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FIRST DIVISION

[G.R. No. 129644. March 7, 2000]

CHINA BANKING CORPORATION, petitioner, vs. HON. COURT OF APPEALS, PAULINO ROXAS CHUA and KIANG
MING CHU CHUA, respondents.

DECISION

YNARES-SANTIAGO, J.:

Before us is a petition for review on certiorari assailing the decision rendered by the Court of Appeals on June 26, 1997 which
affirmed the decision of the Regional Trial Court of Pasig, Metro Manila, Branch 163 in Civil Case No. 63199 entitled "Paulino
Roxas Chua and Kiang Ming Chu Chua, Plaintiffs versus China Banking Corporation, the Sheriff of Manila and the Register of Deeds
of Pasig, Defendants."

The facts of the case are not in dispute:

Alfonso Roxas Chua and his wife Kiang Ming Chu Chua were the owners of a residential land in San Juan, Metro Manila, covered by
Transfer Certificate of Title No. 410603. On February 2, 1984, a notice of levy affecting the property was issued in connection with
Civil Case No. 82-14134 entitled, "Metropolitan Bank and Trust Company, Plaintiff versus Pacific Multi Commercial Corporation
and Alfonso Roxas Chua, Defendants," before the Regional Trial Court, Branch XLVI of Manila. The notice of levy was inscribed and
annotated at the back of TCT 410603. Subsequently, Kiang Ming Chu Chua filed a complaint against the City Sheriff of Manila and
Metropolitan Bank and Trust Company, questioning the levy of the abovementioned property. She alleged that the judgment of the
court in Civil Case No. 82-14134 against Alfonso Roxas Chua could not be enforced against TCT 410603 inasmuch as the land
subject thereof was the conjugal property of the spouses.

The parties thereafter entered into a compromise agreement to the effect that the levy on TCT 410603 was valid and enforceable only
to the extent of the undivided portion of the property pertaining to the conjugal share of Alfonso Roxas Chua.

Meanwhile, on June 19, 1985, petitioner China Bank filed with the Regional Trial Court of Manila, Branch 29, an action for collection
of sum of money against Pacific Multi Agro-Industrial Corporation and Alfonso Roxas Chua which was docketed as Civil Case No.
85-31257. The complaint was anchored on three (3) promissory notes with an aggregate amount of P2,500,000.00 plus stipulated
interest.

On November 7, 1985, the trial court promulgated its decision in Civil Case No. 85-31257 in favor of China Banking Corporation, the
dispositive portion of which reads as follows:

PREMISES CONSIDERED, judgment is hereby rendered in favor of the plaintiff and against the defendants;
ordering the latter to pay, jointly and severally, the former, under the first cause of action, the sum of
P1,800,000.00, representing the unpaid of the promissory note, plus 21% interest per annum and an additional
amount equivalent to 1/10 of 1% per day of the total amount due, as penalty both from and after October 4, 1983,
until fully paid; under the second cause of action, to pay the plaintiff the amount of P350,000.00 representing the
unpaid principal of the promissory note, plus 12% interest per annum and an additional amount equivalent to 1/10
of 1% per day of the total amount due, as penalty both from and after September 14, 1983, until fully paid; under the
third cause of action, to pay the plaintiff the further sum of P350,000.00, representing the unpaid principal of the
promissory note, plus 12% interest per annum and an additional amount equivalent to 1/10 % of 1% per day of the
total amount due as penalty both from and after September 14, 1983, until fully paid; and to pay the same plaintiff
the amount equivalent to 10% of the foregoing sums, as and for attorneys fees, such amount to bear the same rate of
interest as the principal obligation under each promissory note, compounded monthly, until fully paid; and to pay
the costs of suit.

SO ORDERED.[1]

On September 8, 1986, an alias notice of levy on execution on the one-half () undivided portion of TCT 410603 belonging to Alfonso
Chua was issued in connection with Civil Case 82-14134. The notice was inscribed and annotated at the back of TCT 410603 on
September 15, 1986 and a certificate of sale covering the one-half undivided portion of the property was executed in favor of
Metropolitan Bank and Trust Company. The certificate of sale was inscribed at the back of said TCT on December 22, 1987.
Meanwhile, Pacific Multi Agro-Industrial Corporation and Alfonso Roxas Chuas appeal was dismissed by the Court of Appeals on
September 29, 1988 for failure to file brief. [2]

On November 21, 1988, Alfonso Roxas Chua executed a public instrument denominated as "Assignment of Rights to Redeem,"
whereby he assigned his rights to redeem the one-half undivided portion of the property to his son, private respondent Paulino Roxas
Chua.[3] Paulino redeemed said one-half share on the very same day. The instrument was inscribed at the back of TCT 410603 as
Entry No. 7629, and the redemption of the property by Paulino was inscribed as Entry No. 7630, both dated March 14, 1989. [4]

On the other hand, in connection with Civil Case No. 85-31257, another notice of levy on execution was issued on February 4, 1991
by the Deputy Sheriff of Manila against the right and interest of Alfonso Roxas Chua in TCT 410603. Thereafter, a certificate of sale
on execution dated April 13, 1992 was issued by the Sheriff of Branch 39, RTC Manila in Civil Case No. 85-31257, in favor of China
Bank and inscribed at the back of TCT 410603 as Entry No. 01896 on May 4, 1992. [5]

On May 20, 1993, Paulino Roxas Chua and Kiang Ming Chu Chua instituted Civil Case No. 63199 before the RTC of Pasig, Metro
Manila against China Bank, averring that Paulino has a prior and better right over the rights, title, interest and participation of China
Banking Corporation in TCT 410603; that Alfonso Roxas Chua sold his right to redeem one-half (1/2) of the aforesaid conjugal
property in his favor on November 21, 1988 while China Banking Corporation acquired its right from the notice of levy of execution
dated January 30, 1991; that the assignment of rights in his favor was annotated at the back of TCT 410603 on March 14, 1989 and
inscribed as Entry No. 7629, and his redemption of the property was effected in an instrument dated January 11, 1989 and inscribed
and annotated at the back of TCT 410603 on March 14, 1989, two years before the annotation of the rights of China Banking
Corporation on TCT 410603 on February 4, 1991.

The trial court rendered a decision on July 15, 1994 in favor of private respondent Paulino Roxas Chua and against China Banking
Corporation, the decretal portion of which reads:

WHEREFORE, foregoing premises considered, this Court finds sufficient preponderance of evidence against
defendants in favor of plaintiffs and therefore render (sic) judgment ordering defendant to pay plaintiffs:

a) P100,000.00 as moral damages and P50,000.00 as exemplary damages plus 12% interest per annum to start
from the date of this decision until fully paid;

b) P100,000.00 attorneys fee; and

c) the cost of the suit.

The writ of preliminary injunction issued by this Court on 30 June 1993 enjoining China Banking Corporation, the
Sheriff of Manila and the Register of Deeds of San Juan, their officers, representatives, agents or persons acting on
their behalf from causing the transfer of possession, ownership and certificate of title or otherwise disposing of the
property covered by TCT No. 410603 in favor of defendant bank or to any other person is hereby made permanent.
The Register of Deeds of San Juan, Metro Manila is also hereby ordered to cancel all annotations in TCT No.
410603 in favor of defendant China Banking Corporation adverse to the rights and interest of plaintiffs.

SO ORDERED.[6]

The trial court ruled that the assignment was made for a valuable consideration and was executed two years before petitioner China
Bank levied the conjugal share of Alfonso Roxas Chua on TCT 410603. The trial court found that Paulino redeemed the one-half
portion of the property, using therefor the amount of P100,000.00 which he withdrew from his savings account as evidenced by his
bankbook and the receipts of Metrobank for his payment of the redemption price. The court noted that Paulino at that time was already
of age and had his own source of income.

On appeal, the Court of Appeals affirmed the ruling of the trial court. It held that petitioner China Bank had been remiss in the
exercise of its rights as creditor; and that it should have exercised its right of redemption under Sections 29 and 30, Rule 39 of the
Rules of Court.

The issues raised by petitioner before us essentially boil down to whether or not the assignment of the right of redemption made by
Alfonso Roxas Chua in favor of private respondent Paulino was done to defraud his creditors and may be rescinded under Article
1387 of the Civil Code.
Under Article 1381(3) of the Civil Code, contracts which are undertaken in fraud of creditors when the latter cannot in any manner
collect the claims due them, are rescissible.

The existence of fraud or intent to defraud creditors may either be presumed in accordance with Article 1387 of the Civil Code or duly
proved in accordance with the ordinary rules of evidence. Article 1387 reads:

Art. 1387. All contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have
been entered into in fraud of creditors, when the donor did not reserve sufficient property to pay all debts contracted
before the donation.

Alienation by onerous title are also presumed fraudulent when made by persons against whom some judgment has
been rendered in any instance or some writ of attachment has been issued. The decision or attachment need not refer
to the property alienated, and need not have been obtained by the party seeking rescission.

In addition to these presumptions, the design to defraud creditors may be proved in any other manner recognized by
the law of evidence.

Hence, the law presumes that there is fraud of creditors when:

a) There is alienation of property by gratuitous title by the debtor who has not reserved sufficient property to pay his
debts contracted before such alienation; or

b) There is alienation of property by onerous title made by a debtor against whom some judgment has been rendered
in any instance or some writ of attachment has been issued. The decision or attachment need not refer to the property
alienated and need not have been obtained by the party seeking rescission.

After his conjugal share in TCT 410603 was foreclosed by Metrobank, the only property that Alfonso Roxas Chua had was his right to
redeem the same, it forming part of his patrimony. "Property" under civil law comprehends every species of title, inchoate or
complete, legal or equitable.

Alfonso Roxas Chua sold his right of redemption to his son, Paulino Roxas Chua, in 1988. Thereafter, Paulino redeemed the property
and caused the annotation thereof at the back of TCT 410603. This preceded the annotation of the levy of execution in favor of China
Bank by two (2) years and the certificate of sale in favor of China Bank by more than three (3) years. On this basis, the Court of
Appeals concluded that the allegation of fraud made by petitioner China Bank is vague and unsubstantiated.

Such conclusion, however, runs counter to the law applicable in the case at bar. Inasmuch as the judgment of the trial court in favor of
China Bank against Alfonso Roxas Chua was rendered as early as 1985, there is a presumption that the 1988 sale of his property, in
this case the right of redemption, is fraudulent under Article 1387 of the Civil Code. The fact that private respondent Paulino Roxas
Chua redeemed the property and caused its annotation on the TCT more than two years ahead of petitioner China Bank is of no
moment. As stated in the case of Cabaliw vs. Sadorra,[7] "the parties here do not stand in equipoise, for the petitioners have in their
favor, by a specific provision of law, the presumption of fraudulent transaction which is not overcome by the mere fact that the deeds
of sale were in the nature of public instruments."

This presumption is strengthened by the fact that the conveyance has virtually left Alfonsos other creditors with no other property to
attach. It should be noted that the presumption of fraud or intention to defraud creditors is not just limited to the two instances set forth
in the first and second paragraphs of Article 1387 of the Civil Code. Under the third paragraph of the same article, the design to
defraud creditors may be proved in any other manner recognized by the law of evidence. In the early case of Oria vs.
Mcmicking,[8] the Supreme Court considered the following instances as badges of fraud:

1. The fact that the consideration of the conveyance is fictitious or is inadequate.

2. A transfer made by a debtor after suit has begun and while it is pending against him.

3. A sale upon credit by an insolvent debtor.

4. Evidence of large indebtedness or complete insolvency.

5. The transfer of all or nearly all of his property by a debtor, especially when he is insolvent or greatly embarrassed
financially.
6. The fact that the transfer is made between father and son, when there are present other of the above circumstances

7. The failure of the vendee to take exclusive possession of all the property. (Underscoring provided)

Before China Bank obtained judgment against Pacific Multi Agro-Industrial Corporation and Alfonso Roxas Chua on November 7,
1985, Alfonso Roxas Chua had only his one-half share of the conjugal property in question to pay his previous creditor, Metrobank.
Even his son, private respondent Paulino Roxas Chua himself, knew this as shown by the following excerpts of his testimony during
the trial:

Q: You said that month before or October 1988 your father approached you regarding his problem with respect to
his property, subject of this case, can you tell us what in particular did he tell you about Metrobank?

A: He told me about his problem with Metrobank,about the loan with Metrobank and Metrobank gonna foreclose
his property.

xxxxxxxxx

Q: What did your father tell you regarding his problem?

A: He told me about Metrobank, our house will gonna foreclose (sic). He cannot pay Metrobank anymore. His
business is down.[9]

Despite Alfonso Roxas Chuas knowledge that it is the only property he had which his other creditors could levy, he still assigned his
right to redeem his one-half share of the conjugal property in question from Metrobank in favor of his son, Paulino. Alfonsos intent to
defraud his other creditors, specifically, China Bank, becomes even more apparent when we take into consideration the fact that
immediately after the Court of Appeals rendered its Resolution dated September 29, 1988, dismissing the appeal of Pacific Multi-Agro
and Alfonso Roxas Chua in CA-G.R. No. CV-14681 entitled, "China Banking Corporation, Plaintiff-Appellee versus Pacific Multi
Agro-Industrial Corporation, et al., Defendants-Appellants,"[10]he assigned his right to redeem one-half of the conjugal property to his
son on November 21, 1988.

The Court of Appeals, however, maintained that although the transfer was made between father and son, the conveyance was not
fraudulent since Paulino had indeed paid the redemption price of P1,463,375.39 to Metrobank and the sum of P100,000.00 to his
father. The Court of Appeals reiterated the findings of the trial court that Paulino at that time had his own source of income, having
been given HK$1Million by his maternal grandmother which he used to invest in a buy-and-sell business of stuffed toys.

It bears emphasis that it is not sufficient that the conveyance is founded on a valuable consideration. In the case of Oria vs.
Mcmicking,[11] we had occasion to state that "In determining whether or not a certain conveyance is fraudulent the question in every
case is whether the conveyance was a bona fide transaction or a trick and contrivance to defeat creditors, or whether it conserves to the
debtor a special right. It is not sufficient that it is founded on good considerations or is made with bona fide intent: it must have both
elements. If defective in either of these, although good between the parties, it is voidable as to creditors. x x x The test as to whether or
not a conveyance is fraudulent is, does it prejudice the rights of creditors?"

The mere fact that the conveyance was founded on valuable consideration does not necessarily negate the presumption of fraud under
Article 1387 of the Civil Code. There has to be a valuable consideration and the transaction must have been made bona fide.

In the case at bar, the presumption that the conveyance is fraudulent has not been overcome. At the time a judgment was rendered in
favor of China Bank against Alfonso and the corporation, Paulino was still living with his parents in the subject property. Paulino
himself admitted that he knew his father was heavily indebted and could not afford to pay his debts. The transfer was undoubtedly
made between father and son at a time when the father was insolvent and had no other property to pay off his creditors. Hence, it is of
no consequence whether or not Paulino had given valuable consideration for the conveyance.

With regard to the finding of the Court of Appeals that petitioner was remiss in its duties for not having availed of redemption under
Rule 39 of the Rules of Court, it should be borne in mind that petitioner is not limited to the procedure outlined in Rule 39 of the Rules
of Court to enforce its claim against its debtor Alfonso Roxas Chua. Verily, Article 1387 of the Civil Code clearly states that
conveyances made by the debtor to defraud his creditor may be rescinded.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 46735 is REVERSED and SET
ASIDE. The permanent injunction enjoining petitioner, the Sheriff of Manila, the Register of Deeds of San Juan, their officers,
representatives, agents and persons acting on their behalf from causing the transfer of possession, ownership and title of the property
covered by TCT No. 410603 in favor of petitioner is LIFTED. The Assignment of Rights to Redeem dated November 21, 1988
executed by Alfonso Roxas Chua in favor of Paulino Roxas Chua is ordered RESCINDED. The levy on execution dated February 4,
1991 and the Certificate of Sale dated April 30, 1992 in favor of petitioner are DECLARED VALID against the one-half portion of
the subject property.

SO ORDERED.
THIRD DIVISION

[G.R. No. 137705. August 22, 2000]

SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs. PCI LEASING AND FINANCE,
INC., respondent.

DECISION
PANGANIBAN, J.:

After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable, a
party is estopped from subsequently claiming otherwise. Hence, such property is a proper subject of a writ of replevin
obtained by the other contracting party.

The Case

Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision [1] of the Court of Appeals
(CA) in CA-GR SP No. 47332 and its February 26, 1999 Resolution[3] denying reconsideration.The decretal portion of the
[2]

CA Decision reads as follows:

WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution dated March 31, 1998 in Civil Case
No. Q-98-33500 are hereby AFFIRMED. The writ of preliminary injunction issued on June 15, 1998 is hereby LIFTED.[4]

In its February 18, 1998 Order,[5] the Regional Trial Court (RTC) of Quezon City (Branch 218) [6] issued a Writ of
Seizure.[7] The March 18, 1998 Resolution[8] denied petitioners Motion for Special Protective Order, praying that the deputy
sheriff be enjoined from seizing immobilized or other real properties in (petitioners) factory in Cainta, Rizal and to return to
their original place whatever immobilized machineries or equipments he may have removed. [9]

The Facts

The undisputed facts are summarized by the Court of Appeals as follows: [10]

On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI Leasing for short) filed with the RTC-QC a complaint for [a]
sum of money (Annex E), with an application for a writ of replevin docketed as Civil Case No. Q-98-33500.

On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of replevin (Annex B) directing its
sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary
expenses.

On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory, seized one machinery with [the] word
that he [would] return for the other machineries.

On March 25, 1998, petitioners filed a motion for special protective order (Annex C), invoking the power of the court to control the
conduct of its officers and amend and control its processes, praying for a directive for the sheriff to defer enforcement of the writ of
replevin.

This motion was opposed by PCI Leasing (Annex F), on the ground that the properties [were] still personal and therefore still subject
to seizure and a writ of replevin.
In their Reply, petitioners asserted that the properties sought to be seized [were] immovable as defined in Article 415 of the Civil
Code, the parties agreement to the contrary notwithstanding. They argued that to give effect to the agreement would be prejudicial to
innocent third parties. They further stated that PCI Leasing [was] estopped from treating these machineries as personal because the
contracts in which the alleged agreement [were] embodied [were] totally sham and farcical.

On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of the remaining properties. He was able
to take two more, but was prevented by the workers from taking the rest.

On April 7, 1998, they went to [the CA] via an original action for certiorari.

Ruling of the Court of Appeals

Citing the Agreement of the parties, the appellate court held that the subject machines were personal property, and that
they had only been leased, not owned, by petitioners. It also ruled that the words of the contract are clear and leave no
doubt upon the true intention of the contracting parties. Observing that Petitioner Goquiolay was an experienced
businessman who was not unfamiliar with the ways of the trade, it ruled that he should have realized the import of the
document he signed. The CA further held:

Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon the case below, since the merits of the
whole matter are laid down before us via a petition whose sole purpose is to inquire upon the existence of a grave abuse of discretion
on the part of the [RTC] in issuing the assailed Order and Resolution. The issues raised herein are proper subjects of a full-blown trial,
necessitating presentation of evidence by both parties. The contract is being enforced by one, and [its] validity is attacked by the other
a matter x x x which respondent court is in the best position to determine.

Hence, this Petition.[11]

The Issues

In their Memorandum, petitioners submit the following issues for our consideration:

A. Whether or not the machineries purchased and imported by SERGS became real property by virtue of immobilization.

B. Whether or not the contract between the parties is a loan or a lease.[12]

In the main, the Court will resolve whether the said machines are personal, not immovable, property which may be a
proper subject of a writ of replevin. As a preliminary matter, the Court will also address briefly the procedural points raised
by respondent.

The Courts Ruling

The Petition is not meritorious.

Preliminary Matter:Procedural Questions

Respondent contends that the Petition failed to indicate expressly whether it was being filed under Rule 45 or Rule 65
of the Rules of Court.It further alleges that the Petition erroneously impleaded Judge Hilario Laqui as respondent.
There is no question that the present recourse is under Rule 45. This conclusion finds support in the very title of the
Petition, which is Petition for Review on Certiorari.[13]
While Judge Laqui should not have been impleaded as a respondent,[14] substantial justice requires that such lapse by
itself should not warrant the dismissal of the present Petition. In this light, the Court deems it proper to remove, motu
proprio, the name of Judge Laqui from the caption of the present case.

Main Issue: Nature of the Subject Machinery

Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the
RTC, because they were in fact real property. Serious policy considerations, they argue, militate against a contrary
characterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property
only.[15] Section 3 thereof reads:

SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue an order and the corresponding writ
of replevin describing the personal property alleged to be wrongfully detained and requiring the sheriff forthwith to take such property
into his custody.

On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows:

ART. 415. The following are immovable property:

x x x....................................x x x....................................x x x

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be
carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;

x x x....................................x x x....................................x x x
In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory
built on their own land. Indisputably, they were essential and principal elements of their chocolate-making industry. Hence,
although each of them was movable or personal property on its own, all of them have become immobilized by destination
because they are essential and principal elements in the industry. [16] In that sense, petitioners are correct in arguing that the
said machines are real, not personal, property pursuant to Article 415 (5) of the Civil Code. [17]
Be that as it may, we disagree with the submission of the petitioners that the said machines are not proper subjects of
the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real property be considered as
personal.[18] After agreeing to such stipulation, they are consequently estopped from claiming otherwise.Under the principle
of estoppel, a party to a contract is ordinarily precluded from denying the truth of any material fact found therein.
Hence, in Tumalad v. Vicencio,[19] the Court upheld the intention of the parties to treat a house as a personal
property because it had been made the subject of a chattel mortgage. The Court ruled:

x x x. Although there is no specific statement referring to the subject house as personal property, yet by ceding, selling or transferring
a property by way of chattel mortgage defendants-appellants could only have meant to convey the house as chattel, or at least,
intended to treat the same as such, so that they should not now be allowed to make an inconsistent stand by claiming otherwise.

Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills [20] also held that the
machinery used in a factory and essential to the industry, as in the present case, was a proper subject of a writ of replevin
because it was treated as personal property in a contract. Pertinent portions of the Courts ruling are reproduced hereunder:

x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be considered as personal property for
purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be
prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped from denying the
existence of the chattel mortgage.
In the present case, the Lease Agreement clearly provides that the machines in question are to be considered as
personal property.Specifically, Section 12.1 of the Agreement reads as follows: [21]

12.1 The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the PROPERTY or any part
thereof may now be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting upon, real
property or any building thereon, or attached in any manner to what is permanent.

Clearly then, petitioners are estopped from denying the characterization of the subject machines as personal
property. Under the circumstances, they are proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that the machines should be deemed personal property pursuant to
the Lease Agreement is good only insofar as the contracting parties are concerned. [22] Hence, while the parties are bound by
the Agreement, third persons acting in good faith are not affected by its stipulation characterizing the subject machinery as
personal.[23] In any event, there is no showing that any specific third party would be adversely affected.

Validity of the Lease Agreement

In their Memorandum, petitioners contend that the Agreement is a loan and not a lease. [24] Submitting documents
supposedly showing that they own the subject machines, petitioners also argue in their Petition that the Agreement suffers
from intrinsic ambiguity which places in serious doubt the intention of the parties and the validity of the lease agreement
itself.[25] In their Reply to respondents Comment, they further allege that the Agreement is invalid. [26]
These arguments are unconvincing. The validity and the nature of the contract are the lis mota of the civil action
pending before the RTC. A resolution of these questions, therefore, is effectively a resolution of the merits of the
case. Hence, they should be threshed out in the trial, not in the proceedings involving the issuance of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA,[27] the Court explained that the policy under Rule 60 was that questions
involving title to the subject property questions which petitioners are now raising -- should be determined in the trial. In
that case, the Court noted that the remedy of defendants under Rule 60 was either to post a counter-bond or to question the
sufficiency of the plaintiffs bond. They were not allowed, however, to invoke the title to the subject property. The Court
ruled:

In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ of seizure (or delivery) on
ground of insufficiency of the complaint or of the grounds relied upon therefor, as in proceedings on preliminary attachment or
injunction, and thereby put at issue the matter of the title or right of possession over the specific chattel being replevied, the policy
apparently being that said matter should be ventilated and determined only at the trial on the merits. [28]

Besides, these questions require a determination of facts and a presentation of evidence, both of which have no place
in a petition for certiorari in the CA under Rule 65 or in a petition for review in this Court under Rule 45. [29]

Reliance on the Lease Agreement

It should be pointed out that the Court in this case may rely on the Lease Agreement, for nothing on record shows that
it has been nullified or annulled. In fact, petitioners assailed it first only in the RTC proceedings, which had ironically been
instituted by respondent.Accordingly, it must be presumed valid and binding as the law between the parties.
Makati Leasing and Finance Corporation[30] is also instructive on this point. In that case, the Deed of Chattel
Mortgage, which characterized the subject machinery as personal property, was also assailed because respondent had
allegedly been required to sign a printed form of chattel mortgage which was in a blank form at the time of signing. The
Court rejected the argument and relied on the Deed, ruling as follows:

x x x. Moreover, even granting that the charge is true, such fact alone does not render a contract void ab initio, but can only be a
ground for rendering said contract voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a proper action in
court. There is nothing on record to show that the mortgage has been annulled. Neither is it disclosed that steps were taken to nullify
the same. x x x
Alleged Injustice Committed on the Part of Petitioners

Petitioners contend that if the Court allows these machineries to be seized, then its workers would be out of work and
thrown into the streets.[31] They also allege that the seizure would nullify all efforts to rehabilitate the corporation.
Petitioners arguments do not preclude the implementation of the Writ. As earlier discussed, law and jurisprudence
support its propriety.Verily, the above-mentioned consequences, if they come true, should not be blamed on this Court, but
on the petitioners for failing to avail themselves of the remedy under Section 5 of Rule 60, which allows the filing of a
counter-bond. The provision states:

SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicants bond, or of the surety or sureties thereon,
he cannot immediately require the return of the property, but if he does not so object, he may, at any time before the delivery of the
property to the applicant, require the return thereof, by filing with the court where the action is pending a bond executed to the
applicant, in double the value of the property as stated in the applicants affidavit for the delivery thereof to the applicant, if such
delivery be adjudged, and for the payment of such sum to him as may be recovered against the adverse party, and by serving a copy
bond on the applicant.

WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED. Costs
against petitioners.
SO ORDERED.
EN BANC

G.R. No. L-40411 August 7, 1935

DAVAO SAW MILL CO., INC., plaintiff-appellant,


vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees.

Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees.

MALCOLM, J.:

The issue in this case, as announced in the opening sentence of the decision in the trial court and as set forth by counsel for the parties
on appeal, involves the determination of the nature of the properties described in the complaint. The trial judge found that those
properties were personal in nature, and as a consequence absolved the defendants from the complaint, with costs against the plaintiff.

The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine Islands. It has operated a
sawmill in the sitio of Maa, barrio of Tigatu, municipality of Davao, Province of Davao. However, the land upon which the business
was conducted belonged to another person. On the land the sawmill company erected a building which housed the machinery used by
it. Some of the implements thus used were clearly personal property, the conflict concerning machines which were placed and
mounted on foundations of cement. In the contract of lease between the sawmill company and the owner of the land there appeared the
following provision:

That on the expiration of the period agreed upon, all the improvements and buildings introduced and erected by the party of
the second part shall pass to the exclusive ownership of the party of the first part without any obligation on its part to pay any
amount for said improvements and buildings; also, in the event the party of the second part should leave or abandon the land
leased before the time herein stipulated, the improvements and buildings shall likewise pass to the ownership of the party of
the first part as though the time agreed upon had expired: Provided, however, That the machineries and accessories are not
included in the improvements which will pass to the party of the first part on the expiration or abandonment of the land
leased.

In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant,
a judgment was rendered in favor of the plaintiff in that action against the defendant in that action; a writ of execution issued thereon,
and the properties now in question were levied upon as personalty by the sheriff. No third party claim was filed for such properties at
the time of the sales thereof as is borne out by the record made by the plaintiff herein. Indeed the bidder, which was the plaintiff in that
action, and the defendant herein having consummated the sale, proceeded to take possession of the machinery and other properties
described in the corresponding certificates of sale executed in its favor by the sheriff of Davao.

As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a number of occasions treated
the machinery as personal property by executing chattel mortgages in favor of third persons. One of such persons is the appellee by
assignment from the original mortgages.

Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of —

1. Land, buildings, roads and constructions of all kinds adhering to the soil;

xxx xxx xxx

5. Machinery, liquid containers, instruments or implements intended by the owner of any building or land for use in
connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of
such trade of industry.

Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no doubt that the trial judge and
appellees are right in their appreciation of the legal doctrines flowing from the facts.

In the first place, it must again be pointed out that the appellant should have registered its protest before or at the time of the sale of
this property. It must further be pointed out that while not conclusive, the characterization of the property as chattels by the appellant
is indicative of intention and impresses upon the property the character determined by the parties. In this connection the decision of
this court in the case of Standard Oil Co. of New York vs. Jaramillo ( [1923], 44 Phil., 630), whether obiter dicta or not, furnishes the
key to such a situation.

It is, however not necessary to spend overly must time in the resolution of this appeal on side issues. It is machinery which is
involved; moreover, machinery not intended by the owner of any building or land for use in connection therewith, but intended by a
lessee for use in a building erected on the land by the latter to be returned to the lessee on the expiration or abandonment of the lease.

A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme Court, it was held that machinery
which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant, but not when
so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such person acted as the agent of the owner.
In the opinion written by Chief Justice White, whose knowledge of the Civil Law is well known, it was in part said:

To determine this question involves fixing the nature and character of the property from the point of view of the rights of
Valdes and its nature and character from the point of view of Nevers & Callaghan as a judgment creditor of the Altagracia
Company and the rights derived by them from the execution levied on the machinery placed by the corporation in the plant.
Following the Code Napoleon, the Porto Rican Code treats as immovable (real) property, not only land and buildings, but
also attributes immovability in some cases to property of a movable nature, that is, personal property, because of the
destination to which it is applied. "Things," says section 334 of the Porto Rican Code, "may be immovable either by their
own nature or by their destination or the object to which they are applicable." Numerous illustrations are given in the fifth
subdivision of section 335, which is as follows: "Machinery, vessels, instruments or implements intended by the owner of the
tenements for the industrial or works that they may carry on in any building or upon any land and which tend directly to meet
the needs of the said industry or works." (See also Code Nap., articles 516, 518 et seq. to and inclusive of article 534,
recapitulating the things which, though in themselves movable, may be immobilized.) So far as the subject-matter with which
we are dealing — machinery placed in the plant — it is plain, both under the provisions of the Porto Rican Law and of the
Code Napoleon, that machinery which is movable in its nature only becomes immobilized when placed in a plant by the
owner of the property or plant. Such result would not be accomplished, therefore, by the placing of machinery in a plant by a
tenant or a usufructuary or any person having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p.
12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et
seq.) The distinction rests, as pointed out by Demolombe, upon the fact that one only having a temporary right to the
possession or enjoyment of property is not presumed by the law to have applied movable property belonging to him so as to
deprive him of it by causing it by an act of immobilization to become the property of another. It follows that abstractly
speaking the machinery put by the Altagracia Company in the plant belonging to Sanchez did not lose its character of
movable property and become immovable by destination. But in the concrete immobilization took place because of the
express provisions of the lease under which the Altagracia held, since the lease in substance required the putting in of
improved machinery, deprived the tenant of any right to charge against the lessor the cost such machinery, and it was
expressly stipulated that the machinery so put in should become a part of the plant belonging to the owner without
compensation to the lessee. Under such conditions the tenant in putting in the machinery was acting but as the agent of the
owner in compliance with the obligations resting upon him, and the immobilization of the machinery which resulted arose in
legal effect from the act of the owner in giving by contract a permanent destination to the machinery.

xxx xxx xxx

The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the Altagracia Company,
being, as regards Nevers & Callaghan, movable property, it follows that they had the right to levy on it under the execution
upon the judgment in their favor, and the exercise of that right did not in a legal sense conflict with the claim of Valdes, since
as to him the property was a part of the realty which, as the result of his obligations under the lease, he could not, for the
purpose of collecting his debt, proceed separately against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.)

Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this instance to be paid by the
appellant.
FIRST DIVISION

G.R. No. 120098 October 2, 2001

RUBY L. TSAI, petitioner,


vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS, INC. and MAMERTO R VILLALUZ, respondents.

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

[G.R. No. 120109. October 2, 2001.]

PHILIPPINE BANK OF COMMUNICATIONS, petitioner,


vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS and MAMERTO R VILLALUZ, respondents.

QUISUMBING, J.:

These consolidated cases assail the decision1 of the Court of Appeals in CA-G.R. CV No. 32986, affirming the decision2 of the
Regional Trial Court of Manila, Branch 7, in Civil Case No. 89-48265. Also assailed is respondent court's resolution denying
petitioners' motion for reconsideration.

On November 26, 1975, respondent Ever Textile Mills, Inc. (EVERTEX) obtained a three million peso (P3,000,000.00) loan from
petitioner Philippine Bank of Communications (PBCom). As security for the loan, EVERTEX executed in favor of PBCom, a deed of
Real and Chattel Mortgage over the lot under TCT No. 372097, where its factory stands, and the chattels located therein as
enumerated in a schedule attached to the mortgage contract. The pertinent portions of the Real and Chattel Mortgage are quoted
below:

MORTGAGE

(REAL AND CHATTEL)

xxx xxx xxx

The MORTGAGOR(S) hereby transfer(s) and convey(s), by way of First Mortgage, to the MORTGAGEE, . . . certain
parcel(s) of land, together with all the buildings and improvements now existing or which may hereafter exist thereon,
situated in . . .

"Annex A"

(Real and Chattel Mortgage executed by Ever Textile Mills in favor of PBCommunications — continued)

LIST OF MACHINERIES & EQUIPMENT

A. Forty Eight (48) units of Vayrow Knitting Machines-Tompkins made in Hongkong:

Serial Numbers Size of Machines

xxx xxx xxx

B. Sixteen (16) sets of Vayrow Knitting Machines made in Taiwan.

xxx xxx xxx

C. Two (2) Circular Knitting Machines made in West Germany.

xxx xxx xxx


D. Four (4) Winding Machines.

xxx xxx xxx

SCHEDULE "A"

I. TCT # 372097 - RIZAL

xxx xxx xxx

II. Any and all buildings and improvements now existing or hereafter to exist on the above-mentioned lot.

III. MACHINERIES & EQUIPMENT situated, located and/or installed on the above-mentioned lot located at . . .

(a) Forty eight sets (48) Vayrow Knitting Machines . . .

(b) Sixteen sets (16) Vayrow Knitting Machines . . .

(c) Two (2) Circular Knitting Machines . . .

(d) Two (2) Winding Machines . . .

(e) Two (2) Winding Machines . . .

IV. Any and all replacements, substitutions, additions, increases and accretions to above properties.

xxx xxx xxx3

On April 23, 1979, PBCom granted a second loan of P3,356,000.00 to EVERTEX. The loan was secured by a Chattel Mortgage over
personal properties enumerated in a list attached thereto. These listed properties were similar to those listed in Annex A of the first
mortgage deed.

After April 23, 1979, the date of the execution of the second mortgage mentioned above, EVERTEX purchased various machines and
equipments.

On November 19, 1982, due to business reverses, EVERTEX filed insolvency proceedings docketed as SP Proc. No. LP-3091-P
before the defunct Court of First Instance of Pasay City, Branch XXVIII. The CFI issued an order on November 24, 1982 declaring
the corporation insolvent. All its assets were taken into the custody of the Insolvency Court, including the collateral, real and personal,
securing the two mortgages as abovementioned.

In the meantime, upon EVERTEX's failure to meet its obligation to PBCom, the latter commenced extrajudicial foreclosure
proceedings against EVERTEX under Act 3135, otherwise known as "An Act to Regulate the Sale of Property under Special Powers
Inserted in or Annexed to Real Estate Mortgages" and Act 1506 or "The Chattel Mortgage Law". A Notice of Sheriff's Sale was issued
on December 1, 1982.

On December 15, 1982, the first public auction was held where petitioner PBCom emerged as the highest bidder and a Certificate of
Sale was issued in its favor on the same date. On December 23, 1982, another public auction was held and again, PBCom was the
highest bidder. The sheriff issued a Certificate of Sale on the same day.

On March 7, 1984, PBCom consolidated its ownership over the lot and all the properties in it. In November 1986, it leased the entire
factory premises to petitioner Ruby L. Tsai for P50,000.00 a month. On May 3, 1988, PBCom sold the factory, lock, stock and barrel
to Tsai for P9,000,000.00, including the contested machineries.

On March 16, 1989, EVERTEX filed a complaint for annulment of sale, reconveyance, and damages with the Regional Trial Court
against PBCom, alleging inter alia that the extrajudicial foreclosure of subject mortgage was in violation of the Insolvency Law.
EVERTEX claimed that no rights having been transmitted to PBCom over the assets of insolvent EVERTEX, therefore Tsai acquired
no rights over such assets sold to her, and should reconvey the assets.
Further, EVERTEX averred that PBCom, without any legal or factual basis, appropriated the contested properties, which were not
included in the Real and Chattel Mortgage of November 26, 1975 nor in the Chattel Mortgage of April 23, 1979, and neither were
those properties included in the Notice of Sheriff's Sale dated December 1, 1982 and Certificate of Sale . . . dated December 15, 1982.

The disputed properties, which were valued at P4,000,000.00, are: 14 Interlock Circular Knitting Machines, 1 Jet Drying Equipment, 1
Dryer Equipment, 1 Raisin Equipment and 1 Heatset Equipment.

The RTC found that the lease and sale of said personal properties were irregular and illegal because they were not duly foreclosed nor
sold at the December 15, 1982 auction sale since these were not included in the schedules attached to the mortgage contracts. The trial
court decreed:

WHEREFORE, judgment is hereby rendered in favor of plaintiff corporation and against the defendants:

1. Ordering the annulment of the sale executed by defendant Philippine Bank of Communications in favor of defendant Ruby
L. Tsai on May 3, 1988 insofar as it affects the personal properties listed in par. 9 of the complaint, and their return to the
plaintiff corporation through its assignee, plaintiff Mamerto R. Villaluz, for disposition by the Insolvency Court, to be done
within ten (10) days from finality of this decision;

2. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of P5,200,000.00 as compensation
for the use and possession of the properties in question from November 1986 to February 1991 and P100,000.00 every month
thereafter, with interest thereon at the legal rate per annum until full payment;

3. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of P50,000.00 as and for attorney's
fees and expenses of litigation;

4. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of P200,000.00 by way of exemplary
damages;

5. Ordering the dismissal of the counterclaim of the defendants; and

6. Ordering the defendants to proportionately pay the costs of suit.

SO ORDERED.4

Dissatisfied, both PBCom and Tsai appealed to the Court of Appeals, which issued its decision dated August 31, 1994, the dispositive
portion of which reads:

WHEREFORE, except for the deletion therefrom of the award; for exemplary damages, and reduction of the actual damages, from
P100,000.00 to P20,000.00 per month, from November 1986 until subject personal properties are restored to appellees, the judgment
appealed from is hereby AFFIRMED, in all other respects. No pronouncement as to costs.5

Motion for reconsideration of the above decision having been denied in the resolution of April 28, 1995, PBCom and Tsai filed their
separate petitions for review with this Court.

In G.R No. 120098, petitioner Tsai ascribed the following errors to the respondent court:

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN EFFECT MAKING A CONTRACT FOR
THE PARTIES BY TREATING THE 1981 ACQUIRED MACHINERIES AS CHATTELS INSTEAD OF REAL
PROPERTIES WITHIN THEIR EARLIER 1975 DEED OF REAL AND CHATTEL MORTGAGE OR 1979 DEED OF
CHATTEL MORTGAGE.

II

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN HOLDING THAT THE DISPUTED 1981
MACHINERIES ARE NOT REAL PROPERTIES DEEMED PART OF THE MORTGAGE — DESPITE THE CLEAR
IMPORT OF THE EVIDENCE AND APPLICABLE RULINGS OF THE SUPREME COURT.
III

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN DEEMING PETITIONER A


PURCHASER IN BAD FAITH.

IV

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN ASSESSING PETITIONER ACTUAL
DAMAGES, ATTORNEY'S FEES AND EXPENSES OF LITIGATION — FOR WANT OF VALID FACTUAL AND
LEGAL BASIS.

THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN HOLDING AGAINST PETITIONER'S
ARGUMENTS ON PRESCRIPTION AND LACHES.6

In G.R. No. 120098, PBCom raised the following issues:

I.

DID THE COURT OF APPEALS VALIDLY DECREE THE MACHINERIES LISTED UNDER PARAGRAPH 9 OF THE
COMPLAINT BELOW AS PERSONAL PROPERTY OUTSIDE OF THE 1975 DEED OF REAL ESTATE MORTGAGE AND
EXCLUDED THEM FROM THE REAL PROPERTY EXTRAJUDICIALLY FORECLOSED BY PBCOM DESPITE THE
PROVISION IN THE 1975 DEED THAT ALL AFTER-ACQUIRED PROPERTIES DURING THE LIFETIME OF THE
MORTGAGE SHALL FORM PART THEREOF, AND DESPITE THE UNDISPUTED FACT THAT SAID MACHINERIES ARE
BIG AND HEAVY, BOLTED OR CEMENTED ON THE REAL PROPERTY MORTGAGED BY EVER TEXTILE MILLS TO
PBCOM, AND WERE ASSESSED FOR REAL ESTATE TAX PURPOSES?

II

CAN PBCOM, WHO TOOK POSSESSION OF THE MACHINERIES IN QUESTION IN GOOD FAITH, EXTENDED CREDIT
FACILITIES TO EVER TEXTILE MILLS WHICH AS OF 1982 TOTALLED P9,547,095.28, WHO HAD SPENT FOR
MAINTENANCE AND SECURITY ON THE DISPUTED MACHINERIES AND HAD TO PAY ALL THE BACK TAXES OF
EVER TEXTILE MILLS BE LEGALLY COMPELLED TO RETURN TO EVER THE SAID MACHINERIES OR IN LIEU
THEREOF BE ASSESSED DAMAGES. IS THAT SITUATION TANTAMOUNT TO A CASE OF UNJUST ENRICHMENT? 7

The principal issue, in our view, is whether or not the inclusion of the questioned properties in the foreclosed properties is proper. The
secondary issue is whether or not the sale of these properties to petitioner Ruby Tsai is valid.

For her part, Tsai avers that the Court of Appeals in effect made a contract for the parties by treating the 1981 acquired units of
machinery as chattels instead of real properties within their earlier 1975 deed of Real and Chattel Mortgage or 1979 deed of Chattel
Mortgage.8 Additionally, Tsai argues that respondent court erred in holding that the disputed 1981 machineries are not real
properties.9 Finally, she contends that the Court of Appeals erred in holding against petitioner's arguments on prescription and
laches10 and in assessing petitioner actual damages, attorney's fees and expenses of litigation, for want of valid factual and legal
basis.11

Essentially, PBCom contends that respondent court erred in affirming the lower court's judgment decreeing that the pieces of
machinery in dispute were not duly foreclosed and could not be legally leased nor sold to Ruby Tsai. It further argued that the Court of
Appeals' pronouncement that the pieces of machinery in question were personal properties have no factual and legal basis. Finally, it
asserts that the Court of Appeals erred in assessing damages and attorney's fees against PBCom.

In opposition, private respondents argue that the controverted units of machinery are not "real properties" but chattels, and, therefore,
they were not part of the foreclosed real properties, rendering the lease and the subsequent sale thereof to Tsai a nullity. 12

Considering the assigned errors and the arguments of the parties, we find the petitions devoid of merit and ought to be denied.

Well settled is the rule that the jurisdiction of the Supreme Court in a petition for review on certiorari under Rule 45 of the Revised
Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual findings complained of are devoid of support
by the evidence on record or the assailed judgment is based on misapprehension of facts. 13 This rule is applied more stringently when
the findings of fact of the RTC is affirmed by the Court of Appeals.14

The following are the facts as found by the RTC and affirmed by the Court of Appeals that are decisive of the issues: (1) the
"controverted machineries" are not covered by, or included in, either of the two mortgages, the Real Estate and Chattel Mortgage, and
the pure Chattel Mortgage; (2) the said machineries were not included in the list of properties appended to the Notice of Sale, and
neither were they included in the Sheriff's Notice of Sale of the foreclosed properties. 15

Petitioners contend that the nature of the disputed machineries, i.e., that they were heavy, bolted or cemented on the real property
mortgaged by EVERTEX to PBCom, make them ipso facto immovable under Article 415 (3) and (5) of the New Civil Code. This
assertion, however, does not settle the issue. Mere nuts and bolts do not foreclose the controversy. We have to look at the parties'
intent.

While it is true that the controverted properties appear to be immobile, a perusal of the contract of Real and Chattel Mortgage
executed by the parties herein gives us a contrary indication. In the case at bar, both the trial and the appellate courts reached the same
finding that the true intention of PBCOM and the owner, EVERTEX, is to treat machinery and equipment as chattels. The pertinent
portion of respondent appellate court's ruling is quoted below:

As stressed upon by appellees, appellant bank treated the machineries as chattels; never as real properties. Indeed, the 1975
mortgage contract, which was actually real and chattel mortgage, militates against appellants' posture. It should be noted that
the printed form used by appellant bank was mainly for real estate mortgages. But reflective of the true intention of appellant
PBCOM and appellee EVERTEX was the typing in capital letters, immediately following the printed caption of mortgage, of
the phrase "real and chattel." So also, the "machineries and equipment" in the printed form of the bank had to be inserted in
the blank space of the printed contract and connected with the word "building" by typewritten slash marks. Now, then, if the
machineries in question were contemplated to be included in the real estate mortgage, there would have been no necessity to
ink a chattel mortgage specifically mentioning as part III of Schedule A a listing of the machineries covered thereby. It would
have sufficed to list them as immovables in the Deed of Real Estate Mortgage of the land and building involved.

As regards the 1979 contract, the intention of the parties is clear and beyond question. It refers solely to chattels. The
inventory list of the mortgaged properties is an itemization of sixty-three (63) individually described machineries while the
schedule listed only machines and 2,996,880.50 worth of finished cotton fabrics and natural cotton fabrics.16

In the absence of any showing that this conclusion is baseless, erroneous or uncorroborated by the evidence on record, we find no
compelling reason to depart therefrom.

Too, assuming arguendo that the properties in question are immovable by nature, nothing detracts the parties from treating it as
chattels to secure an obligation under the principle of estoppel. As far back as Navarro v. Pineda, 9 SCRA 631 (1963), an immovable
may be considered a personal property if there is a stipulation as when it is used as security in the payment of an obligation where a
chattel mortgage is executed over it, as in the case at bar.

In the instant case, the parties herein: (1) executed a contract styled as "Real Estate Mortgage and Chattel Mortgage," instead of just
"Real Estate Mortgage" if indeed their intention is to treat all properties included therein as immovable, and (2) attached to the said
contract a separate "LIST OF MACHINERIES & EQUIPMENT". These facts, taken together, evince the conclusion that the parties'
intention is to treat these units of machinery as chattels. A fortiori, the contested after-acquired properties, which are of the same
description as the units enumerated under the title "LIST OF MACHINERIES & EQUIPMENT," must also be treated as chattels.

Accordingly, we find no reversible error in the respondent appellate court's ruling that inasmuch as the subject mortgages were
intended by the parties to involve chattels, insofar as equipment and machinery were concerned, the Chattel Mortgage Law applies,
which provides in Section 7 thereof that: "a chattel mortgage shall be deemed to cover only the property described therein and not like
or substituted property thereafter acquired by the mortgagor and placed in the same depository as the property originally mortgaged,
anything in the mortgage to the contrary notwithstanding."

And, since the disputed machineries were acquired in 1981 and could not have been involved in the 1975 or 1979 chattel mortgages, it
was consequently an error on the part of the Sheriff to include subject machineries with the properties enumerated in said chattel
mortgages.

As the auction sale of the subject properties to PBCom is void, no valid title passed in its favor. Consequently, the sale thereof to Tsai
is also a nullity under the elementary principle of nemo dat quod non habet, one cannot give what one does not have.17
Petitioner Tsai also argued that assuming that PBCom's title over the contested properties is a nullity, she is nevertheless a purchaser
in good faith and for value who now has a better right than EVERTEX.

To the contrary, however, are the factual findings and conclusions of the trial court that she is not a purchaser in good faith. Well-
settled is the rule that the person who asserts the status of a purchaser in good faith and for value has the burden of proving such
assertion.18 Petitioner Tsai failed to discharge this burden persuasively.

Moreover, a purchaser in good faith and for value is one who buys the property of another without notice that some other person has a
right to or interest in such property and pays a full and fair price for the same, at the time of purchase, or before he has notice of the
claims or interest of some other person in the property.19 Records reveal, however, that when Tsai purchased the controverted
properties, she knew of respondent's claim thereon. As borne out by the records, she received the letter of respondent's counsel,
apprising her of respondent's claim, dated February 27, 1987.20 She replied thereto on March 9, 1987.21 Despite her knowledge of
respondent's claim, she proceeded to buy the contested units of machinery on May 3, 1988. Thus, the RTC did not err in finding that
she was not a purchaser in good faith.

Petitioner Tsai's defense of indefeasibility of Torrens Title of the lot where the disputed properties are located is equally unavailing.
This defense refers to sale of lands and not to sale of properties situated therein. Likewise, the mere fact that the lot where the factory
and the disputed properties stand is in PBCom's name does not automatically make PBCom the owner of everything found therein,
especially in view of EVERTEX's letter to Tsai enunciating its claim.

Finally, petitioners' defense of prescription and laches is less than convincing. We find no cogent reason to disturb the consistent
findings of both courts below that the case for the reconveyance of the disputed properties was filed within the reglementary period.
Here, in our view, the doctrine of laches does not apply. Note that upon petitioners' adamant refusal to heed EVERTEX's claim,
respondent company immediately filed an action to recover possession and ownership of the disputed properties. There is no evidence
showing any failure or neglect on its part, for an unreasonable and unexplained length of time, to do that which, by exercising due
diligence, could or should have been done earlier. The doctrine of stale demands would apply only where by reason of the lapse of
time, it would be inequitable to allow a party to enforce his legal rights. Moreover, except for very strong reasons, this Court is not
disposed to apply the doctrine of laches to prejudice or defeat the rights of an owner. 22

As to the award of damages, the contested damages are the actual compensation, representing rentals for the contested units of
machinery, the exemplary damages, and attorney's fees.

As regards said actual compensation, the RTC awarded P100,000.00 corresponding to the unpaid rentals of the contested properties
based on the testimony of John Chua, who testified that the P100,000.00 was based on the accepted practice in banking and finance,
business and investments that the rental price must take into account the cost of money used to buy them. The Court of Appeals did
not give full credence to Chua's projection and reduced the award to P20,000.00.

Basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be proven with
reasonable degree of certainty, premised upon competent proof or best evidence obtainable of the actual amount thereof. 23 However,
the allegations of respondent company as to the amount of unrealized rentals due them as actual damages remain mere assertions
unsupported by documents and other competent evidence. In determining actual damages, the court cannot rely on mere assertions,
speculations, conjectures or guesswork but must depend on competent proof and on the best evidence obtainable regarding the actual
amount of loss.24 However, we are not prepared to disregard the following dispositions of the respondent appellate court:

. . . In the award of actual damages under scrutiny, there is nothing on record warranting the said award of P5,200,000.00,
representing monthly rental income of P100,000.00 from November 1986 to February 1991, and the additional award of
P100,000.00 per month thereafter.

As pointed out by appellants, the testimonial evidence, consisting of the testimonies of Jonh (sic) Chua and Mamerto
Villaluz, is shy of what is necessary to substantiate the actual damages allegedly sustained by appellees, by way of unrealized
rental income of subject machineries and equipments.

The testimony of John Cua (sic) is nothing but an opinion or projection based on what is claimed to be a practice in business
and industry. But such a testimony cannot serve as the sole basis for assessing the actual damages complained of. What is
more, there is no showing that had appellant Tsai not taken possession of the machineries and equipments in question,
somebody was willing and ready to rent the same for P100,000.00 a month.

xxx xxx xxx


Then, too, even assuming arguendo that the said machineries and equipments could have generated a rental income of
P30,000.00 a month, as projected by witness Mamerto Villaluz, the same would have been a gross income. Therefrom should
be deducted or removed, expenses for maintenance and repairs . . . Therefore, in the determination of the actual damages or
unrealized rental income sued upon, there is a good basis to calculate that at least four months in a year, the machineries in
dispute would have been idle due to absence of a lessee or while being repaired. In the light of the foregoing rationalization
and computation, We believe that a net unrealized rental income of P20,000.00 a month, since November 1986, is more
realistic and fair.25

As to exemplary damages, the RTC awarded P200,000.00 to EVERTEX which the Court of Appeals deleted. But according to the
CA, there was no clear showing that petitioners acted malevolently, wantonly and oppressively. The evidence, however, shows
otherwise.It is a requisite to award exemplary damages that the wrongful act must be accompanied by bad faith, 26 and the guilty acted
in a wanton, fraudulent, oppressive, reckless or malevolent manner.27 As previously stressed, petitioner Tsai's act of purchasing the
controverted properties despite her knowledge of EVERTEX's claim was oppressive and subjected the already insolvent respondent to
gross disadvantage. Petitioner PBCom also received the same letters of Atty. Villaluz, responding thereto on March 24, 1987. 28 Thus,
PBCom's act of taking all the properties found in the factory of the financially handicapped respondent, including those properties not
covered by or included in the mortgages, is equally oppressive and tainted with bad faith. Thus, we are in agreement with the RTC that
an award of exemplary damages is proper.

The amount of P200,000.00 for exemplary damages is, however, excessive. Article 2216 of the Civil Code provides that no proof of
pecuniary loss is necessary for the adjudication of exemplary damages, their assessment being left to the discretion of the court in
accordance with the circumstances of each case.29 While the imposition of exemplary damages is justified in this case, equity calls for
its reduction. In Inhelder Corporation v. Court of Appeals, G.R. No. L-52358, 122 SCRA 576, 585, (May 30, 1983), we laid down the
rule that judicial discretion granted to the courts in the assessment of damages must always be exercised with balanced restraint and
measured objectivity. Thus, here the award of exemplary damages by way of example for the public good should be reduced to
P100,000.00.

By the same token, attorney's fees and other expenses of litigation may be recovered when exemplary damages are awarded. 30 In our
view, RTC's award of P50,000.00 as attorney's fees and expenses of litigation is reasonable, given the circumstances in these cases.

