain or claiming to own any such
domain. It must be noted though that the
land or an interest therein, but those titles
Constitution declares that alienable lands of
have not been perfected or completed, may
the public domain shall be limited to
apply to the Court of First Instance of the
agricultural lands.[24] Clearly, the subject
province where the land is located for
lands under Section 48(b) of the Public Land
confirmation of their claims and the issuance
Act and Section 14(1) of the Property
of a certificate of title therefor, under the
Registration Decree are of the same type.
Land Registration Act, to wit:
xxx xxx xxx Did the enactment of the Property
Registration Decree and the amendatory
(b) Those who by themselves or through P.D. No. 1073 preclude the application for
their predecessors in interest have been in registration of alienable lands of the public
open, continuous, exclusive, and notorious domain, possession over which commenced
possession and occupation of agricultural only after June 12, 1945? It did not,
lands of the public domain, under a bona considering Section 14(2) of the Property
Registration Decree, which governs and Appeals that Naguit had the right to apply
authorizes the application of those who have for registration owing to the continuous
acquired ownership of private lands by possession by her and her predecessors-in-
prescription under the provisions of existing interest of the land since 1945. The basis of
laws. such conclusion is primarily factual, and the
Court generally respects the factual findings
Prescription is one of the modes of
made by lower courts. Notably, possession
acquiring ownership under the Civil Code.
[25] There is a consistent jurisprudential rule since 1945 was established through proof of
the existence of 50 to 60-year old trees at
that properties classified as alienable public
the time Naguit purchased the property as
land may be converted into private property
well as tax declarations executed by Urbano
by reason of open, continuous and exclusive
in 1945. Although tax declarations and realty
possession of at least thirty (30) years.
[26] With such conversion, such property may tax payment of property are not conclusive
evidence of ownership, nevertheless, they
now fall within the contemplation of private
are good indicia of the possession in the
lands under Section 14(2), and thus
concept of owner for no one in his right mind
susceptible to registration by those who
would be paying taxes for a property that is
have acquired ownership through
not in his actual or at least constructive
prescription. Thus, even if possession of the
possession. They constitute at least proof
alienable public land commenced on a date
that the holder has a claim of title over the
later than June 12, 1945, and such
property. The voluntary declaration of a
possession being been open, continuous
piece of property for taxation purposes
and exclusive, then the possessor may have
manifests not only ones sincere and honest
the right to register the land by virtue of
desire to obtain title to the property and
Section 14(2) of the Property Registration
announces his adverse claim against the
Decree.
State and all other interested parties, but
The land in question was found to be also the intention to contribute needed
cocal in nature, it having been planted with revenues to the Government. Such an act
coconut trees now over fifty years old. strengthens ones bona fide claim of
[27] The inherent nature of the land but
acquisition of ownership.[28]
confirms its certification in 1980 as
Considering that the possession of the
alienable, hence agricultural. There is no
subject parcel of land by the respondent can
impediment to the application of Section
be traced back to that of her predecessors-
14(1) of the Property Registration Decree,
in-interest which commenced since 1945 or
as correctly accomplished by the lower
for almost fifty (50) years, it is indeed
courts.
beyond any cloud of doubt that she has
The OSG posits that the Court of acquired title thereto which may be properly
Appeals erred in holding that Naguit had brought under the operation of the Torrens
been in possession in the concept of owner system. That she has been in possession of
for the required period. The argument begs the land in the concept of an owner, open,
the question. It is again hinged on the continuous, peaceful and without any
assertionshown earlier to be unfoundedthat opposition from any private person and the
there could have been no bona fide claim of government itself makes her right thereto
ownership prior to 1980, when the subject undoubtedly settled and deserving of
land was declared alienable or disposable. protection under the law.
We find no reason to disturb the WHEREFORE, foregoing premises
conclusion of both the RTC and the Court of considered, the assailed Decision of the
Court of Appeals dated July 12, 2000 is under a bona fide claim of ownership since
hereby AFFIRMED. No costs. July 26, 1894. In his turn, Valeriano alleged
he was holding the land by virtue of a permit
SO ORDERED.
granted him by the Bureau of Fisheries,
Puno, (Chairman), Austria-Martinez, issued on January 13, 1947, and approved
Callejo, Sr., and Chico-Nazario, JJ., concur. by the President.
It is not disputed that the land applied for
adjoins a parcel owned by the applicant
which he had acquired from the Government
G.R. No. L-12958 May 30, 1960 by virtue of a free patent title in 1936. It has
FAUSTINO IGNACIO, applicant-appellant, 
 also been established that the parcel in
vs.
 question was formed by accretion and
THE DIRECTOR OF LANDS and alluvial deposits caused by the action of the
LAUREANO VALERIANO, oppositors- Manila Bay which boarders it on the
appellees. southwest. Applicant Ignacio claims that he
had occupied the land since 1935, planting it
Acting Assistant Solicitor General Pacifico P.
with api-api trees, and that his possession
de Castro and Solicitor Crispin V. Bautista
thereof had been continuous, adverse and
for appellee Director of Lands.

public for a period of twenty years until said
Benjamin H. Aquino for appellee Laureano
possession was distributed by oppositor
Veleriano.
Valeriano.
MONTEMAYOR, J.:
On the other hand, the Director of Lands
Faustino Ignacio is appealing the decision of sought to prove that the parcel is foreshore
the Court of First Instance of Rizal, land, covered by the ebb and flow of the tide
dismissing his application for the registration and, therefore, formed part of the public
of a parcel of land. domain.
On January 25, 1950, Ignacio filed an After hearing, the trial court dismissed the
application for the registration of a parcel of application, holding that the parcel formed
land (mangrove), situated in barrio Gasac, part of the public domain. In his appeal,
Navotas, Rizal, with an area of 37,877 Ignacio assigns the following errors:
square meters. Later, he amended his
I. The lower court erred in holding that
application by alleging among others that he
the land in question, altho an
owned the parcel applied for by right of
accretion to the land of the applicant-
accretion. To the application, the Director of
appellant, does not belong to him but
Lands, Laureano Valeriano and Domingo
forms part of the public domain.
Gutierrez filed oppositions. Gutierrez later
withdrew his opposition. The Director of II. Granting that the land in question
Lands claimed the parcel applied for as a forms part of the public domain, the
portion of the public domain, for the reason lower court nevertheless erred in not
that neither the applicant nor his declaring the same to be the
predecessor-in-interest possessed sufficient necessary for any public use or
title thereto, not having acquired it either by purpose and in not ordering in the
composition title from the Spanish present registration proceedings.
government or by possessory information III. The lower court erred in not
title under the Royal Decree of February 13, holding that the land in question now
1894, and that he had not possessed the belongs to the applicant-appellant by
same openly, continuously and adversely virtue of acquisitive prescription, the
said land having ceased to be of the formed by the action of the sea is property
public domain and became the private of the State; Francisco vs. Government of
or patrimonial property of the State. the P.I., 28 Phil., 505, involving a land
IV. The lower court erred in not claimed by a private person and subject to
holding that the oppositor Director of the ebb and flow of the tides of the Manila
Lands is now in estoppel from Bay).
claiming the land in question as a land Then the applicant argues that granting that
of the public domain. the land in question formed part of the public
Appellant contends that the parcel belongs domain, having been gained from the sea,
to him by the law of accretion, having been the trial court should have declared the
formed by gradual deposit by action of the same no longer necessary for any public
Manila Bay, and he cites Article 457 of the use or purpose, and therefore, became
New Civil Code (Article 366, Old Civil Code), disposable and available for private
which provides that: ownership. Article 4 of the Law of Waters of
1866 reads thus:
To the owners of lands adjoining the
banks of rivers belong the accretion ART. 4. Lands added to the shores by
which they gradually receive from the accretions and alluvial deposits
effects of the current of the waters. caused by the action of the sea, form
part of the public domain. When they
The article cited is clearly inapplicable are no longer washed by the waters of
because it refers to accretion or deposits on the sea and are not necessary for
the banks of rivers, while the accretion in the purposes of public utility, or for the
present case was caused by action of the establishment of special industries, or
Manila Bay. for the coastguard service, the
Appellant next contends that Articles 1, 4 Government shall declare them to be
and 5 of the Law of Waters are not the property of the owners of the
applicable because they refer to accretions estates adjacent thereto and as
formed by the sea, and that Manila Bay increment thereof.
cannot be considered as a sea. We find said Interpreting Article 4 of the Law of Waters of
contention untenable. A bay is a part of the 1866, in the case of Natividad vs. Director of
sea, being a mere indentation of the same: Lands, (CA) 37 Off. Gaz., 2905, it was there
Bay. — An opening into the land held that:
where the water is shut in on all sides Article 4 of the Law of Waters of 1866
except at the entrance; an inlet of the provides that when a portion of the
sea; an arm of the sea, distinct from a shore is no longer washed by the
river, a bending or curbing of the waters of the sea and is not
shore of the sea or of a lake. 7 C.J. necessary for purposes of public
1013-1014 (Cited in Francisco, utility, or for the establishment of
Philippine Law of Waters and Water special industries, or for coastguard
Rights p. 6) service, the government shall declare
Moreover, this Tribunal has some cases it to be the property of the owners of
applied the Law of Waters on Lands the estates adjacent thereto and as
bordering Manila Bay. (See the cases of Ker an increment thereof. We believe that
& Co. vs. Cauden, 6 Phil., 732, involving a only the executive and possibly the
parcel of land bounded on the sides by legislative departments have the
Manila Bay, where it was held that such land authority and the power to make the
declaration that any land so gained by wharf on the land, is illegal and is a
the sea, is not necessary for purposes mere detainer, inasmuch as such land
of public utility, or for the is outside of the sphere of commerce;
establishment of special industries, on it pertains to the national domain; it is
for coast-guard service. If no such intended for public uses and for the
declaration has been made by said benefit of those who live nearby.
departments, the lot in question forms We deem it unnecessary to discuss the
part of the public domain. other points raised in the appeal.
