G.R.No.79167May7,1992 THEHEIRSOFPROCESOBAUTISTArepresentedbyPEDROBAUTISTA,petitioners, vs. SPOUSESSEVEROBARZAandESTERP.BARZA,andCOURTOFAPPEALS,respondents. MiguelandValensonLawOfficesforpetitioners. RogelioA.BarbaandAguinaldo,Barza&Associatesforprivaterespondents. ROMERO,J.: Thefactsofthiscasebeganasfarbackas1946,whenthePhilippineswasstillanewrepublicandfrontierlandsand bountifulnaturalresourcesdownsouthbeckonedtheadventurouslikeProcesoBautistaandEsterBarza.

. ItwasonOctober25,1946,tobeexact,whenProcesoBautistaappliedforafishpondpermitoverathirtyhectareparcelof marshy public land located in Sitio Central, Lupon, Davao (Fishpond Application No. 1205). The application was acknowledgeonDecember12,1946,bythethenDivisionofFisheries.Saidapplicationwas,however,rejectedbythesame officeonNovember9,1948becausetheareaappliedforwasneededforfirewoodproductionascertifiedtobytheBureauof Forestry.Therejectioncoveredanareaof49hectaresasagainstthe30hectaresappliedforbyProcesoBautista.1Between October25,1946andNovember9,1948,Bautistaoccupiedanareawhichextendedbeyondtheboundaryoftheonehehad appliedforandintroducedimprovementsthereon.2 OnSeptember23,1948,EsterBarzafiledafishpondapplicationcoveringanareaofapproximately14.85hectaresatSitio Bundas,Lupon,Davao(FishpondApplication.No.2984).Subsequentinvestigationrevealedthattheportionappliedforby BarzaoverlappedtheareaoriginallyappliedforbyProcesoBautista.3 Despitetherejectionofhisapplication,ProcesoBautistafiledanotherfishpondapplicationonFebruary8,1949withthe BureauofFisheries(FishpondApplicationNo.3346).The49hectaresappliedforwasinSitioBundasinsteadofSitio Central.4 The records of the Bureau of Fisheries further show that while the 14.85 hectares applied for by Barza in Fishpond ApplicationNo.2984hadbeenreleasedbytheBureauofForestryasavailableforfishpondpurposes,the49hectares appliedforbyBautistainFishpondApplicationNo.3346hadnotyetbeensimilarlyreleasedbythesaidbureau.Itmustbe emphasizedthatthearea,includingtheportionappliedforbyBarzahadbeengreatlyimprovedbyProcesoBautista.5As expected,anadministrativecaseinvolvingthetwoapplicantsarose. OnSeptember19,1953,theDirectorofFisheriesruledinfavorofEsterBarza.Thedispositiveportion6ofhisorderreads: INVIEWOFTHEFOREGOING,Fp.A.No.2984ofEsterF.Barzashouldbe,asherebyitis,GIVEN DUECOURSE,subjecthowevertothereimbursementoftheamountsofimprovementsintheareato ProcesoBautistawithinaperiodofsixtydaysfromthedatehereof,thesaidamountstobeappraisedand determinedbytheDistrictFisheryOfficeratDavaoCity;andFp.A.No.3346ofProcesoBautistashould be,asherebyitis,REJECTED. SOORDERED. BautistaappealedthesaidordertotheSecretaryofAgricultureandNaturalResources(DANRCaseNo.836).Inadecision datedApril28,1954,theSecretary,throughUndersecretaryJaimeM.Ferrer,dismissedtheappealandaffirmedintotothe order of the Director of Fisheries giving due course to the fishpond application of Barza. 7 Bautista moved for reconsiderationbutthesamewasdeniedonOctober8,1954.8 ItwasnotuntilFebruary2,1955,thattheDirectorofFisheries,inpursuanceoftheorderofSeptember19,1953,required EsterBarzatoremittheamountofP3,391.34whichrepresentedthevalueoftheimprovementsintroducedbyBautista.9 ThisfigurewasprotestedbyMrs.BarzainherletterdatedMarch6,1955wheresheexpressedherwillingnesstopaythe amount ofP1,763.31only.OnApril 18,1955,theDirectorofFisheries advisedhertoremit areappraisedamount of P2,263.33.SubsequentreappraisalsonthevalueoftheimprovementsbecamenecessaryinviewofBautista'sclaimthatthe improvementswereworthP14,000.10 Meanwhile,sincethepartiescouldnotagreeontheamountofreimbursement,onOctober13,1956,Bautistamovedforthe rejectionofthefishpondapplicationofBarzainviewofhernoncompliancewiththeorderoftheDirectorofFisheries datedSeptember19,1953mandatingBarza'sdepositofthevalueoftheimprovements.11Bautistaappealedtothethen SecretaryofAgricultureandNaturalResources,who,inhisdecisiondatedMay5,1959deniedBautista'sappealthereby enforcingtheDirectorofFisheriesorderofSeptember19,1953.12 OnOctober19,1960,JoseMontilla,AssistantDirectorofFisheries,orderedEsterBarzabylettertoreimburseBautista

RepublicofthePhilippines SUPREMECOURT Manila THIRDDIVISION

P1,789.18, the total value of the improvements pursuant to the appraisal report of District Fishery Officer Crispin MondragondatedOctober31,1958.13OnDecember22,1960,Barza,agreeingtosaidappraisal,consignedthesumof P1,789.18withthethenJusticeofthePeaceofLupon,Davao.14Bautista,however,refusedtoacceptthesame.OnJuly11, 1961,anotherreappraisaloftheimprovementswasmadeestablishingthevalueofthedikes,dams,treesandhousesinthe areainvolvedtobeP14,569.08.15OnDecember12,1962,thisamountwasreducedtoP9,514.33inviewofthefindingthat certainimprovementsweresuitableforagriculturalandnotforfishpondpurposes.16Inthemeantime,thedecisionofthe SecretaryofAgricultureandNaturalResourcesdatedMay5,1959becamefinal.17 MorethansevenyearsafterthelastreappraisaloftheimprovementsoronDecember12,1968,EsterBarzaandherhusband, Engr.SeveroM.Barza,filedinthethenCourtofFirstInstanceofDavaoOriental,anactionagainstBautistaprayingfor recovery of possession over the 14.85hectare fishpond area she had applied for, a declaration of the validity of the consignationmadebeforetheJusticeofthePeaceofLupon,anddamagesandattorney'sfees. On January 30, 1971, while the case was pending resolution, Proceso Bautista died. 18 Consequently, his heirs were substitutedaspartydefendants. Thelowercourtat firstdismissedthecaseforlackofjurisdictionbut later,itreconsideredthedismissal.19Aftera protractedtrial,onNovember15,1983,theRegionalTrialCourtofDavaoOriental,20renderedadecision21infavorof defendantBautista.WhiledisagreeingwiththeBautistasthatthepriorityruleinapplicationsforpermitswasinapplicable becauseProcesoBautista'sapplicationwasmadebeforetheareawasdeclaredavailableforfishpondpurposes,thelower courtruledthattheBarzashadnotacquiredavestedrighttopossesstheareasconcernedastheyhadnotcompliedwiththe "conditionprecedent"tosuchpossessionthereimbursementofthevalueoftheimprovementsmadebyBautista.Hence, thecourtruled,itwasprematurefortheBarzastodemandpossessionofthearea. Onwhethertheactionforrecoveryofpossessionhadprescribed,22thelowercourtsaid: ...Besides,areviewoftheestablishedfactsandcircumstanceswouldshowthatProcesoBautistastarted topossessthepropertyadverselyasearlyas1946.ItwasonlyonSeptember23,1948whenEsterBarza filedherapplicationandprotestedBautista'sentry.UnderArticle2253oftheNewCivilCode,"theCivil Codeof1899andotherpreviouslawsshallgovernrightsoriginating,undersaidlaws,fromactsdoneor eventswhichtookplaceundertheirregime,eventhoughthisCodemayregulatethem inadifferent mannerormaynotrecognizethem."Prescriptionthereforewhichstartedpriortotheeffectivityofthe NewCivilCodeonAugust30,1950shouldbegovernedbythelawpriortotheeffectivityoftheNew CivilCode,whichwastheCodeofCivilProcedure,underwhichtheactionofrecoveryof(possession) prescribedwithinten(10)years.Inthiscase,theadversepossessionofProcesoBautistawhichcouldbea basisforprescriptionwasinterruptedwiththefilingoftheapplicationofEsterBarzaandherprotest againsttheactsoftheformerwhichshelodgedwiththeBureauofFisheriesin1948.Whenthedecisionof theDepartmentofAgricultureandNaturalResourcesdatedMay5,1959becamefinalonJuly4,1959as per Exhibit "D" and as in fact admitted by the parties, the said prescription by adverse possession continued(sic).ThisisclearfromtheprovisionofArt.1123oftheNewCivilCodewhichprovidesthat civilinterruptionofpossessionforthepurposeofprescriptionisproducedbythejudicialsummonstothe possessorwhich,intheconflictbetweentheparties,tooktheformofthefishpondapplicationandthe protestfiledbyEsterBarzawiththeBureauofFisheriesin1948.FromJuly4,1959toDecember12,1968, aperiodofmorethannine(9)yearselapsed,andasthesameshouldbetackedwiththeperiodofalmost two(2)yearswhichelapsedfrom1946to1948,whenProcesoBautistastartedtoadverselypossessthe areaandwhen,onSeptember23,1948,EsterBarzafiledherapplication,morethanten(10)yearshad expiredandthereforebyreasonofprescription,therecoveryofpossessionisalsobarred. EmphasizingthatBarza'sfailuretoreimburseBautistafortheimprovementsintroducedontheareawasinconsistentwith goodfaith,thelowercourtheldthattheorderoftheDirectorofFisheriesgivingduecoursetoherfishpondapplicationand thedecisionoftheSecretaryofAgricultureandNaturalResources"hadallbecomestale."Moreover,theconsignationofthe amountofP1,789.18wasillegalasitwasnotinaccordancewithArt.1258oftheNewCivilCodeand,thecourtadded, Barza'sfailuretopaythesumrequiredofherandtofilethenecessaryactionwithintenyearswastantamounttoanonuser ofherrightsundertheSeptember19,1953orderoftheDirectorofFisheries.CitingbyanalogyArt.506oftheCivilCode providingthattherighttomakeuseofpublicwatersisextinguishedbythelapseoftheconcessionandbynonuserforfive (5)years,thelowercourtheldthatthecancellationofBarza'sapplication,asrecommendedbyFisheryProductExaminer AbdulBakir,wasproper. Ontheotherhand,thelowercourtruledthatBautista'srighttoretainpossessionoverhisimprovementswasimpliedbythe orderofSeptember19,1953whileBarza'sfailuretopaythevalueoftheimprovementswas"unfairandunsporting"and violativeofArt.19oftheNewCivilCode.ThelowercourtbelievedthatP9,514.33wasthe"rightamount"thatBarza shouldhaveproperlyconsigned.Thedispositiveportionofthedecision23reads: WHEREFORE, judgment is hereby rendered in favor of the defendants and against the plaintiffs,

dismissingthecomplaintandtheplaintiffsareherebydirectedtopaydefendantsthesumofP10,000by wayoflitigationexpensesandP10,000bywayofattorney'sfeesandtopaythecosts. SOORDERED. TheBarzasappealedtotheCourtofAppeals.OnJune30,1986saidcourtreversedthedecisionofthelowercourt.24It interpretedthedecisionoftheSecretaryofAgricultureandNaturalResourcesasan"officialimprimatur"ontheapplication ofBarzaandasanimplicationthatBautistahadnorighttocontinuepossessionoverthe49hectarescoveredbyFishpond ApplicationNo.3346. While stating that consignation in an action for recovery of possession of realty is not required by law and that the reimbursement of the value of the improvements is not an obligation, the appellate court nonetheless held that the consignationofP1,789.18was"properandeffective."25ItfoundthatBautistawasnotapossessoringoodfaithnora planteringoodfaithbecausehefiledFishpondApplicationNo.3346afterBarzahadfiledFishpondApplicationNo.2984. ItconcludedthatBautista'sclaimtoprescriptiverights,acquiredorvested,didnotarise"becauseitinfringe(d)ontherights of other(s) like Barza whose Fishpond Application No. 2984 was given due course by the proper officials of the government."26Itdisposedofthecaseasfollows: Wherefore,thedecisionaquoisherebysetasideandreversedandanotheroneisrenderedorderingthe heirsofProcesoBautistatoacceptorwithdrawthesumofP1,789.18fromtheMunicipalTrialCourt Lupon,DavaoOriental(formerlyMunicipalCourtofLupon,DavaoOriental)representingthevalueofthe improvementsintroducedonthecontrovertedareaandtosurrenderpossessionofthecontestedareatothe heirsofEsterBarzabothwithin10daysfromreceiptoftheentryofjudgment.Nodamagesandcost. SOORDERED.(Rollo,p.55) OnJuly29,1986,petitionersfiledamotionforreconsiderationofthedecisionoftheCourtofAppealsbutthesamewas deniedonJune18,1987.27 Hence,thisrecourse.Petitionerscontendthattheprivaterespondentscannotbegiventherighttopossessthefishpondin questionastheythemselvesdidnotcomplywiththeDirectorofFisheries'ordertoreimburseBautistafortheimprovements thereon.TheyassertthatwhateverrightstheBarzashadundertheirfishpondapplicationhadbecomestalebynonuser. Attheoutset,itshouldberememberedthatuntiltimberorforestlandsarereleasedasdisposableoralienable,neitherthe BureauofLandsnortheBureauofFisherieshasauthoritytolease,grant,sell,orotherwisedisposeoftheselandsfor homesteads,salespatents,leasesforgrazingpurposes,fishpondleasesandothermodesofutilization.28OnOctober25, 1946whenBautistafiledFishpondApplicationNo.1205,theareaappliedforcouldnotyetbegrantedtohimasitwasyet tobereleasedforpublicutilization.Thesituation,however,changedwhenBarzafiledFishpondApplicationNo.2984for theareahad,bythen,beenopenedforfishpondpurposes. Thus,evenifBautistawereaheadofBarzabytwoyearsintermsofoccupation,possessionandintroductionofsubstantial improvements,hewasnotplacedinabetterpositionthanBarza.ThepriorityruleunderFisheriesAdministrativeOrderNo. 14appliesonlytopubliclandsalreadyreleasedbytheBureauofFisheries.Untilsuchlandshadbeenproperlydeclared available for fishpond purposes, any application is ineffective because there is no disposable land to speak of. 29 Accordingly,Bautista'sapplicationwasprematureandtherulingoftheDirectorofFisheriesonthismatterwas,therefore, correct. Althoughinadministrativedecisiondoesnotnecessarilybindus,itisentitledtogreatweightandrespect.Itshouldbe stressedthatthefunctionofadministeringanddisposingoflandsofthepublicdomaininthemannerprescribedbylawis notentrustedtothecourts buttoexecutiveofficials.30Matters involvedinthegrant,cancellation,reinstatementand revisionoffishpondlicensesandpermitsarevestedundertheexecutivesupervisionoftheappropriatedepartmentheadwho inthiscaseistheSecretaryofAgricultureandNaturalResources.Assuch,hisdiscretionmustberespectedintheabsence ofaclearshowingofabuse.31Thisisinconsonancewithourwellsettledrulingthatadministrativedecisionsonmatters withinthejurisdictionoftheexecutivedepartmentcanonlybesetasideonproofofgrossabuseofjurisdiction,fraudor error of law. 32As earlier noted, and there being nomotionfor its reconsideration, thedecisionof the Secretary of AgricultureandNaturalResourcesbecomefinalonJuly3,1959,thirty(30)daysfromreceiptbythepartiesofcopiesofthe decision.33 Petitioners'contentionthattheactionforrecoveryofpossessionhadprescribedwhentheBarzasfileditonDecember12, 1968iserroneousforitwasfiledwithinthetenyearperiodforenforcingajudgment,whichinthiscaseistheMay5,1959 decisionoftheSecretaryofAgricultureandNaturalResources,asprovidedforinArt.1144oftheCivilCode.Hence,the ultimateissueinthiscaseiswhetherornottheBarzasmayrightfullyseekenforcementofthedecisionoftheDirectorof FisheriesandthatoftheSecretaryofAgricultureandNaturalResources,notwithstandingtheirrefusaltoreimbursethe Bautistasfortheimprovementsinthearea.Wefindthatthepeculiarcircumstancesofthiscasecompelastoruleinthe affirmative. AlthoughBautistawasinpossessionoftheareaforquiteanumberofyears,heceasedtobecomeabonafidepossessor uponreceiptofthedecisionoftheDirectorofFisheriesgrantingduecoursetoBarza'sfishpondapplication.UnderArt.528

oftheCivilCode,"(p)ossessionacquiredingoodfaithdoesnotloseitscharacterexceptinthecaseandfromthemoment factsexistwhichshowthat thepossessorisnotunawarethathepossesses thethingimproperlyorwrongfully."Thus, BautistashouldhavedesistedfromintroducingimprovementsonthepropertywhenhelearnedthatBarza'sapplicationhad beenapproved. However,Bautistamaynotbesolelyfaultedforholdingontotheareanotwithstandingthathehadnorightoverit.The Barzas,afterreceivingtheadministrativedecisionintheirfavor,shouldhavecompliedwithitsdirectivetoreimbursethe Bautistasfortheimprovementsintroducedthereon.Thisisnottosay;however,thatsuchfailuretoabidebythedecisionof theDirectorofFisheriesrendered"stale"thesaiddecision.ThereisalsotheestablishedfactthatBautistarefusedthe payments tendered by the Barzas. However, the Barzas' failure to question the last reappraisal of the improvements constitutedinactionontheirpart,forwhichtheyshouldbearitsconsequences. WHEREFORE,thedecisionoftheCourtofAppealsisherebyAFFIRMEDsubjecttothemodificationthatthepetitioners shallbeREIMBURSEDtheamountofP9,514.33(inclusiveoftheconsignedamountofP1,789.18)withlegalinterestfrom December12,1962untilfullypaid.Uponpaymentofsaidreimbursement,theBautistasshallSURRENDERpossessionof the14.85hectares,includingtheimprovementsthereon,forwhichtheBarzashadbeengrantedtherighttooperateas fishpond.Thisdecisionisimmediatelyexecutory.Nocosts. SOORDERED. Gutierrez,Jr.,FelicianoandDavide,Jr.,JJ.,concur. Bidin,J.,tooknopart.

G.R.No.L69002June30,1988 REPUBLICOFTHEPHILIPPINES,petitioner, vs. AMANDALATVDA.DECASTILLO,FLORENCIOT.CASTILLO,SOLEDADLOTACASTILLO,CARLOSL. CASTILLO,NIEVESKATIGBAKCASTILLO,MARIANOL.CASTILLO,HIPOLITADYTIAPCOCASTILLO, AIDACASTILLOHERRERA,HERMITOHERRERA,JOSEL.CASTILLO,LILIAMACEDACASTILLO, TERESITAL.CASTILLO,REGISTEROFDEEDSOFBATANGASandTHEINTERMEDIATEAPPELLATE COURT,respondents. Castro,Nardo,Quintanilla,Gonzales&MacatangayLawOfficeforrespondents. PARAS,J.: ThisisapetitionforreviewoncertiorarioftheApril26,1984DecisionofthethenIntermediateAppellateCourt*reversing theFebruary6,1976DecisionofthethenCourtofFirstInstanceofBatangas,BranchVI,inCivilCaseNo.2044. Theantecedentalfactsofthiscase,asfoundbythethenIntermediateAppellateCourt,areasfollows:Sometimein 1951,thelateModestoCastilloappliedfortheregistrationoftwoparcelsofland,Lots1and2,locatedinBanadero, Tanauan,Batangas,describedinPlanPsu119166,withatotalareaof39,755squaremeters.Inadecisiondated August31,1951,thesaidModestoCastillo,marriedtoAmandaLat,wasdeclaredthetrueandabsoluteownerof thelandwiththeimprovementsthereon,forwhichOriginalCertificateofTitleNo.0665was,issuedtohimbythe RegisterofDeedsatBatangas,Batangas,onFebruary7,1952.ByvirtueofaninstrumentdatedMarch18,1960,the saidLots1and2coveredbyOriginalCertificateofTitleNo.0665,togetherwithLotNo.12374coveredby TransferCertificateofTitleNo.3254AandLotNo.12377coveredbyTransferCertificateofTitleNo.3251A, wereconsolidatedandsubdividedintoLots1to9underPcs1046.AfterthedeathofModestoCastillo,oron August31,1960,AmandaLatVda.deCastillo,etal.,executedadeedofpartitionandassumptionofmortgagein favorofFlorencioL.Castillo,etal.,asaresultofwhichOriginalCertificateofTitleNo.D665wascancelled,and inlieuthereof,newtransfercerfificatesoftitlewereissuedtoFlorencioCastillo,etal.,towit:TransferCertificate ofTitleNo.21703(Lot4)(and)TransferCertificateofTitleNo.21704toFlorencioCastillo(Lot5);Transfer CertificateofTitleNo.T21708toCarlosL.Castillo(Lot7);TransferCertificateofTitleNo.T21712toMariano L.Castillo(Lot6);TransferCertificateofTitleNo.T21713toJoseL.Castillo(Lot9);TransferCertificateofTitle No.T21718toAidaC.Herrera(Lot2);andTransferCertificateofTitleNo.T21727toTeresitaL.Castillo(Lot8). TheRepublicofthePhilippinesfiledCivilCaseNo.2044withthelowercourtfortheannulmentofthecertificates oftitleissuedtodefendantsAmandaLatVda.deCastillo,etal.,asheirs/successorsofModestoCastillo,andforthe reversionofthelandscoveredthereby(Lots1and2,Psu119166)totheState.Itwasallegedthatsaidlandshad alwaysformedpartoftheTaalLake,washedandinundatedbythewatersthereof,andbeingofpublicownership,it couldnotbethesubjectofregistrationasprivateproperty.Appellantsherein,defendantsbelow,allegedintheir answerthattheGovernment'sactionwasalreadybarredbythedecisionoftheregistrationcourt;thattheactionhas prescribed;andthatthegovernmentwasestoppedfromquestioningtheownershipandpossessionofappellants. Aftertrial,thethenCourtofFirstInstanceofBatangas,BranchVI,presidedoverbyHonorableBenjaminRelova,ina Decision dated February 6, 1976 (Record on Appeal, pp. 6269), ruled in favor of herein petitioner Republic of the Philippines.Thedecretalportionofthesaiddecision,reads: WHEREFORE,theRegisterofDeedsofBatangasisherebyorderedtocancelOriginalCertificateofTitleNo.0 665inthenameofModestoCastilloandthesubsequentTransferofCertificatesofTitleissuedoverthepropertyin thenamesofthedefendants.LotsNos.1and2ofPlanPsu19166areherebydeclaredpubliclandsbelongingtothe state.Withoutpronouncementastocosts. TheCourtofAppeals,onappeal,inaDecisionpromulgatedonApril26,1984,reversedandsetasidetheappealeddecision, anddismissedthecomplaint(Record,pp.3141).HereinpetitionerfiledaMotionforReconsideration(Record,pp.4251), butthesamewasdeniedinaResolutionpromulgatedonOctober12,1984(Record,p.52).Hence,theinstantpetition. ThesoleissueraisedinthiscaseiswhetherornotthedecisionoftheLandRegistrationCourtinvolvingshorelands constitutesresadjudicata. Thereisnoquestionthatoneoftherequisitesofresjudicataisthatthecourtrenderingthefinaljudgmentmusthave jurisdictionoverthesubjectmatter(Ramosv.Pablo,146SCRA24[1986];thatshoresarepropertiesofthepublicdomain intendedforpublicuse(Article420,CivilCode)and,therefore,notregistrable.Thus,ithaslongbeensettledthatportions

RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION

oftheforeshoreoroftheterritorialwatersandbeachescannotberegistered.Theirinclusioninacertificateoftitledoesnot convertthesameintopropertiesofprivateownershiporconfertitleupontheregistrant(Republicv.AyalayCia,14SCRA, 259[1965],citingthecasesofDizon,etal.v.Bayona,etal.,98Phil.943;andDizon,etal.v.Rodriguez,etal.,13SCRA 704). Butanimportantboneofcontentionisthenatureofthelandsinvolvedinthiscase. Petitionercontends"that"Lots1and2,PSU119166hadalwaysformedpartoftheTaalLake,washedandinundatedbythe watersthereof.Consequently,thesamewerenotsubjecttoregistration,beingoutsidethecommerceofmen;andthatsince thelotsinlitigationareofpublicdomain(Art.502),par.4CivilCode)theregistrationcourt(of1951)didnothave jurisdictiontoadjudicatesaidlandsasprivateproperty,hence,resjudicatadoesnotapply.(Rollo,pp.3738). TheGovernmentpresentedbothoralanddocumentaryevidence. As summarizedbytheIntermediateAppelateCourt (nowCourt ofAppeals),thetestimonies ofthewitnesses forthe petitionerareasfollows: 1.RosendoArcenas,aGeodeticEngineerconnectedwiththeBureauofLandssince1961,testifiedtotheeffectthat Lots1and2,Psu119166,whicharethelotsinquestion,adjointhecadastralsurveyofTanauan,Batangas(Cad. 168);thattheoriginalboundaryoftheoriginalcadastralsurveywasforeshorelandasindicatedontheplan;thatthe cadastralsurveyofTanauanwasexecutedsometimein1923;thatthefirstsurveyexecutedofthelandafter1923 wastheoneexecutedin1948underPlanPsu119166thatintherelocationsurveyofthedisputedlotsin1962under SWO40601,saidlotswereannotatedontheplanasclaimedbytheRepublicofthePhilippinesinthesamemanner thatitwassoannotatedinPlanPsu119166;thusshowingthattheGovernmentwastheonlyclaimantoftheland duringthesurveyin1948;thatduringtherelocationsurveymadein1962,oldpointscannotbeIdentifiedorlocated becausetheywereunderwaterbyaboutfortycentimeters;thatduringtheocularinspectionofthepremiseson November23,1970,hefoundthat2monumentsofthelotsinquestionwerewashedoutbythewatersofthe BaloyboyCreek;thathealsofoundduckpensalongthelotsinquestion;thattherearehousesinthepremisesas wellassomecamotesandbananas;andthathefoundalsosomeshells('suso')alongthebanksoftheTaallake(Tsn, Nov.16,1970,pp.1321;Feb.16,1971,pp.436). 2.BraulioAlmendraltestifiedtotheeffectthatheisaresidentofTanauan,Batangas,neartheTaallake;thatlike himself there are other occupants of the land among whom are Atanacio Tironas, Gavino Mendoza, Juliano Tirones,AgapitoLlarena,etc.;thatitwastheywhofilleduptheareatomakeithabitable;thattheyfilledupthe areawithshellsandsand;thattheiroccupationisduckraising;andthattheCastillosneverstayedinoroccupied thepremises(Tsn,Nov.16,1970,pp.3250). 3.ArsenioIbay,aGeodeticEngineerconnectedwiththeBureauofLandssince1968,alsotestifiedtotheeffectthat inaccordancewiththecadastralplanofTanauan,theonlyprivateclaimofSixtoCastilloreferredtoLots1006to 1008;thattheCastillosneverassertedanyprivateclaimtothelotsinquestionduringthecadastralsurvey;'thatin the preparation of plan Psu119166, Lots 12374 and 12377 were made as reference to conform to previously approvedplans;thatlot12374isaportionofcadastrallot10107,SWO86738whileLot22377isaportionofLot 10108ofthesameplan(Tsn,Nov.25,1970,pp.115137). 4.JoseIsidro,aLandInvestigatoroftheBureauofLands,testifiedtotheeffectthatpursuanttotheorderofthe Director of Lands, he, together with Engineer Rufino Santiago and the barrio captain of Tanauan, Batangas, conductedaninvestigationofthelandinquestion;thathesubmittedareportofinvestigation,datedOctober19, 1970(Exh.H1);thatportionsofthelotinquestionwerecoveredbypubliclandapplicationsfiledbytheoccupants thereof;thatEngineerSantiagoalsosubmittedareport(Exh.H8);thathehadnotifiedDr.MarianoCastillobefore conductingtheinvestigation(Tsn,Nov.25,1970,pp.137162). 5.RufinoSantiago,anotherGeodeticEngineerconnectedwiththeBureauofLands,testifiedtotheeffectthaton October19,1970,hesubmittedareportofinvestigationregardingthelandinquestion;thathenotedontheplan ExhibitH9theareasonwhichthehousesofSeveroAlcantaraandotherswerebuilt;thathefoundthattheland wasplantedtococonutswhichareabout15yearsold;thatthelandislikewiseimprovedwithricepaddies;thatthe occupantsthereofareduckraisers;thattheareahadbeenelevatedbecauseofthewastemattersandduckfeedsthat haveaccumulatedonthegroundthroughtheyears(Tsn,Nov.26,1970,pp.163196). 6.PabloTapia,BarrioCaptainofTanauan,Batangas,since1957,testifiedtotheeffectthattheactualoccupantsof LotsIand2areAtanacioTirones,tc.;thatduringthewarthewaterlinereacheduptoapointmarkedExhibitA9 andatpresentthewaterhasrecededtoapointuptoExhibitA12;thatthereasonswhythewatersofTaallakehave recededtothepresentlevelisbecauseofthefillingsmadebythepeoplelivinginLots1and2;thatthereare severalduckpensallovertheplace;thatthecompositionofthesoilisamixtureofmudandduckfeeds;that improvements consist of bananas, bamboos and palay; that the shoreline is not even inshape because ofthe BaloyboyCreek;thatthepeopleintheareanevercametoknowabouttheregistrationcaseinwhichthelotsin questionwereregistered;thatthepeoplelivinginthearea,evenwithoutanygovernmentaid,helpedoneanotherin

theconstructionofirrigatedricepaddies;thathehelpedthemfiletheirpubliclandapplicationsfortheportions occupiedbythem;thattheCastilloshaveneverbeeninpossessionofthepremises;thatthepeopledependupon duckraisingastheirmeansoftheirlivelihood;thatLots1and2wereyetinexistentduringtheJapaneseoccupation; andthatthepeoplestartedimprovingtheareaonlyduringliberationandbegantobuildtheirhousesthereon.(Tsn, Nov.26,1970,pp.197234). AmongtheexhibitsformallyofferedbytheGovernment are: theOriginalPlanofTanauan,Batangas,particularlythe BanaderEstate,theOriginal PlanofPSU119166,RelocationVerificationSurveyPlan,maps,andreportsofGeodetic Engineers,allshowingtheoriginalshorelineofthedisputedareasandthefactthatthepropertiesinquestionwereunder wateratthetimeandarestillunderwaterespeciallyduringtherainyseason(Hearing,March17,1971,TSN,pp.4647). Ontheotherhand,privaterespondentsmaintainthatLots1and2havealwaysbeeninthepossessionoftheCastillofamily formorethan76yearsandthattheirpossessionwaspublic,peaceful,continuous,andadverseagainstthewholeworldand thatsaidlotswerenottitledduringthecadastralsurveyofTanauan,becausetheywerestillunderwaterasaresultofthe eruptionofTaalVolcanoonMay5,1911andthattheinundationofthelandinquestionbythewatersofTaalLakewas merelyaccidentalanddoesnotaffectprivaterespondents'ownershipandpossessionthereofpursuanttoArticle778ofthe LawofWaters.Theyfinallyinsistedthatthisissueoffactshadbeensquarelyraisedatthehearingofthelandregistration caseand,therefore,resjudicata(RecordonAppeal,pp.6364).Theysubmittedoralanddocumentaryevidenceinsupport oftheirclaim. AlsosummarizedbyrespondentAppellateCourt,thetestimoniesofthewitnessesofprivaterespondentsareasfollows: 1.SilvanoReano,testifiedtotheeffectthathewastheoverseerofthepropertyofthelateModestoCastillolocated atBanadero,Tanauan,Batangassince1944to1965;thathealsoknowsLots1and2,theparcelsoflandinquestion, sincehewasmanagingsaidproperty;thattheoccupantsofsaidLots1and2wereengagedinduckraising;that thoseoccupantswerepayingtheCastilloscertainamountofmoneybecausetheiranimalsusedtogetinsidethelots inquestion;thathewaspresentduringthesurveyofthelandin1948;andthatasidefromtheduckpenswhichare builtinthepremises,thelandisplantedtorice(Tsn,April14,1971,pp.6288). 2.Dr.MarianoCastillo,testifiedtotheeffectthatthelateModestoCastillowasagovernmentofficialwhoheld high positions in the Government; and that upon his death the land was subdivided among his legal heirs. (Appellee'sBrief,pp.49). Asabovestated,thetrialcourtdecidedthecaseinfavorofthegovernmentbutthedecisionwasreversedonappealbythe CourtofAppeals. A careful study of the merits of their varied contentions readily shows that the evidence for the government has far outweighedtheevidencefortheprivaterespondents.Otherwisestated,ithasbeensatisfactorilyestablishedasfoundbythe trialcourt,thatthepropertiesinquestionweretheshorelandsofTaalLakeduringthecadastralsurveyof1923. Explainingthefirstsurveyof1923,whichshowedthatLots1and2arepartsoftheTaalLake,EngineerRosendoArcenas testifiedasfollows: ATTY.AGCAOILI: QNow,youmentionedEngineerthatasubjectmatterofthatplanwhichappearstobeLots1and2are adjoiningcadastrallotsoftheTanauanCadastre,now,willyoupleasestatetotheCourtwhatisthe basisofthatstatementofyours? AThebasisofthatstatementistheplanitself,becausethereishereanannotationthattheboundaryon the northeastern side is Tanauan Cadastre 168 which indicates that the boundary of the original cadastralsurveyofTanauanCadastrewaybackintheyear1923adjoinsaforeshorelandwhichisalso indicatedinthisplanasforeshorelandsofTaallake,sir. xxxxxxxxx QNow,onthisplanExhibit"A2",therearetwolotsindicatednamely,Lots12374and12377,whatdo theselotsrepresent? AThisisthecadastrallotexecutedinfavorofacertainModestoCastillothatcorrespondstoLots 12374andanotherLot12377,sir. QAtthetimethissurveyplanPsu119166andmarkedasExhibit"A2"wasexecutedin1948,were theselots1and2alreadyinexistenceaspartofthecadastralsurvey? ANo,sir,becausethereisalreadyaforeshoreboundary. QDoIunderstandfromyouMr.Witnessatthetimeofthesurveyofthislandthesetwolotsformpart ofthisportion? AYes,sir. QWhenagainwasthecadastralsurveyofTanauan,Batangas,executedifyouknow? AIntheyear1923,sir.(HearingofNov.16,1970,TSNpp.1517). SuchfactwasfurtherverifiedintheVerificationRelocationSurveyof1948byEngineerArcenaswhoconductedsaid

surveyhimselfandreportedthefollowing: ThatasperoriginalplanPsu119166,itappearsthatLot1andLot2,Psu119166surveyedandapprovedinthe nameofModestoCastilloisaportionofTaalLakeandassuchitappearstobeunderwaterduringthesurveyof cadastralLotNo.12374andLotNo.12377,whichwassurveyedandapprovedinthenameofModestoCastillo underCad.168.Tosupportthistheoryistheannotationappearingandprintedalonglines2345ofLot1,Psu 119166andalonglines456ofLot2,Psu119166whichnotationsclearlyindicatesthatsuchboundaryofproperty wasaformershorelinesofTaalLake,inotherwords,itwastheextentofcultivationbeingtheshorelinesandthe restoftheareagoingtothesouthwesterndirectionarealreadycoveredbywaterlevel. AnothertheorytobolsterandsupportthisIdeaistheactuallocationnowintheverificationrelocationsurveyofa knowngeographicpointwereBarrioBoundaryMonument(BBMN.22)isunderwaterlevelquiteforsometimes asevidencebyearthworks(collectionofmud)thatamountoveritssurfacebyeighty(80)centimetersbelowthe ground,seenotationappearingonverificationrelocationplanpreviouslysubmitted.(ReVerificationRelocation SurveyExhibits,pp.6465). Saidsurveyswerefurtherconfirmedbythetestimoniesofwitnessestotheeffectthatfrom1950to1969,duringrainy season,thewaterofTaallakeevenwentbeyondthequestionedlots;andthatthewater,whichwasaboutone(1)foot,stayed uptomoreorlesstwo(2)tothree(3)months(TestimoniesofBraulioAlmendralandAnastacioTironesbothresidentsof Banadero,Tanauan,Batangas(HearingofNov.16,1970,TSN,pp.4142andHearingofNov.23,1970,TSN,pp.93,9899, respectively).IntheRelocationSurveyof1962,therewerenodefiniteboundaryorareaofLots1and2becauseacertain pointisexistingwhichwasunderwaterby40centimeters(TestimonyofEngineerArcena,HearingofNov.16,1970,TSN,p. 20). Lakeshorelandorlandsadjacenttothelake,likethelandsinquestionmustbedifferentiatedfromforeshorelandorthatpart ofthelandadjacenttotheseawhichisalternatelycoveredandleftdrybytheordinaryflowofthetides(Castillo,Lawon NaturalResources,FifthEdition,1954,p.67). Suchdistinctiondrawsimportancefromthefactthataccretionsonthebankofalake,likeLagunadeBay,belongtothe ownersoftheestatetowhichtheyhavebeenadded(Gov't.v.ColegiodeSanJose,53Phil.423)whileaccretiononasea bankstillbelongstothepublicdomain,andisnotavailableforprivateownershipuntilformallydeclaredbythegovernment tobenolongerneededforpublicuse(Ignaciov.DirectorofLands,108Phil.335[1960]). Butsaiddistinctionwillnothelpprivaterespondentsbecausethereisnoaccretionshowntoexistinthecaseatbar.Onthe contrary,itwasestablishedthattheoccupantsofthelotswhowereengagedinduckraisingfilleduptheareawithshellsand sandtomakeithabitable. Thedefenseoflongpossessionislikewisenotavailableinthiscasebecause,asalreadyruledbythisCourt,merepossession oflanddoesnotbyitselfautomaticallydivestthelandofitspubliccharacter(Cuevasv.Pineda,143SCRA674[1968]). PREMISESCONSIDERED,theApril26,1984DecisionofthethenIntermediateAppellateCourtisherebySETASIDE andREVERSEDandtheFebruary6,1976DecisionofthethenCourtofFirstInstanceofBatangasisherebyAFFIRMED andREINSTATED. SOORDERED. Yap,C.J.,PadillaandSarmiento,JJ.,concur. Footnotes *FourthCivilCasesDivision.DecisionpennedbyAssociateJusticeMarcelino&Velosoandconcurred inbyAssociateJusticesPorfiroV.Sison(Chairman),AbdulwahidA.Bidin,andDesiderioP.Jurado.

RepublicofthePhilippines SUPREMECOURT Manila THIRDDIVISION G.R.No.82531,1992Sep30, DOMINGOT.MENDOZA,petitioner, vs. MARIA MENDOZA NAVARETTE, EMETERIO NAVARETTE, BENEDICTA NAVARETTE and GEMINIANO NAVARETTEandCOURTOFAPPEALS,respondents., DECISION DAVIDE,JR.,J.: ThethresholdissueinthiscaseiswhetherornotrespondentCourtofAppealscommittedareversibleerrorinsettingaside thetrialcourt'sdenialofamotiontodismissandinorderingthedismissalofthecomplaintonthegroundofprescription. Thematerialoperativefactsandproceduralantecedentsasdisclosedbythepleadingsarenotdisputed. On25July1985,petitionerfiledacomplaint1forAnnulmentofTitle,PartitionandDamagesagainstprivaterespondents withBranch15oftheRegionalTrialCourt(RTC)ofBulacan.ThecasewasdocketedasCivilCaseNo.8307M.Petitioner allegestherein: xxxxxxxxx "2. ThattheplaintiffanddefendantMariaMendozaNavarettearetheonlylegitimatechildrenofSpousesTedoro(sic) MendozaofSto.Rosario,Paombong,Bulacan; 3.That,afterthedeathofthesaidmother,NarcisaJumaquio,thesaidTeodoroMendozacontractedasecondmarriagewith Eugenio(sic)Aquino,andtheywereblesses(sic)withtwo(2)children,butbothofthemdiedbeforetheybecameofage; 4. ThatTeodoroMendozadiedintestateandwithoutanydebtwhatsoeverinPaombong,BulacanonMarch19,1952, leavingaparceloflandmoreparticularlydescribedasfollows,togetherwiththeimprovementthereon,towit: 'AparcelofresidentialLot(unregistered)locatedinSto.Rosario,Paombong,Bulacan.BoundedintheN.,byCalsadadel Barrio;ontheE,byDanieldelosSantosandFortunatoDionisio;ontheS.,bySapangCamachile;andontheW.,by CarmenCrisostomo...Containinganareaof(1,288)Squaremeters,moreorless,andassessedatP52000accordingto TaxDeclarationNo.2941ofthelandrecordsofBulacan',acertifiedtruecopyofwhichisheretoattachedasAnnex"A". ThisparceloflandwassurveyedduringtheCadastralsurveyofPaombong(PaombongCad297)asLot668withanactual areaof(934)squaremetersandLot1024(Roadwidening)withanareaof45squaremeters,oratotalof979squaremeters, andnot1,288squaremetersasstatedinitstaxdeclaration(Annex"A"). 5.ThatthesurvivinglegalheirsofthesaidTeodoroMendozaatthetimeofhisdeatharehiswife,EugeniaAquino,andhis two(2)children;thehereinplaintiffDomingoMendozaanddefendantMariaMendoza,marriedtoLeoncioNavarette; 6.That,onoraboutApril18,1963,theaforementionedlegalheirsofTeodoroMendozaexecutedon(sic)ExtraJudicial SettlementoftheEstateofthedeceasedTeodoroMendozawheretheyhadagreedtoinheritandpartitionthepropertyleft byhimanddescribedaboveasfollows:threefourths (3/4)tohereinDomingoMendoza,plaintiff,(966Sq.Mtrs.per documentbutonly734sq.metersifbasedonactualsurvey),andtheremainingonefourth(1/4)tosurvivingwifeEugenia Aquino (322 square meters per document but only 245 sq. meters if based on actual survey), with the herein Maria Mendoza,defendants,'fullyrenouncingandwaivingherrighttoanyshareorsharesthatshemaybeentitledin(sic)thesaid property', xerox copy of which document is hereto attached as Annex "B" and hereby made an integral part of this complaint; 7.That,inaccordancewiththesaidextrajudicialsettlement,theoldtaxdeclarationofthelateTeodoroMendoza(Annex "A")wascancelledandtwo(2)newoneswereissued,namely,TaxDeclarationNo.4728for966squaremetersinfavorof plaintiffDomingoMendozaandTaxDeclarationNo.4729for322squaremetersinfavorofEugeniaAquino,certifiedtrue copiesofwhichareheretoattachedasAnnex"C"and"D",respectively; 8.That,itappearsthatonMay27,1963thesaidEugeniaAquino,beforeshedied,hadsoldhersaidonefourthshareinthe lotinquestionwhichsheinheritedunderAnnex"B"anddeclaredinhernameforTaxationpurposesunderAnnex"D", consisting of 322 square meters per document (but only 245 square meters if based on actual survey), to the herein defendantMariaMendozaandhis(sic)husbandLeoncioNavarette,certifiedxeroxcopyofwhichdocumentishereto attachedasAnnex"E"; 9.That,subsequentlythereto,thesaidLeoncioNavaretteanddefendantMariaMendozacausedthetransferanddeclaration ofthesaidonefourth(1/4)theyacquiredfromEugeniaAquinointheirnames,certifiedtruecopyofwhichtaxdeclaration

(No.4738)isheretoattachedasAnnex"F"; 10.ThatLeoncioNavarettediedandissurvivedbyhiswife,defendantMariaMendozaNavarette,andthree(3)children; namely,Emeterio,BenedictaandGeminiano,allsurnamedNavarette,whoarethedefendantsnamedinthiscomplaint; 11.ThatitwasrecentlydiscoveredearlythisyearbytheplaintiffthatthelateLeoncioNavaretteandhereindefendantMaria MendozaNavarette,knowingly(sic)wellthattheyarenottheownersofthewholelotinquestion(LotNo.668,CaseI, PaombongCad297),consistingof934squaremeters,butonlyonefourth(1/4)portionthereofconsistingof245square meters,basedontheactualsurvey,andthe(sic)plaintiffistheownerofthethreefourthsthereofconsistingof734square meters,illegally,fraudulentlyandevident(sic)showofbadfaith,filedanapplicationforFreePatent(No.III6000886) withtheBureau(sic)ofLandsandcausedthesaidwholelottobetitledanddeclaredinthenameofLeoncioNavarette, marriedtoMariaMendoza,asevidencedbyO.C.T.NO.P9345oftheRegistryofDeedsfortheProvinceofBulacanand TaxDeclarationNo.3157,certifiedtruecopiesofwhichapplication,titleandtaxdeclarationareheretoattachedasAnnexes "G","H"and"I",respectively; 12. Thatthesaidtitleandtaxdeclaration(Annexes"H"and"I")arenullandvoidabinitioandshouldbeannulledor cancelled,forthesaidregisteredownersarenottherealownersofthelandcoveredbythem,andtheplaintiffhasbeeninthe open, public, adverse and exclusive possession, inthe concept of an owner, ofthe threefourths (3/4) portionthereof consistingof734squaremeterssincethedeathofhisfatherin1952continuously(sic)andpubliclyuptothepresent."2and praysforjudgment: "1.Orderingtheannulment(sic)orcancellationofO.C.T.NO.P9345andTaxDeclarationNo.3157inthename ofLeoncioNavarette,marriedtoMariaMendoza; 2.Orderingthepartitionofthelotinquestion(LotNo.668andNo.1024(roadwidening)inthefollowingmanner; threefourths(3/4)thereoftoplaintiffDomingoMendoza,marriedtoReginaSantos,andonefourth(1/4)thereofto thedefendants; 3. Orderingthedefendants,jointlyandseverally,topayplaintiffactual,moralandexemplarydamagesinsuch amountoramountsherebylefttothesounddiscretionoftheCourt;and 4.Orderingthedefendants,jointlyandseverally,topayattorney'sfeesinthestipulatedamountofP10,000.00,plus P300.00foreverydayofhearing. Plaintiffpraysforsuchotherrelied(sic)consistentwithlawandequityunderthepremises,includingcostofsuit."3 On15November1975,privaterespondentsfiledamotiontodismiss4thecaseonthegroundthattheplaintiff'scauseof action,ifany,isbarredbythestatuteoflimitationsbecausetheapplicationforFreePatentandtheOriginalCertificateof Title,copiesofwhichareannexedtothecomplaint,aredated18March1974and6May1974,respectivelymorethanten (10)yearspriortothefilingofthecomplaint.Itiscontendedthatanactionforannulmentoftitleand/orreconveyanceof realpropertyresultingfromfraudmustbefiledwithinfour(4)yearsfromthediscoveryofthefraud,pursuanttoGeronavs. DeGuzman,5Balbinvs.Medalla,6andCordovavs.Cordova.7Suchdiscoveryisdeemedtotakeplaceatthetimean OriginalCertificateofTitle,througheitherahomesteadorfreepatent,isawarded,becausetheregistrationofsaidpatents constitutesconstructivenoticetothewholeworld.Accordingly,thefouryearperiodduringwhichthepetitionercouldbring thesaidactionexpiredin1978. On21November1985,petitionerfiledhisoppositiontothemotiontodismiss8allegingthereinthat(a)asclearlyallegedin paragraph11ofthecomplaint,sincethefraudwasdiscoveredintheearlypartof1985,thefouryearperiodhadnotyet expiredwhenthecomplaintwasfiled;(b)asallegedinparagraph12thereof,sinceprivaterespondentsarenottheownersof thethreefourths(3/4)portionoftheparceloflandcoveredbyboththeFreePatentandOriginalCertificateofTitle,theydo nothavejusttitlethereto;forpurposesofprescription,justtitlemustbeproved;thereshouldthenbeahearingonthemerits forthemtoprovejusttitle;and(c)asalsoallegedinsaidparagraph12,thepetitionerisintheopen,public,adverseand exclusivepossession,intheconceptofanowner,ofthesaidthreefourths(3/4)portion;privaterespondentscouldnothave acquiredownershipovertheentirelot. Thetrialcourtsetthemotiontodismissforhearingon23July1986.9 On14July1986,privaterespondentsfiledaManifestationandMotionalleging,interalia,thattheMotiontoDismisscanbe resolvedanddecidedbythecourtonthebasisofthepleadingsoftheparties.10Thereupon,thetrialcourtissuedanorder statingthatthe"'MotiontoDismiss','Opposition',and'Rejoinder'filedbythepartiesaredeemedsubmittedforresolution." 11 On1September1986,thetrialcourt,perJudgeEugenioS.Labitoria,issuedanOrder 12denyingforlackofmeritthe motiontodismiss.Thedenialisbasedontheprinciplethatprescriptiondoesnotrunagainstcoownersinacoownership. Theorderstates: "Theplaintiffinoppositiontothemotiontodismissarguedthatthecasescitedbythedefendantsarenotapplicablein thepresentcase.First,thepartiesarecoowners.Asageneralruleprescriptiondoesnotliebetweentheparties.Article 494,par.5,NewCivilCodeprovides:

'Noprescriptionshallruninfavorofacoownerorcoheiragainsthiscoownersorcoheirssolongashe expresslyorimpliedlyrecognizesthecoownership.' Tofurtherbuttressthelegalbasisforthedenialbythecourtofthemotiontodismiss,plaintiffcitedthecaseofSantosvs. HeirsofCrisostomo,41Phil.342,BargayoversusCamunof(sic),40Phil.857.Threeconditionsmustbepresentinorder thatacoownerbecomesanexclusiveowneroftheothers'sharebyprescription.Theseconditionsare:(1)Hemustmake knowntotheothercoownersthatheisdefinitelyrepudiatingthecoownershipandthatheisclaimingcompleteownership overtheentire property; (2)The evidence ofrepudiationand knowledgeonthe part oftheothers must beclear and convincing;and(3)Continuous,open,public,adversepossession. Thedefendantsintheirmotiontodismissneverallegedthattheyareinopen,continuous,publicandadversepossessionof thepropertyinquestionasagainsttheplaintiff.Likewise,intheirmanifestationandmotiondatedJuly14,1986afterthey receivedtheoppositiontothemotiontodismissfiledbytheplaintiffnever(sic)deniedtheirparticipationintheextra judicialparticipation(sic),Annex"P"ofthecomplaint. Fromtheforegoing,itisclearthatthedoctrinelaiddownbytheSupremeCourtinthecasesofBalbinandGerona(supra)is thegeneral ruleonprescriptionwithrespect tothefouryears (sic)periodtofileactionbasedonfraudwhichis not applicabletocoownersandcoheirsintheabsenceofthethreeconditionslaiddownincases(sic)ofSantosandCamunof (sic)(supra.)." Privaterespondentsfiledamotiontosetasidethisorder,whichthetrialcourtdeniedinitsOrder13of1October1986, thus: "TheprincipalgroundforsettingasidetheorderofthisCourtdenyingthemotiontodismissisthemisapplicationof thelawandjurisprudenceonthematter.DefendantscontendthatArticle494,par.5oftheNewCivilCodeisnot applicableconsideringthattherewasanopenrepudiationofthecoownershipbythedefendantswaybackon(sic) March18,1974whentheyfiledanapplicationforfreepatentovertheentireproperty.Thiswasfurtherconfirmedon May6,1974whenOCTNO.P9345wasissuedinthenameofLeoncioNavarettemarriedtoMariaMendozabythe RegisterofDeedsofBulacan. Theplaintiff,fromhiscomplaintclearlystatedthatheisinopen,adverse,publicandexclusivepossessionintheconceptof anownerofthethreefourth(sic)(3/4)portionofthequestionedproperty... Theothergroundsraisedbythedefendantsaserrorsofthecourtis(sic)notgrantingthemotiontodismissarefactualissues whicharebetterresolve(sic)inafullblowntrialonthemerit(sic). Thedefendantsmustprovetheirjusttitleforitisneverpresumediftheycontendthattheyderivetitletheretobyvirtueof prescription(Art.1131,NewCivilCode). xxxxxxxxx ThereisnocompellinglegalbasisforthisCourttoreconsideritsorderdatedSeptember1,1986." On24October1986,privaterespondentsfiledwiththeCourtofAppealsaPetitionforcertiorari,prohibitionandmandamus 14seekingthenullificationandthesettingasideofboththe1Septemberand1October1986ordersofthetrialcourt.The petitionwasdocketedasC.A.G.R.SPNo.10389.Asgroundstherefor,theyallegethat: "1. Thecauseofactionoftheplaintiff,ifany,isbarredbytheStatuteofLimitationsandresadjudicataandasa consequencethereof,thecomplaintinCivilCaseNo.8307Mstatesnocauseofaction,andprivaterespondenthasno causeofactionagainstthepetitioners. 2.Prescriptionrunsagainstacoownerwherethereisadefiniteandopenrepudiationofthecoownership,thereis clearandconvincingevidenceofthesaidrepudiation,andthereiscontinuous,open,publicandadversepossessionby theonerepudiatingthecoownership. 3.RespondentJudgecommittedgraveabuseofdiscretionamountingtowantorexcessofjurisdictioninnotdismissing thecomplaintinCivilCaseNo.8307M."15 InitsDecision16promulgatedon27July1987,therespondentCourtsetasidetheabovementionedordersanddirectedthe respondenttrialjudgetodismissthecomplaintontheprincipalgroundthatsincetheactionisbasedonfraud,itshouldhave beenfiledwithinfour(4)yearsfromtheissuanceofthetitleon6May1974.Thus,itdeclared: "1.Thereisnocontroversionfromrespondentsagainstthepetitioners'assertionthatonMarch18,1974,thelateLeoncio Navarette(MariaMendoza'slatehusband)filedanapplicationforFreePatentoverthedisputedproperty(Lot668,CaseI, PaombongCad.297)andthatonMay6,1974OriginalCertificateofTitleNo.T9345wasissuedinthenameof'Leoncio Navarette,marriedtoMariaMendoza...'(p.9,rec.) Elevenyearsaftertheissuanceandregistrationoftheabovetitle,theprivaterespondent,DomingoJ.Mendoza,filedhis abovecomplaint,fortheannulmentoftitleandpartitionoftheaboveproperty.Thetitleoughttobeannulledwasissued May6,1974(sic),whilethecomplainttoannulthesameandforpartitionofthepropertycoveredbythesaidtitle,wasfiled July24,1985(sic). The titling of the property by the petitioners is denounced by the private respondents as having been done 'illegally, fraudulentlyandinevidentbadfaith.'(p.37,rec.)Theactionfornullificationoftitleandforpartitionofthepropertyis

basedonfraud.Theprivaterespondent'stheoryisthatArticle494,paragraph5oftheCivilCodeofthePhilippinescontrols (sic)thesituation. Article494reads,asfollows: xxxxxxxxx 'Noprescriptionshallruninfavorofacoownerorcoheiragainsthiscoownersorcoheirssolongasheexpresslyor impliedlyrecognizesthecoownership.(400a)' Theprivaterespondent'stheoryiswithoutfoundation. Prescription can, and thus, run (sic) against a coowner, particularly, where the property has been brought under the operation of the Land Registration Act. The Land Registration Act declares the title over a registered land to be incontrovertible.(Sec.38.'Gerona,etal.vs.DeGuzman,etal.,'11SCRA153,givesthereasonwhyprescriptioncanrun againstcoowner(sic)whereoneofthemassertstitleagainsttheformer,...). xxxxxxxxx Itisclearthenthatnothavingbroughttheactionforpartitionofthepropertywithinthereglementaryperiod,theprivate respondents'causeofactionhasbeenbarredbyprescription. Thegroundforthedismissaloftheprivaterespondents'complaintforannulmentandpartitionis,therefore,indubitableand inlinewithjurisprudence,mustbedismissed. xxxxxxxxx Thestatuteoflimitationscommencedtorunagainsttheprivaterespondentwhenthepetitionersappliedforfree(sic)patent, securedthesame,andthenobtainedacertificateoftitleoverthepropertyonMay6,1974.Fromthisdate,whichisanotice inremoftherepudiationofthecoownershipamongtheparties,bythepetitioners,prescriptioncommencedtorun.The privaterespondentshadfouryearsfromMay6,1974withinwhichtofiletheiractionbasedonfraud. Theiraction,filedJuly24,1985(sic),camesevenyearstoolate."17 Hence,thispetitionwhichwasfiledon30March1988.Petitionerraisesthe followingissues: "WHETHERORNOTTHEPATENTANDTHECORRESPONDINGOCTISSUEDCOVERINGTHELOTIN CONTROVERSYAREVALID. WHETHERORNOTPRESCRIPTIONASAMEANSOFACQUIRINGTHEPROPERTYHASALREADY SETINUNDERTHEFACTUALCIRCUMSTANCESOFTHECASEATBAR."18 AfterthefilingoftheComment,theReplytheretoandtheRejoindertotheReply,thisCourtgaveduecoursetothepetition andrequiredthepartiestosubmittheirrespectiveMemoranda,19whichtheysubsequentlycompliedwith. Asshownearlier,thetrialcourtdeniedthemotiontodismissuponthetheorythatthegeneralruleisthatprescriptiondoes notrunamongcoownersandthattherequisitesfortheapplicationoftheexceptionthereto,amongwhichistheneedfor continuous,open,publicandadversepossessionofthepropertyonthepartofthepartywhoclaimsprescription,arenot apparentfromareadingofthecomplaint;onthecontrary,saidcomplaintallegesthatthepetitionerisinsuchpossession over threefourths (3/4) thereof. Upon the other hand, respondent Court of Appeal's exposition is premised on the assumptionthatthecomplaintisbasedonfraud;therefore,thesameshouldhavebeenfiledwithinfour(4)yearsfromthe issuanceoftheoriginalcertificateoftitle.Anenttheissueofprescriptionamongcoowners,therespondentCourtruledthat thefilingoftheapplicationforaFreePatentamountedtoarenunciationofthecoownership. Theissueofprescriptionamongcoownersistotallyirrelevant;hence,thediscussionsthereonbybothcourtsareexercises infutilitywhichproceedfromamisreadingofthecomplaint.Coownershipisnotatallinvolvedinthiscase. Thisisveryclearfromtheallegationsinthecomplaintwhichunmistakablyshowthatwhatevercoownershipexistedamong theheirsofTeodoroMendozaovertheestateheleftbehindwasterminatedon11April1963whensaidheirsexecutedthe deedofextrajudicialsettlement,withprivaterespondentMariaMendozaNavarettewaivingallherrightstothesaidestate. Asaconsequencethereof,threefourths(3/4)ofthepropertywasadjudicatedtothepetitionerwhiletheremainingone fourth(1/4)sharewenttothesurvivingspouse,EugeniaAquino,bothofwhomsecuredseparatetaxdeclarationsfortheir respectivelots. ThecomplaintlikewisesuggeststhatthelotsubjectoftheapplicationforaFreePatentbyLeoncioNavaretteisprivateland andthethreefourths(3/4)portionthereof,whichpetitionerhasbeenopenly,publicly,adverselyandexclusivelypossessing intheconceptofowner,wasincludedillegally,fraudulentlyandwithevidentbadfaithbyLeoncioinsaidapplicationashe isnotthereal ownerofsaidportion.Petitionerthusasks,interalia,fortheannulmentorcancellationoftheoriginal CertificateofTitleoverthelotcoveredbytheFreePatent. Whatthelowercourtshouldhavedonethenwastodeferitsresolutiononthemotiontodismissforthereasonthatthe groundinvokedthereinisnotindubitable.Thisisoneoftheoptionsatrialcourtmayavailofwheneverconfrontedwitha motiontodismiss.Theotheroptionsare(a)tograntthemotion,(b)todenyit,and(c)toallowtheamendmentofthe pleading.Section3,Rule16oftheRulesofCourtprovides:

"SEC.3.Hearingandorder.Afterhearingthecourtmaydenyorgrantthemotionorallowamendmentof pleading,ormaydeferthehearinganddeterminationofthemotionuntilthetrialifthegroundallegedthereindoes notappeartobeindubitable."20 Bethatasitmay,theendresultwasthesameprivaterespondentsfailedintheirattempttoobtainadismissalofthecase. Butwhethersucharebuffresultedfromanoutrightdenialorameredeferment,respondentCourtofAppealsshouldhave rejectedprivaterespondentspetitionforcertioraribecausethetrialcourtcommittednograveabuseofdiscretioninaborting andfrustratingthelatter'smove.Suchpetitionmerelyformedpartofadilatorystrategywhichcleverlyincorporatedres judicataandlackofcauseofactionasadditionalgroundsforthedismissalofthecomplaint.Thelatter,however,isbasedon theargumentthatsinceprescriptionhassetin,petitionercannothaveavalidcauseofaction.Asgroundsforamotionto dismissorasaffirmativedefenses,prescriptionandlackofcauseofactionaredistinctandseparateconcepts.Sinceres judicatawasnotinvokedinthemotiontodismiss,itisdeemedwaivedpursuanttoSection2,Rule9oftheRulesofCourt. Theavermentsinthecomplainttotheeffectthat(a)thelotinquestionbeingprivatelandoriginallyinheritedfromTeodoro Mendozaandsubsequentlyadjudicatedamonghisheirsbythedeedofextrajudicialsettlement,itcannotbeawardedto LeoncioNavarettebyFreePatent,(b)petitionerisinopen,public,adverseandexclusivepossessionofthethreefourths (3/4)portionadjudicatedtohimand(c)saidthreefourth(3/4)portionwasincludedillegally,fraudulentlyandinbadfaith byLeoncioNavaretteinhisapplicationforaFreePatentbecauseheandhiswife,privaterespondentMaria,knewallalong thatpetitioneristheownerandactualpossessorthereof,weredeemedhypotheticallyadmittedbyprivaterespondentsfor purposesofthemotiontodismiss.21 Grantingexgratiathattheabovetheoryofpetitionerembodiedinthefirstavermentiscorrectandhecanthussupportit withevidencewhichwouldnecessarilycallforatrialonthemeritstheFreePatentissuedtoLeoncioNavarettewouldbe voidas topetitioner's property which,as he hadalsoalleged inthe complaint,is possessedbyhim openly,publicly, adverselyandexclusivelyintheconceptofowner.Thus,hecanrecoveritevenbeyondtheexpirationten(10)yearsafterthe issuanceoftheOriginalCertificateofTitlebasedontheFreePatent.AFreePatentissuedoveraprivatelandisnulland void.Inthe1952caseofVitalvs.Anore,22thisCourt,speakingthruMr.JusticeSabinoPadilla,held: "WhetheraTorrenstitle,basedonafreepatentgrantedbytheGovernmentundertheprovisionsofthePublicLandAct(Act 2874)andissuedundertheprovisionsoftheLandRegistrationAct(Act496),hasthevalidityandeffectofaTorrenstitle issuedasaresultofjudicialproceedingsneednotbepassedupon.TherulelaiddowninRamosovs.Obligadoetal.,70Phil 86,that'ahomesteadpatent,onceregisteredundertheRegistrationAct,becomesasindefeasibleasaTorrensTitle,...'is onlytrueandcorrectiftheparcelofagriculturallandpatentedorgrantedashomesteadbytheGovernment,afterthe requirementsofthelawhadbeencompliedwith,wasapartofthepublicdomain.Ifitwasnotbuta privateland,thepatentgrantedandtheTorrenstitleissueduponthepatentorhomesteadgrantareanullity.23 ATorrenstitleissueduponafreepatentmaynotbecancelledafterthelapseoftenyearsfromthedateofitsregistration becausethestatuteoflimitationsbarssuchcancellation.Butiftheregisteredowner,behethepatenteeorhissuccessorin interesttowhomthefreepatentwastransferredorconveyed,knewthattheparceloflanddescribedinthepatentandinthe Torrenstitlebelongedtoanotherwhotogetherwithhispredecessorsininteresthasbeeninpossessionthereof,andifthe patenteeandhissuccessorininterestwereneverinpossessionthereof,thenthestatutebarringanactiontocancelaTorrens titleissueduponafreepatentdoesnotapply,andthetrueownermaybringanactiontohavetheownershiportitletothe landjudiciallysettled,andiftheallegationsoftheplaintiffthatheisthetrueowneroftheparceloflandgrantedasfree patentanddescribedintheTorrenstitleandthatthedefendantandhispredecessorininterestwereneverinpossessionof theparceloflandandknewthattheplaintiffandhispredecessorsininteresthavebeeninpossessionthereofbeestablished, thenthecourtintheexerciseofitsequityjurisdiction,withoutorderingthecancellationoftheTorrenstitleissueduponthe patent,maydirectthedefendant,theregisteredowner,toreconveytheparceloflandtotheplaintiffwhohasbeenfoundto bethetrueownerthereof. Theplaintiffinthiscaseaversthatheandhispredecessorsininteresthavebeeninpossessionoftheparceloflandfrom timeimmemorialtothedateofthefilingofthecomplaint,thatthepatentee,fromwhomthedefendantFranciscoAnore derivedhistitle,hadneverbeeninpossessionoftheparceloflandgrantedtohimasfreepatent;andthatthedefendant FranciscoAnoreknewthathispredecessorininteresthadneverbeeninpossessionoftheparcelofland.Iftheavermentsbe established,thedefendant,assuccessorininterestofthepatentee,couldnotclaimtobeapurchaseringoodfaithandfor valuetoprotecthistitletotheparceloflandacquiredbyhimfromthepatentee.Justiceandequityrequirethatheshould reconveytheparceloflandtotheplaintiff.Theprayeroftheplaintiffinhiscomplaintthathebedeclaredtheownerofthe parceloflanddescribedinthetransfercertificateoftitleissuedinthenameofthedefendantFranciscoAnore,whichhad beengrantedasfreepatenttothelateAmbrosioArabit,togetherwiththegeneralprayerthathebegrantedsuchfurther reliefandremedyasequityandjusticewarrant,wouldjustifyajudgmentdirectingthedefendanttoreconveytheparcelof landtotheplaintiff. Thestatuteoflimitationswhichwouldbaranactionbytheplaintiffcouldnotbeavailedofbythedefendant,becausea motionfordismissalbeinganadmissionofallthematerialallegationsoftheplaintiff'scomplaint thesamerolea

demurrerintheoldCodeofCivilProcedure,Act190,playedinjudicialproceedings theplaintiff'sallegationthatthe defendantandhispredecessorininteresthaveneverbeeninpossessionoftheparceloflandandknewthattheplaintiffand hispredecessorsininteresthavebeeninpossessionthereofsincetimeimmemorialisdeemedadmitted.Ifatthetrialthe defendantshouldprovethatheandhispredecessorsininteresthavebeeninpossessionoftheparceloflandfor10yearsor more,thentheplaintiff'scauseofactionwouldbegroundlessandthecomplaintwouldhavetobedismissed.Theadmitted allegationsofthecomplaintconstituteacauseofaction." Then,inthefairlyrecentcaseofAgnevs.DirectorofLands,24thisCourt,perMr.JusticeFlorenzD.Regalado,ruled: "Wereiteratethatprivateownershipoflandisnotaffectedbytheissuanceofafreepatentoverthesamelandbecausethe PublicLandActappliesonlytolandsofthepublicdomain.25OnlypubliclandmaybedisposedofbytheDirectorof Lands.26Sinceasearlyas1920,thelandindisputewasalreadyundertheprivateownershipofhereinpetitionersandno longerapartofthelandsofthepublicdomain,thesamecouldnothavebeenthesubjectmatterofafreepatent.The patenteeandhissuccessorsininterestacquirednorightortitletothesaidland.Necessarily,FreePatentNo.23263issuedto Herminigildo Agpoon is null and void and the subsequent titles issued pursuant thereto cannot become final and indefeasible.Hence,weruledinDirectorofLandsvs.Sisican,etal.27thatifatthetimethefreepatentswereissuedin 1953thelandcoveredthereinwere(sic)alreadyprivatepropertyofanotherand,therefore,notpartofthedisposablelandof thepublicdomain,thenapplicantspatenteesacquirednorightortitletotheland. Now,acertificateoftitlefraudulentlysecuredisnullandvoidabinitioifthefraudconsistedinmisrepresentingthatthe landispartofthepublicdomain,althoughitisnot.Asearlierstated,thenullityarises,notfromthefraudordeceitbut, fromthefactthatthelandisnotunderthejurisdictionoftheBureauofLands. 28Beingnullandvoid,thefreepatent grantedandthesubsequenttitlesproducenolegaleffectswhatsoever.Quodnullumest,nullumproduciteffectum.29 AfreepatentwhichpurportstoconveylandtowhichtheGovernmentdidnothaveanytitleatthetimeofitsissuancedoes notvestanytitleinthepatenteeasagainstthetrueowner.30TheCourthaspreviouslyheldthattheLandRegistrationAct andtheCadastralActdonotgiveanybodywhoresortstotheprovisionsthereofabettertitlethanwhathereallyand lawfullyhas. '...TheLandRegistrationActaswellastheCadastralActprotectsonlytheholdersofatitleingoodfaithanddoesnot permititsprovisionstobeusedasashieldforthecommissionoffraud,orthatoneshouldenrichhimselfattheexpenseof another(Gustilovs.Maravilla,48Phil.838).TheabovestatedActsdonotgiveanybody,whoresortstotheprovisions thereof,abettertitlethanhereallyandlawfullyhas.Ifhehappenedtoobtainitbymistakeortosecure;totheprejudiceof hisneighbor,morelandthanhereallyowns,withorwithoutbadfaithonhispart,thecertificateoftitle,whichmayhave beenissuedtohimunderthecircumstances,mayandshouldbecancelledorcorrected(LegardaandPrietovs.Saleeby,31 Phil.590)...'31 Wehave,therefore,toarriveattheunavoidableconclusionthatthetitleofhereinpetitionersoverthelandindisputeis superiortothetitleoftheregisteredownerwhichisatotalnullity.Thelongandcontinuedpossessionofpetitionersundera validclaimoftitlecannotbedefeatedbytheclaimofaregisteredownerwhosetitleisdefectivefromthebeginning. ThequalityofconclusivenessofaTorrenstitleisnotavailableforusetoperpetratefraudandchicanery.Toparaphrasefrom Angelesvs.Samia,supra,theLandRegistrationActdoesnotcreateorvesttitle.Itonlyconfirmsandrecordstitlealready existingandvested.Itdoesnotprotectausurperfromthetrueowner.Itcannotbeashieldforthecommissionoffraud.It doesnotpermitonetoenrichhimselfattheexpenseofanother.Statedelsewise,theTorrenssystemwasnotestablishedasa meansfortheacquisitionoftitletoprivateland.Itisintendedmerelytoconfirmandregisterthetitlewhichonemay alreadyhaveontheland.Wheretheapplicantpossessesnotitleorownershipovertheparcelofland,hecannotacquireone undertheTorrenssystemofregistration.32ResorttotheprovisionsoftheLandRegistrationActdoesnotgiveoneabetter titlethanhereallyandlawfullyhas.33 Registrationdoesnotvesttitle.Itisnotamodeofacquiringproperty.Itismerelyevidenceofsuchtitleoveraparticular property.Itdoesnotgivetheholderanybettertitlethanwhatheactuallyhas,especiallyiftheregistrationwasdoneinbad faith.Theeffectisthatitisasifnoregistrationwasmadeatall."34 Besides,thepetitioner'sopen,public,adverseandexclusivepossessionofthethreefourths(3/4)portionofthepropertyand itsillegalinclusionintheFreePatentandOriginalCertificateofTitleissuedtoLeoncioNavarettegivetheformeracauseof actionforquietingoftitle,whichisimprescriptibleinfavorofapersoninpossessionoftheproperty.Theallegationsinhis complaintbeforethetrialcourtaresufficientforsuchacauseofaction.InCaragayLaynovs.CourtofAppeals,35this Court,perMadameJusticeAmeurfinaMelencioHerrera,ruled: "Prescriptioncannotbeinvokedagainst JULIANAforthereasonthat as lawful possessorandowneroftheDisputed Portion,hercauseofactionforreconveyancewhich,ineffect,seeks toquiettitletotheproperty,falls withinsettled jurisprudencethatanactiontoquiettitletopropertyinone'spossessionisimprescriptible.36Herundisturbedpossession overaperiodoffiftytwo(52)yearsgaveheracontinuingrighttoseektheaidofaCourtofequitytodeterminethenature oftheadverseclaimofathirdpartyandtheeffectonherowntitle.37 Besides,underthecircumstances,JULIANA'srighttoquiettitle,toseekreconveyance,andtoannulOCTNo.63accrued

onlyin1966whenshewasmadeawareofaclaimadversetoherown.Itwasonlythenthat thestatutoryperiodof prescriptionmaybesaidtohavecommencedtorunagainsther,followingthepronouncementinFajavs.CourtofAppeals, supra,acasealmostidenticaltothisone." InCoronelvs.IntermediateAppellateCourt,38thisCourt,throughMr.JusticeHugoE.Gutierrez,Jr.,held: "Thecounterclaimoftheprivaterespondentswhichwasineffectareconveyancetothemoftheir1/3undividedshareover LotNo.1950Ahasnotprescribed.Aslawfulpossessorsandownersofthelotinquestiontheircauseofactionfallswithin thesettledjurisprudencethatanactiontoquiettitletopropertyinone'spossessionisimprescriptible.Theirundisturbed possessionoveraperiodofmorethan25yearsgavethemacontinuingrighttoseektheaidofacourtofequitytodetermine thenatureoftheadverseclaimofathirdpartyandtheeffectofhisowntitle.Ifatall,theprivaterespondentsrighttoquiet title,toseekreconveyanceandtoannulTransferCertificateofTitleNo.T75543accruedonlyin1975whentheyweremade awareofaclaimadversetotheirown.Itwasonlyatthattimethatthestatutoryperiodofprescriptionmaybesaidtohave commencedtorunagainstthem.(Saptoetal.v.Fabiana,103Phil683;Fajav.CourtofAppeals,75SCRA441;Caragay Laynov.CourtofAppeals,133SCRA718)." Inlightoftheforegoing,WefailtoseehowrespondentCourtofAppealscanjustifyitsconclusionthatpetitioner'scauseof actionhasprescribed. WHEREFORE,theDecisionoftherespondentCourtofAppeals27July1987anditsResolutionof15March1988inC.A. G.R.SPNo.10389areherebySETASIDE.TheOrdersof1September1986and1 October1986ofBranch15oftheRegionalTrialCourtofBulacaninCivilCaseNo.8307MareREINSTATEDsubjectto themodificationthatthedeterminationofthemotion todismissshallonlybeconsideredasdeferredforthereasonthatthegroundinvokedthereinisnotindubitable. Costsagainstprivaterespondents. SOORDERED. Bidin,RomeroandMelo,JJ.,concur. Gutierrez,Jr.,J.,isonleave.

G.R.No.L66575May24,1988 ADRIANOMANECLANG,JULIETA,RAMONA,VICTOR,ANTONINA,LOURDES,TEODOROandMYRNA, allsurnamedMANECLANG,petitioners, vs. THE INTERMEDIATE APPELLATE COURT and ALFREDO MAZA, CORLETO CASTRO, SALOME RODRIGUEZ, EDUCARDO CUISON, FERNANDO ZARCILLA, MARIANO GABRIEL, NICOMEDES CORDERO,CLETOPEDROZO,FELIXSALARYandJOSEPANLILIO,respondents. LoretoNovisterosforpetitioners. CorletoR.Castroforrespondents. RESOLUTION FERNAN,J.: PetitionersAdrianoManeclang,etal.filedbeforethethenCourtofFirstInstanceofPangasinan,BranchXIacomplaintfor quietingoftitleoveracertainfishpondlocatedwithinthefour[4]parcelsoflandbelongingtothemsituatedinBarrio Salomague,Bugallon,Pangasinan,andtheannulmentofResolutionsNos.38and95oftheMunicipalCouncilofBugallon, Pangasinan.ThetrialcourtdismmissedthecomplaintinadecisiondatedAugust15,1975uponafindingthatthebodyof watertraversingthetitledpropertiesofpetitionersisacreekconstitutingatributaryoftheAgnoRiver;thereforepublicin natureandnotsubjecttoprivateappropriation.ThelowercourtlikewiseheldthatResolutionNo.38,orderinganocular inspectionoftheCayanganCreeksituatedbetweenBarriosSalomagueSurandSalomagueNorte,andResolutionNo.95 authorizingpublicbiddingfortheleaseofallmunicipalferriesandfisheries,includingthefishpondunderconsideration, werepassedbyrespondentshereinasmembersoftheMunicipalCouncilofBugallon,Pangasinanintheexerciseoftheir legislativepowers. PetitionersappealedsaiddecisiontotheIntermediateAppellateCourt,whichaffirmedthesameonApril29,1983.Hence, thispetitionforreviewoncertiorari. Actingonthepetition,theCourtrequiredtherespondentstocommentthereon.However,beforerespondentscoulddoso, petitionersmanifestedthatforlackofinterestonthepartofrespondentAlfredoMaza,theawardeeinthepublicbiddingof thefishpond,thepartiesdesiretoamicablysettlethecasebysubmittingtotheCourtaCompromiseAgreementprayingthat judgmentberenderedrecognizingtheownershipofpetitionersoverthelandthebodyofwaterfoundwithintheirtitled properties,statingtherein,amongotherthings,that"topursuethecase,thesamewillnotamounttoanybenefitofthe parties,ontheotherhanditistotheadvantageandbenefitofthemunicipalityiftheownershipofthelandandthewater foundthereinbelongingtopetitioners berecognizedintheirfavorasitisnowclearthataftertheNationalIrrigation Administration[NIA]hadbuiltthedikearoundtheland,nowatergetsinoroutoftheland.1 ThestipulationscontainedintheCompromiseAgreementpartakeofthenatureofanadjudicationofownershipinfavorof hereinpetitionersofthefishpondindispute,which,asclearlyfoundbythelowerandappellatecourts,wasoriginallya creekformingatxibutaryoftheAgnoRiver.ConsideringthatasheldinthecaseofMercadovs.MunicipalPresidentof Macabebe,59Phil.592[1934],acreek,definedasarecessorarmextendingfromariverandparticipatingintheebband flow of the sea, is a property belonging to the public domain which is not susceptible to private appropriation and acquisitive prescription, and as a public water, it cannot be registered under the Torrens System in the name of any individual[Diegov.CourtofAppeals,102Phil.494;Mangaldanv.Manaoag,38Phil.455];andconsideringfurtherthat neitherthemereconstructionofirrigationdikesbytheNationalIrrigationAdministrationwhichpreventedthewaterfrom flowinginandoutofthesubjectfishpond,noritsconversionintoafishpond,alterorchangethenatureofthecreekasa propertyofthepublicdomain,theCourtfindstheCompromiseAgreementnullandvoidandofnolegaleffect,thesame beingcontrarytolawandpublicpolicy. Thefindingthatthesubjectbodyofwaterisacreekbelongingtothepublicdomainisafactualdeterminationbindingupon thisCourt.TheMunicipalityofBugallon,actingthruitsdulyconstitutedmunicipalcouncilisclothedwithauthorityto pass,asitdidthetworesolutionsdealingwithitsmunicipalwaters,anditcannotbesaidthatpetitionersweredeprivedof theirrighttodueprocessasmerepublicationofthenoticeofthepublicbiddingsufficesasaconstructivenoticetothe wholeworld. INVIEWOFTHEFOREGOING,theCourtResolvedtosetasidetheCompromiseAgreementanddeclarethesamenull andvoidforbeingcontrarytolawandpublicpolicy.TheCourtfurtherresolvedtoDISMISStheinstantpetitionforlackof merit.SOORDERED.

RepublicofthePhilippines SUPREMECOURT Manila THIRDDIVISION

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L15829December4,1967 ROMANR.SANTOS,petitionerappellee, vs. HON.FLORENCIOMORENO,asSecretaryofPublicWorksandCommunicationsandJULIANC.CARGULLO, respondentsappellants. GilR.CarlosandAssociatesforpetitionerappellee. OfficeoftheSolicitorGeneralforrespondentsappellants. BENGZON,J.P.,J.: THEAPPEAL TheHonorableSecretaryofPublicWorks&CommunicationsappealsfromthedecisionoftheCourtofFirstInstanceof ManiladeclaringofprivateownershipcertaincreekssituatedinbarrioSanEsteban,Macabebe,Pampanga. THEBACKGROUND TheZobelfamilyofSpainformerlyownedvasttrackofmarshlandinthemunicipalityofMacabebe,Pampangaprovince. CalledHaciendaSanEsteban,itwasadministeredandmanagedbytheAyalayCia.Fromtheyear1860toabouttheyear 1924AyalayCia.,devotedthehaciendatotheplantingandcultivationofnipapalmsfromwhichitgatherednipasapor "tuba." It operated a distillery plant in barrio San Esteban to turn nipa tuba into potable alcohol which was in turn manufacturedintoliquor. Accessibilitythroughthenipapalmsdeepintothehaciendaposedasaproblem.AyalayCia.,thereforedugcanalsleading towardsthehacienda'sinteriorwheremostoftheminterlinkedwitheachother.Thecanalsfacilitatedthegatheringoftuba andtheguardingandpatrollingofthehaciendabysecurityguardscalled"arundines."Bythegradualprocessoferosion thesecanalsacquiredthecharacteristicsanddimensionsofrivers. In1924AyalayCiashiftedfromthebusinessofalcoholproductiontobangusculture.ItconvertedHaciendaSanEsteban fromaforestofnipagrovestoaweboffishponds.Todoso,itcutdownthenipapalm,constructeddikesandclosedthe canalscrisscrossingthehacienda. Sometimein1925or1926AyalayCia.,soldaportionofHaciendaSanEstebantoRomanSantoswhoalsotransformedthe swamplandintoafishpond.Insodoing,heclosedandbuiltdikesacrossSapangMalaulingMaragul,QuiorangSilab, Pepangebunan,Bulacus,NiguiandNasi. The closing of the manmade canals in Hacienda San Esteban drew complaints from residents of the surrounding communities.Claimingthattheclosingofthecanalscausedfloodsduringtherainyseason,andthatitdeprivedthemof theirmeansoftransportationandfishinggrounds,saidresidentsdemandedreopeningofthosecanals.Subsequently,Mayor LazaroYambaoofMacabebe,accompaniedbypolicemenandsomeresidentswenttoHaciendaSanEstebanandopenedthe closuredikesatSapangMalaulingMaragulNiguiandQuiorangSilab.Whereupon,RomanSantosfiledCivilCaseNo. 4488intheCourtofFirstInstanceofPampangawhichpreliminarilyenjoinedMayorYambaoandothersfromdemolishing thedikesacrossthecanals.ThemunicipalofficialsofMacabebecounteredbyfilingacomplaint(docketedasCivilCase No.4527)inthesamecourt.ThePampangaCourtofFirstInstancerenderedjudgmentinbothcasesagainstRomanSantos whoimmediatelyelevatedthecasetotheSupremeCourt. Inthemeantime,theSecretaryofCommerceandCommunications1 conductedhisowninvestigationandfoundthatthe aforementionedsixstreamsclosedbyRomanSantoswerenatural,floatableandnavigableandwereutilizedbythepublic fortransportationsincetimeimmemorial.HeconsequentlyorderedRomanSantosonNovember3,1930todemolishthe dikesacrosssaidsixstreams.However,onMay8,1931thesaidofficialrevokedhisdecisionofNovember3,1930and declaredthestreamsinquestionprivatelyownedbecausetheywereartificiallyconstructed.Subsequently,uponauthority grantedunderAct3982theSecretaryofCommerceandCommunications enteredintoacontractwithRomanSantos wherebytheformer recognizedtheprivate ownershipofSapang MalaulingMaragul,Quiorang Silab,Pepangebunan, Bulacus,NiguiandNasiandthelatterturnedoverforpublicusetwoartificialcanalsandboundhimselftomaintainthemin

navigablestate.TheProvincialBoardofPampangaandthemunicipalcouncilsofMacabebeandMasantolobjectedtothe contract.However,theSecretaryofJustice,inhisopiniondatedMarch6,1934,uphelditslegality.RomanSantoswithdraw hisappealsintheSupremeCourt. WithrespecttotheportionofHaciendaSanEstebanstillownedbytheZobelfamily,themunicipalauthoritiesofMacabebe filedin1930anadministrativecomplaint,intheBureauofPublicWorksprayingfortheopeningofthedikesanddams acrosscertainstreamsinHaciendaSanEsteban.Whereupon,thedistrictengineerofPampangaandarepresentativeofthe BureauofPublicWorksconductedinvestigations.Inthemeantime,theAttorneyGeneral,uponaqueryfromtheSecretary ofCommerceandCommunications,renderedanopiniondatedOctober11,1930sustainingthelatter'spowertodeclare streamsaspubliclyownedunderSec.4ofAct2152,asamendedbyAct3208. OnSeptember29,1930theinvestigatoroftheBureauofPublicWorks,EliseoPanopio,submittedhisreportrecommending the removal of the dikes and dams in question. And on the basis of said report, the Secretary of Commerce and CommunicationsrenderedhisdecisiononNovember3,1930orderingAyalayCia.,todemolishthedikesanddamsacross thestreamsnamedthereinsituatedinHaciendaSanEsteban.AyalayCia.,movedforreconsideration,questioningthepower oftheSecretaryofCommerceandCommunicationstoorderthedemolitionofsaiddikes. DaysbeforetheSecretaryofCommerceandCommunicationsrenderedhisaforementioneddecision,AyalayCia.,thru counsel,maderepresentationswiththeDirectorofPublicWorksforacompromiseagreement.InitsletterdatedOctober11, 1930,AyalayCia.,offeredtoadmitpublicownershipofthefollowingcreeks: Antipolo, Batasan Teracan, Biuas orBatasan, Capiz, Carbon, Cutut,Dalayap, Enrique, Iba, Inaun, Margarita, MalauliorBudbud,MatalabaPalapat,PalipitMaisao,Panlovenas,Panquitan,Quinapati,Quiorang,Bubongor MalauliMalati,Salop,SinubliandVitas. providedtherestofthestreamsweredeclaredprivate.Actingonsaidoffer,theDirectorofPublicWorksinstructedthe surveyorinhisoffice,EliseoPanopio,toproceedtoPampangaandconductanotherinvestigation. OnJanuary 23,1931Panopiosubmittedhis report totheDirectorofPublicWorks recommendingthat some streams enumeratedthereinbedeclaredpublicandsomeprivateonthegroundthattheywereoriginallydugbythehaciendaowners. Theprivatestreamswere: Agape, Atlong, Cruz, Balanga, Batasan, Batasan Matlaue, Balibago, Baliti, Bato, Buengco Malati, Bungalin, Bungo Malati, Bungo Maragui, Butabuta, 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,MaragulMariablusMalate, Masamaral,Mitulid,Nasi,NiguiorBulacus,Palipit,Maragul,Pangebonan,Paumbong,PascoorCulali,Pilapil, PinacMalati,Pinac,MaragulorMacabacle,QuiorangSilaborMalauliMaragul,Raymundo,Salamin,Salop Maisac,SalopMaragul,SermonandSincaorMabulog. Hethereforerecommendedrevocationofthedecisionalreadymentionedabove,datedNovember3,1930oftheSecretaryof Commerce and Communications ordering the demolition of the dikes closing Malauling Maragul, Quiorang, Silab, Pepangebonan,Nigui,Bulacus,Nasi,andPinac.OnFebruary13,1931theDirectorofPublicWorksconcurredinPanopio's reportandforwardedthesametheSecretaryofCommerceandCommunications. OnFebruary25,1935themunicipalityofMacabebeandtheZobelfamilyexecutedanagreementwherebytheyrecognized thenatureofthestreamsmentionedinPanopio'sreportaspublicorprivate,dependingonthefindingsinsaidreport.This agreementwasapprovedbytheSecretaryofPublicWorksandCommunicationsonFebruary27,1935andconfirmedthe nextdaybythemunicipalcouncilofMacabebeunderResolutionNo.36. Afewmonthslater,thatis,onJune12,1935,thethenSecretaryofJusticeissuedanopinionholdingthatthecontract executedbytheZobelfamilyandthemunicipalityofMacabebehasnovalidityfortworeasons,namely,(1)thestreams althoughoriginallydugbyAyalayCia.,losttheirprivatenaturebyprescriptioninasmuchasthepublicwasallowedtouse them fornavigationandfishing,citingMercadovs.MunicipalityofMacabebe,59Phil.592; and(2)at thetimethe SecretaryofCommerceandCommunicationsapprovedthesaidcontract,hehadnomorepowersotodo,becausesuch powerunderSec.2ofAct2152wasrevokedbytheamendingAct4175whichtookeffectonDecember7,1934. DespitetheaboverulingoftheSecretaryofJustice,thestreamsinquestionremainedclosed. In1939administrativeinvestigationswereagainconductedbyvariousagenciesoftheExecutivebranchofourgovernment culminatinginanorderofPresidentManuelQuezonimmediatelybeforethenationalelectionsin1941requiringtheopening ofSapangMacanduling,MaragulMacabacle,BalbaroandCansusu.Saidstreamswereagainclosedin1942allegedlyupon

orderofPresidentQuezon. THECASE RomanSantosacquiredin1940fromtheZobelfamilyalargerportionofHaciendaSanEstebanwhereinarelocated25 streamswhichwereclosedbyAyalayCia.,andarenowthesubjectmatterintheinstantcontroversy. Eighteenyearslater,thatisin1958,CongressenactedRepublicActNo.2056 2followingacongressionalinquirywhichwas kindledbyaspeechdeliveredbySenatorRogeliodelaRosaintheSenate.OnAugust15,1958SenatordelaRosarequested inwritingtheSecretaryofPublicWorksandcommunicationstoproceedinpursuanceofRepublicActNo.2056against fishpondownersintheprovinceofPampangawhohaveclosedriversandappropriatedthemasfishpondswithoutcolorof title.Onthesameday,BenignoMusniandotherresidentsinthevicinityofHaciendaSanEstebanpetitionedtheSecretary ofPublicWorksandCommunicationstoopenthefollowingstreams: Balbaro,BatasanMatua,Bunga,Cansusu,Macabacle,Macanduling,Maragul,Mariablus,Malate,Matalabang, Maisac,Nigui,QuiorangSilab,SapangMaragulandSepungBato. Thereupon,theSecretaryofPublicWorksandCommunicationsinstructedJulianC.Cargullotoconductaninvestigationon theabovenamedstreams. OnOctober20,1958Musniandhiscopetitionersamendedtheirpetitiontoincludeotherstreams.Theamendedpetition thereforecoveredthefollowingstreams: Balbaro,Balili,Banawa,BatasanMatuaBato,Bengco,Bunga,Butabuta,Camastiles,Cansusu,Cela,DonTimpo, Mabalanga, Mabutol, Macabacle, Macabacle qng. Iba, Macanduling, Maragul, Malauli, Magasawa, Mariablus MalateMasamaral,MatalabangMaisa,Mariablus,3Nigui,Pita,Quiorang,Silab,SapangMaragul,SepungBato, SinagandTumbong. OnMarch2,4,10,30and31,andApril1,1959,theSecretaryofPublicWorksandCommunicationsrenderedhisdecisions orderingtheopeningandrestorationofthechannelofallthestreamsincontroversyexceptSapangMalauling,Maragul, Quiorang,Silab,NiguiPepangebonan,NasiandBulacus,within30daysonthegroundthatsaidstreamsbelongtothe publicdomain. OnApril29,1959,thatis,afterreceiptoftheSecretary'sdecisiondatedMarch4,1959,RomanSantosfiledamotionwith theCourtofFirstInstanceofManforjunctionagainsttheSecretaryofPublicWorksandCommunicationsandJulianC. Cargullo. As prayed for preliminary injunction was granted on May 8, 1959. The Secretary of Public Work and Communicationsansweredandallegedasdefensethatvenuewasimproperlylaid;thatRomanSantosfailedtoexhaust administrativeremedies;thatthecontractbetweenAyalayCia.,andtheMunicipalityofMacabebeisnullandvoid;and, thatSection39ofAct496excludespublicstreamsfromtheoperationoftheTorrensSystem. OnApril29andJune12,1969,RomanSantosreceivedthedecisionoftheSecretaryofPublicWorksandCommunications datedMarch10andMarch30,March31,andApril1,1959.Consequently,onJune24,1959heaskedthecourttocitein contemptSecretaryFlorendoMoreno,UndersecretaryM.D.BautistaandJulianCargulloforissuingandservinguponhim thesaiddecisionsdespitetheexistenceofthepreliminaryinjunction.TheSolicitorGeneralopposedthemotionalleging thatthedecisionsinquestionhadlongbeenissuedwhenthepetitionforinjunctionwasfiled,thattheywerereceivedafter preliminaryinjunctionissuedbecausetheyweretransmittedthroughtheDistrictEngineerofPampangatoRomanSantos; thattheirissuancewasforRomanSantos'informationandguidance;and,thatthemotiondidnotallegethatrespondents tookstepstoenforcethedecision.Actinguponsaidmotion,onJuly17,1959,thetrialcourtconsideredunsatisfactorythe explanationoftheSolicitorGeneralbutruledthatSecretaryFlorencioMoreno,UndersecretaryM.D.BautistaandJulian Cargulloactedingoodfaith.Hence,theyweremerely"admonishedtodesistfromanyandfurtheractioninthiscase, observethepreliminaryinjunctionissuedbythisCourt,withthesternwarning,however,thatarepetitionoftheacts complainedofshallbedealtwithseverely." OnJuly18,1959thetrialcourtdeclaredallthestreamsunderlitigationprivate,andrenderedthefollowingjudgment: TheWritofpreliminaryinjunctionrestrainingtherespondentSecretaryofPublicWorks&Communicationsfrom enforcingthedecisionsofMarch2And4,1959andallothersimilardecisionsisherebymadepermanent. TheSecretaryofPublicWorksandCommunicationandJulianCargulloappealedtothisCourtfromtheorderofJuly17, 1959issuedinconnectionwithRomanSantos'motionforcontemptandfromthedecisionofthelowercourtonthemerits ofthecase.

ISSUES Theissuesare:(1)DidRomanSantosexhaustadministrativeremedies?(2)Wasvenueproperlylaid?(3)Didthelowercourt errinconductingatrialdenovoofthecaseandinadmittingevidencenotpresentedduringtheadministrativeproceeding? (4)DothestreamsinvolvedinthiscasebelongtothepublicdomainortotheownerofHaciendaSanEstebanaccordingto lawandtheevidencesubmittedtotheDepartmentofPublicWorksandCommunications? DISCUSSIONOFTHEISSUES 1.RespondentsmaintainthatRomanSantosresortedtothecourtswithoutfirstexhaustingadministrativeremediesavailable tohim,namely,(a)motionforreconsiderationofthedecisionsoftheSecretaryofPublicWorksandCommunications;and, (b)appealtothePresidentofthePhilippines. Whetheralitigant,inexhaustingavailableadministrativeremedies,needmoveforthereconsiderationofanadministrative decisionbeforehecanturntothecourtsforrelief,wouldlargelydependuponthepertinentlaw, 4therulesofprocedureand theusualpracticefollowedinaparticularoffice.5 RepublicActNo.2056doesnotrequirethefilingofamotionforreconsiderationasaconditionprecedenttojudicialrelief. From the context of the law, the intention of the legislators to forego a motion for reconsideration manifests itself clearly.1awphil.net RepublicActNo.2056underscorestheurgencyandsummarynatureoftheproceedingsauthorized thereunder.ThusinSection2thereoftheSecretaryofPublicWorksandCommunicationsunderpainofcriminalliabilityis dutyboundtoterminatetheproceedingsandrenderhisdecisionwithinaperiodnotexceeding90daysfromthefilingofthe complaint.Underthesamesection,thepartyrespondentconcernedisgivennotthan30dayswithinwhichtocomplywith thedecisionoftheSecretaryofPublicWorksandCommunications,otherwisetheremovalofthedamswouldbedoneby the Government at the expense of said party. Congress has precisely provided for a speedy and a most expeditious proceedingfortheremovalofillegalobstructionstoriversandonthebasisofsuchaprovisionitwouldbepreposterousto concludethatithadinmindtorequireapartytofileamotionforreconsiderationanadditionalproceedingwhichwould certainlylengthenthetimetowardsthefinalsettlementofexistingcontroversies.ThelogicalconclusionisthatCongress intendedthedecisionoftheSecretaryofPublicWorksandCommunicationstobefinalandexecutorysubjecttoatimely reviewbythecourtswithoutgoingthroughformalandtimeconsumingpreliminaries. Moreover,theissuesraisedduringtheadministrativeproceedingsofthiscasearethesameonessubmittedtocourtfor resolution.NonewmatterwasintroducedduringtheproceedinginthecourtbelowwhichtheSecretaryofPublicWorks andCommunicationshadnoopportunitytocorrectunderhisauthority. Furthermore,RomanSantosassailedtheconstitutionalityofRepublicActNo.2056andthejurisdictionoftheSecretaryof PublicWorksandCommunicationstoorderthedemolitionofdamsacrossriversorstreams.Thosequestionsarenotwithin thecompetenceofsaidSecretarytodecideuponamotionforreconsideration.itcalfTheyarepurelylegalquestions,not administrativeinnature,andshouldproperlybeairedbeforeacompetentcourtaswasrightlydonebypetitionerRoman Santos. Atanyrate,thereisnoshowingintherecordsofthiscasethattheSecretaryofPublicWorksandCommunicationsadopted ruleofprocedureininvestigationsauthorizedunderRepublicActNo.2056whichrequireapartylitiganttofileamotionfor thereconsiderationoftheSecretary'sdecisionbeforehecanappealtothecourts.RomanSantoshoweverstatedinhisbrief thatthepracticeisnottoentertainmotionsforreconsiderationforthereasonthatRepublicActNo.2056doesnotexpressly orimpliedlyallowtheSecretarytograntthesame.RomanSantos'statementissupportedbyOpinionNo.61,Seriesof1959, datedApril14,1959oftheSecretaryofJustice. AstothefailureofRomanSantostoappealfromthedecisionoftheSecretaryofPublicWorksandCommunicationstothe PresidentofthePhilippines,sufficeittostatethatsuchappealcouldbedispensedwithbecausesaidSecretaryisthealter 6 egoofthePresident.itcalfTheactionsoftheformerarepresumedtohavetheimpliedsanctionofthelatter. 2.Itiscontendedthatifthiscasewereconsideredasanordinarycivilaction,venuewasimproperlylaidwhenthesamewas institutedintheCourtofFirstInstanceofManilaforthereasonthatthecaseaffectsthetitleofarealproperty.Infine,the propositionisthatsincethecontroversydwellsontheownershipofortitletothestreamslocatedinHaciendaSanEsteban, thecaseisrealactionwhich,pursuanttoSec.3ofRule5oftheRulesofCourtshouldhavebeenfiledintheCourtofFirst InstanceofPampanga. Themerefactthattheresolutionofthecontroversyinthiscasewouldwhollyrestontheownershipofthestreamsinvolved hereinwouldnotnecessarilyclassifyitasarealaction.ThepurposeofthissuitistoreviewthedecisionoftheSecretaryof

PublicWorksandCommunicationstoenjoinhimfromenforcingthemandtopreventhimfrommakingandissuingsimilar decisionsconcerningthestreaminHaciendaSanEsteban.TheactsoftheSecretaryofPublicWorksandCommunications aretheobjectofthelitigation,thatis,petitionerRomanSantosseekstocontrolthem,hence,thesuitoughttobefiledinthe CourtofFirstInstancewhoseterritorialjurisdictionencompassestheplacewheretherespondentSecretaryisfoundoris holdingoffice.Fortheruleisthatoutsideitsterritoriallimits,thecourthasnopowertoenforceitsorder.7 Section3ofRule5oftheRulesofCourtdoesnotapplytodeterminevenueofthisaction.ApplicableisSec.1thesame rule,whichstates: Sec.1.Generalrule.CivilactionsinCourtsofFirstInstancemaybecommencedandtriedwherethedefendant anyofthedefendantsresidentsormaybefoundorwheretheplaintifforanyoftheplaintiffsresides,attheelection oftheplaintiff. Accordingly,thePetitionforinjunctionwhocorrectlyfiledintheCourtofFirstInstanceofManila.RespondentsSecretary ofPublicWorksandCommunicationsandJulianCargulloarefoundandholdofficeintheCityofManila. 3.Thelowercourttriedthiscase denovo.Againstthisprocedurerespondentsobjectedandmaintainedthattheaction, althoughcaptionedasaninjunctionisreallyapetitionforcertioraritoreviewthedecisionoftheSecretaryofPublicWorks andCommunications.Thereforetheynowcontendthatthecourtshouldhaveconfineditselftoreviewingthedecisionsof the respondent Secretary of Public Works and Communications only on the basis of the evidence presented in the administrativeproceedings.Ontheotherhand,RomanSantosnow,submitsthattheactionisaproceedingindependentand distinctfromtheadministrativeinvestigation;that,accordingly,thelowercourtcorrectlyactedintryingthecaseanewand renderingjudgmentuponevidenceadducedduringthetrial. WhethertheactioninstitutedintheCourtofFirstInstancebeformandamus,injunctionorcertiorariisnotverymaterial.In reviewingthedecisionoftheSecretaryofPublicWorksandCommunications,theCourtofFirstInstanceshallconfineits inquiry to the evidence presented during, the administrative proceedings. Evidence not presented therein shall not be admitted,andconsideredbythetrialcourt.AsaptlybythisCourtspeakingthroughMr.JusticeJ.B.L.Reyes,inasimilar case: The findings of the Secretary can not be enervated by new evidence not laid before him, for that would be tantamounttoholdinganewinvestigation,andtosubstituteforthediscretionandjudgmentoftheSecretarythe discretionandjudgmentofthecourt,towhomthestatutehadnotentrustedthecase.Itisimmaterialthatthe presentactionshouldbeoneforprohibitionorinjunctionandnotoneforcertiorari;ineithereventthecasemustbe resolvedupontheevidencesubmittedtotheSecretary,sinceajudicialreviewofexecutivedecisionsdoesnot importatrial denovo,butonlyanascertainmentofwhetherthe"executivefindingsarenotinviolationofthe Constitutionorofthelaws,andarefreefromfraudorimposition,andwhethertheyfindreasonablesupportinthe evidence....8 Thecaseatbar,nomatterwhatthepartiescallit,isinrealityareviewofseveraladministrativedecisionsoftheSecretaryof PublicWorksandCommunications.Beingso,itwaserrorforthelowercourttoconductatrialdenovo.Accordingly,for purposesofthisreview,onlytheevidencepresentedandadmittedintheadministrativeinvestigationwillbeconsideredin ourdeterminationofwhetheronthebasisthereofthedecisionsoftheSecretaryofPublicWorksandCommunicationswere correct. 4.Wecometothequestionwhetherthestreamsinvolvedinthiscasebelongtothepublicdomainortotheownerof HaciendaSanEsteban.Ifsaidstreamsarepublic,thenRepublicAct2056applies,ifprivate,thentheSecretaryofPublic WorksandCommunicationscannotorderdemolitionofthedikesanddamsacrossthempursuanttohisauthoritygrantedby saidlaw. First,wecometothequestionoftheconstitutionalityofRepublicActNo.2056.ThelowercourtheldRepublicActNo. 2056constitutionalbutruledthatitwasappliedbyrespondentsunconstitutionally.Thatis,itheldthatRomanSantoswas beingdeprivedofhispropertywithoutdueprocessoflaw,forthedikesofhisfishpondswereordereddemolishedthrough anadministrative,insteadofajudicial,proceeding.Thisconclusionandrationalizationofthelowercourtamountineffect todeclaringthelawunconstitutional,statedinversely.Notethatthelawprovidesforanexpeditiousadministrativeprocessto determinewhetherornotadamordikeshouldbedeclareapublicnuisanceandordereddemolished.Andtosaythatsuch anadministrativeprocess,whenputtooperation,isunconstitutionalistantamounttosayingthatthelawitselfviolatesthe Constitution.InLovinavs.Moreno,supra,Weheldsaidlawconstitutional.Weseenoreasonheretoholdotherwise. DiscussingnowtheapplicabilityofRepublicAct2056,thesameappliestotwotypesofbodiesofwater,namely(1)public

navigablerivers,streams,coastalwaters,orwaterwaysand(b)areasdeclaredascommunalfishinggrounds,asprovidedfor inSection1thereof: Sec.1....theconstructionorbuildingofdams,dikesoranyotherworkswhichencroachesintoanypublic navigable river, stream, coastal waters and any other navigable public waters or waterways as well as the constructionorbuildingofdams,dikesoranyotherworksinareasdeclaredascommunalfishinggrounds,shallbe orderedremovedaspublicnuisancesorasprohibitedconstructionsashereinprovided:... Wearenotconcernedwithcommunalfishinggroundsbecausethestreamshereinvolvedhavenotbeensodeclared,butwith publicnavigablestreams.Thequestionthereforeis:ArethestreamsinHaciendaSanEstebanwhicharementionedinthe petitionofBenignoMusniandothers,publicandnavigable? Respondentscontendthatsaidstreamsarepubliconthefollowinggrounds: (1)HaciendaSanEstebanwasformerlyamarshlandandbeingso,itisnotsusceptibletoappropriation.Itthereforebelongs totheState.RespondentsrelyonMontanovs.InsularGovernment,12Phil.572. (2)Thestreamsinquestionarenaturalstreams.Theyaretributariesofpublicstreams.CitedarethecasesofSamsonvs. Dionisio,etal.,11Phil.538andBautistavs.Alarcon,23Phil.636. (3)Thestreamshavefortheirsourcepublicrivers,thereforetheycannotbeclassifiedascanals. (4)AssumingthestreamswereartificiallymadebyAyalayCia.,saidtitleholderlostownershipoverthembyprescription whenitallowedthepublictousethemfornavigationforalongtime.RespondentsciteMercadovs.MunicipalPresidentof Macabebe,59Phil.592. (5)AssumingthestreamsinquestionarenotmentionedaspublicinthecertificatesoftitleheldbyAyalayCia.,over HaciendaSanEsteban,stilltheycannotbeconsideredasprivatelyownedforSection39ofAct496expresslyexceptspublic streamsfromprivateownership. (6)ThePanopioReport,whichfoundthestreamsinquestionofprivateownershipwasnullifiedbytheSecretaryofJustice inhisopiniondatedJune12,1935.1awphil.netAnd,thecontractbetweenAyalayCia.,andtheSecretaryofCommerceand Communicationsagreeingontheownershipofthestreamsinquestionisultravires. ThedoctrineinMontanovs.InsularGovernment,supra,thatamarshlandwhichisinundatedbytheriseofthetidesbelongs totheStateandisnotsusceptibletoappropriationbyoccupationhasnoapplicationhereinasmuchasinsaidcasethe landsubjectmatterofthelitigationwasnotyettitledandpreciselyIsabeloMontanosoughttitlethereononthestrengthof tenyears'occupationpursuanttoparagraph6,section54ofAct926ofthePhilippineCommission.Whereas,thesubject matterinthiscaseHaciendaSanEstebanistitledlandandprivateownershipthereofbyAyalayCia.,hasbeen recognizedbytheKingofSpainandlaterbythePhilippineGovernmentwhenthesamewasregisteredunderAct496. RespondentsfurtherciteBautistavs.Alarcon,23Phil.631,wheretheplaintiffsoughtinjunctionagainstthedefendantswho allegedlyconstructedadamacrossapubliccanalwhichconveyedwaterfromtheObandoRivertofishpondsbelongingto severalpersons. Thecanalwassituatedwithinapublicland.InsustainingtheinjunctiongrantedbytheCourtofFirst Instance,thisCourtsaid: Noprivatepersonshasrighttousurppossessionofawatercourse,branchofariver,orlakeofthepublicdomain anduse,unlessitshallhavebeenprovedthatheconstructedthesamewithininpropertyofhisexclusiveownership, andsuchusurpationconstitutesaviolationofthelegalprovisionswhichexplicityexcludesuchwaterwaysfromthe exclusiveuseorpossessionofaprivateparty.(Emphasissupplied) Asindicatedintheabovecitedcase,aprivatepersonmaytakepossessionofawatercourseifheconstructedthesame withinhisproperty.itcalfThisputsUsintoinquirywhetherthestreamsinquestionarenaturalorartificial.Insodoing,We shallexamineonlytheevidencepresentedbeforetheDepartmentofPublicWorksandCommunicationsanddisregardthat whichwaspresentedforthefirsttimebeforethelowercourt,followingourrulinginLovinavs.Moreno,supra. (1) SapangMacandulingMaragulorMacanduli ispresentlyenclosedinFishpondNo.12ofRomanSantos.Itsbanks cannotanymorebeseenbutsometracesofthemcouldbenotedbyarowofisolatednipapalms.Itswaterissubjecttothe riseandfallofthetidescomingfromGuaguaandAntipoloRiversanditisnavigablebylightwatercrafts.Itsinletis AntipoloRiver;anotherdikeatitsoutletalongthePalapatRiver. 9Itisclosedbyfourdikes:Onedikeatitsinletalongthe AntipoloRiver;anotherdikeatitscutletalongthePalatpatRiver;and,twodikesinbetween.Thenexistchannelatthe PalapatRiverwherethefishpondgatelieshasbeenfilledupwithdredgespoilsfromthePampangaRiverControlProject.

(2)SapangMacabacleisfoundinFishpondNo.13.Itsbanksarestillevident.Thisstreamisabout30meterswide,two meters deep and one and onehalf to two kilometers long. Its source is Rio Cansusu. Like Macanduli, its channel is obstructedbyfourdikes.OneofthemwasconstructedbytheengineersofthePampangaRiverControlProject. (3)SapangBalbarowhichisfoundinFishpondNo.13,runsfromCanalEnriquenearRioCansusutoSapangMacabacle,a distanceofaboutonehalfkilometer.Itispassablebybanca.Theclosuresofthisstreamconsistoftwodikeslocatedateach endsonCanalEnriqueandSapangMacabacle. (4)SapangCansusuisacontinuationoftheCansusuRiver.TheCansusuRiveropensattheGuaguaRiverandallegedly endsatthePalanasRiverinfrontofBarrioSanEsteban.AtapointnearthemouthofSapangBalbaro,theownersof HaciendaSanEstebanbuiltacanal leadingstraight tooneendofBarrioSanEsteban.Theycalledthis canal "Canal Enrique."AndatthepointwhereCanalEnriquejoinsCansusutheybuiltadikeacrossCansusu,thusclosingthisvery portionoftheriverwhichextendsuptoPalanasRiverwheretheybuiltanotherclosuredike.Thisclosedportion,called "SapangCansusu,"isnowpartofFishpondNo.1. SapangCansusuishalfakilometerlongandnavigablebybanca. Appellant'switnesses,BelignoMusni,41,MacarioQuiambao,96,RomanManansala,55andCastorQuiambao,76,all residentsofBarrioSanEsteban,testifiedthatpriortotheirclosure,SapangMacaduli,Macabacle,BalbaroandCansusu wereusedaspassagewayandasfishinggrounds;thatpeopletransportedthroughthemtuba,10woodandsasa,11andthat thetubawasbroughttothedistilleryinBarrioSanEsteban.MacarioQuiambaotestifiedalsothatsaidfourstreams"were createdbyGodforthetownpeople";andthatifanydiggingwasdoneitwasonlytodeepentheshallowpartstomake passageeasier.AccordingtowitnessAnastacioQuiambaosaidstreamswerenavigable,evenYangco'sship"Cababayan" couldpassthrough.SimplicioQuiambao,36,andMarcelinoOcampo,55,statedondirectexaminationthatbeforeclosureof theabovenamedfourstreams,peoplefromthesurroundingtownsofGuagua,Bacolor,Macabebe,MasantolandSexmoan fishedandnavigatedinthem. Againsttheaforementioned,testimonialevidenceRomanSantospresentedthetestimonyofNicanorDonarber,80,Mariano Guinto,71,andhisown.Donarber,whostartedworkingasanarundin12testifiedthatAyalayCia.,dugSapangMacanduli, BalbaroandMacabacle;thatheworkedalsointheconstructiontogetherwithotherworkers;and,thatasanoverseerhe inspectedtheirwork.MarianoGuintotestifiedthatheworkedforAyalayCia.,asatubagatherer;thatinordertoreach remotenipagrovesbybanca,theymadecanals;and,thathewasoneofthewhoworkedintheconstructionofthosecanals. RomanSantosalsotestifiedthatSapangMacanduli,Macabacle,BalbaroandCansusuareartificialcanalsexcavatedasfar backas1850andduetoerosioncoupledwiththespongynatureoftheland,theyacquiredtheproportionofrivers;thathe joinedSapangBalbarotoSapangMacabaclebecausetheformerwasadyingcanal;andthatCansusuRiverisdifferentfrom SapangCansusuWitnessDomingoYumanglikewisetestifiedthatSapangBalbaromanmade. WeobservethatwitnessespositivelystatedthatSapangMacanduli,MacabacleandBalbaroweremadebytheownersof HaciendaSanEsteban.WithrespecttoSapangCansusunone,exceptRomanSantoshimself,testifiedthatSapangCansusu isanartificialcanal.ItisnotoneofthestreamsfoundandrecommendedtobedeclaredprivateinthePanopioReport. SapangCansusufollowsawindingcoursedifferentand,distinctfromthatofacanalsuchasthatofCanalEnriquewhichis straight.Moreover,SapangCansusuisapartofCansusuRiver,admittedlyapublicstream. (5)SapangMaragul,MabalangaandDonTimpoareallpartofFishpondNo.1.Maragulis600meterslongand30to35 meterswide.Mabalangais250metersinlengthand50metersinwidth.DonTimpois220meterslongand20meterswide. Allofthemarenavigablebybanca.MaragulandMabalangaopenatGuaguaRiverandjoineachotherinsidethehacienda toformonesinglestream,SapangDonTimpo,whichleadstotheMatalabaRiver.Maragul,MabalangaandDonTimpo, formerly ended inside the hacienda but later Mabalanga was connected to Don Timpo. Maragul was connected to MabalangaandSapangCelawasextendedtojoinMaragul. WitnessesNicanorDonarber,MarianoOcampoandMarianoGuintotestifiedthatMaragul,MabalangaandDonTimpoare artificialcanalsdugbyAyalayCia.,andthatthey(DonarberandMarianoGuinto)workedinsaidexcavations. 13Witness Mariano Guinto clarified that Don Timpo was originally dug but Mabalanga and Maragul were formerly small non navigablestreamswhichweredeepenedintoartificialnavigablecanalsbyAyalayCia.14 ExhibitF,whichisamapshowingthestreamsandriversinHaciendaSanEsteban,showsthatMaragul,Mabalangaand DonTimpoaremoreorlessstraight.Fromthebigrivers(GuaguaandMatalabaRivers)theyleaddeepintotheinteriorof thehacienda,thusconfirmingthetestimonythattheywerebuiltpreciselyasameansofreachingtheinterioroftheestateby banca.Theweightofevidence,therefore,indicatethatsaidstreamsaremanmade.