WHEREFORE, the petitions are DENIED. The assailed decision and resolution of the Court of Appeals in CA-G.R. CV No. 32986
are AFFIRMED WITH MODIFICATIONS. Petitioners Philippine Bank of Communications and Ruby L. Tsai are hereby ordered to
pay jointly and severally Ever Textile Mills, Inc. the following: (1) P20,000.00 per month, as compensation for the use and possession
of the properties in question from November 1986 31 until subject personal properties are restored to respondent corporation; (2)
P100,000.00 by way of exemplary damages, and (3) P50,000.00 as attorney's fees and litigation expenses. Costs against petitioners.

SO ORDERED.
EN BANC

G.R. No. L-64261 December 26, 1984

JOSE BURGOS, SR., JOSE BURGOS, JR., BAYANI SORIANO and J. BURGOS MEDIA SERVICES, INC., petitioners,
vs.
THE CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, THE CHIEF, PHILIPPINE CONSTABULARY, THE
CHIEF LEGAL OFFICER, PRESIDENTIAL SECURITY COMMAND, THE JUDGE ADVOCATE GENERAL, ET
AL., respondents.

Lorenzo M. Tañada, Wigberto E. Tañada, Martiniano Vivo, Augusto Sanchez, Joker P. Arroyo, Jejomar Binay and Rene Saguisag for
petitioners.

The Solicitor General for respondents.

ESCOLIN, J.:

Assailed in this petition for certiorari prohibition and mandamus with preliminary mandatory and prohibitory injunction is the validity
of two [2] search warrants issued on December 7, 1982 by respondent Judge Ernani Cruz-Pano, Executive Judge of the then Court of
First Instance of Rizal [Quezon City], under which the premises known as No. 19, Road 3, Project 6, Quezon City, and 784 Units C &
D, RMS Building, Quezon Avenue, Quezon City, business addresses of the "Metropolitan Mail" and "We Forum" newspapers,
respectively, were searched, and office and printing machines, equipment, paraphernalia, motor vehicles and other articles used in the
printing, publication and distribution of the said newspapers, as well as numerous papers, documents, books and other written
literature alleged to be in the possession and control of petitioner Jose Burgos, Jr. publisher-editor of the "We Forum" newspaper,
were seized.

Petitioners further pray that a writ of preliminary mandatory and prohibitory injunction be issued for the return of the seized articles,
and that respondents, "particularly the Chief Legal Officer, Presidential Security Command, the Judge Advocate General, AFP, the
City Fiscal of Quezon City, their representatives, assistants, subalterns, subordinates, substitute or successors" be enjoined from using
the articles thus seized as evidence against petitioner Jose Burgos, Jr. and the other accused in Criminal Case No. Q- 022782 of the
Regional Trial Court of Quezon City, entitled People v. Jose Burgos, Jr. et al. 1

In our Resolution dated June 21, 1983, respondents were required to answer the petition. The plea for preliminary mandatory and
prohibitory injunction was set for hearing on June 28, 1983, later reset to July 7, 1983, on motion of the Solicitor General in behalf of
respondents.

At the hearing on July 7, 1983, the Solicitor General, while opposing petitioners' prayer for a writ of preliminary mandatory
injunction, manifested that respondents "will not use the aforementioned articles as evidence in the aforementioned case until final
resolution of the legality of the seizure of the aforementioned articles. ..." 2 With this manifestation, the prayer for preliminary
prohibitory injunction was rendered moot and academic.

Respondents would have this Court dismiss the petition on the ground that petitioners had come to this Court without having
previously sought the quashal of the search warrants before respondent judge. Indeed, petitioners, before impugning the validity of the
warrants before this Court, should have filed a motion to quash said warrants in the court that issued them. 3 But this procedural flaw
notwithstanding, we take cognizance of this petition in view of the seriousness and urgency of the constitutional issues raised not to
mention the public interest generated by the search of the "We Forum" offices, which was televised in Channel 7 and widely
publicized in all metropolitan dailies. The existence of this special circumstance justifies this Court to exercise its inherent power to
suspend its rules. In the words of the revered Mr. Justice Abad Santos in the case of C. Vda. de Ordoveza v. Raymundo, 4 "it is always
in the power of the court [Supreme Court] to suspend its rules or to except a particular case from its operation, whenever the purposes
of justice require it...".

Respondents likewise urge dismissal of the petition on ground of laches. Considerable stress is laid on the fact that while said search
warrants were issued on December 7, 1982, the instant petition impugning the same was filed only on June 16, 1983 or after the lapse
of a period of more than six [6] months.
Laches is failure or negligence for an unreasonable and unexplained length of time to do that which, by exercising due diligence,
could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned it or declined to assert it. 5

Petitioners, in their Consolidated Reply, explained the reason for the delay in the filing of the petition thus:

Respondents should not find fault, as they now do [p. 1, Answer, p. 3, Manifestation] with the fact that the Petition
was filed on June 16, 1983, more than half a year after the petitioners' premises had been raided.

The climate of the times has given petitioners no other choice. If they had waited this long to bring their case to
court, it was because they tried at first to exhaust other remedies. The events of the past eleven fill years had taught
them that everything in this country, from release of public funds to release of detained persons from custody, has
become a matter of executive benevolence or largesse

Hence, as soon as they could, petitioners, upon suggestion of persons close to the President, like Fiscal Flaminiano,
sent a letter to President Marcos, through counsel Antonio Coronet asking the return at least of the printing
equipment and vehicles. And after such a letter had been sent, through Col. Balbino V. Diego, Chief Intelligence and
Legal Officer of the Presidential Security Command, they were further encouraged to hope that the latter would
yield the desired results.

After waiting in vain for five [5] months, petitioners finally decided to come to Court. [pp. 123-124, Rollo]

Although the reason given by petitioners may not be flattering to our judicial system, We find no ground to punish or chastise them for
an error in judgment. On the contrary, the extrajudicial efforts exerted by petitioners quite evidently negate the presumption that they
had abandoned their right to the possession of the seized property, thereby refuting the charge of laches against them.

Respondents also submit the theory that since petitioner Jose Burgos, Jr. had used and marked as evidence some of the seized
documents in Criminal Case No. Q- 022872, he is now estopped from challenging the validity of the search warrants. We do not
follow the logic of respondents. These documents lawfully belong to petitioner Jose Burgos, Jr. and he can do whatever he pleases
with them, within legal bounds. The fact that he has used them as evidence does not and cannot in any way affect the validity or
invalidity of the search warrants assailed in this petition.

Several and diverse reasons have been advanced by petitioners to nullify the search warrants in question.

1. Petitioners fault respondent judge for his alleged failure to conduct an examination under oath or affirmation of the applicant and
his witnesses, as mandated by the above-quoted constitutional provision as wen as Sec. 4, Rule 126 of the Rules of Court .6 This
objection, however, may properly be considered moot and academic, as petitioners themselves conceded during the hearing on August
9, 1983, that an examination had indeed been conducted by respondent judge of Col. Abadilla and his witnesses.

2. Search Warrants No. 20-82[a] and No. 20- 82[b] were used to search two distinct places: No. 19, Road 3, Project 6, Quezon City
and 784 Units C & D, RMS Building, Quezon Avenue, Quezon City, respectively. Objection is interposed to the execution of Search
Warrant No. 20-82[b] at the latter address on the ground that the two search warrants pinpointed only one place where petitioner Jose
Burgos, Jr. was allegedly keeping and concealing the articles listed therein, i.e., No. 19, Road 3, Project 6, Quezon City. This assertion
is based on that portion of Search Warrant No. 20- 82[b] which states:

Which have been used, and are being used as instruments and means of committing the crime of subversion
penalized under P.D. 885 as amended and he is keeping and concealing the same at 19 Road 3, Project 6, Quezon
City.

The defect pointed out is obviously a typographical error. Precisely, two search warrants were applied for and issued because the
purpose and intent were to search two distinct premises. It would be quite absurd and illogical for respondent judge to have issued two
warrants intended for one and the same place. Besides, the addresses of the places sought to be searched were specifically set forth in
the application, and since it was Col. Abadilla himself who headed the team which executed the search warrants, the ambiguity that
might have arisen by reason of the typographical error is more apparent than real. The fact is that the place for which Search Warrant
No. 20- 82[b] was applied for was 728 Units C & D, RMS Building, Quezon Avenue, Quezon City, which address appeared in the
opening paragraph of the said warrant. 7 Obviously this is the same place that respondent judge had in mind when he issued Warrant
No. 20-82 [b].
In the determination of whether a search warrant describes the premises to be searched with sufficient particularity, it has been held
"that the executing officer's prior knowledge as to the place intended in the warrant is relevant. This would seem to be especially true
where the executing officer is the affiant on whose affidavit the warrant had issued, and when he knows that the judge who issued the
warrant intended the building described in the affidavit, And it has also been said that the executing officer may look to the affidavit in
the official court file to resolve an ambiguity in the warrant as to the place to be searched." 8

3. Another ground relied upon to annul the search warrants is the fact that although the warrants were directed against Jose Burgos, Jr.
alone, articles b belonging to his co-petitioners Jose Burgos, Sr., Bayani Soriano and the J. Burgos Media Services, Inc. were seized.

Section 2, Rule 126 of the Rules of Court, enumerates the personal properties that may be seized under a search warrant, to wit:

Sec. 2. Personal Property to be seized. — A search warrant may be issued for the search and seizure of the following
personal property:

[a] Property subject of the offense;

[b] Property stolen or embezzled and other proceeds or fruits of the offense; and

[c] Property used or intended to be used as the means of committing an offense.

The above rule does not require that the property to be seized should be owned by the person against whom the search warrant is
directed. It may or may not be owned by him. In fact, under subsection [b] of the above-quoted Section 2, one of the properties that
may be seized is stolen property. Necessarily, stolen property must be owned by one other than the person in whose possession it may
be at the time of the search and seizure. Ownership, therefore, is of no consequence, and it is sufficient that the person against whom
the warrant is directed has control or possession of the property sought to be seized, as petitioner Jose Burgos, Jr. was alleged to have
in relation to the articles and property seized under the warrants.

4. Neither is there merit in petitioners' assertion that real properties were seized under the disputed warrants. Under Article 415[5] of
the Civil Code of the Philippines, "machinery, receptables, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land and which tend directly to meet the needs of the said
industry or works" are considered immovable property. In Davao Sawmill Co. v. Castillo 9 where this legal provision was invoked, this
Court ruled that machinery which is movable by nature becomes immobilized when placed by the owner of the tenement, property or
plant, but not so when placed by a tenant, usufructuary, or any other person having only a temporary right, unless such person acted as
the agent of the owner.

In the case at bar, petitioners do not claim to be the owners of the land and/or building on which the machineries were placed. This
being the case, the machineries in question, while in fact bolted to the ground remain movable property susceptible to seizure under a
search warrant.

5. The questioned search warrants were issued by respondent judge upon application of Col. Rolando N. Abadilla Intelligence Officer
of the P.C. Metrocom.10 The application was accompanied by the Joint Affidavit of Alejandro M. Gutierrez and Pedro U.
Tango, 11 members of the Metrocom Intelligence and Security Group under Col. Abadilla which conducted a surveillance of the
premises prior to the filing of the application for the search warrants on December 7, 1982.

It is contended by petitioners, however, that the abovementioned documents could not have provided sufficient basis for the finding of
a probable cause upon which a warrant may validly issue in accordance with Section 3, Article IV of the 1973 Constitution which
provides:

SEC. 3. ... and no search warrant or warrant of arrest shall issue except upon probable cause to be determined by the
judge, or such other responsible officer as may be authorized by law, after examination under oath or affirmation of
the complainant and the witnesses he may produce, and particularly describing the place to be searched and the
persons or things to be seized.

We find petitioners' thesis impressed with merit. Probable cause for a search is defined as such facts and circumstances which would
lead a reasonably discreet and prudent man to believe that an offense has been committed and that the objects sought in connection
with the offense are in the place sought to be searched. And when the search warrant applied for is directed against a newspaper
publisher or editor in connection with the publication of subversive materials, as in the case at bar, the application and/or its
supporting affidavits must contain a specification, stating with particularity the alleged subversive material he has published or is
intending to publish. Mere generalization will not suffice. Thus, the broad statement in Col. Abadilla's application that petitioner "is in
possession or has in his control printing equipment and other paraphernalia, news publications and other documents which were used
and are all continuously being used as a means of committing the offense of subversion punishable under Presidential Decree 885, as
amended ..." 12 is a mere conclusion of law and does not satisfy the requirements of probable cause. Bereft of such particulars as
would justify a finding of the existence of probable cause, said allegation cannot serve as basis for the issuance of a search warrant and
it was a grave error for respondent judge to have done so.

Equally insufficient as basis for the determination of probable cause is the statement contained in the joint affidavit of Alejandro M.
Gutierrez and Pedro U. Tango, "that the evidence gathered and collated by our unit clearly shows that the premises above- mentioned
and the articles and things above-described were used and are continuously being used for subversive activities in conspiracy with,
and to promote the objective of, illegal organizations such as the Light-a-Fire Movement, Movement for Free Philippines, and April 6
Movement." 13

In mandating that "no warrant shall issue except upon probable cause to be determined by the judge, ... after examination under oath
or affirmation of the complainant and the witnesses he may produce; 14 the Constitution requires no less than personal knowledge by
the complainant or his witnesses of the facts upon which the issuance of a search warrant may be justified. In Alvarez v. Court of First
Instance, 15 this Court ruled that "the oath required must refer to the truth of the facts within the personal knowledge of the petitioner
or his witnesses, because the purpose thereof is to convince the committing magistrate, not the individual making the affidavit and
seeking the issuance of the warrant, of the existence of probable cause." As couched, the quoted averment in said joint affidavit filed
before respondent judge hardly meets the test of sufficiency established by this Court in Alvarez case.

Another factor which makes the search warrants under consideration constitutionally objectionable is that they are in the nature of
general warrants. The search warrants describe the articles sought to be seized in this wise:

1] All printing equipment, paraphernalia, paper, ink, photo (equipment, typewriters, cabinets, tables,
communications/recording equipment, tape recorders, dictaphone and the like used and/or connected in the printing
of the "WE FORUM" newspaper and any and all documents communication, letters and facsimile of prints related
to the "WE FORUM" newspaper.

2] Subversive documents, pamphlets, leaflets, books, and other publication to promote the objectives and piurposes
of the subversive organization known as Movement for Free Philippines, Light-a-Fire Movement and April 6
Movement; and,

3] Motor vehicles used in the distribution/circulation of the "WE FORUM" and other subversive materials and
propaganda, more particularly,

1] Toyota-Corolla, colored yellow with Plate No. NKA 892;

2] DATSUN pick-up colored white with Plate No. NKV 969

3] A delivery truck with Plate No. NBS 524;

4] TOYOTA-TAMARAW, colored white with Plate No. PBP 665; and,

5] TOYOTA Hi-Lux, pick-up truck with Plate No. NGV 427 with marking "Bagong Silang."

In Stanford v. State of Texas 16 the search warrant which authorized the search for "books, records, pamphlets, cards, receipts, lists,
memoranda, pictures, recordings and other written instruments concerning the Communist Party in Texas," was declared void by the
U.S. Supreme Court for being too general. In like manner, directions to "seize any evidence in connectionwith the violation of SDC
13-3703 or otherwise" have been held too general, and that portion of a search warrant which authorized the seizure of any
"paraphernalia which could be used to violate Sec. 54-197 of the Connecticut General Statutes [the statute dealing with the crime of
conspiracy]" was held to be a general warrant, and therefore invalid. 17 The description of the articles sought to be seized under the
search warrants in question cannot be characterized differently.

In the Stanford case, the U.S. Supreme Courts calls to mind a notable chapter in English history: the era of disaccord between the
Tudor Government and the English Press, when "Officers of the Crown were given roving commissions to search where they pleased
in order to suppress and destroy the literature of dissent both Catholic and Puritan Reference herein to such historical episode would
not be relevant for it is not the policy of our government to suppress any newspaper or publication that speaks with "the voice of non-
conformity" but poses no clear and imminent danger to state security.
As heretofore stated, the premises searched were the business and printing offices of the "Metropolitan Mail" and the "We Forum
newspapers. As a consequence of the search and seizure, these premises were padlocked and sealed, with the further result that the
printing and publication of said newspapers were discontinued.

Such closure is in the nature of previous restraint or censorship abhorrent to the freedom of the press guaranteed under the
fundamental law, 18 and constitutes a virtual denial of petitioners' freedom to express themselves in print. This state of being is
patently anathematic to a democratic framework where a free, alert and even militant press is essential for the political enlightenment
and growth of the citizenry.

Respondents would justify the continued sealing of the printing machines on the ground that they have been sequestered under Section
8 of Presidential Decree No. 885, as amended, which authorizes "the sequestration of the property of any person, natural or artificial,
engaged in subversive activities against the government and its duly constituted authorities ... in accordance with implementing rules
and regulations as may be issued by the Secretary of National Defense." It is doubtful however, if sequestration could validly be
effected in view of the absence of any implementing rules and regulations promulgated by the Minister of National Defense.

Besides, in the December 10, 1982 issue of the Daily Express, it was reported that no less than President Marcos himself denied the
request of the military authorities to sequester the property seized from petitioners on December 7, 1982. Thus:

The President denied a request flied by government prosecutors for sequestration of the WE FORUM newspaper
and its printing presses, according to Information Minister Gregorio S. Cendana.

On the basis of court orders, government agents went to the We Forum offices in Quezon City and took a detailed
inventory of the equipment and all materials in the premises.

Cendaña said that because of the denial the newspaper and its equipment remain at the disposal of the owners,
subject to the discretion of the court. 19

That the property seized on December 7, 1982 had not been sequestered is further confirmed by the reply of then Foreign Minister
Carlos P. Romulo to the letter dated February 10, 1983 of U.S. Congressman Tony P. Hall addressed to President Marcos, expressing
alarm over the "WE FORUM " case. 20 In this reply dated February 11, 1983, Minister Romulo stated:

2. Contrary to reports, President Marcos turned down the recommendation of our authorities to close the paper's
printing facilities and confiscate the equipment and materials it uses. 21

IN VIEW OF THE FOREGOING, Search Warrants Nos. 20-82[a] and 20-82[b] issued by respondent judge on December 7, 1982 are
hereby declared null and void and are accordingly set aside. The prayer for a writ of mandatory injunction for the return of the seized
articles is hereby granted and all articles seized thereunder are hereby ordered released to petitioners. No costs.

SO ORDERED.

Fernando, C.J., Teehankee, Makasiar, Concepcion, Jr., Melencio-Herrera, Plana, Relova, Gutierrez, Jr., De la Fuente and Cuevas,
JJ., concur.

Aquino, J., took no part.

Separate Opinions

ABAD SANTOS, J., concurring

I am glad to give my concurrence to the ponencia of Mr. Justice Escolin At the same time I wish to state my own reasons for holding
that the search warrants which are the subject of the petition are utterly void.
The action against "WE FORUM" was a naked suppression of press freedom for the search warrants were issued in gross violation of
the Constitution.

The Constitutional requirement which is expressed in Section 3, Article IV, stresses two points, namely: "(1) that no warrant shall
issue but upon probable cause, to be determined by the judge in the manner set forth in said provision; and (2) that the warrant shall
particularly describe the things to be seized." (Stonehill vs. Diokno, 126 Phil. 738, 747: 20 SCRA 383 [1967].)

Any search warrant is conducted in disregard of the points mentioned above will result in wiping "out completely one of the most
fundamental rights guaranteed in our Constitution, for it would place the sanctity of the domicile and the privacy of communication
and correspondence at the mercy of the whims caprice or passion of peace officers." (Ibid, p. 748.)

The two search warrants were issued without probable cause. To satisfy the requirement of probable cause a specific offense must be
alleged in the application; abstract averments will not suffice. In the case at bar nothing specifically subversive has been alleged;
stated only is the claim that certain objects were being used as instruments and means of committing the offense of subversion
punishable under P.D. No. 885, as amended. There is no mention of any specific provision of the decree. I n the words of Chief Justice
C Concepcion, " It would be legal heresy of the highest order, to convict anybody" of violating the decree without reference to any
determinate provision thereof.

The search warrants are also void for lack of particularity. Both search warrants authorize Col. Rolando Abadilla to seize and take
possession, among other things, of the following:

Subversive documents, pamphlets, leaflets, books and other publication to promote the objectives and purposes of
the subversive organizations known as Movement for Free Philippines, Light-a-Fire Movement and April 6
Movement.

The obvious question is: Why were the documents, pamphlets, leaflets, books, etc. subversive? What did they contain to make them
subversive? There is nothing in the applications nor in the warrants which answers the questions. I must, therefore, conclude that the
warrants are general warrants which are obnoxious to the Constitution.

In point of fact, there was nothing subversive published in the WE FORUM just as there is nothing subversive which has been
published in MALAYA which has replaced the former and has the same content but against which no action has been taken.

Conformably with existing jurisprudence everything seized pursuant to the warrants should be returned to the owners and all of the
items are subject to the exclusionary rule of evidence.

Teehankee, J., concur.

Separate Opinions

ABAD SANTOS, J., concurring

I am glad to give my concurrence to the ponencia of Mr. Justice Escolin At the same time I wish to state my own reasons for holding
that the search warrants which are the subject of the petition are utterly void.

The action against "WE FORUM" was a naked suppression of press freedom for the search warrants were issued in gross violation of
the Constitution.

The Constitutional requirement which is expressed in Section 3, Article IV, stresses two points, namely: "(1) that no warrant shall
issue but upon probable cause, to be determined by the judge in the manner set forth in said provision; and (2) that the warrant shall
particularly describe the things to be seized." (Stonehill vs. Diokno, 126 Phil. 738, 747: 20 SCRA 383 [1967].)

Any search warrant is conducted in disregard of the points mentioned above will result in wiping "out completely one of the most
fundamental rights guaranteed in our Constitution, for it would place the sanctity of the domicile and the privacy of communication
and correspondence at the mercy of the whims caprice or passion of peace officers." (Ibid, p. 748.)
The two search warrants were issued without probable cause. To satisfy the requirement of probable cause a specific offense must be
alleged in the application; abstract averments will not suffice. In the case at bar nothing specifically subversive has been alleged;
stated only is the claim that certain objects were being used as instruments and means of committing the offense of subversion
punishable under P.D. No. 885, as amended. There is no mention of any specific provision of the decree. I n the words of Chief Justice
C Concepcion, " It would be legal heresy of the highest order, to convict anybody" of violating the decree without reference to any
determinate provision thereof.

The search warrants are also void for lack of particularity. Both search warrants authorize Col. Rolando Abadilla to seize and take
possession, among other things, of the following:

Subversive documents, pamphlets, leaflets, books and other publication to promote the objectives and purposes of
the subversive organizations known as Movement for Free Philippines, Light-a-Fire Movement and April 6
Movement.

The obvious question is: Why were the documents, pamphlets, leaflets, books, etc. subversive? What did they contain to make them
subversive? There is nothing in the applications nor in the warrants which answers the questions. I must, therefore, conclude that the
warrants are general warrants which are obnoxious to the Constitution.

In point of fact, there was nothing subversive published in the WE FORUM just as there is nothing subversive which has been
published in MALAYA which has replaced the former and has the same content but against which no action has been taken.

Conformably with existing jurisprudence everything seized pursuant to the warrants should be returned to the owners and all of the
items are subject to the exclusionary rule of evidence.

Teehankee, J., concur.


EN BANC

G.R. No. L-18456 November 30, 1963

CONRADO P. NAVARRO, plaintiff-appellee,


vs.
RUFINO G. PINEDA, RAMONA REYES, ET AL., defendants-appellants.

Deogracias Tañedo, Jr. for plaintiff-appellee.


Renato A. Santos for defendants-appellants.

PAREDES, J.:

On December 14, 1959, defendants Rufino G. Pineda and his mother Juana Gonzales (married to Gregorio Pineda), borrowed from
plaintiff Conrado P. Navarro, the sum of P2,500.00, payable 6 months after said date or on June 14, 1959. To secure the indebtedness,
Rufino executed a document captioned "DEED OF REAL ESTATE and CHATTEL MORTGAGES", whereby Juana Gonzales, by
way of Real Estate Mortgage hypothecated a parcel of land, belonging to her, registered with the Register of Deeds of Tarlac, under
Transfer Certificate of Title No. 25776, and Rufino G. Pineda, by way of Chattel Mortgage, mortgaged his two-story residential house,
having a floor area of 912 square meters, erected on a lot belonging to Atty. Vicente Castro, located at Bo. San Roque, Tarlac, Tarlac;
and one motor truck, registered in his name, under Motor Vehicle Registration Certificate No. A-171806. Both mortgages were
contained in one instrument, which was registered in both the Office of the Register of Deeds and the Motor Vehicles Office of Tarlac.

When the mortgage debt became due and payable, the defendants, after demands made on them, failed to pay. They, however, asked
and were granted extension up to June 30, 1960, within which to pay. Came June 30, defendants again failed to pay and, for the
second time, asked for another extension, which was given, up to July 30, 1960. In the second extension, defendant Pineda in a
document entitled "Promise", categorically stated that in the remote event he should fail to make good the obligation on such date
(July 30, 1960), the defendant would no longer ask for further extension and there would be no need for any formal demand, a nd
plaintiff could proceed to take whatever action he might desire to enforce his rights, under the said mortgage contract. In spite of said
promise, defendants, failed and refused to pay the obligation.

On August 10, 1960, plaintiff filed a complaint for foreclosure of the mortgage and for damages, which consisted of liquidated
damages in the sum of P500.00 and 12% per annum interest on the principal, effective on the date of maturity, until fully paid.

Defendants, answering the complaint, among others, stated —

Defendants admit that the loan is overdue but deny that portion of paragraph 4 of the First Cause of Action which states that
the defendants unreasonably failed and refuse to pay their obligation to the plaintiff the truth being the defendants are hard up
these days and pleaded to the plaintiff to grant them more time within which to pay their obligation and the plaintiff refused;

WHEREFORE, in view of the foregoing it is most respectfully prayed that this Honorable Court render judgment granting
the defendants until January 31, 1961, within which to pay their obligation to the plaintiff.

On September 30, 1960, plaintiff presented a Motion for summary Judgment, claiming that the Answer failed to tender any genuine
and material issue. The motion was set for hearing, but the record is not clear what ruling the lower court made on the said motion. On
November 11, 1960, however, the parties submitted a Stipulation of Facts, wherein the defendants admitted the indebtedness, the
authenticity and due execution of the Real Estate and Chattel Mortgages; that the indebtedness has been due and unpaid since June 14,
1960; that a liability of 12% per annum as interest was agreed, upon failure to pay the principal when due and P500.00 as liquidated
damages; that the instrument had been registered in the Registry of Property and Motor Vehicles Office, both of the province of
Tarlac; that the only issue in the case is whether or not the residential house, subject of the mortgage therein, can be considered a
Chattel and the propriety of the attorney's fees.

On February 24, 1961, the lower court held —

... WHEREFORE, this Court renders decision in this Case:

(a) Dismissing the complaint with regard to defendant Gregorio Pineda;

(b) Ordering defendants Juana Gonzales and the spouses Rufino Pineda and Ramon Reyes, to pay jointly and severally and
within ninety (90) days from the receipt of the copy of this decision to the plaintiff Conrado P. Navarro the principal sum of
P2,550.00 with 12% compounded interest per annum from June 14, 1960, until said principal sum and interests are fully paid,
plus P500.00 as liquidated damages and the costs of this suit, with the warning that in default of said payment of the
properties mentioned in the deed of real estate mortgage and chattel mortgage (Annex "A" to the complaint) be sold to realize
said mortgage debt, interests, liquidated damages and costs, in accordance with the pertinent provisions of Act 3135, as
amended by Act 4118, and Art. 14 of the Chattel Mortgage Law, Act 1508; and

(c) Ordering the defendants Rufino Pineda and Ramona Reyes, to deliver immediately to the Provincial Sheriff of Tarlac the
personal properties mentioned in said Annex "A", immediately after the lapse of the ninety (90) days above-mentioned, in
default of such payment.

The above judgment was directly appealed to this Court, the defendants therein assigning only a single error, allegedly committed by
the lower court, to wit —

In holding that the deed of real estate and chattel mortgages appended to the complaint is valid, notwithstanding the fact that
the house of the defendant Rufino G. Pineda was made the subject of the chattel mortgage, for the reason that it is erected on
a land that belongs to a third person.

Appellants contend that article 415 of the New Civil Code, in classifying a house as immovable property, makes no distinction
whether the owner of the land is or not the owner of the building; the fact that the land belongs to another is immaterial, it is enough
that the house adheres to the land; that in case of immovables by incorporation, such as houses, trees, plants, etc; the Code does not
require that the attachment or incorporation be made by the owner of the land, the only criterion being the union or incorporation with
the soil. In other words, it is claimed that "a building is an immovable property, irrespective of whether or not said structure and the
land on which it is adhered to, belong to the same owner" (Lopez v. Orosa, G.R. Nos. L-10817-8, Feb. 28, 1958). (See also the case of
Leung Yee v. Strong Machinery Co., 37 Phil. 644). Appellants argue that since only movables can be the subject of a chattel mortgage
(sec. 1, Act No. 3952) then the mortgage in question which is the basis of the present action, cannot give rise to an action for
foreclosure, because it is nullity. (Citing Associated Ins. Co., et al. v. Isabel Iya v. Adriano Valino, et al., L-10838, May 30, 1958.)

The trial court did not predicate its decision declaring the deed of chattel mortgage valid solely on the ground that the house
mortgaged was erected on the land which belonged to a third person, but also and principally on the doctrine of estoppel, in that "the
parties have so expressly agreed" in the mortgage to consider the house as chattel "for its smallness and mixed materials of sawali and
wood". In construing arts. 334 and 335 of the Spanish Civil Code (corresponding to arts. 415 and 416, N.C.C.), for purposes o f the
application of the Chattel Mortgage Law, it was held that under certain conditions, "a property may have a character different from
that imputed to it in said articles. It is undeniable that the parties to a contract may by agreement, treat as personal property that
which by nature would be real property" (Standard Oil Co. of N.Y. v. Jaranillo, 44 Phil. 632-633)."There can not be any question that
a building of mixed materials may be the subject of a chattel mortgage, in which case, it is considered as between the parties as
personal property. ... The matter depends on the circumstances and the intention of the parties". "Personal property may retain its
character as such where it is so agreed by the parties interested even though annexed to the realty ...". (42 Am. Jur. 209-210, cited in
Manarang, et al. v. Ofilada, et al., G.R. No. L-8133, May 18, 1956; 52 O.G. No. 8, p. 3954.) The view that parties to a deed of chattel
mortgagee may agree to consider a house as personal property for the purposes of said contract, "is good only insofar as the
contracting parties are concerned. It is based partly, upon the principles of estoppel ..." (Evangelista v. Alto Surety, No. L-11139, Apr.
23, 1958). In a case, a mortgage house built on a rented land, was held to be a personal property, not only because the deed of
mortgage considered it as such, but also because it did not form part of the land (Evangelista v. Abad [CA];36 O.G. 2913), for it is
now well settled that an object placed on land by one who has only a temporary right to the same, such as a lessee or usufructuary,
does not become immobilized by attachment (Valdez v. Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co., Inc. v. Castillo,
et al., 61 Phil. 709). Hence, if a house belonging to a person stands on a rented land belonging to another person, it may be mortgaged
as a personal property is so stipulated in the document of mortgage. (Evangelista v. Abad, supra.) It should be noted, however, that the
principle is predicated on statements by the owner declaring his house to be a chattel, a conduct that may conceivably estop him from
subsequently claiming otherwise (Ladera, et al.. v. C. N. Hodges, et al., [CA]; 48 O.G. 5374). The doctrine, therefore, gathered from
these cases is that although in some instances, a house of mixed materials has been considered as a chattel between them, has been
recognized, it has been a constant criterion nevertheless that, with respect to third persons, who are not parties to the contract, and
specially in execution proceedings, the house is considered as an immovable property (Art. 1431, New Civil Code).

In the case at bar, the house in question was treated as personal or movable property, by the parties to the contract themselves. In the
deed of chattel mortgage, appellant Rufino G. Pineda conveyed by way of "Chattel Mortgage" "my personal properties", a residential
house and a truck. The mortgagor himself grouped the house with the truck, which is, inherently a movable property. The house which
was not even declared for taxation purposes was small and made of light construction materials: G.I. sheets roofing, sawali and
wooden walls and wooden posts; built on land belonging to another.

The cases cited by appellants are not applicable to the present case. The Iya cases (L-10837-38, supra), refer to a building or a house
of strong materials, permanently adhered to the land, belonging to the owner of the house himself. In the case of Lopez v. Orosa, (L-
10817-18), the subject building was a theatre, built of materials worth more than P62,000, attached permanently to the soil. In these
cases and in the Leung Yee case, supra, third persons assailed the validity of the deed of chattel mortgages; in the present case, it was
one of the parties to the contract of mortgages who assailed its validity.

CONFORMABLY WITH ALL THE FOREGOING, the decision appealed from, should be, as it is hereby affirmed, with costs against
appellants.

FIRST DIVISION

REPUBLIC OF THE PHILIPPINES, G.R. No. 154953


Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
- versus - CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.

T.A.N. PROPERTIES, INC., Promulgated:


Respondent. June 26, 2008

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

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review[1] assailing the 21 August 2002Decision[2] of the Court of Appeals in CA-G.R. CV No.
66658. The Court of Appeals affirmed in toto the 16 December 1999 Decision[3] of the Regional Trial Court of Tanauan, Batangas,
Branch 6 (trial court) in Land Registration Case No. T-635.

The Antecedent Facts

This case originated from an Application for Original Registration of Title filed by T.A.N. Properties, Inc. covering Lot 10705-B of
the subdivision plan Csd-04-019741 which is a portion of the consolidated Lot 10705, Cad-424, Sto. Tomas Cadastre. The land, with
an area of 564,007 square meters, or 56.4007 hectares, is located at San Bartolome, Sto. Tomas, Batangas.

On 31 August 1999, the trial court set the case for initial hearing at 9:30 a.m.on 11 November 1999. The Notice of Initial Hearing was
published in the Official Gazette, 20 September 1999 issue, Volume 95, No. 38, pages 6793 to 6794,[4] and in the 18 October
1999 issue of Peoples Journal Taliba,[5] a newspaper of general circulation in the Philippines. The Notice of Initial Hearing was also
posted in a conspicuous place on the bulletin board of the Municipal Building of Sto. Tomas, Batangas, as well as in a conspicuous
place on the land.[6] All adjoining owners and all government agencies and offices concerned were notified of the initial hearing. [7]
On 11 November 1999, when the trial court called the case for initial hearing, there was no oppositor other than the Opposition
dated 7 October 1999 of the Republic of the Philippines represented by the Director of Lands (petitioner). On 15 November 1999, the
trial court issued an Order[8] of General Default against the whole world except as against petitioner.

During the hearing on 19 November 1999, Ceferino Carandang (Carandang) appeared as oppositor. The trial court gave Carandang
until 29 November 1999 within which to file his written opposition.[9] Carandang failed to file his written opposition and to appear in
the succeeding hearings. In an Order[10] dated 13 December 1999, the trial court reinstated the Order of General Default.

During the hearings conducted on 13 and 14 December 1999, respondent presented three witnesses: Anthony Dimayuga Torres
(Torres), respondents Operations Manager and its authorized representative in the case; Primitivo Evangelista (Evangelista), a 72-year
old resident of San Bartolome, Sto. Tomas, Batangas since birth; and Regalado Marquez, Records Officer II of the Land Registration
Authority (LRA), Quezon City.

The testimonies of respondents witnesses showed that Prospero Dimayuga (Kabesang Puroy) had peaceful, adverse, open, and
continuous possession of the land in the concept of an owner since 1942. Upon his death, Kabesang Puroy was succeeded by his son
Antonio Dimayuga (Antonio). On 27 September 1960, Antonio executed a Deed of Donation covering the land in favor of one of his
children, Fortunato Dimayuga (Fortunato). Later, however, Antonio gave Fortunato another piece of land. Hence, on 26 April 1961,
Antonio executed a Partial Revocation of Donation, and the land was adjudicated to one of Antonios children, Prospero Dimayuga
(Porting).[11]On 8 August 1997, Porting sold the land to respondent.

The Ruling of the Trial Court

In its 16 December 1999 Decision, the trial court adjudicated the land in favor of respondent.

The trial court ruled that a juridical person or a corporation could apply for registration of land provided such entity and its
predecessors-in-interest have possessed the land for 30 years or more. The trial court ruled that the facts showed that respondents
predecessors-in-interest possessed the land in the concept of an owner prior to 12 June 1945, which possession converted the land to
private property.

The dispositive portion of the trial courts Decision reads:

WHEREFORE, and upon previous confirmation of the Order of General Default, the Court hereby adjudicates and
decrees Lot 10705-B, identical to Lot 13637, Cad-424, Sto. Tomas Cadastre, on plan Csd-04-019741, situated in
Barangay of San Bartolome, Municipality of Sto. Tomas, Province of Batangas, with an area of 564,007 square
meters, in favor of and in the name of T.A.N. Properties, Inc., a domestic corporation duly organized and existing
under Philippine laws with principal office at 19 thFloor, PDCP Bank Building, 8737 Paseo de Roxas, Makati City.

Once this Decision shall have become final, let the corresponding decree of registration be issued.

SO ORDERED.[12]
Petitioner appealed from the trial courts Decision. Petitioner alleged that the trial court erred in granting the application for registration
absent clear evidence that the applicant and its predecessors-in-interest have complied with the period of possession and occupation as
required by law. Petitioner alleged that the testimonies of Evangelista and Torres are general in nature.Considering the area involved,
petitioner argued that additional witnesses should have been presented to corroborate Evangelistas testimony.

The Ruling of the Court of Appeals

In its 21 August 2002 Decision, the Court of Appeals affirmed in toto the trial courts Decision.

The Court of Appeals ruled that Evangelistas knowledge of the possession and occupation of the land stemmed not only from the fact
that he worked there for three years but also because he and Kabesang Puroy were practically neighbors. On Evangelistas failure to
mention the name of his uncle who continuously worked on the land, the Court of Appeals ruled that Evangelista should not be faulted
as he was not asked to name his uncle when he testified. The Court of Appeals also ruled that at the outset, Evangelista disclaimed
knowledge of Fortunatos relation to Kabesang Puroy, but this did not affect Evangelistas statement that Fortunato took over the
possession and cultivation of the land after Kabesang Puroys death. The Court of Appeals further ruled that the events regarding the
acquisition and disposition of the land became public knowledge because San Bartolome was a small community. On the matter of
additional witnesses, the Court of Appeals ruled that petitioner failed to cite any law requiring the corroboration of the sole witness
testimony.

The Court of Appeals further ruled that Torres was a competent witness since he was only testifying on the fact that he had caused the
filing of the application for registration and that respondent acquired the land from Porting.

Petitioner comes to this Court assailing the Court of Appeals Decision.Petitioner raises the following grounds in its Memorandum:
The Court of Appeals erred on a question of law in allowing the grant of title to applicant corporation despite the
following:

1. Absence of showing that it or its predecessors-in-interest had open, continuous, exclusive, and
notorious possession and occupation in the concept of an owner since 12 June 1945 or earlier; and

2. Disqualification of applicant corporation to acquire the subject tract of land. [13]

The Issues

The issues may be summarized as follows:

1. Whether the land is alienable and disposable;


2. Whether respondent or its predecessors-in-interest had open, continuous, exclusive, and notorious possession and
occupation of the land in the concept of an owner since June 1945 or earlier; and

3. Whether respondent is qualified to apply for registration of the land under the Public Land Act.
The Ruling of this Court

The petition has merit.

Respondent Failed to Prove


that the Land is Alienable and Disposable

Petitioner argues that anyone who applies for registration has the burden of overcoming the presumption that the land forms part of the
public domain.Petitioner insists that respondent failed to prove that the land is no longer part of the public domain.

The well-entrenched rule is that all lands not appearing to be clearly of private dominion presumably belong to the
State.[14] The onus to overturn, by incontrovertible evidence, the presumption that the land subject of an application for registration is
alienable and disposable rests with the applicant.[15]

In this case, respondent submitted two certifications issued by the Department of Environment and Natural Resources (DENR). The 3
June 1997 Certification by the Community Environment and Natural Resources Offices (CENRO), Batangas City,[16] certified that lot
10705, Cad-424, Sto. Tomas Cadastre situated at Barangay San Bartolome, Sto. Tomas, Batangas with an area of 596,116 square
meters falls within the ALIENABLE AND DISPOSABLE ZONE under Project No. 30, Land Classification Map No. 582 certified
[on] 31 December 1925. The second certification[17] in the form of a memorandum to the trial court, which was issued by the Regional
Technical Director, Forest Management Services of the DENR (FMS-DENR), stated that the subject area falls within an alienable and
disposable land, Project No. 30 of Sto. Tomas, Batangas certified on Dec. 31, 1925 per LC No. 582.

The certifications are not sufficient. DENR Administrative Order (DAO) No. 20,[18] dated 30 May 1988, delineated the functions and
authorities of the offices within the DENR. Under DAO No. 20, series of 1988, the CENRO issues certificates of land classification
status for areas below 50 hectares.The Provincial Environment and Natural Resources Offices (PENRO) issues certificate of land
classification status for lands covering over 50 hectares.DAO No. 38, [19] dated 19 April 1990, amended DAO No. 20, series of
1988. DAO No. 38, series of 1990 retained the authority of the CENRO to issue certificates of land classification status for areas
below 50 hectares, as well as the authority of the PENRO to issue certificates of land classification status for lands covering over 50
hectares.[20] In this case, respondent applied for registration of Lot 10705-B. The area covered by Lot 10705-B is over 50 hectares
(564,007 square meters). The CENRO certificate covered the entire Lot 10705 with an area of 596,116 square meters which, as per
DAO No. 38, series of 1990, is beyond the authority of the CENRO to certify as alienable and disposable.

The Regional Technical Director, FMS-DENR, has no authority under DAO Nos. 20 and 38 to issue certificates of land
classification. Under DAO No. 20, the Regional Technical Director, FMS-DENR:

1. Issues original and renewal of ordinary minor products (OM) permits except rattan;
2. Approves renewal of resaw/mini-sawmill permits;
3. Approves renewal of special use permits covering over five hectares for public infrastructure projects; and
4. Issues renewal of certificates of registration for logs, poles, piles, and lumber dealers.

Under DAO No. 38, the Regional Technical Director, FMS-DENR:


1. Issues original and renewal of ordinary minor [products] (OM) permits except rattan;
2. Issues renewal of certificate of registration for logs, poles, and piles and lumber dealers;
3. Approves renewal of resaw/mini-sawmill permits;
4. Issues public gratuitous permits for 20 to 50 cubic meters within calamity declared areas for public infrastructure projects;
and
5. Approves original and renewal of special use permits covering over five hectares for public infrastructure projects.

Hence, the certification issued by the Regional Technical Director, FMS-DENR, in the form of a memorandum to the trial court, has
no probative value.

Further, it is not enough for the PENRO or CENRO to certify that a land is alienable and disposable. The applicant for land
registration must prove that the DENR Secretary had approved the land classification and released the land of the public domain as
alienable and disposable, and that the land subject of the application for registration falls within the approved area per verification
through survey by the PENRO or CENRO. In addition, the applicant for land registration must present a copy of the original
classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. These facts
must be established to prove that the land is alienable and disposable. Respondent failed to do so because the certifications presented
by respondent do not, by themselves, prove that the land is alienable and disposable.

Only Torres, respondents Operations Manager, identified the certifications submitted by respondent. The government officials who
issued the certifications were not presented before the trial court to testify on their contents. The trial court should not have accepted
the contents of the certifications as proof of the facts stated therein. Even if the certifications are presumed duly issued and admissible
in evidence, they have no probative value in establishing that the land is alienable and disposable.

Public documents are defined under Section 19, Rule 132 of the Revised Rules on Evidence as follows:

(a) The written official acts, or records of the official acts of the sovereign authority, official bodies and tribunals,
and public officers, whether of the Philippines, or of a foreign country;
(b) Documents acknowledged before a notary public except last wills and testaments; and

(c) Public records, kept in the Philippines, of private documents required by law to be entered therein.

Applying Section 24 of Rule 132, the record of public documents referred to in Section 19(a), when admissible for any purpose, may
be evidenced by an official publication thereof or by a copy attested by the officer having legal custody of the record, or by his
deputy x x x. The CENRO is not the official repository or legal custodian of the issuances of the DENR Secretary declaring public
lands as alienable and disposable. The CENRO should have attached an official publication[21] of the DENR Secretarys issuance
declaring the land alienable and disposable.

Section 23, Rule 132 of the Revised Rules on Evidence provides:

Sec. 23. Public documents as evidence. Documents consisting of entries in public records made in the performance
of a duty by a public officer are prima facie evidence of the facts stated therein. All other public documents are
evidence, even against a third person, of the fact which gave rise to their execution and of the date of the latter.
The CENRO and Regional Technical Director, FMS-DENR, certifications do not fall within the class of public documents
contemplated in the first sentence of Section 23 of Rule 132. The certifications do not reflect entries in public records made in the
performance of a duty by a public officer, such as entries made by the Civil Registrar [22] in the books of registries, or by a ship captain
in the ships logbook.[23] The certifications are not the certified copies or authenticated reproductions of original official records in the
legal custody of a government office. The certifications are not even records of public documents. [24] The certifications are
conclusions unsupported by adequate proof, and thus have no probative value. [25] Certainly, the certifications cannot be considered
prima facie evidence of the facts stated therein.

The CENRO and Regional Technical Director, FMS-DENR, certifications do not prove that Lot 10705-B falls within the alienable
and disposable land as proclaimed by the DENR Secretary. Such government certifications do not, by their mere issuance, prove the
facts stated therein.[26] Such government certifications may fall under the class of documents contemplated in the second sentence of
Section 23 of Rule 132. As such, the certifications are prima facie evidence of their due execution and date of issuance but they do not
constitute prima facie evidence of the facts stated therein.

The Court has also ruled that a document or writing admitted as part of the testimony of a witness does not constitute proof of the facts
stated therein.[27] Here, Torres, a private individual and respondents representative, identified the certifications but the government
officials who issued the certifications did not testify on the contents of the certifications. As such, the certifications cannot be given
probative value.[28] The contents of the certifications are hearsay because Torres was incompetent to testify on the veracity of the
contents of the certifications.[29] Torres did not prepare the certifications, he was not an officer of CENRO or FMS-DENR, and he did
not conduct any verification survey whether the land falls within the area classified by the DENR Secretary as alienable and
disposable.

Petitioner also points out the discrepancy as to when the land allegedly became alienable and disposable. The DENR Secretary
certified that based on Land Classification Map No. 582, the land became alienable and disposable on 31 December 1925. However,
the certificate on the blue print plan states that it became alienable and disposable on 31 December 1985.
We agree with petitioner that while the certifications submitted by respondent show that under the Land Classification Map No. 582,
the land became alienable and disposable on 31 December 1925, the blue print plan states that it became alienable and disposable
on 31 December 1985.Respondent alleged that the blue print plan merely serves to prove the precise location and the metes and
bounds of the land described therein x x x and does not in any way certify the nature and classification of the land involved.[30] It is
true that the notation by a surveyor-geodetic engineer on the survey plan that the land formed part of the alienable and disposable land
of the public domain is not sufficient proof of the lands classification. [31]However, respondent should have at least presented proof that
would explain the discrepancy in the dates of classification. Marquez, LRA Records Officer II, testified that the documents submitted
to the court consisting of the tracing cloth plan, the technical description of Lot 10705-B, the approved subdivision plan, and the
Geodetic Engineers certification were faithful reproductions of the original documents in the LRA office. He did not explain the
discrepancy in the dates. Neither was the Geodetic Engineer presented to explain why the date of classification on the blue print plan
was different from the other certifications submitted by respondent.

There was No Open, Continuous, Exclusive, and Notorious


Possession and Occupation in the Concept of an Owner
Petitioner alleges that the trial courts reliance on the testimonies of Evangelista and Torres was misplaced. Petitioner alleges that
Evangelistas statement that the possession of respondents predecessors-in-interest was open, public, continuous, peaceful, and adverse
to the whole world was a general conclusion of law rather than factual evidence of possession of title.Petitioner alleges that respondent
failed to establish that its predecessors-in-interest had held the land openly, continuously, and exclusively for at least 30 years after it
was declared alienable and disposable.

We agree with petitioner.

Evangelista testified that Kabesang Puroy had been in possession of the land before 1945. Yet, Evangelista only worked on the land
for three years.Evangelista testified that his family owned a lot near Kabesang Puroys land.The Court of Appeals took note of this and
ruled that Evangelistas knowledge of Kabesang Puroys possession of the land stemmed not only from the fact that he had worked
thereat but more so that they were practically neighbors. [32] The Court of Appeals observed:
In a small community such as that of San Bartolome, Sto. Tomas, Batangas, it is not difficult to understand that
people in the said community knows each and everyone. And, because of such familiarity with each other, news or
events regarding the acquisition or disposition for that matter, of a vast tract of land spreads like wildfire, thus, the
reason why such an event became of public knowledge to them. [33]

Evangelista testified that Kabesang Puroy was succeeded by Fortunato.However, he admitted that he did not know the exact
relationship between Kabesang Puroy and Fortunato, which is rather unusual for neighbors in a small community. He did not also
know the relationship between Fortunato and Porting. In fact, Evangelistas testimony is contrary to the factual finding of the trial court
that Kabesang Puroy was succeeded by his son Antonio, not by Fortunato who was one of Antonios children. Antonio was not even
mentioned in Evangelistas testimony.

The Court of Appeals ruled that there is no law that requires that the testimony of a single witness needs corroboration. However, in
this case, we find Evangelistas uncorroborated testimony insufficient to prove that respondents predecessors-in-interest had been in
possession of the land in the concept of an owner for more than 30 years. We cannot consider the testimony of Torres as sufficient
corroboration. Torres testified primarily on the fact of respondents acquisition of the land. While he claimed to be related to the
Dimayugas, his knowledge of their possession of the land was hearsay. He did not even tell the trial court where he obtained his
information.

The tax declarations presented were only for the years starting 1955. While tax declarations are not conclusive evidence of ownership,
they constitute proof of claim of ownership. [34] Respondent did not present any credible explanation why the realty taxes were only
paid starting 1955 considering the claim that the Dimayugas were allegedly in possession of the land before 1945. The payment of the
realty taxes starting 1955 gives rise to the presumption that the Dimayugas claimed ownership or possession of the land only in that
year.
Land Application by a Corporation
Petitioner asserts that respondent, a private corporation, cannot apply for registration of the land of the public domain in this case.

We agree with petitioner.


Section 3, Article XII of the 1987 Constitution provides:

Sec. 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national
parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they
may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or
associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in
area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve
hectares thereof by purchase, homestead or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of
agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be
acquired, developed, held, or leased and the conditions therefor.

The 1987 Constitution absolutely prohibits private corporations from acquiring any kind of alienable land of the public
domain. In Chavez v. Public Estates Authority,[35] the Court traced the law on disposition of lands of the public domain. Under the
1935 Constitution, there was no prohibition against private corporations from acquiring agricultural land.The 1973 Constitution
limited the alienation of lands of the public domain to individuals who were citizens of the Philippines. Under the 1973 Constitution,
private corporations, even if wholly owned by Filipino citizens, were no longer allowed to acquire alienable lands of the public
domain. The present 1987 Constitution continues the prohibition against private corporations from acquiring any kind of alienable
land of the public domain.[36] The Court explained in Chavez:

The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations from
acquiring any kind of alienable land of the public domain. Like the 1973 Constitution, the 1987 Constitution
allows private corporations to hold alienable lands of the public domain only through lease. x x x x

[I]f the constitutional intent is to prevent huge landholdings, the Constitution could have simply limited the size of
alienable lands of the public domain that corporations could acquire. The Constitution could have followed the
limitations on individuals, who could acquire not more than 24 hectares of alienable lands of the public domain
under the 1973 Constitution, and not more than 12 hectares under the 1987 Constitution.

If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a corporation
would be more effective in preventing the break-up of farmlands. If the farmland is registered in the name of a
corporation, upon the death of the owner, his heirs would inherit shares in the corporation instead of subdivided
parcels of the farmland.This would prevent the continuing break-up of farmlands into smaller and smaller plots from
one generation to the next.

In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from acquiring more
than the allowed area of alienable lands of the public domain. Without the constitutional ban, individuals who
already acquired the maximum area of alienable lands of the public domain could easily set up corporations to
acquire more alienable public lands. An individual could own as many corporations as his means would
allow him. An individual could even hide his ownership of a corporation by putting his nominees as stockholders of
the corporation. The corporation is a convenient vehicle to circumvent the constitutional limitation on acquisition by
individuals of alienable lands of the public domain.

The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a limited area of
alienable land of the public domain to a qualified individual. This constitutional intent is safeguarded by the
provision prohibiting corporations from acquiring alienable lands of the public domain, since the vehicle to
circumvent the constitutional intent is removed. The available alienable public lands are gradually decreasing in the
face of an ever-growing population. The most effective way to insure faithful adherence to this constitutional intent
is to grant or sell alienable lands of the public domain only to individuals. This, it would seem, is the practical
benefit arising from the constitutional ban.[37]
In Director of Lands v. IAC,[38] the Court allowed the land registration proceeding filed by Acme Plywood & Veneer Co., Inc.
(Acme) for five parcels of land with an area of 481,390 square meters, or 48.139 hectares, which Acme acquired from members of the
Dumagat tribe. The issue in that case was whether the title could be confirmed in favor of Acme when the proceeding was instituted
after the effectivity of the 1973 Constitution which prohibited private corporations or associations from holding alienable lands of the
public domain except by lease not to exceed 1,000 hectares. The Court ruled that the land was already private land when Acme
acquired it from its owners in 1962, and thus Acme acquired a registrable title.Under the 1935 Constitution, private corporations
could acquire public agricultural lands not exceeding 1,024 hectares while individuals could acquire not more than 144 hectares. [39]

In Director of Lands, the Court further ruled that open, exclusive, and undisputed possession of alienable land for the period
prescribed by law created the legal fiction whereby the land, upon completion of the requisite period, ipso jure and without the need
of judicial or other sanction ceases to be public land and becomes private property. The Court ruled:

Nothing can more clearly demonstrate the logical inevitability of considering possession of public land which is of
the character and duration prescribed by statute as the equivalent of an express grant from the State than the dictum
of the statute itself that the possessor(s) x x x shall be conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a certificate of title x x x. No proof being admissible to
overcome a conclusive presumption, confirmation proceedings would, in truth be little more than a formality, at the
most limited to ascertaining whether the possession claimed is of the required character and length of time; and
registration thereunder would not confer title, but simply recognize a title already vested. The proceedings would
not originally convert the land from public to private land, but only confirm such a conversion already effected by
operation of law from the moment the required period of possession became complete.

x x x [A]lienable public land held by a possessor, personally or through his predecessors-in-interest, openly,
continuously and exclusively for the prescribed statutory period of (30 years under The Public Land Act, as
amended) is converted to private property by the mere lapse or completion of said period, ipso jure. Following that
rule and on the basis of the undisputed facts, the land subject of this appeal was already private property at the
time it was acquired from the Infiels by Acme. Acme thereby acquired a registrable title, there being at the
time no prohibition against said corporations holding or owning private land. x x x.[40] (Emphasis supplied)

Director of Lands is not applicable to the present case. In Director of Lands,the land x x x was already private property at the time
it was acquired x x x by Acme. In this case, respondent acquired the land on 8 August 1997 from Porting, who, along with his
predecessors-in-interest, has not shown to have been, as of that date, in open, continuous, and adverse possession of the land for 30
years since 12 June 1945. In short, when respondent acquired the land from Porting, the land was not yet private property.