(Natividad vs. Director of
Lands, supra.) In view of the foregoing, the appealed
decision is hereby affirmed, with costs.
The reason for this pronouncement,
according to this Tribunal in the case Paras, C.J., Bengzon, Padilla, Bautista
of Vicente Joven y Monteverde vs. Director Angelo, Labrador, Concepcion, Barrera, and
of Lands, 93 Phil., 134, (cited in Velayo's Gutierrez David, JJ., concur.
Digest, VI. I, p. 52).
. . . is undoubtedly that the courts are G. R. No. L-41001 September 30, 1976
neither primarily called upon, nor
indeed in a position to determine MANILA LODGE NO. 761, BENEVOLENT
whether any public land are to be AND PROTECTIVE ORDER OF THE
used for the purposes specified in ELKS, INC., petitioner, 

Article 4 of the Law of Waters. vs.

THE HONORABLE COURT OF APPEALS,
Consequently, until a formal declaration on CITY OF MANILA, and TARLAC
the part of the Government, through the DEVELOPMENT
executive department or the Legislature, to CORPORATION, respondents.
the effect that the land in question is no
longer needed for coast guard service, for No. L-41012 September 30, 1976
public use or for special industries, they TARLAC DEVELOPMENT
continue to be part of the public domain, not CORPORATION, petitioner, 

available for private appropriation or vs.

ownership. HONORABLE COURT OF APPEALS, CITY
Appellant next contends that he had OF MANILA, LODGE NO. 761,
acquired the parcel in question through BENEVOLENT AND PROTECTIVE
acquisitive prescription, having possessed ORDER OF ELKS, INC., respondents.
the same for over ten years. In answer,
suffice it to say that land of the public CASTRO, C.J.:têñ.£îhqwâ£
domain is not subject to ordinary
prescription. In the case of Insular STATEMENT OF THE CASE AND
Government vs. Aldecoa & Co., 19 Phil., STATEMENTOF THE FACTS
505 this Court said: These two cases are petitions on certiorari
The occupation or material to review the decision dated June 30, 1975
possession of any land formed upon of the Court of Appeals in CA-G.R. No.
the shore by accretion, without 51590-R entitled "Tarlac Development
previous permission from the proper Corporation vs. City of Manila, and Manila
authorities, although the occupant Lodge No. 761, Benevolent and Protective
may have held the same as owner for Order of Elks, Inc.," affirming the trial court's
seventeen years and constructed a finding in Civil Case No. 83009 that the
property subject of the decision a quo is a On July 13, 1911 the City of Manila,
"public park or plaza." affirming a prior sale dated January 16,
On June 26, 1905 the Philippine 1909 cancelled 5,543.07 square meters of
Commission enacted Act No. l360 which the reclaimed area to the Manila Lodge No.
authorized the City of Manila to reclaim a 761, Benevolent and Protective Order of
portion of Manila Bay. The reclaimed area Elks of the U.S.A. (BPOE, for short) on the
was to form part of the Luneta extension. basis of which TCT No. 2195 2 was issued
The Act provided that the reclaimed area to the latter over the Marcela de terreno que
"Shall be the property of the City of Manila" es parte de la Luneta Extension, Situada en
and that "the City of Manila is hereby el Distrito le la Ermita ... ." At the back of this
authorized to set aside a tract of the title vas annotated document 4608/T-1635,
reclaimed land formed by the Luneta which in part reads as follows: "que la citada
extension x x x at the north end not to Ciusdad de Manila tendra derecho a su
exceed five hundred feet by six hundred feet opcion, de recomparar la expresada
in size, for a hotel site, and to lease the propiedad para fines publicos solamete in
same, with the approval of the Governor cualquier tiempo despues de cincuenta
General, to a responsible person or anos desde el 13 le Julio le 1911, precio de
corporation for a term not exceed ninety- la misma propiedad, mas el valor que
nine years." entonces tengan las mejoras."
Subsequently, the Philippine Commission For the remainder of the Luneta Extension,
passed on May 18, 1907 Act No. 1657, that is, after segregating therefrom the
amending Act No. 1360, so as to authorize portion sold to the Manila Lodge No. 761,
the City of' Manila either to lease or to sell PBOE, a new Certificate of Title No.
the portion set aside as a hotel site. 2196 3 was issued on July 17, 1911 to the
City of Manila.
The total area reclaimed was a little over 25
hectares. The City of Manila applied for the Manila Lodge No. 761, BPOE, subsequently
registration of the reclaimed area, and on sold the said 5,543.07 square meters to the
January 20, 1911, O.C.T. No. 1909 was Elks Club, Inc., to which was issued TCT
issued in the name of the City of Manila. No. 67488. 4 The registered owner, "The
The title described the registered land as Elks Club, Inc.," was later changed by court
"un terreno conocido con el nombre de oder to "Manila Lodge No. 761, Benevolent
Luneta Extension, situato en el distrito de la and Protective Order of Elks, Inc."
Ermita x x x." The registration was "subject, In January 1963 the BPOE. petitioned the
however to such of the incumbrances Court of First Instance of Manila, Branch IV,
mentioned in Article 39 of said law (Land for the cancellation of the right of the City of
Registration Act) as may be subsisting" and Manila to repurchase the property This
"sujeto a las disposiciones y condiciones petition was granted on February 15, 1963.
impuestas en la Ley No. 1360; y sujeto On November 19, 1963 the BPOE sold for
tambein a los contratos de venta, the sum of P4,700,000 the land together
celebrados y otorgados por la Ciudad de with all the improvements thereon to the
Manila a favor del Army and Navy Club y la Tarlac Development Corporation (TDC, for
Manila Lodge No. 761, Benevolent and short) which paid P1,700.000 as down
Protective Order of Elks, fechados payment and mortgaged to the vendor the
respectivamente, en 29 de Diciembre de same realty to secure the payment of the
1908 y 16 de Enero de 1909." 1 balance to be paid in quarterly installments.
5At the time of the sale,, there was no
annotation of any subsisting lien on the title par. XVI of the complaint in accordance with
to the property. On December 12, 1963 TCT Art. 1555 of the Civil Code, in the remote
No. 73444 was issued to TDC over the event that the final judgment in this case
subject land still described as "UNA should be that the parcel of land now in
PARCELA DE TERRENO, que es parte de question is a public park; and
la Luneta Extension, situada en el Distrito d) For costs, and for such other and further
de Ermita ... ." relief as the Court may deem just and
In June 1964 the City of Manila filed with the equitable. 6
Court of First Instance of Manila a petition Therein defendant City of Manila, in its
for the reannotation of its right to answer dated May 19, 1971, admitted all the
repurchase; the court, after haering, issued facts alleged in the first cause of action
an order, dated November 19, 1964, except the allegation that TDC purchased
directing the Register of Deeds of the City of said property "for value and in good faith,"
Manila to reannotate in toto the entry but denied for lack of knowledge or
regarind the right of the City of Manila to information the allegations in the second
repurchase the property after fifty years. and third causes of action. As, special and
From this order TDC and BPOE appealed to affirmative defense, the City of Manila
this Court which on July 31, 1968 affirmed in claimed that TDC was not a purchaser in
G.R. Nos. L-24557 and L-24469 the trial good faith for it had actual notice of the
court's order of reannotation, but reserved to City's right to repurchase which was
TDC the right to bring another action for the annotated at the back of the title prior to its
clarification of its rights. cancellation, and that,
As a consequence of such reservation, TDC assuming arguendo that TDC had no notice
filed on April 28, 1971 against the City of of the right to repurchase, it was,
Manila and the Manila Lodge No. 761, nevertheless, under obligation to investigate
BPOE, a complaint, docketed as Civil Case inasmuch as its title recites that the property
No. 83009 of the Court of First Instance of is a part of the Luneta extension. 7
Manila, containing three causes of action The Manila Lodge No. 761, BPOE, in its
and praying - answer dated June 7, 1971, admitted having
a) On the first cause of action, that the sold the land together with the
plaintiff TDC be declared to have purchased improvements thereon for value to therein
the parcel of land now in question with the plaintiff which was in good faith, but denied
buildings and improvements thereon from for lack of knowledge as to their veracity the
the defendant BPOE for value and in good allegations under the second cause of
faith, and accordingly ordering the action. It furthermore admitted that TDC had
cancellation of Entry No. 4608/T-1635 on paid the quarterly installments until October
Transfer Certificate of Title No. 73444 in the l5, 1964 but claimed that the latter failed
name of the Plaintiff; without justifiable cause to pay the
b) On the second cause of action, ordering subsequent installments. It also asserted
the defendant City of Manila to pay the that it was a seller for value in good faith
plaintiff TDC damages in the sum of note without having misrepresented or concealed
less than one hundred thousand pesos tacts relative to the title on the property. As
(P100,000.00); counterclaim, Manila Lodge No. 761 (BPOE)
sought to recover the balance of the
c) On the third cause of action, reserving to purchase price plus interest and costs. 8
the plaintiff TDC the right to recover from the
defendant BPOE the amounts mentioned in
On June 15, 1971 TDC answered the avers that the trial court committed the
aforesaid counterclaim, alleging that its following errors, namely:
refusal to make further payments was fully 1. In holding that the property subject of the
justified.9 action is not patrimonial property of the City
After due trial the court a quo rendered on of Manila; and
July 14, 1972 its decision finding the subject 2. In holding that the Tarlac Development
land to be part of the "public park or plaza" Corporation may recover and enforce its
and, therefore, part of the public domain. right against the defendant BPOE. 11
The court consequently declared that the
sale of the subject land by the City of Manila The Tarlac Development Corporation, on the
to Manila Lodge No. 761, BPOE, was null other hand, asserts that the trial court erred:
and void; that plaintiff TDC was a purchaser (1) In finding that the property in question is
thereof in g faith and for value from BPOE or was a public park and in consequently
and can enforce its rights against the latter; nullifying the sale thereof by the City of
and that BPOE is entitled to recover from Manila to BPOE;
the City of Manila whatever consideration it (2) In applying the cases of Municipality of
had 'paid the latter. 'The dispositive part of Cavite vs. Rojas, 30 Phil. 602, and
the decision reads: ñé+.£ªwph!1 Government vs. Cabangis, 53 Phil. 112, to
WHEREFORE, the Court the case at bar; and
hereby declares that the parcel (3) In not holding that the plaintiff-appellant
of land formerly covered by is entitled to ,recover damages from the
Transfer Certificate of Title Nos defendant City of Manila. 12
2195 and 67488 in the name of
BPOE and now by Transfer Furthermore, TDC as appellee regarding the
Certificate of Title No. 73444 in second assignment of error raised by
the name of Tarlac BPOE, maintained that it can recover and
Development Corporation is a enforce its rigth against BPOE in the event
public' park or plaza, and, that the land in question is declared a public
consequently, instant complaint park or part thereof.13
is dimissed, without In its decision promulgated on June 30,
pronouncement as to costs. 1975, the Court of Appeals concur ed in the
In view of the reservation made findings and conclusions of the lower court
by plaintiff Tarlac Development upon the ground that they are supported by
Corporation to recover from he evidence and are in accordance with law,
defendant BPOE the amounts and accordingly affirmed the lower court's
mentioned in paragraph XVI of judgment.