(6)SapangBunga,nowpartofBungafishpond,getsitswaterfromSapangaIbaandemptiesatSta.CruzRiver.Itisabout 300400meterslong,56meterswideand11.60metersdeep. (7) SapangBatuisfoundinCapizFishpond.About300400meterslong,45meterswideand1.502.20metersdeep,it startsatCapizRiverandendsatMalaulingMaragul.FromCapizRiveruntilitintersectsSapangNiguithestreamiscalled SapangBatuCommencingfromSapangNiguianduptoitsendatSapangMalaulingMaragul,thestreamiscalledSapang Batu.CommencingfromSapangNiguianduptoitsendatSapangMalaulingMaragul,thestreamiscalledSepongBatu. SepongBatuisnotamongthosestreamsdeclaredinthePanopioReportasprivate. (8)SapangBanawahasoneendatPalanasRiverandtheotheratSapangMacabacle.Itisabout300meterslong,34meters wideand1.301.40metersdeep.ItswholelengthiswithinFishpondNo.13ofRomanSantos. (9)SapangMabutolisadeadendstream,thatis,itendsinsidethehacienda.ItopensalongGuaguariver.Sinceitsclosure, ithasbecomepartofFishpondNo.1. (10)SapangButabuta,likeMabutol,diesinsidethehacienda.ItconnectswithCansusuRiverandisabout100meterslong, 34meterswideand1.21.5metersdeep.ItisnowapartofFishpondNo.13. (11)SapangMasamaral,anotherstreamwhichopensatCansusuRiverAndendsinsidethehacienda.,is100200meters long,34meterswideand1.502metersdeep.ItnowformspartofFishpondNo.13. TheuncontradictedtestimonyofMarcosGuintoisthatSapangBunga,Batu,SepongBatu,Banawa,Mabutol,ButaButa andMasamaralwereconstructedbyAyalayCia.,togainaccesstothenipathe,interiorofthehacienda.Thistestimony tallies with the findings in the Panopio Report which will be discussed herein later. The evidence adduced in the administrativeproceedingconductedbeforearepresentativeoftheSecretaryofPublicWorksandCommunicationssupports thecontentionthatsaidstreamsaremerelycanalsbuiltbyAyalayCia.,foreasypassageintothehinterlandofitshacienda. (12) SapangMagasawa consists oftwostreams runningparallel toeachothercommencingfrom MatalabaRiverand terminatingatMariablusRivers.About600700meterslong,45meterswideand1.52metersdeep,thesetwostreamsare navigablebybanca.TheyareenclosedwithinFishpondNo.1. (13)SapangMariablusMalate,about34meterswideand250meterslong,isanotherstreamthatendsinsidethehacienda andgetsitswaterfromGuaguaRiver.ItisnopartofFishpondNo.1. (14)SapangMatalabangMalateorMaisacopensatGuaguaRiverandendsatSapangCelaandMatalabangMaragul.This stream,whichisabout800meterslongand18meterswide,formspartofFishpondNo.1ofRomanSantos. (15)SapangBatasanMatuaabout600meterslong,threemeterswideand.80metersdeepatlowtideand1.90metersdeep athightidecrossesthehaciendafromMariablusRivertoCansusuRiver.ItisatpresentapartofFishpondNo.1A. (16)SapangCamastiles,adeadendstreamofabout200to300metersinlength,getsitswaterfromBiuasRiver.Itiswithin FishpondNo.1. (17)SapangCelaiswithinFishpondNo.1.Itswholelengthsituatedinsidethehacienda,itopensatSapangMatalabang MalateorMaisacandendsatSapangMalungkot.LatterCelawasextendedtoconnectwithSapangMaragul.Itisabout200 meterslongandfourmeterswide. MarianoGuinto,71,testifiedwithoutcontradictionthatSapangMariablusMalateandMatalabangMalatewereformerly smallandnonnavigablestreamswhichweredugbyAyalayCia.,15whileBatasanMatuaCamastiles,MagasawaandCela

areoriginalcanalsmadebyAyalayCia.,16thathewasoneofthosewhoworkedintheconstructionofsaidcanals;andthat ittookyearstoconstructthem.AllthesestreamswererecommendedinthePanopioReportfordeclarationasprivate streams. (18)SapangSinag,200meterslong,fourtofivemeterswide,onemeterandoneandonehalfmetersdeepatlowandhigh tides,respectively,getsitswaterfromCutodRiverandleadsinsidethehaciendatoconnectwithSapangAtlongCruz,a streamdeclaredprivateinthePanopioReport.ItisnowinsideFishpondNo.14. (19)SapangBalili,alsofoundinsideFishpondNo.14,isabout200meterslong,threetofourmeterswideandonemeter deepatlowtide.FromitsmouthatCutodRiveritdriftsintotheinteriorofthehaciendaandjoinsSapangBengco.17 (20)SapangPitaiswithinFishpondCapiz.IttakeswaterfromCapizRiverbutdies250metersinsidethehacienda.Itis aboutfourtofivemeterswide,andonemeterdeepatlowtideand1.50metersdeepathightide.

(21)SapangTumbong,situatedinsideCapizFishpond,derivesitswaterfromSapangQuiorangSilab,astreamdeclared privatebytheSecretaryofPublicWorksandCommunications,andendsinsidethehacienda.18 (22) SapangBengco isfoundwithinFishpondNo.14.1awphil.net Twohundredmeterslong,fivemeterswide,andone meterdeepatlowtideand1.50metersdeepathightideitgetswaterfromSapangBiabasandconnectswithBaliling 19 Maisac. AccordingtoMarcosGuinto,awitnessforRomanSantos,SapangSinag,Balili,PitaTumbongandBengcowereexcavateda longtimeagobyAyalayCia.;andthattheyhaveawindingcoursebecausewhentheyweremadetheworkersfollowedthe locationofthenipapalms.20Ontheotherhand,MarceloQuiambao,testifiedthatSapangTumbongisanaturalstreamand thatthereasonhesaidsoisbecausethestreamwasalreadythereasfarbackas1910whenhereachedtheageoften.No otheroralevidencewaspresentedtocontradictthetestimonyofMarcosGuintothatthesaidfivestreamswereartificially madebyAyalayCia. Toshowthatthestreamsinvolvedinthiscasewereusedexclusivelybythehaciendapersonnelandoccasionallybymembers of their families, RomanSantos introduced the testimonyof EliseoPanopio,Nicanor Donarber,Blas Gaddi, Mariano Ocampo,MarianoGuinto,AlejandroManansalaandhimself.Thewitnesses categoricallytestifiedthatthepublicwas prohibited from using the streams as a means of navigation and that the prohibition was enforced by guards called arundines. Oneandall,theevidence,oralanddocumentary,presentedbyRomanSantosintheadministrativeproceedingssupportsthe conclusionofthelowercourtthatthestreamsinvolvedinthiscasewereoriginallymanmadecanalsconstructedbythe formerownersofHaciendaSanEstebanandthatsaidstreamswerenotheldopenforpublicuse.Thissameconclusionwas reached27yearsearlierbyaninvestigatoroftheBureauofPublicWorkswhosereportandrecommendationswereapproved bytheDirectorofPublicWorksandsubmittedtotheSecretaryofCommerceandCommunications. Asstated,pursuanttoAct2152,asamendedbyAct3208,theBureauofPublicWorksandtheDepartmentofCommerce andCommunicationslockedintoandsettledthequestionofwhetherornotthestreams situatedwithinHaciendaSan Esteban are publicly or privately owned. We refer to the socalled Panopio Report which contains the findings and recommendationsofEliseoPanopio,asurveyorintheBureauofPublicWorks,whowasdesignatedtoconductformal hearingsandinvestigation.Saidreportfoundthefollowingstreams,amongothers,ofprivateownership: Camastiles, Cela Balanga, Bato, Batasan, Bengco, Butabuta, Don Timpo, Mabutol, Macabacle, Macanduli, Malande Malate (Bunga), Magasawa, Masamaral, Maragul, Mariablus Malate, Matalaba Malate, Nasi, Nigui, PangebonanandQuiorangSilab onthegroundthat Thepreponderanceoftheprobatoryfacts,...,showsthattherivers,creeks,esterosandcanalslistedin(1)have originallybeenconstructed,deepened,widened,andlengthenedbytheownersoftheHaciendaSanEsteban.That theyhavebeenusedasmeansofcommunicationfromoneplacetoanotherandtotheinnermostofthenipales, exclusivelyfortheemployees,colonosandlaborersofthesaidHaciendaSanEsteban.Thattheyhaveneverbeen usedbythepublicfornavigationwithouttheexpressconsentoftheownersofthesaidHacienda.21 Basesfortheabovequotedconclusionwere"thereliableinformationsgatheredfromoldresidentsofthelocality,from outsiders,theswornstatementsobtainedfromdifferentpersonsnotinterestedinthiscaseandthecomparisonofthethree planspreparedin1880,1906and1930.22ThepersonsreferredtoareMartinIsip,HilarionLobo,EmigdioIgnacio,Castor Quiambao,MatiasSungafacioCruz,InocencioDayrit,GabrielManansala,LopeQuiambao,MarcelinoBustosandJuan Lara. OnFebruary13,1931theDirectorofPublicWorkstransmittedthePanopioReporttotheSecretaryofCommerceand Communications recommending approval thereof. Later, on February 27, 1935, Secretary of Public Works and CommunicationsDelasAlasapprovedtheagreementofAyalayCia.,andtheMunicipalityofMacabebe,concerningthe ownershipofthestreamsinHaciendaSanEsteban,forbeinginconformitywithsaidPanopioReport. ThisagreementofAyalayCiaandtheMunicipalityofMacabebewhichwasapprovedbytheSecretaryofPublicWorksand CommunicationsonlyonFebruary27,1935,couldnothoweverbindtheGovernmentbecausethepoweroftheSecretaryof PublicWorksandCommunicationtoentertheretohadbeensuppressedbythePhilppineLegislaturewhenitenactedAct 4175whicheffectonDecember7,1934.

NullityoftheaforesaidcontractwouldnotofcourseaffectthefindingsoffactcontainedinthePanopioReport. Inweighingtheevidencepresentedbeforetheadministrativeinvestigationwhichculminatedinthisappeal,respondent SecretaryseemedtohaveignoredthePanopioReportandotherdocumentaryevidenceaswellasthetestimonyofwitnesses presentedbypetitionerbutinsteadgavecredenceonlytothewitnessesofBenignoMusni,etal.Uponreview,however,the lowercourt,takingintoaccountalltheevidenceadducedintheadministrativehearing,includingthePanopioReport,as well as those presented for the first time before it, sustained petitioner's averment that the streams in question were artificiallymade,henceofprivateownership.Asstated,thisconclusionofthelowercourtwhichisinaccordwiththe findings ofPanopioas contained inhis report,finds amplesupport from the evidencepresentedand admitted inthe administrativeinvestigation.Accordingly,weseenomeritindisturbingthelowercourt'sfindingsfact. Wenextconsidertheissueofwhetherunderpertinentlaws,thestreamsinquestionarepublicorprivate. WequoteArticles339,407and408oftheSpanishCivilCodeof1889:
Art.339.Propertyofpublicownershipsis 1.Thatdevotedtopublicuse,suchasroads,canals,rivers,torrents,portsandbridgesconstructedbytheState,riverbanks, shores,roadsteads,andthatofasimilarcharacter; Art.407.Thefollowingareofpublicownership: 1.Riversandtheirnaturalchannels; 2.Continuousorintermittentwatersfromspringsorbrooksrunningintheirnaturalchannelsandthechannelsthemselves. 3.Watersrisingcontinuouslyorintermittentlyonlandsofpublicownership; 4.Lakesandpondsformedbynature,onpubliclands,andtheirbeds; 5.Rainwatersrunningthroughravinesorsandbeds,thechannelsofwhichareofpublicownership; 6.Subterraneanwatersonpubliclands; 7.Watersfoundwithinthezoneofoperationofpublicworks,eventhoughconstructedundercontract; 8.Waterswhichflowcontinuouslyorintermittentlyfromlandsbelongingtoprivatepersons,totheState,toprovinces,orto towns,fromthemomenttheyleavesuchlands; 9.Thewastewatersoffountains,sewers,andpublicinstitutions. Art.408.Thefollowingareofprivateownership: 1.Waters,eithercontinuousorintermittentrisingonprivateetates,whiletheyrunthroughthem; 2.Lakesandpondsandtheirbedswhenformedbynatureonsuchestates; 3.Subterraneanwatersfoundtherein; 4.Rainwaterfallingthereonaslongastheirbounderies. 5.Thechannelsofflowingstreams,continuousorintermittent,formedbyrainwater,andthoseofbrookscrossingestateswhich arenotofpublicownership. Thewater,bed,banks,andfloodgatesofaditchoraqueductaredeemedtobeanintegralpartoftheestateorbuildingforwhich thewatersareintended.Theownersofestatesthroughoralongtheboundariesofwhichtheaqueductpassescanassertno ownershipoverit,noranyrighttomakeuse.ofitbedsorbanks,unlesstheybasetheirclaimsontitledeedwhichspecifythe rightortheownershipclaimed. Articles71and72oftheSpanishLawofWatersofAugust3,1866state: Art.71.Thewaterbedsofallcreeksbelongtotheownersoftheestatesorlandsoverwhichtheyflow. Art.72.Thewaterbedsonpublicland,ofcreeksthroughwhichspringwatersrun,areapartofthepublicdomain. Thenaturalwaterbedsorchannelsofriversarealsopartofthepublicdomain.

PursuanttoArticle71oftheSpanishLawofWatersofAugust3,1866,andArticle408(5)oftheSpanishCivilCode, channelsofcreeksandbrooksbelongtotheownersofestatesoverwhichtheyflow.Thechannels,therefore,ofthestreams inquestionwhichmaybeclassifiedcreeks,belongtotheownersofHaciendaSanEsteban. Thesaidstreams,consideredascanals,ofwhichtheyoriginallywere,areofprivateownershipincontemplationofArticle 339(l)oftheSpanishCivilCode.UnderArticle339,canalsconstructedbytheStateanddevotedtopublicuseareofpublic

ownership.Conversely,canalsconstructedbyprivatepersonswithinprivatelandsanddevotedexclusivelyforprivateuse mustbeofprivateownership. OurattentionhasbeencalledtothecaseofMercadov.MunicipalPresidentofMacabebe,59Phil.592.Therethecreek (BatasanLimasan)involvedwasoriginallydugbytheestate'sownerwho,subsequentlyallowedsaidcreektobeusedbythe publicfornavigationandfishingpurposesforaperiodof22years.SaidthisCourtthroughMr.JusticeDiaz: AndevengrantingthattheBatasanLimasancreekacquiredtheproportionswhichithad,beforeitwasclosed,asa resultofexcavationsmadebylaborersoftheappellant'spredecesorininterest,itbeingafactthat,sincethetimeit wasopenedasawaterroutebetweentheNasiRiverandLimasancreek,theownersthereofaswellasstrangers, thatis,boththeresidentsofthehaciendaandthoseofothernearbybarriosandmunicipalities,hadbeenusingitnot onlyfortheirbancastopassthroughbutalsoforfishingpurposes,anditbeingalsoafactthatsuchwasthe conditionofthecreekatleastsince1906untilitwasclosedin1928,iftheappellantandherpredecessorsininterest hadacquiredanyrighttothecreekinquestionbyvirtueofexcavationswhichtheyhadmadethereon,theyhadsuch rightthroughprescription,inasmuchastheyfailedtoobtain,andinfacttheyhavenotobtained,thenecessary authorizationtodevoteittotheirownusetotheexclusionofallothers.Theuseandenjoymentofacreek,asany otherpropertysimceptibleofappropriation,maybeacquiredorlostthroughprescription,andtheappellantandher predecessorsininterestcertainlylostsuchrightthroughthesaidcause,andtheycannotnowclaimitexclusivelyfor themselvesafterthegeneralpublichadbeenopenlyusingthesamefrom1906to1928.... Inthecitedcase,thecreekcouldhavebeenofprivateownershiphadnotitsbuilderlostitbyprescription.Applyingthe principlethereinenunciatedtothecaseatbar,theconclusionwouldbeinevitablyinfavorofprivateownership,considering thattheownersofHaciendaSanEstebanheldthemfortheirexclusiveuseandprohibitedthepublicfromusingthem. Itmaybenotedthatintheopinion,mentionedearlier,issuedonJune12,1935,theSecretaryofJusticeansweredinthe negative the query of the Secretary of Public Works and Communications whether the latter can declare of private ownershipthosestreamswhich"weredugupartificially",becauseitwasassumedthatthestreamswereused"bythepublic asfishinggroundandintransportingtheircommerceinbancasorinsmallcraftswithouttheobjectionofthepartieswho dug"them.Precisely,Mercadov.MunicipalityofMacabebewasgivenapplicationtherein.However,thefacts,asthenfound bytheBureauofPublicWorks,donotsupportthefactualpremisethatthestreamsinquestionwereusedbythepublic "withouttheobjectionofthepartieswhodug"them.Wecannotthereforetakeascontrollingindeterminingthemeritsof thisthefactualpremisesandthelegalconclusioncontainedinsaidopinion. ThecaseatbarshouldbedifferentiatedfromthosecaseswhereWeheldillegaltheclosingand/orappropriationofriversor streamsbyownersofestatesthroughwhichtheyflowforpurposesofconvertingthemintofishpondsorotherworks. 23In thosecases,thewatercourseswhichweredammedwerenaturalnavigablestreamsandusedhabituallybythepublicfora longtimeasameansofnavigation.Consequently,theybelongtothepublicdomaineitherasriverspursuanttoArticle407 (1)oftheSpanishCivilCodeof1889oraspropertydevotedtopublicuseunderArticle339ofthesamecode.Whereas,the streamsinvolvedinthiscasewereartificiallymadeanddevotedtotheexclusiveuseofthehaciendaowner. Finally,SapangCansusu,beinganaturalstreamandacontinuationoftheCansusuRiver,admittedlyapublicstream, belongstothepublicdomain.ItsclosurethereforebythepredecessorsofRomanSantoswasillegal. ThepetitionfortheopeningofSapangMalaulingMaragul,QuiorangSilab,Nigui,Pepangebunan,NasiandBulacuswas dismissedbytheSecretaryofPublicWorksandCommunicationsandthecaseconsideredclosed.Thesaidadministrative decisionhasnotbeenquestionedinthisappealbyeitherparty.Hence,theyaredeemedexcludedherein. Alltheotherstreams,beingartificialanddevotedexclusivelyfortheuseofthehaciendaownerandhispersonnel,are declaredofprivateownership.Hence,thedamsacrossthemshouldnotheordereddemolishedaspublicnuisances. WithrespecttotheissueofcontemptofcourtonthepartoftheSecretaryofPublicWorksandCommunicationsandJulian Cargullofortheallegedissuanceofaadministrativedecisionsorderingdemolitionofdikesinvolvedinthiscaseafterthe writofinjunctionwasgrantedandserved,sufficeittostatethatthelowercourtmadenofindingofcontemptofcourt. Necessarily,thereisnoconvictionforcontempt reviewablebythis Court andanydiscussiononthematterwouldbe academic. WHEREFORE,thedecisionappealedfromisaffirmed,exceptastoSapangCansusuwhichisherebydeclaredpublicandas towhichthejudgmentofthelowercourtisreversed.Nocosts.Soordered.

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L19570September14,1967 JOSEV.HILARIO,JR.,plaintiffappellant, vs. THECITYOFMANILA,defendantappellee, DIRECTOROFPUBLICWORKS,CITYENGINEEROFMANILA,FERNANDOBUSUEGOandEUGENIO SESE,defendantsappellants, MAXIMOCALALANG,intervenorandDIRECTOROFMINES,intervenors. Calalang,Cruz&Caragforplaintiffappellant. OfficeoftheSolicitorGeneralfordefendantsappellants. CityFiscalofManilafordefendantappellee. RESOLUTION BENGZON,J.P.,J.: ThiscaseisbeforeUsanewonamotionforreconsiderationfiledbyplaintiffappellantHilario.Inthedecision promulgatedonApril27,1967,WeabsolveddefendantsCityofManilaandtheDirectorofPublicWorksfromliabilityto plaintiffforthematerialstakenfromthegravelpitbutdeclaredallthatportionofthesaidareatothewest,startingfroma line20meterseastofthecamachiletree,asstillpartofplaintiff'sproperty. Insupportofhismotion,plaintiffsubmitsthefollowinggrounds:(1)theSupremeCourtcannotmakenewfindingsof factunlessthosemadebythelowercourtwereinabuseofdiscretionorweremanifestlymistaken,absurdorimpossible;(2) theareawheredefendantsextractedgravelandsandisplaintiff'sproperty,and(3)thereisno"secondarybank"above(tothe westof)theNewAccretionArea. ItisonlywhentheissuesraisedintheappealarepurelyquestionsoflawthattheSupremeCourtisboundtorespect thefindingsoffactofthelowercourt,intheabsenceofabuseofdiscretion,orpatentmistake,absurdityorimpossibility. ButtheappealhereinvolvedquestionsoffactwhichrequiredUstoreviewtheentireevidenceonrecordandstatethefacts asestablishedthereby.*Plaintiffhimselfquestionedandassailedthelowercourt'sfindingthatonlythenorthern2/5ofthe areainquestionremainedashisproperty,1andassertedthatdefendantsextractedmaterialsfromwithinhispropertyandnot fromtheriverbedand/orriverbank.Thelattercontrovertedthis.So,Wehadtodeterminepreciselywheretheperipheriesof plaintiff'spropertywere,visavisthoseofthemovingwesternbank,andwheredefendantsextractedmaterialsfrom1945to 1955.ThefindingsoffactWestatedinthedecisionsoughttobereconsideredwereallbasedontheevidenceonrecord,with thenecessaryreferencesandcitationsthereto.Wecouldnotsimplyreviewthefactsfoundbythelowercourtunfavorableto theplaintiffandacceptthosefavorabletohimespeciallybecausethedefendantsalsoappealedfromthedecision. Withal,anewfindingoffacthadtobemadewhenareviewoftheentireevidenceonrecordshowed(1)thattherewas nothingtosupportthelowercourt'sconclusionthatthesitewherericeandcornwerefoundintheocularinspectionofJune 15,1951wasonthenorthern2/5portionand,furthermore,notbeingproperlydelineated,suchdeterminationwouldbe impossibleofproperexecution;(2)thatdefendantsdidnotcausetheunnaturalwideningoftheRiver,contrarytothelower court'sholding;and(3)thatdefendantsdidnotextractindiscriminatelyfromtheareainquestionduringtheentireperiodof theiroperations,butconfinedthemselvestodefiniteareasduringparticularperiodsoftime.Thelowercourtfailedtomake afindinginconformitywiththisestablishedfact. Onthesecondground,plaintiffarguesthatevenasearlyas1945,thegravelpitwasalreadyhighsinceitwasnot reachedbytheordinaryfloodsand,hence,itcouldnotbeconsideredapartofthewestriverbank.Plaintiffrelies,however, onCruz'report(Exh.1Calalang)statingthatfrom1950to1951,thehigherportionsofthegravelpit"whichusedtobe submerged",werenolongerinundated.Thisisundeniableproofthatbefore1950,eventhehigherportionswhichplaintiffis referringtowerecoveredbytheordinaryfloodsaccompanyingtheswellingoftheriver.Moreover,thenoninundationof thehigherareasduringtheperiod19501951waspartlyduetothemovementoftherivertotheeast. 2Itwasthiseastward movementthatcausedtheperipheryofthewestbanktorecedeeastwardalsountilitwaslocatedat20meterswestofthe camachiletreeduringthisperiod.

PlaintiffwouldalsoreferUstoaportionofSuiza'stestimony 3purportedlyshowingthatthiswitnessdidnotseethe Riverfloodedfrom1946to1949,incontradictiontoOurfindingthatSuizastatedthatfrom1947to1949,thedisputedarea wasalwaysinundated.Intheportionalludedto,however,Suizastatedthatitwasperhapsthreeyearsafter1945(whenhe startedworkingintheplant)orin1948whenhefirstsawtheRiverflooded,andthesecondtimewasonthefollowing year,orin1949.Anyway,theassumptionsoughttobedrawnerroneousasitisbasedon whatSuizadidnotsee, cannotovercomethepositivestatementsofwitnessesRossandVillafuerte,andExh.1Calalang. Regardingthelastpoint:Firstofall,Westatedinthedecisionsoughttobereconsidered,thatthephrase"secondary bankline"wasamereconvenientdesignationonly,foridentificationpurposes.Itwasusedtorefertoalateralzonewestof theNewAccretionArea.Wealsomadeitclearthattheperipheryofthewestbankwasmoreorlessinthatportionwhere the"secondarybankline"wasindicatedonlyfrom1945to1949,whentheRiverwasitselfalongtheNewAccretionArea site.Afterwards,thisperipheryrecededeastward,togetherwiththeRiver. Secondly,Weemphasizedthepointthatthereasondefendantswerebeingabsolvedfromliabilitywasduetothe absenceofsufficientevidenceshowingthattheyextractedmaterialsbeyondtherecedingperipheryofthewestbank.Itwas theywhofollowedtheeastwardmovementoftheriveranditswesternbank,notviceversa.Infact,whattheevidenceon recordrevealsisthatdefendantswerepreventedfromconductingoperationsbeyondtheouterbordersofthewesternbank. Inthepresentmotion,plaintiffhasnotpointedtoanyevidenceonrecordtoshowthecontrary. Thirdly,theevidencepointedtoinsupportofthisground,hadalreadybeenpasseduponandconsideredbyUsandno newmatterofsubstantial significanceisbeingbroughtforth.Wealreadystatedthatdefendants'witnesses weremore qualifiedandacquaintedwiththesitesofthedisputedarea.WitnessesLorenzo,AngelesandSantamariaarenotgeologists andithasnotbeenshownthattheywerealwaysinthedisputedareawhiledefendants'operationsweregoingon.The 4 portionofRoss'testimony ontheextentreachedbytheordinaryfloodsreferstotheyear1954only.Theheightofthe gravelpitasagreeduponintheocularinspectionofJune15,1951cannotbeconsideredconclusivesinceExh.1Calalang reportsthatafterthetyphoonsof1952,thelevelofthepitincreasedagain.1awphl.nt WHEREFORE,themotiontoreconsiderisherebydenied.Soordered. Concepcion,C.J.,Reyes,J.B.L.,Dizon,Makalintal,Zaldivar,Sanchez,Castro,AngelesandFernando,JJ.,concur.

 G.R.No.L31271April29,1974 ROMEOMARTINEZandLEONORSUAREZ,spouses,petitionersappellants, vs. HON.COURTOFAPPEALS,SECRETARYandUNDERSECRETARYOFPUBLICWORKS& COMMUNICATIONS,respondentsappellees. FloresMacapagal,OcampoandBalbastroforpetitionersappellants. OfficeoftheSolicitorGeneralFelixQ.Antonio,ActingAssistantSolicitorGeneralDominadorL.QuirozandSolicitor ConcepcionT.Agapinanforrespondentsappellees. ESGUERRA,J.:p PetitionforreviewbycertiorariofthejudgmentoftheCourtofAppealsdatedNovember17,1969initsCAG.R.27655R whichreversesthejudgment oftheCourt ofFirstInstanceofPampangainfavorofpetitionersappellants againstthe SecretaryandUndersecretaryofPublicWorks&CommunicationsinthecaseinstitutedtoannultheorderofNovember25, 1958ofrespondentSecretaryofPublicWorks&Communicationsdirectingtheremovalbythepetitionersofthedikesthey hadconstructedonLotNo.15856oftheRegisterofDeedsofPampanga,whichorderwasissuedpursuanttotheprovisions ofRepublicActNo.2056.ThedispositiveportionofthejudgmentofreversaloftheCourtofAppealsreadsasfollows: INVIEWOFTHEFOREGOINGCONSIDERATIONS,thejudgmentappealedfromisherebyreversed,andanother entered:[1]upholdingthevalidityofthedecisionreachedbytherespondentofficialsintheadministrativecase;[2] dissolvingtheinjunctionissuedbytheCourtbelow;and[3]cancellingtheregistrationofLotNo.2,thedisputedarea, andorderingitsreconveyancetothepublicdomain.Nocostsinthisinstance. ThebackgroundfactsarestatedbytheCourtofAppealsasfollows: ThespousesRomeoMartinezandLeonorSuarez,nowpetitionersappellees,aretheregisteredownersoftwo(2) parcelsoflandlocatedinLubao,Pampanga,coveredbytransfercertificateoftitleNo.15856oftheRegisterofDeeds ofthesaidprovince.Bothparcelsoflandarefishponds.Thepropertyinvolvedintheinstantcaseisthesecondparcel mentionedintheabovenamedtransfercertificateoftitle. ThedisputedpropertywasoriginallyownedbyonePaulinoMontemayor,whosecureda"tituloreal"overitwayback in 1883. After the death of Paulino Montemayor the said property passed to his successorsininterest, Maria MontemayorandDonataMontemayor,whointurn,soldit,aswellasthefirstparcel,toacertainPotencianoGarcia. BecausePotencianoGarciawaspreventedbythethenmunicipalpresidentofLubao,PedroBeltran,fromrestoringthe dikesconstructedonthecontestedproperty,theformer,onJune22,1914,filedCivilCaseNo.1407withtheCourtof FirstInstanceagainstthesaidPedroBeltrantorestrainthelatterinhisofficialcapacityfrommolestinghiminthe possessionofsaidsecondparcel,andonevendate,appliedforawritofpreliminaryinjunction,whichwasissued against said municipal president. The Court, by decision promulgated June 12, 1916, declared permanent the preliminaryinjunction,which,decision,onappeal,wasaffirmedbytheSupremeCourtonAugust21,1918.From June22,1914,thedikesaroundthepropertyinquestionremainedcloseduntilaportionthereofwasagainopenedjust beforetheoutbreakofthePacificWar. OnApril17,1925.PotencianoGarciaappliedfortheregistrationofbothparcelsoflandinhisname,andtheCourtof FirstInstanceofPampanga,sittingaslandregistrationcourt,grantedtheregistrationoverandagainsttheopposition oftheAttorneyGeneralandtheDirectorofForestry.PursuanttotheCourt'sdecision,originalcertificateoftitleNo. 14318,coveringsaidparcels1and2wasissuedtothespousesPotencianoGarciaandLorenzaSioson. TheseparcelsoflandweresubsequentlyboughtbyEmilioCruzdeDiosinwhosenametransfercertificateoftitleNo. 1421wasfirstissuedonNovember9,1925. Thereafter,theownershipofthesepropertieschangedhandsuntileventuallytheywereacquiredbythehereinappellee spouseswhoholdthembyvirtueoftransfercertificateoftitleNo.15856. Toavoidanyuntowardincident,thedisputantsagreedtoreferthemattertotheCommitteeonRiversandStreams,by thencomposedoftheHonorablePedroTuason,atthattimeSecretaryofJustice,aschairman,andtheHonorable SalvadorAranetaandVicenteOrosa,SecretaryofAgricultureandNationalResourcesandSecretaryofPublicWorks andCommunications,respectively,asmembers.ThiscommitteethereafterappointedaSubCommitteetoinvestigate thecaseandtoconductanocularinspectionofthecontestedproperty,andonMarch11,1954,saidSubCommittee submitteditsreporttotheCommitteeonRiversandStreamstotheeffectthatParcelNo.2oftransfercertificateof

RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION

titleNo.15856wasnotapublicriverbutaprivatefishpondownedbythehereinspouses. OnJuly7,1954,theCommitteeonRiversandStreamsrendereditsdecisionthedispositivepartofwhichreads: "Inviewoftheforegoingconsiderations,thespousesRomeoMartinezandLeonorSuarezshouldberestoredtothe exclusivepossession,useandenjoymentofthecreekinquestionwhichformspartoftheirregisteredpropertyandthe decisionofthecourtsonthematterbegivenfullforceandeffect." ThemunicipalofficialsofLubao,ledbyActingMayorMarianoZagad,apparentlyrefusedtorecognizetheabove decision,becauseonSeptember1,1954,thespousesRomeoMartinezandLeonorSuarezinstitutedCivilCaseNo. 751beforetheCourtofFirstInstanceofPampangaagainstsaidMayorZagad,prayingthatthelatterbeenjoinedfrom molesting them in their possession of their property and in the construction of the dikes therein. The writ of preliminaryinjunctionappliedforwasissuedagainsttherespondentmunicipalMayor,whoimmediatelyelevatedthe injunctionsuitforreviewtotheSupremeCourt,whichdismissedMayorZagad'spetitiononSeptember7,1953.With thisdismissalorderhereinappelleespousesproceededtoconstructthedikesinthedisputedparcelofland. Somefour(4)yearslater,andwhileCivilCaseNo.751wasstillpendingtheHonorableFlorencioMoreno,then SecretaryofPublicWorksandCommunications,orderedanotherinvestigationofthesaidparcelofland,directingthe appelleeshereintoremovethedikestheyhadconstructed,onthestrengthoftheauthorityvestedinhimbyRepublic ActNo.2056,approvedonJune13,1958,entitled"AnActToProhibit,Removeand/orDemolishtheConstructionof Dams.Dikes,OrAnyOtherWallsInPublicNavigableWaters,OrWaterwaysandInCommunalFishingGrounds,To RegulateWorksinSuchWatersorWaterwaysAndInCommunalFishingGrounds,AndToProvidePenaltiesForIts Violation,AndForOtherPurposes.1Thesaidorderwhichgaverisetotheinstantproceedings,embodiedathreat thatthedikeswouldbedemolishedshouldthehereinappelleesfailtocomplytherewithwithinthirty(30)days. ThespousesMartinezrepliedtotheorderbycommencingonJanuary2,1959thepresentcase,whichwasdecidedin theirfavorbythelowerCourtinadecisiondatedAugust10,1959,thedispositivepartofwhichreads: "WHEREFORE,inviewoftheforegoingconsiderations,theCourtherebydeclaresthedecision,Exhibit S,renderedbytheUndersecretaryofPublicWorksandCommunicationsnullandvoid;declaresthe preliminary injunction, hereto for issued, permanent, and forever enjoining both respondents from molestingthespousesRomeoMartinezandLeonorSuarezintheirpossession,useandenjoymentoftheir propertydescribedinPlanPsu9992andreferredtointheirpetition." "Withoutpronouncementastocosts." "SOORDERED." AsagainstthisjudgmentrespondentofficialsoftheDepartmentofPublicWorksandCommunicationstookthe instantappeal,contendingthatthelowerCourterred: 1.InholdingthatthenSenatorRogeliodelaRosa,complainantintheadministrativecase,isnotaninterestedparty andhislettercomplaintdatedAugust15,1958didnotconferjurisdictionupontherespondentUndersecretaryof PublicWorksandCommunicationstoinvestigatethesaidadministrativecase; 2.InholdingthatthedutytoinvestigateencroachmentsuponpublicriversconferredupontherespondentSecretary underRepublicActNo.7056cannotbelawfullydelegatedbyhimtohissubordinates; 3.InholdingthattheinvestigationorderedbytherespondentSecretaryinthiscaseisillegalonthegroundthatthe saidrespondentSecretaryhasarrogateduntohimselfthepower,whichhedoesnotpossess,ofreversing,making nugatory,andsettingasidethetwolawfuldecisionsoftheCourtExhibitsKandI,andevenannullingthereby,the onerenderedbythehighestTribunaloftheland; 4.Innotsustainingrespondent'sclaimthatpetitionershavenocauseofactionbecausethepropertyindisputeisa publicriverandinholdingthatthesaidclaimhasnobasisinfactandinlaw; 5.Innotpassinguponanddisposingofrespondent'scounterclaim; 6.Innotsustainingrespondent'sclaimthatthepetitionshouldnothavebeenentertainedonthegroundthatthe petitionershavenotexhaustedadministrativeremedies;and 7.Inholdingthatthedecisionoftherespondentsisillegalonthegroundthatitviolatestheprinciplesthatlaws shallhavenoretroactiveeffectunlessthecontraryisprovidedandinholdingthatthesaidRepublicActNo.2056 isunconstitutionalonthegroundthatrespondents'threatofprosecutingpetitionersunderSection3thereofforacts donefouryearsbeforeitsenactmentrendersthesaidlawexpostfacto. TheCourtofAppealssustainedtheabovementionedassignmentoferrorscommittedbytheCourtofFirstInstanceof Pampangaand,aspreviouslystated,reversedthejudgmentofthelattercourt.Fromthisreversalthisappealbycertiorari wastaken,andbeforethisCourt,petitionersappellantsassignedthefollowingerrorsallegedlycommittedbytheCourtof Appeals: 1.THECOURTOFAPPEALSERREDINDECLARINGINTHEINSTANTCASETHATPARCELNO.2OF TRANSFER CERTIFICATE OF TITLE NO. 15856 IS A PUBLIC RIVER AND ORDERING THE CANCELLATIONOFITSREGISTRATIONBECAUSETHISCONSTITUTESACOLLATERALATTACKON

ATORRENSTITLEINVIOLATIONOFTHELAWANDTHEWELLSETTLEDJURISPRUDENCEONTHE MATTER. 2. THE COURT OF APPEALS ERRED IN REOPENING AND RELITIGATING THE ISSUE AS TO WHETHER OR NOT LOT NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856 REGISTER OF DEEDSOFPAMPANGA,ISAPUBLICRIVERNOTWITHSTANDINGTHEFACTTHATTHISISSUEHAS BEENLONGRESOLVEDANDSETTLEDBYTHELANDREGISTRATIONCOURTOFPAMPANGAIN LANDREGISTRATIONPROCEEDINGNO.692ANDISNOWRESJUDICATA. 3.THECOURTOFAPPEALSERREDINORDERINGTHECANCELLATIONOFTHEREGISTRATIONOF LOTNO.2OFTRANSFERCERTIFICATEOFTITLENO.15856NOTWITHSTANDINGTHEFACTTHAT THE TORRENS TITLE COVERING IT HAS BEEN VESTED IN THE PETITIONERS WHO ARE THE SEVENTHOF THESUCCESSIVEINNOCENTPURCHASERS THEREOF AND WHOIN PURCHASING THESAMERELIEDONTHEPRINCIPLETHATTHEPERSONSDEALINGWITHREGISTEREDLAND NEEDNOTGOBEHINDTHEREGISTERTODETERMINETHECONDITIONOFTHEPROPERTY. The1stand2ndassignmentoferrors,beingcloselyrelated,willbetakenuptogether. TherulingoftheCourtofAppealsthatLotNo.2coveredbyTransferCertificateofTitleNo.15856ofthepetitioners appellantsisapublicstreamandthatsaidtitleshouldbecancelledandtherivercoveredrevertedtopublicdomain,is assailedbythepetitionersappellantsasbeingacollateralattackontheindefeasibilityofthetorrenstitleoriginallyissuedin 1925infavorofthepetitionersappellants'predecessorininterest,PotencianoGarcia,whichisviolativeoftheruleofres judicata.ItisarguedthatasthedecreeofregistrationissuedbytheLandRegistrationCourtwasnotreopenedthrougha petitionforreviewfiledwithinone(1)yearfromtheentryofthedecreeoftitle,thecertificateoftitleissuedpursuant theretoinfavoroftheappellantsforthelandcoveredtherebyisnolongeropentoattackunderSection38oftheLand Registration Act (Act 496) and the jurisprudence on the matter established by this Tribunal. Section 38 of the Land RegistrationActcitedbyappellantsexpresslymakesadecreeofregistration,whichordinarilymakesthetitleabsoluteand indefeasible,subjecttotheexemptionstatedinSection39ofthesaidActamongwhichare:"liens,claimsorrightsarising orexistingunderthelawsorConstitutionoftheUnitedStatesorofthePhilippineIslandswhichthestatuteofthePhilippine Islandscannotrequiretoappearofrecordintheregistry." AtthetimeoftheenactmentofSection496,onerightrecognizedorexistingunderthelawisthatprovidedforinArticle 339oftheoldCivilCodewhichreadsasfollows: Propertyofpublicownershipis: 1.Thatdestinedtothepublicuse,suchasroads,canals,rivers,torrents,ports,andbridgesconstructedbytheState, andbanksshores,roadsteads,andthatofasimilarcharacter.(Par.1) Theabovementionedpropertiesarepartsofthepublicdomainintendedforpublicuse,areoutsidethecommerceofmen and,therefore,notsubjecttoprivateappropriation.(3Manresa,6thed.101104.) InLedesmav.MunicipalityofIloilo,49Phil.769,thisCourtheld: AsimplepossessionofacertificateoftitleundertheTorrenssystemdoesnotnecessarilymakethepossessoratrue ownerofallthepropertydescribedtherein.IfapersonobtainstitleundertheTorrenssystemwhichincludesby mistakeoroversight,landswhichcannotberegisteredundertheTorrenssystem,hedoesnotbyvirtueofsaid certificatealonebecometheownerofthelandillegallyincluded. InMercadov.MunicipalPresidentofMacabebe,59Phil.592,itwasalsosaid: ItisuselessfortheappellantnowtoallegethatshehasobtainedcertificateoftitleNo.329inherfavorbecausethe saidcertificatedoesnotconferuponheranyrighttothecreekinquestion,inasmuchasthesaidcreek,beingofthe publicdomain,isincludedamongthevariousexceptionsenumeratedinSection39ofAct496towhichthesaid certificateissubjectbyexpressprovisionofthelaw. ThesamerulingwaslaiddowninDirectorofLandsv.RomanCatholicBishopofZamboanga,61Phil.644,asregards publicplaza. InDizon,etal.v.Rodriguez,etal.,G.R.No.L2030001andG.R.No.L2035556,April30,1965,20SCRA704,itwas heldthattheincontestableandindefeasiblecharacterofaTorrenscertificateoftitledoesnotoperatewhenthelandcovered therebyisnotcapableofregistration. Itis,therefore,clearthattheauthoritiescitedbytheappellantsastotheconclusivenessandincontestabilityofaTorrens certificateoftitledonotapplyhere.TheLandRegistrationCourthasnojurisdictionovernonregisterableproperties,such aspublicnavigableriverswhicharepartsofthepublicdomain,andcannotvalidlyadjudgetheregistrationoftitleinfavor of a private applicant. Hence, the judgment of the Court ofFirst Instance of Pampanga as regards the Lot No. 2of Certificate of Title No. 15856 in the name of petitionersappellants may be attacked at any time, either directly or collaterally,bytheStatewhichisnotboundbyanyprescriptiveperiodprovidedforbytheStatuteofLimitations(Article 1108,par.4,newCivilCode).TherightofreversionorreconveyancetotheStateofthepublicpropertiesfraudulently registeredandwhicharenotcapableofprivateappropriationorprivateacquisitiondoesnotprescribe.(Republicv.Ramona

Ruiz,etal.,G.R.No.L23712,April29,1968,23SCRA348;Republicv.Ramos,G.R.No. L15484,January31,1963,7SCRA47.) Whenitcomestoregisteredproperties,thejurisdictionoftheSecretaryofPublicWorks&CommunicationsunderRepublic Act2056toordertheremovalorobstructiontonavigationalongapublicandnavigablecreekorriverincludedtherein,has beendefinitelysettledandisnolongeropentoquestion(Lovinav.Moreno,G.R.NoL17821,November29,1963,9SCRA 557;Taleonv.SecretaryofPublicWorks&CommunicationsG.R.No.L24281,May16,1961,20SCRA69,74). TheevidencesubmittedbeforethetrialcourtwhichwaspasseduponbytherespondentCourtofAppealsshowsthatLot No.2(PlanPsu992)ofTransferCertificateofTitleNo.15856,isariverofthepublicdomain.Thetechnicaldescriptionof bothLotsNos.1and2appearinginOriginalCertificateofTitleNo.14318oftheRegisterofDeedsofPampanga,from whichthepresentTransferCertificateofTitleNo.15856wasderived,confirmsthefactthatLotNo.2embracedinsaidtitle isboundedpracticallyonallsidesbyrivers.AsheldbytheCourtofFirstInstanceofPampangainCivilCaseNo.1247for injunctionfiledbythepetitioners'predecessorsininterestagainsttheMunicipalMayorofLubaoanddecidedin1916(Exh. "L"),LotNo.2isabranchofthemainriverthathasbeencoveredwithwatersincetimeimmemorialand,therefore,partof thepublicdomain.ThisfindinghavingbeenaffirmedbytheSupremeCourt,thereisnolongeranydoubtthatLotNo.2of TransferCertificateofTitleNo.15856ofpetitionersisariverwhichisnotcapableofprivateappropriationoracquisitionby prescription. (Palanca v. Com. of the Philippines, 69 Phil. 449; Meneses v. Com. of the Philippines, 69 Phil. 647). Consequently,appellants'titledoesnotincludesaidriver. II Asregardsthe3rdassignmentoferror,thereisnoweightintheappellants'argumentthat,beingapurchaserforvalueandin goodfaithofLotNo.2,thenullificationofitsregistrationwouldbecontrarytothelawandtotheapplicabledecisionsof theSupremeCourtasitwoulddestroythestabilityofthetitlewhichisthecoreofthesystemofregistration.Appellants cannotbedeemedpurchasersforvalueandingoodfaithasinthedeedofabsoluteconveyanceexecutedintheirfavor,the followingappears: 6.Quelasegundaparcelaarribadescritaymencionadaestaactualmenteabierta,sinmaleconesyexcluidadela primeraparcelaenvirtuddelaOrdenAdministrativeNo.103,talcomofueenmendada,delpasadoregimeno Gobierno. 7.QueloscitadoscompradoresRomeoMartinezyLeonorSuarezseencargandegestionardelasautoridades correspondientesparaquelacitadasegundaparcelapuedaserconvertidadenuevoenpesqueria,corriendoacuenta ycargodelosmismostodoslosgastos. 8.Queenel casodequedichoscompradoresnopudiesenconseguirsuspropositosdeconvertirdenuevoen pesqueralacitadasegundaparcela,losaquivendedoresnodevolveranningunacantidaddedineroalosreferidos compradores;estees,nosedisminuiriatelpreciodeestaventa.(Exh.13a,p.52,respondentsrecordofexhibits) Thesestipulationswereacceptedbythepetitionersappellantsinthesameconveyanceinthefollowingterms: RomeoMartinezyLeonorSuarez,mayoresdeedad,filipinosyresidentesenalBarriodeJuloMunicipiode Malabon,ProvinciadeRizal,porlapresente,declaranqueestanenteradosdelcontenidodeestedocumentoylo aceptanenlosprecisosterminosenquearribauedanconsignados.(Exh.13a,ibid) Beforepurchasingaparcelofland,itcannotbecontendedthattheappellantswhowerethevendeesdidnotknowexactly the condition of the land that they were buying and the obstacles or restrictions thereon that may be put up by the governmentinconnectionwiththeirprojectofconvertingLotNo.2inquestionintoafishpond.Nevertheless,theywillfully andvoluntarilyassumedtherisksattendanttothesaleofsaidlot.Onewhobuyssomethingwithknowledgeofdefectorlack oftitleinhisvendorcannotclaimthatheacquireditingoodfaith(LeungLeev.StrongMachineryCo.,etal.,37Phil.664). Therulingthatapurchaserofaregisteredpropertycannotgobeyondtherecordtomakeinquiriesastothelegalityofthe titleoftheregisteredowner,butmayrelyontheregistrytodetermineifthereisnolienorencumbrancesoverthesame, cannotbeavailedofasagainstthelawandtheacceptedprinciplethatriversarepartsofthepublicdomainforpublicuse andnotcapableofprivateappropriationoracquisitionbyprescription. FORALLTHEFOREGOING,thejudgmentoftheCourtofAppealsappealedfromisinaccordancewithlaw,andthesame isherebyaffirmedwithcostsagainstthepetitionersappellants. Makalintal,C.J.,Castro,TeehankeeandMuozPalma,JJ.,concur. Makasiar,J.,isonleave.

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L9069March31,1915 THEMUNICIPALITYOFCAVITE,plaintiffappellant, vs. HILARIAROJASandherhusbandTIUNGSIUKO,aliasSIWA,defendantsappellees. AttorneyGeneralVillamorforappellant. J.Y.Pinzonforappellees. TORRES,J.: AppealfiledthroughbillofexceptionsbytheAttorneyGeneral,representingtheplaintiffmunicipalityofCavite,fromthe judgmentofMarch27,1913,wherebytheHonorableHerbertD.Gale,judge,dismissedthecomplaintwithcostsagainstthe plaintiffparty,declaringthatthesaidmunicipalityhadnorighttorequirethatthedefendantsvacatethelandinquestion. By an instrument dated December 5, 1911, afterwards amended on March 14, 1912, the provincial fiscal of Cavite, representingthemunicipalityofthatname,filedacomplaintintheCourtofFirstInstanceofsaidprovinceallegingthatthe plaintiffmunicipalcorporation,dulyorganizedandconstitutedinaccordancewithActNo.82,andasthesuccessortothe rightssaidentityhadunderthelateSpanishgovernment,andbyvirtueofActNo.1039,hadexclusiveright,controland administrationoverthestreets,lanes,plazas,andpublicplacesofthemunicipalityofCavite;thatthedefendants,byvirtue ofaleasesecuredfromtheplaintiffmunicipality,occupyaparcelofland93squaremetersinareathatformspartothe publicplazaknownunderthenameofSoledad,belongingtothemunicipalityofCavite,thedefendantshavingconstructed thereonahouse,throughpaymenttotheplaintiffforoccupationthereofofarentalofP5,58aquarterinadvance,said defendantsbeingfurthermoreobligatedtovacatetheleasedlandwithinsixtydayssubsequenttoplaintiff'sdemandtothat effect;thatthedefendantshavebeenrequiredbythemunicipalitytovacateanddeliverpossessionofthesaidland,butmore thanthesixtydayswithinwhichtheyhavingdonesotodate;thattheleasesecuredfromthemunicipalityofCavite,by virtuewhereofthedefendantsoccupythelandthatisthesubjectmatterofthecomplaint,isultraviresandthereforeipso factonullandvoidandofnoforceoreffect,forthesaidlandisanintegralportionofapublicplazaofpublicdomainand use,andthemunicipalcouncilofCavitehasneveratanytimehadanypowerorauthoritytowithdrawitfrompublicuse, andtoleaseittoaprivatepartyforhisownuse,andsothedefendantshaveneverhadanyrightoroccupyortoretainthe saidlandunderleasehold,orinanyotherway,theiroccupationoftheparcelbeingfurthermoreillegal;andthereforeprayed thatjudgmentberendereddeclaringthatpossessionofthesadlandlieswiththeplaintiffandorderingthedefendantsto vacatethelandanddeliverpossessionthereoftosaidplaintiff,withthecostsagainstthedefendants. Thedemurrerfiledtotheforegoingcomplainthavingbeenoverruled,withexceptiononthepartofthedefendants,intheir answerofApril10,1912,theyadmittedsomeoftheallegationscontainedinthecomplaintbutdeniedthattheparcelofland whichtheyoccupyandtowhichthecomplaintrefersformsandintegralpartofPlazaSoledad,orthattheleasesecuredby themfromthemunicipalityofCavitewasnullandvoidandultravires,statingiftheyrefusedtovacatesaidlanditwas becausetheyhadacquiredtherightofpossessionthereof.Asaspecialdefensetheyallegedthat,accordingtothelease,they couldonlybeorderedtovacatethelandleasedwhentheplaintiffmunicipalitymightneeditfordecorationorotherpublic use,whichdoesnotapplyinthepresentcase;andinacrosscomplainttheyallegedthatonthelandwhichisthesubject matterofthecomplaintthedefendantshaveerectedahouseofstrongmaterials,assessedatP3,000,whichwasconstructed underalicensesecuredfromtheplaintiffmunicipality;thatiftheyshouldbeorderedtovacatethesaidlandtheywould sufferdamagestotheextentofP3,000,whereforetheyprayedthattheybeabsolvedfromthecomplaint,orinthecontrary casethattheplaintiffbesentencedtoindemnifytheminthesumofP3,000asdamages,andtopaythecosts. Afterhearingofthecase,whereinbothpartiessubmittedparolanddocumentaryevidence,thecourtrenderedthejudgment thathebeenmentioned,wheretocounselforthemunicipalityexceptedandinwritingaskedforareopeningofthecaseand theholdingofanewtrial.Thismotionwasdenied,withexceptiononthepartoftheappellant,andtheforwardedtothe clerkofthiscourt. Itisdulyprovenintherecordthat,uponpresentationofanapplicationbyHilariaRojas,hemunicipalcouncilofCaviteby resolutionNo.10,datedJuly3,107,ExhibitC,leasedtothesaidRojassome70or80squaremetersofPlazaSoledad,on conditionthatshepayrentquarterlyinadvanceaccordingtotheschedulefixedinOrdinanceNo.43,landwithinsixtydays

subsequenttonotificationtothateffect.Therecordshows(receipts,Exhibit1)thatshehaspaidthelandtaxonthehouse erectedonthelot. TheboundarylinebetweenthepropertiesofthemunicipalityofCaviteandthenavalreservation,asfixedinActNo.1039 ofthePhilippineCommission,appearsintheplanpreparedbyanavalengineerandsubmittedasevidencebytheplaintiff, ExhibitCofcivilcaseNo.274oftheCavitecourtandregisteredinthiscourtasNo.9071.Accordingtosaidplan, defendant'shouseiserectedonaplatofgroundthatformspartofthepromenadecalledPlazaSoledad,andthiswasalsoso provenbythetestimonyoftheplaintiff'switnesses. Bysection3ofthesaidActNo.1039,passedJanuary12,1904,thePhilippineCommissiongrantedtothemunicipalityof CaviteallthelandincludedinthetractcalledPlazaSoledad.InthecaseofNicolasvs.Jose(6Phil.Rep.,589),whereinthe municipalityofCavite,representedbyitspresidentCatalinoNicolas,soughtinscriptioninitsnameofthelandcomprisedin thesaidPalzaSoledad,withobjectiononthepartofMariaJoseetal.whoissoughtthatinscriptionbedecreedintheir nameoftheparcelsoflandinthisplazaoccupiedbythem,thiscourtdecidedthatneitherthemunicipalitynortheobjectors wereentitledtoinscription,forwithrespecttotheobjectorssaidplazabelongedtothemunicipalityofCaviteandwith respecttothelatterthesaidPlazaSoledadwasnottransferablepropertyofthatmunicipalitytobeinscribedinitsname, becauseheintentionofActNo.1039wasthatthesaidplazaandotherplacesthereinenumeratedshouldbekeptopenfor public transit; herefore there can be no doubt that the defendant has no right to continue to occupy the land of the municipalityleasedbyher,foritisanintegralportionofPlazaSoledad,whichifforpublicuseandisreservedforthe commonbenefit. Accordingtoarticle344oftheCivilCode:"Propertyforpublicuseinprovincesandintownscomprisestheprovincialand townroads,thesquares,streets,fountains,andpublicwaters,thepromenades,andpublicworksofgeneralservicesupported bysaidtownsorprovinces." ThesaidPlazaSoledadbeingapromenadeforpublicuse,themunicipalcouncilofCavitecouldnotin1907withdrawor excludefrompublicuseaportionthereofinordertoleaseitforthesolebenefitofthedefendantHilariaRojas.Inleasinga portionofsaidplazaorpublicplacetothedefendantforprivateusetheplaintiffmunicipalityexceededitsauthorityinthe exerciseofitspowersbyexecutingacontractoverathingofwhichitcouldnotdispose,norisitempoweredsotodo. TheCivilCode,articles1271,prescribesthateverythingwhichisnotoutsidehecommerceofmanmaybetheobjectofa contract,andplazasandstreetsareoutsideofthiscommerce,aswasdecidedbythesupremecourtofSpaininitsdecisionof February12,195,whichsays:"Communalthingsthatcannotbesoudbecausetheyarebytheirverynatureoutsideof commercearethoseforpublicuse,suchastheplazas,streets,commonlands,rivers,fountains,etc." Therefore,itmustbeconcludedthatthecontract,ExhibitC,wherebyhemunicipalityofCaviteleasedtoHilariaRojasa portionofthePlazaSoledadisnullandvoidandofnoforceoreffect,becauseitiscontrarytothelawandthethingleased cannotbetheobjectofacontract.Onthehyphotesisthatthesaidleaseisnullandvoidinaccordancewiththeprovisionsof article1303oftheCivilCode,thedefendantmustrestoreanddeliverpossessionofthelanddescribedinthecomplaintto themunicipalityofCavite,whichinitsturnmustrestoretothesaiddefendantallthesumsitmayhavereceivedfromherin thenatureofrentalsjustassoonassherestoresthelandimproperlyleased.Forthesamereasonsashavebeensetforth,and assaidcontractisnullandvoidinitsorigin,itcanproducenoeffectandconsequentlythedefendantisnotentitledtoclaim thattheplaintiffmunicipalityindemnityherforthedamagesshemaysufferbytheremovalofherhousefromthesaidland. Foralltheforegoingreasonswemustreversethejudgmentappealedfromanddeclare,aswedodeclare,thattheland occupiedbyHilariaRojasformspartofthepublicplazacalledSoledad,andastheleaseofsaidparceloflandisnulland void,weorderthedefendanttovacateitandreleasethelandinquestionwithinthirtydays,leavingitclearedasitwas beforehroccupation.Thereisnogroundfortheindemnitysoughtinthenatureofdamages,butthemunicipalitymustinits turntothedefendanttherentalscollected;withoutfindingastothecosts.Soordered. Arellano,C.J.,JohnsonandAraullo,JJ.,concur. Moreland,J.,concursintheresult.

CommonwealthvsMeneses38OG123,p.2389

G.R.No.L36610June18,1976 REPUBLICOFTHEPHILIPPINESandDIRECTOROFLANDS,petitioners, vs. HON.AMADOB.REYES,asJudgeoftheCourtofFirstInstanceofBataan,BranchII,and ELISEOPALATINO, respondents.

SolicitorGeneralEstelitoP.Mendoza,AssistantSolicitorGeneralBernardoP.PardoandSolicitorLeonardoI.Cruzforpetitioners. FiloteoT.Banzonforrespondents.

RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION

ESGUERRA,J.: Thisisanappealviacertiorariseekingtoreversethefinalorder(decision)oftheCourtofFirstInstanceofBataan,Branch II,approvingtheregistrationofaparceloflandappliedforbythehereinprivaterespondentandthesettingasideofthe orderdenyingpetitioners'motionforreconsiderationofsaiddecision. Petitionersregisteredtwoassignmentsoferrorallegedlycommittedbythetrialcourt,towit: I THE LOWER COURT ERRED IN RULING THAT THE APPLICANT POSSESSED AN IMPERFECT AND INCOMPLETETITLETHATISREGISTERABLE; II THELOWERCOURTERREDINNOTGRANTINGTHEOPPOSITORGOVERNMENTTHEOPPORTUNITYTO PROVETHATTHELANDAPPLIEDFORWASINALIENABLE.1 Arguingontheseallegederrors,petitioners,inthefirsterroraverredthat"BythedecisionoftheCadastralCourtrendered beforethelastworldwar,Lot622oftheMarivelesCadastrewasdeclaredpublicland...Suchbeingthecase,thelower CourtiswithoutjurisdictionoverthesubjectmatteroftheapplicationforvoluntaryregistrationunderAct496filedby respondentEliseoPalatino.Thelandsubjectthereofhavingbeensubjectedtocompulsoryregistrationproceedingsunderthe CadastralActanddeclaredpubliclandperdecisionoftheCadastralCourt,thesamelandcannolongerbethesubjectof registrationbyvoluntaryproceedingsunderAct496...Theruling(ofthecourtbelow)isplainlyerroneous.Itignoresthe conclusivenessofsaidjudgmentconstitutingresjudicata.Thepreviouscadastralproceedingwasinrem,bindingonthe wholeworld."2 Astotheseconderror,petitionersargued:"...thelowercourtruledthat'notthewholeofMariveleswasdeclaredaU.S. MilitaryReservationandthereisnoevidencetoshowthattheareainquestion,whichispartofLot626ofthecadastral surveyofMariveles,iswithintheU.S.MilitaryReservation." Precisely,thelowerCourtdeprivedtheoppositorGovernmentoftheopportunitytoadduceevidenceonthepointbydenying itsmotionforreconsideration.TruethattheSolicitorGeneralwasgivennoticeoftheinitialhearingsetonDecember21, 1972,butastherecordwasnotforwardedtohimpursuanttolaw(Sections50,51,CA141,asamended),hecouldnotfilea timelyoppositiontotheapplicationonorbeforetheinitialdateofhearing.3 Forhispart,privaterespondentEliseoPalatinoanswersthattheaforecitedassignmentoferrorsallegedbythepetitioners"... hingesuponthedeterminationofthefollowingissues...: 1.Whetherthefailureonthepartofthepetitionerstofileanoticeofappealwiththelowercourtandtoservecopy ofthesametotherespondent,astheoriginal record,thepetition,themotiontodismissandthebriefofthe petitioners show, the judgment or order becomes final, and as a consequence, this Honorable Court has no jurisdictiontoalterthesame; 2.WhetherthisHonorableCourtcanconsiderpetitioners'evidenceinsupportoftheirassignmentoferrors,which evidencewasnotformallyofferedduringthetrialasthepetitionersweredeclaredindefaultanddidnotintroduce anyevidenceandtheycontinuetobeindefaultsincetheydidnotappealfromtheorderdeclaringthemindefault; and, 3.Sincetheappealraisesquestionsoffactsorevenmixedquestionsoffactsandlaw,whetherunderSection2, RepublicActNo.5440,approvedonSeptember9,1968,amendingSection171,JudiciaryAct,thepetitionersmust appealtotheCourtofAppealsandnottotheSupremeCourt.4 Tounderstandtheseissues,Weshallexaminethefactsofthiscaseastheyappearintherecords,towit: 1.OnSeptember6,1972,thehereinprivaterespondentEliseoPalatinofiledwiththerespondentcourtanapplicationfor registrationoftitleunderActNo.496,theLandRegistrationLaw,ofaparceloflandsituatedinBo.Cabcaben,Municipality ofMariveles,BataanProvince,containinganareaof22,744sq.meters,moreorless;5 2.OnOctober20,1972,noticeofinitialhearingwasdulyissuedbytheCommissionerofLandRegistration;6 3.OnDecember21,1972,respondenttrialcourtissuedanorderofgeneraldefaultagainstallpersons,includingherein

petitionertheDirectorofLands,forthefailureofanyone,includingthesaidDirectorofLandsorhisrepresentative,to appearandopposetheapplication;7 4.NoticeofthisorderofgeneraldefaultwasreceivedbypetitionersonJanuary17,1973;8 5.OnJanuary5,1973,respondentcourtissueditsorder(decision)grantingtheapplicationforregistration,thedispositive portionofwhichreadsasfollows: WHEREFORE,findingthattheapplicantisentitledtotheregistrationofthisparceloflandknownasLotNo.622 portion of the Mariveles Cadastre, the Court hereby adjudicates said parcel of land subject matter of this applicationdescribedonplanSgs4377DanditstechnicaldescriptioninfavorofEliseoPalatino,oflegalage, Filipino,marriedtoBeinvenidaM.Palatinoandaresidentof13SanVicenteStreet,SanFranciscodelMonte, QuezonCity. Oncethedecisionbecomesfinal,letcorrespondingdecreeofregistrationissue. xxxxxxxxx9 6.Noticeoftheorder(decision)wasreceivedbyhereinpetitionersonJanuary17,1973;10 7.OnFebruary14,1973,petitionersfiledwiththetrialcourtamotiontolifeorderofgeneraldefaultandforreconsideration oftheorder(decision)onthegroundthat...contrarytothespecificprovisionsofSections50and51ofC.A.No.141the original recordofthecasewas not forwardedtotheOffice oftheSolicitorGeneral,whichthus prevented him from investigatingallthefactsallegedintheapplicationorotherwisebroughttohisattention...andthattheorder(decision) adjudicatingthelotappliedforbytheapplicant,respondentPalatino,iswithoutbasisinfactbecausetheapplicantcouldnot havepossessedthelandappliedforatleastthirtyyearsimmediatelyprecedingtheapplicationforthereasonthattheland wasoriginallypartoftheUnitedStatesMilitaryReservationreservedbythethenGovernorGeneralunderProclamationNo. 10datedFebruary16,1925anditwasonlyonJune10,1967thatthePresidentofthePhilippinesbyProclamationNo.210B revokedProclamationNo.10anddeclaredsuchportionoftheareathereinembracedincludingthelandappliedfor,asare classifiedasalienableanddisposable,openedfordispositionundertheprovisionsofthePublicLandAct."11 8.InanorderdatedMarch26,1973,thetrialcourtdeniedthepetitioners'motiontolifttheorderofgeneraldefaultandfor reconsiderationoftheorder(decision)onthegroundthatthesamewaswithoutmerit;12 9.OnApril5,1973,thepresentappealbycertiorariwasfiledwiththisCourt. Ofthepointsand/orissuesraisedbybothpartieshereinthoseregisteredbytherespondentsappeartobeinneedofOur priorattentionandresolutionbecausetheyinvolvejurisdictionalquestions.Theyare: a)Theappealwasfiledoutsidethereglementary30dayperiodfromreceiptoftheorderordecision; b)TheappealwasfileddirecttotheSupremeCourtwithoutrilinganoticeofappealwiththetrialcourt; c)Respondenthadnotbeenservedcopyoftheappeal.13 ThisCourthadreviewedtherecordsofthiscaseanditisconvincedthatcertainessentialrequisitesofprocedurallawwere notcompliedwithbythehereinpetitioners.Therewasafailuretoperfectanappealandconsequentlythisfailurehadthe effect of renderingfinal and executorythejudgment or final order ofthetrial court.This fact certainlydeprives the appellatecourt,thisCourt,ofjurisdictiontoentertaintheappeal. InviewoftheconsistentstandofthisTribunalthattheperfectionofanappealinaccordancewithlawistheonlylegalbasis foranappellatecourttoacquirejurisdictionandentertheappeal,thisCourtfindsthattheonlyissuetoberesolvedinthis case,relegatingallotherquestionsraisedbybothpartieshereintothebackground,istheissueofwhetherornotanappeal hadbeenperfectedontimebythehereinpetitioners.Thisisajurisdictionalquestion. Sincetherulesinordinarycivilactionsandthoseappliedinlandregistrationproceedingsarethesame,14Section3ofRule 41ofthenewRulesofCourt,inrelationwithSection17ofthesameRule41,appeartobepertinenttothematterathand. SaidSection3reads: Section3.Howappealistaken.Appealmaybetakenbyservingupontheadversepartyandfilingwiththetrial courtwithinthirty(30)daysfromnoticeoforderorjudgment,anoticeofappeal,anappealbond,andarecordon appeal... Ontheotherhand,Section17oftheaforementionedRule,dealingwithappealincertiorari,provides: Section17.Appealincertiorari,prohibition,mandamus,quowarranto,andemployersliabilitycases.Inappeals incertiorari,prohibition,mandamus,quowarranto,workmen'scompensationandemployers'liabilitycases,the originalrecordofthcaseshallbetransmittedtotheappellatecourtinlieuoftherecordonappeal.Theclerkofthe trialcourtshallobservetheprovisionsofSection11ofthisruleasfaraspracticable. Section17ofRule41hasnotsubstantiallychangedtherequirementsofSection3ofthesameRuleinmattersofappeals. Thereglementaryperiodof30daysfromnoticeoftheorderorjudgmentforperfectinganappealandthefilingofthenotice ofappeal withthetrial court,twoessential andjurisdictional requisites enjoinedbythelatterSection,havenotbeen dispensedwitheveninSection17ofsaidRule. Therecordsfailtoshowthatthehereinpetitionershavecompliedwiththeserequisitesforperfectinganappeal.Ashad repeatedlybeendeclaredbythisCourt,perfectionofanappealinthemannerandwithintheperiodlaiddownbylawisnot

onlymandatorybutjurisdictional.Failuretoperfectanappealaslegallyrequiredrendersfinalandexecutorythejudgment ofthecourtbelow,anddeprivestheappellatecourtofjurisdictiontoentertaintheappeal.15 AlthoughitistruethatthehereinpetitionershavefiledamotiononFebruary14,1973,tolifttheorderofgeneraldefault andforreconsiderationoftheorder(decision)ofthetrialcourt,and,applyingthisCourt'srulethatwhereamotionfor reconsiderationisfiled,theperiodforappealshouldbedeemedsuspended,16stillbyactualreckoningoftime,itwillbe seenthattheperiodforfilingandperfectinganappealhadbeenpastoverdue. CommencingonJanuary17,1973,thedaypetitionershadnoticeofthefinalorder(decision)ofthetrialcourttothedaythe runningoftheperiodforappealwassuspendedbythefilingofthemotionforreconsideration17onFebruary14,1973and started running once again on April 3, 1973, the day the petitioners received the order denying their motion for reconsideration,18uptoMay2,1973,whentheDeputyClerkoftheCourtofFirstInstanceofBataan,BranchIIcertified thatasofsaiddaypetitionershavenotfilednoticeofappealordoneanyotheracttendingtoshowtheirintentiontoappeal, 19is astretchoftimefar beyondthe 30dayperiodallowedbylawforperfecting anappeal.Petitioners hereinhave procrastinatedtoolongontheirrightsandonthedutiesimposedonthemthatthisCourtisnowpreventedfromextendingto themtherelieftheyarenowseeking. As We have observed in a similar case, 20 it is truly unfortunate that through inexcusable neglect and laches, the Governmentlostitscase,asitisonceagainlosingthiscasenowforthesameavoidablecause.Section13oftheaforecited Rule41oftheRulesofCourtiscrystalclearinitslanguageandtenor:Wherethenoticeofappeal,appealbondorrecordon appealisnotfiledwithintheperiodsoprescribed,theappealshallbedismissed.Foralllegalpurposes,theStateinthiscase hasalreadylostitscause.AsclearlyandunambiguouslydeclaredbythisCourtinthepast,thejudgmentrenderedinaland registrationcasebecomesfinalupontheexpirationof30daystobecountedfromthedateonwhichtheinterestedpartyhas receivednoticeofthedecision.21Thedecisionorfinalordergrantingtheregistrationoftheparceloflandappliedforby hereinprivaterespondentEliseoPalatino,havingbecomefinalandexecutory,therenowremainsonlytheissuanceofthe decreeandthecertificateoftitleovertheproperty.Thus,thisCourtdeclares,followingitstimehonoreddictum:Aftera decisionhasbecomefinal,theprevailingpartybecomesentitledasamatterofrighttoitsexecution;22thatitbecomes merelytheministerialdutyofthecourttoissuethewritofexecution.23 Despite,however,thisharshstrictureofourlawwhichhad,inmanyinstances,workedagainsttheStateandhadcausedthe lossofportionsofthenationalpatrimonytothosewhomaynotinequitybeentitledtoagrantthereof,theStateisnot withoutremedyinrecoveringorseekingthereversionofinalienablepubliclandsundulyorderedregistered. ThisisbasedonthepremisethatourTorrenssystemoflandregistrationisasystemfortheregistrationoftitletolandonly. Itwasnotestablishedasameansfortheacquisitionoftitletoprivateland,muchlesstitletolandsofthepublicdomain.Itis intendedmerelytoconfirmandregisterthetitlewhichonemayalreadyhaveovertheland.Wheretheapplicantpossesses notitleorownershipovertheparcelofland,hecannotacquireoneundertheTorrensSystemofregistration. Insuchactionforreversion,petitionersmayperhapsbepermittedtoraisethequestionbelatedlysoughttoberaisedherein thattheprivaterespondentwasnotpossessedofregisterabletitle,onthestrengthoftheirallegationthatLotNo.622ofthe MarivelesCadastre,allegedtobethesamelotfinallyawardedbythelowercourttothehereinrespondent,ispartofthe MarivelesMilitaryReservationestablishedbythenGovernorGeneralLeonardWoodunderProclamationNo.10issuedin 1925andthatitwasonlyonJune10,1967thatthisMilitaryReservationareahadbeendeclaredasdisposableandalienable landofthepublicdomainbyPresidentialProclamationNo.210B.Shouldpetitionersdulyestablishbycompetentevidence theseallegations,theymaythenraisethecrucialquestionwhethertheprivaterespondentandhispredecessorsininterest may be deemed to have validly and legally commenced occupation of the land and physically occupied the same en conceptodedueoforthirtyyearsormoretoentitlethemtoregistrationundersection48(b)ofthePublicLandActa questionwhichwecannotresolvenowinviewofourfindingthatwearewithoutjurisdictiontoentertaintheappealsince thedecisionorfinalordergrantingregistrationshaslongbecomefinalandexecutorybesidesthefactthatpetitioners' evidencehasnotbeendulypresentedandadmitted.Suchquestionsasmayberaisedbythepetitionersinaseparatecaseof reversionareofcourseunderstoodtobesubject tosuchcounterevidenceanddefenses astheprivaterespondentmay properlyputupincludingresjudicatawhereapplicable. WHEREFORE,thepetitionforcertioraritoreviewthedecisionororderoftheCourtofFirstInstanceofBataan,and seekingtonullifyallproceedingshadinconnectionwiththeapplicationforregistrationofrespondentEliseoPalatino;to makethepreliminaryinjunctiongrantedearlierbythisCourtpermanent,and/ortograntnewtrialtothehereinpetitioners, isherebydenied.Thisiswithoutprejudice,however,towhateverseparateactionpetitionersmaytakeinthepropercourtfor theannulmentofthedecisionand/orreversionofthelandinvolvedtothepublicdomainandtheproperdefensestheretoin turnoftheprivaterespondentasindicatedintheCourt'sopinion.ThisisfurtherwithoutprejudicetotheSolicitorGeneral's institution of appropriate proceedings against those whose inexcusable neglect has prejudiced the State and for indemnificationofanyconsequentlossordamagesincurredbytheState. SOORDERED.

 G.R.No.L37682March29,1974 REPUBLICOFTHEPHILIPPINES,RepresentedbytheDIRECTOROFLANDS,petitioner, vs. HON.PEDROSAMSONANIMAS,inhiscapacityasJudgeofCFISouthCotabato,BranchI,GeneralSantosCity, ISAGANIDUTIMBOLandtheREGISTEROFDEEDSOFGENERALSANTOSCITY,respondent. OfficeoftheSolicitorGeneralEstelitoP.Mendoza,AssistantSolicitorGeneralSantiagoM.KapunanandSolicitorPatricio M.Patajoforpetitioner. QuitainLawOfficeforprivaterespondent. ESGUERRA,J.:p PetitiontoreviewtheorderoftheCourtofFirstInstanceofSouthCotabato,BranchI,GeneralSantosCity,datedJune22, 1973,dismissingthecomplaintinitsCivilCaseNo.1253,entitled"RepublicofthePhilippines,Plaintiff,vs.IsaganiDu TimbolandtheRegisterofDeedsofGeneralSantosCity,Defendants",institutedbytheplaintifftodeclarenullandvoid Free Patent No.V466102and Original Certificateof Title (O.C.T.)No.P2508based thereonissuedinthename of defendantIsaganiDuTimbol;toordertheaforesaiddefendanttosurrendertheowner'sduplicateofO.C.T.No.P2508and thedefendantRegisterofDeedstocancelthesame;todecreethereversionofthelandinquestiontothemassofpublic domain,andgrantingsuchfurtherreliefasmaybejustandequitableinthepremises. ThelandcoveredbythefreepatentandtitleinquestionwasoriginallyappliedforbyPrecilaSoria,whoonFebruary23, 1966,transferredherrightstothelandanditsimprovementstodefendantIsaganiDuTimbolwhofiledhisapplication thereforonFebruary3,1969,asatransfereefromPrecilaSoria. OnDecember12,1969,freePatentNo.V466102wasissuedbythePresidentofthePhilippinesforthelandinquestion,and onJuly20,1970,aftertransmittalofthepatenttotheRegisterofDeedsofGeneralSantosCity,OriginalCertificateofTitle (O.C.T.)No.P2508wasissuedinthenameofdefendantIsaganiDuTimbol. OnAugust5,1971,theRepublicofthePhilippines,attheinstanceoftheBureauofForestry,filedacomplaintintheCourt ofFirstInstanceofCotabato,BranchI,GeneralSantosCity(CivilCaseNo.1253),todeclarefreepatentNo.V466102and OriginalCertificateofTitleNo.P2508inthenameofdefendantIsaganiDuTimbolnullandvoidabinitioandtoorderthe reversionofthelandinquestiontothemassofpublicdomain.Theactionisbasedonthegroundthatthelandcovered therebyisaforestortimberlandwhichisnotdisposableunderthePublicLandAct;thatinareclassificationofthepublic landsinthevicinitywherethelandinquestionissituatedmadebytheBureauofForestryonMarch7,1958,thesaidland wasplottedonBureauofForestrymapL.C.700tobeinsidetheareawhichwasrevertedtothecategoryofpublicforest, whereastheapplicationforfreepatentbyIsaganiDuTimbolwasfiledonJune3,1969,ormorethanelevenyearsthereafter; that thesaidpatent andtitlewereobtainedfraudulentlyas privaterespondent IsaganiDuTimbolneveroccupiedand cultivatedthelandappliedfor. InvokingthecaseofRamirezvs.CourtofAppeals(G.R.No.L28591,30SCRA207301),holdingthatacertificateoftitle fraudulentlysecuredisnotnullandvoidabinitio,unlessthefraudconsistedinmisrepresentingthatthelandcoveredbythe applicationispartofthepublicdomainwhenitisnot,therespondentcourtdismissedthecomplaintonthegroundthat CertificateofTitlebasedonthepatenthadbecameindefeasibleinviewofthelapseoftheoneyearperiodprescribedunder Section38oftheLandRegistrationActforreviewofadecreeoftitleonthegroundoffraud.FromthisorderofJune22, 1973,dismissingthecomplaint,plaintiffRepublicofthePhilippineshasappealedtothisCourtforreview. Aftercarefuldeliberation,thisCourtgrantsthepetitiononthegroundthattheareacoveredbythepatentandtitleisnot disposablepublicland,itbeingapartoftheforestzoneand,hencethepatentandtitletheretoarenullandvoid. Thedefenseofindefeasibilityofacertificateoftitleissuedpursuanttoafreepatentdoesnotlieagainstthestateinanaction forreversionofthelandcoveredtherebywhensuchlandisapartofapublicforestorofaforestreservation.Asageneral rule,timberorforestlandsarenotalienableordisposableundereithertheConstitutionof1935ortheConstitutionof1973. Although the Director of Lands has jurisdiction over public lands classified as agricultural under the constitution, or alienableordisposableunderthePublicLandAct,andischargedwiththeadministrationofall lawsrelativethereto, mineralandtimberlandsarebeyondhisjurisdiction.ItistheBureauofForestrythathasjurisdictionandauthorityoverthe demarcation,protection,management,reproduction,occupancyanduseofallpublicforestsandforestreservationsandover the granting of licenses for the taking of products therefrom, includingstone and earth (Section1816of the Revised AdministrativeCode).Thattheareainquestionisaforestortimberlandisclearlyestablishedbythecertificationmadeby

RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION

theBureauofForestDevelopmentthatitiswithintheportionoftheareawhichwasrevertedtothecategoryofforestland, approvedbythePresidentonMarch7,1958.WhenthedefendantIsaganiDuTimbolfiledhisapplicationforfreepatent overthelandinquestiononJune3,1969,theareainquestionwasnotadisposableoralienablepubliclandbutapublic forest.TitlesissuedtoprivatepartiesbytheBureauofLandswhenthelandcoveredtherebyisnotdisposablepublicland butforestlandarevoidabinitio.InGatchalianvs.Pavilen,etal.,L17619,Oct.31,1962,6SCRAp.508,512,thisCourt said: AndifitbetruethattheBureauofLandshadnojurisdictiontoissueapatentbecausethelandinvolved wasstillinalienableforestlandwhengranted,thenitmaybeplausiblycontendedthatthepatenttitle wouldbeabinitiovoid,subjecttoattackatanytimebyanypartyadverselyaffected.(Gatchalianvs. Pavilen,etal.,L17619,Oct.31,1962,supra,citingCivilCodeArts.1409and1421;Vaovs.Insular Gov't.,41Phil.161;Aderablevs.DirectorofForestry,L13663,March25,1960). Apatentisvoidatlawiftheofficerwhoissuedthepatenthadnoauthoritytodoso(Knightvs.LandAss.,142U.S.161,12 Sup.Ct.,258,35LED.974;emphasissupplied).IfapersonobtainsatitleunderthePublicLandActwhichincludes,by mistakeoroversight,landswhichcannotberegisteredundertheTorrensSystem,orwhentheDirectorofLandsdidnothave jurisdictionoverthesamebecauseitisapublicforest,thegranteedoesnot,byvirtueofsaidcertificateoftitlealone, becometheownerofthelandillegallyincluded.(SeeLedesmavs.MunicipalityofIloilo,49Phil.769) ThecaseofRamirezvs.CourtofAppeals,G.R.No.L28591,Oct.31,1969,30SCRA297,relieduponbyrespondent Courtindismissingthiscase,isnotcontrolling.Inthatcasenoforestlandwasinvolvedbutagriculturalpubliclandwhich wasfirstcoveredbyapatentissuedtoonepartyandlaterregisteredundertheTorrensSystembytheotherparty.The litigationwasbetweenprivatepartieswherethepartywhoregistereditunderActNo.496soughtthenullityofthetitleof thepatenteeunderthePublicLandAct.Inthecaseatbarthepartyseekingthenullityofthetitleandreversionofthelandis thestateitselfwhichisspecificallyauthorizedunderSection101ofthePublicLandActtoinitiatesuchproceedingsasan attributeofsovereignty,aremedynotavailabletoaprivateindividual. Thecomplaintallegesinitsparagraph8thatapplicantIsaganiDuTimbolwasneverinpossessionofthepropertypriorto hisfilingtheapplication,contrarytotheprovisionsoflawthattheapplicantmusthavebeeninpossessionorcultivation thereofforatleast30years;thattheapplicant,afterdiligentsearchbytheActingChiefoftheSurveyParty,FranciscoR. Alcones,inSouthCotabato,couldnotbecontactedbecauseheisaresidentofDavaoCity;thattherearenoexistingsignsof improvementsfoundintheareainquestionasitisnotundercultivationbutcoveredwithgrasses,bushesandsmalltrees; thatitisbeingusedasranchforgrazingcowsbytheheirsofHermogenesChilsot;thatnomonumentswereplacedonthe areasurveyedwhichgoestoshowthattherewasnoactualsurveythereof;thatthepropertyinquestionisinsidetheranchof theheirsofHermogenesChilsotunderPastureLeaseAgreementNo.1244and,therefore,insidetheforestzone;andthat saidranchhasafencearoundittoshowthatotherpersonscouldnotenterandcultivatethesame,andthatthesignatureof thenActingDistrictLandOfficerEliasdeCastroofSouthCotabatohasbeenforgedtofacilitatetheissuanceofpatentin favorofIsaganiDuTimbol. Theaboveallegedcircumstancesareindicativeoffraudinthefilingoftheapplicationandobtainingtitletotheland,andif proven would override respondent Judge's order dismissing the case without hearing. The misrepresentations of the applicantthathehadbeenoccupyingandcultivatingthelandandresidingthereonaresufficientgroundstonullifythegrant ofthepatentandtitleunderSection91ofthePublicLandLawwhichprovidesasfollows: That statements made in the application shall be considered as essential conditions or parts of any concession,titleorpermitissuedonthebasisofsuchapplication,andanyfalsestatementthereonor omissionoffacts,changing,ormodifyingtheconsiderationofthefactssetforthinsuchstatement,and anysubsequentmodification,alteration,orchangeofthematerialfactssetforthintheapplicationshall ipsofactoproducethecancellationoftheconcession,titleorpermitgranted.... Acertificateoftitlethatisvoidmaybeorderedcancelled.Atitlewillbeconsideredvoidifitisprocuredthroughfraud,as whenapersonappliesforregistrationofthelandunderhisnamealthoughthepropertybelongstoanother.Inthecaseof disposablepubliclands,failureonthepartofthegranteetocomplywiththeconditionsimposedbylawisagroundfor holdingsuchtitlevoid(DirectorofLandsvs.CourtofAppeals,etal.,G.R.No.L17696,May19,1966,17SCRA,71,79 80;emphasissupplied).Thelapseoftheoneyearperiodwithinwhichadecreeoftitlemaybereopenedforfraudwouldnot preventthecancellationthereof,fortoholdthatatitlemaybecomeindefeasiblebyregistration,evenifsuchtitlehadbeen securedthroughfraudorinviolationofthelaw,wouldbetheheightofabsurdity.Registrationshouldnotbeashieldof fraudinsecuringtitle.(J.M.Tuason&Co.,Inc.vs.Macalindog,L15398,December29,1962,6SCRA938,page38). ConsideringthatitisthestateisseekingthecancellationofthetitleofrespondentIsaganiDuTimbol,saidtitlehasnot become indefeasible for prescription cannot be invoked against the state. A title founded on fraud may be cancelled, notwithstandingthelapseofoneyearfromtheissuancethereof,throughapetitionfiledincourtbytheSolicitorGeneral, (Sumailvs.CourtofFirstInstanceofCotabato,51O.G.p.2414Phil.L8278.96Phil.946:Eugenio,etal.,vs.Perdido,et al.,G.R.No.L7083,May19,1955;DelosSantosvs.RomanCatholicChurchofMidsayapG.R.No.L6088,Feb.24,

1954,94Phil.405). Publiclandfraudulentlyincludedinpatentsorcertificatesoftitlemayberecoveredorrevertedtothestateinaccordance withSection101ofthePublicLandAct(DirectorofLandsvs.Jugadoetal.,G.R.No.L14707,May23,1961).Prescription doesnotlieagainstthestateinsuchcasesfortheStatuteofLimitationsdoesnotrunagainstthestate(Article1108, paragraph4oftheNewCivilCode).Therightofreversionorreconveyancetothestateisnotbarredprescription(Republic ofthePhilippinesvs.RamonaRuiz,etal.,G.R.No.L23712,April29,1968,23SCRA348.Peoplevs.Ramos,G.R.No.L 15484,Jan.31,1963,47SCRA12;GovernmentofthePhilippinesvs.MontedePiedad35Phil.728;751753). EvengrantingthatthetitleofprivaterespondentIsaganiDuTimbolcannolongerbereopenedundertheLandRegistration Act, the land covered thereby may be reconveyed to the state in an action for reconveyance under Section 101 of CommonwealthAct141(PublicLandAct),fortheremedyofreconveyanceisadequatelycoveredbytheprayerofthe complaintforthegrantofsuchotherreliefasmaybejustandequitableinthepremises. FORALLTHEFOREGOING,theorderoftherespondentcourt,datedJune22,1973,dismissingthecomplaint,andthatof September29,1973,denyingthemotionforitsreconsideration,bothissuedinCivilCaseNo.1253oftherespondentcourt, areherebyannulledandsetaside.TherespondentcourtshallproceedtohearsaidCivilCaseandrenderjudgmentthereon accordingly. CostsagainstrespondentIsaganiDuTimbol. Makalintal,C.J.,Castro,Makasiar,MuozPalma,JJ.,concur. SeparateOpinions TEEHANKEE,J.,concurring: Iconcurinthejudgmentsettingasiderespondentcourt'sorderswhicherroneouslydismissedpetitioner'scomplaintonthe groundofpurportedindefeasibilityofprivaterespondent'storrenscertificateoftitleundersection38ofAct496and orderingtheremandofthecasefortrialanddispositiononthemerits.Petitioner'scomplaintisnotbarredbythecitedAct sinceitdulyallegesthatrespondent'storrenstitlewasissuedpursuanttoafreepatentcoveringforestortimberlandwhichis notdisposableunderthePublicLandActandifthesefactualallegationsaredulyestablishedatthetrial,petitionerwouldbe entitledtoajudgmentthatthepatentandtitleofrespondent,beingpartoftheforestzone,arenullandvoid.

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L9865December24,1915 VERGOD.TUFEXIS,plaintiffappellant, vs. FRANCISCOOLAGUERAandTHEMUNICIPALCOUNCILOFGUINOBATAN,representedbyitspresident, AgapitoPaulate,defendantsappellees. RafaeldelaSierraforappellant. AttorneyGeneralAvanceaforappelleeMunicipalCouncilofGuinobatan. Noappearancefortheotherappellee. TORRES,J.: Counselforplaintiff,inhiswrittenpetitionofMay13,1913,prayedtheCourtofFirstInstanceofAlbaytodeclarethathis clientwasentitledtothepossessionanduseofthelandreferredtointhecomplaintinconformitywiththetermsofthe Governmentconcession(ExhibitA),ofwhichheclaimedtobethesoleandlawfulowner;thatthedefendantsbeorderedto removefrom thesaidlandallthestores,sheds,billiardtables,andotherobstructions thereon,sothat plaintiffmight reconstructthepublicmarketbuildingonthesaidlandinaccordancewiththeprovisionsofthesaidconcession,andthat theybeorderedtopayjointlyandseverallytotheplaintiff,asdamages,thesumofP250permonthfromMarch1,1912, untilthedateonwhichthelandbevacated,andtopaythelegalcostsandexpensesofthesuit. AfterthecomplainthadbeenansweredbycounselforthedefendantFranciscoOlaguera,whoprayedthathisclientbe absolved therefrom, with the costs against the plaintiff, the provincial fiscal, in the name and representation of the municipalityofGuinobatan,demurredonthegroundthatplaintifflackedthepersonalitytoinstitutetheactionandfurther allegedthatthecomplaintdidnotsetforthsufficientfactstoconstituteacauseofaction.1awphil.net ByanorderofAugust25,1913,thecourtsustainedthedemurrerfiledbythedefendantmunicipalityofGuinobatan,allowed plaintifftendaysinwhichtoamendhiscomplaint,andnotifiedhimthatunlesshedidsowithinthatperiodtheactionwould bedismissed. Counselforplaintiff,byawritingofthe27thofthesaidmonth,setforth:Thatheobjectedtotheaboverulingashe believediterroneousandcontrarytolaw;thathedidnotdesiretoamendhiscomplaint,wherefore,inaccordancewiththe provisionsofsection101oftheCodeofCivilProcedure,thecourtshouldrendersuchjudgmentinthecaseasthelawmight warrant,andhisexceptiontothesaidrulingshouldbeenteredontherecord.ByanorderofSeptember1,1913,thecourt, overrulingthemotionmadebythedefendantOlaguera,dismissedthecomplaintfiledbytheplaintiff,VergoD.Tufexis, againstthemunicipalcouncilofGuinobatanonthegroundthatplaintiffhadnotamendedhiscomplaint.Plaintiff'scounsel, whennotifiedofthisruling,exceptedtheretoandmovedforarehearingandanewtrial.Thismotionwasoverruled, whereupontheplaintiffexceptedandfiledtheproperbillofexceptions. InthecomplaintfiledbycounselforVergoD.Tufexis,itwasallegedthatonSeptember30,1911,plaintiffacquiredata publicsaleheldinexecutionofajudgmentrenderedagainstRicardoPardoyPujol,apieceofpropertysituatedinthe municipalityofGuinobatan,consistingofaframebuildingofstrongmaterialswithagalvanizedironroof,erectedona parceloflandbelongingtothatmunicipalityandintendedforapublicmarket;thatplaintiffalsoacquiredatthesaleallthe right,interest,title,andparticipationinthesaidpropertythatappertainedormightappertaintoPardoyPujol;thatthesaid buildingwasconstructedbyvirtueofaconcessiongrantedbytheformerSpanishgovernmenttoRicardoPardoyCabaas, fatherofthejudgmentdebtor,who,byapublicinstrumentofJuly31,1912,renouncedhisrighttoredeemthesaidproperty andconveyedittoplaintiff,togetherwithallhisrightstherein,theinstrumentofgrant,ExhibitA,beingattachedtothe complaintasapartthereof;thatonJanuary2,1912,thesaidbuildingwastotallydestroyedbyanaccidentalfire;that subsequenttothedatejustmentionedandforseveralmonthsthereafterthemunicipalcouncilofGuinobatancarriedon negotiationswithplaintiffforthepurchaseofhisrightsinthesaidconcession;thatthesenegotiationscouldnotbebrought toaconclusionbecausethemunicipalcouncilhadactedthereindeceitfully,fraudulently,andinbadfaithandforthesole purposeofbeguiling,deceiving,andprejudicingplaintiffinordertopreventhimfromexercisinghisrighttoreconstructthe burnedmarketbuildingandutilizeitinaccordancewiththetermsofthesaidconcession;thatthedefendantmunicipal council,withoutplaintiff'sconsentandinconnivancewiththeotherdefendant,FranciscoOlaguera,hadauthorizedthe

latterunlawfully totakepossessionofall thelandfrom March1,1912,inviolationofplaintiff'srights;that thesaid Olagueraoccupiedthesamewithboothsorstoresforthesaleofgroceriesandothermerchandise,forbilliardtables,and otheranalogoususesandderivedunlawfulgainfromtherevenuesandrentsproducedbythesaidbuildings;thatplaintiff wasentitledtothepossessionofthesaidlandinaccordancewiththeconcession,whichwasinfullforceandeffectand belongedtoplaintiff;thatplaintiffproposedtoconstructanotherpublicmarketbuildingonthesameland,butthatthe defendantshadpreventedhimfromusingthelandandreconstructingthereonthesaidpublicmarketbuilding,andrefusedto recognizeplaintiff'srightandtovacatethelandthathadbeenoccupiedbytheburnededifice. Theprovincialfiscalallegedasagroundforthedemurrerthatinnopartoftheinstrumentofconcessiondiditappearthat theprivilegegrantedtoRicardoPardoyCabaashadlikewisebeengrantedtohissuccessorsorassignees,andthattherefore suchrightsandactionsasmighthaveappertainedtotheassignee,PardoyCabaas,couldnotbeconveyedtonorcouldthey beacquiredbyanyotherperson;thatitwasallegedinthecomplaintthatthebuildingwascompletelydestroyedbyfireon January2,1912,andthatifplaintiff'srighttothepossessionofthelandwasconditionedbytheexistencethereonofthesaid marketbuilding,suchrighthadterminatedbythedisappearanceofthebuilding,inasmuchasplaintiff'srightofactionfor the possession of the land was a corollary of the existence or nonexistence of the market building, and upon the disappearance of the latter the eland had reverted to the control of its owner; that pursuant to the terms of the said concession,thelandbelongingtothemunicipalitywasgrantedforthepurposeofconstructingthereonamarket,andasthis market haddisappearedplaintiffwouldneedanewconcession,ifitcouldbeobtained,inordertobeentitledtothe possessionofthelandandtoconstructanewbuilding;thatbyplaintiff'sacquiringtheright,titleandinterestofRicardo PardoyPujolinthelandhecouldnotbeunderstoodtohavealsoacquiredsuchrightandinterestinthebuildingintended forapublicmarket,forthepurchaseofthebuildingrefersonlytotheedificeitselfanditnevercouldbeunderstoodthat plaintiffacquiredanyrightintheconcession,whichwasneversoldtohim,asthecomplaintcontainsnoallegationwhatever that he purchased or acquired such right; that a personal privilege like the said concession is only temporary and is extinguishedatthedeathofthegrantee,unlessotherwiseprovidedinthegrant;andthat,fromthelackofanallegationin thecomplaintthatplaintifflegallypurchasedoracquiredtherightinthesaidconcession,itwasevidentthatthecomplaint didnotallegesufficientfactstoconstituteacauseofactionandwasfatallydefective. Thequestionpresentedinthecaseatbarconsistsofwhetherabuildingofstrongmaterials,erectedbythesaiddebtor's father,RicardoPardoyCabaas,onlandbelongingtothemunicipalityofGuinobatanandintendedforapublicmarket,by virtueofaconcessiongrantedonAugust4,1884,undertheconditionsthereinimposeduponthegrantee,couldbeattached andsoldforthepaymentofacertaindebtowedbyRicardoPardoyPujoltoathirdpersonwhohadobtainedafinal judgment. IndecidingthisquestionitisindispensabletodeterminewhatrightswereacquiredbyPardoyPujol'sfatherbyvirtueofthe saidconcessiongrantedtohimbytheSpanishGovernment,inthebuildingerectedbyhimonaparceloflandbelongingto themunicipalityofGuinobatan.Theconcessionreferredtocontains,amongotherprovisions,thefollowing:itca1f ARTICLE 1. There is hereby granted to Mr. Ricardo Pardo y Cabaas the parcel of land in the pueblo of Guinobatan, a prolongation of another parcel belonging to him, situated between the store and house of the ChinamanValentinGarciaandthatofMr.Roco,followingthelineofCalleRealorCalzadadeAlbayandthatof CalledelCarmen,uptoandasfarasthesquarethatistobelaidoutinthesaidpueblo. ART.2.Onthesaidlandthepetitionershallconstructapublicmarketbuilding,withagalvanizedironroof,in accordance with the plan submitted to this office on the 13th of last May and which was approved by his Excellency the GovernorGeneral in conformitywiththe changes recommended bythe advisory boardof the consultingboardofpublicworks;andthesechangesarethosehereinafterspecified. ART.3.ThesaidMr.Pardoisgrantedtherighttoenjoytherevenuederivedfromthefloorspaceofthemarketfor theperiodoffortyyears,sincetherevenuefromsuchfloorspaceappertainstothegranteeofthesaidservice.By floorspaceismeanttherighttoshelterorretailmerchandiseinthemarketbelongingtothegrantee. ART.4.Ontheexpirationofthesaidperiodboththelandaforementionedandthebuildingthereonconstructed shallbethepropertyoftheGovernmentandthebuildingshallbedeliveredtoitingoodcondition. ART.5.Itshallbeobligatoryforeveryvendortosellhisgoodsinthesaidmarket,whichshallbetheonlyonein thesaidpueblo. ART.7.ThesaidauthorityshallputMr.Pardoinpossessionofthelandaffectedbythisconcession,andtheproper proceedingsinconnectiontherewithshallbehadinthepresenceofthechiefengineerofpublicworksofthesaid districtandtheheadmenofthepueblo.

ART.8.Mr.Pardoshallinformthisofficeofthedateofthecommencementoftheworkofconstruction,andthe workshallbeinspectedbythepublicworksofficialsresidinginAlbay;thebuildingwhencompletedshallbe examinedandacceptedbythechiefengineerofthedistrictofNuevaCaceresorbythedeputytowhomthelatter maydelegatethisduty:allwiththeknowledgeoftheofficeoftheinspectorofpublicworks. Thelandonwhichthebuildingwaserectedandwhichisreferredtointheforegoingarticles,containedinthefranchise grantedbytheGovernmentoftheformersovereignty,belongstothemunicipalityofGuinobatan.Althoughthebuildingwas constructedattheexpenseandwiththemoneyofthegrantee,RicardoPardoyCabaas,itis,nevertheless,thepropertyof thestateorofthesaidmunicipality,andwastemporarilytransferredtothegrantee,PardoyCabaas,inorderthathemight enjoytheusufructofitsfloorspaceforfortyyears,butontheterminationofthisperiodthesaidrightofusufructwasto ceaseandthebuildingwastobelongfinallyandabsolutelytothestateorthemunicipalityinrepresentationthereof. Forthesereasons,then,thereisnoquestionthatthebuildingandthelandonwhichitwaserected,sincetheydidnotbelong tothegrantee,PardoyCabaas,nordotheybelongtohissonandheir,RicardoPardoyPujol,couldnotbeattachedorsold forthepaymentofadebtcontractedbythelatter. TheconcessiongrantedbytheformerSpanishGovernmentispersonalandtransferableonlybyinheritance,andinno manner could it be conveyed as a special personal privilege to another and a third person unless were an hereditary successorofthegrantee,PardoyCabaas,withoutknowledgeandconsentoftheadministrativeauthoritiesunderwhose controlthespecialrightofusufructinthefloorspaceofthesaidmarketbuildingwasenjoyedandexercised. Eventhoughitisunquestionablethatthecreditorhasarighttocollectthemoneyduehim,outofhisdebtor'sproperty,yet whenamongsuchpropertyisincludedtherightofusufructinapublicservicebuildingandthisrightiscloselyrelatedtoa serviceofapubliccharacter,therightthatliesinbehalfofthecreditorforthecollectionofadebtfromthepersonwho enjoysthesaidspecialprivilegeofrightofusufructinthefloorspaceofabuildingintendedforapublicmarketisnot absoluteandmaybeexercisedonlythroughtheactionofacourtofjusticewithrespecttotheprofitsorrevenuesobtained underthespecialrightofusufructgrantedtothedebtor. RicardoPardoyPujol,asthesuccessorandheirofthegrantee,PardoyCabaas,isboundtopayhisdebtsandhisproperty canbeattachedonpetitionofhiscreditors.However,hispersonalprivilegeofusufructinthefloorspaceofthepublic marketbuildingofGuinobatancannotbeattachedlikeanyordinaryright,becausethatwouldmeanthatapersonwhohas contracted with the state or with the Governmental authorities to furnish a service of a public character would be substituted,foranotherpersonwhotooknopartinthecontract,andthattheregularcourseofapublicservicewouldbe disturbedbythemoreorlesslegalactionofthecreditorsofagrantee,totheprejudiceofthestateandthepublicinterests. Itisindeedtruethatthebuilding,whichformanyyearsservedasapublicmarketinthepuebloofGuinobatan,waserected outoftheprivatefundsofthegrantee,PardoyCabaas,andatfirstsightitseemsnaturalthatthelatter,whopaidthecost of the construction of the building, should be its owner. However, judging from the agreement between him and the Governmentauthorities,hewasgrantedtherighttousufructinthefloorspaceofthesaidbuildinginorderthat,duringthe periodoffortyyears,hemightreimbursehimselfforandcollectthevalueofthebuildingconstructedbyhim;anditmustbe believedthatPardoyCabaas,beforeexecutingthecontractwiththeGovernmentforthepurposeofobtainingtherightof usufructgrantedtohimandbeforeacceptingthecontract,thoughtoveritsconditionsdeliberatelyandmaturelyandfeltsure thathewouldprofitthereby,thatis,thathewouldreimbursehimselfforthevalueofthebuildingheerected,andobtain interestontheinvestmentandotheradvantagesbyenjoyingtheusufructforthespaceoffortylongyears,asinfacteven afterhisdeaththisrightcontinuedtobeenjoyedbyhisson,RicardoPardoyPujol.Therefore,thesaidprivilegeconferred onthegranteebytheSpanishGovernmentonAugust4,1884,wasneitheronerousnorprejudicialtohimorhisheir,buton thecontrarywasbeneficialtothem. So,ifneitherthelandnorthebuildinginquestionbelongstoPardoyPujol,itisevidentthattheycouldnotbeattachedor soldat publicauctiontosatisfyhisdebt and,consequently,theattachment andsaleofthesaidGovernment property executedonpetitionofthecreditorofthesaidPardoyPujolarenotoriouslyillegal,nullandvoid,andtheacquisitionofthe propertybyplaintiffconfersuponhimnorightwhateverbasedonthesaidconcession. InthedecisioninthecaseofLopezvs.Alvarez(9Phil.Rep.,28)theprinciplewasassertedthat: Inattachmentsofallkindsitisanessentialconditionthatthethingwhichisattachedshallbethepropertyofthedebtor,and fromnoprovisionoftheMortgageLawcananyconclusionbedrawnwhichshallbecontrarytothisprinciple. ThissameprinciplewassetupinthedecisionofthecaseofAlvaranvs.Marquez(11Phil.Rep.,263). It having been demonstrated by the foregoing reasons that the building constructed on land of the municipality of

GuinobatanforapublicmarketcouldnotbeattachedandsoldastheresultofadebtcontractedbyRicardoPardoyPujolin favorofathirdperson,weshallnowproceedtoexaminewhetheranattachmentwouldlieofthespecialright,grantedbythe formerSpanishGovernmenttothesaiddebtor'sfather,ofusufructinthefloorspaceofthesaidmarketandrighttocollect therevenuestherefromfortheperiodoffortyyears,countedfromthedateofthegrantingofthesaidright. Withouttheconsentoftheproperadministrativeofficial,agrantee,oronechargedwithconductingapublicservicesuchas amarketofthemunicipalityofGuinobatan,cannotbepermittedtobesubstitutedbyanyotherperson,thoughthislatterbe acreditoroftheusufructuarygrantee.Hence,weholdthattheattachmentoftherightofusufructinthesaidbuildingandof collectingtherevenueobtainedfromthefloorspaceofthesaidpublicmarketofGuinobatan,wasillegal,because,werethis rightsusceptibleofattachment,athirdperson,asacreditororapurchaser,mightexercisesuchright,notwithstandinghis personalstatus,insteadofthegranteecontractor.Thistheorydoesnotbarthecreditorfromcollectingthemoneyowedhim bythegrantee,inasmuchashehastherighttopetitionthecourtstoallowhimthroughproperlegalproceedingstocollect hismoneyoutoftherevenuesproducedbytheusufructconferredbytheGovernmentonthegranteeofthesaidservice. TheconcessionobtainedbyRicardoPardoyPujol'sfatheronAugust4,1884,isatruesovereigntyandthegrantee,Pardoy Cabaas,andthereforethestipulationsmadebyandbetweenthecontractingparties,theobligationtowhichthatcontract mayhavegivenrise,andtheconsequencesthatmayhavebeenentailedbythecontract,allcomewithinthescopeofthe civillawwhichguaranteestherightsofthecontractingparties. Althoughinouropinionthesaidconcessionissomewhatofthenatureofafranchise,yetwedonotthinkthattheprovisions ofsections56to61ofActNo.1459areapplicabletothecaseatbar,forthesesectionsrefertoafranchisegrantedtoa corporation,whiletheconcessiongivenbytheformerSpanishGovernmentwasgrantedtoaprivatepartyandnottoa corporationorjudicialentity.Therefore,thoughunderthesaidActafranchiseissubjecttoattachment,theActcontainsno expressprovisionwhateverwhichauthorizestheattachmentandsaleofarightorfranchiseespeciallygrantedtoaprivate partyundertheconditionsinwhichtheconcessioninquestionwasgranted.Thesubstitutionofathirdpersoninsteadofthe one who obtained such an administrative concession must be explicitly authorized by the proper official of the administrativebranchoftheGovernmentinorderthatthesubstitutemayexercisetherightsogranted. InthecaseofRicardoyPujol,thegranteeoftheusufructonthefloorspaceinthesaidmarketbuildinginGuinobatan,his creditor,inordertoobtainthepaymentofhiscredit,couldhaveappliedtothecourtsforanattachmentoftherevenuesor proceedscollectedbyhissaiddebtorbyvirtueofthesaidconcession;butitwasinnowisepropertoattachandselltheright grantedbythepublicadministrationtooperateandenjoytheusufructofthefloorspaceofthesaidpublicmarket. Althoughthereisnosimilaritybetweenthemanagementofapublicmarketandthatofarailroadcompany,yetforthe reasonthattheoperationoftheoneaswellastheotherisofpublicinterest,whenacreditorofsuchacompanysuesto collectadebtitwouldbeimpropertoattachthestationaryequipmentandrollingstockoftherailroadonlythegross receiptsofthebusinessoverandabovetheamountrequiredforitsoperationcouldbetouched.Thissamelegalprinciple holdsinthecasewherethegranteeofamarketisadebtorandhispropertyisattachedonpetitionofhiscreditor.The receiptsofthemarketmaybeattached,butnottherighttooperateandconducttheservice,whichisofapubliccharacter. Infact,article1448oftheLeydeEnjuiciamientoCivil,citedinthisdecision,notasalawnowinforce,butforthepurpose ofsettingoutaprincipleoflaw,prohibitsthelevyofattachmentsonrailroadsopenedtopublicservice,andonthestations, stores,shops,lands,worksandbuildingsnecessaryfortheiroperation,oronthelocomotives,railsandothermaterial intendedfortheoperationoftheline.Whenexecutionisleviedonsuchrailroadcompanies,theproceedingsaregovernedby theprovisionsoftheLawofNovember12,1869,extendedbyaroyalorderofAugust3,1886,totheoverseasprovinces. Thislawprescribesamongotherthingsthatattachmentsmaybeleviedandexecutedonlyonthegrossreceiptsremaining afterthenecessaryoperatingexpenseshavebeendeducted. Inharmonywiththislegalprovision,thesupremecourtoftheStateofNebraska,inwhichStatethereisnolawwhatever thatauthorizestheattachmentandsaleofabridgebelongingtoacorporation,inthecaseoftheOvertonBridgeco. vs. Means(33Neb.,857)laiddowntheprinciplethatsuchabridgeandtherightsofthecorporationthereincouldnotbesoldto satisfyajudgmentagainstthecorporationforthereasonthat: Thepropertyofcorporationswhichareclosedaspublicagencies,suchasrailroadandbridgecompanies,whichis essentialtotheexerciseoftheircorporatefranchise,andthedischargeofthedutiestheyhaveassumedtowardthe generalpublic,cannot,withoutstatutoryauthority,besoldtosatisfyacommonlawjudgment. Itcitesdecisionsofseveralstates,andalso,inthedecisionreferredto,citedMorawetzonPrivateCorporations,section 1125,andheldthatafterattachmentofthepropertynotnecessarytoenablethecorporationtoperformitsdutiestothe public,theonlyremedyremainingtoajudgmentcreditorwastoobtaintheappointmentofareceiverandasequestrationof

thecompany'searnings. ThesupremecourtofAlabama,indecidingasimilarcase(Gardnervs.Mobile&NorthwesternR.R.Co.,102Ala.,635, 645),affirmedthesameprincipleandsaid: Theonlyremedyofajudgmentcreditoristoobtaintheappointmentofareceiverandthesequestrationofits incomeorearnings. Itistobenotedthatsection56ofActNo.1459,whichpermitsthesaleunderexecutionofacorporation'sfranchise,isinno wiseapplicabletothecaseatbar,forthereasonthat,sincethisActwaspromulgatedonMarch1,1906,itcouldnotand cannot affect the laws, decrees, and orders of the Spanish government in conformity with which the administrative concession,ExhibitA,wasgrantedtoPardoyCabaas. Theoperationofarailroadisofpublicinterest,andconcernsboththepublicandthestate,eventhoughthesuperintendent andmanagementthereofbeconductedbyaprivatecompany.Therefore,thepropertyofarailroad,eitheritsrollingstockor permanentequipment,isnotsubjecttoattachmentandsale,andtherightsofthecreditorsoftheoperatingcompanymaybe exercisedforthecollectionoftheircreditonlyofthegrossreceiptsaftertheoperationoftherailroadisinsuredfromitsown income. Thisdecisionisbasedontheprovisionsoftheaforecitedlawandthepremisethattheusufructofthefloorspaceofthe publicmarketofGuinobatan,grantedtoRicardoPardoyPujol'sfatherwasnotsubjecttoattachmentonaccountofitsbeing ofapubliccharacter,butstillthelatter'screditorcouldhaveappliedforawritofexecutionandlaidanattachmentonthe proceedsobtainedfromtheoperationofthemarket,whichproceedsorincomecouldhavebeencollectedbyareceiverand intervenor. This,however,wasnotdone,butonthecreditor'spetitionthepublicmarketbuilding,whichwasnothisdebtor'sproperty, togetherwithalltheright,interest,titleandparticipationwhichthelatterhadormighthavehadtherein,wasattachedand sold;andasplaintiffwasunabletoacquireanyrightortitleinsuchpropertyillegallysoldandillegallyacquiredbyhimat publicauctionorintheusufructofthefloorspaceofthebuilding,itisunquestionablethathelacksthepersonalitytoclaim possessionofthelandthatbelongstothemunicipalityortheenjoymentandexerciseoftherightconferredbytheaforesaid administrativeconcession,whichwasandisinalienableonaccountofitsbeingapersonalright.Forthesamereason, plaintiffhasnorighttoreconstructtheburnedbuildingonthelandwhereitformerlystood. Theonlyrighttowhichthecreditorwasentitledwastopetitionfortheattachmentoftheincomeandproceedsobtained fromtheuseofthefloorspaceofthemarket;buthedidnotavailhimselfofthisright,norwerethereceiptstherefrom attached,norweretheyadjudicatedeithertothecreditorortotheplaintiffTufexis.Therefore,theorderofdismissal appealedisinaccordancewithlawandthemeritsofthecase,andlikewisetheerrorsassignedtheretohavebeenduly refutedbythereasonssetforthherein. Fortheforegoingconsiderations,weherebyaffirmthesaidorderofdismissal,withthecostsagainsttheappellant.So ordered. Arellano,C.J.,Moreland,andAraullo,JJ.,concur. Johnson,J.,concursintheresult.