For Director of Lands to apply and enable a corporation to file forregistration of alienable and disposable land, the corporation must
have acquired the land when its transferor had already a vested right to a judicial confirmation of title to the land by virtue of his open,
continuous and adverse possession of the land in the concept of an owner for at least 30 years since 12 June 1945. Thus, in Natividad
v. Court of Appeals,[41] the Court declared:

Under the facts of this case and pursuant to the above rulings, the parcels of land in question had already been
converted to private ownership through acquisitive prescription by the predecessors-in-interest of TCMC when the
latter purchased them in 1979. All that was needed was the confirmation of the titles of the previous owners or
predecessors-in-interest of TCMC.

Being already private land when TCMC bought them in 1979, the prohibition in the 1973 Constitution against
corporations acquiring alienable lands of the public domain except through lease (Article XIV, Section 11, 1973
Constitution) did not apply to them for they were no longer alienable lands of the public domain but private
property.
What is determinative for the doctrine in Director of Lands to apply is for the corporate applicant for land registration to establish that
when it acquired the land, the same was already private land by operation of law because the statutory acquisitive prescriptive period
of 30 years had already lapsed. The length of possession of the land by the corporation cannot be tacked on to complete the statutory
30 years acquisitive prescriptive period. Only an individual can avail of such acquisitive prescription since both the 1973 and 1987
Constitutions prohibit corporations from acquiring lands of the public domain.

Admittedly, a corporation can at present still apply for original registration of land under the doctrine in Director of Lands. Republic
Act No. 9176[42](RA 9176) further amended the Public Land Act [43] and extended the period for the filing of applications for judicial
confirmation of imperfect and incomplete titles to alienable and disposable lands of the public domain until 31 December
2020. Thus:

Sec. 2. Section 47, Chapter VIII of the same Act, as amended, is hereby further amended to read as follows:

Sec. 47. The persons specified in the next following section are hereby granted time, not to extend beyond
December 31, 2020 within which to avail of the benefits of this Chapter: Provided, That this period shall apply
only where the area applied for does not exceed twelve (12) hectares: Provided, further, That the several periods
of time designated by the President in accordance with Section Forty-five of this Act shall apply also to the lands
comprised in the provisions of this Chapter, but this Section shall not be construed as prohibiting any of said
persons from acting under this Chapter at any time prior to the period fixed by the President.

Sec. 3. All pending applications filed before the effectivity of this amendatory Act shall be treated as having been
filed in accordance with the provisions of this Act.

Under RA 9176, the application for judicial confirmation is limited only to 12 hectares, consistent with Section 3, Article XII of the
1987 Constitution that a private individual may only acquire not more than 12 hectares of alienable and disposable land. Hence,
respondent, as successor-in-interest of an individual owner of the land, cannot apply for registration of land in excess of 12 hectares.
Since respondent applied for 56.4007 hectares, the application for the excess area of 44.4007 hectares is contrary to law, and thus
void ab initio. In applying for land registration, a private corporation cannot have any right higher than its predecessor-in-interest
from whom it derived its right. This assumes, of course, that the corporation acquired the land, not exceeding 12 hectares, when the
land had already become private land by operation of law. In the present case, respondent has failed to prove that any portion of the
land was already private land when respondent acquired it from Porting in 1997.

WHEREFORE, we SET ASIDE the 21 August 2002 Decision of the Court of Appeals in CA-G.R. CV No. 66658 and the 16
December 1999 Decision of the Regional Trial Court of Tanauan, Batangas, Branch 6 in Land Registration Case No. T-
635. We DENY the application for registration filed by T.A.N. Properties, Inc.

SO ORDERED.
FIRST DIVISION

REPUBLIC OF THE PHILIPPINES, G.R. No. 150000


Petitioner,
Present:

PANGANIBAN, C.J.
(Chairperson)
YNARES-SANTIAGO,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

TRI-PLUS CORPORATION,
Respondent. Promulgated:
September 26, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision[1] dated September
14, 2001 of the Court of Appeals (CA) in CA-G.R. CV No. 60671, which affirmed the judgment of the Municipal Trial Court (MTC)
of Consolacion, Metro Cebu in LRC Case No. N-21 granting herein respondents application for registration of title to Lots Nos. 1061
and 1062 of the Cadastral Survey of Consolacion, Cebu.

The facts of the case are as follows:


On April 30, 1997 Tri-Plus Corporation[2], through its president, Euclid C. Po, filed with the MTC of Consolacion, Metro Cebu,[3] an
Application for Registration of Title over two parcels of land designated as Lots 1061 and 1062 of the cadastral survey of
Consolacion, Cebu, containing an area of 3,939 and 4,796 square meters, respectively, and located at Barangay Tayud, Consolacion,
Cebu.[4] In its application, Tri-Plus alleged that it is the owner in fee simple of the subject parcels of land, including the improvements
thereon, having acquired the same through purchase; and that it is in actual, continuous, public, notorious, exclusive and peaceful
possession of the subject properties in the concept of an owner for more than 30 years, including that of its predecessors-in-
interest.[5] The case was docketed as LRC Case No. N-21.[6]

On September 4, 1997, the trial court received an Opposition to the Application for Registration filed by the Republic of the
Philippines through the Office of the Solicitor General (OSG) on the grounds that neither the applicant nor its predecessors-in-interest
have been in open, continuous, exclusive and notorious possession and occupation of the land in question since June 12, 1945 or prior
thereto; that the muniments of title submitted by the applicant which consists, among others, of tax declarations and receipts of tax
payments, do not constitute competent and sufficient evidence of a bona fide acquisition of the land applied for or of its open,
continuous, exclusive and notorious possession and occupation thereof in the concept of owner since June 12, 1945 or prior thereto;
that the claim of ownership in fee simple on the basis of a Spanish title or grant may no longer be availed of by the applicant because
it failed to file an appropriate application for registration in accordance with the provisions of Presidential Decree (P.D.) No. 892; and
that the subject parcels of land are portions of the public domain belonging to the Republic of the Philippines and are not subject to
private appropriation.[7]
On September 19, 1997, Tri-Plus presented documentary evidence to prove compliance with the jurisdictional requirements of the
law. On even date, a Manifestation and Motion was filed by the heirs of Toribio Pepito praying that they be given a period of 10 days
within which to file their written opposition.[8] However, the oppositors failed to file their written opposition on time. The trial court
then commissioned its clerk of court to receive evidence from the applicant and directed the former to submit a report thereon.
Accordingly, a Commissioners Report was submitted on the proceedings taken. [9]

In its Judgment dated February 26, 1998, the MTC made the following finding and conclusion:

The totality of the evidence, both documentary and testimonial, of the applicant clearly shows that it and its
predecessors-in-interest had been in actual, public, exclusive and continuous possession in concept of owner of the
parcels of land above-mentioned for no less than thirty (30) years prior to the filing of the instant petition for
registration of its imperfect title. This being so, the applicant is entitled that its title be confirmed under the
provisions of the Torrens System of Registration.[10]
Accordingly, it disposed of the case as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered declaring the applicant TRI-PLUS
LAND CORPORATION the exclusive and absolute owner of Lot 1061 of the Cadastral Survey of Consolacion,
Cebu, as shown on plan Ap-07-002362 (Exhibit J) and described in its corresponding technical description (Exhibit
K), and Lot 1062 of the Cadastral Survey of Consolacion, Cebu, as shown on plan Ap-07-002366 (Exhibit O) and
described in its corresponding technical description (Exhibit P).

Once this decision becomes final, let an Order for the issuance of the decree of registration for Lots 1061
and 1062, Consolacion Cadastre, be issued in the name of TRI-PLUS LAND CORPORATION.

SO ORDERED.[11]
The OSG appealed the trial courts judgment with the CA.[12]

Subsequently, the Land Registration Authority (LRA), through its Director on Registration, submitted a Report dated August
6, 1998 to the MTC, pertinent portions of which read as follows:

1. Two (2) parcels of land described as Lots 1062 and 1061, Cad. 545-D, Consolacion Cadastre on Plan
Ap-07-002366 and Ap-07-002362, both situated in the Barangay of
Tayud, Municipality of Consolacion, Province of Cebu, are being applied for original registration of title;
2. After examining the afore-said plan discrepancy was noted in the bearings and distances of line 3-4 and
4-5 of Lot 1061, Ap-07-002362, being S.57 deg. 19W 8.02m. and S.52 deg. 10W 18.24, which do not conform with
the bearings and distances (N. 52 deg. 01E., 18.00m) and (N. 52 deg. 47E., 17.71m.) along lines 12-13 and 11-12,
respectively of plan Rs-07-01-000358, lot 1508, Consolacion Cad. 545-D, decreed in LRA (NALTDRA) Record
No. N-60851.

3. That the above discrepancy was brought to the attention of the Regional Technical Director, DENR,
Land Management Services, Region VII, Mandaue City, for verification and correction in a letter dated 7 July 1998.

4. This Authority is not in a position to verify whether or not the parcels of land subject of registration are
already covered by land patent.[13]

On September 14, 2001, the CA rendered the presently assailed Decision finding no reversible error in the appealed
judgment, thereby, affirming the same.[14]

Hence, herein petition based on the following assignments of errors:


I

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT FINDING THAT THE
TRIAL COURT DID NOT ACQUIRE JURISDICTION TO HEAR AND DECIDE THE CASE,
BECAUSE THE IDENTITY OF THE LAND REMAINS UNCERTAIN.

II

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT FINDING THAT


RESPONDENT FAILED TO DISCHARGE THE BURDEN OF PROVING THAT THE PROPERTY IS
ALIENABLE AND DISPOSABLE.

III

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT FINDING THAT


RESPONDENT IS DISQUALIFIED FROM ACQUIRING LANDS OF THE PUBLIC DOMAIN. [15]

As to the first assigned error, petitioner contends that the CA erred in relying on the original survey plan approved by the Lands

Management Services of the Department of Environment and Natural Resources (DENR) when it ruled that the applicant was able to

duly establish the identity of Lot 1061. This reliance, petitioner argues, is mistaken considering that the Report of the Director on

Registration of the LRA pointed to a discrepancy in the bearings and distances of the boundaries which separate Lot 1061 from an

adjoining land, Lot 1058. This discrepancy, petitioners submit, casts doubt on the identity of the land subject of the application for

registration. Petitioner then concludes that if there is uncertainty in the metes and bounds of the property sought to be titled, the trial

court cannot acquire jurisdiction over the subject matter of the case. Hence, the proceedings before the trial court, including its

decision granting the application for registration, are void.

As to the second assignment of error, petitioner argues that the CA erred in holding that the applicant was able to prove that the
subject properties are alienable and disposable lands of the public domain. Petitioner contends that a mere notation appearing in the
survey plans of the disputed properties showing that the subject lands had been classified as alienable and disposable on June 25, 1963
is not sufficient to establish the nature and character of these lands. Petitioner asserts that there should be a positive act on the part of
the government, such as a certification from the DENR, to prove that the said lands are indeed alienable and disposable. Petitioner
further contends that even if the subject properties were classified as alienable and disposable on June 25, 1963, the law, nonetheless,
requires that such classification should have been made on June 12, 1945 or earlier.

Anent the last assigned error, petitioner contends that since the applicant failed to discharge the burden of proving that the subject
properties are alienable and disposable, there is no basis for the CA to rule that these properties are private lands.

In its Comment, respondent contends that it was able to prove the identity of Lot 1061 with certainty. While it admits the discrepancy
in the bearings and distances which form the boundary between Lot 1061 and the adjoining Lot 1058, respondent contends that such
discrepancy is merely technical in nature because Lots 1058 and 1061 remain the same and that there is neither an increase nor
decrease in the area of the subject lot sought to be titled; and that what was required by the LRA in its Report was for the applicant to
correct and adjust the bearings and distances of Lot 1061 in order to conform to the boundaries of Lot 1058.
Respondent also argues that the notations appearing in the survey plans of the subject properties serve as sufficient proof that these
lands are alienable and disposable. Respondent asserts that the survey plans were duly approved by the DENR, Lands Management
Services whose official acts are presumed to be in accordance with law.

Lastly, respondent argues that its predecessor-in-interests continuous, actual, adverse and peaceful possession of the subject properties
in the concept of an owner for a period of more than 30 years, coupled with the fact that they declared these lands in their name, gives
a strong presumption in respondents favor that the subject properties no longer form part of the public domain.
Parties filed their respective Memoranda.[16]

The Court finds the petition meritorious.


At the outset, however, the Court does not agree with petitioners contention in its first assigned error that respondent failed to
properly identify Lot 1061 which is one of the lots sought to be titled.

Insofar as the identity of the land subject of an application for original registration is concerned, this Court has laid down the
rule, as follows:

The submission in evidence of the original tracing cloth plan, duly approved by the Bureau of Lands, in cases
for application of original registration of land is a mandatory requirement. The reason for this rule is to establish the
true identity of the land to ensure that it does not overlap a parcel of land or a portion thereof already covered by a
previous land registration, and to forestall the possibility that it will be overlapped by a subsequent registration of any
adjoining land. The failure to comply with this requirement is fatal to petitioners application for registration. [17]

However, in Republic of the Philippines v. Court of Appeals[18] and in the more recent cases of Spouses Recto v. Republic of the
Philippines[19] and Republic of the Philippines v. Hubilla[20], the Court ruled that while the best evidence to identify a piece of land for
registration purposes is the original tracing cloth plan from the Bureau of Lands (now the Lands Management Services of the DENR),
blueprint copies and other evidence could also provide sufficient identification. In the present case, respondent submitted in evidence a
blueprint copy of the Advance Plan of Lot 1061 [21] and a Technical Description[22] thereof, both of which had been duly certified and
approved by the Lands Management Services of the DENR. The Court finds these pieces of evidence as substantial compliance with
the legal requirements for the proper identification of Lot 1061. The discrepancy in the common boundary that separates Lot 1061
from Lot 1058, as contained in the LRA Report does not cast doubt on the identity of the subject lot. As the CA correctly held, the
discrepancy is not substantial because it does not unduly increase or affect the total area of the subject lot and at the same time
prejudice the adjoining lot owner. It is only when the discrepancy results to an unexplained increase in the total area of the land sought
to be registered that its identity is made doubtful. Besides, only a portion of the many boundaries of Lot 1061 has been found to bear a
discrepancy in relation to the boundary of one adjoining lot and the LRA Report simply recommends that the Lands Management
Services of the DENR verify the reported discrepancy and make the necessary corrections, if needed, in order to avoid duplication in
the issuance of titles covering the same parcels of land.

Petitioners argument that, on the basis of the LRA Report, the MTC should have dismissed respondents application for
registration for lack of jurisdiction over the subject matter, is without merit. The MTC could not have possibly done this because said
Report was submitted to the trial court more than five months after the latter rendered its Decision. A copy of the LRA Report
attached to the present petition shows that it is dated August 6, 1998 while the MTC decision was rendered much earlier on February
26, 1998. In fact, the Office of the Solicitor General (OSG) perfected its appeal by filing a notice of appeal of the MTC Decision
on April 2, 1998, which is also prior to the submission of the LRA report. Hence, by the time the LRA report was submitted to the
MTC, the latter has already lost jurisdiction over the case, not on the ground cited by petitioner but because the appeal to the CA was
already perfected, vesting jurisdiction upon the appellate court.

In any case, while the subject lands were properly identified, the Court finds that respondent failed to comply with the other legal
requirements for its application for registration to be granted.

Applicants for confirmation of imperfect title must prove the following: (a) that the land forms part of the alienable and
disposable agricultural lands of the public domain; and (b) that they have been in open, continuous, exclusive and notorious
possession and occupation of the same under a bona fide claim of ownership either since time immemorial or since June 12, 1945.[23]

In the present case, the Court finds merit in petitioners contention that respondent failed to prove the first requirement that the
properties sought to be titled forms part of the alienable and disposable agricultural lands of the public domain.

Section 6 of Commonwealth Act No. 141, as amended, provides that the classification and reclassification of public lands
into alienable or disposable, mineral or forest land is the prerogative of the Executive Department. Under the Regalian doctrine, which
is embodied in our Constitution, all lands of the public domain belong to the State, which is the source of any asserted right to any
ownership of land.[24] All lands not appearing to be clearly within private ownership are presumed to belong to the
State.[25] Accordingly, public lands not shown to have been reclassified or released as alienable agricultural land or alienated to a
private person by the State remain part of the inalienable public domain.[26]

It must be stressed that incontrovertible evidence must be presented to establish that the land subject of the application is
alienable or disposable.[27]

In the present case, the only evidence to prove the character of the subject lands as required by law is the notation appearing
in the Advance Plan stating in effect that the said properties are alienable and disposable. However, this is hardly the kind of proof
required by law. To prove that the land subject of an application for registration is alienable, an applicant must establish the existence
of a positive act of the government such as a presidential proclamation or an executive order, an administrative action, investigation
reports of Bureau of Lands investigators, and a legislative act or statute.[28] The applicant may also secure a certification from the
Government that the lands applied for are alienable and disposable. [29] In the case at bar, while the Advance Plan bearing the notation
was certified by the Lands Management Services of the DENR, the certification refers only to the technical correctness of the survey
plotted in the said plan and has nothing to do whatsoever with the nature and character of the property surveyed. Respondents failed to
submit a certification from the proper government agency to prove that the lands subject for registration are indeed alienable and
disposable.
As to the second requirement, testimonial evidence were presented to prove that respondents predecessors-in-interest had
been in possession of the subject lots in the concept of an owner for the period required by law. The first witness was Thelma Pilapil
who claims to be the daughter of Constancia Frias from whom respondent bought Lot 1061. Pilapil testified that her family has been
in possession of Lot 1061 since her birth.[30] When her testimony was offered on October 7, 1997, she was 40 years old.[31]Deducting
40 years from 1997, it means that her family started possession of Lot 1061 only in 1957. The second witness who was presented was
Tomas Frias from whom respondent bought Lot 1062. Frias testified that he was 67 years old at the time that his testimony was taken
on October 7, 1997.[32]He claims that he started owning the subject lot when he was 17 years old and had been in possession of the
same since then.[33] Hence, by simple arithmetic, the testimony of Frias proves that he came to possess Lot 1062 only in 1947. While
he testified that Lot 1062 was previously owned by his father and that he inherited the property from his parents, no evidence was
presented to show that the latter indeed previously owned the said property and that they had been in possession of the same on or
before June 12, 1945.

Moreover, other pieces of evidence presented by respondent to prove the period of its possession and that of its predecessors-in-
interest show that the subject properties were declared for taxation purposes beginning only in 1961. [34] This date may be considered
as relatively recent considering that respondents predecessors-in-interest claim to have been in possession of the subject properties as
early as 1947. While belated declaration of a property for taxation purposes does not necessarily negate the fact of possession, tax
declarations or realty tax payments of property are, nevertheless, good indicia of possession in the concept of an owner, for no one in
his right mind would be paying taxes for a property that is not in his actual, or at least, constructive possession. [35] In the present case,
respondent failed to explain why, despite the claim of its predecessors-in interest that they possessed the subject properties in the
concept of an owner as early as 1947, it was only in 1961 that they started to declare the same for purposes of taxation.

From the foregoing, it is clear that respondent and its predecessors-in-interest failed to prove that they had been in open,
continuous, exclusive and notorious possession of the subject properties under a bona fide claim of ownership since June 12, 1945 or
earlier, as required by law.

Well-entrenched is the rule that the burden of proof in land registration cases rests on the applicant who must show clear,
positive and convincing evidence that his alleged possession and occupation were of the nature and duration required by law. [36] In the
present case, the Court finds that respondent failed to prove, by clear and convincing evidence, the legal requirements that the lands
sought to be titled are alienable and disposable and that its predecessors-in-interest were already in possession of the subject lots since
1945 or earlier.

As to the last assigned error, respondent having failed to prove that the subject properties are alienable and disposable public
lands, the Court agrees with petitioner that there would be no basis in concluding that these lands have already become private. The
presumption remains that said properties remain part of the inalienable public domain and, therefore, could not become the subject of
confirmation of imperfect title.

Finally, while it is an acknowledged policy of the State to promote the distribution of alienable public lands as a spur to
economic growth and in line with the ideal of social justice, the law imposes stringent safeguards upon the grant of such resources lest
they fall into the wrong hands to the prejudice of the national patrimony.[37] The Court must not, therefore, relax the stringent
safeguards relative to the registration of imperfect titles.

WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated September 14, 2001 in CA-
G.R. CV No. 60671 is REVERSED and SET ASIDE. Respondent Tri-Plus Corporations application for registration and issuance of
title to Lots 1061 and 1062, Consolacion Cad-545-D, in LRC Case No. N-21 filed with the Municipal Trial Court of Consolacion,
Metro Cebu, is DISMISSED.

SO ORDERED.
SECOND DIVISION

[G.R. No. 131501. July 14, 2004]

FRANCISCO ZARATE, petitioner, vs. THE DIRECTOR OF LANDS, PRECIOSA T. DAVILA, REGALADO TORIAGA,
PATRIA TORIAGA, RENATO TORIAGA, ROSALINDA TORIAGA, RYL TORIAGA, PROBO TORIAGA, JOSE
CORPUS, MARCELINITO HONORIO, JOSE MELO, LOLITO TALAGA, FELIPE VILLANUEVA,
DOMINADOR TAGBALAY, MAXIMO VILLANUEVA, and the DEVELOPMENT BANK OF THE
PHILIPPINES, respondents.

DECISION
CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals in CA-G.R. CV No. 28241 affirming the
Decision[2] of the Regional Trial Court of Kalibo, Aklan, Branch 3, in Land Registration Case No. 273.
The Antecedents
As gleaned from the decision of the Court of Appeals, the factual backdrop and antecedental proceedings are as follows:

This is an application for registration of title filed by appellant Francisco Zarate on 27 December 1976 to have his three parcels of land
brought under the operation of the Land Registration Act. The subject parcels of land contain a land area of 68.2787 hectares and
10.5135 hectares, located at Dumatiad, Tangalan, Aklan, and of 3.8500 hectares, located at Afga, Tangalan, Aklan. The said parcels
have been subdivided into six (6) lots.

Appellant claims that the first two parcels of land which formed only one parcel of land consisting of about 78.7922 hectares
originally belonged to the spouses Solomon Tirol and Venancia Hontiveros. When they died in 1905 and 1913, respectively, the said
parcels of land were inherited by their children Gregorio, Ignacio, Lamberto, Eleanor and Carmen, all surnamed Tirol.

On 26 May 1923, they donated said parcel to Josefino Tirol, son of Gregorio, and Angeles Arcenas in consideration of their marriage
(Exhs. (sic) Z). Said land was later subdivided into two, one with an area of 68.2787 hectares and the other 10.5135 hectares which
was later sold to herein appellant on 7 January 1976 (Exh. HH). The third parcel (with an area of 3.8500 hectares) was inherited by
Gregorio Tirol, father of Josefino, from his ancestors. When Gregorio died, Josefino inherited the same. He later sold the said land to
herein appellant on 11 March 1976.

Applicant claims that he and his predecessors-in-interest have been in peaceful possession and usufruct of the property for over eighty
(80) years, religiously paying the taxes thereon. Nobody disturbed their possession and usufruct for more than fifty (50) years, until
oppositors Maximo Villanueva, Jose Corpuz, Dominador Tagbalay, Marcelinito Honorio, Lolito Talaga, Felipe Villanueva and Jose
Molo, entered and occupied portions of the land sometime in 1970.

Oppositors Preciosa Tirol Davila, on the other hand, contends that Lot 1, Plan Psu-06-000253 with an area of 530,310 sq. meters
situated in Tangalan, Aklan, owned by her, was previously the property of Ignacio Tirol, her father. When Ignacio died, the said lot
was entrusted to Josefino Tirol, who was his lawyer and first cousin. She did not have any tax declarations because Josefino assured
her that he would be responsible for them.Preciosa denied that the said property was donated by his father to Josefino and that the
signature appearing on the deed of donation was forged.

Oppositor Development Bank of the Philippines gave another version. It claims that the questioned lots are owned by spouses
Valeriano Molo and Lutgarda Molo. The said parcel which consists of about 190,922 square meters located at Afga, Tangalan, Aklan,
was mortgaged to the bank. When the couple failed to pay their indebtedness, the mortgage was foreclosed and the land became the
property of the bank in whose name the land is now declared for taxation purposes.

Oppositors Regalado, Patria, Renato, Rosalinda, Ryl and Probo, all surnamed Toriaga, likewise, contend that the land claimed by them
which is about 4 hectares in area and situated in Afga, Tangalan, Aklan, originally belonged to Eulalio Tanasa, who possessed it
before 1949. When he died, the land was inherited by his daughter Prima who was married to Probio (sic) Toriaga. Prima continuously
resided on the land until her death in 1977. The land passed to her son, Regalado Toriaga, Sr., husband of oppositor Patria and father
of the other oppositors. The said land is declared in the name of the Toriagas.
All the oppositors claim that the land applied for by appellant was unoccupied and covered with wild trees and cogon. They cleared
the land, built their houses and planted mangoes, casoy, jackfruit, bananas, camote, and cassava. Neither Josefino Tirol nor Francisco
Zarate possessed the land nor enjoyed the products thereof.

Oppositor Republic of the Philippines, for its part, claims that the subject land was timberland or unclassified forest. In 1970, at the
time of oppositors occupation, the lands were covered with wild trees and thickets and was (sic) released as alienable and disposable
under Land Classification Map No. 2779, Project 10-A only on 16 April 1973.

Since there were many claimants, the trial court commissioned a geodetic engineer to determine the different portions claimed by the
applicant and the oppositors. The commissioners report shows the following claims:

Regalado Toriaga, et al. - 4.1444 hec.

Maximo Villanueva - 4.3572 "

Jose Molo - 3.7575"

Jose Corpuz - 6.3555"

Marcelino (sic) Honorio - 7.5123"

Dominador Tagbalay - 2.6496"

(pp. 1,310-1,313, Vol. IV, Record)

Oppositor DBP also claimed an area of 19.092 hectares while Preciosa Davila is also claiming an area of 53.0310 hectares of Lot 1.

After the contending parties presented their evidence, the trial court on 26 April 1990 rendered judgment dismissing the application of
title filed by applicant Francisco Zarate, and the claims of private oppositors.

Not satisfied with the aforesaid decision, applicant filed this appeal assigning the following errors:

THE LOWER COURT ERRED IN NOT FINDING THAT THE ADVERSE CLAIMS OF OWNERSHIP OF THE LANDS IN
QUESTION OF THE DEVELOPMENT BANK OF THE PHILIPPINES AND ALL THE OTHER OPPOSITORS ARE FALSE AND
FRAUDULENT WITHOUT BASIS IN FACT AND LAW.

II

THE LOWER COURT ERRED IN NOT HOLDING THAT THE APPLICANT-APPELLANT, INCLUDING THE POSSESSIONS
AND USUFRUCTS OF HIS PREDECESSORS-IN-INTEREST, HAS BEEN IN POSSESSION AND USUFRUCT OF THE LANDS
SUBJECT MATTER OF THIS PROCEEDING FOR OVER 80 YEARS AND FROM TIME IMMEMORIAL AND HE,
THEREFORE, ACQUIRED VESTED RIGHTS THEREON.

III

THE LOWER COURT ERRED IN NOT APPROVING THE APPLICATION FOR REGISTRATION OF TITLE TO LAND
WHICH THE APPLICANT BROUGHT (sic) TO HAVE HIS THREE PARCELS OF LAND BROUGHT UNDER THE
OPERATION OF THE LAND REGISTRATION ACT AND TO HAVE THE TITLES THERETO IN THE EXCLUSIVE NAME OF
THE APPLICANT REGISTERED AND CONFIRMED.[3]

On February 18, 1997, the Court of Appeals rendered judgment affirming the decision of the trial court.

The applicant-appellant, now the petitioner, filed a petition for review contending that:

I
THE COURT OF APPEALS ERRED IN GIVING FULL CREDENCE TO THE TESTIMONY OF GEODETIC ENGINEER
RONDARIO AND RESPONDENT (OPPOSITOR) MAXIMO VILLANUEVA AND NOT TO THAT OF THE PETITIONER
(APPLICANT) AND HIS WITNESSES, RELATIVE TO THE TRUE CLASSIFICATION OF THE SUBJECT PARCELS OF
LAND.

II

THE CLAIMS OF THE RESPONDENTS (OPPOSITORS) ARE RIDDLED WITH INCONSISTENCIES AND
IMPROBABILITIES, WHICH INCONSISTENCIES AND IMPROBABILITIES ONLY STRENGTHEN PETITIONERS
(APPLICANTS) CLAIMS.

III

A STRICT APPLICATION OF THE RULE REGARDING THE RELEASE OF PUBLIC LANDS AS EMBODIED IN THE CASE
OF VALLARTA V. INTERMEDIATE APPELLATE COURT, 151 SCRA 679 (1987), WOULD WORK SERIOUS AND
IRREPARABLE INJUSTICE TO THE PETITIONER APPLICANT). [4]

The petitioner avers that the Court of Appeals erred in giving credence and probative weight to the testimony of Geodetic
Engineer Jose Rondario and his Certification that the subject property was within the alienable and disposable area of Tangalan,
Aklan, certified and released as such under Land Classification Map No. 2779, Project 10-A on April 16, 1973. He asserts that the
appellate court should have considered his testimonial and documentary evidence, that the property subject of his application hardly
comes close to being a forest or timberland, and that there were hardly any big trees on the property. The petitioner and his
predecessors-in-interest even planted bananas, cassava, coconut trees, and camotes on the property.
The petitioner contends that the ruling of this Court in Vallarta vs. Intermediate Appellate Court,[5] should not be applied so as to
prejudice his vested rights over the subject property. The petitioner asserts that for a period of eighty years before 1973, he and his
predecessors-in-interest had been in public, continuous, adverse and exclusive possession of the property. He cites the ruling of this
Court in Ankron vs. Government of the Philippine Islands to fortify his plea.[6]
On the other hand, the trial court declared that:

To find out the real nature of the lands, the Court examined the testimony of the witnesses

Witness Jose Rondario, for the oppositor Development Bank of the Philippines, and surveyor of the lands of the applicant, testified as
follows:

ATTY. TEJADA:

Q You stated that you have gone over the property that you have surveyed for Valeriano Molo, can you tell the court what
[were the] improvements, if there are (sic) any, during the survey in 1974?
A When I execute[d] my survey, I found out that there is no(t) any (sic) plant only kaingin.
xxx
Q When you conducted the survey for Valeriano Molo in 1974, were you approached by any person?
A There is (sic) nobody questioning me during my survey because actually there was a (were) people making kaingin there
I think that (sic) was the tenant of Valeriano Molo. (Tsn, Melgar, November 5, 1987, pp. 7 and 13).

Witness Maximo Villanueva (one of the oppositors) declared:

ATTY. TAPLAC:
Q When you first occupied this land in question, what was the condition of the land?
A Filled with thickets and second group forest.
Q How big are (sic) the trees found when you first occupied this land?
A Some were big trees because we used to get (sic) our materials in building our house.
Q Were there signs of occupation when you first entered the land?
A There was no sign that there was a previous occupation (sic).
xxx
COURT:
Q What kind of trees were existing on the land when you occupied it?
A Wild trees not planted by people.
Q There were no coconut trees existing at the time you occupied the land?
A No, Your Honor. (TSN, Peniano, January 31, 1990, pp. 9-10 and 17).

Witness Agustin Bautista, an employee of the Forest Management Sector of the Community Environment and Natural Resources
Office, Kalibo, Aklan, testifying for the oppositor Director of Lands, averred:

ATTY. TORRE:
Q In this land classification map 10-A, which is described as alienable and disposable, would you mind informing this
Court as to what is the status of this Project No. 10-A previously classified as alienable and disposable?
A That is timberland. Previously, it is not being classified alienable and disposable.

xxx

Q But previous to April 16, 1973, what is (sic) the status of the land then?
A It is (sic) timberland. It is (sic) not classified as alienable and disposable. (Tsn, Gonzales, February 1, 1990, pp. 3 and 5).

Evidently, the three parcels of land in question were forest lands. The applicants predecessor-in-interest, Josefino Tirol, and the private
oppositors, who claimed possession over the area did not and could not have acquired ownership over the said lands considering that
the area was then inalienable and non-disposable.

In the present case, the lands applied for title were released as alienable and disposable only on April 16, 1973 (Exhs. 5-RP and 6-RP)
as per Project No. 10-A, Land Classification Map No. 2779. The application for registration was filed on December 27, 1976. Since
the applicant, and likewise, the private oppositors, possessed the land from the time of release on April 16, 1973, for only three (3)
years and eight (8) months prior to the filing of the application, the thirty (30) year possession required by law was not complied
with.[7]

Moreover, to warrant registration, proof of possession must be conclusive (Municipality of Santiago vs. Court of Appeals, 120 SCRA
734), or well-nigh incontrovertible (Santiago vs. de los Santos, 61 SCRA 146). The applicant was not able to prove such
possession. The bulk of the evidence submitted revealed numerous occupants on the lands. The survey plan submitted by Reynaldo
Lopez, a geodetic engineer commissioned by the Court to determine the different portions claimed by the applicant and the oppositors
(Records, p. 1,314), showed that of the three parcels of land with a total area of eighty one (81) hectares, the private oppositors claim
the following:

Regalado Toriaga, et al. - 4.1554 hectares


(Lot A);
Maximo Villanueva - 4.3572 hectares
(Lot B);
Jose Molo - 3.7575 hectares
(Lot C);
Jose Corpus - 6.3556 hectares
(Lot D);
Marcelinito Honorio - 7.5123 hectares
(Lot E); and
Dominador Tagbalay - 2.6496 hectares
(Lot F).

The evidence likewise showed that Valeriano Molo, now substituted by the Development Bank of the Philippines, claims 19.092
hectares, and oppositor Preciosa Tirol Davila, 53.0310 hectares. The aforementioned oppositors claim that they are in actual, physical
possession of their respective portions. It is admitted by the applicant in his amended application and in his evidence presented during
the trial that oppositors Maximo Villanueva, Jose Corpus, Marcelinito Honorio, Joselito Honorio, Dominador Tagbalay, Jose Molo,
Valeriano Molo (now substituted by the Development Bank of the Philippines), and the heirs of Regalado Toriaga, Sr., occupy
portions of the land through illegal entry, unauthorized squatting or usurpation. More than one-half (1/2) of the total area applied for
registration not being in the possession of the applicant, he cannot, thus, claim exclusive and notorious possession under claim of
ownership, nor can he support his claim of title through acquisitive prescription.

The Court, therefore, holds that the applicant, as well as the private oppositors, failed to prove by sufficient evidence that they have
complied with the requisites provided by law to warrant registration of title to the three (3) parcels of land. [8]

The Court of Appeals concurred in toto with the findings of the trial court and cited the ruling of this Court in Vallarta vs.
Intermediate Appellate Court[9] in ruling against the appellants.
We find the petition to be barren of merit.
The decisive issue for resolution is whether or not the Court of Appeals erred in affirming the appealed decision dismissing the
petitioners application, on the ground that he failed to prove ownership of the three parcels of land subject of his application under
Section 48(b) of Commonwealth Act No. 141, as amended.
The question raised by the petitioner, whether the parcels of land subject of his application are forest lands, and whether the
petitioner, by himself, and his predecessors-in-interest were in open, continuous, exclusive and notorious possession under a bona
fide claim of ownership for at least thirty (30) years immediately preceding his application in 1976, are questions of fact which the
trial court and the Court of Appeals resolved in the negative. Such factual findings are generally conclusive in this Court and will not
be reviewed on appeal.[10] This Court is not a trier of facts in a case appealed to it under Rule 45 of the Rules of Court, as
amended. There are, to be sure, exceptions to this rule. However, we have carefully reviewed the records and find no justification to
deviate from the findings of the trial and appellate courts that the subject property was, before April 16, 1973, forest land, and that the
petitioner failed to prove his claim of title over the parcels of land subject of his application under Section 48(b) of Commonwealth
Act No. 141, as amended, and the legal conclusions based on their findings.
Under the Regalian doctrine, all lands of the public domain belong to the State, and that the State is the source of any asserted
right to ownership of land and charged with the conservation of such patrimony. The same doctrine also states that all lands not
otherwise appearing to be clearly within private ownership are presumed to belong to the State.[11] Consequently, the burden of proof
to overcome the presumption of ownership of lands of the public domain is on the person applying for registration. [12] Unless public
land is shown to have been reclassified and alienated by the State to a private person, it remains part of the inalienable public
domain.[13]
Section 48 of the Public Land Act, as amended by P.D. No. 1073, provides:

SEC. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own such lands or
an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province
where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration
Act, to wit:

xxx xxx xxx

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive, and notorious
possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least
thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force
majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be
entitled to a certificate of title under the provisions of this chapter.

The petitioner was burdened to prove, by positive and incontrovertible evidence, two legal requirements: (1) the land applied for
was alienable and disposable; and, (2) the applicant and his predecessors-in-interest had occupied and possessed the land openly,
continuously, exclusively, and adversely for thirty (30) years immediately preceding the filing of his application on December 26,
1976. One claiming private rights must prove that he has complied with the legal requirements of Commonwealth Act No. 141, as
amended, which prescribes the substantive as well as procedural requirements for acquisition of public lands. [14]When the conditions
set forth by law are complied with, the possessor of the land, by operation of the law, acquires a right to grant, a government grant,
without the necessity of a certificate of title being issued. [15]
Under Section 6 of Commonwealth Act No. 141, as amended, the classification and reclassification of public lands into alienable
or disposable, mineral or forest land is the prerogative of the Executive Department. [16] In Bracewell vs. Court of Appeals,[17] we held
that the rule on the confirmation of imperfect title does not apply unless and until the land classified as forest land is released in an
official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain. The applicant
must secure a certification from the Government that the lands applied for by the applicants are alienable and disposable. [18]
The petitioner failed to discharge his burden.
First. The petitioner failed to adduce in evidence any certification from the Bureau of Lands or the Bureau of Forestry to the
effect that the property is alienable or disposable. On the other hand, the respondents adduced evidence that the property applied for
by the petitioner was classified by the Director of Forestry as disposable and alienable only under Forestry Administrative Order No.
4-1295 issued on April 16, 1973, and Land Classification No. 2779 and Project No. 10-A. This is gleaned from the Certification of the
Director of Forestry, viz:

I hereby certify that this is the correct map of the areas demarcated as timberlands pursuant to Section 1816 of the Revised
Administrative Code and those set aside as Alienable or Disposable under Forestry Administrative Order No. 4-1295 dated April 16,
1973. These areas were surveyed and the field notes plotted in accordance with the standard procedure and mapping instruction of the
Bureau of Forestry. Therefore, this map is hereby approved. The original reports, field notes and computations in connection herewith
are on file in this Office.

Manila, Philippines. April 16, 1973.

NOTE:

FAO No. 4-1295


Approved on (Sgd.) JOSE VIADO
June 19, 1973. Actg. Director of Forestry[19]

Geodetic Engr. Jose R. Rondario, who was commissioned by the petitioner to prepare the survey plan for the subject parcels of
land certified, thus:

I hereby certify that this area surveyed is within the alienable and disposable area of Tangalan, Aklan, certified and released as such on
April 16, 1973 per L.C. No. 2779 and Project No. 10-A.

I further certify that this Lot surveyed is outside civil and military reservation.

(Sgd.) JOSE R. RONDARIO

Geodetic Engineer[20]

The petitioner cannot denigrate the verisimilitude of the contents of the Certification of Engr. Rondario because the same was
offered as his evidence and is based on the records of the Bureau of Forestry.
Since the property was reclassified as alienable and disposable only on April 16, 1973 and the petitioner filed his application
only on December 27, 1976, or only less than four years after the said reclassification. He irrefragably failed to prove his possession of
the property for the requisite thirty (30)-year period. The possession of the land by the applicant and his predecessors-in-interest, even
assuming that his predecessors had been in possession of the property prior to the reclassification thereof as alienable or disposable,
cannot be credited as part of the thirty (30)-year period required under Section 48(b) of Commonwealth Act No. 141, as
amended.[21] Indeed, in Bracewell vs. Court of Appeals,[22] we held that:

Clear from the above is the requirement that the applicant must prove that the land is alienable public land. On this score, we agree
with the respondents that the petitioner failed to show that the parcels of land subject of his application are alienable or disposable. On
the contrary, it was conclusively shown by the government that the same were only classified as alienable or disposable on March 27,
1972. Thus, even granting that [the] petitioner and his predecessors-in-interest had occupied the same since 1908, he still cannot claim
title thereto by virtue of such possession since the subject parcels of land were not yet alienable land at that time nor capable of private
appropriation. The adverse possession which may be the basis of a grant of title or confirmation of animperfect title refers only to
alienable or disposable portions of the public domain

Prior to March 27, 1972, when the subject parcels of land were classified as inalienable or indisposable, therefore, the same could not
be the subject of confirmation of imperfect title. There can be no imperfect title to be confirmed over lands not yet classified as
disposable or alienable. In the absence of such classification, the land remains unclassified public land until released therefrom and
open to disposition. Indeed, it has been held that the rules on [the] confirmation of imperfect title do not apply unless and until the land
classified as forest land is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands
of the public domain.[23]
The ruling of the Court in Ankron vs. Government of the Philippine Island [24]has no application in this case because in that case,
the Court ruled that the property was indisputably agricultural land. The petitioners bare claims, even if true, that no big trees could be
found in the property and that he and his predecessors planted bananas, camotes and other fruit trees on portions of the property, do
not divest the property of its classification as forest land. A similar issue was raised in Heirs of Jose Amunategui vs. Director of
Forestry,[25] where we held that:

A forested area classified as forest land of the public domain does not lose such classification simply because loggers or settlers may
have stripped it of its forest cover.Parcels of land classified as forest land may actually be covered with grass or planted to crops
by kaingin cultivators or other farmers. Forest lands do not have to be on mountains or in out of the way places. Swampy areas
covered by mangrove trees, nipa palms and other trees growing in brackish or sea water may also be classified as forest land. The
classification is descriptive of its legal nature or status and does not have to be descriptive of what the land actually looks like. Unless
and until the land classified as forest is released in an official proclamation to that effect so that it may form part of the disposable
agricultural lands of the public domain, the rules on confirmation of imperfect title do not apply.

This Court ruled in the leading case of Director of Forestry v. Muoz (23 SCRA 1184 [sic]) that possession of forest lands, no matter
how long, cannot ripen into private ownership.And in Republic v. Animas (56 SCRA 499), we granted the petition on the ground that
the area covered by the patent and title was not disposable public land, it being a part of the forest zone and any patent and title to said
area is void ab initio. It bears emphasizing that a positive act of Government is needed to declassify land which is classified as forest
and to convert it into alienable or disposable land for agricultural or other purposes.

The findings of the Court of Appeals are particularly well-grounded in the instant petition.

The fact that no trees enumerated in Section 1821 of the Revised Administrative Code are found in Lot No. 885 does not divest such
land of its being classified as forest land, much less as land of the public domain. [26]

We reject the claim of the petitioner that he had acquired vested rights over the property, on his assertion that he and his
predecessors-in-interest had been in possession of the property for decades before he filed his application in the trial court. It is a rule
of law that possession of forest lands, however long, cannot ripen into private ownership. [27] Such lands are not capable of private
appropriation, and possession thereof, no matter how long, cannot ripen into ownership. [28]
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED DUE COURSE for lack of merit. The Decision of the Court
of Appeals in CA-G.R. CV No. 28241 is AFFIRMED. Costs against the petitioner.
SO ORDERED.
THIRD DIVISION

PHILIPPINE FISHERIES G.R. No. 169836


DEVELOPMENT AUTHORITY,
Petitioner, Present:
Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,

Chico-Nazario, and

Nachura, JJ.

COURT OF APPEALS, OFFICE OF

THE PRESIDENT, DEPARTMENT

OF FINANCE and the CITY OF Promulgated:

ILOILO,

Respondents. July 31, 2007

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

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review is the June 21, 2005 Decision[1] of the Court of Appeals in CA-G.R. SP No. 81228, which held that
petitioner Philippine Fisheries Development Authority (hereafter referred to as Authority) is liable to pay real property taxes on the
land and buildings of the Iloilo Fishing Port Complex (IFPC) which are owned by the Republic of the Philippines but operated and
governed by the Authority.

The facts are not disputed.

On August 11, 1976, then President Ferdinand E. Marcos issued Presidential Decree No. 977 (PD 977) creating the Authority and
placing it under the direct control and supervision of the Secretary of Natural Resources. On February 8, 1982, Executive Order No.
772 (EO 772) was issued amending PD 977, and renaming the Authority as the now Philippine Fisheries Development Authority, and
attaching said agency to the Ministry of Natural Resources. Upon the effectivity of the Administrative Code (EO 292), the Authority
became an attached agency of the Department of Agriculture.[2]
Meanwhile, beginning October 31, 1981, the then Ministry of Public Works and Highways reclaimed from the sea a 21-hectare parcel
of land in Barangay Tanza, Iloilo City, and constructed thereon the IFPC, consisting of breakwater, a landing quay, a refrigeration
building, a market hall, a municipal shed, an administration building, a water and fuel oil supply system and other port related
facilities and machineries. Upon its completion, the Ministry of Public Works and Highways turned over IFPC to the Authority,
pursuant to Section 11 of PD 977, which places fishing port complexes and related facilities under the governance and operation of the
Authority. Notwithstanding said turn over, title to the land and buildings of the IFPC remained with the Republic.

The Authority thereafter leased portions of IFPC to private firms and individuals engaged in fishing related businesses.

Sometime in May 1988, the City of Iloilo assessed the entire IFPC for real property taxes. The assessment remained unpaid until the
alleged total tax delinquency of the Authority for the fiscal years 1988 and 1989 amounted to P5,057,349.67, inclusive of penalties
and interests. To satisfy the tax delinquency, the City of Iloilo scheduled on August 30, 1990, the sale at public auction of the IFPC.

The Authority filed an injunction case with the Regional Trial Court. At the pre-trial, the parties agreed to avail of administrative
proceedings, i.e., for the Authority to file a claim for tax exemption with the Iloilo City Assessors Office. The latter, however, denied
the claim for exemption, hence, the Authority elevated the case to the Department of Finance (DOF).

In its letter-decision[3] dated March 6, 1992, the DOF ruled that the Authority is liable to pay real property taxes to the City
of Iloilo because it enjoys the beneficial use of the IFPC. The DOF added, however, that in satisfying the amount of the unpaid real
property taxes, the property that is owned by the Authority shall be auctioned, and not the IFPC, which is a property of the Republic.[4]

The Authority filed a petition before the Office of the President but it was dismissed. [5] It also denied the motion for reconsideration
filed by the Authority.[6]

On petition with the Court of Appeals, the latter affirmed the decision of the Office of the President. It opined, however, that the IFPC
may be sold at public auction to satisfy the tax delinquency of the Authority. [7] The dispositive portion thereof, reads:

WHEREFORE, premises considered, the instant Petition for Review is DENIED, and accordingly the June 30,
2003 Decision and December 3, 2003 Order of the Office of the President are hereby AFFIRMED.

SO ORDERED.[8]
Hence, this petition.

The issues are as follows: Is the Authority liable to pay real property tax to the City of Iloilo? If the answer is in the
affirmative, may the IFPC be sold at public auction to satisfy the tax delinquency?

To resolve said issues, the Court has to determine (1) whether the Authority is a government owned or controlled corporation (GOCC)
or an instrumentality of the national government; and (2) whether the IFPC is a property of public dominion.

The Court rules that the Authority is not a GOCC but an instrumentality of the national government which is generally
exempt from payment of real property tax. However, said exemption does not apply to the portions of the IFPC which the Authority
leased to private entities. With respect to these properties, the Authority is liable to pay real property tax. Nonetheless, the IFPC, being
a property of public dominion cannot be sold at public auction to satisfy the tax delinquency.

In Manila International Airport Authority (MIAA) v. Court of Appeals,[9] the Court made a distinction between a GOCC
and an instrumentality.Thus:
Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines a government-owned or
controlled corporation as follows:

SEC. 2. General Terms Defined. x x x

(13) Government-owned or controlled corporation refers to any agency organized as a


stock or non-stock corporation, vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the Government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the
extent of at least fifty-one (51) percent of its capital stock: x x x (Emphasis supplied)

A government-owned or controlled corporation must be organized as a stock or non-stock


corporation. MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock corporation because
it has no capital stock divided into shares. MIAA has no stockholders or voting shares.

xxxx

Section 3 of the Corporation Code defines a stock corporation as one whose capital stock is divided into
shares and x x x authorized to distribute to the holders of such shares dividends x x x. MIAA has capital but it is
not divided into shares of stock. MIAA has no stockholders or voting shares. Hence, MIAA is not a stock
corporation.

MIAA is also not a non-stock corporation because it has no members. Section 87 of the Corporation
Code defines a non-stock corporation as one where no part of its income is distributable as dividends to its
members, trustees or officers. A non-stock corporation must have members. Even if we assume that the
Government is considered as the sole member of MIAA, this will not make MIAA a non-stock corporation. Non-
stock corporations cannot distribute any part of their income to their members. Section 11 of the MIAA Charter
mandates MIAA to remit 20% of its annual gross operating income to the National Treasury. This prevents MIAA
from qualifying as a non-stock corporation.

Section 88 of the Corporation Code provides that non-stock corporations are organized for charitable,
religious, educational, professional, cultural, recreational, fraternal, literary, scientific, social, civil service, or similar
purposes, like trade, industry, agriculture and like chambers. MIAA is not organized for any of these
purposes. MIAA, a public utility, is organized to operate an international and domestic airport for public use.

Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-owned or
controlled corporation.[10](Emphasis supplied)

Thus, for an entity to be considered as a GOCC, it must either be organized as a stock or non-stock corporation. Two
requisites must concur before one may be classified as a stock corporation, namely: (1) that it has capital stock divided into shares, and
(2) that it is authorized to distribute dividends and allotments of surplus and profits to its stockholders. If only one requisite is present,
it cannot be properly classified as a stock corporation. As for non-stock corporations, they must have members and must not distribute
any part of their income to said members.[11]

On the basis of the parameters set in the MIAA case, the Authority should be classified as an instrumentality of the national
government. As such, it is generally exempt from payment of real property tax, except those portions which have been leased to
private entities.

In the MIAA case, petitioner Philippine Fisheries Development Authority was cited as among the instrumentalities of the
national government. Thus

Some of the national government instrumentalities vested by law with juridical personalities
are: Bangko Sentral ng Pilipinas,Philippine Rice Research Institute, Laguna Lake Development
Authority, Fisheries Development Authority, Bases Conversion Development Authority, Philippine Ports
Authority, Cagayan de Oro Port Authority, San Fernando Port Authority, Cebu Port Authority, and Philippine
National Railways.

Indeed, the Authority is not a GOCC but an instrumentality of the government. The Authority has a capital stock but it is not
divided into shares of stocks.[12] Also, it has no stockholders or voting shares. Hence, it is not a stock corporation. Neither it is a non-
stock corporation because it has no members.

The Authority is actually a national government instrumentality which is defined as an agency of the national government,
not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all
corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. [13] When the law vests in
a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government
instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only
governmental but also corporate powers.

Thus, the Authority which is tasked with the special public function to carry out the governments policy to promote the
development of the countrys fishing industry and improve the efficiency in handling, preserving, marketing, and distribution of fish
and other aquatic products, exercises the governmental powers of eminent domain, [14] and the power to levy fees and charges.[15] At
the same time, the Authority exercises the general corporate powers conferred by laws upon private and government-owned or
controlled corporations.[16]

The MIAA case held[17] that unlike GOCCs, instrumentalities of the national government, like MIAA, are exempt from
local taxes pursuant to Section 133(o) of the Local Government Code. This exemption, however, admits of an exception with respect
to real property taxes. Applying Section 234(a) of the Local Government Code, the Court ruled that when an instrumentality of the
national government grants to a taxable person the beneficial use of a real property owned by the Republic, said instrumentality
becomes liable to pay real property tax. Thus, while MIAA was held to be an instrumentality of the national government which is
generally exempt from local taxes, it was at the same time declared liable to pay real property taxes on the airport lands and buildings
which it leased to private persons. It was held that the real property tax assessments and notices of delinquencies issued by the City
of Pasay to MIAA are void except those pertaining to portions of the airport which are leased to private parties. Pertinent portions of
the decision, reads:

Section 193 of the Local Government Code expressly withdrew the tax exemption of all juridical persons [u]nless
otherwise provided in this Code. Now, Section 133(o) of the Local Government Code expressly provides
otherwise, specifically prohibiting local governments from imposing any kind of tax on national government
instrumentalities.Section 133(o) states:

SEC. 133. Common Limitations on the Taxing Powers of Local Government


Units. Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:

xxxx

(o) Taxes, fees or charges of any kinds on the National Government, its agencies
and instrumentalities, and local government units.