the complaint in accordance Hence, the present petitions for review
with Article 1555 of the Civil on certiorari.
Code, the Court makes no G.R. No. L-41001
pronouncement on this point. 10
The Manila Lodge No. 761, BPOE,
From said decision the therein plaintiff TDC contends, in its petition for review on
as well as the defendant Manila Lodge No. certiorari docketed as G.R. No. L-41001,
761, BPOE, appealed to the Court of that the Court of Appeals erred in (1)
Appeals. disregarding the very enabling acts and/or
In its appeal docketed as CA-G.R. No. statutes according to which the subject
51590-R, the Manila Lodge No. 761, BPOE, property was, and still is, patrimonial
property of the City of Manila and could reclaimed land shall be the "property of the
therefore be sold and/or disposed of like any City of Manila," the State expressly granted
other private property; and (2) in departing the ownership thereof to the City of Manila
from the accepted and usual course of which. consequently. could enter into
judicial proceedings when it simply made a transactions involving it; that upon the
general affirmance of the court a issuance of O.C.T. No. 1909, there could he
quo's findings and conclusions without no doubt that the reclaimed area owned by
bothering to discuss or resolve several vital the City was its patrimonial property;" that
points stressed by the BPOE in its assigned the south end of the reclaimed area could
errrors. 14 not be for public use for. as argued by TDC
G.R. No. L-41012 a street, park or promenade can be property
for public use pursuant to Article 344 of the
The Tarlac Development Corporation, in its Spanish Civil Code only when it has already
petition for review on certiorari docketed as been so constructed or laid out, and the
G.R. No. L-41012, relies on the following subject land, at the time it was sold to the
grounds for the allowance of its petition: Elk's Club, was neither actually constructed
1. that the Court of Appeals did not correctly as a street, park or promenade nor laid out
interpret Act No. 1360, as amended by Act as a street, park or promenade;" that even
No. 1657, of the Philippine Commission; and assuming that the subject property was at
2. that the Court of Appeals has departed the beginning property of public dominion, it
from the accepted and usual course of was subsequently converted into patrimonial
judicial proceedings in that it did not make property pursuant to Art. 422 of the Civil
its own findings but simply recited those of Code, inasmuch as it had never been used,
the lower court. 15 red or utilized since it was reclaimed in 1905
for purpose other than this of an ordinary
ISSUES AND ARGUMENTS real estate for sale or lease; that the subject
FIRST ISSUE property had never been intended for public
Upon the first issue, both petitioners claim use, is further shown by the fact that it was
that the property subject of the action, neither included as a part of the Luneta Park
pursuant to the provisions of Act No. 1360, under Plan No. 30 of the National Planning
as amended by Act No. 1657, was Commission nor considered a part of the
patrimonial property of the City of Manila Luneta National Park (now Rizal Park) by
and not a park or plaza. Proclamation No. 234 dated December 19,
1955 of President Ramon Magsaysay or by
Arguments of Petitioners Proclamation Order No. 274 dated October
In G.R. No. L-41001, the Manila Lodge No. 4, 1967 of President Ferdinand E.
761, BPOE, admits that "there appears to Marcos;" 19 that, such being the case, there
be some logic in the conclusion" of the is no reason why the subject property
Court of Appeals that "neither Act No. 1360 should -not be considered as having been
nor Act No. 1657 could have meant to converted into patrimonial property,
supply the City of Manila the authority to sell pursuant to the ruling in Municipality vs.
the subject property which is located at the Roa 7 Phil. 20, inasmuch as the City of
south end not the north — of the reclaimed Manila has considered it as its patrimonial
area." 16 It argues, however, that when Act property not only bringing it under the
No. 1360, as amended, authorized the City operation of the Land Registration Act but
of Manila to undertake the construction of also by disposing of it; 20 and that to
the Luneta extension by reclaimed land from consider now the subject property as a
the Manila Bay, and declared that the public plaza or park would not only impair
the obligations of the parties to the contract prevent disposition of the northern portion
of sale (rated July 13, 1911, but also for any purpose other than for a hotel site
authorize deprivation of property without due that the northern and southern ends of the
process of law.21 reclaimed area cannot be considered as
G.R. No. L-410112 extension of the Luneta for they lie beyond
the sides of the original Luneta when
In L-41012, the petitioner TDC stresses that extended in the direction of the sea, and that
the principal issue is the interpretation of Act is the reason why the law authorized the
No. 1360, as amended by. Act No. 1657 of sale of the northern portion for hotel
the Philippine Commission, 22 and avers that purposes, and, for the same reason, it is
inasmuch as Section 6 of Act No. 1360, as implied that the southern portion could
amended by Act 1657, provided that the likewise be disposed of.26
reclamation of the Luneta extension was to
be paid for out of the funds of the City of TDC argues likewise that there are several
Manila which was authorized to borrow items of uncontradicted circumstantial
P350,000 "to be expended in the evidence which may serve as aids in
construction of Luneta Extension," the construing the legislative intent and which
reclaimed area became "public land" demonstrate that the subject property is
belonging to the City of Manila that spent for patrimonial in nature, to wit: (1) Exhibits "J"
the reclamation, conformably to the holding and "J-1", or Plan No. 30 of the National
in Cabangis,23 and consequently, said land Planning Commission showing the Luneta
was subject to sale and other disposition; and its vicinity, do not include the subject
that the Insular Government itself property as part of the Luneta Park; (2)
considered the reclaimed Luneta extension Exhibit "K", which is the plan of the subject
as patrimonial property subject to disposition property covered by TCT No. 67488 of
as evidenced by the fact that See. 3 of Act BPOE, prepared on November 11, 1963,
1360 declared that "the land hereby indicates that said property is not a public
reclaimed shall be the property of the City of park; (3) Exhibit "T", which is a certified copy
Manila;" that this property cannot be of Proclamation No. 234 issued on
property for public use for according to December 15, 1955 is President
Article 344 of the Civil Code, the character Magsaysay, and Exhibit "U" which is
of property for public use can only attach to Proclamation Order No. 273 issued on
roads and squares that have already been October 4, 1967 by President Marcos, do
constructed or at least laid out as such, not include the subject property in the
which conditions did not obtain regarding Luneta Park-, (4) Exhibit "W", which is the
the subject land, that Sec. 5 of Act 1360 location plan of the Luneta National Park
authorized the City of Manila to lease the under Proclamations Nos. 234 and 273,
northern part of the reclaimed area for hotel further confirms that the subject property is
purposes; that Act No. 1657 furthermore not a public park; and (5) Exhibit "Y", which
authorized the City of Manila to sell the is a copy of O.C.T. No. 7333 in the name of
same; 24 that the express statutory authority the United States of America covering the
to lease or sell the northern part of the land now occupied by the America covering
reclaimed area cannot be interpreted to the land now occupied by the American
mean that the remaining area could not be Embassy, the boundaries of which were
sold inasmuch as the purpose of the statute delineated by the Philippine Legislature,
was not merely to confer authority to sell the states that the said land is bounded on the
northern portion but rather to limit the city's northwest by properties of the Army and
power of disposition thereof, to wit: to Navy Club (Block No. 321) and the Elks
Club (Block No. 321), and this circumstance trial court, in its decision affirmed by the
shows that even the Philippine Legislature Court of Appeals, found the TDC -to has
recognized the subject property as private been an innocent purchaser for value, the
property of the Elks Club. 27 court disregarded the petitioner's rights as
TDC furthermore contends that the City of such purchaser that relied on Torrens
Manila is estopped from questioning the certificate of title. 30
validity of the sale of the subject property The Court, continues the petitioner TDC
that it executed on July 13, 1911 to the erred in not holding that the latter is entitled
Manila Lodge No. 761, BPOE, for several to recover from the City of Manila damages
reasons, namely: (1) the City's petition for in the amount of P100,000 caused by the
the reannotation of Entry No. 4608/T-1635 City's petition for- reannotation of its right to
was predicated on the validity of said sale; repurchase.