G.R.No.L6098August12,1911 THEINSULARGOVERNMENT,plaintiffappellee, vs. ALDECOAANDCOMPANY,defendantappellant. EmilioPinedaforappellant. AttorneyGeneralVillamorforappellee. TORRES,J.: OnApril20,1907,theAttorneyGeneralfiledawrittencomplaintintheCourtofFirstInstanceofSurigaoagainstthefirm ofAldecoa&Co.,allegingthatthedefendant,amercantilecopartnershipcompanyorganizedunderthelawsinforcein theseIslandsanddomiciledinthiscityofManilawithabranchofficeinSurigao,continuestooperateassuchmercantile copartnershipcompanyunderthenameofAldecoa&Co.,;thatthesaiddefendant,knowingthatithadnotitleorright whatevertotwoadjoiningparcelsofland,whichbelongtothedomainoftheGovernmentoftheUnitedStatesandwere placedundertheadministrationandcontroloftheGovernmentoftheseIslands,hasbeenoccupyingthemillegallyforthe pastseventeenyears,moreorless,havingconstructedonthelandawharf,locatedalongtherailroad,andbuiltwarehouses oflightmaterialforthestorageofcoalallforitsexclusiveuseandbenefit;thatofthesaidtwoparcelsofland,theparcel Bhasanareaof11centares,approximately,andtheparcelA,84centares,moreorless,andtheirsituation,metesand bounds,togetherwithotherdetailsthereuntopertaining,aresetoutinthejudgmentofthecourt;thattheselands,situatedin Bilangbilang,inthepuebloofSurigaoandtheprovinceofthesamename,belongedtothelateSpanishGovernmentinthe PhilippinesandarenowthepropertyoftheGovernmentoftheUnitedStatesandwereplacedunderthecontrolofthe InsularGovernment,which,byvirtueofthetreatyofParis,hassucceededtheformerinallitsrights;that,sincetheyear 1901,thedefendanthasbeenrequestedrepeatedlybytheAttorneyGeneral,inrepresentationoftheInsularGovernment,to recognizethelatter'srightofdominionoverthesameandtodelivertoitthesaidproperty,andthat,byreasonofsuch demands,Aldecoa&Co.,onFebruary25,1903,recognizingtheInsularGovernment'sownership,agreedtoreturntheland, butthatlater,afterseveraldelays,itconcludedbypersistinginitsattemptillegallytocontinueoccupyingthesaidlandand refusedtoreturnittotheInsularGovernment;whereforetheAttorneyGeneralaskedthecourttoenterjudgmentdeclaring theInsularGovernmenttobetheownerofthelandclaimed,andtoorderthattheplaintiffbeplacedinpossessionofthe same,togetherwiththefruitscollectedbythedefendantssinceittooksuchpossession,andthoseawaitingcollection,andto sentencethedefendanttopaythecosts. Counselforthedefendant,Aldecoa&Co.,inliquidation,answeringtheprecedingcomplaint,setforththatitdeniedeach andalloftheallegationsofthecomplaint,withtheexceptionofthosewhichitexpresslyadmittedinitsanswer;andthatit admittedparagraph2of thecomplaint,that is,thefact ofthe defendant's beingamercantile copartnership company, organizedunderthelawsinforceintheseIslands.Asaspecialdefense,itallegedthatitheldandpossessed,asowner,and hadfullandabsolutedominionover,thelandsclaimedbytheplaintiffinparagraph1ofthecomplaint.Thedefendant thereforeprayedthatjudgmentberenderedinitsfavor,byabsolvingitfromthecomplaint,withthecostsagainstthe plaintiff,togetherwiththeotherreliefsolicited. TheprovincialfiscalofSurigaopresentedamotiononNovember3,1908,forthepurposeofamendingthepreceding complaint, with the permission of the court, by inserting, between paragraphs 4 and 5 of the complaint, a separate paragraph,asfollows:"thatAldecoaandCompany'spossessionofthelandshereinquestion,wasinfactinterruptedduring theyears1900,1901,and1902;"but,inviewoftherulingofthecourtbyanorderofNovember5,1908,directingthe plaintiff,withinthreedaystospecifythefactsthatconstitutedtheallegedinterruptionofthedefendant'spossessionofthe landsinquestion,theprovincialfiscalpresented,onthe6thofthesamemonth,anewwrittenmotionwherebyberequested permissiontoamendthepreviouscomplaintbyinsertingbetweenthesaidparagraphs4and5oftheoriginalcomplaint,a separateparagraph,asfollows."ThatthemunicipalityofSurigao,intheyear1900,andthroughthemediationofCaptain Kendrick,removedthepostsandwirewhichenclosedthepropertyhereinquestion,thesolesignofpossessionthatthe defendantthenhadtothesaidlands."Inasmuchasnoobjectionwhateverwasraisedtotheamendmentrequested,thecourt grantedthesamebyanorderofDecember7,1908. Thecasecameupforhearingonthe1stofDecemberofthatyearand,afterthepresentationoftestimonybybothparties, thedocumentsexhibitedbeingattachedtotherecord,thecourt,onDecember10,1909,renderedjudgmentandfoundthat thelandinquestionwaspubliclandandbelongedtotheState,andorderedthedefendanttoreturnittotheplaintiffmight havethecropsandthebuildingsontheland,uponthepaymentofanindemnitytherefor,ormightcompelthedefendantto payhimthevalueoftheland,asprovidedbyarticle361oftheCivilCode.Counselforthedefendantexceptedtothis judgment,andbyawrittenmotionofthe4thofJanuaryaskedforarehearingofthecaseonthegroundsthatthesaid

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judgmentwasunwarrantedbytheevidenceandwascontrarytolaw.Thismotionwasdisallowed,exceptiontheretowas takenbytheappellantand,therequiredbillofexceptionsbeingfiled,inwhichwassetout,attherequestoftheprovincial fiscal,thelatter'sexceptiontotheorderissuedbythejudgeonJanuary24,whileinCagayan,ProvinceofMisamis,granting anextensionoftimeforthepresentationofthebillofexceptions,itwascertifiedandtransmittedtotheclerkofthiscourt. ThedemandoftherepresentativeoftheGovernmentis fortherecoveryofpossessionoftwounitedparcels ofland, belongingtothepublicuseanddomain,whichareatpresentoccupiedbythedefendantAldecoa&Co.Thelatterclaimsto havethefullandabsoluteownershipofthesaidlandandtohavehelditasownersince1889,byvirtueofaverbalpermit fromthepoliticomilitarygovernorofSurigao. Fromtheproceedingshadandbythetestimonyofalargenumberofcompetentwitnesses,oneofwhomwasintroducedby thedefendantpartyitself,itwasclearlyprovedthat,in1889,thelandinlitigation,aswellasBatesAvenue,was,duringthe extraordinaryhightides,usuallycoveredbyseawaterthatwouldextendtotheothersideofthesaidavenue,asfarasthe warehouseofAldecoa&Co.thatwaserectedthere,and,attheordinarylowtides,asfarasthewallbuiltalongtheshoreby theaforesaidfirmanddesignatedbythenumbers5,6,and7intheplan,ExhibitA.Thisplan,accordingtotheagreement betweentheparties,exactlyrepresentsthelandinlitigation. Itwaslikewiseprovedthatnearlyallthelandinquestionwaslowlandandswampyincertainplaces,withaquaticbushes growinguponit;thatithadbeengraduallyraisedbytheactionofthesea,whichinitsebbandflowleftsandandother sedimentonthelowground;thattheretainingwallerectedtopreventtheseawaterfromreachingthesaidwarehouse,thatis on the opposite side of Bates Avenue, contributed in a large measure toward raising the level of the land; and that, furthermore,betweentheyears1889and1890,thereweretwopiersonthesaidland,onenamedCarloto,alongsideofwhich thevesselsusedtoliethatcalledatSurigaoduringtheirvoyages. Itis,then,incontrovertiblethatthelandinquestionisofthepublicdomainandbelongstotheState,inasmuchasatthe presenttimeitispartlyshorelandandinpart,wassuchformerly,andnowislandformedbytheactionofthesea. Treatingoftheseacoastsandshoresaspropertyofthepublicuseanddomain,partida3,title28,law3,says: Thethingswhichbelongincommontoallthelivingcreaturesofthisworld,are;Theair,rainwater,theseaandits shores;foreverylivingcreaturemayusethem,accordingtoitsneeds,etc. Law4ofthesametitleandpartidasays,amongotherthings: Andbytheseashoreisunderstoodallthatspaceofgroundcoveredbythewatersofthesea,intheirhighestannual tides,whetherinwinterorsummer. TheLawofWatersofAugust3,1866,extendedtotheseIslandsbytheroyaldecreeofthe8thofthesamemonthandyear and, together with the decree ordering its enforcement, issued by the Gobierno General on September 21, 1871, was publishedintheOfficialGazetteofthe24thofthesamemonth,whichlawwasnotsubstitutednorrepealedbythatofJune 13,1879,promulgatedinSpainandnotextendedtotheseIslands,provides,inarticle1,that: Thefollowingarepartofthenationaldomainopentopublicuse: xxxxxxxxx 2.Thecoastsea,thatis,themaritimezoneencirclingthecoasts,tothefullwidthrecognizedbyinternational law.... 3.Theshores.Bytheshoreisunderstoodthatspacealternatelycoveredanduncoveredbythemovementofthetide. Itsinteriororterrestiallimitisthelinereachedbythehighestequinoctialtides.Wherethetidesarenotappreciable, theshorebeginsonthelandsideatthelinereachedbytheseaduringordinarystormsortempests. ART.4.Landsaddedtotheshoresbyaccretionsandalluviumdepositscausedbytheactionofthesea,formpartof thepublicdomain.Whentheyarenolongerwashedbythewatersofthesea,andarenotnecessaryforthepurposes ofpublicutility,orfortheestablishmentofspecialindustries,orforthecoastguardservice,theGovernmentshall declarethemtobethepropertyoftheownersoftheestatesadjacenttheretoandasincrementthereof. ART.5.LandsreclaimedfromtheseainconsequenceofworksconstructedbytheState,orbytheprovinces, pueblos,prprivatepersons,withproperpermission,shallbecomethepropertyofthepartyconstructingsuch works,unlessotherwiseprovidedbythetermsofthegrantofauthority. ART.17.Theuseoftheshoresalsobelongstothepublicunderthepolicesupervisionofthecivilauthorities;all personsmayfishthereon,wash,bathe,embarkanddisembarkonpleasuretrips,spreadanddryclothesandnets bathecattle,removesand,andcollectstones,shells,plants,shellfish,andotherproductsofthesea,anddoother thingsofalikenature.theserightsmayberestrictedbyvirtueoftheregulationsnecessaryforthecoastdefenseor policesupervision,orintheinterestofpublicutilityordecency. ART.18.Innoplaceonthecoasts,shores,ports,orentrancesofrivers,norontheislandsreferredtoinarticle3, shallnewworksofanykindwhateverbeconstructed,noranybuildingbeerected,withoutproperpermission,in accordancewiththeprovisionsofthislawandwiththoseofthelawregardingports. OnthesuppositionthatAldecoa&Co.commencedtooccupythelandandshorehereinconcerned,priortotheenforcement oftheCivilCodeintheseIslands,itisunquestionablethattheissuependingdecisionmustbedeterminedinaccordance

withtheprovisionsofthesaidLawofWatersofAugust3,1866,inasmuchastheshores,aswellasthelandsunitedthereto bytheaccretionsandalluviumdepositsproducedbytheactionofthesea,areofthepublicuseanddomain. ExcludingthespaceoccupiedbyBatesAvenue,thatliesbetweenthedefendant'sbuildingsandtheshoreandthelands addedtothelatterbytheactionoftheseainthesitiocalledBilangbilang,allthissaidland,togetherwiththeadjacent shore,belongstothepublicdomainandisintendedforpublicuses.Sothatthedefendant,inconstructiononthetwo aforementionedparcelsoflandaretainingwall,apierorwharf,arailway,andwarehousesforthestorageofcoal,forits exclusiveuseandbenefit,didallthiswithoutdueandcompetentauthorityandhasbeenillegallyoccupyingthelandsince 1901bytherepresentativeoftheInsularGovernment,Aldecoa&Co.,byaletterofFebruary25,1903,acknowledgedthat thelandbelongedtotheGovernmentandconsentedtovacateit,althoughitafterwardspersistedinitsclaimthatitwasthe ownerofthelandandrefusedtovacateandplaceitatthedisposaloftheInsularGovernment,whoserepresentative,inview ofthedefendant'schangedattitudeinthematter,wasforcedtobringthisactiontorecoveritspossession. Aldecoa&Co.endeavoredtoprovethattheland,consistingofthetwounitedparcelsAandB,belongedtotheminfee simple,onaccountoftheirhavingbeguntooccupyitthroughaverbalpermitfromthethenpoliticomilitarygovernorof Surigao.Althoughtherecorddoesnotshowthenatureofthepermitobtained,yetitisinferredfromthedocumentExhibitC Ithatthesaidpermitwasaverbalauthorizationtooccupythelandonconditionthatthedefendantshouldlateronprepare titledeedsthereto,andthatthisauthorizationwasgrantedforthepurposeoffurnishingfacilitiesto,andbenefitingthe merchantsofSurigao,inviewofthebackwardconditionofthingsinthoseregionsatthetime.Itiscertain,however,that Aldecoa&Co.didnotobtainorsolicitpermissionfromtheGovernmenttoestablishthemselvesthereanderectthereon theirbuildingsandworks,nordidtheyendeavortoobtainanytitleofownershiptothesaidland,asoneoftheirwitnesses, JuanY.Aldecoa,testified.Furthermore,inthesaidletterordocumentExhibitCI,theattorneythenrepresentingthe defendantprayedthatincaseofsaleortotalorpartialleasethereofAldecoa&Co.shouldbegivenpreferencetoanyother party,onaccountoftheimportantimprovementstheyhadmadeontheland. Itistruethat,notwithstandingthefactthatthelandswhichbecomeanadjacentpartoftheshoresthroughtheaccretions occasionedbytheactionofthesea,whentheyarenolongercoveredbysuchwaters,orarenotnecessaryforthepurposesof publicutility,fortheestablishmentofspecialindustries,orforthecoastguardservice,maybedeclaredbytheGovernment tobethepropertyoftheownersoftheestatesadjacentthereto;butthedefendanthasnotproventhatitobtainedforitself,in conformitywiththeprovisions ofarticle4ofthesaidLawofWaters,suchdeclarationofownership,andcompetent authorizationobtainedfromtheInsularGovernmentisindispensibleinorderthatprivatepersonmayconstructworksonthe seashoreandtherebysecurelandsforhisprofitandbenefit,pursuanttoarticle5ofthesamelaw,inasmuchasarticle18 strictlyprohibitstheconstructionofanyworksortheerectionofanybuildingatanyplaceonthecoastsandshores,without properauthorization. Asidefromtheverbalpermissionalleged,butnotdulyproven,andleavingasidethefactthatthesameisnotadmissiblein official and administrative proceedings, it has inno wise been provedthat Aldecoa & Co.obtained from the Insular Governmentanyauthorizationwhatevertoerectaretainingwall,toconstructapierandwarehouses,andtolayarailway wall,toconstructapierandwarehouses,andtolayarailwayonthelandinquestion,whichbelongedtothestateandwas destinedtopublicuses,asthedefendantmusthaveverywellknown;norcouldanyrightwhateverbecreatedinitsfavor, andtotheprejudiceoftheState,byitshavingfilledin,withouttheproperpermission,theaforementionedlandforthe purposeofraisingthelevelthereof. TheCivilCode,whichwentintoeffectintheseIslandsonDecember7,1889,thetwentiethdayofitspublicationinthe GacetadeManilaofthe17thofNovemberofthesameyear,confirmstheprovisionsofthesaidLawofWaters,since,inits article339,itprescribesthat: Propertyofpublicownershipis 1.Thatdestinedtothepublicuse,suchasroads,canals,rivers,torrents,ports,andbridgesconstructedbytheState, andbanks,shores,roadsteads,andthatofasimilarcharacter. Article341ofthesamecodeprovides: Propertyofpublicownership,whennolongerdevotedtogeneralusesortotherequirementofthedefenseofthe territory,shallbecomeapartoftheStateproperty. Theshoresandthelandsreclaimedfromthesea,whiletheycontinuetobedevotedtopublicusesandnograntwhateverhas beenmadeofanyportionofthemtoprivatepersons,remainapartofthepublicdomainandareforpublicuses,and,until theyareconvertedintopatrimonialpropertyoftheState,suchlands,thrownupbytheactionofthesea,andtheshores adjacentthereto,arenotsusceptibleofprescription,inasmuchas,beingdedicatedtothepublicuses,theyarenotsubjectof commerceamongmen,inaccordancewiththeprovisionofarticle1936oftheCivilCode. Theoccupationormaterialpossessionofanylandformedupontheshorebyaccretionsandalluviumdepositsoccasionedby thesea,wheretheoccupantorpossessorisaprivatepersonandholdswithoutpreviouspermissionorauthorizationfromthe Government,grantedindueform,althoughhemayhavehadtheintentiontoholditforthepurposeofmakingithisown,is illegalpossessiononhispartandamountstonothingmorethanameredetaineroftheland,whichisoutofthesphereofthe

commerceofmen,asbelongingtothepublicdomainandbeingallottedtopublicusesandfortheuseofallpersonswho liveattheplacewhereitissituated. TherecorddoesnotdisclosethatAldecoa&Co.hadobtainedfromtheSpanishGovernmentofthePhilippinestherequisite authorizationlegallytooccupythesaidtwoparcelsoflandofwhichtheynowclaimtobetheowners;wherefore,the occupationorpossessionwhichtheallegetheyholdisameredetainerthatcanmeritfromthelawnoprotectionsuchasis affordedonlytothepersonlegallyinpossession. ThepoliticomilitarygovernorofSurigaohavinghadnoauthorityorpowertograntthepossessionorownershipofthesaid twoparcelsofland,couldnothaveauthorizedtheiroccupancyunderatitleofownership.Atthemost,hemayhave,as alleged,verballyauthorizedthedefendanttoconstructapier,tofillinwithearththepassagewaynecessarytoenablethe sametobereachedfromBatesAvenue,toerectaretainingwalltopreventtheseawater,whichusedtoinundatethesaid avenue,fromflowinginwardasfarasthedefendant'swarehouses,andtobuildwarehousesonthehighland,raisedbythe actionofthewaterneartheshore;butsuchverbalauthorization,evenadmittingthatitwasactuallygiven,andthematerial occupationenjoyedbythedefendantduringmorethantenyears,havenotcreatedrightssuchascouldlegitimizeadetention totheprejudiceofthepublic,andoftheStatewhichrepresentsthecommunity,thesoleentityentitledtotheuseand enjoymentofthelandandshoreusurped,fortheveryreasonthatsuchshoresandlandsbelongtothenationaldomain,are intendedforpublicusesandarenotsusceptibleofprescription,astheydonotpertaintothecommerceofmen. Thesubjectofthissuit,ashasbeenseen,isatractoflandthatisacontinuationoftheshoreatthesitioofBilangbilangand wasformedonthatshorebyalluviumdepositsoccasionedbytheactionofthewatersofthesea,thatis,waslandreclaimed fromthesea,asfullyprovenbytherecordinthiscase;thereforethepresentissueisidenticalwiththatdecidedinthecaseof Ker&Co.vs.Cauden(6Phil.Rep.,732)relativetoatractoflandformedbytheactionoftheseaandwhichhasbecomea partofthesocalledSangleyPoint,intheProvinceofCavite,andconsequentlythefindingsanddoctrineestablishedinthat decisionareproperlyapplicabletothisaction,asmaybeseenbyaperusalofthatcase. Thelandinquestion,togetherwiththeshoreofwhichitformsapart,isnot,consideringitsconditions,comprisedwithin theprovisionsofsection54ofActNo.926,forthereasonthatitcannotbedeemedtobeagriculturalpubliclands,nor mangroveswampland,inasmuchasitisunquestionable,astherecordshowsittohavebeenproven,thatthedisputed propertyislandwhichwasreclaimedfromtheseathroughaccretionsproducedbytheactionofthewateruponahighpart oftheshore,andis,therefore,landintendedforpublicuses.Thisclassificationlosesnoneofitsforcefromthefactthata partofthelandisswampy,becausethiscircumstancedoesnotdivestitofitstruecharacteraslandgainedfromtheseaby accretion. Mangroveswampland,whichisgenerallysituatedinlandatacertaindistancefromtheseashore,althoughitisusually inundatedbythewatersofthesea,especiallyathightide,cannotbeconfoundedwiththelandformedbytheactionofthe seaandwhichformstheshorelinethereof;andforthisreason,thedecisionsrenderedinthecasesofMontanovs.Insular Government(12Phil.Rep.,572),andMapavs.InsularGovernment(10Phil.Rep.,175),whereindueconsiderationwas giventotheprovisionsofsection54ofActNo.926,havenoapplicationtothepresentaction,whichsolelyconcernsland formedbytheactionofthesea,andtheshorethatisapartofit,bothintendedforpublicuses,whilethereferencesmadeby theappellantpartyapplytobuildinglots,fisheriesandnipalandsthatwereinundatedbyseawaterandwhich,though coveredwithagooddealofwater,couldnotbesaidtobenavigableways.Thelandinquestion,onthecontrary,together withitsadjacentshore,bordersonwaterofgreatdepth,thePacificOcean,for,besidesthepierconstructedattheplaceby thedefendantandappellant,thereweretwoothers,andallintendedfortheserviceofthesteamshipsthatpliedthehighseas andwereaccustomedtoenterthesaidportandthereanchoralongsideofthesepiers. Undernoconsiderationcouldthelandhereinconcerned,togetherwiththeshoreuponwhichitisformed,beclassedas agriculturallandsusceptibleofappropriation,andassuchformthebasisfortheallegationofthepossessionofanimperfect orprescriptivetitlethereto,because,asaforestated,solongasthelandinlitigationbelongstothenationaldomainandis reservedforpublicuses,itisnotcapableofbeingappropriatedbyanyprivateperson,exceptthroughexpressauthorization grantedindueformbyacompetentauthorityarequisitewhichthedefendantandappellantwasunabletoproveforthe purposeoflegalizinghispossession. However,onthesuppositionthatthedefendant,Aldecoa&Co.,begantooccupythesaidlandandshoreafterfirstobtaining verbalpermissionfromapoliticomilitarygovernor,constructingthereonapier,warehouse,andretainingwall,itisrightto hold,asdidthelowercourtinhisjudgment,thatitactedingoodfaith,andundersuchasupposition,theprovisionsof article361oftheCivilCodemustbecompliedwith. Fortheforegoingreasons,inthecourseoftheexplanationofwhichtheerrorsattributedtothejudgmentappealedfromhave beendisposedof,itisouropinionthatsuchjudgmentshouldbefullyaffirmed,asitisinaccordancewiththelaw.Thecosts shallbeassessedagainsttheappellant.Soordered. MapaandJohnson,JJ.,concur. MorelandandCarson,JJ.,concurintheresult.

G.R.No.L28379March27,1929 THEGOVERNMENTOFTHEPHILIPPINEISLANDS,applicantappellant, vs. CONSORCIACABANGIS,ETAL.,claimantsappellees. AttorneyGeneralJaranillaforappellant. AbadSantos,Camus&Delgadoforappellees. VILLAREAL,J.: TheGovernmentofthePhilippineIslandsappealstothiscourtfromthejudgmentoftheCourtofFirstInstanceofManilain cadastralproceedingNo.373oftheCourtofFirstInstanceofManila,G.L.R.O.CadastralRecordNo.373,adjudicating thetitleanddecreeingtheregistrationoflotsNos.36,39and40,block3055ofthecadastralsurveyoftheCityofManilain favorofConsuelo,Consorcia,ElviraandTomas,surnamedCabangis,inequalparts,anddismissingtheclaimspresentedby theGovernmentofthePhilippineIslandsandtheCityofManila. Insupportofitsappeal,theappellantassignsthefollowingallegederrorsascommittedbythetrialcourtinitsjudgment,to wit: 1.Thelowercourterredinnotholdingthatthelotsinquestionareofthepublicdomain,thesamehavingbeen gainedfromthesea(ManilaBay)byaccession,byfillingsmadebytheBureauofPublicWorksandbythe constructionofthebreakwater(builtbytheBureauofNavigation)nearthemouthofVitasEstero. 2.Thelowercourterredinholdingthatthelotsinquestionformedpartofthebigparceloflandbelongingtothe spousesMaximoCabangisandTitaAndres,andinholdingthatthesespousesandtheirsuccessorsininteresthave beenincontinuous,public,peacefulanduninterruptedpossessionofsaidlotsuptothetimethiscasecameup. 3.Thelowercourterredinholdingthatsaidlotsexistedbefore,butthatduetothecurrentofthePasigRiverandto theactionofthebigwavesinManilaBayduringthesouthwestmonsoons,thesamedisappeared. 4.Thelowercourterredinadjudicatingtheregistrationofthelandsinquestioninthenameoftheappellees,andin denyingtheappellant'smotionforanewtrial. Apreponderanceoftheevidenceintherecordwhichmayproperlybetakenintoconsiderationindecidingthecase,proves thefollowingfacts: Lots36,39and40,block3035ofcadastralproceedingNo.71oftheCityofManila,G.L.R.O.RecordNo.373,were formerlyapartofalargeparceloflandbelongingtothepredecessorofthehereinclaimantsandappellees.Fromtheyear 1896saidlandbegantowearaway,duetotheactionofthewavesofManilaBay,untiltheyear1901whenthesaidlots becamecompletelysubmergedinwaterinordinarytides,andremainedinsuchastateuntil1912whentheGovernment undertookthedredgingofVitasEstuaryinordertofacilitatenavigation,depositingallthesandandsilttakenfromthebed oftheestuaryonthelowlandswhichwerecompletelycoveredwithwater,surroundingthatbelongingtothePhilippine ManufacturingCompany,therebyslowlyandgraduallyformingthelots,thesubjectmatterofthisproceeding. UptothemonthofFebruary,1927nobodyhaddeclaredlot39forthepurposesoftaxation,anditwasonlyintheyear1926 thatDr.PedroGil,inbehalfoftheclaimantsandappellees,declaredlotNo.40forsuchpurpose. Inviewofthefactsjuststated,asprovedbyapreponderanceoftheevidence,thequestionarises:Whoownslots36,39and 40inquestion? Theclaimantsappelleescontendthatinasmuchasthesaidlotsonceformedapartofalargeparceloflandbelongingto their predecessors, whom they succeeded, and their immediate predecessor in interest, Tomas Cabangis, having taken possessionthereofassoonastheywerereclaimed,givinghispermissiontosomefishermentodrytheirfishingnetsand deposittheirbancasthereon,saidlotsbelongtothem. Article339,subsection1,oftheCivilCode,reads: Article339.Propertyofpublicownershipis 1.Thatdevotedtopublicuse,suchasroads,canals,rivers,torrents,portsandbridgesconstructedbytheState, riverbanks,shorts,roadsteads,andthatofasimilarcharacter. xxxxxxxxx Article1,case3,oftheLawofWatersofAugust3,1866,providesasfollows: ARTICLE1.Thefollowingarepartofthenationaldomainopentopublicuse: xxxxxxxxx 3.TheShores.Bytheshoreisunderstoodthatspacecoveredanduncoveredbythemovementofthetide.Its interiororterrestriallimitisthelinereachedbythehighestequinoctialtides.Wherethetidesarenotappreciable, theshorebeginsonthelandsideatthelinereachedbytheseaduringordinarystormsortempests.

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InthecaseofAragonvs.InsularGovernment(19Phil.,223),withreferencetoarticle339oftheCivilCodejustquoted,this courtsaid: Weshouldnotbeunderstood,bythisdecision,toholdthatinacaseofgradualencroachmentorerosionbytheebbandflow ofthetide,privatepropertymaynotbecome'propertyofpublicownership,'asdefinedinarticle339ofthecode,whereit appearsthattheownerhastoallintentsandpurposesabandoneditandpermittedittobetotallydestroyed,soastobecome apartofthe'playa'(shoreoftheseas),'rada'(roadstead),orthelike.... IntheEnciclopediaJuridicaEspanola,volumeXII,page558,wereadthefollowing: Withrelativefrequencytheoppositephenomenonoccurs;that is,theseaadvances andprivateproperties are permanentlyinvadedbythewaves,andinthiscasetheybecomepartoftheshoreorbeach.Theythenpasstothe publicdomain,buttheownerthusdispossesseddoesnotretainanyrighttothenaturalproductsresultingfromtheir newnature;itisadefactocaseofeminentdomain,andnotsubjecttoindemnity. Nowthen,whensaidlandwasreclaimed,didtheclaimantsappelleesortheirpredecessorsrecoveritastheiroriginal property? Aswehaveseen,thelandbelongingtothepredecessorsofthehereinclaimantsappelleesbegantowearwayin1896,owing tothegradualerosioncausedbytheebbandflowofthetide,untiltheyear1901,whenthewatersofManilaBaycompletely submergedaportionofit,includedwithinlots36,39and40hereinquestion,remainingthusunderwateruntilreclaimedas aresultofcertainworkdonebytheGovernmentin1912.Accordingtotheabovecitedauthoritiessaidportionofland,that is,lots36,39and40,whichwasprivateproperty,becameapartofthepublicdomain.Thepredecessorsoftheherein claimantsappelleescouldhaveprotectedtheirlandbybuildingaretainingwall,withtheconsentofcompetentauthority,in 1896whenthewatersoftheseabegantowearitaway,inaccordancewiththeprovisionsofArticle29oftheaforecitedLaw ofWatersofAugust3,1866,andtheirfailuretodosountil1901,whenaportionofthesamebecamecompletelycoveredby saidwaters,remainingthussubmergeduntil1912,constitutesabandonment. Now then: The lots under discussion having been reclaimed from the seas as a result of certain work done by the Government,towhomdotheybelong? Theanswertothisquestionisfoundinarticle5oftheaforementionedLawofWaters,whichisasfollows: ART.5.LandsreclaimedfromtheseainconsequenceofworksconstructedbytheState,orbytheprovinces, pueblosorprivatepersons,withproperpermission,shallbecomethepropertyofthepartyconstructingsuchworks, unlessotherwiseprovidedbythetermsofthegrantofauthority. Thefactthatfrom1912somefishermenhadbeendryingtheirfishingnetsanddepositingtheirbancasonlots36,39and40, bypermissionofTomasCabangis,doesnotconferonthelatterorhissuccessorstheownershipofsaidlots,because,asthey wereconvertedintopublicland,noprivatepersoncouldacquiretitletheretoexceptintheformandmannerestablishedby thelaw. InthecaseofBuzonvs.InsularGovernmentandCityofManila(13Phil.,324),citedbytheclaimantsappellees,thiscourt, admittingthefindingsandholdingsofthelowercourt,saidthefollowing: Ifweheedtheparolevidence,wefindthattheseashorewasformerlyaboutonehundredbrazasdistantfromthe landinquestion;that,inthecourseoftime,andbytheremovalofaconsiderablequantityofsandfromtheshoreat thebackofthelandfortheuseofthestreetcarcompanyinfillinginCalleCervantes,theseawaterinordinary tidesnowcoverspartofthelanddescribedinthepetition. Thefactthatcertainland,notthebedofariverorofthesea,iscoveredbyseawaterduringtheperiodofordinary hightide,isnotareasonestablishedbyanylawtocausethelossthereof,especiallywhen,asinthepresentcase,it becomescoveredbywaterowingtocircumstancesentirelyindependentofthewilloftheowner. In the case of Director of Lands vs. Aguilar (G.R. No. 22034),1 also cited by the claimantsappellees, wherein the Governmentadducednoevidenceinsupportofitscontention,thelowercourtsaidinpart: ThecontentionoftheclaimantsCabangisistotheeffectthatsaidlotsareapartoftheadjoininglandadjudicatedto theirdeceasedfather,DonTomasCabangis,which,foroverfiftyyearshadbelongedtotheirdeceasedgrandmother, TitaAndres,andthat,duetocertainimprovementsmadeinManilaBay,thewatersoftheseacoveredalargepart ofthelotshereinclaimed. TheGovernmentofthePhilippineIslandsalsoclaimstheownershipofsaidlots,because,atordinaryhightide, theyarecoveredbythesea. Uponpetitionoftheparties,thelowercourtmadeanocularinspectionofsaidlotsonSeptember12,1923,andon saidinspectionfoundsomelightmaterialhousesbuiltthereon,andthatonthatoccasionthewatersoftheseadid notreachtheaforesaidlots. Fromtheevidenceadducedatthetrialofthiscause,itmaybeinferredthatTitaAndres,duringherlifetimewasthe ownerofaratherlargeparceloflandwhichwasadjudicatedbyadecreetohersonTomasCabangis;thelotsnow inquestionarecontiguoustothatlandandarecoveredbythewatersoftheseaatextraordinaryhightide;some50 yearsbeforetheseadidnotreachsaidstripofland,andonitwereconstructed,forthemostpart,lightmaterial

houses,occupiedbythetenantsofTitaAndres,towhomtheypaidrent.Uponherdeath,hersonTomasCabangis succeededtothepossession,andhischildrensucceededhim,theybeingthepresentclaimants,Consuelo,Jesus, Tomas,andConsorciaCabangis. TheGovernmentofthePhilippineIslandsdidnotadduceanyevidenceinsupportofitscontention,withthe exceptionofregistryrecordNo.8147,toshowthatthelotshereinquestionwerenotexcludedfromtheapplication presentedinsaidproceeding. ItwillbeseenthatinthecaseofBuzonvs.InsularGovernmentandCityofManila,citedabove,theriseofthewatersofthe seathatcoveredthelandsthereindispute,wasduenottotheactionofthetidebuttothefactthatalargequantityofsand wastakenfromtheseaatthesideofsaidlandinordertofillinCervantesStreet,andthiscourtproperlyheldthatbecauseof thisact,entirelyindependentofthewilloftheownerofsaidland,thelattercouldnotlosetheownershipthereof,andthe merefactthatthewatersoftheseacovereditasaresultofsaidact,isnotsufficienttoconvertitintopublicland,especially, asthelandwashighandappropriateforbuildingpurposes. InthecaseoftheDirectorofLandsvs.Aguilaralsocitedbytheclaimantsappellees,theInsularGovernmentdidnot presentanyevidenceinsupportofitscontention,thusleavinguncontradictedtheevidenceadducedbytheclaimantsAguilar etal.,astotheownership,possessionandoccupationofsaidlots. Intheinstantcasetheevidenceshowsthatfrom1896,thewavesofManilaBayhadbeengraduallyandconstantlywashing awaythesandthatformedthelotshereinquestion,until1901,whentheseawatercompletelycoveredthem,andthusthey remaineduntiltheyear1912.Inthelatteryeartheywerereclaimedfromtheseabyfillinginwithsandandsiltextracted fromthebedofVitasEstuarywhentheGovernmentdredgedsaidestuaryinordertofacilitatenavigation.Neithertheherein claimantsappelleesnortheirpredecessorsdidanythingtopreventtheirdestruction. Inconclusion,then,weholdthatthelotsinquestionhavingdisappearedonaccountofthegradualerosionduetotheebb andflowofthetide,andhavingremainedinsuchastateuntiltheywerereclaimedfromtheseabythefillingindonebythe Government, they are public land. (Aragon vs. Insular Government, 19 Phil., 223; Francisco vs. Government of the PhilippineIslands,28Phil.,505). Byvirtuewhereof,thejudgmentappealedfromisreversedandlotsNos.36,39and40ofcadastralproceedingNo.373of theCityofManilaareheldtobepubliclandbelongingtotheGovernmentoftheUnitedStatesundertheadministrationand controloftheGovernmentofthePhilippineIslands.Soordered. Johnson,Street,Malcolm,Ostrand,JohnsandRomualdez,JJ.,concur.

G.R.No.L37986March1,1934 EUFEMIAMERCADO,plaintiffappellant, vs. THEMUNICIPALPRESIDENTOFMACABEBE,PAMPANGA,andTHESECRETARYOFCOMMERCEAND COMMUNICATIONS,defendantsappellee. EusebioOrenseandNicolasBelmonteforappellant. ProvincialFiscalDazaforappellees. DIAZ,J.: This is an appeal taken byEufemia Mercado from a judgment rendered bythe Court of First Instance of Pampanga dismissingherappealfromanorderoftheSecretaryofCommerceandCommunicationswhereinsaidofficialdirected RomuloMercado,theappellant'spredecessorininterest,toremovethetwodikeswhichhehadconstructedatbothendsof thecreeknamedBatasanLimasanorPinacBugalun,whichtraversespartofthehaciendadescribedincertificateofTitle No.329oftheregistryofdeedsofPampanga,andformerlybelongingtosaidRomuloMercado,butwhichnowbelongsto theappellantbyvirtueofaformaldonationmadetoherbysaidRomuloMercado,aftertheinstitutionofthisaction. Afterduetrial,thecourtaquoheldthatthecreekinquestionispropertyofthepublicdomain. Thecontentionoftheappellant'spredecessorininterestintherecordoftheinvestigationconductedbytheSecretaryof CommerceandCommunications,throughhisagents,andthatoftheappellant,bothinthecourtaquoandinthiscourt,is thatthesaidBatasanLimasanorPinacBugaluncreekisnotanaturalbutanartificialcreekwhichhadbeendevelopedon hishaciendabymeansofexcavationsmadebyhismenontwodifferentoccasions,theformerbeforetherevolutionor duringtheSpanishregime,andthelatteraftertherevolution. Theappellees,inturn,contendthatthecreekinquestionisanaturalnavigablecreekwhichalreadyexistedonthesaid haciendaoftheappellantnotonlylongbeforetherevolutionbutalsofromthetimeimmemorial. Theevidencepresentedbytheappellantshowsthatformerlywhenhersocalledhaciendastillbelongedtohergrandfather MarianoMercado,theportionofthesaidcreek,indicatedontheplanExhibit2bytwoparallellinesinblackinkdrawn fromthepointmarked3towardsthecenteruntilitturnsnorthwards,wasbutarecessorarmthencalledBugalun,ofthe NasiRiver,whicharmwaslostinthehacienda.ItextendedclosetoasmallcreekcalledBatasanLimasanwhichderivedits waters,particularlyduringhightide,fromthelargecreekcalledLimasanindicatedontheaforesaidplan. MarianoMercado,theoriginalownerofthehacienda,inordertofacilitatethecuttingandtransportationoffirewoodand otherproducts,producedonthesaidhacienda,towardstheNasiRiverontheeastortowardsLimasancreekonthewest, connectedthetworecessesorbodiesofwaterinquestionbymeansofexcavationsand,afterhavingsoconnectedthem, madeotherexcavationsatbothendstowardsthesaidriverandcreek,thusconstructingasortofcanaldirectlyconnecting bothbodiesofwater,andwhichlaterbecameknownastheBatasanLimasanorPinacBugaluncreek. ThesaidBatasanLimasanorPinacBugaluncreekorcanalalreadyexistedatthetimeoftheinstitutionoftheregistration proceedingswhereinjudgmentwasrenderedresultingintheissuanceofcertificateoftitleNo.329infavorofRomulo Mercado.Ontheplanoftheland,whichwaspresentedinthesaidcase,theaforesaidcreekappears;andatthetimethecase wastriedaswellaswhenthecertificateoftitlewasissuedinfavoroftheapplicantRomuloMercado,noneoftheherein defendantsnortheInsularGovernmentfiledoppositionorobjectionthereto. OncethesaidBatasanLimasanorPinacBugaluncreekorcanalwasopenedfromtheNasiRivertoLimasancreek,not onlytheresidents ofthe haciendaand those whovisited it but alsosome oftheresidents of thenearbybarrios and municipalitiesbegantouseitasameansofcommunicationinattendingtotheirneeds,sometimeswiththepermissionof theownersofthehacienda,andatothertimeswithouteventhelatter'sknowledge.ItwasthenthatRomuloMercado,the appellant'spredecessorininterest,decidedtoconvertthesaidcreekintoafishpondandwiththatobjectinview,in1928he closedthetwoopeningthereoftowardstheNasiRiverononesideandLimasancreekontheotherside. Theappellant'switnesses,RomuloMercado,MaximodelaPeaandAndres Limintestifiedthatthecreekinquestion becamenavigableonlyfromthetimeMarianoMercadohadexcavatedbothendsandthejunctionoftheformertworecesses fromwhichsaidcreekhadbeenformed;thattheformerownersofthehaciendahademployedabout60menforaperiodof twoweeksinordertoperformsuchtask,andthatduringtherevolutionandforabouttenyears,inviewofthefactthatmany peopleenteredthehaciendatocutorcarryawayfirewoodwithoutpermission,RomuloMercadoorderedthecreekclosedin ordertopreventtheentranceintoandpassageofstrangersthroughit. Ontheotherhand,theappellee'striedtoprovebymeansoftheirwitnesses CastorQuiambao,MaximinoGuintuand LorenzoMagat,thatthecreekinquestionhasexistedontheappellant'shaciendafromtimeimmemorial,andthattheyhad

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beenpassingthroughandfishinginit,asothershaddone,asoftenastheywished,longbeforetherevolutionuntilitwas closedbytheappellant'spredecessorininterestin1928.Tothateffect,theypresentedresolutionNo.6ofthemunicipal councilofMacabebe,Pampanga,placingatpublicauctiontheprivilegeoffishingintheBatasanLimasancreek(Exhibit6), amongotherriversandcreeks.However,theyfailedtoestablishthatanybodyhadeverobtainedsuchprivilege,forwhich reasonsaidevidencecannotbegivenanyweight,therebeingnodoubt,astherecanbenodoubt,thatamerenotice,as Exhibit 6, does not constitute sufficient evidence that the creek in question is the property of the public domain.1vvphi1.ne+ Thetestimonyofthesaidwitnessesfortheappelleesseemsinsufficienttoovercomethatofthewitnessesfortheappellant onthegroundthatCastorQuiambaoisrelativelyyoungandhehimselfadmittedthatinhisyouth,asheremembered,he usedtopassthroughthecreekinquestiononlyonceortwiceamonth.Theotherwitnesses,notbeingresidentsoftheplace, wereinnobetterpositiontoknowwhattheappellant'switnessesknewastothetruenature,conditionsandchangeswhich thesaidcreekhadundergone,inasmuchasthelatterwitnesseshadlivedandworkedinthatsameplaceformanyyears. However,consideringthattheevidenceofbothpartiesisequiponderant,couldnotthequestionbedecidedbytakinginto considerationonly,ormainly,theundisputedfactthatthecreekinquestion,bothduringthefirstyearsofitsexistence,when itwasbutasmallcreekformedbythechannelsorrecessescalledBatasanLimasanandBugalunbysomewitnesses,and afterithadbeenconvertedintosaidcreek,whethernaturallyorartificially,thatit,bymeansofman'slabor,withopenings toward the Nasi River and toward the Limasan creek, derived its waters from the aforesaid river and creek, which unquestionablybelongtothepublicdomain? Thelowercourt,invokingtheprovisionsofarticles339,407and408oftheCivilCode,decidedthequestionmainlyby takingsaidfactintoconsideration. Thepertinentpartsoftheaforesaidthreearticlesprovideasfollows: Propertyofpublicownershipis 1.Thatdevotedtopublicuse,suchasroads,canals,rivers,torrents,portsandbridgesconstructedbytheState, riverbanks,shores,roadsteads,andthatofasimilarcharacter.(Art.339.) Thefollowingareofpublicownership: 1.Riversandtheirnaturalchannels; 2.Continuousorintermittentwatersfromspringsorbrooksrunningintheirnaturalchannelsandthechannels themselves; 3.Watersrisingcontinuouslyorintermittentlyonlandsofpublicownership; xxxxxxxxx 8. Waters which flow continuous or intermittently from lands belonging to private parties, to the State, to provinces,ortotowns,fromthemomenttheyleavesuchlands.(Art.407.) Thefollowingareofprivateownership: 1.Waters,eithercontinuousorintermittentrisingonprivateestates,whiletheyrunthroughthem; 2.Lakesandpondsandtheirbedswhenformedbynatureonsaidestates; 3.Subterraneanwatersfoundonthesame; 4.Rainwatersfallingthereonaslongastheyremainwithintheirboundaries; 5.Thechannelsofflowingstreams,continuousorintermittent,formedbyrainwater,andthoseofbrookscrossing estateswhicharenotofpublicownership. Thewater,bed,banks,andfloodgatesofaditchoraqueductaredeemedtobeanintegralpartoftheestateor buildingforwhichthewatersareintended.Theownersofestatesthroughoralongtheboundariesofwhichthe aqueductpassescanassertnoownershipoverit,noranyrighttomakeuseofitsbedsorbanks,unlesstheybase theirclaimontitledeedswhichspecifytherightortheownershipclaimed.(Art,408.) Itwillbenotedthattheappellantcannotinvokeinherfavorthearticlelastquotedonthegroundthatalthoughitistruethat theBatasanLimasanorPinacBugaluncreekpassesthroughherhacienda,itisnonethelesstruethatitisnotincludedin anyofthekindsofprivatepropertythereinenumerated.Theappellantandherpredecessorsininterest,inclosingthetwo openingsofthesaidcreekandconvertingitintoafishpond,notonlyappropriatedforthemselvesthechannelofthesaid creekbutalsothecreekitself;andacreekisnotabrookbecausethelatterisbutashort,almostcontinuousstreamofwater (DiccionariodelaRealAcademiaEspaola),whiletheformerisarecessorarmextendingfromariver,whichparticipates intheebbandflowofthesea.(15EnciclopediaJuridicaEspaola,216.) Ontheotherhand,theaforecitedarticle339providesthatcanals,rivers,torrents,...andthoseofasimilarcharacterare propertyofpublicownership,andthesimilaritybetweenrivers,canals,andcreeksisundoubtedlyobviousontheground that,ashasbeenstated,acreekisnootherthananarmextendingfromariver.Furthermore,underarticle407,theBatasan LimasanorPinacBugaluncreekmaybeconsideredasbelongingtotheclassofpropertyenumeratedinparagraph8 thereof.And,inadditiontotheforegoing,theContentiousCourtofSpain(TribunalContenciosodeEspaa)inadecision dated June 25, 1890, laiddownthe doctrine that creeks are property of the public domain (15Enciclopedia Juridica

Espaola,216). AndevengrantingthattheBatasanLimasancreekacquiredtheproportionswhichithad,beforeitwasclosed,asaresultof excavationsmadebylaborersoftheappellant'spredecessorininterest,itbeingafactthat,sincethetimeitwasopenedasa waterroutebetweentheNasiRiverandLimasancreek,theownersthereofaswellasstrangers,thatis,boththeresidentsof thehaciendaandthoseofothernearbybarriosandmunicipalities,hadbeenusingitnotonlyfortheirbancastopassthrough butalsoforfishingpurposes,anditbeingalsoafactthatsuchwastheconditionofthecreekatleastsince1906untilitwas closedin1928,iftheappellantandherpredecessorsininteresthadacquiredanyrighttothecreekinquestionbyvirtueof excavationswhichtheyhadmadethereon,theyhadlostsuchrightthroughprescriptioninasmuchastheyfailedtoobtain, andinfacttheyhavenotobtained,thenecessaryauthorizationtodevoteittotheirownusetotheexclusionofallothers.The use and enjoyment of a creek, as any other property susceptible of appropriation, may be acquired or lost through prescription,andtheappellantandherpredecessorsininterestcertainlylostsuchrightthroughthesaidcause,andthey cannotnowclaimitexclusivelyforthemselvesafterthegeneralpublichadbeenopenlyusingthesamefrom1906to1928. Whentwodifferentinterests,onebeingprivateandtheotherpublic,areinconflictwithoneanother,theformershould yieldtothelatter. ItisuselessfortheappellantnowtoallegethatshehasobtainedcertificateoftitleNo.396inherfavorbecausethesaid certificatedoesnotconferuponheranyrighttothecreekinquestion,inasmuchasthecreek,beingofthepublicdomain,is includedamongthevariousexceptionsenumeratedinsection39ofActNo.496towhichthesaidcertificateissubjectby expressprovisionofthelaw,andfurthermore,becauseitsoappearsinthecertificateitself. ThedoctrinelaiddowninthecaseoftheGovernmentofthePhilippineIslandsvs.Santos(G.R.No.27202,promulgated September2,1927,notreported),whichtheappellantinvokesinherfavor,isnotapplicablehereinbecausethesubject matterinthatcaseisnotofthesamenatureastheBatasanLimasanorPinacBugaluncreek.Thethinginvolvedtherein wassimplyadateor,inthewordsofthetrialcourt,alowdepressiononthedefendant'slandwheretherewasawaterway passablebybancasathightide,butwhichcompletelydriedupatlowtideandduringthedryseason.Fromwhathasbeen hereinbeforestated,itmaybeinferredthattheBatasanLimasancreekisperfectlynavigablebybancasthroughouttheyear, inasmuchasatthetimeitwasmeasuredinNovemberbyemployeesandagentsoftheBureauofLands,itwasmorethan twometersdeepatitsmouthandaroundameterandahalfdeepatitsshallowparts.Furthermore,inthecaseofUrbano Santos,thecreekinquestionwasclosedafewyearsafterexcavationshadbeenmadeinthelandunderconsideration. Wherefore,thejudgmentappealedfromisherebyaffirmed,withcostsagainsttheappellant.Soordered. Street,Malcolm,AbadSantos,andButte,JJ.,concur.

G.R.No.L17240January31,1962 CLEMENCIAB.VDA.DEVILLONGCO,ETAL.,petitionersappellees, vs. HON.FLORENCIOMORENO,inhiscapacityasSecretary,DepartmentofPublicWorksandCommunications andBENIGNOMUSNI,respondentsappellants. E.VoltaireGarciaforpetitionersappellees. OfficeoftheSolicitorGeneralforrespondentsappellants. LABRADOR,J.: TheaboveentitledcaseinvolvestheapplicationandinterpretationofRepublicAct.No.2056,entitled"AnActtoprohibit, removeand/ordemolishtheconstructionofdams,dikesoranyworksinpublicnavigablewatersorwaterwaysandin communalfishinggrounds,toregulateworksinsuchwatersorwaterwaysandincommunalfishinggrounds,andtoprovide penaltiesforitsviolation,andforotherpurposes."ThepertinentprovisionsthereofinissueareSection1andthefirstpartof Section2,whichreadasfollows: Sec.2.WhenitisfoundbythesecretaryofPublicWorksandCommunications,afterduenoticeandhearing, thatanydam,dikeoranyotherworksnowexistingormayhereinafterbeconstructedencroachesintoanypublic navigableriver,stream,coastalwatersandanyotherpublicnavigablewatersorwaterways,orthattheyare contructedinareasdeclaredascommunalfishinggrounds,heshallhavetheauthoritytoordertheremovalofany suchworksandgivethepartyconcernedaperiodnottoexceedthirtydaysfortheremovalofthesame;Provide, Thatfishpondconstructionsorworksoncommunalfishinggroundsintroducedingoodfaithbeforetheareaswere proclaimedasfishinggroundsshallbeexemptedfromtheprovisionsofthisAct,providedsuchconstructionsor worksdonotobstructorimpedethefreepassageofanynavigableriver,stream,orwouldnotcauseinundationsof agriculturalareas....". Thefactsinvolvedinthecasemaybebrieflystatedasfollows:OnAugust15,1958,SenatorRogeliodelaRosacomplained withtheSecretaryofPublicWorksandCommunicationsagainstseveralfishpondownersinMacabebe,Pampanga,among whomispetitionerhereinClemenciaB.Vda.deVillongco.Thecomplaintchargesthathasappropriatedaportionofthe coastalwatersofPampanga,locallyknownas"Pantion",convertingportionsofthecoastalareasintofishponds. InvestigationswereconductedundertheauthorityoftheSecretary,whothereafterrenderedthefollowingdecision:. Complainantsallegethattheconversionofthisareaintoafishpondbytherespondentsdeprivedthemoftheusesof theareaasafishinggroundandfornavigation.Ontheotherhand,therespondentscontendthatthisareaisowned bythemasshownbythetitleaboveadvertedto. Arelocationsurvey,basedonthetitle,wasmadeontheareainquestiontodeterminewhetherthefishpond constructionsand/orworksoftherespondentsarewithinthetitledproperty.Saidsurveyshowsthataportionof ManilaBaycoveringanareaofapproximately24,860squaremeterswasincludedaspartofthefishpondbythe respondents. Thedefenseofrespondentsthattheareainquestionbeingaprivateproperty,isnotsubjecttotheprovisionsof RepublicAct2056,deservesconsideration.TheareabeingcoveredbyaTorrensCertificateofTitle,the respondent'stitlethereonisindefeasibleandimprescriptible.Assufficientlyestablished,theareainquestionisa foreshorelandandisdisposableunderSection59ofthePublicLandLaw.However,oftheenclosedportion,the areaof24,860squaremetershasbeenconclusivelyshownbytherelocationsurveyasnotwithintheboundariesof thetitledproperty.Bethatasitmay,thisportionisstillofpublicownershipandthecomplainantsshould,therefore, notbedeprivedofitsusesasafishinggroundandpassageway. PREMISESCONSIDERED,itisherebyorderedthattherespondentsremovetheirfishpondworksand/or constructionsinsofarasitencroachesuponthatportionofManilaBaycoveringtheareaofapproximately24,860 squaremetersandrestoretheoriginalconditionofsaidcoastalwaterwithinthirty(30)daysfromreceiptofthis decision:otherwise,thisOfficeoritsdulyauthorizedrepresentativeshallremovethesameattheexpenseofthe respondentswithinten(10)daysfollowingtheexpirationofthethirtydayperiod,withoutprejudicetoinstituting judicialactionagainstthemundertheprovisionsofSection3ofR.A.2056."(Annex"C",pp.2021). ClemenciaB.Vda.deVillongcofiledamotiontoreconsiderthedecision,butthesamewasdeniedbytheUndersecretaryin aresolutiondatedAugust5,1959.Thereupon,onAugust20,1959,petitionerhereinfiledthepresentsuitintheCourtof FirstInstanceofRizal,callingattentiontotheaboveproceedings,especiallythedecisionoftheSecretaryandtheresolution oftheUndersecretarydenyingthemotionforreconsideration,andarguingthatRepublicAct.No.2056,underwhichthe

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Secretaryissuedtheorderabovequoted,isnullandvoidastoconferringupontheSecretarypowertodecideastowhether ornotthedikesandotherconstructionsencroachuponcoastalwaters,publicstreams,communalfishinggrounds,etc.;that theUndersecretaryactedwithoutorinheexcessofjurisdictionindelegatingreceptionofevidence,incausingresurveyof thepremisesbyapersonwhoisnotadulylicensedsurveyor,inviolationoftheagreementtothateffect,intheabsenceof petitionerVillongco;thattheSecretary'sorderofdemolitionofthefishpondswasbeyondthejurisdictionofsaidSecretary andisunconstitutionalasanencroachmentupontheprivaterightsofthepetitioners,etc.Uponthepresentationofthe petition,thecourtbelowissuedawritofpreliminaryinjunctionagainsttheenforcementoftheSecretary'sdisputedorder. Trialofthecasewashad,withthesubmissionofastipulationoffacts,withexhibits,enteredintobetweentheparties,after whichthecourt,throughHon.AndresReyes,renderedadecisiondeclaringthattheSecretaryofPublicWorksand CommunicationswasinerrorinorderingthedemolitionofthedikesandotherconstructionsofthepetitionerVda.de Villongco,onthegroundthatsaiddikesandotherconstructionsfallundertheexceptionmentionedinSection2ofRepublic Act.No.2056.Wequotetheorderherein:. Withoutthenecessityofresolvingthevariousincidentalissuesraisedbytheparties,theCourtisoftheopinion thatthecaseatbarhingesononlyonevitalissuethatiswhetherthepetitionersproperlyfallwithinthebenefitsof theexemptionexpresslyprovidedforundersection2ofRepublicAct2056,towit:. PROVIDED,Thatfishpondconstructionsoncommunalfishinggroundsintroducedingoodfaithbefore theareaswereproclaimedasfishinggroundsshallbeexemptedfromtheprovisionsofthisAct,provided suchconstructionsorworksdonotobstructorimpedethefreepassageofanynavigableriver,stream,or wouldnotcauseinundationsofagriculturalareas.. ANDPROVIDED,FINALLY,thattheremovalofanysuchworksshallnotimpairfishpondscompletedor abouttobecompletedwhichdonotencroachorobstructanypublicnavigableriverorstreamand/orwhich wouldnotcauseinundationsofagriculturalareasandwhichhavebeenconstructedingoodfaithbeforethe areawasdeclaredcommunalfishinggrounds.'. Aperusaloftheaboveprovisionsrevealsthatthepetitionershereinwouldbeentitledtothebenefitsof saidexemptionsprovidedthefollowingrequisitesarepresent:first,thattheconstructionsorworksin questionwereconstructedingoodfaithbeforetheareasweredeclaredcommunalfishinggrounds;second, thatsaidconstructionsorworkswouldnotimpedethefreepassageofanynavigableriverorstream;and lastly,thatthesamewouldnotcauseinundationsofagriculturalareas. Thereisnoquestionthattheconstructionsofpetitionerswouldnotcauseinundationsofagriculturalareas. ThiswasadmittedintheanswerofrespondentSecretaryandlaterincludedinthestipulationoffacts. ThereisalsonodisputeastothefactthatthesamewereconstructedingoodfaithbeforeJune13,1958 whenRepublicActNo.2056tookeffectandthereforebeforeanyfishinggroundcouldhavebeendeclared communal."(pp.23,ofthedecision). TherespondentSecretaryhasappealedfromtheabovedecision,allegingthefollowingerrors:. I THE LOWER COURT ERRED IN GIVING DUE COURSE TO THE INSTANT CASE FOR CERTIORARI AND PROHIBITIONANDINDECIDINGTHESAMEWITHOUTCONSIDERINGTHEISSUESINVOLVEDTHEREIN. II THE LOWER COURT ERRED IN INTERPRETING THE PROVISIONS OF REPUBLIC ACT NO. 2056 WHICH, OTHERWISE,ISCLEARANDUNAMBIGUOUS,ANDINCONSTRUINGTHEEXEMPTINGCLAUSEPROVIDED INSEC.2THEREOFTOINCLUDEFISHPONDCONSTRUCTIONSORWORKOUTSIDETHEAREASDECLARED ASCOMMUNALFISHINGGROUNDS. III THE LOWER COURT ERRED IN HOLDING THAT THE APPELLEES FAIL WITHIN SAID EXEMPTING PROVISIONOFSECTION2OFREPUBLICACTNO.2056. IV THELOWERCOURTERREDINISSUINGEXPARTETHEWRITOFPRELIMINARYINJUNCTION,ANDLATER MAKINGITPERMANENT.. V THELOWERCOURTERREDINGRANTINGTHEINSTANTPETITIONFORCERTIORARIANDPROHIBITION. AnexaminationofthefactsadducedatthetrialshowsthatpetitionerVda.deVillongcoistheownerofafishpondsituated inMacabebe,Pampanga,coveredbyTransferCertificateofTitleNo.7087datedJanuary28,1952,containinganareaof90 hectares,26aresand54centares,boundedontheSWandWbytheManilaBayandontheNWbytheManilaBayandthe SupangMaruginas(AnnexBStipulation).AcompetentsurveyorinthepersonoftheDredgeOperationSupervisorofthe DepartmentofPublicWorksconductedaninvestigationandsubmittedareport(AnnexEoftheStipulationofFacts),with anaccompanyingsketchofthefishpondshowingthedisputedportion,includedwithinthedikeofthepetitioner.The

existingdikeofthepetitionerisastraightlinefrompointAofAnnexE1topointD,anditincludesaportionofpublicland indicatedinred(portionBcinsaidAnnexE1,containinganareaof2hectares,48aresand60centares(24,860square meters).Thesurveyorfoundthefollowing: ItseemsthattheaveragedepthalongtheseasideofthedikeADasshownintheattachedplanmaybeaboutone (1)footM.L.L.W.1wph1.t ThatsectionBCofthedikeisalongtheprolongationofsectionABtowardspointCandthatnopartofdikeBC protrudingtowardsthesea. ThatnavigationalongdikeADduringlowtideislimitedtovesselswithadraftofaboutonefoot. ThatsectionBCofthedikewillobstructnavigationtowardsapublicdomain(shadedredintheattachedplan) withanindicatedareaofabout24,880squaremeters. Inmyopinion,sectionBCofthedikewillnotobstructnavigationalongorparalleltoit."(AnnexEStipulation). ThecourtbelowheldthatsaidportionfallsundertheexceptionofSection2ofRepublicActNo.2056,becauseitdoesnot interferewithnavigationanddoesnotproduceinundationandthedikeswereconstructedbeforetheareawasafishing ground.(Thepartieshavestipulatedthatthereisyetnoorderdeclaringtheareaasafishingground.) AstudyoftheprovisionsofRepublicActNo.2056,especiallythesectionswequoteabovedisclosethattheauthority grantedtheSecretaryofPublicWorksandCommunicationsistodeclarethattheconstructionorbuildingofdams,dikesor anyotherworksencroachingonnavigablerivers,streams,oranyothernavigablepublicwatersorwaterwaysisprohibited andtoordertheirremovalordemolition.Theareaincludedinthedikesofthepetitioner,indicatedintheredshadedportion intheStipulation,Exh.E1,wasnotapartofthelandtitledinthenameofthepetitioner,asshownbythefactthatthetitled landboundsontheWbyalinefrompoint1topoint19,point19topoint20andpoint20topoint21ofLotNo.2indicated intheplanoftheland.Saidredshadedportion,whichcontainsanareaof24,860squaremeters,isclearly,therefore,a portionoftheManilaBayareaorcoastalarea,whichthepetitionerhasevidentlyincludedwithinherdikes,perhapsto straightenthesame.Astheshadedportionhasadepthof1footandlowtide,itisevidentlynavigableathightideforvessels ofdeeperdraftof1footandatlowtidenavigabletothoseof1footdraft.Itis,therefore,apartofthewaterways,taking intoaccountthattheManilaBayarea,especiallythoseborderingthefishpondsintheprovincesofPampanga,Bulacanand Rizalarewaterways,especiallyusedbyfishermenandfishpondownerstobringintheircatchtomarket.Theshadedarea, therefore,isapublicproperty,notsusceptibletoappropriationbyanyprivateindividual,notonlybecauseitbelongstothe StatebutalsobecauseitbelongstotheStatebutalsobecauseitisusedasawaterway.. Article1.ThefollowingarepartoftheNationaldomainopentopublicuse: xxxxxxxxx 2.Thecoastsea,thatis,themaritimezoneencirclingthecoasts,tothefullwidthrecognizedbyinternational law....."(Art.1,paragraphs1and2,SpanishLawofWaters;seealsoInsularGovernmentv.Aldecoa,19Phil.505. 510.). TheerrorofthecourtbelowliesinthefactthatitconsideredthecoastseaasfallingundertheexceptionofSection2.But anexaminationofSection2showsthatcoastalwatersorpublicwaterwaysarenotincludedintheexception.Onlythose worksconstructedoncommunalfishinggroundsareexempted;constructionsoncoastalwatersorpublicwaterwaysarenot subjecttotheexception.Asidefromthatfact,noinundationorfreepassageofanynavigablerivercantakeplaceonthe coastalwatersorwaterways,socoastalwatersarenotsubjecttotheexception.Theexception,apparently,appliesonlyto constructionsonnavigablerivers,whentheseconstructionsdonotimpedeorobstructthepassageoftheriverandwhen theydonotcauseinundationofagriculturalareas.Coastalwatersarenotwithinthecontemplationoftheexceptionbecause thereisnonavigableriverorstreamincoastalwatersandneithermaytherebeaninundationtherein. We,therefore,findthatthecourtbelowerredinitsdecisionthattheconstructionsofthepetitioner,subjectmatterofthe caseatbar,fallwithintheexceptionmentionedinSec.2oftheActanditsorderinissuingtheprohibitionistherefore, unwarranted. Theothererroristhefailureofthepetitionertoavailoftheadministrativeremedy,whichconsistsinappealingfromthe decisionoftheSecretaryofPublicWorksandCommunicationstothePresidentofthePhilippines.Wefindthisassignment oferroralsotobewelltaken.Wehave,however,chosentoconsiderthemeritsoftheissueinvolvedforthemoreprompt determinationofthecaseandforaproperunderstandingoftheprovisionsofRepublicAct2056. WHEREFORE,thedecisionandtheinjunctionissuedbythecourtbelowareherebysetaside,andthepetitionagainstthe SecretaryofPublicWorksandCommunications,dismissed,withcostsagainstthepetitioner. Bengzon,C.J.,Padilla,BautistaAngelo,Concepcion,Paredes,DizonandDeLeon,JJ.,concur.