By express mandate of the Local Government Code, local governments cannot impose any kind of tax on
national government instrumentalities like the MIAA. Local governments are devoid of power to tax the national
government, its agencies and instrumentalities. The taxing powers of local governments do not extend to the
national government, its agencies and instrumentalities, [u]nless otherwise provided in this Code as stated in the
saving clause of Section 133. x x x

xxxx

The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) of the Code,
which makes the national government subject to real estate tax when it gives the beneficial use of its real
properties to a taxable entity. Section 234(a) of the Local Government Code provides:

SEC. 234. Exemptions from Real Property Tax The following are exempted from
payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person.
x x x[18] (Emphasis supplied)

WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the Court of
Appeals of 5 October 2001 and 27 September 2002 in CA-G.R. SP No.
66878. We DECLARE the AirportLands and Buildings of the Manila International Airport
Authority EXEMPT from the real estate tax imposed by the City of Paraaque. We declare VOID all the real estate
tax assessments, including the final notices of real estate tax delinquencies, issued by the City of Paraaque on
the Airport Lands and Buildings of the Manila International Airport Authority, except for the portions that
the Manila International AirportAuthority has leased to private parties. We also declare VOID the assailed auction
sale, and all its effects, of the Airport Lands and Buildings of the Manila International Airport Authority.

x x x x.[19] (Emphasis added)

In light of the foregoing, the Authority should be classified as an instrumentality of the national government which is liable to
pay taxes only with respect to the portions of the property, the beneficial use of which were vested in private entities. When local
governments invoke the power to tax on national government instrumentalities, such power is construed strictly against local
governments. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. Any doubt
whether a person, article or activity is taxable is resolved against taxation. This rule applies with greater force when local governments
seek to tax national government instrumentalities.[20]

Thus, the real property tax assessments issued by the City of Iloiloshould be upheld only with respect to the portions leased to
private persons.In case the Authority fails to pay the real property taxes due thereon, said portions cannot be sold at public auction to
satisfy the tax delinquency. In Chavez v. Public Estates Authority it was held that reclaimed lands are lands of the public domain and
cannot, without Congressional fiat, be subject of a sale, public or private, thus: [21]

The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the public
domain, are as follows:

Sec. 59. The lands disposable under this title shall be classified as follows:

(a) Lands reclaimed by the Government by dredging, filling, or other means;

(b) Foreshore;

(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable
lakes or rivers;

(d) Lands not included in any of the foregoing classes.


xxxx

Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to
private parties by lease only and not otherwise, as soon as the President, upon recommendation by the Secretary of
Agriculture, shall declare that the same are not necessary for the public service and are open to disposition under
this chapter. The lands included in class (d) may be disposed of by sale or lease under the provisions of this
Act. (Emphasis supplied)

xxxx

Since then and until now, the only way the government can sell to private parties government reclaimed
and marshy disposable lands of the public domain is for the legislature to pass a law authorizing such sale. CA No.
141 does not authorize the President to reclassify government reclaimed and marshy lands into other non-
agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the only alienable or disposable
lands for non-agricultural purposes that the government could sell to private parties. (Emphasis supplied)

In the same vein, the port built by the State in the Iloilo fishing complex is a property of the public dominion and cannot
therefore be sold at public auction. Article 420 of the Civil Code, provides:

ARTICLE 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed
by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public
service or for the development of the national wealth.

The Iloilo fishing port which was constructed by the State for public use and/or public service falls within the term port in the
aforecited provision. Being a property of public dominion the same cannot be subject to execution or foreclosure sale. [22] In like
manner, the reclaimed land on which the IFPC is built cannot be the object of a private or public sale without Congressional
authorization. Whether there are improvements in the fishing port complex that should not be construed to be embraced within the
term port, involves evidentiary matters that cannot be addressed in the present case. As for now, considering that the Authority is a
national government instrumentality, any doubt on whether the entire IFPC may be levied upon to satisfy the tax delinquency should
be resolved against the City of Iloilo.

In sum, the Court finds that the Authority is an instrumentality of the national government, hence, it is liable to pay real
property taxes assessed by the City of Iloilo on the IFPC only with respect to those portions which are leased to private
entities. Notwithstanding said tax delinquency on the leased portions of the IFPC, the latter or any part thereof, being a property of
public domain, cannot be sold at public auction. This means that the City of Iloilohas to satisfy the tax delinquency through means
other than the sale at public auction of the IFPC.

WHEREFORE, the petition is GRANTED and the June 21, 2005 Decision of the Court of Appeals in CA-G.R. SP No.
81228 is SET ASIDE.The real property tax assessments issued by the City Iloilo on the land and buildings of the Iloilo Fishing Port
Complex, is declared VOID EXCEPTthose pertaining to the portions leased to private parties. The City of Iloilo is DIRECTED to
refrain from levying on the Iloilo Fishing Port Complex to satisfy the payment of the real property tax delinquency.

No costs.

SO ORDERED.
EN BANC

G.R. No. L-15829 December 4, 1967

ROMAN R. SANTOS, petitioner-appellee,


vs.
HON. FLORENCIO MORENO, as Secretary of Public Works and Communications and JULIAN C.
CARGULLO, respondents-appellants.

Gil R. Carlos and Associates for petitioner-appellee.


Office of the Solicitor General for respondents-appellants.

BENGZON, J.P., J.:

THE APPEAL

The Honorable Secretary of Public Works & Communications appeals from the decision of the Court of First Instance of Manila
declaring of private ownership certain creeks situated in barrio San Esteban, Macabebe, Pampanga.

THE BACKGROUND

The Zobel family of Spain formerly owned vast track of marshland in the municipality of Macabebe, Pampanga province. Called
Hacienda San Esteban, it was administered and managed by the Ayala y Cia. From the year 1860 to about the year 1924 Ayala y Cia.,
devoted the hacienda to the planting and cultivation of nipa palms from which it gathered nipa sap or "tuba." It operated a distillery
plant in barrio San Esteban to turn nipa tuba into potable alcohol which was in turn manufactured into liquor.

Accessibility through the nipa palms deep into the hacienda posed as a problem. Ayala y Cia., therefore dug canals leading towards
the hacienda's interior where most of them interlinked with each other. The canals facilitated the gathering of tuba and the guarding
and patrolling of the hacienda by security guards called "arundines." By the gradual process of erosion these canals acquired the
characteristics and dimensions of rivers.

In 1924 Ayala y Cia shifted from the business of alcohol production to bangus culture. It converted Hacienda San Esteban from a
forest of nipa groves to a web of fishponds. To do so, it cut down the nipa palm, constructed dikes and closed the canals criss-crossing
the hacienda.

Sometime in 1925 or 1926 Ayala y Cia., sold a portion of Hacienda San Esteban to Roman Santos who also transformed the swamp
land into a fishpond. In so doing, he closed and built dikes across Sapang Malauling Maragul, Quiñorang Silab, Pepangebunan,
Bulacus, Nigui and Nasi.

The closing of the man-made canals in Hacienda San Esteban drew complaints from residents of the surrounding communities.
Claiming that the closing of the canals caused floods during the rainy season, and that it deprived them of their means of
transportation and fishing grounds, said residents demanded re-opening of those canals. Subsequently, Mayor Lazaro Yambao of
Macabebe, accompanied by policemen and some residents went to Hacienda San Esteban and opened the closure dikes at Sapang
Malauling Maragul Nigui and Quiñorang Silab. Whereupon, Roman Santos filed Civil Case No. 4488 in the Court of First Instance of
Pampanga which preliminarily enjoined Mayor Yambao and others from demolishing the dikes across the canals. The municipal
officials of Macabebe countered by filing a complaint (docketed as Civil Case No. 4527) in the same court. The Pampanga Court of
First Instance rendered judgment in both cases against Roman Santos who immediately elevated the case to the Supreme Court.

In the meantime, the Secretary of Commerce and Communications1 conducted his own investigation and found that the
aforementioned six streams closed by Roman Santos were natural, floatable and navigable and were utilized by the public for
transportation since time immemorial. He consequently ordered Roman Santos on November 3, 1930 to demolish the dikes across said
six streams. However, on May 8, 1931 the said official revoked his decision of November 3, 1930 and declared the streams in question
privately owned because they were artificially constructed. Subsequently, upon authority granted under Act 3982 the Secretary of
Commerce and Communications entered into a contract with Roman Santos whereby the former recognized the private ownership of
Sapang Malauling Maragul, Quiñorang Silab, Pepangebunan, Bulacus, Nigui and Nasi and the latter turned over for public use two
artificial canals and bound himself to maintain them in navigable state. The Provincial Board of Pampanga and the municipal councils
of Macabebe and Masantol objected to the contract. However, the Secretary of Justice, in his opinion dated March 6, 1934, upheld its
legality. Roman Santos withdraw his appeals in the Supreme Court.
With respect to the portion of Hacienda San Esteban still owned by the Zobel family, the municipal authorities of Macabebe filed in
1930 an administrative complaint, in the Bureau of Public Works praying for the opening of the dikes and dams across certain streams
in Hacienda San Esteban. Whereupon, the district engineer of Pampanga and a representative of the Bureau of Public Works
conducted investigations. In the meantime, the Attorney General, upon a query from the Secretary of Commerce and
Communications, rendered an opinion dated October 11, 1930 sustaining the latter's power to declare streams as publicly owned under
Sec. 4 of Act 2152, as amended by Act 3208.

On September 29, 1930 the investigator of the Bureau of Public Works, Eliseo Panopio, submitted his report recommending the
removal of the dikes and dams in question. And on the basis of said report, the Secretary of Commerce and Communications rendered
his decision on November 3, 1930 ordering Ayala y Cia., to demolish the dikes and dams across the streams named therein situated in
Hacienda San Esteban. Ayala y Cia., moved for reconsideration, questioning the power of the Secretary of Commerce and
Communications to order the demolition of said dikes.

Days before the Secretary of Commerce and Communications rendered his aforementioned decision, Ayala y Cia., thru counsel, made
representations with the Director of Public Works for a compromise agreement. In its letter dated October 11, 1930, Ayala y Cia.,
offered to admit public ownership of the following creeks:

Antipolo, Batasan Teracan, Biuas or Batasan, Capiz, Carbon, Cutut, Dalayap, Enrique, Iba, Inaun, Margarita, Malauli or
Budbud, Matalaba Palapat, Palipit Maisao, Panlovenas, Panquitan, Quinapati, Quiñorang, Bubong or Malauli Malati, Salop,
Sinubli and Vitas.

provided the rest of the streams were declared private. Acting on said offer, the Director of Public Works instructed the surveyor in his
office, Eliseo Panopio, to proceed to Pampanga and conduct another investigation.

On January 23, 1931 Panopio submitted his report to the Director of Public Works recommending that some streams enumerated
therein be declared public and some private on the ground that they were originally dug by the hacienda owners. The private streams
were:

Agape, Atlong, Cruz, Balanga, Batasan, Batasan Matlaue, Balibago, Baliti, Bato, Buengco Malati, Bungalin, Bungo Malati,
Bungo Maragui, Buta-buta, Camastiles, Catlu, Cauayan or Biabas, Cela, Dampalit, Danlimpu, Dilinquente, Fabian, Laguzan,
Lalap Maburac, Mabutol, Macabacle, Maragul or Macanduli, Macabacle or Mababo, Maisac, Malande, Malati, Magasawa,
Maniup, Manulit, Mapanlao, Maisac, Maragul Mariablus Malate, Masamaral, Mitulid, Nasi, Nigui or Bulacus, Palipit,
Maragul, Pangebonan, Paumbong, Pasco or Culali, Pilapil, Pinac Malati, Pinac, Maragul or Macabacle, Quiñorang Silab or
Malauli Maragul, Raymundo, Salamin, Salop Maisac, Salop Maragul, Sermon and Sinca or Mabulog.

He therefore recommended revocation of the decision already mentioned above, dated November 3, 1930 of the Secretary of
Commerce and Communications ordering the demolition of the dikes closing Malauling Maragul, Quiñorang, Silab, Pepangebonan,
Nigui, Bulacus, Nasi, and Pinac. On February 13, 1931 the Director of Public Works concurred in Panopio's report and forwarded the
same the Secretary of Commerce and Communications.

On February 25, 1935 the municipality of Macabebe and the Zobel family executed an agreement whereby they recognized the nature
of the streams mentioned in Panopio's report as public or private, depending on the findings in said report. This agreement was
approved by the Secretary of Public Works and Communications on February 27, 1935 and confirmed the next day by the municipal
council of Macabebe under Resolution No. 36.

A few months later, that is, on June 12, 1935, the then Secretary of Justice issued an opinion holding that the contract executed by the
Zobel family and the municipality of Macabebe has no validity for two reasons, namely, (1) the streams although originally dug by
Ayala y Cia., lost their private nature by prescription inasmuch as the public was allowed to use them for navigation and fishing, citing
Mercado vs. Municipality of Macabebe, 59 Phil. 592; and (2) at the time the Secretary of Commerce and Communications approved
the said contract, he had no more power so to do, because such power under Sec. 2 of Act 2152 was revoked by the amending Act
4175 which took effect on December 7, 1934.

Despite the above ruling of the Secretary of Justice, the streams in question remained closed.

In 1939 administrative investigations were again conducted by various agencies of the Executive branch of our government
culminating in an order of President Manuel Quezon immediately before the national elections in 1941 requiring the opening of
Sapang Macanduling, Maragul Macabacle, Balbaro and Cansusu. Said streams were again closed in 1942 allegedly upon order of
President Quezon.

THE CASE
Roman Santos acquired in 1940 from the Zobel family a larger portion of Hacienda San Esteban wherein are located 25 streams which
were closed by Ayala y Cia., and are now the subject matter in the instant controversy.

Eighteen years later, that is in 1958, Congress enacted Republic Act No. 20562 following a congressional inquiry which was kindled
by a speech delivered by Senator Rogelio de la Rosa in the Senate. On August 15, 1958 Senator de la Rosa requested in writing the
Secretary of Public Works and communications to proceed in pursuance of Republic Act No. 2056 against fishpond owners in the
province of Pampanga who have closed rivers and appropriated them as fishponds without color of title. On the same day, Benigno
Musni and other residents in the vicinity of Hacienda San Esteban petitioned the Secretary of Public Works and Communications to
open the following streams:

Balbaro, Batasan Matua, Bunga, Cansusu, Macabacle, Macanduling, Maragul, Mariablus, Malate, Matalabang, Maisac,
Nigui, Quiñorang Silab, Sapang Maragul and Sepung Bato.

Thereupon, the Secretary of Public Works and Communications instructed Julian C. Cargullo to conduct an investigation on the above
named streams.

On October 20, 1958 Musni and his co-petitioners amended their petition to include other streams. The amended petition therefore
covered the following streams:

Balbaro, Balili, Banawa, Batasan Matua Bato, Bengco, Bunga, Buta-buta, Camastiles, Cansusu, Cela, Don Timpo,
Mabalanga, Mabutol, Macabacle, Macabacle qng. Iba, Macanduling, Maragul, Malauli, Magasawa, Mariablus Malate
Masamaral, Matalabang Maisa, Mariablus,3 Nigui, Pita, Quiñorang, Silab, Sapang Maragul, Sepung Bato, Sinag and
Tumbong.

On March 2, 4, 10, 30 and 31, and April 1, 1959, the Secretary of Public Works and Communications rendered his decisions ordering
the opening and restoration of the channel of all the streams in controversy except Sapang Malauling, Maragul, Quiñorang, Silab,
Nigui Pepangebonan, Nasi and Bulacus, within 30 days on the ground that said streams belong to the public domain.

On April 29, 1959, that is, after receipt of the Secretary's decision dated March 4, 1959, Roman Santos filed a motion with the Court
of First Instance of Man for junction against the Secretary of Public Works and Communications and Julian C. Cargullo. As prayed
for preliminary injunction was granted on May 8, 1959. The Secretary of Public Work and Communications answered and alleged as
defense that venue was improperly laid; that Roman Santos failed to exhaust administrative remedies; that the contract between Ayala
y Cia., and the Municipality of Macabebe is null and void; and, that Section 39 of Act 496 excludes public streams from the operation
of the Torrens System.

On April 29 and June 12, 1969, Roman Santos received the decision of the Secretary of Public Works and Communications dated
March 10 and March 30, March 31, and April 1, 1959. Consequently, on June 24, 1959 he asked the court to cite in contempt
Secretary Florendo Moreno, Undersecretary M.D. Bautista and Julian Cargullo for issuing and serving upon him the said decisions
despite the existence of the preliminary injunction. The Solicitor General opposed the motion alleging that the decisions in question
had long been issued when the petition for injunction was filed, that they were received after preliminary injunction issued because
they were transmitted through the District Engineer of Pampanga to Roman Santos; that their issuance was for Roman Santos'
information and guidance; and, that the motion did not allege that respondents took steps to enforce the decision. Acting upon said
motion, on July 17, 1959, the trial court considered unsatisfactory the explanation of the Solicitor General but ruled that Secretary
Florencio Moreno, Undersecretary M.D. Bautista and Julian Cargullo acted in good faith. Hence, they were merely "admonished to
desist from any and further action in this case, observe the preliminary injunction issued by this Court, with the stern warning,
however, that a repetition of the acts complained of shall be dealt with severely."

On July 18, 1959 the trial court declared all the streams under litigation private, and rendered the following judgment:

The Writ of preliminary injunction restraining the respondent Secretary of Public Works & Communications from enforcing
the decisions of March 2 And 4, 1959 and all other similar decisions is hereby made permanent.

The Secretary of Public Works and Communication and Julian Cargullo appealed to this Court from the order of July 17, 1959 issued
in connection with Roman Santos' motion for contempt and from the decision of the lower court on the merits of the case.

ISSUES

The issues are: (1) Did Roman Santos exhaust administrative remedies? (2) Was venue properly laid? (3) Did the lower court err in
conducting a trial de novo of the case and in admitting evidence not presented during the administrative proceeding? (4) Do the
streams involved in this case belong to the public domain or to the owner of Hacienda San Esteban according to law and the evidence
submitted to the Department of Public Works and Communications?

DISCUSSION OF THE ISSUES

1. Respondents maintain that Roman Santos resorted to the courts without first exhausting administrative remedies available to him,
namely, (a) motion for reconsideration of the decisions of the Secretary of Public Works and Communications; and, (b) appeal to the
President of the Philippines.

Whether a litigant, in exhausting available administrative remedies, need move for the reconsideration of an administrative decision
before he can turn to the courts for relief, would largely depend upon the pertinent law, 4 the rules of procedure and the usual practice
followed in a particular office. 5

Republic Act No. 2056 does not require the filing of a motion for reconsideration as a condition precedent to judicial relief. From the
context of the law, the intention of the legislators to forego a motion for reconsideration manifests itself clearly.1awphil.net Republic
Act No. 2056 underscores the urgency and summary nature of the proceedings authorized thereunder. Thus in Section 2 thereof the
Secretary of Public Works and Communications under pain of criminal liability is duty bound to terminate the proceedings and render
his decision within a period not exceeding 90 days from the filing of the complaint. Under the same section, the party respondent
concerned is given not than 30 days within which to comply with the decision of the Secretary of Public Works and Communications,
otherwise the removal of the dams would be done by the Government at the expense of said party. Congress has precisely provided for
a speedy and a most expeditious proceeding for the removal of illegal obstructions to rivers and on the basis of such a provision it
would be preposterous to conclude that it had in mind to require a party to file a motion for reconsideration — an additional
proceeding which would certainly lengthen the time towards the final settlement of existing controversies. The logical conclusion is
that Congress intended the decision of the Secretary of Public Works and Communications to be final and executory subject to a
timely review by the courts without going through formal and time consuming preliminaries.

Moreover, the issues raised during the administrative proceedings of this case are the same ones submitted to court for resolution. No
new matter was introduced during the proceeding in the court below which the Secretary of Public Works and Communications had
no opportunity to correct under his authority.

Furthermore, Roman Santos assailed the constitutionality of Republic Act No. 2056 and the jurisdiction of the Secretary of Public
Works and Communications to order the demolition of dams across rivers or streams. Those questions are not within the competence
of said Secretary to decide upon a motion for reconsideration.itc-alf They are purely legal questions, not administrative in nature, and
should properly be aired before a competent court as was rightly done by petitioner Roman Santos .

At any rate, there is no showing in the records of this case that the Secretary of Public Works and Communications adopted rule of
procedure in investigations authorized under Republic Act No. 2056 which require a party litigant to file a motion for the
reconsideration of the Secretary's decision before he can appeal to the courts. Roman Santos however stated in his brief that the
practice is not to entertain motions for reconsideration for the reason that Republic Act No. 2056 does not expressly or impliedly allow
the Secretary to grant the same. Roman Santos' statement is supported by Opinion No. 61, Series of 1959, dated April 14, 1959 of the
Secretary of Justice.

As to the failure of Roman Santos to appeal from the decision of the Secretary of Public Works and Communications to the President
of the Philippines, suffice it to state that such appeal could be dispensed with because said Secretary is the alter ego of the
President.itc-alf The actions of the former are presumed to have the implied sanction of the latter. 6

2. It is contended that if this case were considered as an ordinary civil action, venue was improperly laid when the same was instituted
in the Court of First Instance of Manila for the reason that the case affects the title of a real property. In fine, the proposition is that
since the controversy dwells on the ownership of or title to the streams located in Hacienda San Esteban, the case is real action which,
pursuant to Sec. 3 of Rule 5 of the Rules of Court should have been filed in the Court of First Instance of Pampanga.

The mere fact that the resolution of the controversy in this case would wholly rest on the ownership of the streams involved herein
would not necessarily classify it as a real action. The purpose of this suit is to review the decision of the Secretary of Public Works
and Communications to enjoin him from enforcing them and to prevent him from making and issuing similar decisions concerning the
stream in Hacienda San Esteban. The acts of the Secretary of Public Works and Communications are the object of the litigation, that
is, petitioner Roman Santos seeks to control them, hence, the suit ought to be filed in the Court of First Instance whose territorial
jurisdiction encompasses the place where the respondent Secretary is found or is holding office. For the rule is that outside its
territorial limits, the court has no power to enforce its order. 7
Section 3 of Rule 5 of the Rules of Court does not apply to determine venue of this action. Applicable is Sec. 1 the same rule, which
states:

Sec. 1. General rule. — Civil actions in Courts of First Instance may be commenced and tried where the defendant any of the
defendants residents or may be found or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff.

Accordingly, the Petition for injunction who correctly filed in the Court of First Instance of Manila. Respondents Secretary of Public
Works and Communications and Julian Cargullo are found and hold office in the City of Manila.

3. The lower court tried this case de novo. Against this procedure respondents objected and maintained that the action, although
captioned as an injunction is really a petition for certiorari to review the decision of the Secretary of Public Works and
Communications. Therefore they now contend that the court should have confined itself to reviewing the decisions of the respondent
Secretary of Public Works and Communications only on the basis of the evidence presented in the administrative proceedings. On the
other hand, Roman Santos now, submits that the action is a proceeding independent and distinct from the administrative investigation;
that, accordingly, the lower court correctly acted in trying the case anew and rendering judgment upon evidence adduced during the
trial.

Whether the action instituted in the Court of First Instance be for mandamus, injunction or certiorari is not very material. In reviewing
the decision of the Secretary of Public Works and Communications, the Court of First Instance shall confine its inquiry to the evidence
presented during, the administrative proceedings. Evidence not presented therein shall not be admitted, and considered by the trial
court. As aptly by this Court speaking through Mr. Justice J.B.L. Reyes, in a similar case:

The findings of the Secretary can not be enervated by new evidence not laid before him, for that would be tantamount to
holding a new investigation, and to substitute for the discretion and judgment of the Secretary the discretion and judgment of
the court, to whom the statute had not entrusted the case. It is immaterial that the present action should be one for prohibition
or injunction and not one for certiorari; in either event the case must be resolved upon the evidence submitted to the
Secretary, since a judicial review of executive decisions does not import a trial de novo, but only an ascertainment of whether
the "executive findings are not in violation of the Constitution or of the laws, and are free from fraud or imposition, and
whether they find reasonable support in the evidence. . . . 8

The case at bar, no matter what the parties call it, is in reality a review of several administrative decisions of the Secretary of Public
Works and Communications. Being so, it was error for the lower court to conduct a trial de novo. Accordingly, for purposes of this
review, only the evidence presented and admitted in the administrative investigation will be considered in our determination of
whether on the basis thereof the decisions of the Secretary of Public Works and Communications were correct.

4. We come to the question whether the streams involved in this case belong to the public domain or to the owner of Hacienda San
Esteban. If said streams are public, then Republic Act 2056 applies, if private, then the Secretary of Public Works and
Communications cannot order demolition of the dikes and dams across them pursuant to his authority granted by said law.

First, we come to the question of the constitutionality of Republic Act No. 2056. The lower court held Republic Act No. 2056
constitutional but ruled that it was applied by respondents unconstitutionally. That is, it held that Roman Santos was being deprived of
his property without due process of law, for the dikes of his fishponds were ordered demolished through an administrative, instead of a
judicial, proceeding. This conclusion and rationalization of the lower court amount in effect to declaring the law unconstitutional,
stated inversely. Note that the law provides for an expeditious administrative process to determine whether or not a dam or dike should
be declare a public nuisance and ordered demolished. And to say that such an administrative process, when put to operation, is
unconstitutional is tantamount to saying that the law itself violates the Constitution. In Lovina vs. Moreno, supra, We held said law
constitutional. We see no reason here to hold otherwise.

Discussing now the applicability of Republic Act 2056, the same applies to two types of bodies of water, namely (1)public
navigable rivers, streams, coastal waters, or waterways and (b) areas declared as communal fishing grounds, as provided for in
Section 1 thereof:

Sec. 1. . . . the construction or building of dams, dikes or any other works which encroaches into any public navigable river,
stream, coastal waters and any other navigable public waters or waterways as well as the construction or building of dams,
dikes or any other works in areas declared as communal fishing grounds, shall be ordered removed as public nuisances or as
prohibited constructions as herein provided: . . .

We are not concerned with communal fishing grounds because the streams here involved have not been so declared, but with public
navigable streams. The question therefore is: Are the streams in Hacienda San Esteban which are mentioned in the petition of Benigno
Musni and others, public and navigable?
Respondents contend that said streams are public on the following grounds:

(1) Hacienda San Esteban was formerly a marshland and being so, it is not susceptible to appropriation. It therefore belongs to the
State. Respondents rely on Montano vs. Insular Government, 12 Phil. 572.

(2) The streams in question are natural streams. They are tributaries of public streams. Cited are the cases of Samson vs. Dionisio, et
al., 11 Phil. 538 and Bautista vs. Alarcon, 23 Phil. 636.

(3) The streams have for their source public rivers, therefore they cannot be classified as canals.

(4) Assuming the streams were artificially made by Ayala y Cia., said titleholder lost ownership over them by prescription when it
allowed the public to use them for navigation for a long time. Respondents cite Mercado vs. Municipal President of Macabebe, 59
Phil. 592.

(5) Assuming the streams in question are not mentioned as public in the certificates of title held by Ayala y Cia., over Hacienda San
Esteban, still they cannot be considered as privately owned for Section 39 of Act 496 expressly excepts public streams from private
ownership.

(6) The Panopio Report, which found the streams in question of private ownership was nullified by the Secretary of Justice in his
opinion dated June 12, 1935.1awphil.net And, the contract between Ayala y Cia., and the Secretary of Commerce and
Communications agreeing on the ownership of the streams in question is ultra vires.

The doctrine in Montano vs. Insular Government, supra, that a marshland which is inundated by the rise of the tides belongs to the
State and is not susceptible to appropriation by occupation — has no application here inasmuch as in said case the land subject matter
of the litigation was not yet titled and precisely Isabelo Montano sought title thereon on the strength of ten years' occupation pursuant
to paragraph 6, section 54 of Act 926 of the Philippine Commission. Whereas, the subject matter in this case — Hacienda San Esteban
— is titled land and private ownership thereof by Ayala y Cia., has been recognized by the King of Spain and later by the Philippine
Government when the same was registered under Act 496.

Respondents further cite Bautista vs. Alarcon, 23 Phil. 631, where the plaintiff sought injunction against the defendants who allegedly
constructed a dam across a public canal which conveyed water from the Obando River to fishponds belonging to several persons. The
canal was situated within a public land. In sustaining the injunction granted by the Court of First Instance, this Court said:

No private persons has right to usurp possession of a watercourse, branch of a river, or lake of the public domain and
use, unless it shall have been proved that he constructed the same within in property of his exclusive ownership, and such
usurpation constitutes a violation of the legal provisions which explicity exclude such waterways from the exclusive use or
possession of a private party. (Emphasis supplied)

As indicated in the above-cited case, a private person may take possession of a watercourse if he constructed the same within his
property.itc-alf This puts Us into inquiry whether the streams in question are natural or artificial. In so doing, We shall examine only
the evidence presented before the Department of Public Works and Communications and disregard that which was presented for the
first time before the lower court, following our ruling in Lovina vs. Moreno, supra.

(1) Sapang Macanduling Maragul or Macanduli is presently enclosed in Fishpond No. 12 of Roman Santos. Its banks cannot anymore
be seen but some traces of them could be noted by a row of isolated nipa palms. Its water is subject to the rise and fall of the tides
coming from Guagua and Antipolo Rivers and it is navigable by light watercrafts. Its inlet is Antipolo River; another dike at its outlet
along the Palapat River.9 It is closed by four dikes: One dike at its inlet along the Antipolo River; another dike at its cutlet along the
Palatpat River; and, two dikes in between. Then exist channel at the Palapat River where the fishpond gate lies has been filled up with
dredge spoils from the Pampanga River Control Project.

(2) Sapang Macabacle is found in Fishpond No. 13. Its banks are still evident. This stream is about 30 meters wide, two meters deep
and one and one-half to two kilometers long. Its source is Rio Cansusu. Like Macanduli, its channel is obstructed by four dikes. One
of them was constructed by the engineers of the Pampanga River Control Project.

(3) Sapang Balbaro which is found in Fishpond No. 13, runs from Canal Enrique near Rio Cansusu to Sapang Macabacle, a distance
of about one-half kilometer. It is passable by banca. The closures of this stream consist of two dikes located at each ends on Canal
Enrique and Sapang Macabacle.
(4) Sapang Cansusu is a continuation of the Cansusu River. The Cansusu River opens at the Guagua River and allegedly ends at the
Palanas River in front of Barrio San Esteban. At a point near the mouth of Sapang Balbaro, the owners of Hacienda San Esteban built
a canal leading straight to one end of Barrio San Esteban. They called this canal "Canal Enrique." And at the point where Canal
Enrique joins Cansusu they built a dike across Cansusu, thus closing this very portion of the river which extends up to Palanas River
where they built another closure dike. This closed portion, called "Sapang Cansusu," is now part of Fishpond No. 1.

Sapang Cansusu is half a kilometer long and navigable by banca.

Appellant's witnesses, Beligno Musni, 41, Macario Quiambao, 96, Roman Manansala, 55 and Castor Quiambao, 76, all residents of
Barrio San Esteban, testified that prior to their closure, Sapang Macaduli, Macabacle, Balbaro and Cansusu were used as passageway
and as fishing grounds; that people transported through them tuba, 10 wood and sasa,11 and that the tuba was brought to the distillery in
Barrio San Esteban. Macario Quiambao testified also that said four streams "were created by God for the town people"; and that if any
digging was done it was only to deepen the shallow parts to make passage easier. According to witness Anastacio Quiambao said
streams were navigable, even Yangco's ship "Cababayan" could pass through. Simplicio Quiambao, 36, and Marcelino Ocampo, 55,
stated on direct examination that before closure of the above named four streams, people from the surrounding towns of Guagua,
Bacolor, Macabebe, Masantol and Sexmoan fished and navigated in them.

Against the aforementioned, testimonial evidence Roman Santos presented the testimony of Nicanor Donarber, 80, Mariano Guinto,
71, and his own. Donarber, who started working as an arundin12 testified that Ayala y Cia., dug Sapang Macanduli, Balbaro and
Macabacle; that he worked also in the construction together with other workers; and, that as an overseer he inspected their work.
Mariano Guinto testified that he worked for Ayala y Cia., as a tuba gatherer; that in order to reach remote nipa groves by banca, they
made canals; and, that he was one of the who worked in the construction of those canals. Roman Santos also testified that Sapang
Macanduli, Macabacle, Balbaro and Cansusu are artificial canals excavated as far back as 1850 and due to erosion coupled with the
spongy nature of the land, they acquired the proportion of rivers; that he joined Sapang Balbaro to Sapang Macabacle because the
former was a dying canal; and that Cansusu River is different from Sapang Cansusu Witness Domingo Yumang likewise testified that
Sapang Balbaro man-made.

We observe that witnesses positively stated that Sapang Macanduli, Macabacle and Balbaro were made by the owners of Hacienda
San Esteban. With respect to Sapang Cansusu none, except Roman Santos himself, testified that Sapang Cansusu is an artificial canal.
It is not one of the streams found and recommended to be declared private in the Panopio Report. Sapang Cansusu follows a winding
course different and, distinct from that of a canal such as that of Canal Enrique which is straight. Moreover, Sapang Cansusu is a part
of Cansusu River, admittedly a public stream.

(5) Sapang Maragul, Mabalanga and Don Timpo are all part of Fishpond No. 1. Maragul is 600 meters long and 30 to 35 meters wide.
Mabalanga is 250 meters in length and 50 meters in width. Don Timpo is 220 meters long and 20 meters wide. All of them are
navigable by banca. Maragul and Mabalanga open at Guagua River and join each other inside the hacienda to form one single stream,
Sapang Don Timpo, which leads to the Matalaba River. Maragul, Mabalanga and Don Timpo, formerly ended inside the hacienda but
later Mabalanga was connected to Don Timpo. Maragul was connected to Mabalanga and Sapang Cela was extended to join Maragul.

Witnesses Nicanor Donarber, Mariano Ocampo and Mariano Guinto testified that Maragul, Mabalanga and Don Timpo are artificial
canals dug by Ayala y Cia., and that they (Donarber and Mariano Guinto) worked in said excavations.13 Witness Mariano Guinto
clarified that Don Timpo was originally dug but Mabalanga and Maragul were formerly small non-navigable streams which were
deepened into artificial navigable canals by Ayala y Cia.14

Exhibit F, which is a map showing the streams and rivers in Hacienda San Esteban, shows that Maragul, Mabalanga and Don Timpo
are more or less straight. From the big rivers (Guagua and Matalaba Rivers) they lead deep into the interior of the hacienda, thus
confirming the testimony that they were built precisely as a means of reaching the interior of the estate by banca. The weight of
evidence, therefore, indicate that said streams are manmade.

(6) Sapang Bunga, now part of Bunga fishpond, gets its water from Sapanga Iba and empties at Sta. Cruz River. It is about 300-400
meters long, 5-6 meters wide and 1-1.60 meters deep.

(7) Sapang Batu is found in Capiz Fishpond. About 300-400 meters long, 4-5 meters wide and 1.50-2.20 meters deep, it starts at Capiz
River and ends at Malauling Maragul. From Capiz River until it intersects Sapang Nigui the stream is called Sapang Batu
Commencing from Sapang Nigui and up to its end at Sapang Malauling Maragul, the stream is called Sapang Batu. Commencing from
Sapang Nigui and up to its end at Sapang Malauling Maragul, the stream is called Sepong Batu. Sepong Batu is not among those
streams declared in the Panopio Report as private.

(8) Sapang Banawa has one end at Palanas River and the other at Sapang Macabacle. It is about 300 meters long, 3-4 meters wide and
1.30-1.40 meters deep. Its whole length is within Fishpond No. 13 of Roman Santos.
(9) Sapang Mabutol is a dead-end stream, that is, it ends inside the hacienda. It opens along Guagua river. Since its closure, it has
become part of Fishpond No. 1.

(10) Sapang Buta-buta, like Mabutol, dies inside the hacienda. It connects with Cansusu River and is about 100 meters long, 3-4
meters wide and 1.2-1.5 meters deep. It is now a part of Fishpond No. 13.

(11) Sapang Masamaral, another stream which opens at Cansusu River And ends inside the hacienda., is 100-200 meters long, 3-4
meters wide and 1.50-2 meters deep. It now forms part of Fishpond No. 13.

The uncontradicted testimony of Marcos Guinto is that Sapang Bunga, Batu, Sepong Batu, Banawa, Mabutol, Buta-Buta and
Masamaral were constructed by Ayala y Cia., to gain access to the nipa the, interior of the hacienda. This testimony tallies with the
findings in the Panopio Report which will be discussed herein later. The evidence adduced in the administrative proceeding conducted
before a representative of the Secretary of Public Works and Communications supports the contention that said streams are merely
canals built by Ayala y Cia., for easy passage into the hinterland of its hacienda.

(12) Sapang Magasawa consists of two streams running parallel to each other commencing from Matalaba River and terminating at
Mariablus Rivers. About 600-700 meters long, 4-5 meters wide and 1.5-2 meters deep, these two streams are navigable by banca.
They are enclosed within Fishpond No. 1.

(13) Sapang Mariablus Malate, about 3-4 meters wide and 250 meters long, is another stream that ends inside the hacienda and gets
its water from Guagua River. It is no part of Fishpond No. 1.

(14) Sapang Matalabang Malate or Maisac opens at Guagua River and ends at Sapang Cela and Matalabang Maragul. This stream,
which is about 800 meters long and 18 meters wide, forms part of Fishpond No. 1 of Roman Santos.

(15) Sapang Batasan Matua about 600 meters long, three meters wide and .80 meters deep at low tide and 1.90 meters deep at high
tide crosses the hacienda from Mariablus River to Cansusu River. It is at present a part of Fishpond No. 1-A.

(16) Sapang Camastiles, a dead end stream of about 200 to 300 meters in length, gets its water from Biuas River. It is within Fishpond
No. 1.

(17) Sapang Cela is within Fishpond No. 1. Its whole length situated inside the hacienda, it opens at Sapang Matalabang Malate or
Maisac and ends at Sapang Malungkot. Latter Cela was extended to connect with Sapang Maragul. It is about 200 meters long and
four meters wide.

Mariano Guinto, 71, testified without contradiction that Sapang Mariablus Malate and Matalabang Malate were formerly small and
non-navigable streams which were dug by Ayala y Cia.,15 while Batasan Matua Camastiles, Magasawa and Cela are original canals
made by Ayala y Cia.,16 that he was one of those who worked in the construction of said canals; and that it took years to construct
them. All these streams were recommended in the Panopio Report for declaration as private streams.

(18) Sapang Sinag, 200 meters long, four to five meters wide, one meter and one and one-half meters deep at low and high tides,
respectively, gets its water from Cutod River and leads inside the hacienda to connect with Sapang Atlong Cruz, a stream declared
private in the Panopio Report. It is now inside Fishpond No. 14.

(19) Sapang Balili, also found inside Fishpond No. 14, is about 200 meters long, three to four meters wide and one meter deep at low
tide. From its mouth at Cutod River it drifts into the interior of the hacienda and joins Sapang Bengco. 17

(20) Sapang Pita is within Fishpond Capiz. It takes water from Capiz River but dies 250 meters inside the hacienda. It is about four to
five meters wide, and one meter deep at low tide and 1.50 meters deep at high tide.

(21) Sapang Tumbong, situated inside Capiz Fishpond, derives its water from Sapang Quiñorang Silab, a stream declared private by
the Secretary of Public Works and Communications, and ends inside the hacienda.18

(22) Sapang Bengco is found within Fishpond No. 14.1awphil.net Two hundred meters long, five meters wide, and one meter deep at
low tide and 1.50 meters deep at high tide it gets water from Sapang Biabas and connects with Baliling Maisac.19

According to Marcos Guinto, a witness for Roman Santos, Sapang Sinag, Balili, Pita Tumbong and Bengco were excavated a long
time ago by Ayala y Cia.; and that they have a winding course because when they were made the workers followed the location of the
nipa palms.20 On the other hand, Marcelo Quiambao, testified that Sapang Tumbong is a natural stream and that the reason he said so
is because the stream was already there as far back as 1910 when he reached the age of ten. No other oral evidence was presented to
contradict the testimony of Marcos Guinto that the said five streams were artificially made by Ayala y Cia.

To show that the streams involved in this case were used exclusively by the hacienda personnel and occasionally by members of their
families, Roman Santos introduced the testimony of Eliseo Panopio, Nicanor Donarber, Blas Gaddi, Mariano Ocampo, Mariano
Guinto, Alejandro Manansala and himself. The witnesses categorically testified that the public was prohibited from using the streams
as a means of navigation and that the prohibition was enforced by guards called arundines.

One and all, the evidence, oral and documentary, presented by Roman Santos in the administrative proceedings supports the
conclusion of the lower court that the streams involved in this case were originally man-made canals constructed by the former owners
of Hacienda San Esteban and that said streams were not held open for public use. This same conclusion was reached 27 years earlier
by an investigator of the Bureau of Public Works whose report and recommendations were approved by the Director of Public Works
and submitted to the Secretary of Commerce and Communications.

As stated, pursuant to Act 2152, as amended by Act 3208, the Bureau of Public Works and the Department of Commerce and
Communications locked into and settled the question of whether or not the streams situated within Hacienda San Esteban are publicly
or privately owned. We refer to the so-called Panopio Report which contains the findings and recommendations of Eliseo Panopio, a
surveyor in the Bureau of Public Works, who was designated to conduct formal hearings and investigation. Said report found the
following streams, among others, of private ownership:

Camastiles, Cela Balanga, Bato, Batasan, Bengco, Buta-buta, Don Timpo, Mabutol, Macabacle, Macanduli, Malande Malate
(Bunga), Magasawa, Masamaral, Maragul, Mariablus Malate, Matalaba Malate, Nasi, Nigui, Pangebonan and Quiñorang
Silab

on the ground that —

The preponderance of the probatory facts, . . ., shows that the rivers, creeks, esteros and canals listed in (1) have originally
been constructed, deepened, widened, and lengthened by the owners of the Hacienda San Esteban. That they have been used
as means of communication from one place to another and to the inner most of the nipales, exclusively for the employees,
colonos and laborers of the said Hacienda San Esteban. That they have never been used by the public for navigation without
the express consent of the owners of the said Hacienda.21

Bases for the above-quoted conclusion were "the reliable informations gathered from old residents of the locality, from outsiders, the
sworn statements obtained from different persons not interested in this case and the comparison of the three plans prepared in 1880,
1906 and 1930.22 The persons referred to are Martin Isip, Hilarion Lobo, Emigdio Ignacio, Castor Quiambao, Matias Sunga facio
Cruz, Inocencio Dayrit, Gabriel Manansala, Lope Quiambao, Marcelino Bustos and Juan Lara .

On February 13, 1931 the Director of Public Works transmitted the Panopio Report to the Secretary of Commerce and
Communications recommending approval thereof. Later, on February 27, 1935, Secretary of Public Works and Communications De
las Alas approved the agreement of Ayala y Cia., and the Municipality of Macabebe, concerning the ownership of the streams in
Hacienda San Esteban, for being in conformity with said Panopio Report.

This agreement of Ayala y Cia and the Municipality of Macabebe which was approved by the Secretary of Public Works and
Communications only on February 27, 1935, could not however bind the Government because the power of the Secretary of Public
Works and Communication to enter thereto had been suppressed by the Philppine Legislature when it enacted Act 4175 which effect
on December 7, 1934.

Nullity of the aforesaid contract would not of course affect the findings of fact contained in the Panopio Report.

In weighing the evidence presented before the administrative investigation which culminated in this appeal, respondent Secretary
seemed to have ignored the Panopio Report and other documentary evidence as well as the testimony of witnesses presented by
petitioner but instead gave credence only to the witnesses of Benigno Musni, et al. Upon review, however, the lower court, taking into
account all the evidence adduced in the administrative hearing, including the Panopio Report, as well as those presented for the first
time before it, sustained petitioner's averment that the streams in question were artificially made, hence of private ownership. As
stated, this conclusion of the lower court which is in accord with the findings of Panopio as contained in his report, finds ample
support from the evidence presented and admitted in the administrative investigation. Accordingly, we see no merit in disturbing the
lower court's findings fact.

We next consider the issue of whether under pertinent laws, the streams in question are public or private.
We quote Articles 339, 407 and 408 of the Spanish Civil Code of 1889:

Art. 339. Property of public ownerships is —

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, river banks,
shores, roadsteads, and that of a similar character;

Art. 407. The following are of public ownership:

1. Rivers and their natural channels;

2. Continuous or intermittent waters from springs or brooks running in their natural channels and the channels themselves.

3. Waters rising continuously or intermittently on lands of public ownership;

4. Lakes and ponds formed by nature, on public lands, and their beds;

5. Rain waters running through ravines or sand beds, the channels of which are of public ownership;

6. Subterranean waters on public lands;

7. Waters found within the zone of operation of public works, even though constructed under contract;

8. Waters which flow continuously or intermittently from lands belonging to private persons, to the State, to provinces, or to
towns, from the moment they leave such lands;

9. The waste waters of fountains, sewers, and public institutions.

Art. 408. The following are of private ownership:

1. Waters, either continuous or intermittent rising on private etates, while they run through them;

2. Lakes and ponds and their beds when formed by nature on such estates;

3. Subterranean waters found therein;

4. Rain water falling thereon as long as their bounderies.

5. The channels of flowing streams, continuous or intermittent, formed by rain water, and those of brooks crossing estates
which are not of public ownership.

The water, bed, banks, and floodgates of a ditch or aqueduct are deemed to be an integral part of the estate or building for
which the waters are intended. The owners of estates through or along the boundaries of which the aqueduct passes can assert
no ownership over it, nor any right to make use. of it beds or banks, unless they base their claims on title deed which specify
the right or the ownership claimed.

Articles 71 and 72 of the Spanish Law of Waters of August 3, 1866 state:

Art. 71. The water-beds of all creeks belong to the owners of the estates or lands over which they flow.

Art. 72. The water-beds on public land, of creeks through which spring waters run, are a part of the public domain.

The natural water-beds or channels of rivers are also part of the public domain.

Pursuant to Article 71 of the Spanish Law of Waters of August 3, 1866, and Article 408(5) of the Spanish Civil Code, channels of
creeks and brooks belong to the owners of estates over which they flow. The channels, therefore, of the streams in question which may
be classified creeks, belong to the owners of Hacienda San Esteban.
The said streams, considered as canals, of which they originally were, are of private ownership in contemplation of Article 339(l) of
the Spanish Civil Code. Under Article 339, canals constructed by the State and devoted to public use are of public ownership.
Conversely, canals constructed by private persons within private lands and devoted exclusively for private use must be of private
ownership.

Our attention has been called to the case of Mercado v. Municipal President of Macabebe, 59 Phil. 592. There the creek (Batasan-
Limasan) involved was originally dug by the estate's owner who, subsequently allowed said creek to be used by the public for
navigation and fishing purposes for a period of 22 years. Said this Court through Mr. Justice Diaz:

And even granting that the Batasan-Limasan creek acquired the proportions which it had, before it was closed, as a result of
excavations made by laborers of the appellant's predecesor in interest, it being a fact that, since the time it was opened as a
water route between the Nasi River and Limasan creek, the owners thereof as well as strangers, that is, both the residents of
the hacienda and those of other nearby barrios and municipalities, had been using it not only for their bancas to pass through
but also for fishing purposes, and it being also a fact that such was the condition of the creek at least since 1906 until it was
closed in 1928, if the appellant and her predecessors in interest had acquired any right to the creek in question by virtue of
excavations which they had made thereon, they had such right through prescription, inasmuch as they failed to obtain, and in
fact they have not obtained, the necessary authorization to devote it to their own use to the exclusion of all others. The use
and enjoyment of a creek, as any other property simceptible of appropriation, may be acquired or lost through prescription,
and the appellant and her predecessors in interest certainly lost such right through the said cause, and they cannot now claim
it exclusively for themselves after the general public had been openly using the same from 1906 to 1928. . . .

In the cited case, the creek could have been of private ownership had not its builder lost it by prescription. Applying the principle
therein enunciated to the case at bar, the conclusion would be inevitably in favor of private ownership, considering that the owners of
Hacienda San Esteban held them for their exclusive use and prohibited the public from using them.

It may be noted that in the opinion, mentioned earlier, issued on June 12, 1935, the Secretary of Justice answered in the negative the
query of the Secretary of Public Works and Communications whether the latter can declare of private ownership those streams which
"were dug up artificially", because it was assumed that the streams were used "by the public as fishing ground and in transporting their
commerce in bancas or in small crafts without the objection of the parties who dug" them. Precisely, Mercado v. Municipality of
Macabebe was given application therein. However, the facts, as then found by the Bureau of Public Works, do not support the factual
premise that the streams in question were used by the public "without the objection of the parties who dug" them. We cannot therefore
take as controlling in determining the merits of this the factual premises and the legal conclusion contained in said opinion.

The case at bar should be differentiated from those cases where We held illegal the closing and/or appropriation of rivers or streams
by owners of estates through which they flow for purposes of converting them into fishponds or other works. 23 In those cases, the
watercourses which were dammed were natural navigable streams and used habitually by the public for a long time as a means of
navigation. Consequently, they belong to the public domain either as rivers pursuant to Article 407 (1) of the Spanish Civil Code of
1889 or as property devoted to public use under Article 339 of the same code. Whereas, the streams involved in this case were
artificially made and devoted to the exclusive use of the hacienda owner.

Finally, Sapang Cansusu, being a natural stream and a continuation of the Cansusu River, admittedly a public stream, belongs to the
public domain. Its closure therefore by the predecessors of Roman Santos was illegal.

The petition for the opening of Sapang Malauling Maragul, Quiñorang Silab, Nigui, Pepangebunan, Nasi and Bulacus was dismissed
by the Secretary of Public Works and Communications and the case considered closed. The said administrative decision has not been
questioned in this appeal by either party. Hence, they are deemed excluded herein.

All the other streams, being artificial and devoted exclusively for the use of the hacienda owner and his personnel, are declared of
private ownership. Hence, the dams across them should not he ordered demolished as public nuisances.

With respect to the issue of contempt of court on the part of the Secretary of Public Works and Communications and Julian Cargullo
for the alleged issuance of a administrative decisions ordering demolition of dikes involved in this case after the writ of injunction was
granted and served, suffice it to state that the lower court made no finding of contempt of court. Necessarily, there is no conviction for
contempt reviewable by this Court and any discussion on the matter would be academic.

WHEREFORE, the decision appealed from is affirmed, except as to Sapang Cansusu which is hereby declared public and as to which
the judgment of the lower court is reversed. No costs. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal. Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
THIRD DIVISION

[G.R. No. 136438. November 11, 2004]

TEOFILO C. VILLARICO, petitioner, vs. VIVENCIO SARMIENTO, SPOUSES BESSIE SARMIENTO-DEL MUNDO &
BETH DEL MUNDO, ANDOKS LITSON CORPORATION and MARITES CARINDERIA, respondents.

DECISION
SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari of the Decision[1] of the Court of Appeals dated December 7, 1998 in CA-G.R.
CV No. 54883, affirming in totothe Decision[2] of the Regional Trial Court (RTC) of Paraaque City, Branch 259, dated November 14,
1996, in Civil Case No. 95-044.
The facts of this case, as gleaned from the findings of the Court of Appeals, are:
Teofilo C. Villarico, petitioner, is the owner of a lot in La Huerta, Paraaque City, Metro Manila with an area of sixty-six (66)
square meters and covered by Transfer Certificate of Title (T.C.T.) No. 95453 issued by the Registry of Deeds, same city.
Petitioners lot is separated from the Ninoy Aquino Avenue (highway) by a strip of land belonging to the government. As this
highway was elevated by four (4) meters and therefore higher than the adjoining areas, the Department of Public Works and Highways
(DPWH) constructed stairways at several portions of this strip of public land to enable the people to have access to the highway.
Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and her husband Beth Del Mundo, respondents herein,
had a building constructed on a portion of said government land. In November that same year, a part thereof was occupied by Andoks
Litson Corporation and Marites Carinderia, also impleaded as respondents.
In 1993, by means of a Deed of Exchange of Real Property, petitioner acquired a 74.30 square meter portion of the same area
owned by the government. The property was registered in his name as T.C.T. No. 74430 in the Registry of Deeds of Paraaque City.
In 1995, petitioner filed with the RTC, Branch 259, Paraaque City, a complaint for accion publiciana against respondents,
docketed as Civil Case No. 95-044. He alleged inter alia that respondents structures on the government land closed his right of way to
the Ninoy Aquino Avenue; and encroached on a portion of his lot covered by T.C.T. No. 74430.
Respondents, in their answer, specifically denied petitioners allegations, claiming that they have been issued licenses and permits
by Paraaque City to construct their buildings on the area; and that petitioner has no right over the subject property as it belongs to the
government.
After trial, the RTC rendered its Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Declaring the defendants to have a better right of possession over the subject land except the portion thereof
covered by Transfer Certificate of Title No. 74430 of the Register of Deeds of Paraaque;
2. Ordering the defendants to vacate the portion of the subject premises described in Transfer Certificate of Title
No. 74430 and gives its possession to plaintiff; and
3. Dismissing the claim for damages of the plaintiff against the defendants, and likewise dismissing the claim for
attorneys fees of the latter against the former.

Without pronouncement as to costs.

SO ORDERED.[3]

The trial court found that petitioner has never been in possession of any portion of the public land in question. On the contrary,
the defendants are the ones who have been in actual possession of the area. According to the trial court, petitioner was not deprived of
his right of way as he could use the Kapitan Tinoy Street as passageway to the highway.
On appeal by petitioner, the Court of Appeals issued its Decision affirming the trial courts Decision in toto, thus:
WHEREFORE, the judgment hereby appealed from is hereby AFFIRMED in toto, with costs against the plaintiff-appellant.

SO ORDERED.[4]

In this petition, petitioner ascribes to the Court of Appeals the following assignments of error:
I

THE FINDINGS OF FACT OF THE HON. COURT OF APPEALS CONTAINED A CONCLUSION WITHOUT CITATION OF
SPECIFIC EVIDENCE ON WHICH THE SAME WAS BASED.

II

THE HON. COURT OF APPEALS ERRED IN CONSIDERING THAT THE ONLY ISSUE IN THIS CASE IS WHETHER OR
NOT THE PLAINTIFF-APPELLANT HAS ACQUIRED A RIGHT OF WAY OVER THE LAND OF THE GOVERNMENT
WHICH IS BETWEEN HIS PROPERTY AND THE NINOY AQUINO AVENUE.

III

THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT ACCION PUBLICIANA IS NOT THE PROPER REMEDY
IN THE CASE AT BAR.

IV

THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT THE EXISTENCE OF THE PLAINTIFF-APPELLANTS
RIGHT OF WAY DOES NOT CARRY POSSESSION OVER THE SAME.