(2) when the property was bought by the DISCUSSION AND RESOLUTION OF
petitioner TDC it was not a public plaza or FIRST ISSUE
park as testified to by both Pedro Cojuanco,
treasurer of TDC, and the surveyor, Manuel It is a cardinal rule of statutory construction
Añoneuvo, according to whom the subject that courts must give effect to the general
property was from all appearances private legislative intent that can be discovered from
property as it was enclosed by fences; (3) or is unraveled by the four corners of the
the property in question was cadastrally statute, 31 and in order to discover said
surveyed and registered as property of the intent, the whole statute, and not only a
Elks Club, according to Manuel Anonuevo; particular provision thereof, should be
(4) the property was never used as a public considered.32 It is, therefore, necessary to
park, for, since the issuance of T.C.T. No. analyze all the provisions of Act No. 1360,
2165 on July 17, 1911 in the name of the as amended, in order to unravel the
Manila Lodge NO. 761, the latter used it as legislative intent.
private property, and as early as January 16, Act No. 1360 which was enacted by the
1909 the City of Manila had already Philippine Commission on June 26, 1905, as
executed a deed of sale over the property in amended by Act No. 1657 enacted on May
favor of the Manila Lodge No. 761; and (5) 18, 1907, authorized the "construction of
the City of Manila has not presented any such rock and timber bulkheads or sea walls
evidence to show that the subject property as may be necessary for the making of an
has ever been proclaimed or used as a extension to the Luneta" (Sec. 1 [a]), and
public park. 28 the placing of the material dredged from the
TDC, moreover, contends that Sec. 60 of harbor of Manila "inside the bulkheads
Com. Act No. 141 cannot apply to the constructed to inclose the Luneta extension
subject land, for Com. Act No. 141 took above referred to" (Sec. 1 [a]). It likewise
effect on December 1, 1936 and at that time provided that the plan of Architect D. H.
the subject land was no longer part of the Burnham as "a general outline for the
part of the public domain. 29 extension and improvement of the Luneta in
the City of Manila" be adopted; that "the
TDC also stresses that its rights as a reclamation from the Bay of Manila of the
purchaser in good faith cannot be land included in said projected Luneta
disregarded, for the mere mention in the extension... is hereby authorized and the
certificate of title that the lot it purchased land thereby reclaimed shall be the property
was "part of the Luneta extension" was not a of the City of Manila" (Sec. 3); that "the City
sufficient warning that tile title to the City of of Manila is hereby authorized to set aside a
Manila was invalid; and that although the
tract of the reclaimed land formed by the interpretation of a public grant is that there is
Luneta extension authorized by this Act at in such grant a gratuitous donation of, public
the worth end of said tract, not to exceed money or resources which results in an
five hundred feet by six hundred feet in unfair advantage to the grantee and for that
size, for a hotel site, and to lease the reason, the grant should be narrowly
same with the approval of the Governor restricted in favor of the public.34 This
General, ... for a term not exceeding ninety- reason for strict interpretation obtains
nine years; that "should the Municipal Board relative to the aforesaid grant, for, although
... deem it advisable it is hereby authorized the City of Manila was to pay for the
to advertise for sale to sell said tract of construction of such work and timber
land ... ;" "that said tract shall be used for bulkheads or sea walls as may be
hotel purposes as herein prescribed, and necessary for the making of the Luneta
shall not be devoted to any other purpose or extension, the area to be reclaimed would
object whatever;" "that should the grantee x be filled at the expense of the Insular
x x fail to maintain on said tract a first-class Government and without cost to the City of
hotel x x x then the title to said tract of land Manila, with material dredged from Manila
sold, conveyed, and transferred, and shall Bay. Hence, the letter of the statute should
not be devoted to any other purpose or be narrowed to exclude maters which if
object whatever;" "that should the grantee x included would defeat the policy of the
x x fail to maintain on said tract a first-class legislation.
hotel x x x then the title to said tract of land The reclaimed area, an extension to the
sold, conveyed, and transferred to the Luneta, is declared to be property of the City
grantee shall revert to the City of Manila, of Manila. Property, however, is either of
and said City of Manila shall thereupon public ownership or of private ownership. 35
become entitled to immediate possession of What kind of property of the City is the
said tract of land" (Sec. 5); that the reclaimed land? Is it of public ownership
construction of the rock and timber (dominion) or of private ownership?
bulkheads or sea wall "shall be paid for out
of the funds of the City of Manila, but the We hold that it is of public dominion,
area to be reclaimed by said proposed intended for public use.
Luneta extension shall be filled, without cost Firstly, if the reclaimed area was granted to
to the City of Manila, with material dredged the City of Manila as its patrimonial property,
from Manila Bay at the expense of the the City could, by virtue of its ownership,
Insular Government" (Sec. 6); and that "the dispose of the whole reclaimed area without
City of Manila is hereby authorized to need of authorization to do so from the
borrow from the Insular Government ... the lawmaking body. Thus Article 348 of the
sum of three hundred thousand pesos, to be Civil Code of Spain provides that "ownership
expended in the construction of Luneta is the right to enjoy and dispose of a thing
extension provided for by paragraph (a) of without further limitations than those
section one hereof" (Sec.7). established by law." 36 The right to dispose
The grant made by Act No. 1360 of the (jus disponendi) of one's property is an
reclaimed land to the City of Manila is a attribute of ownership. Act No. 1360, as
grant of "public" nature, the same having amended, however, provides by necessary
been made to a local political subdivision. implication, that the City of Manila could not
Such grants have always dispose of the reclaimed area without
been strictly construed against the grantee. being authorized by the lawmaking body.
33 One compelling reason given for the strict Thus the statute provides that "the City of
Manila is hereby authorized to set aside a
tract ... at the north end, for a hotel site, and precisely Act 1360 that gave the City the
to lease the same ... should the municipal power to dispose for it was hereby
board ... deem it advisable, it is hereby authorized by lease of sale. Hence, the City
authorized ...to sell said tract of land ... of Manila had no power to dispose of the
" (Sec. 5). If the reclaimed area were reclaimed land had such power not been
patrimonial property of the City, the latter granted by Act No. 1360, and the purpose of
could dispose of it without need of the the authorization was to empower the city to
authorization provided by the statute, and sell or lease the northern part and not, as
the authorization to set aside ... lease ... or TDC claims, to limit only the power to
sell ... given by the statute would indeed be dispose. Moreover, it is presumed that when
superfluous. To so construe the statute s to the lawmaking body enacted the statute, it
render the term "authorize," which is had full knowledge of prior and existing laws
repeatedly used by the statute, superfluous and legislation on the subject of the statute
would violate the elementary rule of legal and acted in accordance or with respect
hermeneutics that effect must be given to thereto.39 If by another previous law, the City
every word, clause, and sentence of the of Manila could already dispose of the
statute and that a statute should be so reclaimed area, which it could do if such
interpreted that no part thereof becomes area were given to it as its patrimonial
inoperative or superfluous. 37 To authorize property, would it then not be a superfluity
means to empower, to give a right to for Act No. 1360 to authorize the City to
act. 38 Act No. 1360 furthermore qualifies the dispose of the reclaimed land? Neither has
verb it authorize" with the adverb "hereby," petitioner TDC pointed to any other law that
which means "by means of this statue or authorized the City to do so, nor have we
section," Hence without the authorization come across any. What we do know is that if
expressly given by Act No. 1360, the City of the reclaimed land were patrimonial
Manila could not lease or sell even the property, there would be no need of giving
northern portion; much less could it dispose special authorization to the City to dispose
of the whole reclaimed area. Consequently, of it. Said authorization was given because
the reclaimed area was granted to the City the reclaimed land was not intended to be
of Manila, not as its patrimonial property. At patrimonial property of the City of Manila,
most, only the northern portion reserved as and without the express authorization to
a hotel site could be said to be patrimonial dispose of the northern portion, the City
property for, by express statutory provision it could not dispose of even that part.