G.R.No.L26053February21,1967 CITYOFMANILA,plaintiffappellee, vs. GERARDOGARCIACARMENCITAVILLANUEVA,MODESTAPARAYNONARCISOPARAYNO,JUAN ASPERAS,MARIATABIASIMEONDILIMAN,AQUILINOBARRIOSLEONORARUIZ,LAUREANO DIZO,BERNABEAYUDALEOGARDADELOSSANTOS,ISABELOOBAOBANDREARIPARIP,JOSE BARRIENTOS, URBANO RAMOS,1 ELENA RAMOS, ESTEFANIA NEPACINA, MODESTA SANCHEZ, MARCIALLAZARO,MARCIANAALANO,HONORIOBERIOSEDORAORAYLE,GLORIAVELASCO, WILARICORICAMATA,BENEDICTODIAZ,ANADEQUIZ(MRS.)ALUNAN,LORENZOCARANDANG, JUANPECAYO,FELICIDADMIRANDAEMIGDIOEGIPTO,defendantsappellants. MauricioZ.Alunanfordefendantsappellants. CityFiscal'sOfficeforplaintiffappellee. SANCHEZ,J.: PlaintiffCityofManilaisownerofparcelsofland,formingonecompactarea,borderingKansas,VermontandSingalong streetsinMalate,Manila,andcoveredbyTorrensTitlesNos.49763,37082and37558.Shortlyafterliberationfrom1945to 1947,defendantsentereduponthesepremiseswithoutplaintiff'sknowledgeandconsent.Theybuilthousesofsecondclass materials,againwithoutplaintiff'sknowledgeandconsent,andwithoutthenecessarybuildingpermitsfromthecity.There theylivedthrutheyearstothepresent. InNovember,1947,thepresenceofdefendantshavingpreviouslybeendiscovered,defendantsFelicidadMiranda(Emigdio Egipto),ModestaC.Parayno,BenedictoDiaz,LaureanoDizo,JoseBarrientos,ElenaRamos,EstefaniaNepacina,Modesta Sanchez,HonorioBerio,GloriaVelasco,AnaDequisAlunanandBenedictoOfiaza(predecessorofdefendantCarandang) weregivenbyMayorValerianoE.Fugosowrittenpermitseachlabeled"leasecontract"tooccupyspecificareasinthe property upon conditions therein set forth. Defendants Isabelo Obaob and Gerardo Garcia (in the name of Marta A. Villanueva)receivedtheirpermitsfromMayorManueldelaFuenteonJanuary29andMarch18,respectively,bothof1948. Therestofthe23defendantsexhibitednone. Fortheiroccupancy,defendantswerechargednominalrentals.1wph1.t FollowingaretherentalsdueasofFebruary,1962:
NAME 1.GerardoGarcia 2.ModestaC.Parayno 3.JuanAsperas 4.MariaTabia 5.AquilinoBarrios (LeonoraRuiz) 6.LaureanoDizo 7.BernabeAyuda 8.IsabeloObaob 9.JoseBarrientos 10.CeciliaManzanoin lieuofUrbanoRamos(deceased) 11.ElenaRamos 12.EstefaniaNepacina 13.ModestaSanchez Area insq.m. 66.00 87.75 39.00 35.20 54.00 35.00 39.60 75.52 39.53 46.65 34.80 41.80 33.48 Monthly Rental P7.92 10.53 4.68 5.76 4.32 2.80 3.17 9.06 4.74 5.60 2.78 3.34 2.68 Amt.duefrom dateofdelinquency toFeb.1962 P1,628.97 379.08 9.36 570.24 99.36 22.40 323.34 208.38 744.18 Paidupto Feb.1962. 186.26 504.34 444.88

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14.MarcialLazaro 15.MarcianaAlano 16.HonorioBerio 17.GloriaVelasco 18.WilaricoRicamata 19.BenedictoDiaz 20.AnaDequisAlunan 21.LorenzoCarandang 22.JuanN.Pecayo 23.FelicidadMiranda

22.40 25.80 24.00 32.40 45.83 40.20 64.26 45.03 25.52 48.02

1.79 2.06 1.92 2.59 3.67 4.82 7.71 5.40 3.06 5.76

688.32 255.44 188.16 56.98 739.68 Paidupto March1962. 30.84 437.40 30.60 132.48 P7,580.69

EpifaniodelosSantosElementarySchoolisclose,thoughnotcontiguous,totheproperty.Cametheneedforthisschool's expansion;itbecamepressing.OnSeptember14,1961,plaintiff'sCityEngineer,pursuanttotheMayor'sdirectivetoclear squatters' houses on city property, gave each of defendants thirty (30) days to vacate and remove his construction or improvementonthepremises.ThiswasfollowedbytheCityTreasurer'sdemandoneachdefendant,madeinFebruaryand March,1962,forthepaymentoftheamountduebyreasonoftheoccupancyandtovacateinfifteen(15)days.Defendants refused.Hence,thissuittorecoverpossession.2 Thejudgmentbelowdirecteddefendantstovacatethepremises;topaytheamountsheretoforeindicatedoppositetheir respectivenames;andtopaytheirmonthlyrentalsfromMarch,1962,untiltheyvacatethesaidpremises,andthecosts. Defendantsappealed. 1.Wearecalledupontoruleontheforefrontquestionofwhetherthetrialcourtproperlyfoundthatthecityneeds thepremisesforschoolpurposes. Thecity'sevidenceonthispointisExhibitE,thecertificationoftheChairman,CommitteeonAppropriationsof theMunicipalBoard.ThatdocumentrecitesthattheamountofP100,000.00hadbeensetasideinOrdinance4566, the19621963ManilaCityBudget,fortheconstructionofanadditionalbuildingoftheEpifaniodelosSantos ElementarySchool.Itisindeedcorrecttosaythatthecourtbelow,atthehearing,ruledouttheadmissibilityofsaid document.Butthen,inthedecisionunderreview,thetrialjudgeobviouslyrevisedhisviews.Hetheredeclaredthat therewasneedfordefendantstovacatethepremisesforschoolexpansion;hecitedtheverydocument,ExhibitE, aforesaid. Itis beyonddebatethat acourt ofjusticemayalterits rulingwhilethecaseiswithinits power,tomakeit conformabletolawandjustice.3Suchwasdonehere.Defendants'remedywastobringtotheattentionofthecourt itscontradictorystance.Nothavingdoneso,thisCourtwillnotreopenthecasesolelyforthispurpose.4 Anyway,eliminationofthecertification,ExhibitE,asevidence,wouldnotprofitdefendants.For,inreversinghis stand,thetrialjudgecouldwellhavetakenbecausethewasdutyboundtotakejudicialnotice5ofOrdinance 4566.ThereasonbeingthatthecitycharterofManilarequiresallcourtssittingthereintotakejudicialnoticeofall ordinances passed by the municipal board of Manila.6 And, Ordinance 4566 itself confirms the certification aforesaidthatanappropriationofP100,000.00wassetasideforthe"constructionofadditionalbuilding"ofthe EpifaniodelosSantosElementarySchool. Furthermore,defendants'positionisvulnerabletoassaultfromathirddirection.Defendantshaveabsolutelyno righttoremaininthepremises.Theexcusethattheyhavepermitsfromthemayorisatbestflimsy.Thepermitsto occupyarerecoverableonthirtydays'notice.Theyhavebeenaskedtoleave;theyrefusedtoheed.Itisinthis factual backgroundthat wesaythat thecity's needforthepremises is unimportant.Thecity's right tothrow defendantsoutoftheareacannotbegainsaid.Thecity'sdominicalrighttopossessionisparamount.Iferrorthere wasinthefindingthatthecityneedstheland,sucherrorisharmlessandwillnotjustifyreversalofthejudgment below.7 2.Butdefendantsinsistthattheyhaveacquiredthelegalstatusoftenants.Theyarewrong. Theyenteredtheland,builthousesofsecondclassmaterialsthereonwithouttheknowledgeandconsentofthe city.Theirhomeswereerectedwithoutcitypermits. Theseconstructionsareillegal.Inalanguagefamiliartoall,defendantsaresquatters: Sincethelastglobalwar,squattingonanother'spropertyinthiscountryhasbecomeawidespreadvice.Itwasand

isablight.Squatters'areasposeproblemsofhealth,sanitation.Theyarebreedingplacesforcrime.Theyconstitute proofthatrespectforthelawandtherightsofothers,eventhoseofthegovernment,arebeingflouted.Knowingly, squattershaveembarkedontheperniciousactofoccupyingpropertywheneverandwhereverconvenienttotheir interestswithoutasmuchasleave,andevenagainstthewill,oftheowner.Theyareemboldenedseemingly becauseoftheirbeliefthattheycouldviolatethelawwithimpunity.Thepugnaciousnessofsomeofthemhastied upthehandsoflegitimateowners.Thelatterarethuspreventedfromrecoveringpossessionbypeacefulmeans. Governmentlandshavenotbeensparedbythem.Theyknow,ofcourse,thatintrusionintoproperty,governmentor private,iswrong.But,then,themillsofjusticegrindslow,mainlybecauseoflawyerswho,bymeans,fairorfoul, arequiteoftensuccessfulinprocuringdelayofthedayofreckoning.Rampancyofforcibleentryintogovernment landsparticularly,isabettedbytheapathyofsomepublicofficialstoenforcethegovernment'srights.Obstinacyof thesesquattersisdifficulttoexplainunlessitisspawnedbyofficialtolerance,ifnotoutrightencouragementor protection.Saidsquattershavebecomeinsensibletothedifferencebetweenrightandwrong.Tothem,violationof lawmeansnothing.Withtheresultthatsquattingstillexists,muchtothedetrimentofpublicinterest.Itishightime that,inthisaspect,sanityandtheruleoflawberestored.Itisinthisenvironmentthatwelookintothevalidityof thepermitsgranteddefendantsherein. Thesepermits,erroneouslylabeled"lease"contracts,wereissuedbythemayorsin1947and1948whentheeffects ofthewarhadsimmereddownandwhenthesedefendantscouldhaveverywelladjustedthemselves.Twodecades havenowelapsedsincetheunlawfulentry.Defendantscouldhave,iftheywantedto,locatedpermanentpremises fortheirabode.Andyet,usurpersthattheyare,theypreferredtoremainoncityproperty. Defendants'entryasaforesaidwasillegal.Theirconstructionsareasillegal,withoutpermits.8Thecitycharter enjoinsthemayorto"safeguardallthelands"oftheCityofManila.9 Surelyenough,thepermitsgranteddidnot"safeguard"thecity'slandinquestion.Itisourconsideredviewthatthe MayoroftheCityofManilacannotlegalizeforcibleentryintopublicpropertybythesimpleexpedientofgiving permits,or,forthatmatter,executingleases. Squattingisunlawfulandnoamountofacquiescenceonthepartofthecityofficialswillelevateitintoalawfulact. Inprinciple,acompoundofillegalentryandofficialpermittostayisobnoxioustoourconceptofproperofficial normofconduct.Because,suchpermitdoesnotservesocialjustice;itfostersmoraldecadence.Itdoesnotpromote publicwelfare;itabetsdisrespectforthelaw.Ithasitsrootsinvice;soitisaninfectedbargain.Officialapprovalof squattingshouldnot,therefore,bepermittedtoobtaininthiscountrywherethereisanorderlyformofgovernment. We,accordingly,rulethattheManilamayorsdidnothaveauthoritytogivepermits,writtenororal,todefendants, andthatthepermitshereingrantedarenullandvoid. 3.Letuslookintothehousesandconstructionsplantedbydefendantsonthepremises.Theyclearlyhinderand impairtheuseofthatpropertyforschoolpurposes.Thecourtsmaywelltakejudicialnoticeofthefactthathousing schoolchildrenintheelementarygradeshasbeenandstillisaperennialprobleminthecity.Theselfishinterestsof defendantsmusthavetoyieldtothegeneralgood.Thepublicpurposeofconstructingtheschoolbuildingannexis paramount.10 Inthesituationthusobtaining,thehousesandconstructionsaforesaidconstitutepublicnuisanceperse.Andthis, forthereasonthattheyhinderandimpairtheuseofthepropertyforabadlyneededschoolbuilding,tothe prejudiceoftheeducationoftheyouthoftheland.11Theyshacklethehandsofthegovernmentandthusobstruct performanceofitsconstitutionallyordainedobligationtoestablishandmaintainacompleteandadequatesystemof publiceducation,andmore,to"provideatleastfreepublicprimaryinstruction".12 Reasondictatesthatnofurtherdelayshouldbecountenanced.Thepublicnuisancecouldwellhavebeensummarily abatedbythecityauthoritiesthemselves,evenwithouttheaidofthecourts.13 4.DefendantschallengethejurisdictionoftheCourtofFirstInstanceofManila.Theysaythatthecaseshouldhave beenstartedinthemunicipalcourt.Theypropuptheirpositionbytheavermentthatnoticeforthemtovacatewas onlyservedinSeptember,1961,andsuitwasstartedinJuly,1962.TheirlegalgroundisSection1,Rule70ofthe RulesofCourt.Wehavereachedtheconclusionthattheirforcibleentrydatesbacktotheperiodfrom1945to1947. Thatentrywasnotlegalizedbythepermits.Theirpossessioncontinuedtoremainillegalfromincipiency.Suitwas filedlongaftertheoneyearlimitationsetforthinSection1ofRule70.AndtheManilaCourtofFirstInstancehas jurisdiction.14 Uponthepremises,wevotetoaffirmthejudgmentunderreview.Costsagainstdefendantsappellants.Soordered. Concepcion,C.J.,Reyes,J.B.L.,Dizon,Regala,Makalintal,Bengzon,J.P.,ZaldivarandCastro,JJ.,concur.

G.R.No.L37995August31,1987 BUREAUOFFORESTRY,BUREAUOFLANDSandPHILIPPINEFISHERIESCOMMISSION,petitioners, vs. COURTOFAPPEALSandFILOMENOGALLO,respondents. PARAS,J.: BeforeUsisapetitionforreviewoncertiorari,whichseekstoannulandsetasidetheDecision1(promulgatedonApril11, 1973)oftherespondentcourtinCAG.R.No.38163R,affirmingthedecision2(datedApril6,1966)ofthethenCourtof FirstInstanceofIloiloinLandRegistrationCaseNo.N506,G.L.R.O.RecordNo.N20783entitled"FilomenoGallo, Applicantvs.BureauofForestry,BureauofLands,andPhilippineFisheriesCommission,oppositors."Thedispositive portionofthetrialcourt'sdecisionreadsasfollows: WHEREFORE,thecourtOrderstheregistrationofLotsNos.2,3,and4andthebiggerportionofLotNo.1after excludingtheportionIdentifiedasLot1AtogetherwiththeimprovementsthereoninthenameofFilomenoGallo, oflegalage,widower,Filipinocitizen,andresidentof155FuentesStreet,IloiloCity,Philippines.LotsNos.1,2 and3aresubjecttotheroadrightofwayof15meterswidewhichispresentlyknownasSto.RosarioRizal MontpillerprovincialRoadandBuenavistaDaragaprovincialRoadtheybeingpropertiesoftheProvinceofIloilo andshouldberegisteredinthenameofsaidprovince.TheoppositionsoftheDirectorofLands,Directorof ForestryandthePhilippineFisheriesCommissionaredismissed.Lot1Awithanareaof2.6864hectareswhichis enclosedinredpencilandisfoundinsideLotNo.1intheplanExhibitisherebydeclaredpublicland.Afterthe decisionhasbecomefinalletthecorrespondingdecreebeissued. SOORDERED.(p.38,JointRecordonAppealAnnex"A."p.25,Rollo) Thisappealalsoseekstoannulandsetasiderespondentcourt'sresolutiondatedDecember14,1973denyingforlackof merit,hereinpetitioners'motionforreconsideration. Thebasicissuewhichpetitionersraiseinthisappealis WhetherornottheclassificationoflandsofthepublicdomainbytheExecutiveBranchoftheGovernmentinto agricultural,forestormineralcanbechangedorvariedbythecourtdependingupontheevidenceadducedbefore it.(p.9,BriefforthePetitioners,p.105,Rollo) Theantecedentfactsofthecaseareasfollows: On July 11, 1961, four (4) parcels of land situated in Buenavista, Iloilo described in Plan Psu150727, containing an approximateareaof30.5943hectareswerethesubjectofanapplicationforregistrationbyMercedesDiagowhoalleged amongothersthatsheherselfoccupiedsaidparcelsoflandhavingboughtthemfromthetestateestateofthelateJoseMa. Navawho,inhislifetime,hadboughtthelandsinturnfromCanutoGustiloonJune21,1934.TheDirectorofLands opposedsaidapplicationonthegroundthatneithertheapplicantnorherpredecessorsininteresthavesufficienttitleover the lands applied for, which could be registered under the Torrens systems, and that they have never been in open, continuousandexclusivepossessionofthesaidlandsforatleast30yearspriortothefilingoftheapplication.TheDirector ofForestryontheotherhandanchoredhisoppositionprincipallyonthegroundthatcertainspecificportionsofthelands subjectmatteroftheapplication,withanareaofapproximately194,080squaremetersaremangroveswampsandarewithin TimberlandBlock"B"L.C.ProjectNo.38,L.C.MapNo.1971ofBuenavista,Iloilo. OnJune30,1965,respondentFilomenoGallo,havingpurchasedthesubjectparcelsoflandfromMercedesDiagoonApril 27,1965,movedtobesubstitutedinplaceofthelatter,attachingtohismotionanAmendedApplicationforRegistrationof Title substantially reproducing the allegations in the application of Mercedes Diago. Petitioner Philippine Fisheries CommissionalsomovedonAugust30,1965tobesubstitutedinplaceofpetitionerBureauofForestryasoppositorovera portionofthelandsoughttoberegistered,supervisionandcontrolofsaidportionhavingbeentransferredfromtheBureau ofForestrytothePhilippineFisheriesCommission. OnApril6,1966,thetrialcourtrendereditsdecisionorderingtheregistrationofthefour(4)parcelsoflandinthenameof respondentFilomenoGalloafterexcludingaportionIdentifiedasLot"1A"whichisthesiteofthemunicipalhallof Buenavistatown,andsubjectingLotsNos.1,2and3totheroadofwayof15meterswidth. PetitionersappealedfromsaiddecisiontotherespondentCourtofAppealsassigningthefollowingerrorsintheirbrief: THE TRIAL COURT ERRED IN ORDERING THE REGISTRATION OF THE SUBJECT LAND WHICH CONSISTSOFTIMBERLAND,FORESHORELANDANDLANDBELONGINGTOTHEPUBLICDOMAIN HENCEUNREGISTERABLE. THE TRIAL COURT ERRED IN HOLDING THAT THE POSSESSION OF THE APPLICANTAPPELLEE

RepublicofthePhilippines SUPREMECOURT Manila FIRSTDIVISION

AND HIS PREDECESSORSININTEREST HAD BEEN PEACEFUL, OPEN, CONTINUOUS, UNINTERRUPTEDANDADVERSETOCLAIMANTSANDINTHECONCEPTOFOWNER.(p.6,Brieffor thePetitioners,p.105,Rollo) Respondentcourtaffirmedsaiddecisionanddeniedamotionforreconsiderationofthesamehencethepresentpetitionwith two(2)assignederrors,basicallythesameissuesraisedwiththerespondentcourt: RESPONDENT COURT ERRED IN NOT HOLDING THAT THE DETERMINATION OF WHETHER A PUBLIC LAND IS AGRICULTURAL OR STILL A FOREST LAND RESTS EXCLUSIVELY UPON THE DIRECTOR OF FORESTRY (NOW DIRECTOR OF FOREST DEVELOPMENT), THE SECRETARY OF NATURALRESOURCES)ANDTHEPRESIDENTOFTHEPHILIPPINES. RESPONDENTCOURTERREDINNOTHOLDINGTHATTHELANDISPRESUMEDTOBELONGTO THE PUBLIC DOMAIN AND PRIVATE RESPONDENT HEREIN HAS NOT CONVINCINGLY SHOWN THATTHEREMOTEPREDECESSORININTERESTPOSSESSEDTHELANDINQUESTIONSINCETIME IMMEMORIAL.(pp.9&20,BriefforthePetitioners,p.105,Rollo) Outofthe30.5943hectaresappliedforregistrationundertheTorrensSystem,11.1863hectaresarecoconutlandsand admittedlywithinthedisposableportionofthepublicdomain.ThesearemoreparticularlyIdentifiedasparcels"B,"B1", "B2"and"B3"ofthesketchplanExh."1A."Therest,consistingof19.4080hectaresandIdentifiedasparcelsA,A1,A 2andA3ofthesameplanExh."1A,"isnowthecenterofcontroversyofthepresentappeal. Petitionerscontendthatrespondentcourtcompletelyignoredtheundisputedfactsthat1)thecontrovertedareaiswithin TimberlandBlock"B,"L.C.Project No.38,L.C.MapNo.1971ofBuenavista,Iloiloandthat 2)thecertificationof February18,1956ofthethenDirectorofForestrytotheeffectthattheareainquestionisneededforforestpurposes. RespondentcourtinaffirmingthedecisionoftheIloilotrialcourtruledthatalthoughthecontrovertedportionof19.4080 hectaresaremangroveandnipaswampswithinTimberlandBlock"B,"L.C.ProjectNo.38,samecannotbeconsideredpart ofthepublicforestnotsusceptibleofprivateownershipsincepetitionersfailedtosubmitconvincingproofthattheselands aremorevaluableforforestrythanforagricultural purposes,andthepresumptionisthat theseareagricultural lands. Respondentcourtbaseditsconclusionuponthepremisethatwhetherornotacontrovertedparceloflandisforestland,isa questionoffactwhichshouldbesettledbycompetentproofs,andifsuchaquestionbeanissueinalandregistration proceeding,itisincumbentupontheDirectorofForestrytosubmittothecourtconvincingproofsthatthelandindisputeis notmorevaluableforagriculturethanforforestpurposes.Itisthepositionofrespondentthatrespondentcourtdid"not hesitatetoapplythispresumptionwithfullforceparticularlywhere,asinthecaseatbar,thelandsappliedforhavebeen possessed and cultivated by the applicant and his predecessorsininterest for a long number of years without the governmenttakinganypositivesteptodislodgetheoccupantsfromtheirholdingswhichhavepassedfromonetoanotherby inheritance or by purchase." (p. 9, Brief for private respondents) Otherwise stated, it is Our impression that private respondentsclaimtheruleofprescriptionagainstthegovernment. Suchcontentionsofprivaterespondentsdonotholdwater.Admittedlythecontroversialareaiswithinatimberlandblockas classificationofthemunicipalityandcertifiedtobytheDirectorofForestryonFebruary18,1956aslandsneededforforest purposesandhencetheyareportionsofthepublicdomainwhichcannotbethesubjectofregistrationproceedings.Clearly thereforethelandispubliclandandthereisnoneedfortheDirectorofForestrytosubmittothecourtconvincingproofs thatthelandindisputeisnotmorevaluableforagriculturethanforforestpurposes,astherewasnoquestionofwhetherthe landisforestlandornot.BeitrememberedthatsaidforestlandhadbeendeclaredandcertifiedassuchbytheDirectorof the Bureau of Forestry on February 18, 1956, several years before the original applicant of the lands for registration MercedesDiago,fileditonJuly11,1961.InthecaseofGovernmentofthePhilippineIslandsvs.Abella,49Phil.49,cited byprivaterespondentsthemselvesintheirbrief,Weheld FollowingthedecisionofAnkonvs.GovernmentofthePhilippineIslands(40Phil.10),itisagainheld,that whetheraparticularparceloflandismorevaluableforforestrypurposesthanforagriculturalpurposes,orvice versa,isafactwhichmustbeestablishedduringthetrialofthecase.Whethertheparticularlandisagricultural, forestryormineralisaquestiontobesettledineachparticularcaseunlesstheBureauofForestryhas,underthe authorityconferreduponitbylaw,priortotheinterventionofprivateinterest,setasidesaidlandforforestryor mineralresources.(Italicsforemphasis) WealsoheldinthecaseofRepublicvs.Animas,56SCRA499,503that ...Asageneralrule,timberorforestlandsarenotalienableordisposableundereithertheConstitutionof1935or theConstitutionof1973. ...ItistheBureauofForestrythathasjurisdictionandauthorityoverthedemarcation,protection,management, reproduction,occupancyanduseofallpublicforestsandforestreservationsandoverthegrantingoflicensesfor thetakingofproductstherefrom,includingstoneandearth(Section1816oftheRevisedAdministrativeCode). ThattheareainquestionisaforestortimberlandisclearlyestablishedbythecertificationmadebytheBureauof ForestDevelopmentthatitiswithintheportionoftheareawhichwasrevertedtothecategoryofforestland,

approvedbythePresidentonMarch7,1958. AsprovidedforunderSec.6ofCommonwealthActNo.141,whichwasliftedfromActNo.2874,theclassificationor reclassificationofpubliclandsintoalienableordisposable,mineralorforestlandsisnowaprerogativeoftheExecutive Departmentofthegovernmentandnotofthecourts.Withtheserules,thereshouldbenomoreroomfordoubtthatitisnot thecourtwhichdeterminestheclassificationoflandsofthepublicdomainintoagricultural,forestormineralbutthe Executive Branchofthe Government,throughthe Officeofthe President. Hence, it was graveerror and/orabuse of discretionfortherespondentcourttoignoretheuncontrovertedfactsthat(1)thedisputedareaiswithinatimberlandblock and(2)ascertifiedtobythethenDirectorofForestry,theareaisneededforforestpurposes. Furthermore,privaterespondentsCannotclaimtohaveobtainedtheirtitlebyprescriptioninasmuchastheapplicationfiled bythemnecessarilyimpliedanadmissionthattheportionsappliedforarepartofthepublicdomainwhichcannotbe acquiredbyprescription,unlessthelawexpresslypermitsit.Itisaruleoflawthatpossessionofforestlands,howeverlong, cannotripenintoprivateownership(DirectorofForestryvs.Munoz,23SCRA1184). WHEREFORE,inthelightoftheforegoing,theassaileddecisionisherebySETASIDE,andanewoneisherebyrendered, declaringthat: 1)Parcels"B,""B1,""B2and"B3"ofthesketchplanExhibit"1A"consistingof11.1863hectaresofcoconutlandand admittedlywithinthedisposableportionofthepublicdomainareherebyorderedregisteredinthenameoftheapplicant FilomenoGalloand/orhissuccessorsininterestasprovidedforbythePublicLandLaw;and 2)Parcels"A,""A1,"and"A2,"and"A3"ofthesameplanExh."1A,"consistingof19.4080hectares,areforestlandsor landsofthepublicdomainoftheRepublicofthePhilippinesandarethereforeinalienable. SOORDERED. Teehankee,C.J.,Narvasa,CruzandGancayco,JJ.,concur.

Republicvs.CAGRNo.4040216March1987

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L17635March30,1963 EDUARDOSANCHEZ,GREGORIONUEZ,SULPICIOBANAAG,LINOBASAandRODOLPOFERNANDEZ, petitionersappellants, vs. MUNICIPALITYOFASINGAN,ProvinceofPangasinan,respondentappellee. Castillo,Diaz,TayabasandTorresforpetitionersappellants. Guillermo,Navarro,RameandVentureforrespondentappellee. MAKALINTAL,J.: ThiscaseisbeforeusonappealbytheplaintiffsfromthedecisionoftheCourtofFirstInstanceofPangasinan. Thefactsasfoundbythetrialcourtareasfollows:Thedefendantmunicipality,appelleeherein,istheownerofatriangular stripoflandsituatedbetweenthesiteofthemunicipalschoolbuildingandtheprovincialroad,measuring42x261/2x46 meters.Onthatlandappellants,withtheknowledgeandimpliedconsentofthemunicipality,constructedtemporarystores andbuildingsoflightmaterialsshortlyaftertheendofthelastwar.Between1952and1959theypaidrentstoappellee. WhenanewlocaladministrationtookoveraftertheelectionsofNovember1959themunicipalcouncilpassedaresolution notifyingtheoccupantsofthelandthatthesamewasneededforcertainpublicpurposes,suchasparkingspace,expansion ofschoolgrounds,wideningoftheroadandwaitingareaforpedestrians.Appellantswerethereforeadvisedtovacateonor beforeMay15,1960,somefive(5)monthsafterthedateofnotice.Insteadofmoving,however,appellantsfiledapetition forprohibitionwiththecourtaquoonMay10,1960topreventthemunicipalityfromejectingthemfromtheland,withthe alternativeprayerthatshouldtheybeejected,appelleebeorderedtoreimbursetothemtherentswhichtheyhadpaid,inthe totalsumofP1,178.20.Therewasalsoademandfordamagesandattorney'sfees.Aftertrial,thecourtdismissedthepetition andorderedappellantstovacatetheland,withcosts. Appellants'firstcontentionhereisthatthelandinquestionbelongstotheProvinceofPangasinanandthereforeappelleehas norighttoordertheirejectment.Thepremiseofthecontentionisincorrect,fortheclearandspecificfindingofthecourta quo isthatthesaidlandisownedbytheMunicipalityofAsingan.Thisisafactualconclusionthatisnolongeropento reviewinthepresentappeal.Theadditionalstatementbythecourt"thatitispartofthebroadshoulderoftheprovincial road"doesnotmakethelandprovincialproperty,suchstatementbeingmerelydescriptiveofitslocationandnotindicative ofitsownership.. ThenextissueraisedbyappellantsiswithreferencetothesumofP1,178.20paidbythemasrentsfrom1952to1959.They claimtherighttobereimbursedincasetheyshouldbeejected,andcitethecaseofRojasv.MunicipalityofCavite,30Phil. 607,wherethisCourt,afterdeclaringnullandvoidtheleaseofapublicplazabelongingtothesaidmunicipalityand orderingthelesseetovacatethesame,orderedthemunicipalitytoreimbursetherentalscollected.Itshouldbenotedthat whilethepropertyinvolvedinthatcasewasclearlydevotedtopublicuse,andthereforeoutsidethecommerceofman,and couldnotunderanycircumstancehavebeentheobjectofavalidcontractoflease,appellee'spositionhereinisthattheland inquestionispatrimonialcharacter,notbeingincludedinanyofthecategoriesofmunicipalpropertiesforpublicuse enumeratedinArticle424oftheCivilCode,namely:"municipalstreets,squares,fountains,publicwaters,promenadesand publicworksforpublicserviceinsaidmunicipality."Thereisindeednothinginthedecisionappealedfromorinthebriefs of the parties to show that the land was devoted to any of those purposes when appellants began their occupancy. Consequently,theimpliedagreementofleasewiththemwasnotnullandvoid,althoughterminableuponthenoticeas appelleehereinelectedtoterminateit.Thatbeingso,thereisnogroundonwhichreimbursementoftherentsmaybe ordered. Inanyevent,evengrantingthatthelandinquestionisforpublicuseandthereforethemunicipalityofAsingancouldnot legallyleaseittoprivateparties,weseenojustificationforthestandmaintainedbyappellantsthatafterhavingoccupied saidlandandderivedbenefitstherefromtheyshouldstillbeentitledtorecoverwhattheyhavepaidasaconditionfortheir ejectment.Thatwouldbetoenrichthemundulytotheprejudiceofappellee.Besides,itmaybesaidthatwhentheybuilt theirtemporarystructuresonthelandwiththelatter'sknowledgeandimpliedconsenttheybothtreateditasmunicipal patrimonial property. Insofar as the rents already paid by them are concerned appellants are estopped from claiming

otherwiseinordertoobtainarecovery. Wherefore,thepartiesrespectfullypraythattheforegoingstipulationoffactsbeadmittedandapprovedbythisHonorable Court,withoutprejudicetothepartiesadducingotherevidencetoprovetheircasenotcoveredbythisstipulationoffacts. Thejudgmentappealedfromisaffirmed,withcostagainstappellants. Bengzon,C.J.,Padilla,BautistaAngelo,Labrador,Concepcion,Reyes,J.B.L.,Barrera,Paredes,DizonandRegala,JJ., concur.

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L2017November24,1906 THEMUNICIPALITYOFOAS,plaintiffappellee, vs. BARTOLOMEROA,defendantappellant. DelPan,OrtigasandFisher,forappellant. EnriqueLlopizforappellee. WILLARD,J.: TheplaintiffbroughtthisactionfortherecoveryofatractoflandinthepuebloofOas,claimingthatitwasapartofthe publicsquareofsaidtown.Thedefendantinhisanswerallegedthathewastheowneroftheproperty.Judgmentwas renderedinfavoroftheplaintiffandthedefendanthasbroughtthecaseherebybillofexceptions. Aswelookatthecase,theonlyquestioninvolvedisoneoffact.Wasthepropertyinquestionapartofthepublicsquareof thetownofOas?Thetestimonyuponthispointinfavoroftheplaintiffconsistedofstatementsmadebywitnessestothe effectthatthislandhadalwaysbeenapartofthepublicsquare,andofcertainresolutionsadoptedbytheprincipaliaofthe pueblorecitingthesamefact,themostimportantofthesebeingtheminutesofthemeetingofthe27thofFebruary,1892.In thatdocumentitisexpresslystatedthatthislandwasboughtin1832bythethenparishpriestforthebenefitofthepueblo. Itrecitesvariousproceedingstakenthereafterinconnectionwiththisownership,includingamongthemanorderofthe corregidorofNuevaCaceresprohibitingtheerectionofhousesuponthelandbyreasonofthefactaboverecitednamely, thatthelandbelongedtothepueblo.Thisresolutionterminatedwithanordertotheoccupantofthebuildingthenstanding uponthepropertythatheshouldnotrepairit.Thedefendantsignedthisresolution. Itfurtherappearsthatthesamebuildingwasalmostentirelydestroyedbyabaguioonthe13thand14thofMay,1893,and thattheauthoritiesofthepueboorderedthecompletedemolitionthereof.Theresolutionofthe31stofMay,1893,declared thatthethenownerofthebuilding,JoseCastillo,hadnorighttoreconstructitbecauseitwassituateduponlandwhichdid notbelongtohim.Thisresolutionwasalsosignedbythedefendant. Theevidenceonthepartofthedefendanttendstoshowthatin1876JuanaRicarteandJuanaRiquizasoldthelandin questiontoJuanRoco,andthatonthe17thdayofDecember,1894,JoseCastillosoldittothedefendant.Nodeedof conveyancefromJuanRocotoJoseCastillowaspresentedinevidence,butCastillo,testifyingasawitness,saidthathehad boughtthepropertybyverbalcontractfromRoco,hisfatherinlaw.Thedefendant,afterhispurchasein1894,procureda possessoryofinformationwhichwasallowedbyanorderofthejusticeofthepeaceofOasonthe19thdayofJanuary,1895, andrecordedintheRegistryofPropertyonthe28thofMarchofthesameyear. Inthisstateoftheevidence,wecannotsaythattheproofisplainlyandmanifestlyagainstthedecisionofthecourtbelow. Unlessitisso,thefindingoffactmadebythatcourtcannotbereversed.(DelaRamavs.DelaRama,201U.S.,303.) ThetwostatementssignedbyRoa,onein1892andtheotherin1893,arecompetent evidenceagainsthim.Theyare admissionsbyhimtotheeffectthatatthattimethepueblowastheownerofthepropertyinquestion.Theyare,ofcourse, notconclusiveagainsthim.Hewasentitledto,anddidpresentevidencetoovercometheeffectoftheseadmissions.The evidencedoesnotmakeoutacaseofestoppelagainsthim.(sec.333,par.1,CodeofCivilProcedure.) TheadmissibilityofthesestatementsmadebyRoadonotrestuponsection278oftheCodeofCivilProcedure,which relatestodeclarationsoradmissionsmadebypersonsnotapartytothesuit,butitrestsupontheprinciplethatwhenthe defendantinasuithashimselfmadeanadmissionofanyfactpertinenttoissueinvolved,itcanbereceivedagainsthim. Thisactionwascommencedonthe17thofDecember,1902.Thereisnoevidenceofanyadverseoccupationofthislandfor thirtyyears,consequentlytheextraordinaryperiodofprescriptiondoesnotapply.Thedefendantcannotrelyuponthe ordinaryperiodofprescriptionoftenyearsbecausehewasnotaholderingoodfaith.Heknewatthattimeofhispurchase in1894,andhadsostatedinwriting,thatthepueblowastheowneroftheproperty.Sothat,evenifthestatuteoflimitations ranagainstamunicipalityinreferencetoapublicsquare,itcouldnotavailthedefendantinthiscase. ItappearsthatRoahasconstructedupontheproperty,andthattherenowstandsthereon,asubstantialbuilding.Asearlyas 1852thislandhadbeenusedbythemunicipalityconstructedthereonbuildingsforthestorageofpropertyoftheState,

quartersforthecuadrilleros,andothersofalikecharacter.Itthereforehadceasedtobepropertyusedbythepublicandhad becomeapartofthe bienespatrimoniales ofthepueblo.(CivilCode,arts.341,344.)Tothecaseareapplicablethose provisionsoftheCivilCodewhichrelatetotheconstructionbyonepersonofabuildinguponlandbelongingtoanother. Article364oftheCivilCodeisasfollows: Wheretherehasbeenbadfaith,notonlyonthepartofthepersonwhobuilt,sowed,orplantedonanother'sland, butalsoonthepartoftheownerofthelatter,therightsofbothshallbethesameasiftheyhadactedingoodfaith. Badfaithonthepartoftheownerisunderstoodwhenevertheacthasbeenexecutedinhispresencewithhis knowledgeandtoleranceandwithoutobjection. Thedefendantconstructedthebuildinginbadfaithfor,aswehavesaid,hehadknowledgeofthefactthathisgrantorwas nottheownerthereof.Therewasabadfaithalsoonthepartoftheplaintiffinaccordancewiththeexpressprovisionsof article364sinceitallowedRoatoconstructthebuildingwithoutanyoppositiononitspartandtosooccupyitforeight years.Therightsofthepartiesmust,therefore,bedeterminedasiftheybothhadactedingoodfaith.Theirrightsinsuch casesaregovernedbyarticle361oftheCivilCode,whichisasfollows: Theownerofthelandonwhichthebuilding,sowing,orplantingisdoneingoodfaithshallhavearightto appropriateashisownthework,sowing,orplantingaftertheindemnitymentionedinarticles453and454,or,to obligethepersonwhohasbuiltorplanted,topayhimthevalueofthelandandtoforcethepersonwhosowedto paytheproperrent. Thejudgmentofthecourtbelowissomodifiedastodeclarethattheplaintiffistheownerofthelandandthatithasthe optionofbuyingthebuildingthereon,whichisthepropertyofthedefendant,orofsellingtohimthelandonwhichit stands.Theplaintiffisentitledtorecoverthecostsofbothinstances.1wphil.net Aftertheexpirationoftwentydaysletjudgmentbeenteredinaccordanceherewithandatthepropertimethereafterletthe recordberemandedtothecourtbelowforproperaction.Soordered. Johnson,CarsonandTracey,JJ.,concur.

 G.R.No.L40474August29,1975 CEBUOXYGEN&ACETYLENECO.,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. JoseAntonioRCondeforpetitioner. OfficeoftheActingSolicitorGeneralHugoE.Gutierrez,Jr.,AssistantSolicitorGeneralOctavioR.RamirezandTrial AttorneyDavidR.Hilarioforrespondents.. CONCEPCION,Jr.,J.: ThisisapetitionforthereviewoftheorderoftheCourtofFirstInstanceofCebudismissingpetitioner'sapplicationfor registrationoftitleoveraparceloflandsituatedintheCityofCebu. TheparceloflandsoughttoberegisteredwasonlyaportionofM.BorcesStreet,Mabolo,CebuCity.OnSeptember23, 1968,theCityCouncilofCebu,throughResolutionNo.2193,approvedonOctober3,1968,declaredtheterminalportionof M.BorcesStreet,Mabolo,CebuCity,asanabandonedroad,thesamenotbeingincludedintheCityDevelopmentPlan.1 Subsequently,onDecember19,1968,theCityCouncilofCebupassedResolutionNo.2755,authorizingtheActingCity Mayortosellthelandthroughapublicbidding.2Pursuantthereto,thelotwasawardedtothehereinpetitionerbeingthe highestbidderandonMarch3,1969,theCityofCebu,throughtheActingCityMayor,executedadeedofabsolutesaleto thehereinpetitionerforatotalconsiderationofP10,800.00.3Byvirtueoftheaforesaiddeedofabsolutesale,thepetitioner filedanapplicationwiththeCourtofFirstinstanceofCebutohaveitstitletothelandregistered.4 OnJune26,1974,theAssistantProvincialFiscalofCebufiledamotiontodismisstheapplicationonthegroundthatthe propertysoughttoberegisteredbeingapublicroadintendedforpublicuseisconsideredpartofthepublicdomainand thereforeoutsidethecommerceofman.Consequently,itcannotbesubjecttoregistrationbyanyprivateindividual.5 Afterhearingtheparties,onOctober11,1974thetrialcourtissuedanorderdismissingthepetitioner'sapplicationfor registrationoftitle.6Hence,theinstantpetitionforreview. Fortheresolutionofthiscase,thepetitionerposesthefollowingquestions: (1)DoestheCityCharterofCebuCity(RepublicActNo.3857)underSection31,paragraph34,givetheCityof Cebuthevalidrighttodeclarearoadasabandoned?and (2)Doesthedeclarationoftheroad,asabandoned,makeitthepatrimonialpropertyoftheCityofCebuwhichmay betheobjectofacommoncontract? (1)ThepertinentportionsoftheRevisedCharterofCebuCityprovides: Section31.LegislativePowers.Anyprovisionoflawandexecutiveordertothecontrarynotwithstanding,theCity Councilshallhavethefollowinglegislativepowers: xxxxxxxxx (34)...;tocloseanycityroad,streetoralley,boulevard,avenue,parkorsquare.Propertythuswithdrawnfrom publicservitudemaybeusedorconveyedforanypurposeforwhichotherrealpropertybelongingtotheCitymay belawfullyusedorconveyed. Fromtheforegoing,itisundoubtedlyclearthattheCityofCebuisempoweredtocloseacityroadorstreet.Inthecaseof Favisvs.CityofBaguio,7wherethepowerofthecityCouncilofBaguioCitytoclosecitystreetsandtovacateor withdrawthesamefrompublicusewassimilarlyassailed,thiscourtsaid: 5.Soitis,thatappellantmaynotchallengethecitycouncil'sactofwithdrawingastripofLapuLapuStreetatits deadendfrompublicuseandconvertingtheremainderthereofintoanalley.Theseareactswellwithintheambitof thepowertocloseacitystreet.Thecitycouncil,itwouldseemtous,istheauthoritycompetenttodetermine whetherornotacertainpropertyisstillnecessaryforpublicuse. Suchpowertovacateastreetoralleyisdiscretionary.Andthediscretionwillnotordinarilybecontrolledor interferedwithbythecourts,absentaplaincaseofabuseorfraudorcollusion.Faithfulnesstothepublictrustwill bepresumed.Sothefactthatsomeprivateinterestsmaybeservedincidentallywillnotinvalidatethevacation ordinance. (2)Sincethatportionofthecitystreetsubjectofpetitioner'sapplicationforregistrationoftitlewaswithdrawnfrompublic use,itfollowsthatsuchwithdrawnportionbecomespatrimonialpropertywhichcanbetheobjectofanordinarycontract. Article422oftheCivilCodeexpresslyprovidesthat"Propertyofpublicdominion,whennolongerintendedforpublicuse

RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION

orforpublicservice,shallformpartofthepatrimonialpropertyoftheState." Besides,theRevisedCharteroftheCityofCebuheretoforequoted,inveryclearandunequivocal terms,states that: "Propertythuswithdrawnfrompublicservitudemaybeusedorconveyedforanypurposeforwhichotherrealproperty belongingtotheCitymaybelawfullyusedorconveyed." Accordingly,thewithdrawalofthepropertyinquestionfrompublicuseanditssubsequentsaletothepetitionerisvalid. Hence,thepetitionerhasaregisterabletitleoverthelotinquestion. WHEREFORE,theorderdatedOctober11,1974,renderedbytherespondentcourtinLandReg.CaseNo.N948,LRCRec. No.N44531isherebysetaside,andtherespondentcourtisherebyorderedtoproceedwiththehearingofthepetitioner's applicationforregistrationoftitle. SOORDERED. Makalintal,C.J,Fernando,BarredoandAquino,JJ.,concur

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L7054January20,1913 MUNICIPALITYOFHINUNANGAN,plaintiffappellee, vs. THEDIRECTOROFLANDS,defendantappellant. AttorneyGeneralVillamor,forappellant. ProvincialFiscalDelaRama,forappellee. MORELAND,J.: ThisisanappealfromthejudgmentoftheCourtofLandRegistration,orderingtheregistrationofthetitleofthepetitioner tothelandsdescribedinthepetition.TheappealistakenbytheInsularGovernmentfromtheregistrationofthetitleofone oftheparcelsoflandonly.ItissituatedinthemunicipalityofHinunangan,ProvinceofLeyte,andcontainsanareaof 10,328.8squaremeters.Itisboundedonthenortheastbythemaritimezone;onthesoutheastbyNorthAmericaStreet;on thesouthwestbyManililiStreet,andonthenorthwestbySanIsidroLabradorStreet.Uponthislotisbuiltastonefortwhich hasstoodtherefromtimeimmemorialandwasintimespastusedasadefenseagainsttheinvasionoftheMoros. Formerly,asnow,thedefenseofthenationalterritoryagainstinvasionbyforeignenemiesresteduponthestateandnotupon thetownsandvillagesandforthisreasonallofthedefenseswereconstructedbytheNationalGovernment.Involume2, book3,title7,law1oftheLawsoftheIndiesappearsthefollowing: Wecommandthatallthegroundroundaboutthecastlesandfortressesbeclearandunoccupied,andifanybuilding iserectedwithin300pacesofthewallorotherbuildingsostrongthatevenatagreaterdistanceitwouldprejudice thedefenses,itshallbetorndown,andtheownerofthesameshallbepaidfromtheRoyalTreasuryforthe damagescausedhim. Book4,title7,law12,readsasfollows: Weorderthat,forthesecurityanddefenseofthecitiesasisnowassuredbythecastlesandfortresses,nobuilding shallbeerectedwithin300pacesofthewallsorstockadesofthenewcities. Article339oftheCivilCodeisasfollows,inpart: ART.339.Thefollowingarepublicproperty: xxxxxxxxx 2.Thatwhichbelongsprivatelytothestate,whichisnotforpublicuseandwhichisdestinedforthepublicgoodor toincreasethenationalriches,suchaswalls,fortressesandotherconstructionsforthedefenseofthecountry,and theminesaslongasnoconcessioninregardtothemismade. Article341oftheCivilCodeprovides: ART.341.Publicproperty,whenitceasestobeusedforthepublicgoodorforthenecessitiesofthedefenseofthe country,becomesapartofthepropertyofthestate. Fromtheseprovisionsitseemsclearthatthefortressinquestionwaserectedforthenationaldefenseandwasapartofthe propertyofthestatedestinedandusedforthatpurpose.Asanecessaryresult,thelanduponwhichitstandsmustalsohave beendedicatedtothatpurpose. Thefactthatsaidfortressmaynothavebeenusedformanyyearsforthepurposesforwhichitwasoriginallybuiltdoesnot ofnecessitydeprivethestateofitsownershiptherein.Aswehaveseen,theCivilCodeprovidesthat,whenthefortress ceasestobeusedforthepurposesforwhichitwasconstructed,itbecomesthepropertyofthestateinwhatmaybecalled the private sense. That the municipality may have exercised within recent years acts of ownership over the land by permittingittobeoccupiedandconsentingtotheerectionofprivatehousesthereondoesnotdeterminenecessarilythatthe landhasbecomethepropertyofthemunicipality.Wehaveheldinseveralcasesthat,wherethemunicipalityhasoccupied landsdistinctlyforpublicpurposes,suchasforthemunicipalcourthouse,thepublicschool,thepublicmarket,orother necessarymunicipalbuilding,wewill,intheabsenceofprooftothecontrary,presumeagrantfromthestateinfavorofthe

municipality;but,asindicatedbythewording,thatrulemaybeinvokedonlyastopropertywhichisuseddistinctlyfor publicpurposes.Itcannotbeappliedagainstthestatewhenoccupiedforanyotherpurpose. Theevidencedoesnotdisclosethatthemunicipalityhasusedthelandforpurposesdistinctlypublic. Thejudgmentinrelationtotheparceloflandheretoforedescribedisreversedandthepetitionastothatparceldismissed.In allotherrespectsthejudgmentisaffirmed.Soordered. Arellano,C.J.,Torres,Mapa,Johnson,andTrent,JJ.,concur.

RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.L33022April22,1975 CENTRALBANKOFTHEPHILIPPINES,petitioner, vs. COURTOFAPPEALSandABLAZACONSTRUCTION&FINANCECORPORATION,respondents. F.E.Evangelistaforpetitioner. Cruz,Villarin&Lauretaforprivaterespondent. BARREDO,J. PetitionoftheCentralBankofthePhilippinesforreviewofthedecisionoftheCourtofAppealsinCAG.R.No.43638R affirmingthejudgmentoftheCourtofFirstInstanceofRizal inCivilCaseNo.Q10919sentencedpetitionertopay respondentAblazaConstructionandFinanceCorporationdamagesforbreachcontractinthatafterhavingformallyand officially awarded, pursuant to the results of the usual bidding to Ablaza in December 1965 the "contract" for the constructionofitsSanFernando,LaUnionbranchbuildingandallowedsaidcontractortocommencetheworkuptoabout May,1966,albeitwithoutanywrittenformalcontracthavingbeenexecuted,theBankfailedandrefusedtoproceedwiththe project,unlesstheplanswererevisedandalowerpricewereagreedtobyAblaza,theBankclaimingthatitsactionwas pursuanttothepolicyoffiscalrestraintannouncedbythethennewPresidentofthePhilippinesonDecember30,1965and theMemorandumCircularNo.1datedDecember31,1965ofthesamePresident. Thefactualbackgroundofthiscaseisrelatedinthefollowingportionsofthedecisionofthetrialcourt,whichtheCourtof Appealsaffirmedwithoutmodification:t.hqw Sometimein1965,defendantCentralBankofthePhilippinesissuedInvitationstoBidandInstructionstoBidders forthepurposeofreceivingsealedproposalsforthegeneralconstructionofitsvariousproposedregionaloffices, includingtheCentralBankregionalofficebuildinginSanFernando,LaUnion. InresponsetotheaforesaidInvitationstoBid,theplaintiffAblazaConstructionandFinanceCorporation,which wasoneofthequalifiedbidders,submittedabidproposalforthegeneralconstructionofdefendant'sproposed regionalofficebuildinginSanFernando,LaUnionatthepublicbiddingheldonNovember3,1965.Thesaid proposalwas,asrequiredbythedefendantaccompaniedbyacashbidder'sbondinthesumofP275,000.00. OnDecember7,1965,theMonetaryBoardofthedefendantCentralBankofthePhilippines,afterevaluatingallthe bidproposalssubmittedduringtheabovementionedbidding,unanimouslyvotedandapprovedtheawardtothe plaintiff of the contract for the general construction of defendant's proposed regional office building in San Fernando,LaUnion,forthesumofP3,749,000.00underplaintiff'sProposalItemNo.2. Pursuantthereto,onDecember10,1965,Mr.RizalinoL.Mendoza,AssistanttotheGovernorandconcurrentlythe ChairmanoftheManagementBuildingCommitteeofthedefendantCentralBankofthePhilippines,setatelegram totheplaintiff,informingthelatterthatthecontractforthegeneralconstructionofdefendant'sproposedregional officebuildinginSanFernando,LaUnion,hadbeenawardedtotheplaintiff.Thesaidtelegramwasfollowedbya formalletter,alsodatedDecember10,1965,dulysignedbysaidMr.RizalinoL.Mendoza,confirmingtheapproval oftheawardoftheabovestatedcontractunderplaintiff'sProposalItemNo.2intheamountofP3,749,000.00. Uponreceiptoftheaforementionedletter,plaintiffimmediatelyacceptedthesaidawardbymeansofaletterdated December15,1965,wherebyplaintiffalsorequestedpermissionforitsworkmentoenterthesiteoftheproject, builda temporaryshelterand enclosure,and dosomeclearingjobthereat. Accordingly,saidpermissionwas grantedbythedefendantasembodiedinitsletterdatedJanuary4,1966,addressedtotheplaintiff.. Withinfive(5)daysfromreceiptbytheplaintiffofthesaidnoticeofaward,andseveraltimesthereafterMr. NicomedesC.Ablaza,anofficeroftheplaintiffcorporation,wentpersonallytoseeMr.RizalinoL.Mendozaatthe latter'sCentralBankofficetofollowupthesigningofthecorrespondingcontract.Aperformancebondinthetotal amountofP962,250.00(P275,000.00ofwhichwasincashandP687,250.00intheformofasuretybond)was subsequentlypostedbytheplaintiffincompliancewiththeabovestatedInstructionstoBidders,whichbondwas dulyacceptedbythedefendant. Pursuanttothepermissiongrantedbythedefendant,asaforesaid,plaintiffcommencedactualconstructionworkon the project about the middle of January, 1966. On February 8, 1966, bymeans of a formal letter, defendant requestedtheplaintifftosubmit aschedule ofdeliveries ofmaterials which,accordingtoplaintiff's accepted proposal,shallbefurnishedbythedefendant.Incompliancetherewith,onFebruary16,1966,plaintiffsubmittedto thedefendantthescheduleofdeliveriesrequestedfor. Duringtheperiodwhentheactualconstructionworkontheprojectwasinprogress,Mr.NicomedesG.Ablazahad

severalmeetingswithMr.RizalinoL.Mendozaatthelatter'sofficeintheCentralBank.Duringthosemeetings, theydiscussedtheprogressoftheconstructionworkbeingthenundertakenbytheplaintiffoftheprojectsofthe defendantinSanFernando,LaUnion,includingtheprogressoftheexcavationwork. SometimeduringtheearlypartofMarch,1966,Mr.RizalinoL.Mendozawasattheconstructionsiteofthesaid project.Whilehewasthere,headmittedhavingseenpileofsoilinthepremises.Atthattime,theexcavationwork beingundertakenbytheplaintiffwasabout20%complete.OnMarch22,1966,defendantagainwrotetheplaintiff, requestingthelattertosubmitthenameofitsrepresentativeauthorizedtosignthebuildingcontractwiththe defendant.Incompliancewiththesaidrequest,plaintiffsubmittedtothedefendantthenameofitsdulyauthorized representativebymeansofaletterdatedMarch24,1966. AmeetingcalledbythedefendantwasheldattheconferenceroomoftheCentralBankonMay20,1966.Atthe saidmeeting,the defendant, thruFinanceSecretary EduardoRomualdez, announced, amongother things,the reductionoftheappropriationsfortheconstructionofthedefendant'svariousproposedregionaloffices,including thatoftheproposedSanFernando,LaUnionregionalofficebuilding,theconstructionofwhichhadalreadybeen startedbytheplaintiff.HealsostatedthattheCentralBankAssociatedArchitectswouldbeaskedtopreparenew plansanddesignsbasedonsuchreducedappropriations.Thedefendant,duringthatsamemeeting,alsoadvisedthe plaintiff,thruMessrs.NicomedesG.AblazaandAlfredoG.Ablaza(whorepresentedtheplaintiffcorporationat thesaidmeeting),tostopitsconstructionworkontheCentralBankRegionalofficebuildinginSanFernando,La Union.Thiswasimmediatelycompliedwithbytheplaintiff,althoughitsvariousconstructionequipmentremained inthejobsite.Thedefendantlikewisepresentedcertainofferandproposalstotheplaintiff,amongwhichwere:(a) theimmediatereturnofplaintiff'scashbidder'sbondofP275,000.00;(b)thepaymentofinterestonsaidbidder's bondat12%perannum;(c)thereimbursementtotheplaintiffofthevalueofalltheworkaccomplishedatthesite; (d)theenteringintoanegotiatedcontractwiththeplaintiffonthebasisofthereducedappropriationfortheproject inquestion;and(e)thereimbursementofthepremiumonplaintiff'sperformancebond.Notoneoftheseoffersand proposalsofthedefendant,however,wasacceptedbytheplaintiffduringthatmeetingofMay20,1966. On June 3, 1966, plaintiff, thru counsel, wrote the defendant, demanding for the formal execution of the correspondingcontract,withoutprejudicetoitsclaimfordamages.Thedefendant,thruitsDeputyGovernor,Mr. AmadoR.Brinas,onJune15,1966,repliedtothesaidletteroftheplaintiff,wherebythedefendantclaimedthatan agreementwasreachedbetweentheplaintiffandthedefendantduringthemeetingheldonMay20,1966.Onthe followingday,however,initsletterdatedJune16,1966,theplaintiff,thrucounsel,vehementlydeniedthatsaid partiesconcludedanyagreementduringthemeetinginquestion. OnJuly5,1966,defendantagainofferedtoreturnplaintiff'scashbidder'sbondintheamountofP275,000.00.The plaintiff,thrucounsel,onJuly6,1966,agreedtoaccept thereturnofthesaidcashbond,without prejudice, however,toitsclaimsascontainedinitsletterstothedefendantdatedJune3,June10,andJune16,1966,andwith furtherreservationregardingpaymentofthecorrespondinginterestthereon.OnJuly7,1966,thesaidsumof P275,000.00wasreturnedbythedefendanttotheplaintiff. OnJanuary30,1967,inaccordancewiththeletteroftheplaintiff,thrucounsel,datedJanuary26,1967,the constructionequipmentoftheplaintiffwerepulledoutfromtheconstructionsite,forwhichtheplaintiffincurred haulingexpenses. Thenegotiationsofthepartiesforthesettlementofplaintiff'sclaimsoutofcourtprovedtobefutile;hence,the presentactionwasinstitutedbyplaintiffagainstthedefendant."(Pp.249256,Rec.onAppeal). ItmaybeaddedthattheInstructionstoBiddersonthebasisofwhichthebidandawardinquestionweresubmittedand madecontained,amongothers,thefollowingprovisions:t.hqw IB113.4TheacceptanceoftheProposalshallbecommunicatedinwritingbytheOwnerandnootheractofthe OwnershallconstitutetheacceptanceoftheProposal.TheacceptanceofaProposalshallbindthesuccessful biddertoexecutetheContractandtoberesponsibleforliquidateddamagesashereinprovided.Therightsand obligationsprovidedforintheContractshallbecomeeffectiveandbindinguponthepartiesonlywithitsformal execution. xxxxxxxxx IB114.1ThebidderwhoseproposalisacceptedwillberequiredtoappearattheOfficeoftheOwnerinperson,or, ifafirmorcorporation,adulyauthorizedrepresentativeshallsoappear,andtoexecutethatcontractwithinfive(5) daysafternoticethatthecontracthasbeenawardedtohim.Failureorneglecttodososhallconstituteabreachof agreementeffectedbytheacceptanceoftheProposal. xxxxxxxxx IB118.1TheContractorshallcommencetheworkwithinten(10)calendardaysfromthedatehereceivesacopyof the fully executed Contract, and he shall complete the work within the time specified." (Pp. 1819& 5859, PetitionerAppellant'sBrief.)