THE HON. COURT OF APPEALS ERRED IN NOT RESOLVING THE ISSUE OF WHO HAS THE BETTER RIGHT OF
POSSESSION OVER THE SUBJECT LAND BETWEEN THE PLAINTIFF-APPELLANT AND THE DEFENDANT-
APPELLEES.[5]

In their comment, respondents maintain that the Court of Appeals did not err in ruling that petitioners action for accion
publiciana is not the proper remedy in asserting his right of way on a lot owned by the government.
Here, petitioner claims that respondents, by constructing their buildings on the lot in question, have deprived him of his right of
way and his right of possession over a considerable portion of the same lot, which portion is covered by his T.C.T. No. 74430 he
acquired by means of exchange of real property.
It is not disputed that the lot on which petitioners alleged right of way exists belongs to the state or property of public dominion.
Property of public dominion is defined by Article 420 of the Civil Code as follows:

ART. 420. The following things are property of public dominion:

(1) Those intended for public use such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and other of similar character.

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of
the national wealth.

Public use is use that is not confined to privileged individuals, but is open to the indefinite public. [6] Records show that the lot on
which the stairways were built is for the use of the people as passageway to the highway. Consequently, it is a property of public
dominion.
Property of public dominion is outside the commerce of man and hence it: (1) cannot be alienated or leased or otherwise be the
subject matter of contracts; (2) cannot be acquired by prescription against the State; (3) is not subject to attachment and execution; and
(4) cannot be burdened by any voluntary easement.[7]
Considering that the lot on which the stairways were constructed is a property of public dominion, it can not be burdened by a
voluntary easement of right of way in favor of herein petitioner. In fact, its use by the public is by mere tolerance of the government
through the DPWH. Petitioner cannot appropriate it for himself. Verily, he can not claim any right of possession over it. This is clear
from Article 530 of the Civil Code which provides:

ART. 530. Only things and rights which are susceptible of being appropriated may be the object of possession.

Accordingly, both the trial court and the Court of Appeals erred in ruling that respondents have better right of possession over
the subject lot.
However, the trial court and the Court of Appeals found that defendants buildings were constructed on the portion of the same lot
now covered by T.C.T. No. 74430 in petitioners name. Being its owner, he is entitled to its possession.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated December 7, 1998 in CA-G.R.
CV No. 54883 is AFFIRMED with MODIFICATION in the sense that neither petitioner nor respondents have a right of possession
over the disputed lot where the stairways were built as it is a property of public dominion. Costs against petitioner.
SO ORDERED.
Panganiban, (Chairman), Carpio Morales and Garcia, JJ., concur.
Corona, J., on leave.
EN BANC

G.R. No. 93654 May 6, 1992

FRANCISCO U. DACANAY, petitioner,


vs.
MAYOR MACARIO ASISTIO, JR., CITY ENGR. LUCIANO SARNE, JR. of Kalookan City, Metro Manila, MILA
PASTRANA AND/OR RODOLFO TEOFE, STALLHOLDERS AND REPRESENTING CO-STALLHOLDERS, respondents.

David D. Advincula, Jr. for petitioner.

Juan P. Banaga for private respondents.

GRIÑO-AQUINO, J.:

May public streets or thoroughfares be leased or licensed to market stallholders by virtue of a city ordinance or resolution of the Metro
Manila Commission? This issue is posed by the petitioner, an aggrieved Caloocan City resident who filed a special civil action
of mandamus against the incumbent city mayor and city engineer, to compel these city officials to remove the market stalls from
certain city streets which the aforementioned city officials have designated as flea markets, and the private respondents (stallholders)
to vacate the streets.

On January 5, 1979, MMC Ordinance No. 79-02 was enacted by the Metropolitan Manila Commission, designating certain city and
municipal streets, roads and open spaces as sites for flea markets. Pursuant, thereto, the Caloocan City mayor opened up seven (7) flea
markets in that city. One of those streets was the "Heroes del '96" where the petitioner lives. Upon application of vendors Rodolfo
Teope, Mila Pastrana, Carmen Barbosa, Merle Castillo, Bienvenido Menes, Nancy Bugarin, Jose Manuel, Crisaldo Paguirigan,
Alejandro Castron, Ruben Araneta, Juanita and Rafael Malibaran, and others, the respondents city mayor and city engineer, issued
them licenses to conduct vending activities on said street.

In 1987, Antonio Martinez, as OIC city mayor of Caloocan City, caused the demolition of the market stalls on Heroes del '96, V.
Gozon and Gonzales streets. To stop Mayor Martinez' efforts to clear the city streets, Rodolfo Teope, Mila Pastrana and other
stallowners filed an action for prohibition against the City of Caloocan, the OIC City Mayor and the City Engineer and/or their
deputies (Civil Case No. C-12921) in the Regional Trial Court of Caloocan City, Branch 122, praying the court to issue a writ of
preliminary injunction ordering these city officials to discontinue the demolition of their stalls during the pendency of the action.

The court issued the writ prayed for. However, on December 20, 1987, it dismissed the petition and lifted the writ of preliminary
injunction which it had earlier issued. The trial court observed that:

A perusal of Ordinance 2, series of 1979 of the Metropolitan Manila Commission will show on the title itself that it
is an ordinance ––

Authorizing and regulating the use of certain city and/or municipal streets, roads and open spaces
within Metropolitan Manila as sites for flea market and/or vending areas, under certain terms and
conditions, subject to the approval of the Metropolitan Manila Commission, and for other
purposes

which is further amplified in Section 2 of the said ordinance, quoted hereunder:

Sec. 2. The streets, roads and open spaces to be used as sites for flea markets (tiangge) or vending areas; the design,
measurement or specification of the structures, equipment and apparatuses to be used or put up; the allowable
distances; the days and time allowed for the conduct of the businesses and/or activities herein authorized; the rates
or fees or charges to be imposed, levied and collected; the kinds of merchandise, goods and commodities sold and
services rendered; and other matters and activities related to the establishment, maintenance and management and
operation of flea markets and vending areas, shall be determined and prescribed by the mayors of the cities and
municipalities in the Metropolitan Manila where the same are located, subject to the approval of the Metropolitan
Manila Commission and consistent with the guidelines hereby prescribed.
Further, it is so provided in the guidelines under the said Ordinance No. 2 of the MMC that —

Sec. 6. In the establishment, operation, maintenance and management of flea markets and vending areas, the
following guidelines, among others, shall be observed:

xxx xxx xxx

(m) That the permittee shall remove the equipment, facilities and other appurtenances used by him in the conduct of
his business after the close or termination of business hours. (Emphasis ours; pp. 15-16, Rollo.)

The trial court found that Heroes del '96, Gozon and Gonzales streets are of public dominion, hence, outside the commerce of man:

The Heroes del '96 street, V. Gozon street and Gonzales street, being of public dominion must, therefore, be outside
of the commerce of man. Considering the nature of the subject premises, the following jurisprudence co/principles
are applicable on the matter:

1) They cannot be alienated or leased or otherwise be the subject matter of contracts.


(Municipality of Cavite vs. Rojas, 30 Phil. 602);

2) They cannot be acquired by prescription against the state (Insular Government vs. Aldecoa, 19
Phil. 505). Even municipalities can not acquire them for use as communal lands against the state
(City of Manila vs. Insular Government, 10 Phil. 327);

3) They are not subject to attachment and execution (Tan Toco vs. Municipal Council of Iloilo, 49
Phil. 52);

4) They cannot be burdened by any voluntary easement (2-II Colin & Capitant 520) (Tolentino,
Civil Code of the Phils., Vol. II, 1983 Ed. pp. 29-30).

In the aforecited case of Municipality of Cavite vs. Rojas, it was held that properties for public use
may not be leased to private individuals. Such a lease is null and void for the reason that a
municipal council cannot withdraw part of the plaza from public use. If possession has already
been given, the lessee must restore possession by vacating it and the municipality must thereupon
restore to him any sums it may have collected as rent.

In the case of City of Manila vs. Gerardo Garcia, 19 SCRA 413, the Supreme Court held:

The property being a public one, the Manila Mayors did not have the authority
to give permits, written or oral, to the squatters, and that the permits granted are
therefore considered null and void.

This doctrine was reiterated in the case of Baguio Citizens Action Inc. vs. The
City Council, 121 SCRA 368, where it was held that:

An ordinance legalizing the occupancy by squatters of public land is null and


void.

The authority of respondent Municipality of Makati to demolish the shanties of the petitioner's
members is mandated by
P.D. 772, and Sec. 1 of Letter of Instruction No. 19 orders certain public officials, one of whom is
the Municipal Mayor to remove all illegal constructions including buildings on and along esteros
and river banks, those along railroad tracks and those built without permits on public or private
property (Zansibarian Residents Association vs. Mun. of Makati, 135 SCRA 235). The City
Engineer is also among those required to comply with said Letter of Instruction.

The occupation and use of private individuals of sidewalks and other public places devoted for
public use constitute both public and private nuisances and nuisance per se, and this applies to
even case involving the use or lease of public places under permits and licenses issued by
competent authority, upon the theory that such holders could not take advantage of their unlawful
permits and license and claim that the land in question is a part of a public street or a public place
devoted to public use, hence, beyond the commerce of man. (Padilla, Civil Code Annotated, Vol.
II, p. 59, 6th Ed., citing Umali vs. Aquino, IC. A. Rep. 339.)

From the aforequoted jurisprudence/principles, the Court opines that defendants have the right to demolish the
subject stalls of the plaintiffs, more so when Section 185, par. 4 of Batas Pambansa Blg. 337, otherwise known as
the Local Government Code provides that the City Engineer shall:

(4) . . .

(c) Prevent the encroachment of private buildings and fences on the streets and
public places;

xxx xxx xxx

(j) Inspect and supervise the construction, repair, removal and safety of private
buildings;

xxx xxx xxx

(k) With the previous approval of the City Mayor in each case, order the
removal of materials employed in the construction or repair of any building or
structures made in violation of law or ordinance, and cause buildings and
structures dangerous to the public to made secure or torn down;

xxx xxx xxx

Further, the Charter of the City of Caloocan, Republic Act No. 5502, Art. VII, Sec. 27, par. g, 1 and m, grants the
City Engineer similar powers. (Emphasis supplied; pp. 17-20, Rollo.)

However, shortly after the decision came out, the city administration in Caloocan City changed hands. City Mayor Macario Asistio,
Jr., as successor of Mayor Martinez, did not pursue the latter's policy of clearing and cleaning up the city streets.

Invoking the trial court's decision in Civil Case No. C-12921, Francisco U. Dacanay, a concerned citizen, taxpayer and registered
voter of Barangay 74, Zone 7, District II of Caloocan City, who resides on Heroes del '96 Street, one of the affected streets, wrote a
letter dated March 7, 1988 to Mayor Asistio, Jr., calling his attention to the illegally-constructed stalls on Heroes del '96 Street and
asked for their demolition.

Dacanay followed up that letter with another one dated April 7, 1988 addressed to the mayor and the city engineer, Luciano Sarne, Jr.
(who replaced Engineer Arturo Samonte), inviting their attention to the Regional Trial Court's decision in Civil Case No. 12921.
There was still no response.

Dacanay sought President Corazon C. Aquino's intervention by writing her a letter on the matter. His letter was referred to the city
mayor for appropriate action. The acting Caloocan City secretary, Asuncion Manalo, in a letter dated August 1, 1988, informed the
Presidential Staff Director that the city officials were still studying the issue of whether or not to proceed with the demolition of the
market stalls.

Dacanay filed a complaint against Mayor Asistio and Engineer Sarne (OMB-0-89-0146) in the Office of the OMBUDSMAN. In their
letter-comment dated April 3, 1989, said city officials explained that in view of the huge number of stallholders involved, not to
mention their dependents, it would be harsh and inhuman to eject them from the area in question, for their relocation would not be an
easy task.

In reply, Dacanay maintained that respondents have been derelict in the performance of their duties and through manifest partiality
constituting a violation of Section 3(e) of R.A. 3019, have caused undue injury to the Government and given unwarranted benefits to
the stallholders.

After conducting a preliminary investigation, the OMBUDSMAN rendered a final evaluation and report on August 28, 1989, finding
that the respondents' inaction is purely motivated by their perceived moral and social responsibility toward their constituents, but "the
fact remains that there is an omission of an act which ought to be performed, in clear violation of Sections 3(e) and (f) of Republic Act
3019." (pp. 83-84, Rollo.) The OMBUDSMAN recommended the filing of the corresponding information in court.

As the stallholders continued to occupy Heroes del '96 Street, through the tolerance of the public respondents, and in clear violation of
the decision it Civil Case No. C-12921, Dacanay filed the present petition for mandamus on June 19, 1990, praying that the public
respondents be ordered to enforce the final decision in Civil Case No. C-12921 which upheld the city mayor's authority to order the
demolition of market stalls on V. Gozon, Gonzales and Heroes del '96 Streets and to enforce P.D. No. 772 and other pertinent laws.

On August 16, 1990, the public respondents, through the City Legal Officer, filed their Comment' on the petition. The Office of the
Solicitor General asked to be excused from filing a separate Comment in behalf of the public respondents. The City Legal Officer
alleged that the vending area was transferred to Heroes del '96 Street to decongest Malonzo Street, which is comparatively a busier
thoroughfare; that the transfer was made by virtue of Barangay Resolution No. 30 s'78 dated January 15, 1978; that while the
resolution was awaiting approval by the Metropolitan Manila Commission, the latter passed Ordinance No. 79-2, authorizing the use
of certain streets and open spaces as sites for flea markets and/or vending areas; that pursuant thereto, Acting MMC Mayor Virgilio P.
Robles issued Executive Order No. 135 dated January 10, 1979, ordering the establishment and operation of flea markets in specified
areas and created the Caloocan City Flea Market Authority as a regulatory body; and that among the sites chosen and approved by the
Metro Manila Commission, Heroes del '96 Street has considered "most viable and progressive, lessening unemployment in the city
and servicing the residents with affordable basic necessities."

The petition for mandamus is meritorious.

There is no doubt that the disputed areas from which the private respondents' market stalls are sought to be evicted are public streets,
as found by the trial court in Civil Case No. C-12921. A public street is property for public use hence outside the commerce of man
(Arts. 420, 424, Civil Code). Being outside the commerce of man, it may not be the subject of lease or other contract (Villanueva et al.
vs. Castañeda and Macalino, 15 SCRA 142, citing the Municipality of Cavite vs. Rojas, 30 SCRA 602; Espiritu vs. Municipal Council
of Pozorrubio, 102 Phil. 869; and Muyot vs. De la Fuente, 48 O.G. 4860).

As the stallholders pay fees to the City Government for the right to occupy portions of the public street, the City Government, contrary
to law, has been leasing portions of the streets to them. Such leases or licenses are null and void for being contrary to law. The right of
the public to use the city streets may not be bargained away through contract. The interests of a few should not prevail over the good
of the greater number in the community whose health, peace, safety, good order and general welfare, the respondent city officials are
under legal obligation to protect.

The Executive Order issued by Acting Mayor Robles authorizing the use of Heroes del '96 Street as a vending area for stallholders
who were granted licenses by the city government contravenes the general law that reserves city streets and roads for public use.
Mayor Robles' Executive Order may not infringe upon the vested right of the public to use city streets for the purpose they were
intended to serve: i.e., as arteries of travel for vehicles and pedestrians. As early as 1989, the public respondents bad started to look for
feasible alternative sites for flea markets. They have had more than ample time to relocate the street vendors.

WHEREFORE, it having been established that the petitioner and the general public have a legal right to the relief demanded and that
the public respondents have the corresponding duty, arising from public office, to clear the city streets and restore them to their
specific public purpose (Enriquez vs. Bidin, 47 SCRA 183; City of Manila vs. Garcia et al., 19 SCRA, 413 citing Unson vs. Lacson,
100 Phil. 695), the respondents City Mayor and City Engineer of Caloocan City or their successors in office are hereby ordered to
immediately enforce and implement the decision in Civil Case No. C-1292 declaring that Heroes del '96, V. Gozon, and Gonzales
Streets are public streets for public use, and they are ordered to remove or demolish, or cause to be removed or demolished, the market
stalls occupying said city streets with utmost dispatch within thirty (30)days from notice of this decision. This decision is immediately
executory.

SO ORDERED.
THIRD DIVISION

G.R. No. 182913 November 20, 2013

REPUBLIC OF THE PHILIPPINES, Petitioner,


vs.
ANTONIO, FELIZA, NEMESIO, ALBERTO, FELICIDAD, RICARDO, MILAGROS AND CIPRIANO, ALL SURNAMED
BACAS; EMILIANA CHABON, SATURNINO ABDON, ESTELA, CHABON, LACSASA DEMON, PDERITA CHABON,
FORTUNATA EMBALSADO, MINDA J. CASTILLO, PABLO CASTILLO, ARTURO P. LEGASPI, and JESSIE I.
LEGASPI, Respondents.

DECISION

MENDOZA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to review, reverse and set aside the November 12,
2007 Decision1 and the May 15, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 64142, upholding the decision of
the Regional Trial Court, Branch 17, Cagayan de Oro City (RTC) , which dismissed the consolidated cases of Civil Case No. 3494,
entitled Republic of the Philippines v. Antonio, et al. and Civil Case No. 5918, entitled Republic of the Philippines v. Emiliana
Chabon , et al. Said civil cases were filed by the Republic of the Philippines (Republic) for the cancellation and annulment of Original
Certificate of Title (OCT) No. 0-358 and OCT No. O-669, covering certain parcels of land occupied and utilized as part of the Camp
Evangelista Military Reservation, Misamis Oriental, presently the home of the 4th Infantry Division of the Philippine Army.

The Antecedents:

In 1938, Commonwealth President Manuel Luis Quezon (Pres. Quezon) issued Presidential Proclamation No. 265, which took effect
on March 31, 1938, reserving for the use of the Philippine Army three (3) parcels of the public domain situated in the barrios of Bulua
and Carmen, then Municipality of Cagayan, Misamis Oriental. The parcels of land were withdrawn from sale or settlement and
reserved for military purposes, "subject to private rights, if any there be."

Land Registration Case No. N-275

[Antonio, Feliza, Nemesio, Roberto, and Felicidad, all surnamed Bacas, and the Heirs of Jesus Bacas, Applicants (The Bacases)]

The Bacases filed their Application for Registration3 on November 12, 1964 covering a parcel of land, together with all the
improvements found thereon, located in Patag, Cagayan de Oro City, more particularly described and bounded as follows:

A parcel of land, Lot No. 4354 of the Cadastral Survey of Cagayan, L.R.C. Record No. 1612, situated at Barrio Carmen, Municipality
of Cagayan, Province of Misamis Oriental. Bounded on the SE., along lines 1-2-3-4, by Lot 4357; and alongline 4-5, by Lot 3862; on
the S., along line 5-6, by Lot 3892; on the W. and NW., along lines 6-7-8, by Lot 4318; on the NE., along line 8-9, by Lot 4319, along
line 9-10, by Lot 4353 and long line 10-11, by Lot 4359; and on the SE., along line 11-1, by Lot 4356, all of Cagayan Cadastre;
containing an area of THREE HUNDRED FIFTY FOUR THOUSAND THREE HUNDRED SEVENTY SEVEN (354,377) square
meters, more or less, under Tax Declaration No. 35436 and assessed at ₱3,540.00. 4

They alleged ownership in fee simple of the property and indicated in their application the names and addresses of the adjoining
owners, as well as a statement that the Philippine Army (Fourth Military Area) recently occupied a portion of the land by their mere
tolerance.5

The Director of the Bureau of Lands, thru its Special Counsel, Benito S. Urcia (Urcia) , registered its written Opposition6 against the
application. Later, Urcia, assisted by the District Land Officer of Cagayan de Oro City, thru the Third Assistant Provincial Fiscal of
Misamis Oriental, Pedro R. Luspo (Luspo) , filed an Amended Opposition. 7

On April 10, 1968, based on the evidence presented by the Bacases, the Land Registration Court (LRC) rendered a decision8 holding
that the applicants had conclusively established their ownership in fee simple over the subject land and that their possession, including
that of their predecessor-in-interest, had been open, adverse, peaceful, uninterrupted, and in concept of owners for more than forty (40)
years.

No appeal was interposed by the Republic from the decision of the LRC. Thus, the decision became final and executory, resulting in
the issuance of a decree and the corresponding certificate of title over the subject property.
Land Registration Case No. N-521 [Emiliana Chabon, Estela Chabon and Pedrita Chabon, Applicants (The Chabons)]

The Chabons filed their Application for Registration9 on May 8, 1974 covering a parcel of land located in Carmen-District, Cagayan
de Oro City, known as Lot 4357, Cagayan Cadastre, bounded and described as:

A parcel of land (Lot 4357, Cagayan Cadastre, plan Ap-12445), situated in the District of Carmen, City of Cagayan de Oro. Bounded
on the NE. by property of Potenciano Abrogan vs. Republic of the Philippines (Public Land); on the SE. by properties of Geronimo
Wabe and Teofilo Batifona or Batipura; on the SW. by property of Teofilo Batifona or Batipura; and on the NW. by property of Felipe
Bacao or Bacas vs. Republic of the Philippines (Public Land). Point "1" is N. 10 deg. 39’W., 379.88 M. from B.L.L.M. 14, Cagayan
Cadastre. Area SIXTY NINE THOUSAND SIX HUNDRED THIRTY TWO (69,632) SQUARE METERS, more or less. 10

They alleged ownership in fee simple over the property and indicated therein the names and addresses of the adjoining owners, but no
mention was made with respect to the occupation, if any, by the Philippine Army. The Chabons likewise alleged that, to the best of
their knowledge, no mortgage or encumbrance of any kind affecting said land with the exception of 18,957 square meters sold to
Minda J. Castillo and 1,000 square meters sold and conveyed to Atty. Arturo R. Legaspi. 11

On February 18, 1976, there being no opposition made, even from the government, hearing on the application ensued. The LRC then
rendered a decision12 holding that Chabons’ evidence established their ownership in fee simple over the subject property and that their
possession, including that of their predecessor-in-interest, had been actual, open, public, peaceful, adverse, continuous, and in concept
of owners for more than thirty (30) years.

The decision then became final and executory. Thus, an order 13 for the issuance of a decree and the corresponding certificate of title
was issued.

The present cases

As a consequence of the LRC decisions in both applications for registration, the Republic filed a complaint for annulment of titles
against the Bacases and the Chabons before the RTC. More specifically, on September 7, 1970 or one (1) year and ten (10) months
from the issuance of OCT No. 0-358, a civil case for annulment, cancellation of original certificate of title, reconveyance of lot or
damages was filed by the Republic against the Bacases, which was docketed as Civil Case No. 3494. On the other hand, on April 21,
1978 or two (2) years and seven (7) months after issuance of OCT No. 0-669, the Republic filed a civil case for annulment of title and
reversion against the Chabons, docketed as Civil Case No. 5918.

Civil Case No. 3494 against the Bacases

The Republic claimed in its petition for annulment before the RTC14 that the certificate of title issued in favor of the Bacases was null
and void because they fraudulently omitted to name the military camp as the actual occupant in their application for registration.
Specifically, the Republic, through the Fourth Military Area, was the actual occupant of Lot No. 4354 and also the owner and
possessor of the adjoining Lots Nos. 4318 15 and 4357. Further, the Bacases failed to likewise state that Lot No. 4354 was part of Camp
Evangelista. These omissions constituted fraud which vitiated the decree and certificate of title issued.

Also, the Republic averred that the subject land had long been reserved in 1938 for military purposes at the time it was applied for
and, so, it was no longer disposable and subject to registration. 16

Civil Case No. 5918 against the Chabons

In this case, the Republic claimed that it was the absolute owner and possessor of Lot No. 4357. The said lot, together with Lots
431817 and 4354, formed part of the military reservation known as Camp Evangelista in Cagayan de Oro City, which was set aside and
reserved under Presidential Proclamation No. 265 issued by President Quezon on March 31, 1938. 18

In its petition for annulment before the RTC,19 the Republic alleged that OCT No. 0-669 issued in favor of the Chabons and all
transfer certificates of titles, if any, proceeding therefrom, were null and void for having been vitiated by fraud and/or lack of
jurisdiction.20 The Chabons concealed that the fact that Lot 4357 was part of Camp Evangelista and that the Republic, through the
Armed Forces of the Philippines, was its actual occupant and possessor. 21 Further, Lot 4357 was a military reservation, established as
such as early as March 31, 1938 and, thus, could not be the subject of registration or private appropriation. 22 As a military reservation,
it was beyond the commerce of man and the registration court did not have any jurisdiction to adjudicate the same as private
property.23

Decision of the Regional Trial Court


As the facts and issues in both cases were substantially the same and identical, and the pieces of evidence adduced were applicable to
both, the cases were consolidated and jointly tried. Thereafter, a joint decision dismissing the two complaints of the Republic was
rendered.

In dismissing the complaints, the RTC explained that the stated fact of occupancy by Camp Evangelista over certain portions of the
subject lands in the applications for registration by the respondents was a substantial compliance with the requirements of the law. 24 It
would have been absurd to state Camp Evangelista as an adjoining owner when it was alleged that it was an occupant of the
land.25 Thus, the RTC ruled that the respondents did not commit fraud in filing their applications for registration.

Moreover, the RTC was of the view that the Republic was then given all the opportunity to be heard as it filed its opposition to the
applications, appeared and participated in the proceedings. It was, thus, estopped from contesting the proceedings.

The RTC further reasoned out that assuming arguendo that respondents were guilty of fraud, the Republic lost its right to a relief for
its failure to file a petition for review on the ground of fraud within one (1) year after the date of entry of the decree of
registration.26 Consequently, it would now be barred by prior judgment to contest the findings of the LRC. 27

Finally, the RTC agreed with the respondents that the subject parcels of land were exempted from the operation and effect of the
Presidential Proclamation No. 265 pursuant to a proviso therein that the same would not apply to lands with existing "private rights."
The presidential proclamation did not, and should not, apply to the respondents because they did not apply to acquire the parcels of
land in question from the government, but simply for confirmation and affirmation of their rights to the properties so that the titles
over them could be issued in their favor.28 What the proclamation prohibited was the sale or disposal of the parcels of land involved to
private persons as a means of acquiring ownership of the same, through the modes provided by law for the acquisition of disposable
public lands.29

The Republic filed its Notice of Appeal before the RTC on July 5, 1991. On the other hand, the Bacases and the Chabons filed an Ex-
Parte Motion for the Issuance of the Writ of Execution and Possession on July 16, 1991. An amended motion was filed on July 31,
1991. The RTC then issued the Order,30 dated February 24, 1992, disapproving the Republic’s appeal for failure to perfect it as it
failed to notify the Bacases and granting the writ of execution.

Action of the Court of Appeals and the Court regarding the Republic’s Appeal

The Republic filed a Notice of Appeal on April 1, 1992 from the February 24, 1992 of the RTC. The same was denied in the RTC
Order,31 dated April 23, 1992. The Republic moved for its reconsideration but the RTC was still denied it on July 8, 1992. 32

Not satisfied, the Republic filed a petition before the CA, docketed as CA-G.R. SP No. 28647, entitled Republic vs. Hon. Cesar M.
Ybañez,33 questioning the February 24, 1992 Order of the RTC denying its appeal in Civil Case No. 3494. The CA sustained the
government and, accordingly, annulled the said RTC order.

The respondents appealed to the Court, which later found no commission of a reversible error on the part of the CA. Accordingly, the
Court dismissed the appeal as well as the subsequent motions for reconsideration. An entry of judgment was then issued on February
16, 1995.34

Ruling of the Court of Appeals

The appeal allowed, the CA docketed the case as CA G.R. CV No. 64142.

On November 12, 2007, the CA affirmed the ruling of the RTC. It explained that once a decree of registration was issued under the
Torrens system and the reglementary period had passed within which the decree may be questioned, the title was perfected and could
not be collaterally questioned later on.35 Even assuming that an action for the nullification of the original certificate of title may still be
instituted, the review of a decree of registration under Section 38 of Act No. 496 [Section 32 of Presidential Decree (P.D.) No. 1529]
would only prosper upon proof that the registration was procured through actual fraud, 36 which proceeded from an intentional
deception perpetrated through the misrepresentation or the concealment of a material fact. 37 The CA stressed that "[t]he fraud must be
actual and extrinsic, not merely constructive or intrinsic; the evidence thereof must be clear, convincing and more than merely
preponderant, because the proceedings which are assailed as having been fraudulent are judicial proceedings which by law, are
presumed to have been fair and regular." 38

Citing the rule that "[t]he fraud is extrinsic if it is employed to deprive parties of their day in court and, thus, prevent them from
asserting their right to the property registered in the name of the applicant," 39 the CA found that there was none. The CA agreed with
the RTC that there was substantial compliance with the requirement of the law. The allegation of the respondent that Camp
Evangelista occupied portions of their property negated the complaint that they committed misrepresentation or concealment
amounting to fraud.40

As regards the issue of exemption from the proclamation, the CA deemed that a discussion was unnecessary because the LRC already
resolved it. The CA stressed that the proceeding was one in rem, thereby binding everyone to the legal effects of the same and that a
decree of registration that had become final should be deemed conclusive not only on the questions actually contested and determined,
but also upon all matters that might be litigated or decided in the land registration proceeding. 41

Not in conformity, the Republic filed a motion for reconsideration which was denied on May 15, 2008 for lack of merit.

Hence, this petition.

GROUNDS RELIED UPON


WARRANTING REVIEW OF THE
PETITION

1. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE LAND REGISTRATION
COURT HAD JURISDICTION OVER THE APPLICATION FOR REGISTRATION FILED BY RESPONDENTS
DESPITE THE LATTER’S FAILURE TO COMPLY WITH THE MANDATORY REQUIREMENT OF INDICATING
ALL THE ADJOINING OWNERS OF THE PARCELS OF LAND SUBJECT OF THE APPLICATION.

2. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT RESPONDENTS HAVE A
REGISTRABLE RIGHT OVER THE SUBJECT PARCELS OF LAND WHICH ARE WITHIN THE CAMP
EVANGELISTA MILITARY RESERVATION.

3. IN G.R. NO. 157306 ENTITLED "REPUBLIC OF THE PHILIPPINES VS. ANATALIA ACTUB TIU ESTONILO, ET
AL.," WHICH INVOLVES PRIVATE INDIVIDUALS CLAIMING RIGHTS OVER PORTIONS OF THE CAMP
EVANGELISTA MILITARY RESERVATION, THIS HONORABLE COURT HELD THAT THESE INDIVIDUALS
COULD NOT HAVE VALIDLY OCCUPIED THEIR CLAIMED LOTS BECAUSE THE SAME WERE CONSIDERED
INALIENABLE FROM THE TIME OF THEIR RESERVATION IN 1938. HERE, THE CERTIFICATES OF TITLE
BEING SUSTAINED BY THE COURT OF APPEALS WERE ISSUED PURSUANT TO THE DECISIONS OF THE
LAND REGISTRATION COURT IN APPLICATIONS FOR REGISTRATION FILED IN 1964 AND 1974. VERILY, THE
COURT OF APPEALS, IN ISSUING THE HEREIN ASSAILED DECISION DATED NOVEMBER 15, 2007 AND
RESOLUTION DATED MAY 15, 2008, HAS DECIDED THAT INSTANT CONTROVERSY IN A MANNER THAT IS
CONTRARY TO LAW AND JURISPRUDENCE.42

Position of the Republic

In advocacy of its position, the Republic principally argues that (1) the CA erred in holding that the LRC acquired jurisdiction over the
applications for registration of the reserved public lands filed by the respondents; and (2) the respondents do not have a registrable
right over the subject parcels of land which are within the Camp Evangelista Military Reservation.

With respect to the first argument, the Republic cites Section 15 of P.D. No. 1529, which requires that applicants for land registration
must disclose the names of the occupants of the land and the names and addresses of the owners of the adjoining properties. The
respondents did not comply with that requirement which was mandatory and jurisdictional. Citing Pinza v. Aldovino, 43 it asserts that
the LRC had no jurisdiction to take cognizance of the case. Moreover, such omission constituted fraud or willful misrepresentation.
The respondents cannot invoke the indefeasibility of the titles issued since a "grant tainted with fraud and secured through
misrepresentation is null and void and of no effect whatsoever." 44

On the second argument, the Republic points out that Presidential Proclamation No. 265 reserved for the use of the Philippine Army
certain parcels of land which included Lot No. 4354 and Lot No. 4357. Both lots were, however, allowed to be registered. Lot No.
4354 was registered as OCT No. 0-0358 and Lot No. 4357 as OCT No. O-669.

The Republic asserts that being part of the military reservation, these lots are inalienable and cannot be the subject of private
ownership. Being so, the respondents do not have registrable rights over them. Their possession of the land, however long, could not
ripen into ownership, and they have not shown proof that they were entitled to the land before the proclamation or that the said lots
were segregated and withdrawn as part thereof.

Position of the Respondents


The Bacases

The Bacases anchor their opposition to the postures of the Republic on three principal arguments:

First, there was no extrinsic fraud committed by the Bacases in their failure to indicate Camp Evangelista as an adjoining lot owner as
their application for registration substantially complied with the legal requirements. More importantly, the Republic was not
prejudiced and deprived of its day in court.

Second, the LRC had jurisdiction to adjudicate whether the Bacases had "private rights" over Lot No. 4354 in accordance with, and
therefore exempt from the coverage of, Presidential Proclamation No. 265, as well as to determine whether such private rights
constituted registrable title under the land registration law.

Third, the issue of the registrability of the title of the Bacases over Lot No. 4354 is res judicata and cannot now be subject to a re-
litigation or reopening in the annulment proceedings.45

Regarding the first ground, the Bacases stress that there was no extrinsic fraud because their application substantially complied with
the requirements when they indicated that Camp Evangelista was an occupant by mere tolerance of Lot No. 4354. Also, the Republic
filed its opposition to the respondents’ application and actively participated in the land registration proceedings by presenting
evidence, through the Director of Lands, who was represented by the Solicitor General. The Republic, therefore, was not deprived of
its day in court or prevented from presenting its case. Its insistence that the non-compliance with the requirements of Section 15 of
P.D. No. 1529 is an argument that is at once both empty and dangerous. 46

On jurisdiction, the Bacases assert that even in the case of Republic v. Estonilo,47 it was recognized in Presidential Proclamation No.
265 that the reservation was subject to private rights. In other words, the LRC had authority to hear and adjudicate their application for
registration of title over Lot No. 4354 if they would be able to prove that their private rights under the presidential proclamation
constituted registrable title over the said lot. They claim that there is completely no basis for the Republic to argue that the LRC had
no jurisdiction to hear and adjudicate their application for registration of their title to Lot No. 4354 just because the proclamation
withdrew the subject land from sale and settlement and reserved the same for military purposes. They cited the RTC statement that
"the parcels of land they applied for in those registration proceedings and for which certificates of title were issued in their favor are
precisely exempted from the operation and effect of said presidential proclamation when the very same proclamation in itself made a
proviso that the same will not apply to lands with existing ‘private rights’ therein." 48

The Bacases claim that the issue of registrability is no longer an issue as what is only to be resolved is the question on whether there
was extrinsic or collateral fraud during the land registration proceedings. There would be no end to litigation on the registrability of
their title if questions of facts or law, such as, whether or not Lot No. 4354 was alienable and disposable land of the public domain
prior to its withdrawal from sale and settlement and reservation for military purposes under Presidential Proclamation No. 265;
whether or not their predecessors-in-interest had prior possession of the lot long before the issuance of the proclamation or the
establishment of Camp Evangelista in the late 1930’s; whether or not such possession was held in the concept of an owner to
constitute recognizable "private rights" under the presidential proclamation; and whether or not such private rights constitute
registrable title to the lot in accordance with the land registration law, which had all been settled and duly adjudicated by the LRC in
favor of the Bacases, would be re-examined under this annulment case.49

The issue of registrability of the Bacases’ title had long been settled by the LRC and is

res judicata between the Republic and the respondents. The findings of the LRC became final when the Republic did not appeal its
decision within the period to appeal or file a petition to reopen or review the decree of registration within one year from entry
thereof.50

To question the findings of the court regarding the registrability of then title over the land would be an attempt to reopen issues
already barred by res judicata. As correctly held by the RTC, it is estopped and barred by prior judgment to contest the findings of the
LRC.51

The Chabons

In traversing the position of the Republic, the Chabons insist that the CA was correct when it stated that there was substantial
compliance52 with the requirements of the P.D. No. 1529 because they expressly stated in their application that Camp Evangelista was
occupying a portion of it. It is contrary to reason or common sense to state that Camp Evangelista is an adjoining owner when it is
occupying a portion thereof.
And as to the decision, it was a consequence of a proceeding in rem and, therefore, the decree of registration is binding and conclusive
against all persons including the Republic who did not appeal the same. It is now barred forever to question the validity of the title
issued. Besides, res judicata has set in because there is identity of parties, subject matter and cause of action. 53

The Chabons also assailed the proclamation because when it was issued, they were already the private owners of the subject parcels of
land and entitled to protection under the Constitution. The taking of their property in the guise of a presidential proclamation is not
only oppressive and arbitrary but downright confiscatory. 54

The Issues

The ultimate issues to be resolved are: 1) whether or not the decisions of the LRC over the subject lands can still be questioned; and 2)
whether or not the applications for registration of the subject parcels of land should be allowed.

The Court’s Ruling

The Republic can question even final and executory judgment when there was fraud.

The governing rule in the application for registration of lands at that time was Section 21 of Act 496 55 which provided for the form
and content of an application for registration, and it reads:

Section 21. The application shall be in writing, signed and sworn to by applicant, or by some person duly authorized in his behalf. x x
x It shall also state the name in full and the address of the applicant, and also the names and addresses of all adjoining owners and
occupants, if known; and, if not known, it shall state what search has been made to find them. x x x

The reason behind the law was explained in the case of Fewkes vs. Vasquez, 56 where it was written:

Under Section 21 of the Land Registration Act an application for registration of land is required to contain, among others, a
description of the land subject of the proceeding, the name, status and address of the applicant, as well as the names and addresses of
all occupants of the land and of all adjoining owners, if known, or if unknown, of the steps taken to locate them. When the application
is set by the court for initial hearing, it is then that notice (of the hearing), addressed to all persons appearing to have an interest in the
lot being registered and the adjoining owners, and indicating the location, boundaries and technical description of the land being
registered, shall be published in the Official Gazette for two consecutive times. It is this publication of the notice of hearing that is
considered one of the essential bases of the jurisdiction of the court in land registration cases, for the proceedings being in rem, it is
only when there is constructive seizure of the land, effected by the publication and notice, that jurisdiction over the res is vested on the
court. Furthermore, it is such notice and publication of the hearing that would enable all persons concerned, who may have any rights
or interests in the property, to come forward and show to the court why the application for registration thereof is not to be granted.

Here, the Chabons did not make any mention of the ownership or occupancy by the Philippine Army. They also did not indicate any
efforts or searches they had exerted in determining other occupants of the land. Such omission constituted fraud and deprived the
Republic of its day in court. Not being notified, the Republic was not able to file its opposition to the application and, naturally, it was
not able to file an appeal either.

The Republic can also question a final and executory judgment when the LRC had no jurisdiction over the land in question

With respect to the Bacases, although the lower courts might have been correct in ruling that there was substantial compliance with the
requirements of law when they alleged that Camp Evangelista was an occupant, the Republic is not precluded and estopped from
questioning the validity of the title.

The success of the annulment of title does not solely depend on the existence of actual and extrinsic fraud, but also on the fact that a
judgment decreeing registration is null and void. In Collado v. Court of Appeals and the Republic,57the Court declared that any title to
an inalienable public land is void ab initio. Any procedural infirmities attending the filing of the petition for annulment of judgment
are immaterial since the LRC never acquired jurisdiction over the property. All proceedings of the LRC involving the property are null
and void and, hence, did not create any legal effect. A judgment by a court without jurisdiction can never attain finality.58 In Collado,
the Court made the following citation:

The Land Registration Court has no jurisdiction over non-registrable properties, such as public navigable rivers which are parts of the
public domain, and cannot validly adjudge the registration of title in favor of private applicant. Hence, the judgment of the Court of
First Instance of Pampanga as regards the Lot No. 2 of certificate of Title No. 15856 in the name of petitioners may be attacked at any
time, either directly or collaterally, by the State which is not bound by any prescriptive period provided for by the Statute of
Limitations.59

Prescription or estoppel cannot lie against the government

In denying the petition of the Republic, the CA reasoned out that 1) once a decree of registration is issued under the Torrens system
and the reglementary period has passed within which the decree may be questioned, the title is perfected and cannot be collaterally
questioned later on;60 2) there was no commission of extrinsic fraud because the Bacases’ allegation of Camp Evangelista’s occupancy
of their property negated the argument that they committed misrepresentation or concealment amounting to fraud; 61 and 3) the
Republic did not appeal the decision and because the proceeding was one in rem, it was bound to the legal effects of the decision.

Granting that the persons representing the government was negligent, the doctrine of estoppel cannot be taken against the Republic. It
is a well-settled rule that the Republic or its government is not estopped by mistake or error on the part of its officials or agents. In
Republic v. Court of Appeals,62 it was written:

In any case, even granting that the said official was negligent, the doctrine of estoppel cannot operate against the State . "It is a well-
settled rule in our jurisdiction that the Republic or its government is usually not estopped by mistake or error on the part of its officials
or agents (Manila Lodge No. 761 vs. CA, 73 SCRA 166, 186; Republic vs. Marcos, 52 SCRA 238, 244; Luciano vs. Estrella, 34
SCRA 769).

Consequently, the State may still seek the cancellation of the title issued to Perpetuo Alpuerto and his successors-interest pursuant to
Section 101 of the Public Land Act. Such title has not become indefeasible, for prescription cannot be invoked against the State
(Republic vs. Animas, supra).

The subject lands, being part of a military reservation, are inalienable and cannot be the subjects of land registration proceedings

The application of the Bacases and the Chabons were filed on November 12, 1964 and May 8, 1974, respectively. Accordingly, the
law governing the applications was Commonwealth Act (C.A.) No. 141, 63 as amended by RA 1942,64 particularly Sec. 48(b) which
provided that:

Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive and notorious possession
and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, for at least thirty years
immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These
shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this chapter.

As can be gleaned therefrom, the necessary requirements for the grant of an application for land registration are the following:

1. The applicant must, by himself or through his predecessors-in-interest, have been in possession and occupation of the
subject land;

2. The possession and occupation must be open, continuous, exclusive and notorious;

3. The possession and occupation must be under a bona fide claim of ownership for at least thirty years immediately
preceding the filing of the application; and

4. The subject land must be an agricultural land of the public domain. As earlier stated, in 1938, President Quezon issued
Presidential Proclamation No. 265, which took effect on March 31, 1938, reserving for the use of the Philippine Army
parcels of the public domain situated in the barrios of Bulua and Carmen, then Municipality of Cagayan, Misamis Oriental.
The subject parcels of land were withdrawn from sale or settlement or reserved for military purposes, "subject to private
rights, if any there be."65

Such power of the President to segregate lands was provided for in Section 64(e) of the old Revised Administrative Code and C.A.
No. 141 or the Public Land Act. Later, the power of the President was restated in Section 14, Chapter 4, Book III of the 1987
Administrative Code. When a property is officially declared a military reservation, it becomes inalienable and outside the commerce
of man.66 It may not be the subject of a contract or of a compromise agreement. 67 A property continues to be part of the public domain,
not available for private appropriation or ownership, until there is a formal declaration on the part of the government to withdraw it
from being such.68 In the case of Republic v. Court of Appeals and De Jesus,69 it was even stated that
Lands covered by reservation are not subject to entry, and no lawful settlement on them can be acquired.1âwphi1 The claims 0f
persons who have settled on, occupied, and improved a parcel of public land which is later included in a reservation are considered
worthy of protection and are usually respected, but where the President, as authorized by law, issues a proclamation reserving certain
lands and warning all persons to depart therefrom, this terminates any rights previously acquired in such lands by a person who was
settled thereon in order to obtain a preferential right of purchase. And patents for lands which have been previously granted, reserved
from sale, or appropriate, are void.

Regarding the subject lots, there was a reservation respecting "private rights." In Republic v. Estonilo, 70 where the Court earlier
declared that Lot No. 4318 was part of the Camp Evangelista Military Reservation and, therefore, not registrable, it noted the proviso
in Presidential Proclamation No. 265 requiring the reservation to be subject to private rights as meaning that persons claiming rights
over the reserved land were not precluded from proving their claims. Stated differently, the said proviso did not preclude the LRC
from determining whether or not the respondents indeed had registrable rights over the property.

As there has been no showing that the subject parcels of land had been segregated from the military reservation, the respondents had
to prove that the subject properties were alienable and disposable land of the public domain prior to its withdrawal from sale and
settlement and reservation for military purposes under Presidential Proclamation No. 265. The question is of primordial importance
because it is determinative if the land can in fact be subject to acquisitive prescription and, thus, registrable under the Torrens system.
Without first determining the nature and character of the land, all the other requirements such as the length and nature of possession
and occupation over such land do not come into play. The required length of possession does not operate when the land is part of the
public domain.

In this case, however, the respondents miserably failed to prove that, before the proclamation, the subject lands were already private
lands. They merely relied on such "recognition" of possible private rights. In their application, they alleged that at the time of their
application,71 they had been in open, continuous, exclusive, and notorious possession of the subject parcels of land for at least thirty
(30) years and became its owners by prescription. There was, however, no allegation or showing that the government had earlier
declared it open for sale or settlement, or that it was already pronounced as inalienable and disposable.

It is well-settled that land of the public domain is not ipso facto converted into a patrimonial or private property by the mere
possession and occupation by an individual over a long period of time. In the case of Diaz v. Republic, 72 it was written:

But even assuming that the land in question was alienable land before it was established as a military reservation, there was
nevertheless still a dearth of evidence with respect to its occupation by petitioner and her predecessors-in-interest for more than 30
years. x x x.

x x x.

A mere casual cultivation of portions of the land by the claimant, and the raising thereon of cattle, do not constitute possession under
claim of ownership. In that sense, possession is not exclusive and notorious as to give rise to a presumptive grant from the State.
While grazing livestock over land is of course to be considered with other acts of dominion to show possession, the mere occupancy
of land by grazing livestock upon it, without substantial enclosures, or other permanent improvements, is not sufficient to support a
claim of title thru acquisitive prescription. The possession of public land, however long the period may have extended, never confers
title thereto upon the possessor because the statute of limitations with regard to public land does not operate against the State unless
the occupant can prove possession and occupation of the same under claim of ownership for the required number of years to constitute
a grant from the State. [Emphases supplied]

In the recent case of Heirs of Mario Malabanan vs. Republic of the Philippines, 73 the Court emphasized that fundamental is the rule
that lands of the public domain, unless declared otherwise by virtue of a statute or law, are inalienable and can never be acquired by
prescription. No amount of time of possession or occupation can ripen into ownership over lands of the public domain. All lands of the
public domain presumably belong to the State and are inalienable. Lands that are not clearly under private ownership are also
presumed to belong to the State and, therefore, may not be alienated or disposed. 74

Another recent case, Diaz v. Republic,75 also held that possession even for more than 30 years cannot ripen into
ownership.76 Possession is of no moment if applicants fail to sufficiently and satisfactorily show that the subject lands over which an
application was applied for was indeed an alienable and disposable agricultural land of the public domain. It would not matter even if
they declared it for tax purposes. In Republic v. Heirs of Juan Fabio, 77 the rule was reiterated. Thus:

Well-entrenched is the rule that unless a land is reclassified and declared alienable and disposable, occupation in the concept of an
owner, no matter how long, cannot ripen into ownership and be registered as a title. Consequently, respondents could not have
occupied the Lot in the concept of an owner in 1947 and subsequent years when respondents declared the Lot for taxation purposes, or
even earlier when respondents' predecessors-in-interest possessed the Lot, because the Lot was considered inalienable from the time of
its declaration as a military reservation in 1904. Therefore, respondents failed to prove, by clear and convincing evidence, that the Lot
is alienable and disposable.

Public lands not shown to have been classified as alienable and disposable land remain part of the inalienable public domain. In view
of the lack of sufficient evidence showing that the Lot was already classified as alienable and disposable, the Lot applied for by
respondents is inalienable land of the public domain, not subject to registration under Section 14(1) of PD 1529 and Section 48(b) of
CA 141, as amended by PD 1073. Hence, there is no need to discuss the other requisites dealing with respondents' occupation and
possession of the Lot in the concept of an owner.

While it is an acknowledged policy of the State to promote the distribution of alienable public lands to spur economic growth and in
line with the ideal of social justice, the law imposes stringent safeguards upon the grant of such resources lest they fall into the wrong
hands to the prejudice of the national patrimony. We must not, therefore, relax the stringent safeguards relative to the registration of
imperfect titles. [Emphases Supplied]

In Estonilo,78 where the Court ruled that persons claiming the protection of "private rights" in order to exclude their lands from
military reservations must show by clear and convincing evidence that the properties in question had been acquired by a legal method
of acquiring public lands, the respondents therein failed to clearly prove that the lands over which they lay a claim were alienable and
disposable so that the same belonged and continued to belong to the State and could not be subject to the commerce of man or
registration. Specifically, the Court wrote:

Land that has not been acquired from the government, either by purchase or by grant, belongs to the State as part of the public domain.
For this reason, imperfect titles to agricultural lands are subjected to rigorous scrutiny before judicial confirmation is granted. In the
same manner, persons claiming the protection of "private rights" in order to exclude their lands from military reservations must show
by clear and convincing evidence that the pieces of property in question have been acquired by a legal method of acquiring public
lands.

In granting respondents judicial confirmation of their imperfect title, the trial and the appellate courts gave much weight to the tax
declarations presented by the former. However, while the tax declarations were issued under the names of respondents’ predecessors-
in-interest, the earliest one presented was issued only in 1954. 19 The Director, Lands Management Bureau v. CA20 held thus:

"x x x. Tax receipts and tax declarations are not incontrovertible evidence of ownership.1âwphi1 They are mere indicia of [a] claim of
ownership. In Director of Lands vs. Santiago:

‘x x x [I]f it is true that the original owner and possessor, Generosa Santiago, had been in possession since 1925, why were the subject
lands declared for taxation purposes for the first time only in 1968, and in the names of Garcia and Obdin? For although tax receipts
and declarations of ownership for taxation purposes are not incontrovertible evidence of ownership, they constitute at least proof that
the holder had a claim of title over the property.’"

In addition, the lower courts credited the alleged prior possession by Calixto and Rosendo Bacas, from whom respondents’
predecessors had purportedly bought the property. This alleged prior possession, though, was totally devoid of any supporting
evidence on record. Respondents’ evidence hardly supported the conclusion that their predecessors-in-interest had been in possession
of the land since "time immemorial."

Moreover, as correctly observed by the Office of the Solicitor General, the evidence on record merely established the transfer of the
property from Calixto Bacas to Nazaria Bombeo . The evidence did not show the nature and the period of the alleged possession by
Calixto and Rosendo Bacas. It is important that applicants for judicial confirmation of imperfect titles must present specific acts of
ownership to substantiate their claims; they cannot simply offer general statements that are mere conclusions of law rather than factual
evidence of possession.

It must be stressed that respondents, as applicants, have the burden of proving that they have an imperfect title to Lot 4318. Even the
absence of opposition from the government does not relieve them of this burden. Thus, it was erroneous for the trial and the appellate
courts to hold that the failure of the government to dislodge respondents, judicially or extrajudicially, from the subject land since 1954
already amounted to a title. [Emphases supplied]

The ruling reiterated the long standing rule in the case of Director Lands Management Bureau v. Court of Appeals,79

x x x. The petitioner is not necessarily entitled to have the land registered under the Torrens system simply because no one appears to
oppose his title and to oppose the registration of his land. He must show, even though there is no opposition to the satisfaction of the
court, that he is the absolute owner, in fee simple. Courts are not justified in registering property under the Torrens system, simply
because there is no opposition offered. Courts may, even in the absence of any opposition, deny the registration of the land under the
Torrens system, upon the ground that the facts presented did not show that the petitioner is the owner, in fee simple, of the land which
he is attempting to have registered.

The Court is not unmindful of the principle of immutability of judgments that nothing is more settled in law than that once a judgment
attains finality it thereby becomes immutable and unalterable.80 Such principle, however, must yield to the basic rule that a decision
which is null and void for want of jurisdiction of the trial court is not a decision m contemplation of law and can never become final
and executory.81

Had the LRC given primary importance on the status of the land and not merely relied on the testimonial evidence of the respondents
without other proof of the alienability of the land, the litigation would have already been ended and finally settled in accordance with
law and jurisprudence a long time ago.

WHEREFORE, the petition is GRANTED. The November 12, 2007 Decision and the May 15, 2008 Resolution of the Court of
Appeals in CA G.R. CV No. 64142 are hereby REVERSED and SET ASIDE. Judgment is rendered declaring the proceedings in the
Land Registration Court as NULL and VOID for lack of jurisdiction. Accordingly, Original Certificate of Title Nos. 0-358 and 0-669
issued by the Registry of Deeds of Cagayan de Oro City are CANCELLED. Lot No. 4354 and Lot No. 4357 are ordered reverted to
the public domain.

SO ORDERED.
SECOND DIVISION

CITY OF PASIG, REPRESENTED G.R. No. 185023

BY THE CITY TREASURER and

THE CITY ASSESSOR,

Petitioner,

Present:

CARPIO, J., Chairperson,

BRION,

- versus - PERALTA,*

PEREZ, and

MENDOZA,**JJ.

REPUBLIC OF THE PHILIPPINES,

REPRESENTED BY THE

PRESIDENTIAL COMMISSION ON

GOOD GOVERNMENT, Promulgated:

Respondent. August 24, 2011

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

DECISION

CARPIO, J.:

The Case
This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 17 October 2008
Decision2 of the Court of Appeals in CA-G.R. SP No. 97498, affirming the 6 November 2006 Decision 3 of the Regional Trial Court
(RTC), National Capital Judicial Region, Pasig City, Branch 155, in SCA No. 2901.

The Facts

Mid-Pasig Land Development Corporation (MPLDC) owned two parcels of land, with a total area of 18.4891 hectares, situated in
Pasig City. The properties are covered by Transfer Certificate of Title (TCT) Nos. 337158 and 469702 and Tax Declaration Nos. E-
030-01185 and E-030-01186 under the name of MPLDC. Portions of the properties are leased to different business establishments.

In 1986, the registered owner of MPLDC, Jose Y. Campos (Campos), voluntarily surrendered MPLDC to the Republic of the
Philippines.