could be disposed of, and the title thereto Secondly, the reclaimed area is an
would revert to the City should the grantee "extension to the Luneta in the City of
fail to comply with the terms provided by the Manila." 40 If the reclaimed area is an
statute. extension of the Luneta, then it is of the
TDC however, contends that the purpose of same nature or character as the old Luneta.
the authorization provided in Act No. 1360 to Anent this matter, it has been said that a
lease or sell was really to limit the City's power to extend (or continue an act or
power of disposition. To sustain such business) cannot authorize a transaction
contention is to beg the question. If the that is totally distinct. 41 It is not disputed
purpose of the law was to limit the City's that the old Luneta is a public park or plaza
power of disposition then it is necessarily and it is so considered by Section 859 of the
assumed that the City had already the Revised Ordinances of the City of Manila.
power to dispose, for if such power did not 42 Hence the "extension to the Luneta" must

exist, how could it be limited? It was


be also a public park or plaza and for public domain. for public use .4' Hence, a part of
use. the shore, and for that purpose a part of the
TDC, however, contends that the subject bay, did not lose its character of being for
property cannot be considered an extension public use after it was reclaimed.
of the old Luneta because it is outside of the Fourthly, Act 1360, as amended, authorized
limits of the old Luneta when extended to the lease or sale of the northern portion of
the sea. This is a strained interpretation of the reclaimed area as a hotel sites. The
the term "extension," for an "extension," it subject property is not that northern portion
has been held, "signifies enlargement in any authorized to be leased or sold; the subject
direction — in length, breadth, or property is the southern portion. Hence,
circumstance." 43 applying the rule of expresio unius est
Thirdly, the reclaimed area was formerly a exlusio alterius, the City of Manila was not
part of the manila Bay. A bay is nothing authorized to sell the subject property. The
more than an inlet of the sea. Pursuant to application of this principle of statutory
Article 1 of the Law of Waters of 1866, bays, construction becomes the more imperative
roadsteads, coast sea, inlets and shores are in the case at bar inasmuch as not only
parts of the national domain open to public must the public grant of the reclaimed area
use. These are also property of public to the City of Manila be, as above stated,
ownership devoted to public use, according strictly construed against the City of Manila,
to Article 339 of the Civil Code of Spain. but also because a grant of power to a
municipal corporation, as happens in this
When the shore or part of the bay is case where the city is author ized to lease or
reclaimed, it does not lose its character of sell the northern portion of the Luneta
being property for public use, according extension, is strictly limited to such as are
to Government of the Philippine Islands vs. expressly or impliedly authorized or
Cabangis.44 The predecessor of the necessarily incidental to the objectives of
claimants in this case was the owner of a the corporation.
big tract of land including the lots in
question. From 1896 said land began to Fifthly, Article 344 of the Civil Code of Spain
wear away due to the action of the waters of provides that to property of public use, in
Manila Bay. In 1901 the lots in question provinces and in towns, comprises the
became completely submerged in water in provincial and town roads, the squares
ordinary tides. It remained in such a state streets fountains, and public waters the
until 1912 when the Government undertook promenades, and public works of general
the dredging of the Vitas estuary and service paid for by such towns or
dumped the Sand and - silt from estuary on provinces." A park or plaza, such as the
the low lands completely Submerged in extension to the Luneta, is undoubtedly
water thereby gradually forming the lots in comprised in said article.
question. Tomas Cabangis took possession The petitioners, however, argue that,
thereof as soon as they were reclaimed according to said Article 344, in order that
hence, the claimants, his successors in the character of property for public use may
interest, claimed that the lots belonged to be so attached to a plaza, the latter must be
them. The trial court found for the claimants actually constructed or at least laid out as
and the Government appealed. This Court such, and since the subject property was not
held that when the lots became a part of the yet constructed as a plaza or at least laid
shore. As they remained in that condition out as a plaza when it was sold by the City,
until reclaimed by the filling done by the it could not be property for public use. It
Government, they belonged to the public should be noted, however, that properties of
provinces and towns for public use are property of the City of Manila for public use.
governed by the same principles as But, could not said property-later on be
properties of the same character belonging converted, as the petitioners contend, to
to the public domain.46 In order to be patrimonial property? It could be. But this
property of public domain an intention to Court has already said, in Ignacio vs. The
devote it to public use is sufficient. 47 The, Director of Lands, 49 the executive and
petitioners' contention is refuted by Manresa possibly the legislation department that has
himself who said, in his comments", on the authority and the power to make the
Article 344, that: ñé+.£ªwph!1 declaration that said property, is no longer
Las plazas, calles y paseos required for public use, and until such
publicos correspondent sin declaration i made the property must
duda aiguna aldominio publico continue to form paint of the public domain.
municipal ), porque se hallan In the case at bar, there has been no such
establecidos sobre suelo explicit or unequivocal declaration It should
municipal y estan destinadas al be noted, furthermore, anent this matter,
uso de todos Laurent presenta that courts are undoubted v not. primarily
tratando de las plazas, una called upon, and are not in a position, to
question relativa a si deben determine whether any public land is still
conceptuarse como de dominio needed for the purposes specified in Article
publico los lugares vacios 4 of the Law of Waters .50
libres, que se encuenttan en los Having disposed of the petitioners' principal
Municipios rurales ... Laurent arguments relative to the main issue, we
opina contra Pioudhon que toda now pass to the items of circumstantial
vez que estan al servicio de evidence which TDC claims may serve as
todos pesos lugares, deben aids in construing the legislative intent in the
considerable publicos y de enactment of Act No. 1360, as amended. It
dominion publico. Realmente, is noteworthy that all these items of alleged
pala decidir el punto, bastara circumstantial evidence are acts far
siempre fijarse en el destino removed in time from the date of the
real y efectivo de los citados enactment of Act No.1360 such that they
lugares, y si este destino cannot be considered contemporaneous
entraña un uso comun de with its enactment. Moreover, it is not
todos, no hay duda que son de farfetched that this mass of circumstantial
dominio publico municipal si no evidence might have been influenced by the
patrimoniales. antecedent series of invalid acts, to wit: the
It is not necessary, therefore, that a plaza be City's having obtained over the reclaimed
already constructed of- laid out as a plaza in area OCT No. 1909 on January 20,1911; the
order that it be considered property for sale made by the City of the subject
public use. It is sufficient that it be intended property to Manila Lodge No. 761; and the
to be such In the case at bar, it has been issuance to the latter of T.C.T. No. 2195. It
shown that the intention of the lawmaking cannot gainsaid that if the subsequent acts
body in giving to the City of Manila the constituting the circumstantial evidence
extension to the Luneta was not a grant to it have been base on, or at least influenced,
of patrimonial property but a grant for public by those antecedent invalid acts and
use as a plaza. Torrens titles S they can hardly be indicative
of the intent of the lawmaking body in
We have demonstrated ad satietatem that
the Luneta extension as intended to be
enacting Act No. 1360 and its amendatory reserve certain parcels of land situated in
act. the District of Ermita, City of Manila, for park
TDC claims that Exhs. "J," "J-l" "K," "T," "U," site purposes. Assuming that the subject
"W" and "Y" show that the subject property property is not within the boundaries of the
is not a park. reservation, this cannot be interpreted to
mean that the subject property was not
Exhibits "J" and "J-1," the "Luneta and originally intended to be for public use or
vicinity showing proposed development" that it has ceased to be such. Conversely,
dated May 14, 1949, were prepared by the had the subject property been included in
National Urban Planning Commission of the the reservation, it would mean, if it really
Office of the President. It cannot be were private property, that the rights of the
reasonably expected that this plan for owners thereof would be extinguished, for
development of the Luneta should show that the reservations was "subject to private
the subject property occupied by the rights, if any there be." That the subject
ElksClub is a public park, for it was made 38 property was not included in the reservation
years after the sale to the Elks, and after only indicates that the President knew of the
T.C.T. No. 2195 had been issued to Elks. It existence of the Torrens titles mentioned
is to be assumed that the Office of the above. The failure of the Proclamations to
President was cognizant of the Torrens title include the subject property in the
of BPOE. That the subject property was not reservation for park site could not change
included as a part of the Luneta only the character of the subject property as
indicated that the National Urban Planning originally for public use and to form part of
Commission that made the plan knew that the Luneta Park. What has been said here
the subject property was occupied by Elks applies to Exhibits "V", "V-1" to "V-3," and
and that Elks had a Torrens title thereto. But "W" which also refer to the area and location
this in no way proves that the subject of the reservation for the Luneta Park.
property was originally intended to be
patrimonial property of the City of Manila or Exhibit "Y" is a copy of O.C.T. No. 7333
that the sale to Elks or that the Torrens-title dated November 13, 1935, covering the lot
of the latter is valid. where now stands the American Embassy
[Chancery]. It states that the property is
Exhibit "K" is the "Plan of land covered by "bounded ... on the Northwest by properties
T.C.T . No ----, as prepared for Tarlac of Army and Navy Club (Block No.321) and
Development Company." It was made on Elks Club (Block No. 321)." Inasmuch as the
November 11, 1963 by Felipe F. Cruz, said bounderies delineated by the Philippine
private land surveyor. This surveyor is Legislature in Act No. 4269, the petitioners
admittedly a surveyor for TDC. 51 This plan contend that the Legislature recognized and
cannot be expected to show that the subject conceded the existence of the Elks Club
property is a part of the Luneta Park, for he property as a primate property (the property
plan was made to show the lot that "was to in question) and not as a public park or
be sold to petitioner." This plan must have plaza. This argument is non sequitur plain
also assumed the existence of a valid title to and simple Said Original Certificate of Title
the land in favor of Elks. cannot be considered as an incontrovertible
Exhibits "T" and "U" are copies of declaration that the Elks Club was in truth
Presidential Proclamations No. 234 issued and in fact the owner of such boundary lot.
on November 15, 1955 and No. 273 issued Such mention as boundary owner is not a
on October 4, 1967, respectively. The means of acquiring title nor can it validate a
purpose of the said Proclamations was to title that is null and void.