Inthelightofthesefacts,petitionerhasmadethefollowingassignmentoferrors:t.hqw I. THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS A PERFECTED CONTRACT BETWEEN PETITIONER CENTRAL BANK OF THE PHILIPPINES AND RESPONDENT ABLAZA CONSTRUCTION & FINANCE CORPORATION FOR THE GENERAL CONSTRUCTION WORK OF PETITIONER'SREGIONALOFFICEBUILDINGATSANFERNANDO,LAUNION. II.THECOURTOFAPPEALSERREDINHOLDINGTHATPETITIONERHASCOMMITTEDABREACH OFCONTRACT. III.THECOURTOFAPPEALSERREDINHOLDINGTHATPETITIONERHADGIVENITSAPPROVALTO THEWORKDONEBYRESPONDENTABLAZACONSTRUCTION&FINANCECORPORATION. IV. THE COURT OF APPEALS ERRED IN HOLDING THAT THE AWARD OF ACTUAL AND COMPENSATORYDAMAGES,ATTORNEY'SFEESANDRETAININGFEEISFAIRANDREASONABLE, ANDINHOLDINGTHATPETITIONERISLIABLEFORCOSTS."(Pp.A&B,PetitionerAppellant'sBrief.) Underthefirstassignederror,petitionerdenotesthemajorpartofitsefforttothediscussionofitspropositionthatthere couldbenoperfectedcontractinthiscase,(contrarytotheconclusionofthecourtsbelow)becausethereisnoshowingof compliance, and infact,there has beennocompliancewiththe requirement that theremust beacertificationofthe availabilityoffundsbytheAuditorGeneralpursuanttoSection607oftheRevisedAdministrativeCodewhichprovides thus: Section607.Certificateshowingappropriationtomeetcontract.Exceptinthecaseofacontractforpersonal serviceorforsuppliestobecarriedinstock,nocontractinvolvinganexpenditurebytheNationalGovernmentof threethousandpesosormoreshallbeenteredintoorauthorizeduntiltheAuditorGeneralshallhavecertifiedto theofficerenteringintosuchobligationthatfundshavebeendulyappropriatedforsuchpurposeandthatthe amountnecessarytocovertheproposedcontractisavailableforexpenditureonaccountthereof.Whenapplication ismadetotheAuditorGeneralforthecertificatehereinrequired,acopyoftheproposedcontractoragreement shallbesubmittedtohimaccompaniedbyastatementinwritingfromtheofficermakingtheapplicationshowing allobligationsnotyetpresentedforauditwhichhavebeenincurredagainsttheappropriationtowhichthecontract inquestionwouldbechargeable;andsuchcertificate,whensignedbytheAuditor,shallbeattachedtoandbecome apartoftheproposedcontract,andthesumsocertifiedshallnotthereafterbeavailableforexpenditureforany otherpurposesuntiltheGovernmentisdischargedfromthecontractinquestion. Exceptinthecaseofacontractforsuppliestobecarriedinstock,nocontractinvolvingtheexpenditurebyany province,municipality,charteredcity,ormunicipaldistrictoftwothousandpesosormoreshallbeenteredintoor authorizeduntilthetreasurerofthepoliticaldivisionconcernedshallhavecertifiedtotheofficerenteringintosuch contract that fundshavebeendulyappropriatedforsuchpurposeandthattheamountnecessarytocoverthe proposed contract is available for expenditure on account thereof. Such certificate, when signed by the said treasurer,shallbeattachedtoandbecomepartoftheproposedcontractandthesumsocertifiedshallnotthereafter beavailableforexpenditureforanyotherpurposeuntilthecontractinquestionislawfullyabrogatedordischarged. Forthepurposeofmakingthecertificatehereinaboverequiredninetypercentumoftheestimatedrevenuesand receiptswhichshouldaccrueduringthecurrentfiscalyearbutwhichareyetuncollected,shallbedeemedtobein thetreasuryoftheparticularbranchoftheGovernmentagainstwhichtheobligationinquestionwouldcreatea charge."(Pp.2325,PetitionerAppellant'sBrief.) ItiscontendedthatinviewofsuchomissionandconsideringtheprovisionsofSection608ofthesamecodetotheeffect that"apurportedcontractenteredintocontrarytotherequirementsofthenextprecedingsectionhereofshallbewholly void","nocontractbetweenthepetitionerandrespondentAblazaConstructionandFinanceCorporationforthegeneral constructionoftheproposedregionalofficebuildingoftheCentralBankinSanFernando,LaUnion,waseverperfected because only the first stage, that is the award of the contract to the lowest responsible bidder, respondent Ablaza ConstructionandFinanceCorporation,wascompleted."(p.29,PetitionerAppellant'sBrief.)Andinsupportofthispose, petitionerreliesheavilyonTanC.Tee&Co.vs.Wrightthus:t.hqw TheaforesaidrequirementsoftheRevisedAdministrativeCodefortheperfectionofgovernmentcontractshave beenupheldbythisHonorableCourtinthecaseofTanC.TeeCo.vs.Wright,53Phil.172,inwhichcaseitwas heldthattheawardofthecontracttothelowestbidderdoesnotamounttoenteringintothecontractbecauseofthe requirementofSection607oftheRevisedAdministrativeCodethatacopyoftheproposedcontractshallbe submittedtotheAuditorGeneraltogetherwitharequestfortheavailabilityoffundstocovertheproposedcontract. Thus,thisHonorableCourtheld: 'To award the contract to the lowest responsible bidder is not the equivalent of entering into the contract.Section607oftheAdministrativeCoderequiresthatacopyoftheproposedcontractshallbe submittedalongwiththerequestforthecertificateofavailabilityoffunds,buttherecouldbeno proposedcontracttobesubmitteduntilaftertheawardwasmade.'

Andtoguidegovernmentauthoritiesinthelettingofgovernmentcontracts,thisHonorableCourt,insaidcaseof TanC.Teevs.Wright,supra,laiddowntheprocedurewhichshouldbefollowed,asfollows: `PROCEDURE WHICH SHOULD BE FOLLOWED IN THE LETTING OF CONTRACTS FOR INSULARWORKS.TheprocedurewhichshouldbefollowedinthelettingofcontractsforInsular worksisthefollowing:First,thereisanawardofthecontractbytheDirectorofPublicWorkstothe lowestresponsiblebidder.Second,thereisacertificateofavailabilityoffundstobeobtainedfromthe InsularAuditor,andinsomecasesfromtheInsularTreasurer,tocovertheproposedcontract.And third,thereisacontracttobeexecutedonbehalfoftheGovernmentbytheDirectorofPublicWorks withtheapprovalofthedepartmenthead.'"(Pp.2728,PetitionerAppellant'sBrief.) Thecontentioniswithoutmerit.Tostartwith,therecordrevealsthatitismoreofanafterthought.Respondentneverraised thisquestionwhetherinitspleadingsoratthehearingsinthetrialcourt.Wehavealsoreaditsbriefintheappellatecourt andnomentionismadethereinofthispoint.Noteveninitsmemorandumsubmittedtothatcourtinlieuoforalargumentis thereanydiscussionthereof,evenasitappearsthatemphasiswasgiventhereintovariousportionsoftheRevisedManualof InstructionstoTreasurersregardingtheperfectionandconstitutionofpubliccontracts.Infact,referencewasmadethereinto Administrative Order No. 290of the President of the Philippines, dated February 5,1959, requiring"all contracts of whatevernatureinvolvingP10,000ormoretobeenteredintobyallbureausandoffices,...includingthe...CentralBank... shallbesubmittedtotheAuditorGeneralforexaminationandreviewbeforethesameareperfectedand/orconsummated, etc.",withoutmentioning,however,thatsaidadministrativeorderwasnolongerinforce,thesamehavingbeenrevokedon January17,1964byPresidentMacapagalunderAdministrativeOrderNo.81,s.1964. Hence,ifonlyforthereasonthatitisafamiliarruleinprocedurethatdefensesnotpleadedintheanswermaynotberaised forthefirsttimeonappeal,petitioner'spositioncannotbesustained.Indeed,intheCourtofAppeals,petitionercouldonly bringupsuchquestionsasarerelatedtotheissuesmadebythepartiesintheirpleadings,particularlywherefactualmatters maybeinvolved,becausetopermitapartytochangehistheoryonappeal"wouldbeunfairtotheadverseparty."(II,Moran, RulesofCourt,p.505,1970ed.)Furthermore,underSection7ofRule51,theappellatecourtcannotconsideranyerrorof thelowercourt"unlessstatedintheassignmentoferrorsandproperlyarguedinthebrief." Evenprescindingfromthisconsiderationofbelatedness,however,itisOurconsideredviewthatcontractsenteredintoby petitionerCentralBankarenotwithinthecontemplationofSections607and608citedbyit.Immediatelytobenoted, Section607specificallyrefersto"expenditure(s)oftheNationalGovernment"andthattheterm"NationalGovernment" maynotbedeemedtoincludetheCentralBank.UndertheAdministrativeCodeitself,theterm"NationalGovernment" refersonlytothecentralgovernment,consistingofthelegislative,executiveandjudicialdepartmentsofthegovernment,as distinguishedfromlocalgovernmentsandothergovernmentalentitiesandisnotsynonymous,therefore,withtheterms "TheGovernmentoftheRepublicofthePhilippines"or"PhilippineGovernment",whicharetheexpressionsbroadenough toincludenotonlythecentralgovernmentbutalsotheprovincialandmunicipalgovernments,charteredcitiesandother governmentcontrolledcorporationsoragencies,liketheCentralBank.(I,Martin,AdministrativeCode,p.15.) TobesuretheCentralBankisagovernmentinstrumentality.Butitwascreatedasanautonomousbodycorporatetobe governed by the provisions of its charter, Republic Act 265, "to administer the monetary and banking system of the Republic."(Sec.1)Assuch,itisauthorized"toadopt,alteranduseacorporatesealwhichshallbejudiciallynoticed;to makecontracts;toleaseorownrealandpersonalproperty,andtosellorotherwisedisposeofthesame;tosueandbesued; andotherwisetodoandperformanyandallthingsthatmaybenecessaryorpropertocarryoutthepurposesofthisAct. TheCentralBankmayacquireandholdsuchassetsandincursuchliabilitiesasresultdirectlyfromoperationsauthorizedby theprovisionsofthisAct,orasareessentialtotheproperconductofsuchoperations."(Sec.4)Ithascapitalofitsownand operatesunderabudgetpreparedbyitsownMonetaryBoardandotherwiseappropriatesmoneyforitsoperationsandother expendituresindependentlyofthenationalbudget.ItdoesnotdependontheNationalGovernmentforthefinancingofits operations;itis theNational Government that occasionallyresortstoitforneededbudgetaryaccommodations.Under Section14oftheBank'scharter,theMonetaryBoardmayauthorizesuchexpendituresbytheCentralBankasareinthe interestoftheeffectiveadministrationandoperationoftheBank."Itsprerogativetoincursuchliabilitiesandexpendituresis notsubjecttoanyprerequisitefoundinanystatuteorregulationnotexpresslyapplicabletoit.Relevantlytotheissuesinthis case, it is not subject, like the Social Security Commission, to Section 1901 and related provisions of the Revised AdministrativeCodewhichrequirenationalgovernmentconstructionstobedonebyorunderthesupervisionoftheBureau ofPublicWorks.(Op.oftheSec.ofJusticeNo.92,Seriesof1960)Forthesereasons,theprovisionsoftheRevised AdministrativeCodeinvokedbytheBankdonotapplytoit.ToOurknowledge,innootherinstancehastheBankever considereditselfsubjectthereto. InZobelvs.CityofManila,47Phil.169,thisCourtadoptedarestrictiveconstructionofSection607oftheAdministrative Codethus: Thesecondquestiontobeconsideredhas referencetotheapplicabilityofsection607oftheAdministrativeCodeto contractsmadebytheCityofManila.Inthesecondparagraphofsaidsectionitisdeclaredthatnocontractinvolvingthe

expenditurebyanyprovince,municipality,township,orsettlementoftwothousandpesosormoreshallbeenteredintoor authorizeduntilthetreasurerofthepoliticaldivisionconcernedshallhavecertifiedtotheofficerenteringintosuchcontract thatfundshavebeendulyappropriatedforsuchpurposeandthattheamountnecessarytocovertheproposedcontractis availableforexpenditureonaccountthereof.ItisadmittedthatnosuchcertificatewasmadebythetreasurerofManilaat thetimethecontractnowinquestionwasmade.Weareoftheopinionthattheprovisioncitedhasnoapplicationto contractsofacharteredcity,suchastheCityofManila.Uponexaminingsaidprovision(sec.607)itwillbefoundthatthe termcharteredcity,orothersimilarexpression,suchaswouldincludetheCityofManila,isnotused;anditisquite manifestfromthecarefuluseoftermsinsaidsectionthatcharteredcitieswereintendedtobeexcluded.Inthisconnection the definitions of "province," "municipality," and "chartered city," given in section 2 of the Administrative Code are instructive. The circumstance that for certain purposes the City of Manila has the status both of a province and a municipality(asistrueinthedistributionofrevenue)isnotinconsistentwiththisconclusion."1 WeperceivenovalidreasonwhytheCourtshouldnotfollowthesameviewnowinrespecttothefirstparagraphofthe sectionbyconfirmingitsapplicationonlytotheofficescomprisedwithinthetermNationalGovernmentasabovedefined, particularlyinsofarasgovernmentownedorcreatedcorporationsorentitieshavingpowerstomakeexpendituresandto incurliabilitiesbyvirtueoftheirowncorporateauthorityindependentlyofthenationalorlocallegislativebodies,asinthe caseofthepetitionerherein,areconcerned.Whenevernecessary,theMonetaryBoard,likeanyothercorporateboard, makes all required appropriations directly from the funds of the Bank and does not need any official statement of availabilityfromitstreasurerorauditorandwithoutsubmittinganypapersto,muchlesssecuringtheapprovalofthe AuditorGeneraloranyoutsideauthoritybeforedoingso.Indeed,thisisreadilytobeinferredfromtherepealalready mentionedearlierofAdministrativeOrderNo.290,s.1959,whichpetitionertriedtoinvoke,overlookingperhapssuch repeal.Inotherwords,bythatrepeal,therequirementthattheCentralBankshouldsubmittotheAuditorGeneralfor examinationandreviewbeforecontractsinvolvingP10,000ormoretobeenteredintobyit"beforethesameareperfected and/orconsummated"hadalreadybeeneliminatedatthetimethetransactionhereininvolvedtookplace.Consequently,the pointofinvaliditypressed,belatedlyatthat,bypetitionerhasnolegtostandon. Theothermaincontentionofpetitioneristhatthepurportedorallegedcontractbeingrelieduponbyrespondentnever reachedthestageofperfectionwhichwouldmakeitbindinguponthepartiesandentitleeitherofthemtosueforspecific performanceincaseofbreachthereof.Inthisconnection,sincethetransactionhereininvolvedarosefromtheawardofa constructioncontract2byagovernmentcorporationandtheattemptonitsparttodiscontinuewiththeconstructionseveral monthsaftersuchawardhadbeenacceptedbythecontractorandafterthelatterhadalreadycommencedtheworkwithout anyobjectiononthepartofthecorporation,somuchsothatentryintothesiteforthepurposewasuponexpresspermission fromit,butbeforeanywrittencontracthasbeenexecuted,itispreferablethatcertainpertinentpointsbeclarifiedforthe properresolutionoftheissuebetweenthepartieshereandthegeneralguidanceofallwhomightbesimilarlysituated. PetitionerbuttressesitspositioninregardtothisissueontheprovisionsearlierquotedinthisopinionoftheInstructionto Bidders:t.hqw IB113.4TheacceptanceoftheProposalshallbecommunicatedinwritingbytheOwnerandnootheract oftheOwnershallconstitutetheacceptanceoftheProposal.TheacceptanceofaProposalshallbindthe successfulbiddertoexecutetheContractandtoberesponsibleforliquidateddamagesashereinprovided. TherightsandobligationsprovidedforintheContractshallbecomeeffectiveandbindingupontheparties onlywithitsformalexecution. xxxxxxxxx IB118.1TheContractorshallcommencetheworkwithinten(10)calendardaysfromthedatehereceives acopyofthefullyexecutedContract,andheshallcompletetheworkwithinthetimespecified."(Pp.18 19,PetitionerAppellant'sBrief.) Petitionerinsiststhatundertheseprovisions,therightsandobligationsoftheBankandAblazacouldbecomeeffectiveand bindingonlyupontheexecutionoftheformalcontract,andsinceadmittedlynoformalcontracthasyetbeensignedbythe partiesherein,thereisyetnoperfectedcontracttospeakofandrespondenthas,therefore,nocauseofactionagainstthe Bank.Andinrefutationofrespondent'sargumentthatithadalreadystartedtheworkwithsomeclearingjobandfoundation excavations,whichhasneverbeenstoppedbypetitionerwhohadpreviouslygivenexpresspermissiontorespondenttoenter the jobsite, build a temporary shelter and enclosures thereon, petitioner counters that under the above instructions, respondentissupposedtocommencethework"withinten(10)calendardaysfromthedatehereceivesacopyofthefully executedContract,"andforsaidrespondenttohavestartedactualconstructionworkbeforeanycontracthasbeensignedwas unauthorized and was consequently undertaken at his own risk, all the above circumstances indicative of estoppel notwithstanding. Wearenotpersuadedthat petitioner's postureconforms withlawandequity.AccordingtoParagraphIB 114.1ofthe InstructionstoBidders,Ablazawas"requiredtoappearintheofficeoftheOwner(theBank)inperson,or,ifafirmor corporation,adulyauthorizedrepresentative(thereof),andtoexecutethecontractwithinfive(5)daysafternoticethatthe

contract has been awardedtohim.Failureor neglect todososhall constitute abreach ofagreement effected bythe acceptanceoftheProposal."TherecanbenoothermeaningofthisprovisionthanthattheBank'sacceptanceofthebidof respondentAblazaeffectedanactionableagreementbetweenthem.Wecannotreaditintheunilateralsensesuggestedby petitionerthatitboundonlythecontractor,withoutanycorrespondingresponsibilityorobligationatallonthepartofthe Bank.Anagreementpresupposesameetingofmindsandwhenthatpointisreachedinthenegotiationsbetweentwoparties intendingtoenterintoacontract,thepurportedcontractisdeemedperfectedandnoneofthemmaythereafterdisengage himselftherefromwithoutbeingliabletotheotherinanactionforspecificperformance. TheratherambiguoustermsofParagraphIB113.4oftheInstructionstoBiddersrelieduponbypetitionerhavetobe reconciledwiththeotherparagraphsthereoftoavoidlackofmutualityintherelationbetweentheparties.Thisinvoked paragraphstipulatesthat"theacceptanceof(respondent's)ProposalshallbindsaidrespondenttoexecutetheContractandto beresponsibleforliquidateddamagesashereinprovided."Andyet,evenifthecontractorisreadyandwillingtoexecutethe formalcontractwithinthefive(5)dayperiodgiventohim,petitionernowclaimsthatundertheinvokedprovision,itcould refusetoexecutesuchcontractandstillbeabsolutelyfreefromanyliabilitytothecontractorwho,inthemeantime,hasto makenecessaryarrangementsandincurexpendituresinordertobeabletocommencework"withinten(10)daysfromthe datehereceivesacopyofthefullyexecutedContract,"orberesponsiblefordamagesfordelay.Theunfairnessofsucha viewistooevidenttobejustifiedbytheinvocationoftheprinciplethateverypartytoacontractwhoissuijurisandwho hasenteredintoitvoluntarilyandwithfullknowledgeofitsunfavorableprovisionsmaynotsubsequentlycomplainabout themwhentheyarebeingenforced,ifonlybecausethereareotherportionsoftheInstructiontoBidderswhichindicatethe contrary.Certainly,Wecannotsanctionthatintheabsenceofunavoidablejustreasons,theBankcouldsimplyrefuseto execute the contract and therebyavoidit entirely.Even a government owned corporation may not under the guise of protecting the public interest unceremoniously disregard contractual commitments to the prejudice of the other party. Otherwise,thedoorwouldbewideopentoabusesandanomaliesmoredetrimentaltopublicinterest.Iftherecouldbe instances wherein a government corporation may justifiably withdraw from a commitment as a consequence of more paramountconsiderations,thecaseatbarisnot,forthereasonsalreadygiven,oneofthem. AsWeseeitthen,contrarytothecontentionoftheBank,theprovisionitiscitingmaynotbeconsideredasdeterminativeof theperfectionofthecontracthereinquestion.Saidprovisiononlymeansthatasregardstheviolationofanyparticularterm orconditiontobecontainedintheformalcontract,thecorrespondingactionthereforcannotariseuntilafterthewritinghas beenfullyexecuted.Thus,aftertheProposalofrespondentwasacceptedbytheBankthruitstelegramandletterbothdated December10,1965andrespondentinturnacceptedtheawardbyitsletterofDecember15,1965,bothpartiesbecame boundtoproceedwiththesubsequentstepsneededtoformalizeandconsummatetheiragreement.Failureonthepartof eitherofthemtodoso,entitiestheothertocompensationfortheresultingdamages.Tosucheffectwastherulingofthis CourtinValenciavs.RFC103Phil.444.Weheldthereinthattheawardofacontracttoabidderconstitutesanacceptance ofsaidbidder'sproposalandthat"theeffectofsaidacceptancewastoperfectacontract,uponnoticeoftheawardto(the bidder)".(atp.450)Wefurtherheldthereinthatthebidder's"failureto(signthecorrespondingcontract)donotrelievehim oftheobligationarisingfromtheunqualifiedacceptanceofhisoffer.Muchlessdiditaffecttheexistenceofacontract betweenhimandrespondent".(atp.452) ItisneitherjustnorequitablethatValenciashouldbeconstruedtohavesanctionedaonesidedviewoftheperfectionof contracts inthe sense that the acceptance of a bidby a duly authorized official of a governmentowned corporation, financiallyandotherwiseautonomousbothfromtheNationalGovernmentandtheBureauofPublicWorks,insofarasits construction contracts are concerned, binds only the bidder and not the corporation until theformal execution of the correspondingwrittencontract. Suchunfairness andinequitywouldevenbe more evident inthe caseat bar,ifWewere toupholdpetitioner's pose. Pertinentlytothepointunderconsideration,thetrialcourtfoundasfollows: Todeterminetheamountofdamagesrecoverablefromthedefendant,plaintiff'sclaimforactualdamagesinthesumof P298,433.35,ashereinabovestated,andtherecommendationofMessrs.AmbrosioR.FloresandRicardoY.Mayuga,as containedintheirseparatereports(Exhs."13"and"15"),intheamountsofP154,075.00andP147,500.00,respectively, shouldbetakenintoaccount. Thereis evidence onrecordshowingthat plaintiffincurred thesum ofP48,770.30for the preparationofthe jobsite, constructionofbodegas,fencesfieldoffices,workingsheds,andworkmen'squarters;thatthevalueoftheexcavationwork accomplishedbytheplaintiffatthesitewasP113,800.00;thattherentalofthevariousconstructionequipmentofthe plaintifffromthestoppageofworkuntiltheremovalthereoffromthejobsitewouldamounttoP78,540.00(Exhs."K""K l");thattheinterestonthecashbondofP275,000.00fromNovember3,1965toJuly7,1966at12%perannumwouldbe P22,000.00; that for removingsaidconstructionequipment from the jobsitetoManila,plaintiffpaida haulingfee of P700.00(Exhs."L""L1");thatfortheperformancebondthattheplaintiffpostedasrequiredunderitscontractwiththe defendant,theformerwasobligedtopayapremiumofP2,216.55;andthattheplaintiffwaslikewisemadetoincurthesum ofP32,406.50,representingthe3%contractor's tax(Exhs."AA""Al").Theitemizedlist ofall theseexpenditures,

totallingP298,433.35isattachedtotherecordsofthiscase(Annex"B",Complaint)andformspartoftheevidenceofthe plaintiff. Mr. Nicomedes G. Ablaza, the witness for the plaintiff, properly identified said document and affirmed the contentsthereofwhenhetestifiedduringthehearing.Thesamewitnesslikewiseexplainedindetailthevariousfigures containedtherein,andidentifiedthecorrespondingsupportingpapers. Itisnoteworthy,inthisconnection,thatthereisnothingintherecordsthatwouldshowthatthedefendantassailedthe accuracyand/orreasonablenessofthefigurespresentedbytheplaintiff;neitherdoesitappearthatthedefendantofferedany evidencetorefutesaidfigures. WhileitisclaimedbythedefendantthattheplaintiffincurredatotalexpenseofonlyP154,075.00accordingtothereportof Mr.AmbrosioR.Flores,orP147,500.00,accordingtothereportofMr.RicardoY.Mayuga,theCourtfindssaidestimatesto beinaccurate.Tociteonlyaninstance,inestimating,thevalueoftheexcavationwork,thedefendantmerelymeasuredthe depth,lengthandwidthoftheexcavated,areawhichwassubmergedinwater,withoutascertainingthevolumeofrockand thevolumeofearthactuallyexcavatedaswasdonebytheplaintiffwhopreparedadetailedplanshowingtheprofileofthe excavationworkperformedinthesite(Exh."B").Likewise,theunitmeasureadoptedbythedefendantwasincubicmeter whileitshouldbeincubicyard.AlsotheunitpriceusedbythedefendantwasonlyP8.75forrockexcavationwhileitshould beP10.00percubicyard;andonlyP4.95forearthexcavationwhileitshouldbeP5.50percubicyardasclearlyindicatedin plaintiff'sproposal(Annex"A",Complaint;sameasAnnex"1",Answer).TheCourt,therefore,cannotgivecredenceto defendant's,aforementionedestimatesinviewoftheirevidentinaccuracies. TheCourtfindsfromtheevidenceadducedthatPlaintiffclaimforactualdamagesinthesumofP298,433.35ismeritorious. TheBulkofplaintiffsclaimsconsistsofexpectedprofitwhichitfailedtorealizeduetothebreachofthecontractin question by the defendant. As previously stated, the plaintiff seeks to recover the amount of P814,190.00 by way of unrealizedexpectedprofit.Thisfigurerepresents18%ofP4,523,275.00whichistheestimateddirectcostofthesubject project. Asithasbeenestablishedbytheevidencethatthedefendantinfactwasguiltyofbreachofcontractand,therefore,liablefor damages(Art.1170,NewCivilCode),theCourtfindsthattheplaintiffisentitledtorecoverfromthedefendantunrealized expectedprofitaspartoftheactualorcompensatorydamages.Indemnificationfordamagesshallcomprehendnotonlythe valueofthelosssuffered,butalsothatoftheprofitswhichtheobligeefailedtoobtain(Art.2200,NewCivilCode). Whereapartyisguiltyofbreachofcontract,theotherpartyisentitledtorecovertheprofitwhichthelatterwouldhavebeen abletomakehadthecontractbeenperformed(PazP.Arrieta,etal.,plaintiffsappellees,vs.NationalRiceCorporation defendantappellant,G.R.No.L15645,promulgatedonJanuary31,1964;VivencioCerrano,plaintiffappellee,vs.Tan Chuco,defendantappellant,38Phil.392). Regardingtheexpectedprofit,anumberofquestionswillhavetobeanswered:Isthe18%unrealizedexpectedprofitbeing claimedbytheplaintiffreasonable?Wouldtheplaintiffbeentitledtothewholeamountofsaidexpectedprofitalthough therewasonlypartialperformanceofthecontract?Wouldthe18%expectedprofitbebasedontheestimateddirectcostof thesubjectintheamountofP4,523,275.00,oronplaintiff'sbidproposalofP3,749,000.00? Onthequestionofreasonablenessofthe18%expectedprofit,theCourtnotedthataccordingtodefendant'sownexpert witness,Mr.AmbrosioR.Flores,25%contractor'sprofitforaprojectsimilarinmagnitudeastheoneinvolvedinthe presentcasewouldbeampleandreasonable.Plaintiff'switness,Mr.NicomedesG.Ablaza,anexperiencedcivilengineer whohas beenactivelyengagedintheconstructionbusiness,testifiedthat15%to20%contractor'sprofitwouldbein accordancewiththestandardengineeringpractice.Consideringthetypeoftheprojectinvolvedinthiscase,hestated,the contractor'sprofitwasplacedat18%.Takingintoconsiderationthefactthatthispercentageofprofitisevenlowerthanwhat defendant'switnessconsideredtobeampleandreasonable,theCourtbelievesthatthereasonablepercentageshouldbe18% inasmuchastheactualworkwasnotdonecompletelyandtheplaintiffhasnotinvestedthewholeamountofmoneycalled forbytheproject."(Pp.263268,RecordonAppeal.) ThesefindingshavenotbeenshowntoUstobeerroneous.Andadditionalandclarificatorydetails,whichWefindtobe adequatelysupportedbytherecord,arestatedinRespondents'briefthus:t.hqw 23.InaletterdatedJanuary4,1966,petitionerCentralBank,throughthesameMr.Mendoza,tothis requestofrespondentAblaza.(Annex"D1"tothePartialStipulationofFacts,R.A.,p.146). 24.Actinguponthiswrittenpermission,respondentAblazaimmediatelybroughtitsmenandequipment fromManilatotheconstructionsiteinSanFernando,LaUnion,andpromptlycommencedconstruction workthereat.This work, consisted ofthesettingupofan enclosure aroundthe site, thebuildingof temporaryshelterforitsworkmen,andthemakingofthenecessaryexcavationworks.(Commissioner's Report,R.A.,p.181). 25.Followingthecommencementofsuchconstructionwork,petitionerCentralBank,throughaletter datedFebruary8,1966,formallyrequestedrespondentAblazatosubmittopetitionerthefollowing:t. hqw (a)Ascheduleofdeliveriesofmaterialwhich,underthetermsofrespondentAblaza's

approvedproposal,weretobefurnishedbypetitioner. (b)Atimetablefortheaccomplishmentoftheconstructionwork. Inshort,asearlyasFebruary8,1966,ormorethanthreemonthspriortopetitioner's repudiation of the contract in question the latter (petitioner) already took the above positivestepsitcompliancewithitsownobligationsunderthecontract. 26.Actinguponpetitioner'saboveletterofFebruary8,1966,onFebruary16,1966,respondentAblaza submitted the schedule of deliveries requested by petitioner. (Commissioner's Report, R.A., p. 182; Decisionid.,252;alsoExhs."D"to"D7",inclusive.) 27.Duringtheperiodofactualconstruction,respondentAblaza,onseveraloccasions,actuallydiscussed the progress of the work with Mr. Mendoza. In addition, in March 1966, the latter (Mr. Mendoza) personallyvisitedtheconstructionsite.Therehesawtheworkwhichrespondenthadbythattimealready accomplishedwhichconsistedofthecompletionofapproximately20%ofthenecessaryexcavationworks. (Commissioner'sReport,R.A.,p.182;Decision,id.,p.252). 28.FollowingMr.Mendoza'svisitattheconstructionsite,ormorespecificallyonMarch22,1966,the latter(Mendoza)wrotetorespondentAblaza,instructingthelattertoformallydesignatethepersonto representthecorporationatthesigningoftheformalconstructioncontract.(Exh."H";alsot.s.n.,pp.119 121,December18,1967). 29.ByaletterdatedMarch24,1966,respondentAblazapromptlycompliedwiththeaboverequest.(Exh. "I";alsot.s.n.,pp121123,December18,1967). 30.Subsequently,respondentAblazapostedtherequiredperformanceguarantybondinthetotalamount ofP962,250.00,consistingof(a)acashbondintheamountofP275,000.00,and(b)asuretybond,PSIC Bond No. B252ML, dated May 19, 1966, in the amount of P687,250.00. In this connection, it is importanttonotethatthespecificpurposeofthisbondwastoguarantee"thefaithfulPerformanceofthe Contract" byrespondentAblaza.(Partial StipulationofFacts,par.6,R.A.,p.141).Thisperformance guarantybondwasdulyacceptedbypetitioner.(Id.) 31. However, on May 20, 1966, petitioner Central Bank called for a meeting with representatives of respondentAblazaandanothercontractor.ThismeetingwasheldattheConferenceRoomoftheCentral Bank Building. At this meeting, then Finance Secretary Eduardo Romualdez, who acted as the representativeofpetitioner,announcedthattheMonetaryBoardhaddecidedtoreducetheappropriations forthevariousproposedCentralBankregionalofficebuildings,includingtheoneforSanFernando,La Union. 32.Inviewofthisdecision,SecretaryRomualdezinformedrespondentAblazathatnewplansanddesigns fortheproposedregionalofficebuildinginSanFernandowouldhavetobedrawnuptotakeaccountof the reductioninappropriation.SecretaryRomualdez then advisedrespondent tosuspendworkat the constructionsiteinSanFernandointhemeanwhile.(Decision,R.A.,pp.253254). 33.Aftermakingtheaboveannouncements,SecretaryRomualdezproposedthatallexistingcontracts previouslyenteredintobetweenpetitionerCentralBankandtheseveralwinningcontractors(amongthem beingrespondentAblaza)beconsideredsetaside. 34.Obviouslytoinduceacceptanceoftheaboveproposal,SecretaryRomualdezofferedthefollowing concessionstorespondentAblaza:t.hqw (a)ThatitscashbondintheamountofP275,000.00bereleasedimmediately,andthat interestbepaidthereonattherateof12%perannum. (b)ThatrespondentAblazabereimbursedforexpensesincurredforthepremiumsonthe performancebondwhichitposted,andwhichpetitionerhadalreadyaccepted.(Decision, R.A.,pp.253254). 35.Inaddition,SecretaryRomualdezalsoproposedtheconclusionofanewcontractwithrespondent AblazafortheconstructionofamoremodestregionalofficebuildingatSanFernando,LaUnion,ona negotiatedbasis.However,thesincerityandfeasibilityofthisproposalwasrendereddubiousbyacaveat attachedtoit,asfollows:t.hqw '4. Where auditing regulations would permit, the Central Bank would enter into a negotiatedcontractwiththesaidcorporation(Ablaza)fortheconstructionworkonthe buildingonthebasisoftherevisedestimates.'(Annex"8"toAnswer,R.A.,p.95). 36.Therevisedcostfixedforthisproposedalternativeregionalofficebuildingwasfixedatamaximumof P3,000,000.00(comparedtoP3,749,000.00underthecontractoriginallyawardedtorespondent).(Annex "6A"toAnswer,R.A.,p.87). 37.Needlessperhapstostate,respondentAblazarejectedtheaboveproposals(pars.34and35,supra.),

andonJune3,1966,throughcounsel,wrotetopetitionerdemandingtheformalexecutionofthecontract previouslyawardedtoit,orinthealternative,topay"alldamagesandexpensessufferedby(it)inthetotal amountofP1,181,950.00..."(Annex"7"toAnswer,R.A.,pp.8991;Decision,id.,p.254). 38.InaletterdatedJune15,1966,petitionerCentralBank,throughDeputyGovernorAmadoR.Brinas, repliedtorespondentAblaza'sdemanddenyinganyliabilityonthebasisofthefollowingclaim:t. hqw `(That,allegedly)inlinewiththeagreement...reachedbetweentheCentralBankand AblazaConstructionandFinanceCorporationatameetingheld...onMay20,1966,' "whateveragreementsmighthavebeenpreviouslyagreeduponbetween(petitionerand respondent) would be considered set aside." (Decision, R.A., p. 255; Annex "8" to Answer,id.,pp.9396.) 39.Theaboveclaimwas,however,promptlyandperemptorilydeniedbyrespondent Ablaza,through counsel,inaletterdatedJune16,1966.(PartialStipulationofFacts,par.9,R.A.,p.142,alsoAnnex"G" thereof;Commissioner'sReport,R.A.,p.185;Decision,id.,p.255.)"(Appellee'sBrief,pars.23to39,pp. 1419.) Noneofthesefactsisseriouslyorinanyeventsufficientlydeniedinpetitioner'sreplybrief. Consideringallthesefacts,itisquiteobviousthattheBank'sinsistencenowregardingtheneedfortheexecutionofthe formalcontractcomesalittletoolatetobebelievable.EvenassumingarguendothattheRevisedManualofInstructionsto TreasurerswereapplicabletotheCentralBank,whichisdoubtful,consideringthatundertheprovisionsofitscharter alreadyreferredtoearlier,disbursementsandexpendituresoftheBankaresupposedtobegovernedbyrulesandregulations promulgatedbytheMonetaryBoard,inthisparticularcase,theattitudeandactuationsthenoftheBankinrelationtothe workbeingdonebyAblazapriortoMay20,1966clearlyindicatethatbothpartiesassumedthattheactualexecutionofthe writtencontractisamereformalitywhichcouldnotmateriallyaffecttheirrespectivecontractualrightsandobligations.In legaleffect,therefore,theBankmustbeconsideredashavingwaivedsuchrequirement. Tobemoreconcrete,fromDecember15,1965,whenAblazaacceptedtheawardofthecontractinquestion,bothparties weresupposedtohaveseentoitthattheformalcontractweredulysigned.UndertheInstructionstoBidders,Ablazawas underobligationtosignthesamewithinfive(5)daysfromnoticeoftheaward,andso,hecalledontheBankatvarious timesforthatpurpose.TheBankneverindicateduntilMay,1966thatitwouldnotcomply.Onthecontrary,onFebruary8, 1966,Ablazawasrequestedtosubmita"scheduleofdeliveriesofmaterials"whichunderthetermsofthebidweretobe furnishedbytheBank.OnMarch22,1966,AblazareceivedaletterfromtheBankinquiringastowhowouldbeAblaza's representativetosigntheformalcontract.Inthemeanwhile,nolessthanMr.RizalinoMendoza,theChairmanofthe ManagementBuildingCommitteeoftheCentralBankwhohadbeensigningfortheBankallthecommunicationsregarding theprojectatissue,hadvisitedtheconstructionsiteinMarch,1966,justbeforehewrotetherequestabovementionedofthe 22ndofthatmonthforthenominationoftherepresentativetosigntheformalcontract,andactuallysawtheprogressofthe work and that it was being continued, but he never protested or had it stopped. All these despite the fact that the MemorandumCircularbeinginvokedbytheBankwasissuedwaybackonDecember31,1965yet.Andwhenfinallyon May20,1966theBankmetwiththerepresentativesofAblazaregardingtheideaofchangingtheplanstomoreeconomical ones,therewasnomentionofthenonexecutionofthecontractasentitlingtheBanktobackoutofitunconditionally. Rather,thetalk,accordingtothefindingsofthelowercourts,wasaboutthepossibilityofsettingasidewhateveragreement therewasalready.Underthesecircumstances,itappearsthatrespondenthasbeenmadetobelieveuptothetimetheBank decideddefinitelynottohonoranyagreementatallthatitsexecutionwasnotindispensabletoacontracttobeconsideredas alreadyoperatingandrespondentcouldthereforeproceedwiththework,whilethecontractcouldbeformalizedlater. Petitionercontendsnextthatitswithdrawalfromthecontractisjustifiedbythepolicyofeconomicrestraintordainedby MemorandumCircularNo.1.Wedonotseeitthatway.Inasmuchasthecontracthereinquestionwasperfectedbeforethe issuanceofsaidMemorandumCircular,itiselementarythatthesamemaynotbeenforcedinsuchamannerastoresultin theimpairmentoftheobligationsofthecontract,forthatisnotconstitutionallypermissible.Notevenbymeansofastatute, whichismuchmoreweightythanameredeclarationofpolicy,maythegovernmentissueanyregulationrelievingitselfor anypersonfromthebindingeffectsofacontract.(Section1(10),ArticleIII,PhilippineConstitutionof1953andSection11, ArticleIV,1973ConstitutionofthePhilippines.)SpeciallyinthecaseoftheCentralBank,perhaps,itmightnothavebeen reallyimperativethatitshouldhavereviseditsplans,consideringthatithasitsownresourcesindependentofthoseofthe nationalgovernmentandthatthefundsoftheCentralBankarederivedfromitsownoperations,notfromtaxes.Inany event,ifthememorandumcircularhadtobeimplemented,thecorrespondingactioninthatdirectionshouldhavebeentaken withoutlossoftimeandbeforethecontractinquestionhadtakendeeperroots.Itisthusclearthatinunjustifiablyfailingto honoritscontractwithrespondent,petitionerhastosuffertheconsequencesofitsaction. ThelastissuesubmittedforOurresolutionreferstotheamountofdamagesawardedtoAblazabythetrialcourtandfound bytheCourtofAppealstobe"fairandreasonable."Again,afterareviewoftherecord,Wedonotfindsufficientgroundto

disturbtheappealedjudgmenteveninthisrespect,exceptastoattorney'sfees. Therearethreeprincipalitemsofdamagesawardedbythecourtsbelow,namely:(1)compensationforactualworkdonein theamountofP298,433.35,(2)unrealizedprofitsequivalentto18%ofthecontractpriceofP3,749,000orP674,820.00and (3)15%ofthetotalrecoveryasattorney'sfeesinadditiontotheP5,000alreadypaidasretainingfee.Alloftheseitemswere thesubjectofevidencepresentedbytheparties.AccordingtotheCourtofAppeals:t.hqw Asregardtheaccuracyandreasonablenessoftheawardfordamages,bothactualandcompensatory,itis tobenotedthatthetrialcourtsubjectedtheCommissioner'sreportandtheevidenceadducedthereintoa carefulscrutiny.Thus,whentheappellantcalledthetrialcourt'sattentiontothefactthattheP814,190.00 unrealizedexpectedprofitbeingclaimedbyappelleerepresented18%ofP4,523,275.00whichwasthe estimated cost of the project, while the contract awarded to appellee was only in the amount of P3,749,000.00asperitsbidproposal,theCourtmadethenecessarymodification.Itisfurthertobenoted thattheamountof18%oftheestimatedcostconsideredinthesaidawardismuchlessthanthatgivenby appellant'sownexpertwitness,AmbrosioR.Flores.Hetestifiedthat25%ascontractor'sprofit"wouldbe fair,ampleandreasonable."(T.s.n,p.557,Batalla.)"(p.17A,Appellant'sbrief.) Basically,thesearefactualconclusionswhichWearenotgenerallyatlibertytodisregard.AndWehavenotbeenshownthat theyaredevoidofreasonablebasis. Therecanbenodisputeastothelegalobligationofpetitionertopayrespondenttheactualexpensesithasincurredin performingitspartofthecontract. Upontheotherhand,thelegalquestionofwhetherornottheBankisliableforunrealizedprofitspresentsnodifficulty.In Arrietavs.NaricG.R.No.L15645,Jan.31,1964,10SCRA79,thisCourtsustainedasamatteroflawtheawardof damagesntheamountofU.S.$286,000,payableinPhilippineCurrency,measuredintherateofexchangeprevailingatthe timetheobligationwasincurred(August,1952),comprisingofunrealizedprofitsoftheplaintiff,Mrs.PazArrieta,inacase where a governmentowned corporation, the Naric failed to proceed with the purchase of imported rice after having acceptedandapprovedthebidofArrietaandaftershehadalreadyclosedhercontractwithherforeignsellers. Actually,thelawonthematterisunequivocallyexpressedinArticles2200and2201oftheCivilCodethus:t.hqw ART.2200.Identificationfordamagesshallcomprehendnotonlythevalueofthelosssuffered,butalso thatoftheprofits,whichtheobligeefailedtoobtain.. ART.2201.Incontractsandquasicontracts,thedamagesforwhichtheobligorwhoactedingoodfaithis liableshallbethosethatarethenaturalandprobableconsequencesofthebreachoftheobligation,and whichthepartieshaveforseenorcouldhavereasonablyforeseenatthetimetheobligationwasconstituted. Incaseoffraud,badfaith,maliceorwantonattitude,theobligorshallberesponsibleforalldamages whichmaybereasonablyattributedtothenonperformanceoftheobligation. Construingtheseprovisions,thefollowingiswhatthisCourtheldinCerranovs.TanChuco,38Phil.392:t.hqw .... Article 1106 (now 2200) of the Civil Code establishes the rule that prospective profits may be recovered as damages, while article 1107 (now 2201) of the same Code provides that the damages recoverableforthebreachofobligationsnotoriginatinginfraud(dolo)arethosewhichwereormight havebeenforeseenatthetimethecontractwasenteredinto.Applyingtheseprinciplestothefactsinthis case,wethinkthatitisunquestionablethatdefendantmustbedeemedtohaveforeseenatthetimehe madethecontractthatintheeventofhisfailuretoperformit,theplaintiffwouldbedamagedbytheloss oftheprofithemightreasonablyhaveexpectedtoderivefromitsuse. Whentheexistenceofalossisestablished,absolutecertaintyastoitsamountisnotrequired.Thebenefit tobederivedfromacontractwhichoneofthepartieshasabsolutelyfailedtoperformisofnecessityto someextent,amatterofspeculation,buttheinjuredpartyisnottobedeniedallremedyforthatreason alone.Hemustproducethebestevidenceofwhichhiscaseissusceptibleandifthatevidencewarrantsthe inferencethathehasbeendamagedbythelossofprofitswhichhemightwithreasonablecertaintyhave anticipated but for the defendant's wrongful act, he is entitled to recover. As stated in Sedgwick on Damages(NinthEd.,par.177): Thegeneralruleis,then,thataplaintiffmayrecovercompensationforanygainwhichhecanmakeit appearwithreasonablecertaintythedefendant'swrongfulactpreventedhimfromacquiring,...'.(Seealso Algarravs.Sandejas,27Phil.Rep.,284,289;Hicksvs.ManilaHotelCo.,28Phil.Rep.,325.)(Atpp. 398399.) Later,inGeneralEnterprises,Inc.vs.LiangaBayLoggingCo.Inc.,11SCRA733,Article2200oftheCivilCodewasagain appliedasfollows:t.hqw Regardingtheactualdamagesawardedtoappellee,appellantcontendsthattheyareunwarrantedinasmuch asappelleehasfailedtoadduceanyevidencetosubstantiatethemevenassumingarguendothatappellant hasfailedtosupplytheadditionalmonthly2,000,000boardfeetfortheremainderoftheperiodagreed

uponinthecontractExhibitA.Appellantmaintainsthatforappelleetobeentitledtodemandpaymentof salesthatwerenoteffecteditshouldhaveproved(1)thatthereareactualsalesmadeofappellee'slogs whichwerenotfulfilled,(2)thatithadobtainedthebestpriceforsuchsales,(3)thattherearebuyers readytobuyatsuchpricestatingthevolumetheyarereadytobuy,and(4)appelleecouldnotcoverthe salesfromthelogsofothersuppliers.Sincethesefactswerenotproven,appellee'srighttounearned commissionsmustfail. Thisargumentmustbeoverruledinthelightofthelawandevidenceonthematter.UnderArticle2200of theCivilCode,indemnificationfordamagescomprehendsnotonlythevalueofthelosssufferedbutalso thatoftheprofitswhichthecreditorfailstoobtain.Inotherwords,lucrumcessansisalsoabasisfor indemnification.Thequestionthenthatarisesis:Hasappelleefailedtomakeprofitsbecauseofappellant's breachofcontract,andintheaffirmative,isthereherebasisfordeterminingwithreasonablecertainty suchunearnedprofits? Appellant'smemorandum(p.9)showsthatappelleehassoldtoKoreaunderthecontractinquestionthe followingboardfeetoflogs,BrearetonScale:t.hqw MonthsBoardFeet FromJunetoAugust19593,007,435 September,1959none October,19592,299,805 November,1959801,021 December,19591,297,510 Total7,405,861 TheabovefigurestallywiththoseofExhibitN.Initsbrief(p.141)appellantclaimsthatinlessthansix months' time appellee received by way of commission the amount of P117,859.54, while in its memorandum,appellantmakesthefollowingstatement: `11.TheinvoiceF.O.B.priceofthesalethroughplaintiffGeneralisP767,798.82buttheagreedF.O.B. pricewasP799,319.00,thecommissionat13%(F.O.B.)isP117,859.54.But,astherewerealwaystwo pricesInvoiceF.O.BpriceandF.O.B.priceaspercontract,becauseofthesalesdifferenceamounting toP31,920.18,andthesamewasdeductedfromthecommission,actuallypaidtoplaintiffGeneralisonly P79,580.82.'"Itappears,therefore,thatduringtheperiodofJunetoDecember,1959,inspiteoftheshort deliveryincurredbyappellant,appelleehadbeenearningitscommissionwheneverlogsweredeliveredto it.ButfromJanuary,1960,appelleehadceasedtoearnanycommissionbecauseappellantfailedtodeliver anyloginviolationoftheiragreement.Hadappellantcontinuedtodeliverthelogsasitwasboundto pursuanttotheagreementitisreasonabletoexpectthatitwouldhavecontinuedearningitscommissionin muchthesamemannerasitusedtoinconnectionwiththepreviousshipmentsoflogs,whichclearly indicates that it failed to earn the commissions it should earn during this period of time. And this commissionisnotdifficulttoestimate.Thus,duringtheseventeenremainingmonthsofthecontract,at therateofatleast2,000,000boardfeet,appellantshouldhavedeliveredthirtyfourmillionboardfeet.If wetakethenumberofboardfeetdeliveredduringthemonthspriortotheinterruption,namely,7,405,861 boardfeet,andthecommissionreceivedbyappelleethereon,whichamountstoP79,580.82,wewould havethatappelleereceivedacommissionofP.0107456perboardfeet.Multiplying34millionboardfeetby P.0107456,theproductisP365,350.40,whichrepresentsthelucrumcessansthatshouldaccruetoappellee. Theawardtherefore,madebythecourtaquooftheamountofP400,000.00ascompensatorydamagesis notspeculative,butbasedonreasonableestimate. Inthelightoftheseconsiderations,WecannotsaythattheCourtofAppealserredinmakingtheaforementionedawardof damagesforunrealizedprofitstorespondentAblaza. Withrespecttotheawardforattorney'sfees,WebelievethatinlinewiththeamountfixedinLianga,supra.,anawardoften percentum(10%)oftheamountofthetotalrecoveryshouldbeenough. PREMISESCONSIDERED,thedecisionoftheCourtofAppealsinthiscaseisaffirmed,withthemodificationthatthe awardforattorney'sfeesmadethereinisherebyreducedtotenpercentum(10%)ofthetotalrecoveryofrespondentAblaza. Costsagainstpetitioner. Fernando(Chairman),Antonio,AquinoandConcepcion,JJ.,concur.