On 30 September 2002, the Pasig City Assessors Office sent MPLDC two notices of tax delinquency for its failure to pay real
property tax on the properties for the period 1979 to 2001 totaling P256,858,555.86. In a letter dated 29 October 2002, Independent
Realty Corporation (IRC) President Ernesto R. Jalandoni (Jalandoni) and Treasurer Rosario Razon informed the Pasig City Treasurer
that the tax for the period 1979 to 1986 had been paid, and that the properties were exempt from tax beginning 1987.

In letters dated 10 July 2003 and 8 January 2004, the Pasig City Treasurer informed MPLDC and IRC that the properties were not
exempt from tax. In a letter dated 16 February 2004, MPLDC General Manager Antonio Merelos(Merelos) and Jalandoni again
informed the Pasig City Treasurer that the properties were exempt from tax. In a letter dated 11 March 2004, the Pasig City Treasurer
again informed Merelos that the properties were not exempt from tax.

On 20 October 2005, the Pasig City Assessors Office sent MPLDC a notice of final demand for payment of tax for the period 1987 to
2005 totalingP389,027,814.48. On the same day, MPLDC paid P2,000,000 partial payment under protest.

On 9 November 2005, MPLDC received two warrants of levy on the properties. On 1 December 2005, respondent Republic of the
Philippines, through the Presidential Commission on Good Government (PCGG), filed with the RTC a petition for prohibition with
prayer for issuance of a temporary restraining order or writ of preliminary injunction to enjoin petitioner Pasig City from auctioning
the properties and from collecting real property tax.

On 2 December 2005, the Pasig City Treasurer offered the properties for sale at public auction. Since there was no other bidder, Pasig
City bought the properties and was issued the corresponding certificates of sale.

On 19 December 2005, PCGG filed with the RTC an amended petition for certiorari, prohibition and mandamus against Pasig City.
PCGG prayed that: (1) the assessments for the payment of real property tax and penalty be declared void; (2) the warrants of levy on
the properties be declared void; (3) the public auction be declared void; (4) the issuance of certificates of sale be declared void; (5)
Pasig City be prohibited from assessing MPLDC real property tax and penalty; (6) Pasig City be prohibited from collecting real
property tax and penalty from MPLDC; (7) Pasig City be ordered to assess the actual occupants of the properties real property tax and
penalty; and (8) Pasig City be ordered to collect real property tax and penalty from the actual occupants of the properties.
The RTCs Ruling

In its 6 November 2006 Decision, the RTC granted the petition for certiorari, prohibition and mandamus. The RTC held:

The primordial issue to be resolved in the present case is whether or not respondent City of Pasig, through the City Treasurer
and the City Assessor, acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it assessed,
levied and sold in public auction the payanig properties for non-payment of real property taxes.

However, before dwelling on the merits of the main issue, certain matters need to be addressed by the Court, to wit:

1. Does the Court have jurisdiction over the instant petition?

2. Who owns the so-called payanig properties that were subjected to payment of real property taxes by respondent?

The Court maintains that it is not precluded from assuming jurisdiction over the instant amended petition which involves the
legality of the assailed actions by respondent in assessing and collecting real property tax on the properties owned by the
Republic of the Philippines. It is a jurisprudential doctrine that the issue is purely legal when the authority of the respondent
to assess and collect real property taxes on the subject properties is being questioned (Ty vs. Trampe, 250 SCRA 500).

xxxx

In the instant proceeding, there is no dispute that the properties are surrendered ill-gotten wealth of former President Marcos.
As such, the same assumes [sic] a public character and thus belongs [sic] to the Republic of the Philippines. x x x

xxxx

Hence, upon the voluntary surrender by Jose Y. Campos, the controlling owner of Mid-Pasig and Independent Realty
Corporation, of the payanig properties to PCGG, a clear admission that these properties were part of the ill-gotten wealth of
former President Marcos was already evident. As such, there was already constructive reconveyance to the State, which
immediately placed these reconveyed properties under the control and stewardship of the PCGG as representative of the
Republic of the Philippines. Under such special circumstance, these voluntary surrendered properties had already belonged to
the State.

xxxx
Premised on the foregoing, the payanig properties, being part of the recovered ill-gotten wealth of President Marcos, and
therefore are owned by the State itself, are exempt from payment of real property taxes. It is only when the beneficial use of
said properties has been granted to a taxable person that the same may be subject to imposition of real property tax.

Furthermore, in real estate taxation, the unpaid tax attaches to the property and is chargeable against the taxable person who
had actual or beneficial use and possession of it regardless of whether or not he is the owner (Testate Estate of Concordia T.
Lim vs. City of Manila, 182 SCRA 482).

In the instant case, the taxable persons being referred to are the lessees occupying and/or doing business therein and have
beneficial use over portions within the payanig properties.

xxxx

Consequently, there can be no iota of doubt that respondent City of Pasig abused its discretion by committing the acts sought
to be annulled herein despite knowledge of the fact that ownership over the subject properties belong to petitioner. But what
is more appalling in the instant action is that such abuse was capriciously committed by respondent City of Pasig against the
sovereign State itself from where that atxing local government unit derives its very existence. The spring cannot rise higher
than its source.

xxxx

In sum, the acts of respondent in assessing real property taxes on properties owned and controlled by the Republic of the
Philippines, in collecting taxes from Mid-Pasig in lieu of the actual occupants or beneficial users of certain portions thereof,
and in auctioning said properties in favor of respondent, followed by the corresponding certificate of sale, are all
unequivocally tainted with grave abuse of discretion amounting to lack or excess of jurisdiction.

WHEREFORE, in the light of the foregoing, the instant Amended Petition is hereby GRANTED.

Accordingly, the following acts of respondent are hereby ANNULLED and SET ASIDE.

1. the assessment dated September 30, 2002 for the payment of real property taxes and penalties made by the City of Pasig on
two (2) parcels of land covered by TCT No. 337158 and TCT No. 469702 registered under the name of Mid-Pasig;
2. the warrants of levy dated November 8, 2005 issued thereon by the City of Pasig;

3. the subsequent public auction sale of subject properties held on December 2, 2005 followed by the issuance of the
corresponding Certificate of Sale;

FURTHER, the City of Pasig is hereby PROHIBITED from further:

1. Assessing real property taxes and penalties charges [sic] on the said properties;

2. Collecting said taxes and penalty charges from the State;

3. Disposing or encumbering the subject properties or any portion thereof;

FURTHER, the City of Pasig is hereby COMMANDED:

1. To return or effect the refund of the amount of Two Million Pesos (Php2,000,000.00) paid under protest by Mid-Pasig Land
Development Corporation on October 20, 2005, or credit the same amount to any outstanding tax liability that said
corporation may have with the City of Pasig; and

2. To assess and collect from the actual occupants or beneficial users of the subject properties, and not from the State,
whatever real property taxes and penalties that may be due on the respective areas occupied by them.

SO ORDERED.4

Pasig City appealed to the Court of Appeals.

The Court of Appeals Ruling

In its 31 March 2008 Decision,5 the Court of Appeals set aside the RTCs 6 November 2006 Decision. The Court of Appeals held:

We find nothing in PCGGs petition that supports its claim regarding Pasig Citys alleged grave abuse of discretion. It is
undisputed that the subject parcels of land are registered in the name of Mid-Pasig, a private entity. Although the
government, through the PCGG have [sic] sequestered Mid-Pasig and all its assets including the subject parcels of land, the
sequestration per se, did not operate to convert Mid-Pasig and its properties to public property. The power of the PCGG to
sequester property claimed to be ill-gotten means to place or cause to be placed under its possession or control said
property, or any building or office wherein any such property and any records pertaining thereto may be found, including
business enterprises and entities for the purpose of preventing the destruction, concealment or dissipation of, and otherwise
conserving and preserving the same until it can be determined, through appropriate judicial proceedings, whether the
property was in truth ill-gotten, i.e., acquired through or as a result of improper or illegal use of or the conversion of funds
belonging to the Government or any of its branches, instrumentalities, enterprises, banks or financial institutions, or by
taking undue advantage of official position, authority, relationship, connection or influence, resulting in unjust enrichment of
the ostensible owner and great damage and prejudice to the State. x x x As such, prior to a valid court declaration the PCGG
cannot perform acts of strict ownership of [sic] sequestered property. It is a mere conservator. In view thereof and the fact
that Mid-Pasig and its properties have not been validly declared by the Sandiganbayan as ill-gotten wealth, the same are not
yet public properties. The PCGG even admitted that the transfer certificates of title covering the subject parcels of land in the
name of Mid-Pasig have not been cancelled due to an order of the Sandiganbayan. The trial court also found that the subject
parcels of land are the subject of litigation between Ortigas and Company Limited Partnership and the PCGG in Civil Case
No. 0093 pending before the Sandiganbayan. These facts clearly show that the Sandiganbayan has not validly declared yet
that the subject parcels of land are ill-gotten wealth. If so, they cannot be claimed yet as properties of the State: they remain
properties of a private entity. Thus, Pasig City through its City Assessor and City Treasurer did not act with grave abuse of
discretion when it issued real property tax assessment on the subject parcels of land.

Even admitting that the subject parcels of land are already owned by the State, we still see no grave abuse of discretion on the
part of Pasig City when it issued the challenged tax assessment, for it is well settled that the test of exemptions from taxation
is the use of the property for purposes mentioned in the Constitution. The owner of the property does not matter. Even if he is
not a tax-exempt entity, as long as the property is being used for religious, charitable or educational purposes, the property is
exempt from tax. Conversely, even if the government owns the property, if the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person, the property is subject to tax. Here, the PCGG admitted that portions of the
subject properties were leased to private entities engaged in commercial dealings. As well, the trial court found that lessees
occupy different areas of the subject parcels of land beginning 1992 until 2005. Therefore, considering that portions of the
subject parcels of land are used for commercial purposes, the duty imposed by law to owners and administrators of real
property to declare the same for tax purposes and the fact that the tax declarations over the subject parcels of land are in the
name of Mid-Pasig, again, Pasig City did not act with grave abuse of discretion when it issued the challenged tax assessment.

The foregoing snowball to one conclusion the allegations in PCGGs petition imputing grave abuse of discretion on the part of
Pasig City, acting through the City Assessor and City Treasurer, in the assessment and collection of the taxes were made in
order to justify the filing of the petition for certiorari, prohibition and mandamus with the trial court.

The extraordinary remedies of certiorari, prohibition and mandamus may be resorted to only when there is no other plain,
available, speedy and adequate remedy in the course of law. Where administrative remedies are available, petitions for the
issuance of these peremptory writs do not lie in order to give the administrative body the opportunity to decide the matter by
itself correctly and to prevent unnecessary and premature resort to courts.

Republic Act No. 7160 or the Local Government Code of 1991, clearly sets forth the administrative remedies available to a
taxpayer or real property owner who is not satisfied with the assessment or reasonableness of the real property tax sought to
be collected. The Supreme Court outlined said remedies, to wit:

Should the taxpayer/real property owner question the excessiveness or reasonableness of the assessment, Section 252 directs
that the taxpayer should first pay the tax due before his protest can be entertained. There shall be annotated on the tax
receipts the words paid under protest. It is only after the taxpayer has paid the tax due that he may file a protest in writing
within thirty days from payment of the tax to the Provincial, City or Municipal Treasurer, who shall decide the protest within
sixty days from receipt. In no case is the local treasurer obliged to entertain the protest unless the tax due has been paid.

If the local treasurer denies the protest or fails to act upon it within the 60-day period provided for in Section 252, the
taxpayer/real property owner may then appeal or directly file a verified petition with the LBAA within sixty days from denial
of the protest or receipt of the notice of assessment, as provided in Section 226 of R.A. No. 7160[.]
And, if the taxpayer is not satisfied with the decision of the LBAA, he may elevate the same to the CBAA, which exercises
exclusive jurisdiction to hear and decide all appeals from the decisions, orders and resolutions of the Local Boards involving
contested assessments of real properties, claims for tax refund and/or tax credits or overpayments of taxes. An appeal may be
taken to the CBAA by filing a notice of appeal within thirty days from receipt thereof.

From the Central Board Assessment Appeals, the dispute may then be taken to the Court of Tax Appeals by filing a verified
petition for review under Rule 42 of the Revised Rules of Court; to the Court of tax Appeals en banc; and finally to the
Supreme Court via a petition for review on certiorari pursuant to Rule 45 of the Revised Rules of Court.

We are not convinced with PCGGs stance that their recourse of filing the petition for certiorari, prohibition and mandamus
before the trial court is proper as they are questioning not merely the correctness of the tax assessment but the actions of
Pasig City, through its City Assessor and City Treasurer, which were done in grave abuse of discretion amounting to lack or
excess of jurisdiction.

The well-established rule is that allegations in the complaint and the character of the relief sought determine the nature of an
action. A perusal of the petition before the trial court plainly shows that what is actually being assailed is the correctness of
the assessments made by the City Assessor of Pasig City on the subject parcels of land. PCGG claims, among others, that: 1)
the subject parcels of land are exempt from real property taxation as they are public property; 2) even if the subject parcels of
land are subject to tax, as the beneficial use thereof was granted to private persons and entities, only the portion thereof used
for commerce is subject to tax and the users thereof are the ones liable to pay the tax; and 3) the right of Pasig City to collect
the real property taxes pertaining to 1987 to 1998 has already prescribed. These claims essentially involve questions of fact,
which are improper in a petition for certiorari, prohibition and mandamus; hence, the petition should have been brought, at
the very first instance, to the Local Board Assessment Appeals, which has authority to rule on the objections of any interested
party who is not satisfied with the action of the assessor. Under the doctrine of primacy of administrative remedies, an error
in the assessment must be administratively pursued to the exclusion of ordinary courts whose decisions would be void for
lack of jurisdiction.

Granting that the assessors authority and the legality of the assessment are indeed an issue, the proper remedy is a suit for the
refund of the real property tax after paying the same under protest. It must be pointed out that in order for the trial court to
resolve the instant petition, the issues of the correctness of the tax assessment and collection must also necessarily be dealt
with; hence, a petition for certiorari, prohibition and mandamus is not the proper remedy. x x x [T]he resolution of the issues
raised in the instant case involve examination and determination of relevant and material facts, i.e. facts relating to the
ownership of the subject parcels of land, the portion of the subject parcel of land used for commercial purposes and the
identities of the lessees and the users thereof. Since resolution of factual issues is not allowed in a petition for certiorari,
prohibition and mandamus, the trial court is precluded from entertaining the petition.

Finally, Section 252 of the R.A. No. 7160 requires payment under protest in assailing real property tax assessment. Even an
appeal shall not suspend the collection of the atx assessed without prejudice to a later adjustment pending the outcome of the
appeal. This principle is consistent with the time-honored principle that taxes are the lifeblood of the nation. But the PCGG
failed to pay the tax assessment prior to questioning it before the trial court; hence, the trial court should have dismissed
PCGGs petition in line with the Supreme Court pronouncement that a trial court has no jurisdiction to entertain a similar
petition absent payment under protest.
In conclusion and taking all the foregoing into account, we hold that the trial court had no jurisdiction to take cognizance and
decide PCGG petition for certiorari, prohibition and mandamus; the trial court should have dismissed the petition. 6

PCGG filed a motion for reconsideration. In its 17 October 2008 Decision, the Court of Appeals reversed itself. The Court of Appeals
held:

At the outset, although as a rule, administrative remedies must first be exhausted before ersort to judicial action can prosper,
there is a well-settled exception in cases where the controversy does not involve questions of fact but only of law. We find
that the Republic has shown a cause for the application of the foregoing exception. Essentially, the Republic has raised a pure
question of law whether or not the City of Pasig has the power to impose real property tax on the subject properties, which
are owned by the State. It bears stressing that the Republic did not raise any question concerning the amount of the real
property tax or the determination thereof. Thus, having no plain, speedy, and adequate remedy in law, the Republic correctly
resorted to judicial action via the petition for certiorari, prohibition, and mandamus, to seek redress.

We are convinced that the subject properties were not sequestered by the government so as to amount to a deprivation of
property without due process of law; instead, they were voluntarily surrendered to the State by Campos, a self-admitted crony
of the then President Marcos. The relinquishment of the subject properties to the State as ill-gotten wealth of Marcos, as
recognized by the Supreme Court, makes a judicial declaration that the same were ill-gotten unnecessary. By virtue of said
relinquishment, the State correctly exercised dominion over the subject properties. Indubitably, the subject properties, being
ill-gotten wealth, belong to the State. x x x By its nature, ill-gotten wealth is owned by the State. As a matter of fact, the
Republic continues to exercise dominion over the subject properties. 7

Hence, the present petition.

Issues

Pasig City raises as issues that the lower courts erred in granting PCGGs petition for certiorari, prohibition and mandamus and in
ordering Pasig City to assess and collect real property tax from the lessees of the properties.

The Courts Ruling

The petition is partly meritorious.


As correctly found by the RTC and the Court of Appeals, the Republic of the Philippines owns the properties. Campos voluntarily
surrendered MPLDC, which owned the properties, to the Republic of the Philippines. In Republic of the Philippines v.
Sandiganbayan,8 the Court stated:

x x x Jose Y. Campos, a confessed crony of former President Ferdinand E. Marcos, voluntarily surrendered or turned over to
the PCGG the properties, assets and corporations he held in trust for the deposed President. Among the corporations he
surrendered were the Independent Realty Corporation and the Mid-Pasig Land Development Corporation.9

In Republic of the Philippines v. Sandiganbayan,10 the Court stated:

The antecedent facts are stated by the Solicitor General as follows:

xxxx

3. Sometime in the later part of August 1987, defendant Jose D. Campos, Jr., having been served with summons on August 5,
1987, filed with the respondent Court an undated Manifestation and Motion to Dismiss Complaint with Respect to Jose D.
Campos praying that he be removed as party defendant from the complaint on the grounds that he had voluntarily
surrendered or turned over any share in his name on [sic] any of the corporations referred to, aside from disclaiming any
interest, ownership or right thereon to the Government of the Republic of the Philippines and that he was entitled to the
immunity granted by the Presidential Commission on Good Government pursuant to Executive Order No. 14, under the
Commissions Resolution dated May 28, 1986 to Mr. Jose Y. Campos and his family he being a member of the immediate
family of Jose Y. Campos.

xxxx

In the instant case, the PCGG issued a resolution dated May 28, 1986, granting immunity from both civil and criminal
prosecutions to Jose Y. Campos and his family. The pertinent provisions of the resolution read as follows:

3.0. In consideration of the full cooperation of Mr. Jose Y. Campos to this Commission, his voluntary surrender of the
properties and assets disclosed and declared by him to belong to deposed President Ferdinand E. Marcos to the Government
of the Republic of the Philippines, his full, complete and truthful disclosures, and his commitment to pay a sum of money as
determined by the Philippine Government, this Commission has decided and agreed:

xxxx

Undoubtedly, this resolution embodies a compromise agreement between the PCGG on one hand and Jose Y. Campos on the
other. Hence, in exchange for the voluntary surrender of the ill-gotten properties acquired by the then President Ferdinand E.
Marcos and his family which were in Jose Campos control, the latter and his family were given full immunity in both civil
and criminal prosecutions. x x x
xxxx

By virtue of the PCGGs May 28, 1986 resolution, Jose Campos, Jr. was given full immunity from both civil and criminal
prosecutions in exchange for the full cooperation of Mr. Jose Y. Campos to this Commission, his voluntary surrender of the
properties and assets disclosed and declared by him to belong to deposed President Ferdinand E. Marcos to the Government
of the Republic of the Philippines, his full, complete and truthful disclosures, and his commitment to pay a sum of money as
determined by the Philippine Government. In addition, Campos, Jr. had already waived and surrendered to the Republic his
registered equity interest in the Marcos/Romualdez corporations involved in the civil case. 11

Even as the Republic of the Philippines is now the owner of the properties in view of the voluntary surrender of MPLDC by its former
registered owner, Campos, to the State, such transfer does not prevent a third party with a better right from claiming such properties in
the proper forum. In the meantime, the Republic of the Philippines is the presumptive owner of the properties for taxation purposes.

Section 234(a) of Republic Act No. 7160 states that properties owned by the Republic of the Philippines are exempt from real property
tax except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person. Thus, the
portions of the properties not leased to taxable entities are exempt from real estate tax while the portions of the properties leased to
taxable entities are subject to real estate tax. The law imposes the liability to pay real estate tax on the Republic of the Philippines for
the portions of the properties leased to taxable entities. It is, of course, assumed that the Republic of the Philippines passes on the real
estate tax as part of the rent to the lessees.

In Philippine Fisheries Development Authority v. Central Board of Assessment Appeals,12 the Court held:

In the 2007 case of Philippine Fisheries Development Authority v. Court of Appeals, the Court resolved the issue of whether
the PFDA is a government-owned or controlled corporation or an instrumentality of the national government. In that case,
the City of Iloilo assessed real property taxes on the Iloilo Fishing Port Complex (IFPC), which was managed and
operated by PFDA. The Court held that PFDA is an instrumentality of the government and is thus exempt from the
payment of real property tax, thus:

The Court rules that the Authority is not a GOCC but an instrumentality of the national government which is
generally exempt from payment of real property tax. However, said exemption does not apply to the portions
of the IFPC which the Authority leased to private entities. With respect to these properties, the Authority is
liable to pay property tax. Nonetheless, the IFPC, being a property of public dominion cannot be sold at public
auction to satisfy the tax delinquency.

xxxx

This ruling was affirmed by the Court in a subsequent PFDA case involving the Navotas Fishing Port Complex, which is also
managed and operated by the PFDA. In consonance with the previous ruling, the Court held in the subsequent PFDA case that the
PFDA is a government instrumentality not subject to real property tax except those portions of the NavotasFishing Port
Complex that were leased to taxable or private persons and entities for their beneficial use.
Similarly, we hold that as a government instrumentality, the PFDA is exempt from real property tax imposed on
the Lucena Fishing Port Complex, except those portions which are leased to private persons or entities.13 (Emphasis supplied)

In Government Service Insurance System v. City Treasurer of the City of Manila,14 the Court held:

x x x The tax exemption the property of the Republic or its instrumentalities carries ceases only if, as stated in Sec.
234(a) of the LGC of 1991, beneficial use thereof has been granted, for a consideration or otherwise, to a taxable
person. GSIS, as a government instrumentality, is not a taxable juridical person under Sec. 133(o) of the LGC. GSIS,
however, lost in a sense that status with respect to the Katigbak property when it contracted its beneficial use to MHC,
doubtless a taxable person. Thus, the real estate tax assessment of Php54,826,599.37 covering 1992 to 2002 over the
subject Katigbak property is valid insofar as said tax delinquency is concerned as assessed over said
property.15 (Emphasis supplied)

In Manila International Airport Authority v. Court of Appeals,16 the Court held:

x x x Section 234(a) of the Local Government Code states that real property owned by the Republic loses its tax
exemption only if the beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person.MIAA, as a government instrumentality, is not a taxable person under Section 133(o) of the local Government Code.
Thus, even if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and Buildings, such
fact does not make these real properties subject to real estate tax.

However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real
estate tax. For example, the land area occupied by hangars that MIAA leases to private corporations is subject to real
estate tax. In such a case, MIAA has granted the beneficial use of such land area for a consideration to a taxable
person and therefore such land area is subject to real estate tax.17 (Emphasis supplied)

In Lung Center of the Philippines v. Quezon City,18 the Court held:

x x x While portions of the hospital are used for the treatment of patients and the dispensation of medical services to them,
whether paying or non-paying, other portions thereof are being leased to private individuals for their clinics and a canteen.
Further, a portion of the land is being leased to a private individual for her business enterprise under the business name
Elliptical Orchids and Garden Center. Indeed, the petitioners evidence shows that it collected P1,136,483.45 as rentals in
1991 and P1,679,999.28 for 1992 from the said lessees.

Accordingly, we hold that the portions of the land leased to private entities as well as those parts of the hospital leased
to private individuals are not exempt from such taxes. On the other hand, the portions of the land occupied by the hospital
and portions of the hospital used for its patients, whether paying or non-paying, are exempt from real property
taxes.19 (Emphasis supplied)
Article 420 of the Civil Code classifies as properties of public dominion those that are intended for public use, such as roads, canals,
rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads and those that are intended for some public
service or for the development of the national wealth. Properties of public dominion are not only exempt from real estate tax, they are
exempt from sale at public auction. In Heirs of Mario Malabanan v. Republic,20the Court held that, It is clear that property of public
dominion, which generally includes property belonging to the State, cannot be x x x subject of the commerce of man.21

In Philippine Fisheries Development Authority v. Court of Appeals,22 the Court held:

x x x [T]he real property tax assessments issued by the City of Iloilo should be upheld only with respect to the portions leased
to private persons. In case the Authority fails to pay the real property taxes due thereon, said portions cannot be sold at
public auction to satisfy the tax delinquency. In Chavez v. Public Estates Authority it was held that reclaimed lands are
lands of the public dominion and cannot, without Congressional fiat, be subject of a sale, public or private x x x.

In the same vein, the port built by the State in the Iloilo fishing complex is a property of the public dominion and
cannot therefore be sold at public auction. Article 420 of the Civil Code, provides:

Article 420. The following things are property of public dominion:

1. Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the
State, banks, shores, roadsteads, and others of similar character;

2. Those which belong to the State, without being for public use, and are intended for some public service or
for the development of the national wealth.

The Iloilo fishing port which was constructed by the State for public use and/or public service falls within the term
port in the aforecited provision. Being a property of public dominion the same cannot be subject to execution or
foreclosure sale. In like manner, the reclaimed land on which the IFPC is built cannot be the object of a private or public sale
without Congressional authorization.23 (Emphasis supplied)

In Manila International Airport Authority,24 the Court held:

x x x [T]he Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public
dominion. Properties of public dominion are owned by the State or the Republic. Article 420 of the Civil Code provides:

Art. 420. The following things are property of public dominion:


(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks,
shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the
development of the national wealth.

The term ports x x x constructed by the Sate includes airports and seaports. The Airport Lands and Buildings of MIAA are
intended for public use, and at the very least intended for public service. Whether intended for public use or public service,
the Airport Lands and Buildings are properties of public dominion. As properties of public dominion, the the Airport lands
and Buildings are owned by the Republic and thus exempt from real estate tax under Section 234(a) of the Local Government
Code.

xxxx

Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public use, are properties
of public dominion and thus owned by the State or the Republic of the Philippines. Article 420 specifically mentions ports
x x x constructed by the State, which includes public airports and seaports, as properties of public dominion and owned by
the Republic. As properties of public dominion owned by the Republic, there is no doubt whatsoever that the Airport Lands
and Buildings are expressly exempt from real estate tax under Section 234(a) of the local Government Code. This Court has
also repeatedly ruled that properties of public dominion are not subject to execution or foreclosure sale.25 (Emphasis
supplied)

In the present case, the parcels of land are not properties of public dominion because they are not intended for public use, such as
roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads. Neither are they intended for some
public service or for the development of the national wealth. MPLDC leases portions of the properties to different business
establishments. Thus, the portions of the properties leased to taxable entities are not only subject to real estate tax, they can also be
sold at public auction to satisfy the tax delinquency.

In sum, only those portions of the properties leased to taxable entities are subject to real estate tax for the period of such leases. Pasig
City must, therefore, issue to respondent new real property tax assessments covering the portions of the properties leased to taxable
entities. If the Republic of the Philippines fails to pay the real property tax on the portions of the properties leased to taxable entities,
then such portions may be sold at public auction to satisfy the tax delinquency.

WHEREFORE, the petition is PARTIALLY GRANTED. The Court SETS ASIDE the 17 October 2008 Decision of the Court of
Appeals in CA-G.R. SP No. 97498 and declares VOID the 30 September 2002 real property tax assessment issued by Pasig City on
the subject properties of Mid-Pasig Land Development Corporation, the 8 November 2005 warrants of levy on the properties, and the
2 December 2005 auction sale. Pasig City is DIRECTED to issue to respondent new real property tax assessments covering only the
portions of the properties actually leased to taxable entities, and only for the period of such leases. Interests and penalties on such new
real property tax assessment shall accrue only after receipt of such new assessment by respondent.

SO ORDERED.
SECOND DIVISION

G.R. No. L40474 August 29, 1975

CEBU OXYGEN & ACETYLENE CO., INC., petitioner,


vs.
HON. PASCUAL A. BERCILLES Presiding Judge, Branch XV, 14th Judicial District, and JOSE L. ESPELETA, Assistant
Provincial Fiscal, Province of Cebu, representing the Solicitor General's Office and the Bureau of Lands, respondents.

Jose Antonio R Conde for petitioner.

Office of the Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General Octavio R. Ramirez and Trial Attorney
David R. Hilario for respondents. .

CONCEPCION, Jr., J.:

This is a petition for the review of the order of the Court of First Instance of Cebu dismissing petitioner's application for registration of
title over a parcel of land situated in the City of Cebu.

The parcel of land sought to be registered was only a portion of M. Borces Street, Mabolo, Cebu City. On September 23, 1968, the
City Council of Cebu, through Resolution No. 2193, approved on October 3, 1968, declared the terminal portion of M. Borces Street,
Mabolo, Cebu City, as an abandoned road, the same not being included in the City Development Plan.1 Subsequently, on December
19, 1968, the City Council of Cebu passed Resolution No. 2755, authorizing the Acting City Mayor to sell the land through a public
bidding.2 Pursuant thereto, the lot was awarded to the herein petitioner being the highest bidder and on March 3, 1969, the City of
Cebu, through the Acting City Mayor, executed a deed of absolute sale to the herein petitioner for a total consideration of
P10,800.00.3 By virtue of the aforesaid deed of absolute sale, the petitioner filed an application with the Court of First instance of
Cebu to have its title to the land registered.4

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

After hearing the parties, on October 11, 1974 the trial court issued an order dismissing the petitioner's application for registration of
title.6 Hence, the instant petition for review.

For the resolution of this case, the petitioner poses the following questions:

(1) Does the City Charter of Cebu City (Republic Act No. 3857) under Section 31, paragraph 34, give the City of
Cebu the valid right to declare a road as abandoned? and

(2) Does the declaration of the road, as abandoned, make it the patrimonial property of the City of Cebu which may
be the object of a common contract?

(1) The pertinent portions of the Revised Charter of Cebu City provides:

Section 31. Legislative Powers. Any provision of law and executive order to the contrary notwithstanding, the City
Council shall have the following legislative powers:

xxx xxx xxx

(34) ...; to close any city road, street or alley, boulevard, avenue, park or square. Property thus withdrawn from
public servitude may be used or conveyed for any purpose for which other real property belonging to the City may
be lawfully used or conveyed.
From the foregoing, it is undoubtedly clear that the City of Cebu is empowered to close a city road or street. In the case of Favis vs.
City of Baguio,7 where the power of the city Council of Baguio City to close city streets and to vacate or withdraw the same from
public use was similarly assailed, this court said:

5. So it is, that appellant may not challenge the city council's act of withdrawing a strip of Lapu-Lapu Street at its
dead end from public use and converting the remainder thereof into an alley. These are acts well within the ambit of
the power to close a city street. The city council, it would seem to us, is the authority competent to determine
whether or not a certain property is still necessary for public use.

Such power to vacate a street or alley is discretionary. And the discretion will not ordinarily be controlled or
interfered with by the courts, absent a plain case of abuse or fraud or collusion. Faithfulness to the public trust will
be presumed. So the fact that some private interests may be served incidentally will not invalidate the vacation
ordinance.

(2) Since that portion of the city street subject of petitioner's application for registration of title was withdrawn from public use, it
follows that such withdrawn portion becomes patrimonial property which can be the object of an ordinary contract.

Article 422 of the Civil Code expressly provides that "Property of public dominion, when no longer intended for public use or for
public service, shall form part of the patrimonial property of the State."

Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and unequivocal terms, states that: "Property thus
withdrawn from public servitude may be used or conveyed for any purpose for which other real property belonging to the City may be
lawfully used or conveyed."

Accordingly, the withdrawal of the property in question from public use and its subsequent sale to the petitioner is valid. Hence, the
petitioner has a registerable title over the lot in question.

WHEREFORE, the order dated October 11, 1974, rendered by the respondent court in Land Reg. Case No. N-948, LRC Rec. No. N-
44531 is hereby set aside, and the respondent court is hereby ordered to proceed with the hearing of the petitioner's application for
registration of title.

SO ORDERED.

Makalintal, C.J, Fernando, Barredo and Aquino, JJ., concur.

EN BANC

G.R. No. L-29788 August 30, 1972

RAFAEL S. SALAS, in his capacity as Executive Secretary; CONRADO F. ESTRELLA, in his capacity as Governor of the
Land Authority; and LORENZO GELLA, in his capacity as Register of Deeds of Manila, petitioners-appellants,
vs.
HON. HILARION U. JARENCIO, as Presiding Judge of Branch XXIII, Court of First Instance of Manila; ANTONIO J.
VILLEGAS, in his capacity as Mayor of the City of Manila; and the CITY OF MANILA, respondents-appellees.

Office of the Solicitor General Felix V. Makasiar, Assistant Solicitor-General Antonio A. Torres, Solicitor Raul I. Goco and Magno B.
Pablo & Cipriano A. Tan, Legal Staff, Land Authority for petitioners-appellants.

Gregorio A. Ejercito and Felix C. Chavez for respondents-appellees.

ESGUERRA, J.:p

This is a petition for review of the decision of the Court of First Instance of Manila, Branch XXIII, in Civil Case No. 67946, dated
September 23, 1968, the dispositive portion of which is as follows:
WHEREFORE, the Court renders judgment declaring Republic Act No. 4118 unconstitutional and invalid in that it
deprived the City of Manila of its property without due process and payment of just compensation. Respondent
Executive Secretary and Governor of the Land Authority are hereby restrained and enjoined from implementing the
provisions of said law. Respondent Register of Deeds of the City of Manila is ordered to cancel Transfer Certificate
of Title No. 80876 which he had issued in the name of the Land Tenure Administration and reinstate Transfer
Certificate of Title No. 22547 in the name of the City of Manila which he cancelled, if that is feasible, or issue a new
certificate of title for the same parcel of land in the name of the City of Manila. 1

The facts necessary for a clear understanding of this case are as follows:

On February 24, 1919, the 4th Branch of the Court of First Instance of Manila, acting as a land registration court, rendered judgment
in Case No. 18, G.L.R.O. Record No. 111, declaring the City of Manila the owner in fee simple of a parcel of land known as Lot No.
1, Block 557 of the Cadastral Survey of the City of Mani1a, containing an area of 9,689.8 square meters, more or less. Pursuant to said
judgment the Register of Deeds of Manila on August 21, 1920, issued in favor of the City of Manila, Original Certificate of Title No.
4329 covering the aforementioned parcel of land. On various dates in 1924, the City of Manila sold portions of the aforementioned
parcel of land in favor of Pura Villanueva. As a consequence of the transactions Original Certificate of Title No. 4329 was cancelled
and transfer certificates of title were issued in favor of Pura Villanueva for the portions purchased by her. When the last sale to Pura
Villanueva was effected on August 22, 1924, Transfer Certificate of Title No. 21974 in the name of the City of Manila was cancelled
and in lieu thereof Transfer Certificate of Title (TCT) No. 22547 covering the residue thereof known as Lot 1-B-2-B of Block 557,
with an area of 7,490.10 square meters, was issued in the name of the City of Manila.

On September 21, 1960, the Municipal Board of Manila, presided by then Vice-Mayor Antono J. Villegas, adopted a resolution
requesting His Excellency, the President of the Philippines to consider the feasibility of declaring the City property bounded by
Florida, San Andres, and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and 22547, containing a total area of 7,450
square meters as a patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof.2

The said resolution of the Municipil Board of the City of Manila was officially transmitted to the President of the Philippines by then
Vice-Mayor Antonio J. Villegas on September 21, 1960, with the information that the same resolution was, on the same date,
transmitted to the Senate and House of Representatives of the Congress of the Philippines. 3

During the First Session of the Fifth Congress of the Philippines, House Bill No. 191 was filed in the House of Representatives by
then Congressman Bartolome Cabangbang seeking to declare the property in question as patrimonial property of the City of Manila,
and for other purposes. The explanatory note of the Bill gave the grounds for its enactment, to wit:

In the particular case of the property subject of this bill, the City of Manila does not seem to have use thereof as a
public communal property. As a matter of fact, a resolution was adopted by the Municipal Board of Manila at its
regular session held on September 21, 1960, to request the feasibility of declaring the city property bounded by
Florida, San Andres and Nebraska Streets as a patrimonial property of the City of Manila for the purpose of
reselling these lots to the actual occupants thereof. Therefore, it will be to the best interest of society that the said
property be used in one way or another. Since this property has been occupied for a long time by the present
occupants thereof and since said occupants have expressed their willingness to buy the said property, it is but proper
that the same be sold to them.4

Subsequently, a revised version of the Bill was introduced in the House of Representatives by Congressmen Manuel Cases, Antonio
Raquiza and Nicanor Yñiguez as House Bill No. 1453, with the following explanatory note:

The accompanying bill seeks to convert one (1) parcel of land in the district of Malate, which is reserved as
communal property into a disposable or alienable property of the State and to provide its subdivision and sale to
bona fide occupants or tenants.

This parcel of land in question was originally an aggregate part of a piece of land with an area of 9,689.8 square
meters, more or less. ... On September 21, 1960, the Municipal Board of Manila in its regular session unanimously
adopted a resolution requesting the President of the Philippines and Congress of the Philippines the feasibility of
declaring this property into disposable or alienable property of the State. There is therefore a precedent that this
parcel of land could be subdivided and sold to bona fide occupants. This parcel of land will not serve any useful
public project because it is bounded on all sides by private properties which were formerly parts of this lot in
question.

Approval of this bill will implement the policy of the Administration of land for the landless and the Fifth
Declaration of Principles of the Constitution, which states that the promotion of Social Justice to insure the well-
being and economic security of all people should be the concern of the State. We are ready and willing to enact
legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such
kind of legislation arises.

In view of the foregoing consideration and to insure fairness and justice to the present bona fide occupants thereof, approval of this
Bill is strongly urged.5

The Bill having been passed by the House of Representatives, the same was thereafter sent to the Senate where it was thoroughly
discussed, as evidenced by the Congressional Records for May 20, 1964, pertinent portion of which is as follows:

SENATOR FERNANDEZ: Mr. President, it will be re called that when the late Mayor Lacson was still alive, we
approved a similar bill. But afterwards, the late Mayor Lacson came here and protested against the approval, and the
approval was reconsidered. May I know whether the defect in the bill which we approved, has already been
eliminated in this present bill?

SENATOR TOLENTINO: I understand Mr. President, that that has already been eliminated and that is why the City
of Manila has no more objection to this bill.

SENATOR FERNANDEZ: Mr. President, in view of that manifestation and considering that Mayor Villegas and
Congressman Albert of the Fourth District of Manila are in favor of the bill. I would not want to pretend to know
more what is good for the City of Manila.

SENATOR TOLENTINO: Mr. President, there being no objection, I move that we approve this bill on second
reading.

PRESIDENT PRO-TEMPORE: The biII is approved on second reading after several Senetors said aye and nobody
said nay.

The bill was passed by the Senate, approved by the President on June 20, 1964, and became Republic Act No. 4118. It reads as
follows:

Lot I-B-2-B of Block 557 of the cadastral survey of the City of Manila, situated in the District of Malate, City of
Manila, which is reserved as communal property, is hereby converted into disposal or alienable land of the State, to
be placed under the disposal of the Land Tenure Administration. The Land Tenure Administration shall subdivide
the property into small lots, none of which shall exceed one hundred and twenty square meters in area and sell the
same on installment basis to the tenants or bona fide occupants thereof and to individuals, in the order
mentioned: Provided, That no down payment shall be required of tenants or bona fide occupants who cannot afford
to pay such down payment: Provided, further, That no person can purchase more than one lot: Provided,
furthermore, That if the tenant or bona fide occupant of any given lot is not able to purchase the same, he shall be
given a lease from month to month until such time that he is able to purchase the lot: Provided, still further, That in
the event of lease the rentals which may be charged shall not exceed eight per cent per annum of the assessed value
of the property leased: And provided, finally, That in fixing the price of each lot, which shall not exceed twenty
pesos per square meter, the cost of subdivision and survey shall not be included.

Sec. 2. Upon approval of this Act no ejectment proceedings against any tenant or bona fide occupant of the above
lots shall be instituted and any ejectment proceedings pending in court against any such tenant or bona fide occupant
shall be dismissed upon motion of the defendant: Provided, That any demolition order directed against any tenant or
bona fide occupant shall be lifted.

Sec. 3. Upon approval of this Act, if the tenant or bona fide occupant is in arrears in the payment of any rentals, the
amount legally due shall be liquidated and shall be payable in twenty-four equal monthly installments from the date
of liquidation.

Sec. 4. No property acquired by virtue of this Act shall be transferred, sold, mortgaged, or otherwise disposed of
within a period of five years from the date full ownership thereof has been vested in the purchaser without the
consent of the Land Tenure Administration.

Sec. 5. In the event of the death of the purchaser prior to the complete payment of the price of the lot purchased by
him, his widow and children shall succeed in all his rights and obligations with respect to his lot.
Sec. 6. The Chairman of the Land Tenure Administration shall implement and issue such rules and regulations as
may be necessary to carry out the provisions of this Act.

Sec. 7. The sum of one hundred fifty thousand pesos is appropriated out of any funds in the National Treasury not
otherwise appropriated, to carry out the purposes of this Act.

Sec. 8. All laws or parts of laws inconsistent with this Act are repealed or modified accordingly.

Sec. 9. This Act shall take effect upon its approval.

Approved, June 20, 1964.

To implement the provisions of Republic Act No. 4118, and pursuant to the request of the occupants of the property involved, then
Deputy Governor Jose V. Yap of the Land Authority (which succeeded the Land Tenure Administration) addressed a letter, dated
February 18, 1965, to Mayor Antonio Villegas, furnishing him with a copy of the proposed subdivision plan of said lot as prepared for
the Republic of the Philippines for resale of the subdivision lots by the Land Authority to bona fide applicants. 6

On March 2, 1965, the City Mayor of Manila, through his Executive and Technical Adviser, acknowledged receipt of the proposed
subdivision plan of the property in question and informed the Land Authority that his office would interpose no objection to the
implementation of said law, provided that its provisions be strictly complied with.7

With the above-mentioned written conformity of the City of Manila for the implementation of Republic Act No. 4118, the Land
Authority, thru then Deputy Governor Jose V. Yap, requested the City Treasurer of Manila, thru the City Mayor, for the surrender and
delivery to the former of the owner's duplicate of Transfer Certificate of Title No. 22547 in order to obtain title thereto in the name of
the Land Authority. The request was duly granted with the knowledge and consent of the Office of the City Mayor. 8

With the presentation of Transfer Certificate of Title No. 22547, which had been yielded as above stated by the, City authorities to the
Land Authority, Transfer Certificate of Title (T.C.T. No. 22547) was cancelled by the Register of Deeds of Manila and in lieu thereof
Transfer Certificate of Title No. 80876 was issued in the name of the Land Tenure Administration (now Land Authority) pursuant to
the provisions of Republic Act No.
4118.9

But due to reasons which do not appear in the record, the City of Manila made a complete turn-about, for on December 20, 1966,
Antonio J. Villegas, in his capacity as the City Mayor of Manila and the City of Manila as a duly organized public corporation,
brought an action for injunction and/or prohibition with preliminary injunction to restrain, prohibit and enjoin the herein appellants,
particularly the Governor of the Land Authority and the Register of Deeds of Manila, from further implementing Republic Act No.
4118, and praying for the declaration of Republic Act No. 4118 as unconstitutional.

With the foregoing antecedent facts, which are all contained in the partial stipulation of facts submitted to the trial court and approved
by respondent Judge, the parties waived the presentation of further evidence and submitted the case for decision. On September 23,
1968, judgment was rendered by the trial court declaring Republic Act No. 4118 unconstitutional and invalid on the ground that it
deprived the City of Manila of its property without due process of law and payment of just compensation. The respondents were
ordered to undo all that had been done to carry out the provisions of said Act and were restrained from further implementing the same.

Two issues are presented for determination, on the resolution of which the decision in this case hinges, to wit:

I. Is the property involved private or patrimonial property of the City of Manila?

II. Is Republic Act No. 4118 valid and not repugnant to the Constitution?

I.

As regards the first issue, appellants maintain that the land involved is a communal land or "legua comunal" which is a portion of the
public domain owned by the State; that it came into existence as such when the City of Manila, or any pueblo or town in the
Philippines for that matter, was founded under the laws of Spain, the former sovereign; that upon the establishment of a pueblo, the
administrative authority was required to allot and set aside portions of the public domain for a public plaza, a church site, a site for
public buildings, lands to serve as common pastures and for streets and roads; that in assigning these lands some lots were earmarked
for strictly public purposes, and ownership of these lots (for public purposes) immediately passed to the new municipality; that in the
case of common lands or "legua comunal", there was no such immediate acquisition of ownership by the pueblo, and the land though
administered thereby, did not automatically become its property in the absence of an express grant from the Central Government, and
that the reason for this arrangement is that this class of land was not absolutely needed for the discharge of the municipality's
governmental functions.

It is argued that the parcel of land involved herein has not been used by the City of Manila for any public purpose and had not been
officially earmarked as a site for the erection of some public buildings; that this circumstance confirms the fact that it was originally
"communal" land alloted to the City of Manila by the Central Government not because it was needed in connection with its
organization as a municipality but simply for the common use of its inhabitants; that the present City of Manila as successor of the
Ayuntamiento de Manila under the former Spanish sovereign merely enjoys the usufruct over said land, and its exercise of acts of
ownership by selling parts thereof did not necessarily convert the land into a patrimonial property of the City of Manila nor divest the
State of its paramount title.

Appellants further argue that a municipal corporation, like a city is a governmental agent of the State with authority to govern a
limited portion of its territory or to administer purely local affairs in a given political subdivision, and the extent of its authority is
strictly delimited by the grant of power conferred by the State; that Congress has the exclusive power to create, change or destroy
municipal corporations; that even if We admit that legislative control over municipal corporations is not absolute and even if it is true
that the City of Manila has a registered title over the property in question, the mere transfer of such land by an act of the legislature
from one class of public land to another, without compensation, does not invade the vested rights of the City.

Appellants finally argue that Republic Act No. 4118 has treated the land involved as one reserved for communal use, and this
classification is conclusive upon the courts; that if the City of Manila feels that this is wrong and its interests have been thereby
prejudiced, the matter should be brought to the attention of Congress for correction; and that since Congress, in the exercise of its wide
discretionary powers has seen fit to classify the land in question as communal, the Courts certainly owe it to a coordinate branch of the
Government to respect such determination and should not interfere with the enforcement of the law.

Upon the other hand, appellees argue by simply quoting portions of the appealed decision of the trial court, which read thus:

The respondents (petitioners-appellants herein) contend, among other defenses, that the property in question is
communal property. This contention is, however, disproved by Original Certificate of Title No. 4329 issued on
August 21, 1920 in favor of the City of Manila after the land in question was registered in the City's favor. The
Torrens Title expressly states that the City of Manila was the owner in 'fee simple' of the said land. Under Sec. 38 of
the Land Registration Act, as amended, the decree of confirmation and registration in favor of the City of Manila ...
shall be conclusive upon and against all persons including the Insular Government and all the branches there ...
There is nothing in the said certificate of title indicating that the land was 'communal' land as contended by the
respondents. The erroneous assumption by the Municipal Board of Manila that the land in question was communal
land did not make it so. The Municipal Board had no authority to do that.

The respondents, however, contend that Congress had the power and authority to declare that the land in question
was 'communal' land and the courts have no power or authority to make a contrary finding. This contention is not
entirely correct or accurate. Congress has the power to classify 'land of the public domain', transfer them from one
classification to another and declare them disposable or not. Such power does not, however, extend to properties
which are owned by cities, provinces and municipalities in their 'patrimonial' capacity.

Art. 324 of the Civil Code provides that properties of provinces, cities and municipalities are divided into properties
for public use and patrimonial property. Art. 424 of the same code provides that properties for public use consist of
provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades and public works
for public service paid for by said province, cities or municipalities. All other property possessed by any of them is
patrimonial. Tested by this criterion the Court finds and holds that the land in question is patrimonial property of the
City of Manila.

Respondents contend that Congress has declared the land in question to be 'communal' and, therefore, such
designation is conclusive upon the courts. The Courts holds otherwise. When a statute is assailed as unconstitutional
the Courts have the power and authority to inquire into the question and pass upon it. This has long ago been settled
in Marbury vs. Madison, 2 L. ed. 60, when the United States Supreme Court speaking thru Chief Justice Marshall
held:

... If an act of the legislature, repugnant to the constitution, is void, does it, notwithstanding its
validity, bind the courts, and oblige them to give effect? It is emphatically the province and duty
of the judicial department to say what the law is ... So if a law be in opposition to the constitution;
if both the law and the constitution apply to a particular case, so that the court must either decide
that case conformable to the constitution, disregarding the law, the court must determine which of
these conflicting rules governs the case. This is of the very essence of unconstitutional judicial
duty.

Appellees finally concluded that when the courts declare a law unconstitutional it does not mean that the judicial power is superior to
the legislative power. It simply means that the power of the people is superior to both and that when the will of the legislature,
declared in statutes, stands in opposition to that of the people, declared in the Constitution, the judges ought to be governed by the
Constitution rather than by the statutes.

There is one outstanding factor that should be borne in mind in resolving the character of the land involved, and it is that the City of
Manila, although declared by the Cadastral Court as owner in fee simple, has not shown by any shred of evidence in what manner it
acquired said land as its private or patrimonial property. It is true that the City of Manila as well as its predecessor, the Ayuntamiento
de Manila, could validly acquire property in its corporate or private capacity, following the accepted doctrine on the dual character —
public and private — of a municipal corporation. And when it acquires property in its private capacity, it acts like an ordinary person
capable of entering into contracts or making transactions for the transmission of title or other real rights. When it comes to acquisition
of land, it must have done so under any of the modes established by law for the acquisition of ownership and other real rights. In the
absence of a title deed to any land claimed by the City of Manila as its own, showing that it was acquired with its private or corporate
funds, the presumption is that such land came from the State upon the creation of the municipality (Unson vs. Lacson, et al., 100 Phil.
695). Originally the municipality owned no patrimonial property except those that were granted by the State not for its public but for
private use. Other properties it owns are acquired in the course of the exercise of its corporate powers as a juridical entity to which
category a municipal corporation pertains.

Communal lands or "legua comunal" came into existence when a town or pueblo was established in this country under the laws of
Spain (Law VII, Title III, Book VI, Recopilacion de las Leyes de Indios). The municipalities of the Philippines were not entitled, as a
matter of right, to any part of the public domain for use as communal lands. The Spanish law provided that the usufruct of a portion of
the public domain adjoining municipal territory might be granted by the Government for communal purposes, upon proper petition,
but, until granted, no rights therein passed to the municipalities, and, in any event, the ultimate title remained in the sovereign (City of
Manila vs. Insular Government, 10 Phil. 327).

For the establishment, then, of new pueblos the administrative authority of the province, in representation of the
Governor General, designated the territory for their location and extension and the metes and bounds of the same;
and before alloting the lands among the new settlers, a special demarcation was made of the places which were to
serve as the public square of the pueblo, for the erection of the church, and as sites for the public buildings, among
others, the municipal building or the casa real, as well as of the lands whick were to constitute the common pastures,
and propios of the municipality and the streets and roads which were to intersect the new town were laid out, ... .
(Municipality of Catbalogan vs. Director of Lands, 17 Phil. 216, 220) (Emphasis supplied)

It may, therefore, be laid down as a general rule that regardless of the source or classification of land in the possession of a
municipality, excepting those acquired with its own funds in its private or corporate capacity, such property is held in trust for the
State for the benefit of its inhabitants, whether it be for governmental or proprietary purposes. It holds such lands subject to the
paramount power of the legislature to dispose of the same, for after all it owes its creation to it as an agent for the performance of a
part of its public work, the municipality being but a subdivision or instrumentality thereof for purposes of local administration.
Accordingly, the legal situation is the same as if the State itself holds the property and puts it to a different use (2 McQuilin,Municipal
Corporations, 3rd Ed., p. 197, citing Monagham vs. Armatage, 218 Minn. 27, 15 N. W. 2nd 241).

True it is that the legislative control over a municipal corporation is not absolute even when it comes to its property devoted to public
use, for such control must not be exercised to the extent of depriving persons of their property or rights without due process of law, or
in a manner impairing the obligations of contracts. Nevertheless, when it comes to property of the municipality which it did not
acquire in its private or corporate capacity with its own funds, the legislature can transfer its administration and disposition to an
agency of the National Government to be disposed of according to its discretion. Here it did so in obedience to the constitutional
mandate of promoting social justice to insure the well-being and economic security of the people.

It has been held that a statute authorizing the transfer of a Municipal airport to an Airport Commission created by the legislature, even
without compensation to the city, was not violative of the due process clause of the American Federal Constitution. The Supreme
Court of Minnessota in Monagham vs. Armatage, supra, said:

... The case is controlled by the further rule that the legislature, having plenary control of the local municipality, of
its creation and of all its affairs, has the right to authorize or direct the expenditures of money in its treasury, though
raised, for a particular purpose, for any legitimate municipal purpose, or to order and direct a distribution thereof
upon a division of the territory into separate municipalities ... . The local municipality has no such vested right in or
to its public funds, like that which the Constitution protects in the individual as precludes legislative
interferences. People vs. Power, 25 Ill. 187; State Board (of Education) vs. City, 56 Miss. 518. As remarked by the
supreme court of Maryland in Mayor vs. Sehner, 37 Md. 180: "It is of the essence of such a corporation, that the
government has the sole right as trustee of the public interest, at its own good will and pleasure, to inspect, regulate,
control, and direct the corporation, its funds, and franchises."

We therefore hold that c.500, in authorizing the transfer of the use and possession of the municipal airport to the
commission without compensation to the city or to the park board, does not violate the Fourteenth Amendment to
the Constitution of the United States.

The Congress has dealt with the land involved as one reserved for communal use (terreno comunal). The act of classifying State
property calls for the exercise of wide discretionary legislative power and it should not be interfered with by the courts.

This brings Us to the second question as regards the validity of Republic Act No. 4118, viewed in the light of Article III, Sections 1,
subsection (1) and (2) of the Constitution which ordain that no person shall be deprived of his property without due process of law and
that no private property shall be taken for public use without just compensation.

II .