TDC finally claims that the City of Manila is there is a total absence of title in the vendor,
estopped from questioning the validity of the and the good faith of the purchaser TDC
sale it executed on July 13,'1911 cannot create title where none exists. 55
conconveying the subject property to the The so-called sale of the subject property
Manila Lodge No. 761, BPOE. This having been executed, the restoration or
contention cannot be seriously defended in restitution of what has been given is order 56
the light of the doctrine repeatedly
enunciated by this Court that the SECOND ISSUE
Government is never estopped by mistakes The second ground alleged in support of the
or errors on the pan of its agents, and instant petitions for review on certiorari is
estoppel does not apply to a municipal that the Court of Appeals has departed from
corporation to validate a contract that is the accepted and usual course of judicial
prohibited by law or its against Republic proceedings as to call for an exercise of the
policy, and the sale of July 13, 1911 power of supervision. TDC in L-41012,
executed by the City of Manila to Manila argues that the respondent Court did not
Lodge was certainly a contract prohibited by make its own findings but simply recited
law. Moreover, estoppel cannot be urged those of the lower court and made a general
even if the City of Manila accepted the affirmance, contrary to the requirements of
benefits of such contract of sale and the the Constitution; that the respondent Court
Manila Lodge No. 761 had performed its made glaring and patent mistakes in
part of the agreement, for to apply the recounting even the copied findings,
doctrine of estoppel against the City of palpably showing lack of deliberate
Manila in this case would be tantamount to consideration of the matters involved, as, for
enabling it to do indirectly what it could not example, when said court said that Act No.
do directly. 52 1657 authorized the City of Manila to set
The sale of the subject property executed by aside a portion of the reclaimed land
the City of Manila to the Manila Lodge No. "formed by the Luneta Extension of- to lease
761, BPOE, was void and inexistent for lack or sell the same for park purposes;" and that
of subject matter. 53 It suffered from an respondent Court. further more, did not
incurable defect that could not be ratified resolve or dispose of any of the assigned
either by lapse of time or by express errors contrary to the mandate of the
ratification. The Manila Lodge No. 761 Judiciary Act..57
therefore acquired no right by virtue of the The Manila Lodge No. 761, in L-41001,
said sale. Hence to consider now the likewise alleges, as one of the reasons
contract inexistent as it always has seen, warranting review, that the Court of Appeals
cannot be, as claimed by the Manila Lodge departed from the accepted and usual
No. 761, an impairment of the obligations of course of Judicial proceedings by simply
contracts, for there was it, contemplation of making a general affirmance of the court a
law, no contract at all. quo findings without bothering to resolve
The inexistence of said sale can be set up several vital points mentioned by the BPOE
against anyone who asserts a right arising in its assigned errors. 58
from it, not only against the first vendee, the COMMENTS ON SECOND ISSUE
Manila Lodge No. 761, BPOE, but also We have shown in our discussion of the first
against all its suceessors, including the TDC issue that the decision of the trial court is
which are not protected the doctrine of bona fully in accordance with law. To follows that
fide ii purchaser without notice, being when such decision was affirmed by the
claimed by the TDC does not apply where Court of Appeals, the affirmance was
likewise in accordance with law. Hence, no Communal-Goob (from Km.
useful purpose will be served in further 12.38 to 15.88) was
discussing the second issue. constructed during the period
CONCLUSION from 1950 to 1952 by the
plaintiff at its exclusive expense
ACCORDINGLY, the petitions in both G.R. with the knowledge and
Nos. L-41001 and L-41012 are denied for consent of the Provincial Board
lack of merit, and the decision of the Court of Oriental Mindoro;
of Appeals of June 30, 1975, is hereby
affirmed, at petitioner's cost. (b) That before actual
construction of said road and
Makasiar, Munoz Palma and Martin, JJ., bridge the personnel of the
concur.1äwphï1.ñët Office of the District Engineer
Teehankee, concurs in the result which is surveyed the lay-out of the road
wholly consistent with the basic rulings and to be constructed, also at the
jugdment of this Court in its decision of July expense of the plaintiff;
31, 1968. (c) That before the actual
construction of the road in
question the plaintiff secured
G.R. No. L-16351 June 30, 1964 and used road-right-of-way
CALAPAN LUMBER COMPANY, agreements (Exhs. Y, Y-1 to Y-7
INC., plaintiff-appellee, 
 and Z-AA), executed in favor of
vs.
 the plaintiff by the owners of the
COMMUNITY SAWMILL COMPANY, ET several portions of land
AL., defendants-appellants. traversed by said road;
Ferdinand E. Marcos for plaintiff-appellee.
 (d) That from the completion of
Salvador H. Laurel and Exequiel S. the road up to the present the
Consulta for defendants-appellants. plaintiff has been contributing to
PADILLA, J.: the repair and maintenance of
the said road such as stones,
This is an action for injunction, prohibition gravel, sand and lumber at its
against defendant public officers, own expense;
compensatory, exemplary and nominal
damages, attorney's fees and costs. (e) That since the completion of
the road in question (to) the
All the defendants prayed in their respective same has been used by the
answers for the dismissal of the second public without any restriction
amended complaint, in addition to their with the written consent of the
counterclaim. plaintiff as embodied in
After trial, the Court of First Instance of Resolutions Nos. 222 (Exh. A)
Oriental Mindoro rendered judgment, the and 119 (Exh. B), with the
dispositive part of which reads: exception of logging and lumber
WHEREFORE, this Court renders concerns who might use the
judgment: road with the permission of the
plaintiff;
1. Finding:
(f) That Lao Kee (alias Lu
(a) That the road and bridge in Pong), Lee Cok Tan Hong, Tan
question, known as the Biga- Kian, Co Giac, Tan Hong Chian
Hian, Tan Tak Tiao, Kick Chia Hian, Tan Tak Tiao, Kiok Chia
and the Community Sawmill and Community Sawmill
Company had used the road Company, their agents,
and bridge in question attorneys, or other persons or
sometime before April 6, 1953, entities from acting on their
until the issuance of the writ of behalf;
preliminary injunction of June (b) The same defendants
25, 1953, manifest bad faith; named in the immediately
2. Declaring: preceding paragraph to pay
(a) That Resolution No. 186, jointly and severally to the
series of 1953, marked Exh. C, plaintiff the sum of P10,000.00
is valid insofar as it repealed as attorney's fees and to pay
Resolution No. 222, series of the costs;
1953; marked Exh. "A", and 4. Absolving from the third amended
Resolution No. 119, series of complaint the defendants Marciano
1953, marked Exh. B; Roque, Pablo Lorenzo, Isaias
(b) That Resolution No. 186, Fernando, Francisco Infantado,
series of 1953, marked Exh. C. Bernabe Jamilla and Cenon C.
insofar as it declared that the Laurena;
road and bridge in question, 5. Dismissing all the counterclaims
public is null and void the same filed by the defendants for lack of
being in violation of Sec. 2131 sufficient merits. (Civil Case No.
of the Revised Administrative R-542)
Code; From the judgment thus rendered, the
(c) That the road and bridge in defendants Lao Kee (alias Lu Pong), Lee
question are of private Cok Tan Hong, Tan Kian, Co Giac, Chia
ownership belonging to the Hian, Tan Tak Tiao, Kiok Chia, all acting
plaintiff; under the name and style of Community
(d) That the said defendant Lao Sawmill Company, appealed to this Court.
Kee (alias Lu Pong), Lee Cok, They claim that the trial court committed the
Tan Hong, Tan Kian, Co Giac, following errors:
Tan Hong, Chia Hian, Tan Tak 1. The lower court erred in holding
Tiao, Kiok Chia and Community that the road in question is a private
Sawmill did not have the right to road and that, therefore, plaintiff could
use the road and bridge in legally deny its use to herein
question; appellants.
3. Ordering: 2. The lower court erred in ordering
(a) That the writ of preliminary herein appellants to pay plaintiff
injunction issued against the attorney's fees.
Community Sawmill Company 3. The lower court erred in holding
be made permanent, that plaintiff can recover expenses of
perpetually restraining the said litigation under article 2208 of the Civil
defendants Lao Kee (alias Lu Code.
Pong), Lee Cok, Tan Hong, Tan 4. The lower court erred in not
Kian, Co Giac, Tan Hong Chia dismissing the complaint and finding
for herein appellants on their (c) 2nd Indorsement of
counterclaim. Governor Infantado dated
At the trial, the parties submitted to the March 23, 1953;
Court a stipulation of facts which reads: (d) 3rd Indorsement of District
1. That the parties agree to the Engineer C. C. Laurena dated
existence and authenticity of the March 26, 1953;
following resolutions which were (e) 4th Indorsement of
passed by the Provincial Board of Governor Infantado dated
Oriental Mindoro, as follows: March 28, 1953;
(a) Resolution No. 222, Series (f) Letter of Rodolfo G. Naguit,
of 1950 (Annex "A" of the Third representative of the
Amended Complaint), but not Community Sawmill Company,
its regularity and validity, which dated May 4, 1953 and
must be proven; addressed to the Assistant
(b) Resolution No. 119, Series Executive Secretary, Office of
of 1953 (Annex "B" of the Third the President;
Amended Complaint); (g) Letter of Atty. Ferdinand E.