The trial court declared Republic Act No. 4118 unconstitutional for allegedly depriving the City of Manila of its property without due
process of law and without payment of just compensation. It is now well established that the presumption is always in favor of the
constitutionality of a law (U S. vs. Ten Yu, 24 Phil. 1; Go Ching, et al. vs. Dinglasan, et al., 45 O.G. No. 2, pp. 703, 705). To declare a
law unconstitutional, the repugnancy of that law to the Constitution must be clear and unequivocal, for even if a law is aimed at the
attainment of some public good, no infringement of constitutional rights is allowed. To strike down a law there must be a clear
showing that what the fundamental law condemns or prohibits, the statute allows it to be done (Morfe vs. Mutuc, et al., G.R. No. L-
20387, Jan. 31, 1968; 22 SCRA 424). That situation does not obtain in this case as the law assailed does not in any manner trench
upon the constitution as will hereafter be shown. Republic Act No. 4118 was intended to implement the social justice policy of the
Constitution and the Government program of "Land for the Landless". The explanatory note of House Bill No. 1453 which became
Republic Act No. 4118, reads in part as follows:

Approval of this bill will implement the policy of the administration of "land for the landless" and the Fifth
Declaration of Principles of the Constitution which states that "the promotion of social justice to insure the well-
being and economic security of all people should be the concern of the State." We are ready and willing to enact
legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such
kind of legislation arises.

The respondent Court held that Republic Act No. 4118, "by converting the land in question — which is the patrimonial property of the
City of Manila into disposable alienable land of the State and placing it under the disposal of the Land Tenure Administration —
violates the provisions of Article III (Secs. 1 and 2) of the Constitution which ordain that "private property shall not be taken for
public use without just compensation, and that no person shall be deprived of life, liberty or property without due process of law". In
support thereof reliance is placed on the ruling in Province of Zamboanga del Norte vs. City of Zamboanga, G.R. No. 2440, March 28,
1968; 22 SCRA 1334, which holds that Congress cannot deprive a municipality of its private or patrimonial property without due
process of law and without payment of just compensation since it has no absolute control thereof. There is no quarrel over this rule if
it is undisputed that the property sought to be taken is in reality a private or patrimonial property of the municipality or city. But it
would be simply begging the question to classify the land in question as such. The property, as has been previously shown, was not
acquired by the City of Manila with its own funds in its private or proprietary capacity. That it has in its name a registered title is not
questioned, but this title should be deemed to be held in trust for the State as the land covered thereby was part of the territory of the
City of Manila granted by the sovereign upon its creation. That the National Government, through the Director of Lands, represented
by the Solicitor General, in the cadastral proceedings did not contest the claim of the City of Manila that the land is its property, does
not detract from its character as State property and in no way divests the legislature of its power to deal with it as such, the state not
being bound by the mistakes and/or negligence of its officers.

One decisive fact that should be noted is that the City of Manila expressly recognized the paramount title of the State over said land
when by its resolution of September 20, 1960, the Municipal Board, presided by then Vice-Mayor Antonio Villegas, requested "His
Excellency the President of the Philippines to consider the feasibility of declaring the city property bounded by Florida, San Andres
and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and 25547, containing an area of 7,450 square meters, as
patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof." (See Annex E,
Partial Stipulation of Facts, Civil Case No. 67945, CFI, Manila, p. 121, Record of the Case) [Emphasis Supplied]
The alleged patrimonial character of the land under the ownership of the City of Manila is totally belied by the City's own official act,
which is fatal to its claim since the Congress did not do as bidden. If it were its patrimonial property why should the City of Manila be
requesting the President to make representation to the legislature to declare it as such so it can be disposed of in favor of the actual
occupants? There could be no more blatant recognition of the fact that said land belongs to the State and was simply granted in
usufruct to the City of Manila for municipal purposes. But since the City did not actually use said land for any recognized public
purpose and allowed it to remain idle and unoccupied for a long time until it was overrun by squatters, no presumption of State grant
of ownership in favor of the City of Manila may be acquiesced in to justify the claim that it is its own private or patrimonial property
(Municipality of Tigbauan vs. Director of Lands, 35 Phil. 798; City of Manila vs. Insular Government, 10 Phil. 327; Municipality of
Luzuriaga vs. Director of Lands, 24 Phil. 193). The conclusion of the respondent court that Republic Act No. 4118 converted a
patrimonial property of the City of Manila into a parcel of disposable land of the State and took it away from the City without
compensation is, therefore, unfounded. In the last analysis the land in question pertains to the State and the City of Manila merely
acted as trustee for the benefit of the people therein for whom the State can legislate in the exercise of its legitimate powers.

Republic Act No. 4118 was never intended to expropriate the property involved but merely to confirm its character as communal land
of the State and to make it available for disposition by the National Government: And this was done at the instance or upon the request
of the City of Manila itself. The subdivision of the land and conveyance of the resulting subdivision lots to the occupants by
Congressional authorization does not operate as an exercise of the power of eminent domain without just compensation in violation of
Section 1, subsection (2), Article III of the Constitution, but simply as a manifestation of its right and power to deal with state
property.

It should be emphasized that the law assailed was enacted upon formal written petition of the Municipal Board of Manila in the form
of a legally approved resolution. The certificate of title over the property in the name of the City of Manila was accordingly cancelled
and another issued to the Land Tenure Administration after the voluntary surrender of the City's duplicate certificate of title by the
City Treasurer with the knowledge and consent of the City Mayor. To implement the provisions of Republic Act No. 4118, the then
Deputy Governor of the Land Authority sent a letter, dated February 18, 1965, to the City Mayor furnishing him with a copy of the
"proposed subdivision plan of the said lot as prepared for the Republic of the Philippines for subdivision and resale by the Land
Authority to bona fide applicants." On March 2, 1965, the Mayor of Manila, through his Executive and Technical Adviser,
acknowledged receipt of the subdivision plan and informed the Land Authority that his Office "will interpose no objection to the
implementation of said law provided that its provisions are strictly complied with." The foregoing sequence of events, clearly indicate
a pattern of regularity and observance of due process in the reversion of the property to the National Government. All such acts were
done in recognition by the City of Manila of the right and power of the Congress to dispose of the land involved.

Consequently, the City of Manila was not deprived of anything it owns, either under the due process clause or under the eminent
domain provisions of the Constitution. If it failed to get from the Congress the concession it sought of having the land involved given
to it as its patrimonial property, the Courts possess no power to grant that relief. Republic Act No. 4118 does not, therefore, suffer
from any constitutional infirmity.

WHEREFORE, the appealed decision is hereby reversed, and petitioners shall proceed with the free and untrammeled implementation
of Republic Act No. 4118 without any obstacle from the respondents. Without costs.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Fernando, Teehankee and Antonio, JJ., concur.

Barredo and Makasiar, JJ., took no part.


FIRST DIVISION

G. R. No. L-41001 September 30, 1976

MANILA LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF THE ELKS, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, CITY OF MANILA, and TARLAC DEVELOPMENT
CORPORATION, respondents.

No. L-41012 September 30, 1976

TARLAC DEVELOPMENT CORPORATION, petitioner,


vs.
HONORABLE COURT OF APPEALS, CITY OF MANILA, LODGE NO. 761, BENEVOLENT AND PROTECTIVE
ORDER OF ELKS, INC., respondents.

CASTRO, C.J.:têñ.£îhqwâ£

STATEMENT OF THE CASE AND STATEMENTOF THE FACTS

These two cases are petitions on certiorari to review the decision dated June 30, 1975 of the Court of Appeals in CA-G.R. No. 51590-
R entitled "Tarlac Development Corporation vs. City of Manila, and Manila Lodge No. 761, Benevolent and Protective Order of Elks,
Inc.," affirming the trial court's finding in Civil Case No. 83009 that the property subject of the decision a quo is a "public park or
plaza."

On June 26, 1905 the Philippine Commission enacted Act No. l360 which authorized the City of Manila to reclaim a portion of Manila
Bay. The reclaimed area was to form part of the Luneta extension. The Act provided that the reclaimed area "Shall be the property of
the City of Manila" and that "the City of Manila is hereby authorized to set aside a tract of the reclaimed land formed by the Luneta
extension x x x at the north end not to exceed five hundred feet by six hundred feet in size, for a hotel site, and to lease the same, with
the approval of the Governor General, to a responsible person or corporation for a term not exceed ninety-nine years."

Subsequently, the Philippine Commission passed on May 18, 1907 Act No. 1657, amending Act No. 1360, so as to authorize the City
of' Manila either to lease or to sell the portion set aside as a hotel site.

The total area reclaimed was a little over 25 hectares. The City of Manila applied for the registration of the reclaimed area, and on
January 20, 1911, O.C.T. No. 1909 was issued in the name of the City of Manila. The title described the registered land as "un terreno
conocido con el nombre de Luneta Extension, situato en el distrito de la Ermita x x x." The registration was "subject, however to such
of the incumbrances mentioned in Article 39 of said law (Land Registration Act) as may be subsisting" and "sujeto a las disposiciones
y condiciones impuestas en la Ley No. 1360; y sujeto tambein a los contratos de venta, celebrados y otorgados por la Ciudad de
Manila a favor del Army and Navy Club y la Manila Lodge No. 761, Benevolent and Protective Order of Elks, fechados
respectivamente, en 29 de Diciembre de 1908 y 16 de Enero de 1909." 1

On July 13, 1911 the City of Manila, affirming a prior sale dated January 16, 1909 cancelled 5,543.07 square meters of the reclaimed
area to the Manila Lodge No. 761, Benevolent and Protective Order of Elks of the U.S.A. (BPOE, for short) on the basis of which
TCT No. 2195 2 was issued to the latter over the Marcela de terreno que es parte de la Luneta Extension, Situada en el Distrito le la
Ermita ... ." At the back of this title vas annotated document 4608/T-1635, which in part reads as follows: "que la citada Ciusdad de
Manila tendra derecho a su opcion, de recomparar la expresada propiedad para fines publicos solamete in cualquier tiempo despues de
cincuenta anos desde el 13 le Julio le 1911, precio de la misma propiedad, mas el valor que entonces tengan las mejoras."

For the remainder of the Luneta Extension, that is, after segregating therefrom the portion sold to the Manila Lodge No. 761, PBOE, a
new Certificate of Title No. 2196 3 was issued on July 17, 1911 to the City of Manila.

Manila Lodge No. 761, BPOE, subsequently sold the said 5,543.07 square meters to the Elks Club, Inc., to which was issued TCT No.
67488. 4 The registered owner, "The Elks Club, Inc.," was later changed by court oder to "Manila Lodge No. 761, Benevolent and
Protective Order of Elks, Inc."
In January 1963 the BPOE. petitioned the Court of First Instance of Manila, Branch IV, for the cancellation of the right of the City of
Manila to repurchase the property This petition was granted on February 15, 1963.

On November 19, 1963 the BPOE sold for the sum of P4,700,000 the land together with all the improvements thereon to the Tarlac
Development Corporation (TDC, for short) which paid P1,700.000 as down payment and mortgaged to the vendor the same realty to
secure the payment of the balance to be paid in quarterly installments.5At the time of the sale,, there was no annotation of any
subsisting lien on the title to the property. On December 12, 1963 TCT No. 73444 was issued to TDC over the subject land still
described as "UNA PARCELA DE TERRENO, que es parte de la Luneta Extension, situada en el Distrito de Ermita ... ."

In June 1964 the City of Manila filed with the Court of First Instance of Manila a petition for the reannotation of its right to
repurchase; the court, after haering, issued an order, dated November 19, 1964, directing the Register of Deeds of the City of Manila
to reannotate in toto the entry regarind the right of the City of Manila to repurchase the property after fifty years. From this order TDC
and BPOE appealed to this Court which on July 31, 1968 affirmed in G.R. Nos. L-24557 and L-24469 the trial court's order of
reannotation, but reserved to TDC the right to bring another action for the clarification of its rights.

As a consequence of such reservation, TDC filed on April 28, 1971 against the City of Manila and the Manila Lodge No. 761, BPOE,
a complaint, docketed as Civil Case No. 83009 of the Court of First Instance of Manila, containing three causes of action and praying -

a) On the first cause of action, that the plaintiff TDC be declared to have purchased the parcel of land now in question with the
buildings and improvements thereon from the defendant BPOE for value and in good faith, and accordingly ordering the cancellation
of Entry No. 4608/T-1635 on Transfer Certificate of Title No. 73444 in the name of the Plaintiff;

b) On the second cause of action, ordering the defendant City of Manila to pay the plaintiff TDC damages in the sum of note less than
one hundred thousand pesos (P100,000.00);

c) On the third cause of action, reserving to the plaintiff TDC the right to recover from the defendant BPOE the amounts mentioned in
par. XVI of the complaint in accordance with Art. 1555 of the Civil Code, in the remote event that the final judgment in this case
should be that the parcel of land now in question is a public park; and

6
d) For costs, and for such other and further relief as the Court may deem just and equitable.

Therein defendant City of Manila, in its answer dated May 19, 1971, admitted all the facts alleged in the first cause of action except
the allegation that TDC purchased said property "for value and in good faith," but denied for lack of knowledge or information the
allegations in the second and third causes of action. As, special and affirmative defense, the City of Manila claimed that TDC was not
a purchaser in good faith for it had actual notice of the City's right to repurchase which was annotated at the back of the title prior to
its cancellation, and that, assuming arguendo that TDC had no notice of the right to repurchase, it was, nevertheless, under obligation
to investigate inasmuch as its title recites that the property is a part of the Luneta extension. 7

The Manila Lodge No. 761, BPOE, in its answer dated June 7, 1971, admitted having sold the land together with the improvements
thereon for value to therein plaintiff which was in good faith, but denied for lack of knowledge as to their veracity the allegations
under the second cause of action. It furthermore admitted that TDC had paid the quarterly installments until October l5, 1964 but
claimed that the latter failed without justifiable cause to pay the subsequent installments. It also asserted that it was a seller for value in
good faith without having misrepresented or concealed tacts relative to the title on the property. As counterclaim, Manila Lodge No.
761 (BPOE) sought to recover the balance of the purchase price plus interest and costs. 8

On June 15, 1971 TDC answered the aforesaid counterclaim, alleging that its refusal to make further payments was fully justified.9

After due trial the court a quo rendered on July 14, 1972 its decision finding the subject land to be part of the "public park or plaza"
and, therefore, part of the public domain. The court consequently declared that the sale of the subject land by the City of Manila to
Manila Lodge No. 761, BPOE, was null and void; that plaintiff TDC was a purchaser thereof in g faith and for value from BPOE and
can enforce its rights against the latter; and that BPOE is entitled to recover from the City of Manila whatever consideration it had
'paid the latter. 'The dispositive part of the decision reads: ñé+.£ªwph!1

WHEREFORE, the Court hereby declares that the parcel of land formerly covered by Transfer Certificate of Title
Nos 2195 and 67488 in the name of BPOE and now by Transfer Certificate of Title No. 73444 in the name of Tarlac
Development Corporation is a public' park or plaza, and, consequently, instant complaint is dimissed, without
pronouncement as to costs.
In view of the reservation made by plaintiff Tarlac Development Corporation to recover from defendant BPOE the
amounts mentioned in paragraph XVI of the complaint in accordance with Article 1555 of the Civil Code, the Court
makes no pronouncement on this point. 10

From said decision the therein plaintiff TDC as well as the defendant Manila Lodge No. 761, BPOE, appealed to the Court of Appeals.

In its appeal docketed as CA-G.R. No. 51590-R, the Manila Lodge No. 761, BPOE, avers that the trial court committed the following
errors, namely:

1. In holding that the property subject of the action is not patrimonial property of the City of Manila; and

11
2. In holding that the Tarlac Development Corporation may recover and enforce its right against the defendant BPOE.

The Tarlac Development Corporation, on the other hand, asserts that the trial court erred:

(1) In finding that the property in question is or was a public park and in consequently nullifying the sale thereof by the City of Manila
to BPOE;

(2) In applying the cases of Municipality of Cavite vs. Rojas, 30 Phil. 602, and Government vs. Cabangis, 53 Phil. 112, to the case at
bar; and

(3) In not holding that the plaintiff-appellant is entitled to ,recover damages from the defendant City of Manila. 12

Furthermore, TDC as appellee regarding the second assignment of error raised by BPOE, maintained that it can recover and enforce its
rigth against BPOE in the event that the land in question is declared a public park or part thereof. 13

In its decision promulgated on June 30, 1975, the Court of Appeals concur ed in the findings and conclusions of the lower court upon
the ground that they are supported by he evidence and are in accordance with law, and accordingly affirmed the lower court's
judgment.

Hence, the present petitions for review on certiorari.

G.R. No. L-41001

The Manila Lodge No. 761, BPOE, contends, in its petition for review on certiorari docketed as G.R. No. L-41001, that the Court of
Appeals erred in (1) disregarding the very enabling acts and/or statutes according to which the subject property was, and still is,
patrimonial property of the City of Manila and could therefore be sold and/or disposed of like any other private property; and (2) in
departing from the accepted and usual course of judicial proceedings when it simply made a general affirmance of the court a
quo's findings and conclusions without bothering to discuss or resolve several vital points stressed by the BPOE in its assigned
errrors. 14

G.R. No. L-41012

The Tarlac Development Corporation, in its petition for review on certiorari docketed as G.R. No. L-41012, relies on the following
grounds for the allowance of its petition:

1. that the Court of Appeals did not correctly interpret Act No. 1360, as amended by Act No. 1657, of the Philippine Commission; and

2. that the Court of Appeals has departed from the accepted and usual course of judicial proceedings in that it did not make its own
findings but simply recited those of the lower court. 15

ISSUES AND ARGUMENTS

FIRST ISSUE

Upon the first issue, both petitioners claim that the property subject of the action, pursuant to the provisions of Act No. 1360, as
amended by Act No. 1657, was patrimonial property of the City of Manila and not a park or plaza.
Arguments of Petitioners

In G.R. No. L-41001, the Manila Lodge No. 761, BPOE, admits that "there appears to be some logic in the conclusion" of the Court of
Appeals that "neither Act No. 1360 nor Act No. 1657 could have meant to supply the City of Manila the authority to sell the subject
property which is located at the south end not the north — of the reclaimed area." 16 It argues, however, that when Act No. 1360, as
amended, authorized the City of Manila to undertake the construction of the Luneta extension by reclaimed land from the Manila Bay,
and declared that the reclaimed land shall be the "property of the City of Manila," the State expressly granted the ownership thereof to
the City of Manila which. consequently. could enter into transactions involving it; that upon the issuance of O.C.T. No. 1909, there
could he no doubt that the reclaimed area owned by the City was its patrimonial property;" that the south end of the reclaimed area
could not be for public use for. as argued by TDC a street, park or promenade can be property for public use pursuant to Article 344 of
the Spanish Civil Code only when it has already been so constructed or laid out, and the subject land, at the time it was sold to the
Elk's Club, was neither actually constructed as a street, park or promenade nor laid out as a street, park or promenade;" that even
assuming that the subject property was at the beginning property of public dominion, it was subsequently converted into patrimonial
property pursuant to Art. 422 of the Civil Code, inasmuch as it had never been used, red or utilized since it was reclaimed in 1905 for
purpose other than this of an ordinary real estate for sale or lease; that the subject property had never been intended for public use, is
further shown by the fact that it was neither included as a part of the Luneta Park under Plan No. 30 of the National Planning
Commission nor considered a part of the Luneta National Park (now Rizal Park) by Proclamation No. 234 dated December 19, 1955
of President Ramon Magsaysay or by Proclamation Order No. 274 dated October 4, 1967 of President Ferdinand E. Marcos;" 19 that,
such being the case, there is no reason why the subject property should -not be considered as having been converted into patrimonial
property, pursuant to the ruling in Municipality vs. Roa 7 Phil. 20, inasmuch as the City of Manila has considered it as its patrimonial
property not only bringing it under the operation of the Land Registration Act but also by disposing of it; 20 and that to consider now
the subject property as a public plaza or park would not only impair the obligations of the parties to the contract of sale (rated July 13,
1911, but also authorize deprivation of property without due process of law. 21

G.R. No. L-410112

In L-41012, the petitioner TDC stresses that the principal issue is the interpretation of Act No. 1360, as amended by. Act No. 1657 of
the Philippine Commission, 22 and avers that inasmuch as Section 6 of Act No. 1360, as amended by Act 1657, provided that the
reclamation of the Luneta extension was to be paid for out of the funds of the City of Manila which was authorized to borrow
P350,000 "to be expended in the construction of Luneta Extension," the reclaimed area became "public land" belonging to the City of
Manila that spent for the reclamation, conformably to the holding in Cabangis,23 and consequently, said land was subject to sale and
other disposition; that the Insular Government itself considered the reclaimed Luneta extension as patrimonial property subject to
disposition as evidenced by the fact that See. 3 of Act 1360 declared that "the land hereby reclaimed shall be the property of the City
of Manila;" that this property cannot be property for public use for according to Article 344 of the Civil Code, the character of
property for public use can only attach to roads and squares that have already been constructed or at least laid out as such, which
conditions did not obtain regarding the subject land, that Sec. 5 of Act 1360 authorized the City of Manila to lease the northern part of
the reclaimed area for hotel purposes; that Act No. 1657 furthermore authorized the City of Manila to sell the same; 24 that the express
statutory authority to lease or sell the northern part of the reclaimed area cannot be interpreted to mean that the remaining area could
not be sold inasmuch as the purpose of the statute was not merely to confer authority to sell the northern portion but rather to limit the
city's power of disposition thereof, to wit: to prevent disposition of the northern portion for any purpose other than for a hotel site that
the northern and southern ends of the reclaimed area cannot be considered as extension of the Luneta for they lie beyond the sides of
the original Luneta when extended in the direction of the sea, and that is the reason why the law authorized the sale of the northern
portion for hotel purposes, and, for the same reason, it is implied that the southern portion could likewise be disposed of. 26

TDC argues likewise that there are several items of uncontradicted circumstantial evidence which may serve as aids in construing the
legislative intent and which demonstrate that the subject property is patrimonial in nature, to wit: (1) Exhibits "J" and "J-1", or Plan
No. 30 of the National Planning Commission showing the Luneta and its vicinity, do not include the subject property as part of the
Luneta Park; (2) Exhibit "K", which is the plan of the subject property covered by TCT No. 67488 of BPOE, prepared on November
11, 1963, indicates that said property is not a public park; (3) Exhibit "T", which is a certified copy of Proclamation No. 234 issued on
December 15, 1955 is President Magsaysay, and Exhibit "U" which is Proclamation Order No. 273 issued on October 4, 1967 by
President Marcos, do not include the subject property in the Luneta Park-, (4) Exhibit "W", which is the location plan of the Luneta
National Park under Proclamations Nos. 234 and 273, further confirms that the subject property is not a public park; and (5) Exhibit
"Y", which is a copy of O.C.T. No. 7333 in the name of the United States of America covering the land now occupied by the America
covering the land now occupied by the American Embassy, the boundaries of which were delineated by the Philippine Legislature,
states that the said land is bounded on the northwest by properties of the Army and Navy Club (Block No. 321) and the Elks Club
(Block No. 321), and this circumstance shows that even the Philippine Legislature recognized the subject property as private property
of the Elks Club. 27

TDC furthermore contends that the City of Manila is estopped from questioning the validity of the sale of the subject property that it
executed on July 13, 1911 to the Manila Lodge No. 761, BPOE, for several reasons, namely: (1) the City's petition for the reannotation
of Entry No. 4608/T-1635 was predicated on the validity of said sale; (2) when the property was bought by the petitioner TDC it was
not a public plaza or park as testified to by both Pedro Cojuanco, treasurer of TDC, and the surveyor, Manuel Añoneuvo, according to
whom the subject property was from all appearances private property as it was enclosed by fences; (3) the property in question was
cadastrally surveyed and registered as property of the Elks Club, according to Manuel Anonuevo; (4) the property was never used as a
public park, for, since the issuance of T.C.T. No. 2165 on July 17, 1911 in the name of the Manila Lodge NO. 761, the latter used it as
private property, and as early as January 16, 1909 the City of Manila had already executed a deed of sale over the property in favor of
the Manila Lodge No. 761; and (5) the City of Manila has not presented any evidence to show that the subject property has ever been
proclaimed or used as a public park. 28

TDC, moreover, contends that Sec. 60 of Com. Act No. 141 cannot apply to the subject land, for Com. Act No. 141 took effect on
December 1, 1936 and at that time the subject land was no longer part of the part of the public domain. 29

TDC also stresses that its rights as a purchaser in good faith cannot be disregarded, for the mere mention in the certificate of title that
the lot it purchased was "part of the Luneta extension" was not a sufficient warning that tile title to the City of Manila was invalid; and
that although the trial court, in its decision affirmed by the Court of Appeals, found the TDC -to has been an innocent purchaser for
value, the court disregarded the petitioner's rights as such purchaser that relied on Torrens certificate of title. 30

The Court, continues the petitioner TDC erred in not holding that the latter is entitled to recover from the City of Manila damages in
the amount of P100,000 caused by the City's petition for- reannotation of its right to repurchase.

DISCUSSION AND RESOLUTION OF FIRST ISSUE

It is a cardinal rule of statutory construction that courts must give effect to the general legislative intent that can be discovered from or
is unraveled by the four corners of the statute, 31 and in order to discover said intent, the whole statute, and not only a particular
provision thereof, should be considered.32 It is, therefore, necessary to analyze all the provisions of Act No. 1360, as amended, in
order to unravel the legislative intent.

Act No. 1360 which was enacted by the Philippine Commission on June 26, 1905, as amended by Act No. 1657 enacted on May 18,
1907, authorized the "construction of such rock and timber bulkheads or sea walls as may be necessary for the making of an extension
to the Luneta" (Sec. 1 [a]), and the placing of the material dredged from the harbor of Manila "inside the bulkheads constructed to
inclose the Luneta extension above referred to" (Sec. 1 [a]). It likewise provided that the plan of Architect D. H. Burnham as "a
general outline for the extension and improvement of the Luneta in the City of Manila" be adopted; that "the reclamation from the Bay
of Manila of the land included in said projected Luneta extension... is hereby authorized and the land thereby reclaimed shall be the
property of the City of Manila" (Sec. 3); that "the City of Manila is hereby authorized to set aside a tract of the reclaimed land formed
by the Luneta extension authorized by this Act at the worth end of said tract, not to exceed five hundred feet by six hundred feet in
size, for a hotel site, and to lease the same with the approval of the Governor General, ... for a term not exceeding ninety-nine years;
that "should the Municipal Board ... deem it advisable it is hereby authorized to advertise for sale to sell said tract of land ... ;" "that
said tract shall be used for hotel purposes as herein prescribed, and shall not be devoted to any other purpose or object whatever;" "that
should the grantee x x x fail to maintain on said tract a first-class hotel x x x then the title to said tract of land sold, conveyed, and
transferred, and shall not be devoted to any other purpose or object whatever;" "that should the grantee x x x fail to maintain on said
tract a first-class hotel x x x then the title to said tract of land sold, conveyed, and transferred to the grantee shall revert to the City of
Manila, and said City of Manila shall thereupon become entitled to immediate possession of said tract of land" (Sec. 5); that the
construction of the rock and timber bulkheads or sea wall "shall be paid for out of the funds of the City of Manila, but the area to be
reclaimed by said proposed Luneta extension shall be filled, without cost to the City of Manila, with material dredged from Manila
Bay at the expense of the Insular Government" (Sec. 6); and that "the City of Manila is hereby authorized to borrow from the Insular
Government ... the sum of three hundred thousand pesos, to be expended in the construction of Luneta extension provided for by
paragraph (a) of section one hereof" (Sec.7).

The grant made by Act No. 1360 of the reclaimed land to the City of Manila is a grant of "public" nature, the same having been made
to a local political subdivision. Such grants have always been strictly construed against the grantee.33 One compelling reason given for
the strict interpretation of a public grant is that there is in such grant a gratuitous donation of, public money or resources which results
in an unfair advantage to the grantee and for that reason, the grant should be narrowly restricted in favor of the public.34 This reason
for strict interpretation obtains relative to the aforesaid grant, for, although the City of Manila was to pay for the construction of such
work and timber bulkheads or sea walls as may be necessary for the making of the Luneta extension, the area to be reclaimed would
be filled at the expense of the Insular Government and without cost to the City of Manila, with material dredged from Manila Bay.
Hence, the letter of the statute should be narrowed to exclude maters which if included would defeat the policy of the legislation.

The reclaimed area, an extension to the Luneta, is declared to be property of the City of Manila. Property, however, is either of public
ownership or of private ownership. 35 What kind of property of the City is the reclaimed land? Is it of public ownership (dominion) or
of private ownership?
We hold that it is of public dominion, intended for public use.

Firstly, if the reclaimed area was granted to the City of Manila as its patrimonial property, the City could, by virtue of its ownership,
dispose of the whole reclaimed area without need of authorization to do so from the lawmaking body. Thus Article 348 of the Civil
Code of Spain provides that "ownership is the right to enjoy and dispose of a thing without further limitations than those established
by law." 36 The right to dispose (jus disponendi) of one's property is an attribute of ownership. Act No. 1360, as amended, however,
provides by necessary implication, that the City of Manila could not dispose of the reclaimed area without being authorized by the
lawmaking body. 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 to lease the same ... should the municipal board ... deem it advisable, it is hereby authorized ...to sell said tract of land ...
" (Sec. 5). If the reclaimed area were patrimonial property of the City, the latter could dispose of it without need of the authorization
provided by the statute, and the authorization to set aside ... lease ... or sell ... given by the statute would indeed be superfluous. To so
construe the statute s to render the term "authorize," which is repeatedly used by the statute, superfluous would violate the elementary
rule of legal hermeneutics that effect must be given to every word, clause, and sentence of the statute and that a statute should be so
interpreted that no part thereof becomes inoperative or superfluous. 37 To authorize means to empower, to give a right to act. 38 Act
No. 1360 furthermore qualifies the verb it authorize" with the adverb "hereby," which means "by means of this statue or section,"
Hence without the authorization expressly given by Act No. 1360, the City of Manila could not lease or sell even the northern portion;
much less could it dispose of the whole reclaimed area. Consequently, the reclaimed area was granted to the City of Manila, not as its
patrimonial property. At most, only the northern portion reserved as a hotel site could be said to be patrimonial property for, by
express statutory provision it could be disposed of, and the title thereto would revert to the City should the grantee fail to comply with
the terms provided by the statute.

TDC however, contends that the purpose of the authorization provided in Act No. 1360 to lease or sell was really to limit the City's
power of disposition. To sustain such contention is to beg the question. If the purpose of the law was to limit the City's power of
disposition then it is necessarily assumed that the City had already the power to dispose, for if such power did not exist, how could it
be limited? It was precisely Act 1360 that gave the City the power to dispose for it was hereby authorized by lease of sale. Hence, the
City of Manila had no power to dispose of the reclaimed land had such power not been granted by Act No. 1360, and the purpose of
the authorization was to empower the city to sell or lease the northern part and not, as TDC claims, to limit only the power to dispose.
Moreover, it is presumed that when the lawmaking body enacted the statute, it had full knowledge of prior and existing laws and
legislation on the subject of the statute and acted in accordance or with respect thereto. 39 If by another previous law, the City of Manila
could already dispose of the reclaimed area, which it could do if such area were given to it as its patrimonial property, would it then
not be a superfluity for Act No. 1360 to authorize the City to dispose of the reclaimed land? Neither has petitioner TDC pointed to any
other law that authorized the City to do so, nor have we come across any. What we do know is that if the reclaimed land were
patrimonial property, there would be no need of giving special authorization to the City to dispose of it. Said authorization was given
because the reclaimed land was not intended to be patrimonial property of the City of Manila, and without the express authorization to
dispose of the northern portion, the City could not dispose of even that part.

Secondly, the reclaimed area is an "extension to the Luneta in the City of Manila." 40 If the reclaimed area is an extension of the
Luneta, then it is of the same nature or character as the old Luneta. Anent this matter, it has been said that a power to extend (or
continue an act or business) cannot authorize a transaction that is totally distinct. 41 It is not disputed that the old Luneta is a public
park or plaza and it is so considered by Section 859 of the Revised Ordinances of the City of Manila. 42 Hence the "extension to the
Luneta" must be also a public park or plaza and for public use.

TDC, however, contends that the subject property cannot be considered an extension of the old Luneta because it is outside of the
limits of the old Luneta when extended to the sea. This is a strained interpretation of the term "extension," for an "extension," it has
been held, "signifies enlargement in any direction — in length, breadth, or circumstance." 43

Thirdly, the reclaimed area was formerly a part of the manila Bay. A bay is nothing more than an inlet of the sea. Pursuant to Article 1
of the Law of Waters of 1866, bays, roadsteads, coast sea, inlets and shores are parts of the national domain open to public use. These
are also property of public ownership devoted to public use, according to Article 339 of the Civil Code of Spain.

When the shore or part of the bay is reclaimed, it does not lose its character of being property for public use, according to Government
of the Philippine Islands vs. Cabangis.44 The predecessor of the claimants in this case was the owner of a big tract of land including
the lots in question. From 1896 said land began to wear away due to the action of the waters of Manila Bay. In 1901 the lots in
question became completely submerged in water in ordinary tides. It remained in such a state until 1912 when the Government
undertook the dredging of the Vitas estuary and dumped the Sand and - silt from estuary on the low lands completely Submerged in
water thereby gradually forming the lots in question. Tomas Cabangis took possession thereof as soon as they were reclaimed hence,
the claimants, his successors in interest, claimed that the lots belonged to them. The trial court found for the claimants and the
Government appealed. This Court held that when the lots became a part of the shore. As they remained in that condition until
reclaimed by the filling done by the Government, they belonged to the public domain. for public use .4' Hence, a part of the shore, and
for that purpose a part of the bay, did not lose its character of being for public use after it was reclaimed.
Fourthly, Act 1360, as amended, authorized the lease or sale of the northern portion of the reclaimed area as a hotel sites. The subject
property is not that northern portion authorized to be leased or sold; the subject property is the southern portion. Hence, applying the
rule of expresio unius est exlusio alterius, the City of Manila was not authorized to sell the subject property. The application of this
principle of statutory construction becomes the more imperative in the case at bar inasmuch as not only must the public grant of the
reclaimed area to the City of Manila be, as above stated, strictly construed against the City of Manila, but also because a grant of
power to a municipal corporation, as happens in this case where the city is author ized to lease or sell the northern portion of the
Luneta extension, is strictly limited to such as are expressly or impliedly authorized or necessarily incidental to the objectives of the
corporation.

Fifthly, Article 344 of the Civil Code of Spain provides that to property of public use, in provinces and in towns, comprises the
provincial and town roads, the squares streets fountains, and public waters the promenades, and public works of general service paid
for by such towns or provinces." A park or plaza, such as the extension to the Luneta, is undoubtedly comprised in said article.

The petitioners, however, argue that, according to said Article 344, in order that the character of property for public use may be so
attached to a plaza, the latter must be actually constructed or at least laid out as such, and since the subject property was not yet
constructed as a plaza or at least laid out as a plaza when it was sold by the City, it could not be property for public use. It should be
noted, however, that properties of provinces and towns for public use are governed by the same principles as properties of the same
character belonging to the public domain.46 In order to be property of public domain an intention to devote it to public use is
sufficient. 47 The, petitioners' contention is refuted by Manresa himself who said, in his comments", on Article 344, that: ñé+.£ªwph!1

Las plazas, calles y paseos publicos correspondent sin duda aiguna aldominio publico municipal ), porque se hallan
establecidos sobre suelo municipal y estan destinadas al uso de todos Laurent presenta tratando de las plazas, una
question relativa a si deben conceptuarse como de dominio publico los lugares vacios libres, que se encuenttan en
los Municipios rurales ... Laurent opina contra Pioudhon que toda vez que estan al servicio de todos pesos lugares,
deben considerable publicos y de dominion publico. Realmente, pala decidir el punto, bastara siempre fijarse en el
destino real y efectivo de los citados lugares, y si este destino entraña un uso comun de todos, no hay duda que son
de dominio publico municipal si no patrimoniales.

It is not necessary, therefore, that a plaza be already constructed of- laid out as a plaza in order that it be considered property for public
use. It is sufficient that it be intended to be such In the case at bar, it has been shown that the intention of the lawmaking body in
giving to the City of Manila the extension to the Luneta was not a grant to it of patrimonial property but a grant for public use as a
plaza.

We have demonstrated ad satietatem that the Luneta extension as intended to be property of the City of Manila for public use. But,
could not said property-later on be converted, as the petitioners contend, to patrimonial property? It could be. But this Court has
already said, in Ignacio vs. The Director of Lands, 49 the executive and possibly the legislation department that has the authority and
the power to make the declaration that said property, is no longer required for public use, and until such declaration i made the
property must continue to form paint of the public domain. In the case at bar, there has been no such explicit or unequivocal
declaration It should be noted, furthermore, anent this matter, that courts are undoubted v not. primarily called upon, and are not in a
position, to determine whether any public land is still needed for the purposes specified in Article 4 of the Law of Waters . 50

Having disposed of the petitioners' principal arguments relative to the main issue, we now pass to the items of circumstantial evidence
which TDC claims may serve as aids in construing the legislative intent in the enactment of Act No. 1360, as amended. It is
noteworthy that all these items of alleged circumstantial evidence are acts far removed in time from the date of the enactment of Act
No.1360 such that they cannot be considered contemporaneous with its enactment. Moreover, it is not farfetched that this mass of
circumstantial evidence might have been influenced by the antecedent series of invalid acts, to wit: the City's having obtained over the
reclaimed area OCT No. 1909 on January 20,1911; the sale made by the City of the subject property to Manila Lodge No. 761; and the
issuance to the latter of T.C.T. No. 2195. It cannot gainsaid that if the subsequent acts constituting the circumstantial evidence have
been base on, or at least influenced, by those antecedent invalid acts and Torrens titles S they can hardly be indicative of the intent of
the lawmaking body in enacting Act No. 1360 and its amendatory act.

TDC claims that Exhs. "J," "J-l" "K," "T," "U," "W" and "Y" show that the subject property is not a park.

Exhibits "J" and "J-1," the "Luneta and vicinity showing proposed development" dated May 14, 1949, were prepared by the National
Urban Planning Commission of the Office of the President. It cannot be reasonably expected that this plan for development of the
Luneta should show that the subject property occupied by the ElksClub is a public park, for it was made 38 years after the sale to the
Elks, and after T.C.T. No. 2195 had been issued to Elks. It is to be assumed that the Office of the President was cognizant of the
Torrens title of BPOE. That the subject property was not included as a part of the Luneta only indicated that the National Urban
Planning Commission that made the plan knew that the subject property was occupied by Elks and that Elks had a Torrens title
thereto. But this in no way proves that the subject property was originally intended to be patrimonial property of the City of Manila or
that the sale to Elks or that the Torrens-title of the latter is valid.

Exhibit "K" is the "Plan of land covered by T.C.T . No ----, as prepared for Tarlac Development Company." It was made on
November 11, 1963 by Felipe F. Cruz, private land surveyor. This surveyor is admittedly a surveyor for TDC. 51 This plan cannot be
expected to show that the subject property is a part of the Luneta Park, for he plan was made to show the lot that "was to be sold to
petitioner." This plan must have also assumed the existence of a valid title to the land in favor of Elks.

Exhibits "T" and "U" are copies of Presidential Proclamations No. 234 issued on November 15, 1955 and No. 273 issued on October
4, 1967, respectively. The purpose of the said Proclamations was to reserve certain parcels of land situated in the District of Ermita,
City of Manila, for park site purposes. Assuming that the subject property is not within the boundaries of the reservation, this cannot
be interpreted to mean that the subject property was not originally intended to be for public use or that it has ceased to be such.
Conversely, had the subject property been included in the reservation, it would mean, if it really were private property, that the rights
of the owners thereof would be extinguished, for the reservations was "subject to private rights, if any there be." That the subject
property was not included in the reservation only indicates that the President knew of the existence of the Torrens titles mentioned
above. The failure of the Proclamations to include the subject property in the reservation for park site could not change the character
of the subject property as originally for public use and to form part of the Luneta Park. What has been said here applies to Exhibits
"V", "V-1" to "V-3," and "W" which also refer to the area and location of the reservation for the Luneta Park.

Exhibit "Y" is a copy of O.C.T. No. 7333 dated November 13, 1935, covering the lot where now stands the American Embassy
[Chancery]. It states that the property is "bounded ... on the Northwest by properties of Army and Navy Club (Block No.321) and Elks
Club (Block No. 321)." Inasmuch as the said bounderies delineated by the Philippine Legislature in Act No. 4269, the petitioners
contend that the Legislature recognized and conceded the existence of the Elks Club property as a primate property (the property in
question) and not as a public park or plaza. This argument is non sequitur plain and simple Said Original Certificate of Title cannot be
considered as an incontrovertible declaration that the Elks Club was in truth and in fact the owner of such boundary lot. Such mention
as boundary owner is not a means of acquiring title nor can it validate a title that is null and void.

TDC finally claims that the City of Manila is estopped from questioning the validity of the sale it executed on July 13,'1911
conconveying the subject property to the Manila Lodge No. 761, BPOE. This contention cannot be seriously defended in the light of
the doctrine repeatedly enunciated by this Court that the Government is never estopped by mistakes or errors on the pan of its agents,
and estoppel does not apply to a municipal corporation to validate a contract that is prohibited by law or its against Republic policy,
and the sale of July 13, 1911 executed by the City of Manila to Manila Lodge was certainly a contract prohibited by law. Moreover,
estoppel cannot be urged even if the City of Manila accepted the benefits of such contract of sale and the Manila Lodge No. 761 had
performed its part of the agreement, for to apply the doctrine of estoppel against the City of Manila in this case would be tantamount
to enabling it to do indirectly what it could not do directly. 52

The sale of the subject property executed by the City of Manila to the Manila Lodge No. 761, BPOE, was void and inexistent for lack
of subject matter. 53 It suffered from an incurable defect that could not be ratified either by lapse of time or by express ratification. The
Manila Lodge No. 761 therefore acquired no right by virtue of the said sale. Hence to consider now the contract inexistent as it always
has seen, cannot be, as claimed by the Manila Lodge No. 761, an impairment of the obligations of contracts, for there was it,
contemplation of law, no contract at all.

The inexistence of said sale can be set up against anyone who asserts a right arising from it, not only against the first vendee, the
Manila Lodge No. 761, BPOE, but also against all its suceessors, including the TDC which are not protected the doctrine of bona fide
ii purchaser without notice, being claimed by the TDC does not apply where there is a total absence of title in the vendor, and the good
faith of the purchaser TDC cannot create title where none exists. 55

The so-called sale of the subject property having been executed, the restoration or restitution of what has been given is order 56

SECOND ISSUE

The second ground alleged in support of the instant petitions for review on certiorari is that the Court of Appeals has departed from
the accepted and usual course of judicial proceedings as to call for an exercise of the power of supervision. TDC in L-41012, argues
that the respondent Court did not make its own findings but simply recited those of the lower court and made a general affirmance,
contrary to the requirements of the Constitution; that the respondent Court made glaring and patent mistakes in recounting even the
copied findings, palpably showing lack of deliberate consideration of the matters involved, as, for example, when said court said that
Act No. 1657 authorized the City of Manila to set aside a portion of the reclaimed land "formed by the Luneta Extension of- to lease
or sell the same for park purposes;" and that respondent Court. further more, did not resolve or dispose of any of the assigned errors
contrary to the mandate of the Judiciary Act..57
The Manila Lodge No. 761, in L-41001, likewise alleges, as one of the reasons warranting review, that the Court of Appeals departed
from the accepted and usual course of Judicial proceedings by simply making a general affirmance of the court a quo findings without
bothering to resolve several vital points mentioned by the BPOE in its assigned errors. 58

COMMENTS ON SECOND ISSUE

We have shown in our discussion of the first issue that the decision of the trial court is fully in accordance with law. To follows that
when such decision was affirmed by the Court of Appeals, the affirmance was likewise in accordance with law. Hence, no useful
purpose will be served in further discussing the second issue.

CONCLUSION

ACCORDINGLY, the petitions in both G.R. Nos. L-41001 and L-41012 are denied for lack of merit, and the decision of the Court of
Appeals of June 30, 1975, is hereby affirmed, at petitioner's cost.
EN BANC

G.R. No. 92013 July 25, 1990

SALVADOR H. LAUREL, petitioner,


vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary of Foreign Affairs, and
CATALINO MACARAIG, as Executive Secretary, respondents.

G.R. No. 92047 July 25, 1990

DIONISIO S. OJEDA, petitioner,


vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN RAMON T. GARCIA,
AMBASSADOR RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND BIDDING COMMITTEES ON THE
UTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT PROPERTIES IN JAPAN, respondents.

Arturo M. Tolentino for petitioner in 92013.

GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin respondents, their representatives and agents from proceeding with
the bidding for the sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on
February 21, 1990. We granted the prayer for a temporary restraining order effective February 20, 1990. One of the
petitioners (in G.R. No. 92047) likewise prayes for a writ of mandamus to compel the respondents to fully disclose to the public
the basis of their decision to push through with the sale of the Roppongi property inspire of strong public opposition and to
explain the proceedings which effectively prevent the participation of Filipino citizens and entities in the bidding process.

The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on March 13, 1990. After G.R. No.
92047, Ojeda v. Secretary Macaraig, et al. was filed, the respondents were required to file a comment by the Court's resolution
dated February 22, 1990. The two petitions were consolidated on March 27, 1990 when the memoranda of the parties in
the Laurel case were deliberated upon.

The Court could not act on these cases immediately because the respondents filed a motion for an extension of thirty (30) days
to file comment in G.R. No. 92047, followed by a second motion for an extension of another thirty (30) days which we granted
on May 8, 1990, a third motion for extension of time granted on May 24, 1990 and a fourth motion for extension of time which
we granted on June 5, 1990 but calling the attention of the respondents to the length of time the petitions have been pending.
After the comment was filed, the petitioner in G.R. No. 92047 asked for thirty (30) days to file a reply. We noted his motion
and resolved to decide the two (2) cases.

The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine government under the
Reparations Agreement entered into with Japan on May 9, 1956, the other lots being:

(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area of approximately 2,489.96
square meters, and is at present the site of the Philippine Embassy Chancery;

(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72 square meters and categorized as
a commercial lot now being used as a warehouse and parking lot for the consulate staff; and

(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a residential lot which is now
vacant.

The properties and the capital goods and services procured from the Japanese government for national development projects
are part of the indemnification to the Filipino people for their losses in life and property and their suffering during World
War II.
The Reparations Agreement provides that reparations valued at $550 million would be payable in twenty (20) years in
accordance with annual schedules of procurements to be fixed by the Philippine and Japanese governments (Article 2,
Reparations Agreement). Rep. Act No. 1789, the Reparations Law, prescribes the national policy on procurement and
utilization of reparations and development loans. The procurements are divided into those for use by the government
sector and those for private parties in projects as the then National Economic Council shall determine. Those intended for the
private sector shall be made available by sale to Filipino citizens or to one hundred (100%) percent Filipino-owned entities in
national development projects.

The Roppongi property was acquired from the Japanese government under the Second Year Schedule and listed under the
heading "Government Sector", through Reparations Contract No. 300 dated June 27, 1958. The Roppongi property consists of
the land and building "for the Chancery of the Philippine Embassy" (Annex M-D to Memorandum for Petitioner, p. 503). As
intended, it became the site of the Philippine Embassy until the latter was transferred to Nampeidai on July 22, 1976 when the
Roppongi building needed major repairs. Due to the failure of our government to provide necessary funds, the Roppongi
property has remained undeveloped since that time.

A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos J. Valdez, to
make the property the subject of a lease agreement with a Japanese firm - Kajima Corporation — which shall construct two
(2) buildings in Roppongi and one (1) building in Nampeidai and renovate the present Philippine Chancery in Nampeidai. The
consideration of the construction would be the lease to the foreign corporation of one (1) of the buildings to be constructed in
Roppongi and the two (2) buildings in Nampeidai. The other building in Roppongi shall then be used as the Philippine
Embassy Chancery. At the end of the lease period, all the three leased buildings shall be occupied and used by the Philippine
government. No change of ownership or title shall occur. (See Annex "B" to Reply to Comment) The Philippine government
retains the title all throughout the lease period and thereafter. However, the government has not acted favorably on this
proposal which is pending approval and ratification between the parties. Instead, on August 11, 1986, President Aquino
created a committee to study the disposition/utilization of Philippine government properties in Tokyo and Kobe, Japan
through Administrative Order No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.

On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to avail of
separations' capital goods and services in the event of sale, lease or disposition. The four properties in Japan including the
Roppongi were specifically mentioned in the first "Whereas" clause.

Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor, its decision
to sell the reparations properties starting with the Roppongi lot. The property has twice been set for bidding at a minimum
floor price of $225 million. The first bidding was a failure since only one bidder qualified. The second one, after
postponements, has not yet materialized. The last scheduled bidding on February 21, 1990 was restrained by his Court. Later,
the rules on bidding were changed such that the $225 million floor price became merely a suggested floor price.

The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R. No. 92013 objects to the
alienation of the Roppongi property to anyone while the petitioner in G.R. No. 92047 adds as a principal objection the alleged
unjustified bias of the Philippine government in favor of selling the property to non-Filipino citizens and entities. These
petitions have been consolidated and are resolved at the same time for the objective is the same - to stop the sale of the
Roppongi property.

The petitioner in G.R. No. 92013 raises the following issues:

(1) Can the Roppongi property and others of its kind be alienated by the Philippine Government?; and

(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the Roppongi property?

Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the government to alienate the Roppongi
property assails the constitutionality of Executive Order No. 296 in making the property available for sale to non-Filipino
citizens and entities. He also questions the bidding procedures of the Committee on the Utilization or Disposition of Philippine
Government Properties in Japan for being discriminatory against Filipino citizens and Filipino-owned entities by denying
them the right to be informed about the bidding requirements.

II

In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots were acquired as part of the
reparations from the Japanese government for diplomatic and consular use by the Philippine government. Vice-President
Laurel states that the Roppongi property is classified as one of public dominion, and not of private ownership under Article
420 of the Civil Code (See infra).

The petitioner submits that the Roppongi property comes under "property intended for public service" in paragraph 2 of the
above provision. He states that being one of public dominion, no ownership by any one can attach to it, not even by the State.
The Roppongi and related properties were acquired for "sites for chancery, diplomatic, and consular quarters, buildings and
other improvements" (Second Year Reparations Schedule). The petitioner states that they continue to be intended for a
necessary service. They are held by the State in anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it cannot
be appropriated, is outside the commerce of man, or to put it in more simple terms, it cannot be alienated nor be the subject
matter of contracts (Citing Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at
the moment, the petitioner avers that the same remains property of public dominion so long as the government has not used it
for other purposes nor adopted any measure constituting a removal of its original purpose or use.

The respondents, for their part, refute the petitioner's contention by saying that the subject property is not governed by our
Civil Code but by the laws of Japan where the property is located. They rely upon the rule of lex situs which is used in
determining the applicable law regarding the acquisition, transfer and devolution of the title to a property. They also invoke
Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary of Justice which used the lex situs in explaining the
inapplicability of Philippine law regarding a property situated in Japan.

The respondents add that even assuming for the sake of argument that the Civil Code is applicable, the Roppongi property has
ceased to become property of public dominion. It has become patrimonial property because it has not been used for public
service or for diplomatic purposes for over thirteen (13) years now (Citing Article 422, Civil Code) and because
the intention by the Executive Department and the Congress to convert it to private use has been manifested by overt acts, such
as, among others: (1) the transfer of the Philippine Embassy to Nampeidai (2) the issuance of administrative orders for the
possibility of alienating the four government properties in Japan; (3) the issuance of Executive Order No. 296; (4) the
enactment by the Congress of Rep. Act No. 6657 [the Comprehensive Agrarian Reform Law] on June 10, 1988 which contains
a provision stating that funds may be taken from the sale of Philippine properties in foreign countries; (5) the holding of the
public bidding of the Roppongi property but which failed; (6) the deferment by the Senate in Resolution No. 55 of the bidding
to a future date; thus an acknowledgment by the Senate of the government's intention to remove the Roppongi property from
the public service purpose; and (7) the resolution of this Court dismissing the petition in Ojeda v. Bidding Committee, et al.,
G.R. No. 87478 which sought to enjoin the second bidding of the Roppongi property scheduled on March 30, 1989.

III

In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality of Executive Order No. 296. He
had earlier filed a petition in G.R. No. 87478 which the Court dismissed on August 1, 1989. He now avers that the executive
order contravenes the constitutional mandate to conserve and develop the national patrimony stated in the Preamble of the
1987 Constitution. It also allegedly violates:

(1) The reservation of the ownership and acquisition of alienable lands of the public domain to Filipino citizens. (Sections 2
and 3, Article XII, Constitution; Sections 22 and 23 of Commonwealth Act 141).i•t•c-aüsl

(2) The preference for Filipino citizens in the grant of rights, privileges and concessions covering the national economy and
patrimony (Section 10, Article VI, Constitution);

(3) The protection given to Filipino enterprises against unfair competition and trade practices;

(4) The guarantee of the right of the people to information on all matters of public concern (Section 7, Article III,
Constitution);

(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by Filipino citizens of capital goods
received by the Philippines under the Reparations Act (Sections 2 and 12 of Rep. Act No. 1789); and

(6) The declaration of the state policy of full public disclosure of all transactions involving public interest (Section 28, Article
III, Constitution).

Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional executive order is a misapplication
of public funds He states that since the details of the bidding for the Roppongi property were never publicly disclosed until
February 15, 1990 (or a few days before the scheduled bidding), the bidding guidelines are available only in Tokyo, and the
accomplishment of requirements and the selection of qualified bidders should be done in Tokyo, interested Filipino citizens or
entities owned by them did not have the chance to comply with Purchase Offer Requirements on the Roppongi. Worse, the
Roppongi shall be sold for a minimum price of $225 million from which price capital gains tax under Japanese law of about 50
to 70% of the floor price would still be deducted.

IV

The petitioners and respondents in both cases do not dispute the fact that the Roppongi site and the three related properties
were through reparations agreements, that these were assigned to the government sector and that the Roppongi property itself
was specifically designated under the Reparations Agreement to house the Philippine Embassy.

The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated by the terms of the
Reparations Agreement and the corresponding contract of procurement which bind both the Philippine government and the
Japanese government.

There can be no doubt that it is of public dominion unless it is convincingly shown that the property has become patrimonial.
This, the respondents have failed to do.

As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its ownership is a
special collective ownership for general use and enjoyment, an application to the satisfaction of collective needs, and resides in
the social group. The purpose is not to serve the State as a juridical person, but the citizens; it is intended for the common and
public welfare and cannot be the object of appropration. (Taken from 3 Manresa, 66-69; cited in Tolentino, Commentaries on
the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26).