(c) Resolution No. 186, Series Marcos, counsel for the plaintiff
of 1955, revoking Resolutions company addressed to
Nos. 222, Series of 1950 and Executive Secretary Marciano
119, Series of 1953, of the Roque, dated May 21, 1953
Provincial Board, granting the (Annex "F", Third Amended
Calapan Lumber Company the Complaint);
exclusive right under certain (h) 7th Indorsement of Director
conditions to use the Biga- of Public Works, Isaias
Communal-Goob road for a Fernando, dated April 20, 1953
period of twenty (20) years, and (Annex "D", Third Amended
declaring said road as a toll Complaint);
road. (i) 8th Indorsement of
2. That the parties agree as to the Undersecretary Vicente Orosa,
existence and authenticity of the dated April 25, 1953;
following official communications, (j) 9th Indorsement of Executive
indorsements and letters re the Biga- Secretary Marciano Roque
Communal-Goob road: dated May 11, 1953 (Annex "E",
(a) letter dated March 20, 1953 Third Amended Complaint);
addressed to the Hon. (k) 3rd Indorsement of Acting
Executive Secretary, signed by Executive Secretary Marciano
Rodolfo Naguit and Joe Ong, Roque, dated July 8, 1953 and
both representatives of the the 4th Indorsement of
Community Sawmill Company: Undersecretary Vicente Orosa,
(b) 1st Indorsement of Assistant dated July 16, 1953;
Executive Secretary Lucas (l) 1st Indorsement of Acting
Madamba, dated March 21, Executive Secretary Marciano
1953 (Annex "C", Third Roque, dated July 17, 1953.
Amended Complaint);
Wherefore, the parties respectfully Lumber Co., Inc. to undertake the
pray that the foregoing stipulation of construction of the unfinished
facts be admitted and approved by provincial road in the barrio of Viga,
this Honorable Court, without municipality of Calapan, known as the
prejudice to the parties adducing Viga-Communal-Goob Road, subject
other evidence to prove their case not to the stipulations stated above; and
covered by this stipulation of RESOLVED FURTHER, That copies
facts. 1äwphï1.ñët of this resolution be furnished the
xxx xxx xxx District Engineer and the Calapan
Resolution No. 222, adopted 4 December Lumber Co., Inc., through its
1950, reads: President, Mr. D. M. Gotauco, for their
information.
Whereas, there is at present an
unfinished provincial road in the barrio xxx xxx xxx
of Viga, of the municipality of Resolution No. 119, adopted 6 April 1953,
Calapan, known as the Viga- reads:
Communal-Goob Road, the Whereas, under Resolution No. 222,
construction of which could not be series of 1950, the Provincial Board of
undertaken by the province due to Oriental Mindoro under the former
insufficiency of funds; administration, granted the Calapan
Whereas, the Calapan Lumber Co., Lumber Co., Inc. the right to
Inc., through its President, Mr. D. M. undertake the construction of the
Gotauco, in a letter addressed to the unfinished Viga-Communal-Goob
Governor of this province has made provincial road the sole right for its
representations to undertake the use, under the following conditions:
construction of said road under (1) That after a period of twenty
certain conditions; and (20) years, said company shall
Whereas, the province is willing to donate to the province the road
accede to the request of the Calapan it had constructed;
Lumber Co., Inc. and to give it the (2) That during the said period
sole right for its use, provided that of 20 years other concerns
after a period of twenty (20) years, dealing in logs and/or lumber
said company shall donate to the may use the same road upon
province the road it had constructed, permission granted to them by
provided further that during the said the Calapan Lumber Co.; and
period of 20 years other concerns
dealing in logs and/or lumber may use (3) That said road is open to all
the same road upon permission non-logging concerns or
granted to them by the said Calapan individuals during the said
Lumber Co., Inc.; and provided finally period of 20 years.
that said road is open to all non- Whereas, according to the records of
logging concerns or individuals during the Provincial Board the said
the said period of 20 years. Now, resolution has not been amended or
therefore, be it modified up to the present, and,
RESOLVED, That the Provincial therefore, the same is still in force and
Board of Oriental Mindoro grants, as binding as per agreement stipulated
hereby is granting, the Calapan therein;
Whereas, this Board has received SERIES OF 1953, OF THE
reliable information to the effect that PROVINCIAL BOARD, GRANTING
another certain lumber company is THE CALAPAN LUMBER COMPANY
attempting to use, or has actually THE EXCLUSIVE RIGHT UNDER
used the same road, by allowing to CERTAIN CONDITIONS TO USE
pass thru it its heavy trucks and THE VIGA-COMMUNAL-GOOB
tractors without securing any PROVINCIAL ROAD FOR A PERIOD
permission from the Calapan Lumber OF TWENTY (20) YEARS.
Co., Inc., to the detriment and Whereas, under Resolution No. 222,
prejudice of the interests of the latter series of 1950, the Provincial Board of
lumber company which shouldered Oriental Mindoro, under the former
the cost of its completion in provincial administration, granted the
accordance with the rights granted to Calapan Lumber Co., Inc. an authority
it by the province; and to undertake the construction of the
Whereas, after a careful consideration unfinished Viga-Goob provincial road
of the matter this Board is of the from Point Km. 12.38 to Km. 15.88,
opinion that the right of the Calapan and the exclusive right for its use,
Lumber Co., Inc. over the said road under certain conditions;
as stipulated in the condition set forth Whereas, on April 6, 1953, this Board
in the resolution must be upheld for passed another resolution (119)
obvious reasons; Now, therefore, be it maintaining the right of the Calapan
RESOLVED by the Provincial Board Lumber Co., Inc. over the said road
of Oriental Mindoro to authorize, as it under the conditions stipulated in the
hereby authorizes, the Calapan above-cited resolution No. 222, and
Lumber Company, Inc., to prohibit the forthwith authorized the said company
use of the Viga-Communal-Goob to prohibit the use of the portion of
provincial road, from point Km. 12.38 said road constructed at its expense
up to Km. 15.88 of said road, by any by any other concern or company
other concern or company dealing in dealing in logs or lumber without its
logs and/or lumber, without the permission;
permission or consent of the said Whereas, in a 9th Indorsement dated
Calapan Lumber Co., Inc. in May 11, 1953, the pertinent parts of
accordance with one of the which are quoted hereunder, the
stipulations or conditions agreed upon Honorable, the Executive Secretary to
in Resolution No. 222, series of 1950, whom the case regarding this matter
of the Provincial Board; and was appealed for decision, and upon
RESOLVED, FURTHER, That the the recommendation of the Director of
District Engineer and the Calapan Public Works and with the
Lumber Co., Inc. be furnished with concurrence of the Undersecretary of
copies of this resolution, for their Public Works and Communications,
information. ruled that provincial roads are
xxx xxx xxx considered as properties for public
use and the Provincial Board may not
Resolution No. 186, adopted 19 June 1953, therefore grant the exclusive use
reads: thereof to any private individual or
REVOKING RESOLUTIONS NOS. entity which would discriminate
222, SERIES OF 1950, AND 119, against or exclude the general public
from a reasonable use thereof, and Viga-Communal-Goob provincial road
therefore, the resolution in question as a toll road; and,
should be revoked. Whereas, according to an estimate
In this connection, it should be made by the office of the District
stated that Provincial roads are Engineer the Calapan Lumber
properties for public use and Company has spent for the
the provincial board may not construction of the portion of the road
grant the exclusive use thereof in question having a length of 3.5
to any private individual or kilometers, the amount of P25,000.00
entitle or enter into a contract or more or less; Now, therefore, be it —
agreement which would tend to RESOLVED, That Resolutions Nos.
discriminate against or exclude 222, series of 1950, and 119, series of
the general public from a 1953, of the Provincial Board, which
reasonable use thereof. grant the Calapan Lumber Co., Inc.,
Resolutions Nos. 222, series of the exclusive right to use the Viga-
1950, and 119, series of 1953, Communal-Goob provincial road for a
of the Provincial Board, period of 20 years, under certain
granting the Calapan Lumber conditions, be, and hereby are,
Company an exclusive right to revoked;
use the said road for a period of
twenty (20) year and to prohibit RESOLVED, FURTHER, That the
lumber or logging concerns portion of said Viga-Communal-Goob
from using the road in question provincial road, from Point Km. 12.38
without the company's up to Km. 15.88 thereof, be and
permission, should therefore be hereby is, declared PROVINCIAL
revoked. In consonance with TOLL ROAD, under the provisions of
the policy of the law, and as section 2131 of the Revised
correctly the suggested by the Administrative Code;
Director of Public Works and RESOLVED, FURTHERMORE, That
the Undersecretary of Public the following toll rates to be paid by
Works and Communications the any motor vehicle for the use of the
portion of the Viga-Communal provincial road be, and hereby are,
Road from Km. 12.38 to 15.89, fixed, effective today, June 19, 1953,
having a length of 3.5 the proceeds from which shall be
kilometers, should be declared used for the maintenance of the said
a toll road in order to raise road and the balance thereof for the
funds for its maintenance and reimbursement to the said company
with which to reimburse the for the expenses it had incurred in the
Calapan Lumber Company for construction for said portion of the
the expenses the latter had road:
incurred in the construction of For every truck, one way P1.00 

this portion of the road. For every weapon carrier, one
Whereas, in view of the said ruling, way .60 

this Board has been requested to take For every jeepney .30
immediate action on the matter to PROVIDED, however, that the portion
declare the above-said portion of the of the road declared herein as
provincial toll road shall continue to be
so up to and until the amount spent by such construction and private use shall not
the Calapan Lumber Company for its prevent or obstruct the public use of such
construction shall have been covered thoroughfares, streets, roads or other public
by reimbursement to said company; property and that the permit granted shall at
and all times be subject to revocation by the
RESOLVED, FINALLY, That copies of Secretary of the Interior, if, in the judgment
this resolution be forwarded to His of that official, the public interest requires it."