The applicable provisions of the Civil Code are:

ART. 419. Property is either of public dominion or of private ownership.

ART. 420. The following things are property of public dominion

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the
State, banks shores roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or
for the development of the national wealth.

ART. 421. All other property of the State, which is not of the character stated in the preceding article, is
patrimonial property.

The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property belonging to the
State and intended for some public service.

Has the intention of the government regarding the use of the property been changed because the lot has been Idle for some
years? Has it become patrimonial?

The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it
to patrimonial property. Any such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and
Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public domain, not available for
private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from
being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).

The respondents enumerate various pronouncements by concerned public officials insinuating a change of intention. We
emphasize, however, that an abandonment of the intention to use the Roppongi property for public service and to make it
patrimonial property under Article 422 of the Civil Code must be definiteAbandonment cannot be inferred from the non-use
alone specially if the non-use was attributable not to the government's own deliberate and indubitable will but to a lack of
financial support to repair and improve the property (See Heirs of Felino Santiago v. Lazaro, 166 SCRA 368 [1988]).
Abandonment must be a certain and positive act based on correct legal premises.

A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the Roppongi property's original
purpose. Even the failure by the government to repair the building in Roppongi is not abandonment since as earlier stated,
there simply was a shortage of government funds. The recent Administrative Orders authorizing a study of the status and
conditions of government properties in Japan were merely directives for investigation but did not in any way signify a clear
intention to dispose of the properties.

Executive Order No. 296, though its title declares an "authority to sell", does not have a provision in its text expressly
authorizing the sale of the four properties procured from Japan for the government sector. The executive order does not
declare that the properties lost their public character. It merely intends to make the properties available to foreigners and not
to Filipinos alone in case of a sale, lease or other disposition. It merely eliminates the restriction under Rep. Act No. 1789 that
reparations goods may be sold only to Filipino citizens and one hundred (100%) percent Filipino-owned entities. The text of
Executive Order No. 296 provides:

Section 1. The provisions of Republic Act No. 1789, as amended, and of other laws to the contrary
notwithstanding, the above-mentioned properties can be made available for sale, lease or any other manner
of disposition to non-Filipino citizens or to entities owned by non-Filipino citizens.

Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and the three other properties were
earlier converted into alienable real properties. As earlier stated, Rep. Act No. 1789 differentiates the procurements for the
government sector and the private sector (Sections 2 and 12, Rep. Act No. 1789). Only the private sector properties can be sold
to end-users who must be Filipinos or entities owned by Filipinos. It is this nationality provision which was amended by
Executive Order No. 296.

Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of funds for its implementation, the
proceeds of the disposition of the properties of the Government in foreign countries, did not withdraw the Roppongi property
from being classified as one of public dominion when it mentions Philippine properties abroad. Section 63 (c) refers to
properties which are alienable and not to those reserved for public use or service. Rep Act No. 6657, therefore, does not
authorize the Executive Department to sell the Roppongi property. It merely enumerates possible sources of future funding to
augment (as and when needed) the Agrarian Reform Fund created under Executive Order No. 299. Obviously any property
outside of the commerce of man cannot be tapped as a source of funds.

The respondents try to get around the public dominion character of the Roppongi property by insisting that Japanese law and
not our Civil Code should apply.

It is exceedingly strange why our top government officials, of all people, should be the ones to insist that in the sale of
extremely valuable government property, Japanese law and not Philippine law should prevail. The Japanese law - its coverage
and effects, when enacted, and exceptions to its provision — is not presented to the Court It is simply asserted that the lex loci
rei sitae or Japanese law should apply without stating what that law provides. It is a ed on faith that Japanese law would allow
the sale.

We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A conflict of law situation
arises only when: (1) There is a dispute over the title or ownership of an immovable, such that the capacity to take and transfer
immovables, the formalities of conveyance, the essential validity and effect of the transfer, or the interpretation and effect of a
conveyance, are to be determined (See Salonga, Private International Law, 1981 ed., pp. 377-383); and (2) A foreign law on land
ownership and its conveyance is asserted to conflict with a domestic law on the same matters. Hence, the need to determine
which law should apply.

In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question that the property belongs to the
Philippines. The issue is the authority of the respondent officials to validly dispose of property belonging to the State. And the
validity of the procedures adopted to effect its sale. This is governed by Philippine Law. The rule of lex situs does not apply.

The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex situs rule is misplaced. The
opinion does not tackle the alienability of the real properties procured through reparations nor the existence in what body of
the authority to sell them. In discussing who are capable of acquiring the lots, the Secretary merely explains that it is the
foreign law which should determine who can acquire the properties so that the constitutional limitation on acquisition of lands
of the public domain to Filipino citizens and entities wholly owned by Filipinos is inapplicable. We see no point in belaboring
whether or not this opinion is correct. Why should we discuss who can acquire the Roppongi lot when there is no showing that
it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the recommendation by the investigating committee to
sell the Roppongi property was premature or, at the very least, conditioned on a valid change in the public character of the
Roppongi property. Moreover, the approval does not have the force and effect of law since the President already lost her
legislative powers. The Congress had already convened for more than a year.

Assuming for the sake of argument, however, that the Roppongi property is no longer of public dominion, there is another
obstacle to its sale by the respondents.

There is no law authorizing its conveyance.

Section 79 (f) of the Revised Administrative Code of 1917 provides

Section 79 (f ) Conveyances and contracts to which the Government is a party. — In cases in which the
Government of the Republic of the Philippines is a party to any deed or other instrument conveying the title
to real estate or to any other property the value of which is in excess of one hundred thousand pesos, the
respective Department Secretary shall prepare the necessary papers which, together with the proper
recommendations, shall be submitted to the Congress of the Philippines for approval by the same. Such deed,
instrument, or contract shall be executed and signed by the President of the Philippines on behalf of the
Government of the Philippines unless the Government of the Philippines unless the authority therefor be
expressly vested by law in another officer. (Emphasis supplied)

The requirement has been retained in Section 48, Book I of the Administrative Code of 1987 (Executive Order No. 292).

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government
is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by
the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President,
unless the authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)

It is not for the President to convey valuable real property of the government on his or her own sole will. Any such conveyance
must be authorized and approved by a law enacted by the Congress. It requires executive and legislative concurrence.

Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of the Roppongi property does not
withdraw the property from public domain much less authorize its sale. It is a mere resolution; it is not a formal declaration
abandoning the public character of the Roppongi property. In fact, the Senate Committee on Foreign Relations is conducting
hearings on Senate Resolution No. 734 which raises serious policy considerations and calls for a fact-finding investigation of
the circumstances behind the decision to sell the Philippine government properties in Japan.

The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon the constitutionality of Executive
Order No. 296. Contrary to respondents' assertion, we did not uphold the authority of the President to sell the Roppongi
property. The Court stated that the constitutionality of the executive order was not the real issue and that resolving the
constitutional question was "neither necessary nor finally determinative of the case." The Court noted that "[W]hat petitioner
ultimately questions is the use of the proceeds of the disposition of the Roppongi property." In emphasizing that "the decision
of the Executive to dispose of the Roppongi property to finance the CARP ... cannot be questioned" in view of Section 63 (c) of
Rep. Act No. 6657, the Court did not acknowledge the fact that the property became alienable nor did it indicate that the
President was authorized to dispose of the Roppongi property. The resolution should be read to mean that in case the
Roppongi property is re-classified to be patrimonial and alienable by authority of law, the proceeds of a sale may be used for
national economic development projects including the CARP.

Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed 1990 sale of the Roppongi
property. We are resolving the issues raised in these petitions, not the issues raised in 1989.
Having declared a need for a law or formal declaration to withdraw the Roppongi property from public domain to make it
alienable and a need for legislative authority to allow the sale of the property, we see no compelling reason to tackle the
constitutional issues raised by petitioner Ojeda.

The Court does not ordinarily pass upon constitutional questions unless these questions are properly raised in appropriate
cases and their resolution is necessary for the determination of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not
pass upon a constitutional question although properly presented by the record if the case can be disposed of on some other
ground such as the application of a statute or general law (Siler v. Louisville and Nashville R. Co., 213 U.S. 175, [1909],
Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]).

The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:

The Roppongi property is not just like any piece of property. It was given to the Filipino people in reparation
for the lives and blood of Filipinos who died and suffered during the Japanese military occupation, for the
suffering of widows and orphans who lost their loved ones and kindred, for the homes and other properties
lost by countless Filipinos during the war. The Tokyo properties are a monument to the bravery and sacrifice
of the Filipino people in the face of an invader; like the monuments of Rizal, Quezon, and other Filipino
heroes, we do not expect economic or financial benefits from them. But who would think of selling these
monuments? Filipino honor and national dignity dictate that we keep our properties in Japan as memorials
to the countless Filipinos who died and suffered. Even if we should become paupers we should not think of
selling them. For it would be as if we sold the lives and blood and tears of our countrymen. (Rollo- G.R. No.
92013, p.147)

The petitioner in G.R. No. 92047 also states:

Roppongi is no ordinary property. It is one ceded by the Japanese government in atonement for its past
belligerence for the valiant sacrifice of life and limb and for deaths, physical dislocation and economic
devastation the whole Filipino people endured in World War II.

It is for what it stands for, and for what it could never bring back to life, that its significance today remains
undimmed, inspire of the lapse of 45 years since the war ended, inspire of the passage of 32 years since the
property passed on to the Philippine government.

Roppongi is a reminder that cannot — should not — be dissipated ... (Rollo-92047, p. 9)

It is indeed true that the Roppongi property is valuable not so much because of the inflated prices fetched by real property in
Tokyo but more so because of its symbolic value to all Filipinos — veterans and civilians alike. Whether or not the Roppongi
and related properties will eventually be sold is a policy determination where both the President and Congress must concur.
Considering the properties' importance and value, the laws on conversion and disposition of property of public dominion must
be faithfully followed.

WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of prohibition is issued enjoining the
respondents from proceeding with the sale of the Roppongi property in Tokyo, Japan. The February 20, 1990 Temporary
Restraining Order is made PERMANENT.

SO ORDERED.

Melencio-Herrera, Paras, Bidin, Griño-Aquino and Regalado, JJ., concur.

Separate Opinions

CRUZ, J., concurring:

I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the following observations only for
emphasis.

It is clear that the respondents have failed to show the President's legal authority to sell the Roppongi property. When asked to
do so at the hearing on these petitions, the Solicitor General was at best ambiguous, although I must add in fairness that this
was not his fault. The fact is that there is -no such authority. Legal expertise alone cannot conjure that statutory permission
out of thin air.

Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such authority. Neither does Rep. Act
No. 6657, which simply allows the proceeds of the sale of our properties abroad to be used for the comprehensive agrarian
reform program. Senate Res. No. 55 was a mere request for the deferment of the scheduled sale of tile Roppongi property,
possibly to stop the transaction altogether; and ill any case it is not a law. The sale of the said property may be authorized only
by Congress through a duly enacted statute, and there is no such law.

Once again, we have affirmed the principle that ours is a government of laws and not of men, where every public official, from
the lowest to the highest, can act only by virtue of a valid authorization. I am happy to note that in the several cases where this
Court has ruled against her, the President of the Philippines has submitted to this principle with becoming grace.

PADILLA, J., concurring:

I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few observations which could help in
further clarifying the issues.

Under our tripartite system of government ordained by the Constitution, it is Congress that lays down or determines policies.
The President executes such policies. The policies determined by Congress are embodied in legislative enactments that have to
be approved by the President to become law. The President, of course, recommends to Congress the approval of policies but,
in the final analysis, it is Congress that is the policy - determining branch of government.

The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted by Congress and approved
by the President, and presidential acts implementing such laws, are in accordance with the Constitution.

The Roppongi property was acquired by the Philippine government pursuant to the reparations agreement between the
Philippine and Japanese governments. Under such agreement, this property was acquired by the Philippine government for a
specific purpose, namely, to serve as the site of the Philippine Embassy in Tokyo, Japan. Consequently, Roppongi is a property
of public dominion and intended for public service, squarely falling within that class of property under Art. 420 of the Civil
Code, which provides:

Art. 420. The following things are property of public dominion :

(1) ...

(2) Those which belong to the State, without being for public use, and are intended for some public service or
for the development of the national wealth. (339a)

Public dominion property intended for public service cannot be alienated unless the property is first transformed into private
property of the state otherwise known as patrimonial property of the state. 1 The transformation of public dominion property
to state patrimonial property involves, to my mind, a policy decision. It is a policy decision because the treatment of the
property varies according to its classification. Consequently, it is Congress which can decide and declare the conversion of
Roppongi from a public dominion property to a state patrimonial property. Congress has made no such decision or
declaration.

Moreover, the sale of public property (once converted from public dominion to state patrimonial property) must be approved
by Congress, for this again is a matter of policy (i.e. to keep or dispose of the property). Sec. 48, Book 1 of the Administrative
Code of 1987 provides:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by
the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by
the President, unless the authority therefor is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name of any
political subdivision or of any corporate agency or instrumentality, by the executive head of
the agency or instrumentality. (Emphasis supplied)

But the record is bare of any congressional decision or approval to sell Roppongi. The record is likewise bare of any
congressional authority extended to the President to sell Roppongi thru public bidding or otherwise.

It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public bidding or otherwise without a
prior congressional approval, first, converting Roppongi from a public dominion property to a state patrimonial property,
and, second, authorizing the President to sell the same.

ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary restraining order earlier
issued by this Court.

SARMIENTO, J., concurring:

The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its nature as property of public
dominion, and hence, has become patrimonial property of the State. I understand that the parties are agreed that it was
property intended for "public service" within the contemplation of paragraph (2), of Article 430, of the Civil Code, and
accordingly, land of State dominion, and beyond human commerce. The lone issue is, in the light of supervening developments,
that is non-user thereof by the National Government (for diplomatic purposes) for the last thirteen years; the issuance of
Executive Order No. 296 making it available for sale to any interested buyer; the promulgation of Republic Act No. 6657, the
Comprehensive Agrarian Reform Law, making available for the program's financing, State assets sold; the approval by the
President of the recommendation of the investigating committee formed to study the property's utilization; and the issuance of
Resolution No. 55 of the Philippine Senate requesting for the deferment of its disposition it, "Roppongi", is still property of the
public dominion, and if it is not, how it lost that character.

When land of the public dominion ceases to be one, or when the change takes place, is a question our courts have debated
early. In a 1906 decision, 1 it was held that property of the public dominion, a public plaza in this instance, becomes
patrimonial upon use thereof for purposes other than a plaza. In a later case, 2 this ruling was reiterated. Likewise, it has been
held that land, originally private property, has become of public dominion upon its donation to the town and its conversion
and use as a public plaza. 3 It is notable that under these three cases, the character of the property, and any change occurring therein,
depends on the actual use to which it is dedicated. 4

Much later, however, the Court held that "until a formal declaration on the part of the Government, through the executive department
or the Legislative, to the effect that the land . . . is no longer needed for [public] service- for public use or for special industries, [it]
continue[s] to be part of the public [dominion], not available for private expropriation or ownership." 5 So also, it was ruled that a
political subdivision (the City of Cebu in this case) alone may declare (under its charter) a city road abandoned and thereafter, to
dispose of it. 6

In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property from public domain to make it
alienable and a land for legislative authority to allow the sale of the property" 7 the majority lays stress to the fact that: (1) An
affirmative act — executive or legislative — is necessary to reclassify property of the public dominion, and (2) a legislative decree is
required to make it alienable. It also clears the uncertainties brought about by earlier interpretations that the nature of property-whether
public or patrimonial is predicated on the manner it is actually used, or not used, and in the same breath, repudiates the Government's
position that the continuous non-use of "Roppongi", among other arguments, for "diplomatic purposes", has turned it into State
patrimonial property.

I feel that this view corresponds to existing pronouncements of this Court, among other things, that: (1) Property is presumed to be
State property in the absence of any showing to the contrary; 8 (2) With respect to forest lands, the same continue to be lands of the
public dominion unless and until reclassified by the Executive Branch of the Government; 9 and (3) All natural resources, under the
Constitution, and subject to exceptional cases, belong to the State. 10

I am elated that the Court has banished previous uncertainties.

FELICIANO, J., dissenting


With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E. Gutierrez, Jr.

For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi, 5-Chome, Minato-ku Tokyo, Japan
(hereinafter referred to as the "Roppongi property") may be characterized as property of public dominion, within the meaning of
Article 420 (2) of the Civil Code:

[Property] which belong[s] to the State, without being for public use, and are intended for some public service -.

It might not be amiss however, to note that the appropriateness of trying to bring within the confines of the simple threefold
classification found in Article 420 of the Civil Code ("property for public use property "intended for some public service" and
property intended "for the development of the national wealth") all property owned by the Republic of the Philippines whether found
within the territorial boundaries of the Republic or located within the territory of another sovereign State, is not self-evident. The first
item of the classification property intended for public use — can scarcely be properly applied to property belonging to the Republic
but found within the territory of another State. The third item of the classification property intended for the development of the
national wealth is illustrated, in Article 339 of the Spanish Civil Code of 1889, by mines or mineral properties. Again, mineral lands
owned by a sovereign State are rarely, if ever, found within the territorial base of another sovereign State. The task of examining in
detail the applicability of the classification set out in Article 420 of our Civil Code to property that the Philippines happens to own
outside its own boundaries must, however, be left to academicians.

For present purposes, too, I agree that there is no question of conflict of laws that is, at the present time, before this Court. The issues
before us relate essentially to authority to sell the Roppongi property so far as Philippine law is concerned.

The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been converted into patrimonial property or
property of the private domain of the State; and (b) assuming an affirmative answer to (a), whether or not there is legal authority to
dispose of the Roppongi property.

Addressing the first issue of conversion of property of public dominion intended for some public service, into property of the private
domain of the Republic, it should be noted that the Civil Code does not address the question of who has authority to effect such
conversion. Neither does the Civil Code set out or refer to any procedure for such conversion.

Our case law, however, contains some fairly explicit pronouncements on this point, as Justice Sarmiento has pointed out in his
concurring opinion. In Ignacio v. Director of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued that if the land in question
formed part of the public domain, the trial court should have declared the same no longer necessary for public use or public purposes
and which would, therefore, have become disposable and available for private ownership. Mr. Justice Montemayor, speaking for the
Court, said:

Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer washed by the waters
of the sea and is not necessary for purposes of public utility, or for the establishment of special industries, or for
coast-guard service, the government shall declare it to be the property of the owners of the estates adjacent thereto
and as an increment thereof. We believe that only the executive and possibly the legislative departments have the
authority and the power to make the declaration that any land so gained by the sea, is not necessary for purposes of
public utility, or for the establishment of special industries, or for coast-guard service. If no such declaration has
been made by said departments, the lot in question forms part of the public domain. (Natividad v. Director of
Lands, supra.)

The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y Monteverde v. Director
of Lands, 93 Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).

... is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to determine whether any
public land are to be used for the purposes specified in Article 4 of the Law of Waters. Consequently, until a formal
declaration on the part of the Government, through the executive department or the Legislature, to the effect that the
land in question is no longer needed for coast-guard service, for public use or for special industries, they continue
to be part of the public domain not available for private appropriation or ownership. (108 Phil. at 338-339;
emphasis supplied)

Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the State of public
dominion into patrimonial property of the State. No particular formula or procedure of conversion is specified either in statute law or
in case law. Article 422 of the Civil Code simply states that: "Property of public dominion, when no longer intended for public use or
for public service, shall form part of the patrimonial property of the State". I respectfully submit, therefore, that the only requirement
which is legitimately imposable is that the intent to convert must be reasonably clear from a consideration of the acts or acts of the
Executive Department or of the Legislative Department which are said to have effected such conversion.

The same legal situation exists in respect of conversion of property of public dominion belonging to municipal corporations, i.e., local
governmental units, into patrimonial property of such entities. In Cebu Oxygen Acetylene v. Bercilles (66 SCRA 481 [1975]), the City
Council of Cebu by resolution declared a certain portion of an existing street as an abandoned road, "the same not being included in
the city development plan". Subsequently, by another resolution, the City Council of Cebu authorized the acting City Mayor to sell the
land through public bidding. Although there was no formal and explicit declaration of conversion of property for public use into
patrimonial property, the Supreme Court said:

xxx xxx xxx

(2) Since that portion of the city street subject of petitioner's application for registration of title was withdrawn from
public use, it follows that such withdrawn portion becomes patrimonial property which can be the object of an
ordinary contract.

Article 422 of the Civil Code expressly provides that "Property of public dominion, when no longer intended for
public use of 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 registrable title over the lot in question. (66 SCRA at 484-; emphasis supplied)

Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property owned by municipal corporations simple
non-use or the actual dedication of public property to some use other than "public use" or some "public service", was sufficient legally
to convert such property into patrimonial property (Municipality of Oas v. Roa, 7 Phil. 20 [1906]- Municipality of Hinunganan v.
Director of Lands 24 Phil. 124 [1913]; Province of Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).

I would also add that such was the case not only in respect of' property of municipal corporations but also in respect of property of the
State itself. Manresa in commenting on Article 341 of the 1889 Spanish Civil Code which has been carried over verbatim into our
Civil Code by Article 422 thereof, wrote:

La dificultad mayor en todo esto estriba, naturalmente, en fijar el momento en que los bienes de dominio publico
dejan de serlo. Si la Administracion o la autoridad competente legislative realizan qun acto en virtud del cual cesa el
destino o uso publico de los bienes de que se trata naturalmente la dificultad queda desde el primer momento
resuelta. Hay un punto de partida cierto para iniciar las relaciones juridicas a que pudiera haber lugar Pero puede
ocurrir que no haya taldeclaracion expresa, legislativa or administrativa, y, sin embargo, cesar de hecho el destino
publico de los bienes; ahora bien, en este caso, y para los efectos juridicos que resultan de entrar la cosa en el
comercio de los hombres,' se entedera que se ha verificado la conversion de los bienes patrimoniales?

El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por la afirmativa, y por nuestra parte creemos
que tal debe ser la soluciion. El destino de las cosas no depende tanto de una declaracion expresa como del uso
publico de las mismas, y cuanda el uso publico cese con respecto de determinados bienes, cesa tambien su situacion
en el dominio publico. Si una fortaleza en ruina se abandona y no se repara, si un trozo de la via publica se abandona
tambien por constituir otro nuevo an mejores condiciones....ambos bienes cesan de estar Codigo, y leyes especiales
mas o memos administrativas. (3 Manresa, Comentarios al Codigo Civil Espanol, p. 128 [7a ed.; 1952) (Emphasis
supplied)

The majority opinion says that none of the executive acts pointed to by the Government purported, expressly or definitely, to convert
the Roppongi property into patrimonial property — of the Republic. Assuming that to be the case, it is respectfully submitted
that cumulative effect of the executive acts here involved was to convert property originally intended for and devoted to public service
into patrimonial property of the State, that is, property susceptible of disposition to and appropration by private persons. These
executive acts, in their totality if not each individual act, make crystal clear the intent of the Executive Department to effect such
conversion. These executive acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the disposition/utilization of the
Government's property in Japan, The Committee was composed of officials of the Executive Department: the Executive Secretary; the
Philippine Ambassador to Japan; and representatives of the Department of Foreign Affairs and the Asset Privatization Trust. On 19
September 1988, the Committee recommended to the President the sale of one of the lots (the lot specifically in Roppongi) through
public bidding. On 4 October 1988, the President approved the recommendation of the Committee.

On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese Ministry of Foreign Affairs of the
Republic's intention to dispose of the property in Roppongi. The Japanese Government through its Ministry of Foreign Affairs replied
that it interposed no objection to such disposition by the Republic. Subsequently, the President and the Committee informed the
leaders of the House of Representatives and of the Senate of the Philippines of the proposed disposition of the Roppongi property.

(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that the majority opinion is right in saying
that Executive Order No. 296 is insufficient to authorize the sale of the Roppongi property, it is here submitted with respect that
Executive Order No. 296 is more than sufficient to indicate an intention to convert the property previously devoted to public service
into patrimonial property that is capable of being sold or otherwise disposed of

(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public purposes. Assuming (but only arguendo)
that non-use does not, by itself, automatically convert the property into patrimonial property. I respectfully urge that prolonged non-
use, conjoined with the other factors here listed, was legally effective to convert the lot in Roppongi into patrimonial property of the
State. Actually, as already pointed out, case law involving property of municipal corporations is to the effect that simple non-use or
the actual dedication of public property to some use other than public use or public service, was sufficient to convert such property
into patrimonial property of the local governmental entity concerned. Also as pointed out above, Manresa reached the same conclusion
in respect of conversion of property of the public domain of the State into property of the private domain of the State.

The majority opinion states that "abandonment cannot be inferred from the non-use alone especially if the non-use was attributable not
to the Government's own deliberate and indubitable will but to lack of financial support to repair and improve the property" (Majority
Opinion, p. 13). With respect, it may be stressed that there is no abandonment involved here, certainly no abandonment of property or
of property rights. What is involved is the charge of the classification of the property from property of the public domain into property
of the private domain of the State. Moreover, if for fourteen (14) years, the Government did not see fit to appropriate whatever funds
were necessary to maintain the property in Roppongi in a condition suitable for diplomatic representation purposes, such circumstance
may, with equal logic, be construed as a manifestation of the crystalizing intent to change the character of the property.

(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale of the lot in Roppongi. The
circumstance that this bidding was not successful certainly does not argue against an intent to convert the property involved into
property that is disposable by bidding.

The above set of events and circumstances makes no sense at all if it does not, as a whole, show at least the intent on the part of the
Executive Department (with the knowledge of the Legislative Department) to convert the property involved into patrimonial property
that is susceptible of being sold.

II

Having reached an affirmative answer in respect of the first issue, it is necessary to address the second issue of whether or not there
exists legal authority for the sale or disposition of the Roppongi property.

The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which reads as follows:

SEC. 79 (f). Conveyances and contracts to which the Government is a party. — In cases in which the Government
of the Republic of the Philippines is a party to any deed or other instrument conveying the title to real estate or to
any other property the value of which is in excess of one hundred thousand pesos, the respective Department
Secretary shall prepare the necessary papers which, together with the proper recommendations, shall be submitted to
the Congress of the Philippines for approval by the same. Such deed, instrument, or contract shall be executed and
signed by the President of the Philippines on behalf of the Government of the Philippines unless the authority
therefor be expressly vested by law in another officer. (Emphasis supplied)

The majority opinion then goes on to state that: "[T]he requirement has been retained in Section 4, Book I of the Administrative Code
of 1987 (Executive Order No. 292)" which reads:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized
by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:
(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the
authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of
any corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis
supplied)

Two points need to be made in this connection. Firstly, the requirement of obtaining specific approval of Congress when the price of
the real property being disposed of is in excess of One Hundred Thousand Pesos (P100,000.00) under the Revised Administrative
Code of 1917, has been deleted from Section 48 of the 1987 Administrative Code. What Section 48 of the present Administrative Code
refers to is authorization by law for the conveyance. Section 48 does not purport to be itself a source of legal authority for conveyance
of real property of the Government. For Section 48 merely specifies the official authorized to execute and sign on behalf of the
Government the deed of conveyance in case of such a conveyance.

Secondly, examination of our statute books shows that authorization by law for disposition of real property of the private domain of
the Government, has been granted by Congress both in the form of (a) a general, standing authorization for disposition of patrimonial
property of the Government; and (b) specific legislation authorizing the disposition of particular pieces of the Government's
patrimonial property.

Standing legislative authority for the disposition of land of the private domain of the Philippines is provided by Act No. 3038, entitled
"An Act Authorizing the Secretary of Agriculture and Natural Resources to Sell or Lease Land of the Private Domain of the
Government of the Philippine Islands (now Republic of the Philippines)", enacted on 9 March 1922. The full text of this statute is as
follows:

Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled and by the
authority of the same:

SECTION 1. The Secretary of Agriculture and Natural Resources (now Secretary of the Environment and Natural
Resources) is hereby authorized to sell or lease land of the private domain of the Government of the Philippine
Islands, or any part thereof, to such persons, corporations or associations as are, under the provisions of Act
Numbered Twenty-eight hundred and seventy-four, (now Commonwealth Act No. 141, as amended) known as the
Public Land Act, entitled to apply for the purchase or lease or agricultural public land.

SECTION 2. The sale of the land referred to in the preceding section shall, if such land is agricultural, be made in
the manner and subject to the limitations prescribed in chapters five and six, respectively, of said Public Land Act,
and if it be classified differently, in conformity with the provisions of chapter nine of said Act: Provided, however,
That the land necessary for the public service shall be exempt from the provisions of this Act.

SECTION 3. This Act shall take effect on its approval.

Approved, March 9, 1922. (Emphasis supplied)

Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the State, it must be noted that Chapter
9 of the old Public Land Act (Act No. 2874) is now Chapter 9 of the present Public Land Act (Commonwealth Act No. 141, as
amended) and that both statutes refer to: "any tract of land of the public domain which being neither timber nor mineral land, is
intended to be used for residential purposes or for commercial or industrial purposes other than agricultural" (Emphasis
supplied).i•t•c-aüsl In other words, the statute covers the sale or lease or residential, commercial or industrial land of the private
domain of the State.

Implementing regulations have been issued for the carrying out of the provisions of Act No. 3038. On 21 December 1954, the then
Secretary of Agriculture and Natural Resources promulgated Lands Administrative Orders Nos. 7-6 and 7-7 which were entitled,
respectively: "Supplementary Regulations Governing the Sale of the Lands of the Private Domain of the Republic of the Philippines";
and "Supplementary Regulations Governing the Lease of Lands of Private Domain of the Republic of the Philippines" (text in 51 O.G.
28-29 [1955]).

It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in effect and has not been repealed. 1

Specific legislative authorization for disposition of particular patrimonial properties of the State is illustrated by certain earlier statutes.
The first of these was Act No. 1120, enacted on 26 April 1904, which provided for the disposition of the friar lands, purchased by the
Government from the Roman Catholic Church, to bona fide settlers and occupants thereof or to other persons. In Jacinto v. Director of
Lands (49 Phil. 853 [1926]), these friar lands were held to be private and patrimonial properties of the State. Act No. 2360, enacted on
-28 February 1914, authorized the sale of the San Lazaro Estate located in the City of Manila, which had also been purchased by the
Government from the Roman Catholic Church. In January 1916, Act No. 2555 amended Act No. 2360 by including therein all lands
and buildings owned by the Hospital and the Foundation of San Lazaro theretofor leased by private persons, and which were also
acquired by the Philippine Government.

After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one statute authorizing the President to
dispose of a specific piece of property. This statute is Republic Act No. 905, enacted on 20 June 1953, which authorized the

President to sell an Identified parcel of land of the private domain of the National Government to the National Press Club of the
Philippines, and to other recognized national associations of professionals with academic standing, for the nominal price of P1.00. It
appears relevant to note that Republic Act No. 905 was not an outright disposition in perpetuity of the property involved- it provided
for reversion of the property to the National Government in case the National Press Club stopped using it for its headquarters. What
Republic Act No. 905 authorized was really a donation, and not a sale.

The basic submission here made is that Act No. 3038 provides standing legislative authorization for disposition of the Roppongi
property which, in my view, has been converted into patrimonial property of the Republic. 2

To some, the submission that Act No. 3038 applies not only to lands of the private domain of the State located in the Philippines but
also to patrimonial property found outside the Philippines, may appear strange or unusual. I respectfully submit that such position is
not any more unusual or strange than the assumption that Article 420 of the Civil Code applies not only to property of the Republic
located within Philippine territory but also to property found outside the boundaries of the Republic.

It remains to note that under the well-settled doctrine that heads of Executive Departments are alter egos of the President (Villena v.
Secretary of the Interior, 67 Phil. 451 [1939]), and in view of the constitutional power of control exercised by the President over
department heads (Article VII, Section 17,1987 Constitution), the President herself may carry out the function or duty that is
specifically lodged in the Secretary of the Department of Environment and Natural Resources (Araneta v. Gatmaitan 101 Phil. 328
[1957]). At the very least, the President retains the power to approve or disapprove the exercise of that function or duty when done by
the Secretary of Environment and Natural Resources.

It is hardly necessary to add that the foregoing analyses and submissions relate only to the austere question of existence of legal power
or authority. They have nothing to do with much debated questions of wisdom or propriety or relative desirability either of the
proposed disposition itself or of the proposed utilization of the anticipated proceeds of the property involved. These latter types of
considerations He within the sphere of responsibility of the political departments of government the Executive and the Legislative
authorities.

For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and 92047.

Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.

Separate Opinions

CRUZ, J., concurring:

I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the following observations only for emphasis.

It is clear that the respondents have failed to show the President's legal authority to sell the Roppongi property. When asked to do so at
the hearing on these petitions, the Solicitor General was at best ambiguous, although I must add in fairness that this was not his fault.
The fact is that there is -no such authority. Legal expertise alone cannot conjure that statutory permission out of thin air.

Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such authority. Neither does Rep. Act No.
6657, which simply allows the proceeds of the sale of our properties abroad to be used for the comprehensive agrarian reform
program. Senate Res. No. 55 was a mere request for the deferment of the scheduled sale of tile Roppongi property, possibly to stop the
transaction altogether; and ill any case it is not a law. The sale of the said property may be authorized only by Congress through a duly
enacted statute, and there is no such law.
Once again, we have affirmed the principle that ours is a government of laws and not of men, where every public official, from the
lowest to the highest, can act only by virtue of a valid authorization. I am happy to note that in the several cases where this Court has
ruled against her, the President of the Philippines has submitted to this principle with becoming grace.

PADILLA, J., concurring:

I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few observations which could help in further
clarifying the issues.

Under our tripartite system of government ordained by the Constitution, it is Congress that lays down or determines policies. The
President executes such policies. The policies determined by Congress are embodied in legislative enactments that have to be
approved by the President to become law. The President, of course, recommends to Congress the approval of policies but, in the final
analysis, it is Congress that is the policy - determining branch of government.

The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted by Congress and approved by the
President, and presidential acts implementing such laws, are in accordance with the Constitution.

The Roppongi property was acquired by the Philippine government pursuant to the reparations agreement between the Philippine and
Japanese governments. Under such agreement, this property was acquired by the Philippine government for a specific purpose,
namely, to serve as the site of the Philippine Embassy in Tokyo, Japan. Consequently, Roppongi is a property of public dominion and
intended for public service, squarely falling within that class of property under Art. 420 of the Civil Code, which provides:

Art. 420. The following things are property of public dominion :

(1) ...

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the
development of the national wealth. (339a)

Public dominion property intended for public service cannot be alienated unless the property is first transformed into private property
of the state otherwise known as patrimonial property of the state. 1 The transformation of public dominion property to state
patrimonial property involves, to my mind, a policy decision. It is a policy decision because the treatment of the property varies
according to its classification. Consequently, it is Congress which can decide and declare the conversion of Roppongi from a public
dominion property to a state patrimonial property. Congress has made no such decision or declaration.

Moreover, the sale of public property (once converted from public dominion to state patrimonial property) must be approved by
Congress, for this again is a matter of policy (i.e. to keep or dispose of the property). Sec. 48, Book 1 of the Ad ministrative Code of
1987 provides:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized
by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the
President, unless the authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)

But the record is bare of any congressional decision or approval to sell Roppongi. The record is likewise bare of any congressional
authority extended to the President to sell Roppongi thru public bidding or otherwise.

It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public bidding or otherwise without a prior
congressional approval, first, converting Roppongi from a public dominion property to a state patrimonial property, and, second,
authorizing the President to sell the same.

ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary restraining order earlier issued by
this Court.
SARMIENTO, J., concurring:

The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its nature as property of public dominion,
and hence, has become patrimonial property of the State. I understand that the parties are agreed that it was property intended for
"public service" within the contemplation of paragraph (2), of Article 430, of the Civil Code, and accordingly, land of State dominion,
and beyond human commerce. The lone issue is, in the light of supervening developments, that is non-user thereof by the National
Government (for diplomatic purposes) for the last thirteen years; the issuance of Executive Order No. 296 making it available for sale
to any interested buyer; the promulgation of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, making available for
the program's financing, State assets sold; the approval by the President of the recommendation of the investigating committee formed
to study the property's utilization; and the issuance of Resolution No. 55 of the Philippine Senate requesting for the deferment of its
disposition it, "Roppongi", is still property of the public dominion, and if it is not, how it lost that character.

When land of the public dominion ceases to be one, or when the change takes place, is a question our courts have debated early. In a
1906 decision, 1 it was held that property of the public dominion, a public plaza in this instance, becomes patrimonial upon use thereof
for purposes other than a plaza. In a later case, 2 this ruling was reiterated. Likewise, it has been held that land, originally private
property, has become of public dominion upon its donation to the town and its conversion and use as a public plaza. 3 It is notable that
under these three cases, the character of the property, and any change occurring therein, depends on the actual use to which it is
dedicated. 4

Much later, however, the Court held that "until a formal declaration on the part of the Government, through the executive department
or the Legislative, to the effect that the land . . . is no longer needed for [public] service- for public use or for special industries, [it]
continue[s] to be part of the public [dominion], not available for private expropriation or ownership." 5 So also, it was ruled that a
political subdivision (the City of Cebu in this case) alone may declare (under its charter) a city road abandoned and thereafter, to
dispose of it. 6

In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property from public domain to make it
alienable and a land for legislative authority to allow the sale of the property" 7 the majority lays stress to the fact that: (1) An
affirmative act — executive or legislative — is necessary to reclassify property of the public dominion, and (2) a legislative decree is
required to make it alienable. It also clears the uncertainties brought about by earlier interpretations that the nature of property-whether
public or patrimonial is predicated on the manner it is actually used, or not used, and in the same breath, repudiates the Government's
position that the continuous non-use of "Roppongi", among other arguments, for "diplomatic purposes", has turned it into State
patrimonial property.

I feel that this view corresponds to existing pronouncements of this Court, among other things, that: (1) Property is presumed to be
State property in the absence of any showing to the contrary; 8 (2) With respect to forest lands, the same continue to be lands of the
public dominion unless and until reclassified by the Executive Branch of the Government; 9 and (3) All natural resources, under the
Constitution, and subject to exceptional cases, belong to the State. 10

I am elated that the Court has banished previous uncertainties.

FELICIANO, J., dissenting

With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E. Gutierrez, Jr.

For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi, 5-Chome, Minato-ku Tokyo, Japan
(hereinafter referred to as the "Roppongi property") may be characterized as property of public dominion, within the meaning of
Article 420 (2) of the Civil Code:

[Property] which belong[s] to the State, without being for public use, and are intended for some public service -.

It might not be amiss however, to note that the appropriateness of trying to bring within the confines of the simple threefold
classification found in Article 420 of the Civil Code ("property for public use property "intended for some public service" and
property intended "for the development of the national wealth") all property owned by the Republic of the Philippines whether found
within the territorial boundaries of the Republic or located within the territory of another sovereign State, is not self-evident. The first
item of the classification property intended for public use — can scarcely be properly applied to property belonging to the Republic
but found within the territory of another State. The third item of the classification property intended for the development of the
national wealth is illustrated, in Article 339 of the Spanish Civil Code of 1889, by mines or mineral properties. Again, mineral lands
owned by a sovereign State are rarely, if ever, found within the territorial base of another sovereign State. The task of examining in
detail the applicability of the classification set out in Article 420 of our Civil Code to property that the Philippines happens to own
outside its own boundaries must, however, be left to academicians.
For present purposes, too, I agree that there is no question of conflict of laws that is, at the present time, before this Court. The issues
before us relate essentially to authority to sell the Roppongi property so far as Philippine law is concerned.

The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been converted into patrimonial property or
property of the private domain of the State; and (b) assuming an affirmative answer to (a), whether or not there is legal authority to
dispose of the Roppongi property.

Addressing the first issue of conversion of property of public dominion intended for some public service, into property of the private
domain of the Republic, it should be noted that the Civil Code does not address the question of who has authority to effect such
conversion. Neither does the Civil Code set out or refer to any procedure for such conversion.

Our case law, however, contains some fairly explicit pronouncements on this point, as Justice Sarmiento has pointed out in his
concurring opinion. In Ignacio v. Director of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued that if the land in question
formed part of the public domain, the trial court should have declared the same no longer necessary for public use or public purposes
and which would, therefore, have become disposable and available for private ownership. Mr. Justice Montemayor, speaking for the
Court, said:

Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer washed by the waters
of the sea and is not necessary for purposes of public utility, or for the establishment of special industries, or for
coast-guard service, the government shall declare it to be the property of the owners of the estates adjacent thereto
and as an increment thereof. We believe that only the executive and possibly the legislative departments have the
authority and the power to make the declaration that any land so gained by the sea, is not necessary for purposes of
public utility, or for the establishment of special industries, or for coast-guard service. If no such declaration has
been made by said departments, the lot in question forms part of the public domain. (Natividad v. Director of
Lands, supra.)

The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y Monteverde v. Director
of Lands, 93 Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).

... is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to determine whether any
public land are to be used for the purposes specified in Article 4 of the Law of Waters. Consequently, until a formal
declaration on the part of the Government, through the executive department or the Legislature, to the effect that the
land in question is no longer needed for coast-guard service, for public use or for special industries, they continue
to be part of the public domain not available for private appropriation or ownership. (108 Phil. at 338-339;
emphasis supplied)

Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the State of public
dominion into patrimonial property of the State. No particular formula or procedure of conversion is specified either in statute law or
in case law. Article 422 of the Civil Code simply states that: "Property of public dominion, when no longer intended for public use or
for public service, shall form part of the patrimonial property of the State". I respectfully submit, therefore, that the only requirement
which is legitimately imposable is that the intent to convert must be reasonably clear from a consideration of the acts or acts of the
Executive Department or of the Legislative Department which are said to have effected such conversion.

The same legal situation exists in respect of conversion of property of public dominion belonging to municipal corporations, i.e., local
governmental units, into patrimonial property of such entities. In Cebu Oxygen Acetylene v. Bercilles (66 SCRA 481 [1975]), the City
Council of Cebu by resolution declared a certain portion of an existing street as an abandoned road, "the same not being included in
the city development plan". Subsequently, by another resolution, the City Council of Cebu authorized the acting City Mayor to sell the
land through public bidding. Although there was no formal and explicit declaration of conversion of property for public use into
patrimonial property, the Supreme Court said:

xxx xxx xxx

(2) Since that portion of the city street subject of petitioner's application for registration of title was withdrawn from
public use, it follows that such withdrawn portion becomes patrimonial property which can be the object of an
ordinary contract.

Article 422 of the Civil Code expressly provides that "Property of public dominion, when no longer intended for
public use of 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 registrable title over the lot in question. (66 SCRA at 484-; emphasis supplied)

Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property owned by municipal corporations simple
non-use or the actual dedication of public property to some use other than "public use" or some "public service", was sufficient legally
to convert such property into patrimonial property (Municipality of Oas v. Roa, 7 Phil. 20 [1906]- Municipality of Hinunganan v.
Director of Lands 24 Phil. 124 [1913]; Province of Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).

I would also add that such was the case not only in respect of' property of municipal corporations but also in respect of property of the
State itself. Manresa in commenting on Article 341 of the 1889 Spanish Civil Code which has been carried over verbatim into our
Civil Code by Article 422 thereof, wrote:

La dificultad mayor en todo esto estriba, naturalmente, en fijar el momento en que los bienes de dominio publico
dejan de serlo. Si la Administracion o la autoridad competente legislative realizan qun acto en virtud del cual cesa el
destino o uso publico de los bienes de que se trata naturalmente la dificultad queda desde el primer momento
resuelta. Hay un punto de partida cierto para iniciar las relaciones juridicas a que pudiera haber lugar Pero puede
ocurrir que no haya taldeclaracion expresa, legislativa or administrativa, y, sin embargo, cesar de hecho el destino
publico de los bienes; ahora bien, en este caso, y para los efectos juridicos que resultan de entrar la cosa en el
comercio de los hombres,' se entedera que se ha verificado la conversion de los bienes patrimoniales?

El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por la afirmativa, y por nuestra parte creemos
que tal debe ser la soluciion. El destino de las cosas no depende tanto de una declaracion expresa como del uso
publico de las mismas, y cuanda el uso publico cese con respecto de determinados bienes, cesa tambien su situacion
en el dominio publico. Si una fortaleza en ruina se abandona y no se repara, si un trozo de la via publica se abandona
tambien por constituir otro nuevo an mejores condiciones....ambos bienes cesan de estar Codigo, y leyes especiales
mas o memos administrativas. (3 Manresa, Comentarios al Codigo Civil Espanol, p. 128 [7a ed.; 1952) (Emphasis
supplied)

The majority opinion says that none of the executive acts pointed to by the Government purported, expressly or definitely, to convert
the Roppongi property into patrimonial property — of the Republic. Assuming that to be the case, it is respectfully submitted
that cumulative effect of the executive acts here involved was to convert property originally intended for and devoted to public service
into patrimonial property of the State, that is, property susceptible of disposition to and appropration by private persons. These
executive acts, in their totality if not each individual act, make crystal clear the intent of the Executive Department to effect such
conversion. These executive acts include:

(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the disposition/utilization of the
Government's property in Japan, The Committee was composed of officials of the Executive Department: the Executive Secretary; the
Philippine Ambassador to Japan; and representatives of the Department of Foreign Affairs and the Asset Privatization Trust. On 19
September 1988, the Committee recommended to the President the sale of one of the lots (the lot specifically in Roppongi) through
public bidding. On 4 October 1988, the President approved the recommendation of the Committee.

On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese Ministry of Foreign Affairs of the
Republic's intention to dispose of the property in Roppongi. The Japanese Government through its Ministry of Foreign Affairs replied
that it interposed no objection to such disposition by the Republic. Subsequently, the President and the Committee informed the
leaders of the House of Representatives and of the Senate of the Philippines of the proposed disposition of the Roppongi property.

(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that the majority opinion is right in saying
that Executive Order No. 296 is insufficient to authorize the sale of the Roppongi property, it is here submitted with respect that
Executive Order No. 296 is more than sufficient to indicate an intention to convert the property previously devoted to public service
into patrimonial property that is capable of being sold or otherwise disposed of

(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public purposes. Assuming (but only arguendo)
that non-use does not, by itself, automatically convert the property into patrimonial property. I respectfully urge that prolonged non-
use, conjoined with the other factors here listed, was legally effective to convert the lot in Roppongi into patrimonial property of the
State. Actually, as already pointed out, case law involving property of municipal corporations is to the effect that simple non-use or
the actual dedication of public property to some use other than public use or public service, was sufficient to convert such property
into patrimonial property of the local governmental entity concerned. Also as pointed out above, Manresa reached the same conclusion
in respect of conversion of property of the public domain of the State into property of the private domain of the State.

The majority opinion states that "abandonment cannot be inferred from the non-use alone especially if the non-use was attributable not
to the Government's own deliberate and indubitable will but to lack of financial support to repair and improve the property" (Majority
Opinion, p. 13). With respect, it may be stressed that there is no abandonment involved here, certainly no abandonment of property or
of property rights. What is involved is the charge of the classification of the property from property of the public domain into property
of the private domain of the State. Moreover, if for fourteen (14) years, the Government did not see fit to appropriate whatever funds
were necessary to maintain the property in Roppongi in a condition suitable for diplomatic representation purposes, such circumstance
may, with equal logic, be construed as a manifestation of the crystalizing intent to change the character of the property.

(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale of the lot in Roppongi. The
circumstance that this bidding was not successful certainly does not argue against an intent to convert the property involved into
property that is disposable by bidding.

The above set of events and circumstances makes no sense at all if it does not, as a whole, show at least the intent on the part of the
Executive Department (with the knowledge of the Legislative Department) to convert the property involved into patrimonial property
that is susceptible of being sold.

II

Having reached an affirmative answer in respect of the first issue, it is necessary to address the second issue of whether or not there
exists legal authority for the sale or disposition of the Roppongi property.

The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which reads as follows:

SEC. 79 (f). Conveyances and contracts to which the Government is a party. — In cases in which the Government
of the Republic of the Philippines is a party to any deed or other instrument conveying the title to real estate or to
any other property the value of which is in excess of one hundred thousand pesos, the respective Department
Secretary shall prepare the necessary papers which, together with the proper recommendations, shall be submitted to
the Congress of the Philippines for approval by the same. Such deed, instrument, or contract shall be executed and
signed by the President of the Philippines on behalf of the Government of the Philippines unless the authority
therefor be expressly vested by law in another officer. (Emphasis supplied)

The majority opinion then goes on to state that: "[T]he requirement has been retained in Section 4, Book I of the Administrative Code
of 1987 (Executive Order No. 292)" which reads:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is authorized
by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the
authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of
any corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis
supplied)

Two points need to be made in this connection. Firstly, the requirement of obtaining specific approval of Congress when the price of
the real property being disposed of is in excess of One Hundred Thousand Pesos (P100,000.00) under the Revised Administrative
Code of 1917, has been deleted from Section 48 of the 1987 Administrative Code. What Section 48 of the present Administrative Code
refers to is authorization by law for the conveyance. Section 48 does not purport to be itself a source of legal authority for conveyance
of real property of the Government. For Section 48 merely specifies the official authorized to execute and sign on behalf of the
Government the deed of conveyance in case of such a conveyance.

Secondly, examination of our statute books shows that authorization by law for disposition of real property of the private domain of
the Government, has been granted by Congress both in the form of (a) a general, standing authorization for disposition of patrimonial
property of the Government; and (b) specific legislation authorizing the disposition of particular pieces of the Government's
patrimonial property.
Standing legislative authority for the disposition of land of the private domain of the Philippines is provided by Act No. 3038, entitled
"An Act Authorizing the Secretary of Agriculture and Natural Resources to Sell or Lease Land of the Private Domain of the
Government of the Philippine Islands (now Republic of the Philippines)", enacted on 9 March 1922. The full text of this statute is as
follows:

Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled and by the
authority of the same:

SECTION 1. The Secretary of Agriculture and Natural Resources (now Secretary of the Environment and Natural
Resources) is hereby authorized to sell or lease land of the private domain of the Government of the Philippine
Islands, or any part thereof, to such persons, corporations or associations as are, under the provisions of Act
Numbered Twenty-eight hundred and seventy-four, (now Commonwealth Act No. 141, as amended) known as the
Public Land Act, entitled to apply for the purchase or lease or agricultural public land.

SECTION 2. The sale of the land referred to in the preceding section shall, if such land is agricultural, be made in
the manner and subject to the limitations prescribed in chapters five and six, respectively, of said Public Land Act,
and if it be classified differently, in conformity with the provisions of chapter nine of said Act: Provided, however,
That the land necessary for the public service shall be exempt from the provisions of this Act.

SECTION 3. This Act shall take effect on its approval.

Approved, March 9, 1922. (Emphasis supplied)

Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the State, it must be noted that Chapter
9 of the old Public Land Act (Act No. 2874) is now Chapter 9 of the present Public Land Act (Commonwealth Act No. 141, as
amended) and that both statutes refer to: "any tract of land of the public domain which being neither timber nor mineral land, is
intended to be used for residential purposes or for commercial or industrial purposes other than agricultural" (Emphasis supplied). In
other words, the statute covers the sale or lease or residential, commercial or industrial land of the private domain of the State.

Implementing regulations have been issued for the carrying out of the provisions of Act No. 3038. On 21 December 1954, the then
Secretary of Agriculture and Natural Resources promulgated Lands Administrative Orders Nos. 7-6 and 7-7 which were entitled,
respectively: "Supplementary Regulations Governing the Sale of the Lands of the Private Domain of the Republic of the Philippines";
and "Supplementary Regulations Governing the Lease of Lands of Private Domain of the Republic of the Philippines" (text in 51 O.G.
28-29 [1955]).

It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in effect and has not been repealed. 1

Specific legislative authorization for disposition of particular patrimonial properties of the State is illustrated by certain earlier statutes.
The first of these was Act No. 1120, enacted on 26 April 1904, which provided for the disposition of the friar lands, purchased by the
Government from the Roman Catholic Church, to bona fide settlers and occupants thereof or to other persons. In Jacinto v. Director of
Lands (49 Phil. 853 [1926]), these friar lands were held to be private and patrimonial properties of the State. Act No. 2360, enacted on
-28 February 1914, authorized the sale of the San Lazaro Estate located in the City of Manila, which had also been purchased by the
Government from the Roman Catholic Church. In January 1916, Act No. 2555 amended Act No. 2360 by including therein all lands
and buildings owned by the Hospital and the Foundation of San Lazaro theretofor leased by private persons, and which were also
acquired by the Philippine Government.

After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one statute authorizing the President to
dispose of a specific piece of property. This statute is Republic Act No. 905, enacted on 20 June 1953, which authorized the

President to sell an Identified parcel of land of the private domain of the National Government to the National Press Club of the
Philippines, and to other recognized national associations of professionals with academic standing, for the nominal price of P1.00. It
appears relevant to note that Republic Act No. 905 was not an outright disposition in perpetuity of the property involved- it provided
for reversion of the property to the National Government in case the National Press Club stopped using it for its headquarters. What
Republic Act No. 905 authorized was really a donation, and not a sale.

The basic submission here made is that Act No. 3038 provides standing legislative authorization for disposition of the Roppongi
property which, in my view, has been converted into patrimonial property of the Republic. 2
To some, the submission that Act No. 3038 applies not only to lands of the private domain of the State located in the Philippines but
also to patrimonial property found outside the Philippines, may appear strange or unusual. I respectfully submit that such position is
not any more unusual or strange than the assumption that Article 420 of the Civil Code applies not only to property of the Republic
located within Philippine territory but also to property found outside the boundaries of the Republic.

It remains to note that under the well-settled doctrine that heads of Executive Departments are alter egos of the President (Villena v.
Secretary of the Interior, 67 Phil. 451 [1939]), and in view of the constitutional power of control exercised by the President over
department heads (Article VII, Section 17,1987 Constitution), the President herself may carry out the function or duty that is
specifically lodged in the Secretary of the Department of Environment and Natural Resources (Araneta v. Gatmaitan 101 Phil. 328
[1957]). At the very least, the President retains the power to approve or disapprove the exercise of that function or duty when done by
the Secretary of Environment and Natural Resources.

It is hardly necessary to add that the foregoing analyses and submissions relate only to the austere question of existence of legal power
or authority. They have nothing to do with much debated questions of wisdom or propriety or relative desirability either of the
proposed disposition itself or of the proposed utilization of the anticipated proceeds of the property involved. These latter types of
considerations He within the sphere of responsibility of the political departments of government the Executive and the Legislative
authorities.

For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and 92047.

Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.