Excellency, the President of the Consequently, Resolution No. 186 revoking
Philippines, thru the Director of Public the two previous resolutions was in order.
Works and the Honorable, the The road known as the Viga-Communal-
Secretary of Public Works and Goob connecting two finished or completed
Communications, Manila. parts of the provincial road, from kilometer
xxx xxx xxx 12.38 to 15.88, as laid out by the personnel
of the office of the District Engineer was
Resolution No. 169, adopted 21 April 1956, planned or intended to be laid out and
revoked Resolution No. 186 in so far as it constructed by the Provincial Government of
declared Provincial Toll Road that part of the Oriental Mindoro to complete said road. The
road invoked in this case. fact that the survey, lay-out and actual
There seems to be no doubt that construction of the unfinished part of the
Resolutions Nos. 222 and 119, adopted by road were done at the appellee's expense,
the Provincial Board of Oriental Mindoro does not convert said road after construction
quoted above, mere ultra vires, because into a private road, for it does not appear
sections 2067 (f) and (g) on powers of the that the parts of the land where the road
provinces as political bodies corporate; 2102 was laid out and constructed belong to or
(g) on powers of the provincial boards; 2106 are owned by the appellee. The evidence
(f) on powers of the provincial boards to be shows that the owners of such parts of land
exercised with the approval of the ceded their parts of the land owned by them
Department Head; and 2113 (a) on road and without any consideration because of their
bridge fund, of the Revised Administrative desire to have the road completed or to
Code, do not authorize the Provincial Board connect the ends of two completed parts of
of Oriental Mindoro to pass and adopt said the road. It may be conceded that the
resolutions. The contention that the appellee built the road in question in good
Provincial Board of Oriental Mindoro under faith; and such being the case, it may be
section 2106 (g) invoked by the appellee is argued that the appellee is entitled to keep
authorized to pass those resolutions Nos. or have possession of the road until after it
222 and 199 quoted above, is untenable shall have been reimbursed of the expenses
because said paragraph of the section it had incurred in constructing and
authorizes the Provincial Board "to permit, maintaining the road in good condition. The
upon favorable recommendation by the provisions of the Civil Code on the right of a
Secretary of Public Works and builder in good faith on a private
Communications, and subject to such land1 cannot be invoked and applied to the
conditions as may properly protect the road in question, because public interest is
public interests, the construction and involved and the people living in that part of
maintenance, for private use of railways, the province are entitled to use the road.
conduits, and telephone lines across public It is true that that part of the Resolution No.
thoroughfares, streets, roads, or other public 186 above quoted converting the road in
property and in the province: Provided, That question into toll road contravenes section
2131 of the Revised Administrative Code,
because in the case of road the
recommendation of the Secretary of Public G.R. No. L40474 August 29, 1975
Works and Communications and the CEBU OXYGEN & ACETYLENE CO.,
authorization of the president of the INC., petitioner, 

Philippines had to be secured and such vs.

recommendation and authorization had not HON. PASCUAL A. BERCILLES Presiding
been obtained. Judge, Branch XV, 14th Judicial District,
Upon the foregoing considerations, this and JOSE L. ESPELETA, Assistant
Court is of the opinion, and so holds, that Provincial Fiscal, Province of Cebu,
the road involved in this case cannot be representing the Solicitor General's
declared private property, and for that Office and the Bureau of
reason the Provincial Board of Oriental Lands, respondents.
Mindoro may elect between paying the Jose Antonio R Conde for petitioner.
appellee the total cost of the construction of Office of the Acting Solicitor General Hugo
the road together with lawful interest from E. Gutierrez, Jr., Assistant Solicitor General
the date of actual disbursement by the Octavio R. Ramirez and Trial Attorney David
appellee to the date of payment by the R. Hilario for respondents. .
Province of Oriental Mindoro within a
reasonable period not to exceed one year
from the date this judgment shall become CONCEPCION, Jr., J.:
final; or upon securing the recommendation This is a petition for the review of the order
of the Secretary of Public Works and of the Court of First Instance of Cebu
Communications and authorization of the dismissing petitioner's application for
President of the Philippines to designate registration of title over a parcel of land
such road an toll road, to raise the situated in the City of Cebu.
necessary fund to reimburse the appellee of
the total cost of construction of the road, The parcel of land sought to be registered
together with lawful interest from the date of was only a portion of M. Borces Street,
actual disbursement by the appellee to the Mabolo, Cebu City. On September 23, 1968,
date of payment by the Province of Oriental the City Council of Cebu, through Resolution
Mindoro, and the latter is ordered to refund No. 2193, approved on October 3, 1968,
the amount paid for tolls by, the appellee declared the terminal portion of M. Borces
during the enforcement of Resolution No. Street, Mabolo, Cebu City, as an abandoned
186 which, as above stated, was road, the same not being included in the
unauthorized. The judgment appealed from City Development Plan.1 Subsequently, on
making final the preliminary writ of injunction December 19, 1968, the City Council of
and ordering the appellants to pay the Cebu passed Resolution No. 2755,
appellee the sum of P10,000 as attorney's authorizing the Acting City Mayor to sell the
fees, are reversed and set aside. The rest of land through a public bidding.2 Pursuant
the judgment appealed from not inconsistent thereto, the lot was awarded to the herein
with this opinion is affirmed, without petitioner being the highest bidder and on
pronouncement as to costs. March 3, 1969, the City of Cebu, through the
Acting City Mayor, executed a deed of
Bengzon, C.J., Bautista Angelo, Labrador, absolute sale to the herein petitioner for a
Concepcion, Reyes, J.B.L., Parades, total consideration of P10,800.00.3 By virtue
Regala and Makalintal, JJ., concur.
 of the aforesaid deed of absolute sale, the
Barrera and Dizon, JJ., took no part. petitioner filed an application with the Court
of First instance of Cebu to have its title to belonging to the City may be
the land registered.4 lawfully used or conveyed.
On June 26, 1974, the Assistant Provincial From the foregoing, it is undoubtedly clear
Fiscal of Cebu filed a motion to dismiss the that the City of Cebu is empowered to close
application on the ground that the property a city road or street. In the case of Favis vs.
sought to be registered being a public road City of Baguio,7 where the power of the city
intended for public use is considered part of Council of Baguio City to close city streets
the public domain and therefore outside the and to vacate or withdraw the same from
commerce of man. Consequently, it cannot public use was similarly assailed, this court
be subject to registration by any private said:
individual.5 5. So it is, that appellant may
After hearing the parties, on October 11, not challenge the city council's
1974 the trial court issued an order act of withdrawing a strip of
dismissing the petitioner's application for Lapu-Lapu Street at its dead
registration of title.6 Hence, the instant end from public use and
petition for review. converting the remainder
For the resolution of this case, the petitioner thereof into an alley. These are
poses the following questions: acts well within the ambit of the
power to close a city street. The
(1) Does the City Charter of city council, it would seem to
Cebu City (Republic Act No. us, is the authority competent to
3857) under Section 31, determine whether or not a
paragraph 34, give the City of certain property is still
Cebu the valid right to declare a necessary for public use.
road as abandoned? and
Such power to vacate a street
(2) Does the declaration of the or alley is discretionary. And the
road, as abandoned, make it discretion will not ordinarily be
the patrimonial property of the controlled or interfered with by
City of Cebu which may be the the courts, absent a plain case
object of a common contract? of abuse or fraud or collusion.
(1) The pertinent portions of the Revised Faithfulness to the public trust
Charter of Cebu City provides: will be presumed. So the fact
Section 31. Legislative Powers. that some private interests may
Any provision of law and be served incidentally will not
executive order to the contrary invalidate the vacation
notwithstanding, the City ordinance.
Council shall have the following (2) Since that portion of the city street
legislative powers: subject of petitioner's application for
xxx xxx xxx registration of title was withdrawn from
public use, it follows that such withdrawn
(34) ...; to close any city road, portion becomes patrimonial property which
street or alley, boulevard, can be the object of an ordinary contract.
avenue, park or square.
Property thus withdrawn from Article 422 of the Civil Code expressly
public servitude may be used or provides that "Property of public dominion,
conveyed for any purpose for when no longer intended for public use or
which other real property
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.