 G.R.No.93654May6,1992 FRANCISCOU.DACANAY,petitioner, vs. MAYORMACARIOASISTIO,JR.,CITYENGR.LUCIANOSARNE,JR.ofKalookanCity,MetroManila,MILA PASTRANA AND/OR RODOLFO TEOFE, STALLHOLDERS AND REPRESENTING COSTALLHOLDERS, respondents. DavidD.Advincula,Jr.forpetitioner. JuanP.Banagaforprivaterespondents. GRIOAQUINO,J.: Maypublicstreetsorthoroughfaresbeleasedorlicensedtomarketstallholdersbyvirtueofacityordinanceorresolutionof theMetroManilaCommission?Thisissueisposedbythepetitioner,anaggrievedCaloocanCityresidentwhofileda specialcivilactionofmandamusagainsttheincumbentcitymayorandcityengineer,tocompelthesecityofficialsto removethemarketstallsfromcertaincitystreetswhichtheaforementionedcityofficialshavedesignatedasfleamarkets, andtheprivaterespondents(stallholders)tovacatethestreets. OnJanuary5,1979,MMCOrdinanceNo.7902wasenactedbytheMetropolitanManilaCommission,designatingcertain cityandmunicipalstreets,roadsandopenspacesassitesforfleamarkets.Pursuant,thereto,theCaloocanCitymayor openedupseven(7)fleamarketsinthatcity.Oneofthosestreetswasthe"Heroesdel'96"wherethepetitionerlives.Upon applicationofvendorsRodolfoTeope,MilaPastrana,CarmenBarbosa,MerleCastillo,BienvenidoMenes,NancyBugarin, Jose Manuel, Crisaldo Paguirigan, Alejandro Castron, Ruben Araneta, Juanita and Rafael Malibaran, and others, the respondentscitymayorandcityengineer,issuedthemlicensestoconductvendingactivitiesonsaidstreet. In1987,AntonioMartinez,asOICcitymayorofCaloocanCity,causedthedemolitionofthemarketstallsonHeroesdel '96,V.GozonandGonzalesstreets.TostopMayorMartinez'effortstoclearthecitystreets,RodolfoTeope,MilaPastrana andotherstallownersfiledanactionforprohibitionagainsttheCityofCaloocan,theOICCityMayorandtheCityEngineer and/ortheirdeputies(CivilCaseNo.C12921)intheRegionalTrialCourtofCaloocanCity,Branch122,prayingthecourt toissueawritofpreliminaryinjunctionorderingthesecityofficialstodiscontinuethedemolitionoftheirstallsduringthe pendencyoftheaction. Thecourt issuedthewritprayedfor.However,onDecember20,1987,itdismissedthepetitionandliftedthewritof preliminaryinjunctionwhichithadearlierissued.Thetrialcourtobservedthat: AperusalofOrdinance2,seriesof1979oftheMetropolitanManilaCommissionwillshowonthetitleitselfthatit isanordinance Authorizingandregulatingtheuseofcertaincityand/ormunicipalstreets,roadsandopenspaces withinMetropolitanManilaassitesforfleamarketand/orvendingareas,undercertaintermsand conditions, subject to the approval of the Metropolitan Manila Commission, and for other purposes whichisfurtheramplifiedinSection2ofthesaidordinance,quotedhereunder: Sec.2.Thestreets,roadsandopenspacestobeusedassitesforfleamarkets(tiangge)orvendingareas;thedesign, measurementorspecificationofthestructures,equipmentandapparatusestobeusedorputup;theallowable distances;thedaysandtimeallowedfortheconductofthebusinessesand/oractivitieshereinauthorized;therates orfeesorchargestobeimposed,leviedandcollected;thekindsofmerchandise,goodsandcommoditiessoldand servicesrendered;andothermattersandactivitiesrelatedtotheestablishment,maintenanceandmanagementand operationoffleamarketsandvendingareas,shallbedeterminedandprescribedbythemayorsofthecitiesand municipalitiesintheMetropolitanManilawherethesamearelocated,subjecttotheapprovaloftheMetropolitan ManilaCommissionandconsistentwiththeguidelinesherebyprescribed. Further,itissoprovidedintheguidelinesunderthesaidOrdinanceNo.2oftheMMCthat Sec. 6. In the establishment, operation, maintenance and management of flea markets and vending areas, the followingguidelines,amongothers,shallbeobserved: xxxxxxxxx (m)Thatthepermitteeshallremovetheequipment,facilitiesandotherappurtenancesusedbyhimintheconductof hisbusinessafterthecloseorterminationofbusinesshours.(Emphasisours;pp.1516,Rollo.) ThetrialcourtfoundthatHeroesdel'96,GozonandGonzalesstreetsareofpublicdominion,hence,outsidethecommerce

RepublicofthePhilippines SUPREMECOURT Manila ENBANC

ofman:

TheHeroesdel'96street,V.GozonstreetandGonzalesstreet,beingofpublicdominionmust,therefore,beoutside ofthecommerceofman.Consideringthenatureofthesubjectpremises,thefollowingjurisprudenceco/principles areapplicableonthematter: 1)Theycannotbealienatedorleasedorotherwisebethesubjectmatterofcontracts.(Municipalityof Cavitevs.Rojas,30Phil.602); 2)Theycannotbeacquiredbyprescriptionagainstthestate(InsularGovernmentvs.Aldecoa,19Phil. 505).Evenmunicipalitiescannotacquirethemforuseascommunallandsagainstthestate(Cityof Manilavs.InsularGovernment,10Phil.327); 3)Theyarenotsubjecttoattachmentandexecution(TanTocovs.MunicipalCouncilofIloilo,49Phil. 52); 4)Theycannotbeburdenedbyanyvoluntaryeasement(2IIColin&Capitant520)(Tolentino,Civil CodeofthePhils.,Vol.II,1983Ed.pp.2930). IntheaforecitedcaseofMunicipalityofCavitevs.Rojas,itwasheldthatpropertiesforpublicusemay notbeleasedtoprivateindividuals.Suchaleaseisnullandvoidforthereasonthatamunicipal councilcannotwithdrawpartoftheplazafrompublicuse.Ifpossessionhasalreadybeengiven,the lesseemustrestorepossessionbyvacatingitandthemunicipalitymustthereuponrestoretohimany sumsitmayhavecollectedasrent. InthecaseofCityofManilavs.GerardoGarcia,19SCRA413,theSupremeCourtheld: Thepropertybeingapublicone,theManilaMayorsdidnothavetheauthorityto give permits, written or oral, to the squatters, and that the permits granted are thereforeconsiderednullandvoid. ThisdoctrinewasreiteratedinthecaseofBaguioCitizensActionInc.vs.TheCity Council,121SCRA368,whereitwasheldthat: Anordinancelegalizingtheoccupancybysquattersofpubliclandisnullandvoid. The authority of respondent Municipality of Makati to demolish the shanties of the petitioner's membersismandatedbyP.D.772,andSec.1ofLetterofInstructionNo.19orderscertainpublic officials,oneofwhomistheMunicipalMayortoremoveallillegalconstructionsincludingbuildings onandalongesterosandriverbanks,thosealongrailroadtracksandthosebuiltwithoutpermitson publicorprivateproperty(ZansibarianResidentsAssociationvs.Mun.ofMakati,135SCRA235). TheCityEngineerisalsoamongthoserequiredtocomplywithsaidLetterofInstruction. Theoccupationanduseofprivateindividualsofsidewalksandotherpublicplacesdevotedforpublic useconstitutebothpublicandprivatenuisancesandnuisanceperse,andthisappliestoevencase involvingtheuseorleaseofpublicplacesunderpermitsandlicensesissuedbycompetentauthority, uponthetheorythatsuchholderscouldnottakeadvantageoftheirunlawfulpermitsandlicenseand claimthatthelandinquestionisapartofapublicstreetorapublicplacedevotedtopublicuse,hence, beyondthecommerceofman.(Padilla,CivilCodeAnnotated,Vol.II,p.59,6thEd.,citingUmalivs. Aquino,IC.A.Rep.339.) Fromtheaforequotedjurisprudence/principles,theCourtopinesthatdefendantshavetherighttodemolish thesubjectstallsoftheplaintiffs,moresowhenSection185,par.4ofBatasPambansaBlg.337,otherwise knownastheLocalGovernmentCodeprovidesthattheCityEngineershall: (4)... (c)Preventtheencroachmentofprivatebuildingsandfencesonthestreetsandpublic places; xxxxxxxxx (j) Inspect and supervise the construction, repair, removal and safety of private buildings; xxxxxxxxx (k)WiththepreviousapprovaloftheCityMayorineachcase,ordertheremovalof materialsemployedintheconstructionorrepairofanybuildingorstructuresmadein violationoflaworordinance,andcausebuildingsandstructuresdangeroustothe publictomadesecureortorndown; xxxxxxxxx Further,theCharteroftheCityofCaloocan,RepublicActNo.5502,Art.VII,Sec.27,par.g,1andm, grantstheCityEngineersimilarpowers.(Emphasissupplied;pp.1720,Rollo.) However,shortlyafterthedecisioncameout,thecityadministrationinCaloocanCitychangedhands.CityMayorMacario

Asistio,Jr.,assuccessorofMayorMartinez,didnotpursuethelatter'spolicyofclearingandcleaningupthecitystreets. Invokingthetrialcourt'sdecisioninCivilCaseNo.C12921,FranciscoU.Dacanay,aconcernedcitizen,taxpayerand registeredvoterofBarangay74,Zone7,DistrictIIofCaloocanCity,whoresidesonHeroesdel'96Street,oneofthe affectedstreets,wrotealetterdatedMarch7,1988toMayorAsistio,Jr.,callinghisattentiontotheillegallyconstructed stallsonHeroesdel'96Streetandaskedfortheirdemolition. DacanayfollowedupthatletterwithanotheronedatedApril7,1988addressedtothemayorandthecityengineer,Luciano Sarne,Jr.(whoreplacedEngineerArturoSamonte),invitingtheirattentiontotheRegionalTrialCourt'sdecisioninCivil CaseNo.12921.Therewasstillnoresponse. DacanaysoughtPresidentCorazonC.Aquino'sinterventionbywritingheraletteronthematter.Hisletterwasreferredto thecitymayorforappropriateaction.TheactingCaloocanCitysecretary,AsuncionManalo,inaletterdatedAugust1, 1988,informedthePresidentialStaffDirectorthatthecityofficialswerestillstudyingtheissueofwhetherornottoproceed withthedemolitionofthemarketstalls. Dacanay filed a complaint against Mayor Asistio and Engineer Sarne (OMB0890146) in the Office of the OMBUDSMAN.IntheirlettercommentdatedApril3,1989,saidcityofficialsexplainedthatinviewofthehugenumber ofstallholdersinvolved,nottomentiontheirdependents,itwouldbeharshandinhumantoejectthemfromtheareain question,fortheirrelocationwouldnotbeaneasytask. Inreply,Dacanaymaintainedthatrespondentshavebeenderelictintheperformanceoftheirdutiesandthroughmanifest partialityconstitutingaviolationofSection3(e)ofR.A.3019,havecausedundueinjurytotheGovernmentandgiven unwarrantedbenefitstothestallholders. Afterconductingapreliminaryinvestigation,theOMBUDSMANrenderedafinalevaluationandreportonAugust28, 1989,findingthattherespondents'inactionispurelymotivatedbytheirperceivedmoralandsocialresponsibilitytoward theirconstituents,but"thefactremainsthatthereisanomissionofanactwhichoughttobeperformed,inclearviolationof Sections 3(e) and (f) of Republic Act 3019." (pp. 8384, Rollo.)The OMBUDSMAN recommended the filingof the correspondinginformationincourt. AsthestallholderscontinuedtooccupyHeroesdel'96Street,throughthetoleranceofthepublicrespondents,andinclear violationofthedecisionitCivilCaseNo.C12921,DacanayfiledthepresentpetitionformandamusonJune19,1990, prayingthatthepublicrespondentsbeorderedtoenforcethefinaldecisioninCivilCaseNo.C12921whichupheldthecity mayor'sauthoritytoorderthedemolitionofmarketstallsonV.Gozon,GonzalesandHeroesdel'96Streetsandtoenforce P.D.No.772andotherpertinentlaws. OnAugust16,1990,thepublicrespondents,throughtheCityLegalOfficer,filedtheirComment'onthepetition.The OfficeoftheSolicitorGeneralaskedtobeexcusedfromfilingaseparateCommentinbehalfofthepublicrespondents.The CityLegalOfficerallegedthatthevendingareawastransferredtoHeroesdel'96StreettodecongestMalonzoStreet,which iscomparativelyabusierthoroughfare;thatthetransferwasmadebyvirtueofBarangayResolutionNo.30s'78dated January15,1978;thatwhiletheresolutionwasawaitingapprovalbytheMetropolitanManilaCommission,thelatterpassed OrdinanceNo.792,authorizingtheuseofcertainstreetsandopenspacesassitesforfleamarketsand/orvendingareas; thatpursuantthereto,ActingMMCMayorVirgilioP.RoblesissuedExecutiveOrderNo.135datedJanuary10,1979, orderingtheestablishmentandoperationoffleamarketsinspecifiedareasandcreatedtheCaloocanCityFleaMarket Authorityasaregulatorybody;andthatamongthesiteschosenandapprovedbytheMetroManilaCommission,Heroesdel '96Streethasconsidered"mostviableandprogressive,lesseningunemploymentinthecityandservicingtheresidentswith affordablebasicnecessities." Thepetitionformandamusismeritorious. Thereisnodoubtthatthedisputedareasfromwhichtheprivaterespondents'marketstallsaresoughttobeevictedare publicstreets,asfoundbythetrialcourtinCivilCaseNo.C12921.Apublicstreetispropertyforpublicusehenceoutside thecommerceofman(Arts.420,424,CivilCode).Beingoutsidethecommerceofman,itmaynotbethesubjectoflease orothercontract(Villanuevaetal.vs.CastaedaandMacalino,15SCRA142,citingtheMunicipalityofCavitevs.Rojas, 30SCRA602;Espirituvs.MunicipalCouncilofPozorrubio,102Phil.869;andMuyotvs.DelaFuente,48O.G.4860). As the stallholders pay fees to the City Government for the right to occupy portions of the public street, the City Government,contrarytolaw,hasbeenleasingportionsofthestreetstothem.Suchleasesorlicensesarenullandvoidfor beingcontrarytolaw.Therightofthepublictousethecitystreetsmaynotbebargainedawaythroughcontract.The interestsofafewshouldnotprevailoverthegoodofthegreaternumberinthecommunitywhosehealth,peace,safety,good orderandgeneralwelfare,therespondentcityofficialsareunderlegalobligationtoprotect. TheExecutiveOrderissuedbyActingMayorRoblesauthorizingtheuseofHeroesdel'96Streetasavendingareafor stallholderswhoweregrantedlicensesbythecitygovernmentcontravenesthegenerallawthatreservescitystreetsand roadsforpublicuse.MayorRobles'ExecutiveOrdermaynotinfringeuponthevestedrightofthepublictousecitystreets forthepurposetheywereintendedtoserve:i.e.,asarteriesoftravelforvehiclesandpedestrians.Asearlyas1989,the publicrespondentsbadstartedtolookforfeasiblealternativesitesforfleamarkets.Theyhavehadmorethanampletimeto

relocatethestreetvendors. WHEREFORE,ithavingbeenestablishedthatthepetitionerandthegeneralpublichavealegalrighttothereliefdemanded andthatthepublicrespondentshavethecorrespondingduty,arisingfrompublicoffice,toclearthecitystreetsandrestore themtotheirspecificpublicpurpose(Enriquezvs.Bidin,47SCRA183;CityofManilavs.Garciaetal.,19SCRA,413 citingUnsonvs.Lacson,100Phil.695),therespondentsCityMayorandCityEngineerofCaloocanCityortheirsuccessors inofficeareherebyorderedtoimmediatelyenforceandimplementthedecisioninCivilCaseNo.C1292declaringthat Heroesdel'96,V.Gozon,andGonzalesStreetsarepublicstreetsforpublicuse,andtheyareorderedtoremoveordemolish, orcausetoberemovedordemolished,themarketstallsoccupyingsaidcitystreetswithutmostdispatchwithinthirty (30)daysfromnoticeofthisdecision.Thisdecisionisimmediatelyexecutory. SOORDERED. Narvasa,C.J.,MelecioHerrera,Gutierrez,Jr.Cruz,Paras,Feliciano,Padilla,Bidin,Medialdea,Regalado,Davide,Jr., RomeroandNocon,JJ.,concur. Bellosillo,J.,tooknopart.

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L24440March28,1968 THEPROVINCEOFZAMBOANGADELNORTE,plaintiffappellee, vs. CITYOFZAMBOANGA,SECRETARYOFFINANCEandCOMMISSIONEROFINTERNALREVENUE, defendantsappellants. Fortugaleza,Lood,Sarmiento,M.T.Yap&Associatesforplaintiffappellee. OfficeoftheSolicitorGeneralfordefendantsappellants. BENGZON,J.P.,J.: Priortoitsincorporationasacharteredcity,theMunicipalityofZamboangausedtobetheprovincialcapitalofthe thenZamboangaProvince.OnOctober12,1936,CommonwealthAct39wasapprovedconvertingtheMunicipalityof ZamboangaintoZamboangaCity.Sec.50oftheActalsoprovidedthat Buildingsandpropertieswhichtheprovinceshallabandonuponthetransferofthecapitaltoanotherplace willbeacquiredandpaidforbytheCityofZamboangaatapricetobefixedbytheAuditorGeneral. Thepropertiesandbuildingsreferredtoconsistedof50lotsandsomebuildingsconstructedthereon,locatedinthe CityofZamboangaandcoveredindividuallybyTorrenscertificatesoftitleinthenameofZamboangaProvince.Asfaras canbegleanedfromtherecords,1saidpropertieswerebeingutilizedasfollows No.ofLots Use 1 ................................................CapitolSite 3 ................................................SchoolSite 3 ................................................HospitalSite 3 ................................................Leprosarium 1 ................................................CuruanSchool 1 ................................................TradeSchool 2 ................................................BurleighSchool 2 ................................................HighSchoolPlayground 9 ................................................Burleighs 1 ................................................HydroElectricSite(Magay) 1 ................................................SanRoque 23 ................................................vacant Itappearsthatin1945,thecapitalofZamboangaProvincewastransferredtoDipolog. 2Subsequently,oronJune16, 1948, Republic Act 286 was approved creating the municipality of Molave and making it the capital of Zamboanga Province. OnMay26,1949,theAppraisalCommitteeformedbytheAuditorGeneral,pursuanttoCommonwealthAct39,fixed thevalueofthepropertiesandbuildingsinquestionleftbyZamboangaProvinceinZamboangaCityatP1,294,244.00.3 OnJune6,1952,RepublicAct711wasapproveddividingtheprovinceofZamboangaintotwo(2):Zamboangadel NorteandZamboangadelSur.Astohowtheassetsandobligationsoftheoldprovinceweretobedividedbetweenthetwo newones,Sec.6ofthatlawprovided: UpontheapprovalofthisAct,thefunds,assetsandotherpropertiesandtheobligationsoftheprovinceof Zamboanga shall be divided equitably between the Province of Zamboanga del Norte and the Province of ZamboangadelSurbythePresidentofthePhilippines,upontherecommendationoftheAuditorGeneral. Pursuantthereto,theAuditorGeneral,onJanuary11,1955,apportionedtheassetsandobligationsofthedefunct

ProvinceofZamboangaasfollows:54.39%forZamboangadelNorteand45.61%forZamboangadelSur.Zamboangadel Norte therefore became entitled to 54.39% of P1,294,244.00, the total valueof the lots and buildings inquestion,or P704,220.05payablebyZamboangaCity. OnMarch17,1959,theExecutiveSecretary,byorderofthePresident,issuedaruling 4holdingthatZamboangadel Norte had a vested right as owner (should be coowner proindiviso) of the properties mentioned in Sec. 50 of CommonwealthAct39,andisentitledtothepricethereof,payablebyZamboangaCity.Thisrulingrevokedtheprevious CabinetResolutionofJuly13,1951conveyingallthesaid50lotsandbuildingsthereontoZamboangaCityforP1.00, effectiveasof1945,whentheprovincialcapitalofthethenZamboangaProvincewastransferredtoDipolog. TheSecretaryofFinancethenauthorizedtheCommissionerofInternalRevenuetodeductanamountequalto25%of theregularinternalrevenueallotmentfortheCityofZamboangaforthequarterendingMarch31,1960,thenforthequarter ending June 30, 1960, and again for the first quarter of the fiscal year 19601961. The deductions, all aggregating P57,373.46,wascreditedtotheprovinceofZamboangadelNorte,inpartialpaymentoftheP764,220.05dueit. However,onJune17,1961,RepublicAct3039wasapprovedamendingSec.50ofCommonwealthAct39by providingthat Allbuildings,propertiesandassetsbelongingtotheformerprovinceofZamboangaandlocatedwithinthe CityofZamboangaareherebytransferred,freeofcharge,infavorofthesaidCityofZamboanga.(Stressedfor emphasis). Consequently,theSecretaryofFinance,onJuly12,1961,orderedtheCommissionerofInternalRevenuetostopfrom effectingfurtherpaymentstoZamboangadelNorteandtoreturntoZamboangaCitythesumofP57,373.46takenfromit outoftheinternalrevenueallotmentofZamboangadelNorte.ZamboangaCityadmitsthatsincetheenactmentofRepublic Act3039,P43,030.11oftheP57,373.46hasalreadybeenreturnedtoit. ThisconstrainedplaintiffappelleeZamboangadelNortetofileonMarch5,1962,acomplaintentitled"Declaratory ReliefwithPreliminaryMandatoryInjunction"intheCourtofFirstInstanceofZamboangadelNorteagainstdefendants appellantsZamboangaCity,theSecretaryofFinanceandtheCommissionerofInternalRevenue.Itwasprayedthat:(a) RepublicAct3039bedeclaredunconstitutionalfordeprivingplaintiffprovinceofpropertywithoutdueprocessandjust compensation;(b)Plaintiff'srightsandobligationsundersaidlawbedeclared;(c)TheSecretaryofFinanceandtheInternal RevenueCommissionerbeenjoinedfrom reimbursingthesum ofP57,373.46todefendant City;and(d)Thelatterbe orderedtocontinuepayingthebalanceofP704,220.05inquarterlyinstallmentsof25%ofitsinternalrevenueallotments. OnJune4,1962,thelowercourtorderedtheissuanceofpreliminaryinjunctionasprayedfor.Afterdefendantsfiled theirrespectiveanswers,trialwasheld.OnAugust12,1963,judgmentwasrendered,thedispositiveportionofwhichreads: WHEREFORE,judgmentisherebyrendereddeclaringRepublicActNo.3039unconstitutionalinsofarasit deprives plaintiff Zamboanga del Norte of its private properties, consisting of 50 parcels of land and the improvementsthereonundercertificatesoftitle(Exhibits"A"to"A49")inthenameofthedefunctprovinceof Zamboanga;orderingdefendantCityofZamboangatopaytotheplaintiffthesumofP704,220.05paymentthereof tobedeductedfromitsregularquarterlyinternalrevenueallotmentequivalentto25%thereofeveryquarteruntil saidamountshallhavebeenfullypaid;orderingdefendantSecretaryofFinancetodirectdefendantCommissioner ofInternalRevenuetodeduct25%fromtheregularquarterlyinternalrevenueallotmentfordefendantCityof ZamboangaandtoremitthesametoplaintiffZamboangadelNorteuntilsaidsumofP704,220.05shallhavebeen fullypaid;orderingplaintiffZamboangadelNortetoexecutethroughitsproperofficialsthecorrespondingpublic instrumentdeedingtodefendantCityofZamboangathe50parcelsoflandandtheimprovementsthereonunderthe certificatesoftitle(Exhibits"A"to"A49")uponpaymentbythelatteroftheaforesaidsumofP704,220.05infull; dismissingthecounterclaimofdefendantCityofZamboanga;anddeclaringpermanentthepreliminarymandatory injunctionissuedonJune8,1962,pursuanttotheorderoftheCourtdatedJune4,1962.Nocostsareassessed againstthedefendants. ItisSOORDERED. Subsequently,butpriortotheperfectionofdefendants'appeal,plaintiffprovincefiledamotiontoreconsiderpraying thatZamboangaCitybeorderedinsteadtopaytheP704,220.05inlumpsumwith6%interestperannum.Overdefendants' opposition,thelowercourtgrantedplaintiffprovince'smotion. ThedefendantsthenbroughtthecasebeforeUsonappeal.

 Brushingasidetheproceduralpointconcerningthepropertyofdeclaratoryrelieffiledinthelowercourtonthe assertionthatthelawhadalreadybeenviolatedandthatplaintiffsoughttogiveitcoerciveeffect,sinceassumingthesame tobetrue,theRulesanywayauthorizetheconversionoftheproceedingstoanordinaryaction, 5Weproceedtothemore importantandprincipalquestionofthevalidityofRepublicAct3039. Thevalidityofthelawultimatelydependsonthenatureofthe50lotsandbuildingsthereoninquestion.For,the matterinvolvedhereistheextentoflegislativecontroloverthepropertiesofamunicipalcorporation,ofwhichaprovinceis one.Theprincipleitselfissimple:Ifthepropertyisownedbythemunicipality(meaningmunicipalcorporation)inits publicandgovernmentalcapacity,thepropertyispublicandCongresshasabsolutecontroloverit.Butifthepropertyis ownedinitsprivateorproprietarycapacity,thenitispatrimonialandCongresshasnoabsolutecontrol.Themunicipality cannotbedeprivedofitwithoutdueprocessandpaymentofjustcompensation.6 Thecapacityinwhichthepropertyisheldis,however,dependentontheusetowhichitisintendedanddevoted.Now, whichoftwonorms,i.e.,thatoftheCivilCodeorthatobtainingunderthelawofMunicipalCorporations,mustbeusedin classifyingthepropertiesinquestion? TheCivilCodeclassificationisembodiedinitsArts.423and424whichprovide:1wph1.t ART.423.Thepropertyofprovinces,cities,andmunicipalitiesisdividedintopropertyforpublicuseand patrimonialproperty. ART.424.Propertyforpublicuse,intheprovinces,cities,andmunicipalities,consistsoftheprovincial roads,citystreets,municipalstreets,thesquares,fountains,publicwaters,promenades,andpublicworksforpublic servicepaidforbysaidprovinces,cities,ormunicipalities. AllotherpropertypossessedbyanyofthemispatrimonialandshallbegovernedbythisCode,withoutprejudiceto theprovisionsofspeciallaws.(Stressedforemphasis). Applying the above cited norm, all the properties in question, except the two (2) lots used as High School playgrounds,couldbeconsideredaspatrimonialpropertiesoftheformerZamboangaprovince.Eventhecapitalsite,the hospitalandleprosariumsites,andtheschoolsiteswillbeconsideredpatrimonialfortheyarenotforpublicuse.They wouldfallunderthephrase"publicworksforpublicservice"forithasbeenheldthatundertheejusdemgenerisrule,such publicworksmustbeforfreeandindiscriminateusebyanyone,justliketheprecedingenumeratedpropertiesinthefirst paragraphofArt424.7Theplaygrounds,however,wouldfitintothiscategory. Thiswasthenormappliedbythelowercourt.Anditcannotbesaidthatitsactuationwaswithoutjurisprudential precedentforinMunicipalityofCatbaloganv.DirectorofLands,8andinMunicipalityofTaclobanv.DirectorofLands,9 itwasheldthatthecapitolsiteandtheschoolsitesinmunicipalitiesconstitutetheirpatrimonialproperties.Thisresultis understandable because, unlike in the classification regarding State properties, properties for public service in the municipalitiesarenotclassifiedaspublic.AssumingthentheCivilCodeclassificationtobethechosennorm,thelower courtmustbeaffirmedexceptwithregardtothetwo(2)lotsusedasplaygrounds. Ontheotherhand,applyingthenormobtainingundertheprinciplesconstitutingthelawofMunicipalCorporations, allthoseofthe50propertiesinquestionwhicharedevotedtopublicservicearedeemedpublic;therestremainpatrimonial. Underthisnorm,tobeconsideredpublic,itisenoughthatthepropertybeheldand,devotedforgovernmentalpurposeslike localadministration,publiceducation,publichealth,etc.10 Supportingjurisprudencearefoundinthefollowingcases:(1)HINUNANGANV.DIRECTOROFLANDS, 11 whereitwasstatedthat"...wherethemunicipalityhasoccupiedlands distinctlyforpublicpurposes,suchas forthe municipalcourthouse,thepublicschool,thepublicmarket,orothernecessarymunicipalbuilding,wewill,intheabsence ofprooftothecontrary,presumeagrantfromtheStatesinfavorofthemunicipality;but,asindicatedbythewording,that rulemaybeinvokedonlyastopropertywhichisuseddistinctlyforpublicpurposes...."(2)VIUDADETANTOCOV. MUNICIPALCOUNCILOFILOILO12heldthatmunicipalpropertiesnecessaryforgovernmentalpurposesarepublicin nature.Thus,theautotrucksusedbythemunicipalityforstreetsprinkling,thepolicepatrolautomobile,policestationsand concretestructureswiththecorrespondinglotsusedasmarketsweredeclaredexemptfromexecutionandattachmentsince they were not patrimonial properties. (3) MUNICIPALITY OF BATANGAS VS. CANTOS 13 held squarely that a municipallotwhichhadalwaysbeendevotedtoschoolpurposesisonededicatedtopublicuseandisnotpatrimonial propertyofamunicipality.

Followingthisclassification,RepublicAct3039isvalidinsofarasitaffectsthelotsusedascapitolsite,schoolsites anditsgrounds,hospitalandleprosariumsitesandthehighschoolplaygroundsitesatotalof24lotssincethesewere heldbytheformerZamboangaprovinceinitsgovernmentalcapacityandthereforearesubjecttotheabsolutecontrolof Congress.Saidlotsconsideredaspublicpropertyarethefollowing: TCTNumber LotNumber Use 2200 ...................................... 4B ...................................... CapitolSite 2816 ...................................... 149 ...................................... SchoolSite 3281 ...................................... 1224 ...................................... HospitalSite 3282 ...................................... 1226 ...................................... HospitalSite 3283 ...................................... 1225 ...................................... HospitalSite 3748 ...................................... 434A1 ...................................... SchoolSite 5406 ...................................... 171 ...................................... SchoolSite 5564 ...................................... 168 ...................................... HighSchoolPlayground 5567 ...................................... 157&158 ...................................... TradeSchool 5583 ...................................... 167 ...................................... HighSchoolPlayground 6181 ...................................... (O.C.T.) ...................................... CuruanSchool 11942 ...................................... 926 ...................................... Leprosarium 11943 ...................................... 927 ...................................... Leprosarium 11944 ...................................... 925 ...................................... Leprosarium 5557 ...................................... 170 ...................................... BurleighSchool 5562 ...................................... 180 ...................................... BurleighSchool 5565 ...................................... 172B ...................................... Burleigh 5570 ...................................... 171A ...................................... Burleigh 5571 ...................................... 172C ...................................... Burleigh 5572 ...................................... 174 ...................................... Burleigh 5573 ...................................... 178 ...................................... Burleigh 5585 ...................................... 171B ...................................... Burleigh 5586 ...................................... 173 ...................................... Burleigh 5587 ...................................... 172A ...................................... Burleigh WenoticedthattheeightBurleighlotsabovedescribedareadjoiningeachotherandinturnarebetweenthetwolots wherein the Burleigh schools are built, as per records appearing herein and in the Bureau of Lands. Hence, there is sufficientbasisforholdingthatsaideightlotsconstitutetheappurtenantgroundsoftheBurleighschools,andpartakeofthe natureofthesame. Regardingtheseveralbuildingsexistingonthelotsabovementioned,therecordsdonotdisclosewhethertheywere constructedattheexpenseoftheformerProvinceofZamboanga.Consideringhoweverthefactthatsaidbuildingsmust havebeenerectedevenbefore1936whenCommonwealthAct39wasenactedandthefurtherfactthatprovincesthenhadno powertoauthorizeconstructionofbuildingssuchasthoseinthecaseatbarattheirownexpense,14itcanbeassumedthat saidbuildingswereerectedbytheNationalGovernment,usingnationalfunds.Hence,Congresscouldverywelldisposeof saidbuildingsinthesamemannerthatitdidwiththelotsinquestion. Butevenassumingthatprovincialfundswereused,stillthebuildingsconstitutemereaccessoriestothelands,which arepublicinnature,andso,theyfollowthenatureofsaidlands,i.e.,public.Moreover,saidbuildings,thoughlocatedinthe city,willnotbefortheexclusiveuseandbenefitofcityresidentsfortheycouldbeavailedofalsobytheprovincial residents.Theprovincethenanditssuccessorsininterestarenotreallydeprivedofthebenefitsthereof. ButRepublicAct3039cannotbeappliedtodepriveZamboangadelNorteofitsshareinthevalueoftherestofthe26 remaininglotswhicharepatrimonialpropertiessincetheyarenotbeingutilizedfordistinctly,governmentalpurposes.Said lotsare: TCTNumber LotNumber Use

5577 13198 5569

...................................... ...................................... ......................................

177 1270 169

...................................... ...................................... ......................................

Mydro,Magay SanRoque Burleigh15

5558 ...................................... 175 ...................................... Vacant 5559 ...................................... 188 ...................................... " 5560 ...................................... 183 ...................................... " 5561 ...................................... 186 ...................................... " 5563 ...................................... 191 ...................................... " 5566 ...................................... 176 ...................................... " 5568 ...................................... 179 ...................................... " 5574 ...................................... 196 ...................................... " 5575 ...................................... 181A ...................................... " 5576 ...................................... 181B ...................................... " 5578 ...................................... 182 ...................................... " 5579 ...................................... 197 ...................................... " 5580 ...................................... 195 ...................................... " 5581 ...................................... 159B ...................................... " 5582 ...................................... 194 ...................................... " 5584 ...................................... 190 ...................................... " 5588 ...................................... 184 ...................................... " 5589 ...................................... 187 ...................................... " 5590 ...................................... 189 ...................................... " 5591 ...................................... 192 ...................................... " 5592 ...................................... 193 ...................................... " 5593 ...................................... 185 ...................................... " 7379 ...................................... 4147 ...................................... " Moreover,thefactthatthese26lotsareregisteredstrengthensthepropositionthattheyaretrulyprivateinnature.On theotherhand,thatthe24lotsusedforgovernmentalpurposesarealsoregisteredisofnosignificancesinceregistration cannotconvertpublicpropertytoprivate.16 Wearemoreinclinedtoupholdthislatterview.ThecontroversyhereismorealongthedomainsoftheLawof MunicipalCorporationsStatevs.ProvincethanalongthatofCivilLaw.Moreover,thisCourtisnotinclinedtohold that municipal property heldand devoted to public service is in the same category as ordinary private property. The consequencesaredire.Asordinaryprivateproperties,theycanbelevieduponandattached.Theycanevenbeacquiredthru adversepossessionallthesetothedetrimentofthelocalcommunity.Lastly,theclassificationofpropertiesotherthan thoseforpublicuseinthemunicipalitiesaspatrimonialunderArt.424oftheCivilCodeis"...withoutprejudicetothe provisionsofspeciallaws."Forpurposeofthisarticle,theprinciples,obtainingundertheLawofMunicipalCorporations canbeconsideredas"speciallaws".Hence,theclassificationofmunicipalpropertydevotedfordistinctlygovernmental purposesaspublicshouldprevailovertheCivilCodeclassificationinthisparticularcase. Defendants' claim that plaintiff and its predecessorininterest are "guilty of laches is without merit. Under CommonwealthAct39,Sec.50,thecauseofactioninfavorofthedefunctZamboangaProvincearoseonlyin1949afterthe AuditorGeneralfixedthevalueofthepropertiesinquestion.Whilein1951,theCabinetresolvedtransfersaidproperties practicallyforfreetoZamboangaCity,areconsiderationthereofwasseasonablysought.In1952,theoldprovincewas dissolved.Assuccessorininteresttomorethanhalfofthepropertiesinvolved,ZamboangadelNortewasabletogeta reconsiderationoftheCabinetResolutionin1959.Infact,partialpaymentswereeffectedsubsequentlyanditwasonlyafter thepassageofRepublicAct3039in1961thatthepresentcontroversyarose.Plaintiffbroughtsuitin1962.Alltheforegoing, negativelaches. ItresultsthenthatZamboangadelNorteisstillentitledtocollectfromtheCityofZamboangatheformer's54.39% shareinthe26propertieswhicharepatrimonialinnature,saidsharetocomputedonthebasisofthevaluationofsaid26

propertiesascontainedinResolutionNo.7,datedMarch26,1949,oftheAppraisalCommitteeformedbytheAuditor General. Plaintiff'sshare,however,cannotbepaidinlumpsum,exceptastotheP43,030.11alreadyreturnedtodefendantCity. Thereturnofsaidamounttodefendantwaswithoutlegalbasis.RepublicAct3039tookeffectonlyonJune17,1961aftera partialpaymentofP57,373.46hadalreadybeenmade.Sincethelawdidnotprovideforretroactivity,itcouldnothave validlyaffectedacompletedact.Hence,theamountofP43,030.11shouldbeimmediatelyreturnedbydefendantCityto plaintiffprovince.Theremainingbalance,ifany,intheamountofplaintiff's54.39%shareinthe26lotsshouldthenbepaid bydefendantCityinthesamemanneroriginallyadoptedbytheSecretaryofFinanceandtheCommissionerofInternal Revenue,andnotinlumpsum.Plaintiff'sprayer,particularlypars.5and6,readtogetherwithpars.10and11ofthefirst causeofactionrecitedinthecomplaint17clearlyshowsthatthereliefsoughtwasmerelythecontinuanceofthequarterly paymentsfromtheinternalrevenueallotmentsofdefendantCity.Art.1169oftheCivilCodeonreciprocalobligations invokedbyplaintifftojustifylumpsumpaymentisinapplicablesincetherehasbeensofarinlegalcontemplationno completedeliveryofthelotsinquestion.ThetitlestotheregisteredlotsarenotyetinthenameofdefendantZamboanga City. WHEREFORE,thedecisionappealedfromisherebysetasideandanotherjudgmentisherebyenteredasfollows:. (1)DefendantZamboangaCityisherebyorderedtoreturntoplaintiffZamboangadelNorteinlumpsumtheamount ofP43,030.11whichtheformertookbackfromthelatteroutofthesumofP57,373.46previouslypaidtothelatter;and (2)Defendantsareherebyorderedtoeffectpaymentsinfavorofplaintiffofwhateverbalanceremainsofplaintiff's 54.39%shareinthe26patrimonialproperties,afterdeductingtherefromthesumofP57,373.46,onthebasisofResolution No.7datedMarch26,1949oftheAppraisalCommitteeformedbytheAuditorGeneral,bywayofquarterlypaymentsfrom theallotmentsofdefendantCity,inthemanneroriginallyadoptedbytheSecretaryofFinanceandtheCommissionerof InternalRevenue.Nocosts.Soordered. Reyes,J.B.L.,Actg.C.J.,Dizon,Makalintal,Zaldivar,Sanchez,Castro,AngelesandFernando,JJ.,concur. Concepcion,C.J.,isonleave.

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L29788August30,1972 RAFAELS.SALAS,inhiscapacityasExecutiveSecretary;CONRADOF.ESTRELLA,inhiscapacityasGovernorof theLandAuthority;andLORENZOGELLA,inhiscapacityasRegisterofDeedsofManila,petitionersappellants, vs. HON.HILARIONU.JARENCIO,asPresidingJudgeofBranchXXIII,CourtofFirstInstanceofManila;ANTONIOJ. VILLEGAS,inhiscapacityasMayoroftheCityofManila;andtheCITYOFMANILA,respondentsappellees. OfficeoftheSolicitorGeneralFelixV.Makasiar,AssistantSolicitorGeneralAntonioA.Torres,SolicitorRaulI.Gocoand MagnoB.Pablo&CiprianoA.Tan,LegalStaff,LandAuthorityforpetitionersappellants. GregorioA.EjercitoandFelixC.Chavezforrespondentsappellees. ESGUERRA,J.:p ThisisapetitionforreviewofthedecisionoftheCourtofFirstInstanceofManila,BranchXXIII,inCivilCaseNo.67946, datedSeptember23,1968,thedispositiveportionofwhichisasfollows: WHEREFORE,theCourtrendersjudgmentdeclaringRepublicActNo.4118unconstitutionalandinvalidinthatit deprivedtheCityofManilaofitspropertywithoutdueprocessandpaymentofjustcompensation.Respondent ExecutiveSecretaryandGovernoroftheLandAuthorityareherebyrestrainedandenjoinedfromimplementingthe provisionsofsaidlaw.RespondentRegisterofDeedsoftheCityofManilaisorderedtocancelTransferCertificate ofTitleNo.80876whichhehadissuedinthenameoftheLandTenureAdministrationandreinstateTransfer CertificateofTitleNo.22547inthenameoftheCityofManilawhichhecancelled,ifthatisfeasible,orissuea newcertificateoftitleforthesameparceloflandinthenameoftheCityofManila.1 Thefactsnecessaryforaclearunderstandingofthiscaseareasfollows: OnFebruary24,1919,the4thBranchoftheCourtofFirstInstanceofManila,actingasalandregistrationcourt,rendered judgmentinCaseNo.18,G.L.R.O.RecordNo.111,declaringtheCityofManilatheownerinfeesimpleofaparcelofland knownasLotNo.1,Block557oftheCadastralSurveyoftheCityofMani1a,containinganareaof9,689.8squaremeters, moreorless.PursuanttosaidjudgmenttheRegisterofDeedsofManilaonAugust21,1920,issuedinfavoroftheCityof Manila,OriginalCertificateofTitleNo.4329coveringtheaforementionedparcelofland.Onvariousdatesin1924,the CityofManilasoldportionsoftheaforementionedparceloflandinfavorofPuraVillanueva.Asaconsequenceofthe transactionsOriginalCertificateofTitleNo.4329wascancelledandtransfercertificatesoftitlewereissuedinfavorofPura Villanuevafortheportionspurchasedbyher.WhenthelastsaletoPuraVillanuevawaseffectedonAugust22,1924, Transfer CertificateofTitle No.21974inthename oftheCityofManila was cancelledand inlieu thereofTransfer CertificateofTitle(TCT)No.22547coveringtheresiduethereofknownasLot1B2BofBlock557,withanareaof 7,490.10squaremeters,wasissuedinthenameoftheCityofManila. OnSeptember 21,1960,theMunicipal BoardofManila, presidedbythenViceMayorAntonoJ.Villegas, adopted a resolutionrequesting His Excellency,the President of the Philippines toconsider the feasibility of declaringthe City propertyboundedbyFlorida,SanAndres,andNebraskaStreets,underTransferCertificateofTitleNos.25545and22547, containingatotalareaof7,450squaremetersasapatrimonialpropertyoftheCityofManilaforthepurposeofreselling theselotstotheactualoccupantsthereof.2 The said resolution of the Municipil Board of the City of Manila was officially transmitted to the President of the PhilippinesbythenViceMayorAntonioJ.VillegasonSeptember21,1960,withtheinformationthatthesameresolution was,onthesamedate,transmittedtotheSenateandHouseofRepresentativesoftheCongressofthePhilippines.3 During the First Session of the Fifth Congress of the Philippines, House Bill No. 191 was filed in the House of RepresentativesbythenCongressmanBartolomeCabangbangseekingtodeclarethepropertyinquestionaspatrimonial propertyoftheCityofManila,andforotherpurposes.TheexplanatorynoteoftheBillgavethegroundsforitsenactment, towit: Intheparticularcaseofthepropertysubjectofthisbill,theCityofManiladoesnotseemtohaveusethereofasa publiccommunalproperty.Asamatteroffact,aresolutionwasadoptedbytheMunicipalBoardofManilaatits regularsessionheldonSeptember21,1960,torequestthefeasibilityofdeclaringthecitypropertyboundedby Florida,SanAndresandNebraskaStreetsasapatrimonialpropertyoftheCityofManilaforthepurposeof

resellingtheselotstotheactualoccupantsthereof.Therefore,itwillbetothebestinterestofsocietythatthesaid propertybeusedinonewayoranother.Sincethispropertyhasbeenoccupiedforalongtimebythepresent occupantsthereofandsincesaidoccupantshaveexpressedtheirwillingnesstobuythesaidproperty,itisbutproper thatthesamebesoldtothem.4 Subsequently,arevisedversionoftheBillwasintroducedintheHouseofRepresentativesbyCongressmenManuelCases, AntonioRaquizaandNicanorYiguezasHouseBillNo.1453,withthefollowingexplanatorynote: Theaccompanyingbillseekstoconvertone(1)parceloflandinthedistrictofMalate,whichisreservedas communalpropertyintoadisposableoralienablepropertyoftheStateandtoprovideitssubdivisionandsaleto bonafideoccupantsortenants. Thisparceloflandinquestionwasoriginallyanaggregatepartofapieceoflandwithanareaof9,689.8square meters,moreorless....OnSeptember21,1960,theMunicipalBoardofManilainitsregularsessionunanimously adoptedaresolutionrequestingthePresidentofthePhilippinesandCongressofthePhilippinesthefeasibilityof declaringthispropertyintodisposableoralienablepropertyoftheState.Thereisthereforeaprecedentthatthis parceloflandcouldbesubdividedandsoldtobonafideoccupants.Thisparceloflandwillnotserveanyuseful publicprojectbecauseitisboundedonallsidesbyprivatepropertieswhichwereformerlypartsofthislotin question. Approval of this bill will implement the policy of the Administration of land for the landless and the Fifth DeclarationofPrinciplesoftheConstitution,whichstatesthatthepromotionofSocialJusticetoinsurethewell beingandeconomicsecurityofallpeopleshouldbetheconcernoftheState.Wearereadyandwillingtoenact legislationpromotingthesocialandeconomicwellbeingofthepeoplewheneveranopportunityforenactingsuch kindoflegislationarises. Inviewoftheforegoingconsiderationandtoinsurefairnessandjusticetothepresentbonafideoccupantsthereof,approval ofthisBillisstronglyurged.5 TheBillhavingbeenpassedbytheHouseofRepresentatives,thesamewasthereaftersenttotheSenatewhereitwas thoroughlydiscussed,asevidencedbytheCongressionalRecordsforMay20,1964,pertinentportionofwhichisasfollows: SENATORFERNANDEZ:Mr.President,itwillberecalledthatwhenthelateMayorLacsonwasstillalive,we approvedasimilarbill.Butafterwards,thelateMayorLacsoncamehereandprotestedagainsttheapproval,andthe approval was reconsidered. May I know whether the defect in the bill which we approved, has already been eliminatedinthispresentbill? SENATORTOLENTINO:IunderstandMr.President,thatthathasalreadybeeneliminatedandthatiswhythe CityofManilahasnomoreobjectiontothisbill. SENATORFERNANDEZ:Mr.President,inviewofthatmanifestationandconsideringthatMayorVillegasand CongressmanAlbertoftheFourthDistrictofManilaareinfavorofthebill.Iwouldnotwanttopretendtoknow morewhatisgoodfortheCityofManila. SENATORTOLENTINO:Mr.President,therebeingnoobjection,Imovethatweapprovethisbillonsecond reading. PRESIDENTPROTEMPORE:ThebiIIisapprovedonsecondreadingafterseveralSenetorssaidayeandnobody saidnay. ThebillwaspassedbytheSenate,approvedbythePresidentonJune20,1964,andbecameRepublicActNo.4118.Itreads asfollows: LotIB2BofBlock557ofthecadastralsurveyoftheCityofManila,situatedintheDistrictofMalate,Cityof Manila,whichisreservedascommunalproperty,isherebyconvertedintodisposaloralienablelandoftheState,to beplacedunderthedisposaloftheLandTenureAdministration.TheLandTenureAdministrationshallsubdivide thepropertyintosmalllots,noneofwhichshallexceedonehundredandtwentysquaremetersinareaandsellthe sameoninstallmentbasistothetenantsorbonafideoccupantsthereofandtoindividuals,intheordermentioned: Provided,Thatnodownpaymentshallberequiredoftenantsorbonafideoccupantswhocannotaffordtopaysuch downpayment:Provided,further,Thatnopersoncanpurchasemorethanonelot:Provided,furthermore,Thatif thetenantorbonafideoccupantofanygivenlotisnotabletopurchasethesame,heshallbegivenaleasefrom monthtomonthuntilsuchtimethatheisabletopurchasethelot:Provided,stillfurther,Thatintheeventoflease therentalswhichmaybechargedshallnotexceedeightpercentperannumoftheassessedvalueoftheproperty leased:Andprovided,finally,Thatinfixingthepriceofeachlot,whichshallnotexceedtwentypesospersquare meter,thecostofsubdivisionandsurveyshallnotbeincluded. Sec.2.UponapprovalofthisActnoejectmentproceedingsagainstanytenantorbonafideoccupantoftheabove lots shall be instituted and any ejectment proceedings pending in court against any such tenant or bona fide occupantshallbedismisseduponmotionofthedefendant:Provided,Thatanydemolitionorderdirectedagainstany tenantorbonafideoccupantshallbelifted.

Sec.3.UponapprovalofthisAct,ifthetenantorbonafideoccupantisinarrearsinthepaymentofanyrentals,the amountlegallydueshallbeliquidatedandshallbepayableintwentyfourequalmonthlyinstallmentsfromthedate ofliquidation. Sec.4.NopropertyacquiredbyvirtueofthisActshallbetransferred,sold,mortgaged,orotherwisedisposedof withinaperiodoffiveyearsfromthedatefullownershipthereofhasbeenvestedinthepurchaserwithoutthe consentoftheLandTenureAdministration. Sec.5.Intheeventofthedeathofthepurchaserpriortothecompletepaymentofthepriceofthelotpurchasedby him,hiswidowandchildrenshallsucceedinallhisrightsandobligationswithrespecttohislot. Sec.6.TheChairmanoftheLandTenureAdministrationshallimplementandissuesuchrulesandregulationsas maybenecessarytocarryouttheprovisionsofthisAct. Sec.7.ThesumofonehundredfiftythousandpesosisappropriatedoutofanyfundsintheNationalTreasurynot otherwiseappropriated,tocarryoutthepurposesofthisAct. Sec.8.AlllawsorpartsoflawsinconsistentwiththisActarerepealedormodifiedaccordingly. Sec.9.ThisActshalltakeeffectuponitsapproval. Approved,June20,1964. Toimplement the provisions of Republic Act No.4118,andpursuant tothe request oftheoccupants of the property involved,thenDeputyGovernorJoseV.YapoftheLandAuthority(whichsucceededtheLandTenureAdministration) addressed a letter, dated February 18, 1965, to Mayor Antonio Villegas, furnishing him with a copy of the proposed subdivisionplanofsaidlotaspreparedfortheRepublicofthePhilippinesforresaleofthesubdivisionlotsbytheLand Authoritytobonafideapplicants.6 OnMarch2,1965,theCityMayorofManila,throughhisExecutiveandTechnicalAdviser,acknowledgedreceiptofthe proposedsubdivisionplanofthepropertyinquestionandinformedtheLandAuthoritythathisofficewouldinterposeno objectiontotheimplementationofsaidlaw,providedthatitsprovisionsbestrictlycompliedwith.7 WiththeabovementionedwrittenconformityoftheCityofManilafortheimplementationofRepublicActNo.4118,the LandAuthority,thruthenDeputyGovernorJoseV.Yap,requestedtheCityTreasurerofManila,thrutheCityMayor,forthe surrenderanddeliverytotheformeroftheowner'sduplicateofTransferCertificateofTitleNo.22547inordertoobtain titletheretointhenameoftheLandAuthority.TherequestwasdulygrantedwiththeknowledgeandconsentoftheOffice oftheCityMayor.8 WiththepresentationofTransferCertificateofTitleNo.22547,whichhadbeenyieldedasabovestatedbythe,City authoritiestotheLandAuthority,TransferCertificateofTitle(T.C.T.No.22547)wascancelledbytheRegisterofDeedsof ManilaandinlieuthereofTransferCertificateofTitleNo.80876wasissuedinthenameoftheLandTenureAdministration (nowLandAuthority)pursuanttotheprovisionsofRepublicActNo.4118.9 Butduetoreasonswhichdonotappearintherecord,theCityofManilamadeacompleteturnabout,foronDecember20, 1966,AntonioJ.Villegas,inhiscapacityastheCityMayorofManilaandtheCityofManilaasadulyorganizedpublic corporation,broughtanactionforinjunctionand/orprohibitionwithpreliminaryinjunctiontorestrain,prohibitandenjoin thehereinappellants,particularlytheGovernoroftheLandAuthorityandtheRegisterofDeedsofManila,fromfurther implementingRepublicActNo.4118,andprayingforthedeclarationofRepublicActNo.4118asunconstitutional. Withtheforegoingantecedentfacts,whichareallcontainedinthepartialstipulationoffactssubmittedtothetrialcourtand approvedbyrespondentJudge,thepartieswaivedthepresentationoffurtherevidenceandsubmittedthecasefordecision. OnSeptember23,1968,judgmentwasrenderedbythetrialcourtdeclaringRepublicActNo.4118unconstitutionaland invalidonthegroundthatitdeprivedtheCityofManilaofitspropertywithoutdueprocessoflawandpaymentofjust compensation.TherespondentswereorderedtoundoallthathadbeendonetocarryouttheprovisionsofsaidActandwere restrainedfromfurtherimplementingthesame. Twoissuesarepresentedfordetermination,ontheresolutionofwhichthedecisioninthiscasehinges,towit: I.IsthepropertyinvolvedprivateorpatrimonialpropertyoftheCityofManila? II.IsRepublicActNo.4118validandnotrepugnanttotheConstitution? I. Asregardsthefirstissue,appellantsmaintainthatthelandinvolvedisacommunallandor"leguacomunal"whichisa portionofthepublicdomainownedbytheState;thatitcameintoexistenceassuchwhentheCityofManila,oranypueblo ortowninthePhilippines forthat matter,was foundedunderthelaws ofSpain,theformersovereign; that uponthe establishmentofapueblo,theadministrativeauthoritywasrequiredtoallotandsetasideportionsofthepublicdomainfora publicplaza,achurchsite,asiteforpublicbuildings,landstoserveascommonpasturesandforstreetsandroads;thatin assigning these lands some lots were earmarked for strictly public purposes, and ownership of these lots (for public purposes)immediatelypassedtothenewmunicipality;thatinthecaseofcommonlandsor"leguacomunal",therewasno suchimmediateacquisitionofownershipbythepueblo,andthelandthoughadministeredthereby,didnotautomatically 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 landwas not absolutelyneeded forthedischargeof the municipality's governmental functions. ItisarguedthattheparceloflandinvolvedhereinhasnotbeenusedbytheCityofManilaforanypublicpurposeandhad notbeenofficiallyearmarkedasasitefortheerectionofsomepublicbuildings;thatthiscircumstanceconfirmsthefactthat itwasoriginally"communal"landallotedtotheCityofManilabytheCentralGovernmentnotbecauseitwasneededin connectionwithitsorganizationasamunicipalitybutsimplyforthecommonuseofitsinhabitants;thatthepresentCityof ManilaassuccessoroftheAyuntamientodeManilaundertheformerSpanishsovereignmerelyenjoystheusufructoversaid land,anditsexerciseofactsofownershipbysellingpartsthereofdidnotnecessarilyconvertthelandintoapatrimonial propertyoftheCityofManilanordivesttheStateofitsparamounttitle. Appellantsfurtherarguethatamunicipalcorporation,likeacityisagovernmentalagentoftheStatewithauthorityto governalimitedportionofitsterritoryortoadministerpurelylocalaffairsinagivenpoliticalsubdivision,andtheextentof itsauthorityisstrictlydelimitedbythegrantofpowerconferredbytheState;thatCongresshastheexclusivepowerto create,changeordestroymunicipalcorporations;thatevenifWeadmitthatlegislativecontrolovermunicipalcorporations isnotabsoluteandevenifitistruethattheCityofManilahasaregisteredtitleoverthepropertyinquestion,themere transferofsuchlandbyanactofthelegislaturefromoneclassofpubliclandtoanother,withoutcompensation,doesnot invadethevestedrightsoftheCity. AppellantsfinallyarguethatRepublicActNo.4118hastreatedthelandinvolvedasonereservedforcommunaluse,andthis classificationisconclusiveuponthecourts;thatiftheCityofManilafeelsthatthisiswronganditsinterestshavebeen therebyprejudiced,themattershouldbebroughttotheattentionofCongressforcorrection;andthatsinceCongress,inthe exerciseofitswidediscretionarypowershasseenfittoclassifythelandinquestionascommunal,theCourtscertainlyowe ittoacoordinatebranchoftheGovernmenttorespectsuchdeterminationandshouldnotinterferewiththeenforcementof thelaw. Upontheotherhand,appelleesarguebysimplyquotingportionsoftheappealeddecisionofthetrialcourt,whichreadthus: Therespondents(petitionersappellantsherein)contend,amongotherdefenses,thatthepropertyinquestionis communalproperty.Thiscontentionis,however,disprovedbyOriginalCertificateofTitleNo.4329issuedon August21,1920infavoroftheCityofManilaafterthelandinquestionwasregisteredintheCity'sfavor.The TorrensTitleexpresslystatesthattheCityofManilawastheownerin'feesimple'ofthesaidland.UnderSec.38of theLandRegistrationAct,asamended,thedecreeofconfirmationandregistrationinfavoroftheCityofManila... shallbeconclusiveuponandagainstallpersonsincludingtheInsularGovernmentandallthebranchesthere... Thereisnothinginthesaidcertificateoftitleindicatingthatthelandwas'communal'landascontendedbythe respondents.TheerroneousassumptionbytheMunicipalBoardofManilathatthelandinquestionwascommunal landdidnotmakeitso.TheMunicipalBoardhadnoauthoritytodothat. Therespondents,however,contendthatCongresshadthepowerandauthoritytodeclarethatthelandinquestion was'communal'landandthecourtshavenopowerorauthoritytomakeacontraryfinding.Thiscontentionisnot entirelycorrectoraccurate.Congresshasthepowertoclassify'landofthepublicdomain',transferthemfromone classificationtoanotheranddeclarethemdisposableornot.Suchpowerdoesnot,however,extendtoproperties whichareownedbycities,provincesandmunicipalitiesintheir'patrimonial'capacity. Art.324oftheCivilCodeprovidesthatpropertiesofprovinces,citiesandmunicipalitiesaredividedintoproperties forpublicuseandpatrimonialproperty.Art.424ofthesamecodeprovidesthatpropertiesforpublicuseconsistof provincialroads,citystreets,municipalstreets,thesquares,fountains,publicwaters,promenadesandpublicworks forpublicservicepaidforbysaidprovince,citiesormunicipalities.Allotherpropertypossessedbyanyofthemis patrimonial.TestedbythiscriteriontheCourtfindsandholdsthatthelandinquestionispatrimonialpropertyof theCityofManila. 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 unconstitutionaltheCourtshavethepowerandauthoritytoinquireintothequestionandpassuponit.Thishaslong agobeensettledinMarburyvs.Madison,2L.ed.60,whentheUnitedStatesSupremeCourtspeakingthruChief JusticeMarshallheld: ...Ifanactofthelegislature,repugnanttotheconstitution,isvoid,doesit,notwithstandingitsvalidity, bindthecourts,andobligethemtogiveeffect?Itisemphaticallytheprovinceanddutyofthejudicial departmenttosaywhatthelawis...Soifalawbeinoppositiontotheconstitution;ifboththelawand theconstitutionapplytoaparticularcase,sothatthecourtmusteitherdecidethatcaseconformableto the constitution, disregarding the law, the court must determine which of these conflicting rules governsthecase.Thisisoftheveryessenceofunconstitutionaljudicialduty. Appelleesfinallyconcludedthatwhenthecourtsdeclarealawunconstitutionalitdoesnotmeanthatthejudicialpoweris superiortothelegislativepower.Itsimplymeansthatthepowerofthepeopleissuperiortobothandthatwhenthewillof

thelegislature,declaredinstatutes,standsinoppositiontothatofthepeople,declaredintheConstitution,thejudgesought tobegovernedbytheConstitutionratherthanbythestatutes. Thereisoneoutstandingfactorthatshouldbeborneinmindinresolvingthecharacterofthelandinvolved,anditisthatthe CityofManila,althoughdeclaredbytheCadastralCourtasownerinfeesimple,hasnotshownbyanyshredofevidencein whatmanneritacquiredsaidlandasitsprivateorpatrimonialproperty.ItistruethattheCityofManilaaswellasits predecessor,theAyuntamientodeManila,couldvalidlyacquirepropertyinitscorporateorprivatecapacity,followingthe accepteddoctrineonthedualcharacterpublicandprivateofamunicipalcorporation.Andwhenitacquiresproperty initsprivatecapacity,itactslikeanordinarypersoncapableofenteringintocontractsormakingtransactionsforthe transmissionoftitleorotherrealrights.Whenitcomestoacquisitionofland,itmusthavedonesounderanyofthemodes establishedbylawfortheacquisitionofownershipandotherrealrights.Intheabsenceofatitledeedtoanylandclaimedby theCityofManilaasitsown,showingthatitwasacquiredwithitsprivateorcorporatefunds,thepresumptionisthatsuch landcamefromtheStateuponthecreationofthemunicipality(Unsonvs.Lacson,etal.,100Phil.695).Originallythe municipalityownednopatrimonialpropertyexceptthosethatweregrantedbytheStatenotforitspublicbutforprivateuse. Otherpropertiesitownsareacquiredinthecourseoftheexerciseofitscorporatepowersasajuridicalentitytowhich categoryamunicipalcorporationpertains. Communallandsor"leguacomunal"cameintoexistencewhenatownorpueblowasestablishedinthiscountryunderthe lawsofSpain(LawVII,TitleIII,BookVI,RecopilaciondelasLeyesdeIndios).ThemunicipalitiesofthePhilippineswere notentitled,asamatterofright,toanypartofthepublicdomainforuseascommunallands.TheSpanishlawprovidedthat theusufruct ofaportionofthepublicdomainadjoiningmunicipalterritorymightbegrantedbytheGovernmentfor communalpurposes,uponproperpetition,but,untilgranted,norightsthereinpassedtothemunicipalities,and,inany event,theultimatetitleremainedinthesovereign(CityofManilavs.InsularGovernment,10Phil.327). Fortheestablishment,then,ofnewpueblostheadministrativeauthorityoftheprovince,inrepresentationofthe GovernorGeneral,designatedtheterritoryfortheirlocationandextensionandthemetesandboundsofthesame; andbeforeallotingthelandsamongthenewsettlers,aspecialdemarcationwasmadeoftheplaceswhichwereto serveasthepublicsquareofthepueblo,fortheerectionofthechurch,andassitesforthepublicbuildings,among others,themunicipalbuildingorthecasareal,aswell as ofthelands whickweretoconstitutethecommon pastures,andpropiosofthemunicipalityandthestreetsandroadswhichweretointersectthenewtownwerelaid out,....(MunicipalityofCatbaloganvs.DirectorofLands,17Phil.216,220)(Emphasissupplied) Itmay,therefore,belaiddownasageneralrulethatregardlessofthesourceorclassificationoflandinthepossessionofa municipality,exceptingthoseacquiredwithitsownfundsinitsprivateorcorporatecapacity,suchpropertyisheldintrust fortheStateforthebenefitofitsinhabitants,whetheritbeforgovernmentalorproprietarypurposes.Itholdssuchlands subjecttotheparamountpowerofthelegislaturetodisposeofthesame,forafterallitowesitscreationtoitasanagentfor theperformanceofapartofitspublicwork,themunicipalitybeingbutasubdivisionorinstrumentalitythereofforpurposes oflocaladministration.Accordingly,thelegalsituationisthesameasiftheStateitselfholdsthepropertyandputsittoa differentuse(2McQuilin,MunicipalCorporations,3rdEd.,p.197,citingMonaghamvs.Armatage,218Minn.27,15N.W. 2nd241). Trueitisthatthelegislativecontroloveramunicipalcorporationisnotabsoluteevenwhenitcomestoitspropertydevoted topublicuse,forsuchcontrolmustnotbeexercisedtotheextentofdeprivingpersonsoftheirpropertyorrightswithout dueprocessoflaw,orinamannerimpairingtheobligationsofcontracts.Nevertheless,whenitcomestopropertyofthe municipalitywhichitdidnotacquireinitsprivateorcorporatecapacitywithitsownfunds,thelegislaturecantransferits administrationanddispositiontoanagencyoftheNationalGovernmenttobedisposedofaccordingtoitsdiscretion.Hereit didsoinobediencetotheconstitutionalmandateofpromotingsocialjusticetoinsurethewellbeingandeconomicsecurity ofthepeople. IthasbeenheldthatastatuteauthorizingthetransferofaMunicipalairporttoanAirportCommissioncreatedbythe legislature,evenwithoutcompensationtothecity,wasnotviolativeofthedueprocessclauseoftheAmericanFederal Constitution.TheSupremeCourtofMinnessotainMonaghamvs.Armatage,supra,said: ...Thecaseiscontrolledbythefurtherrulethatthelegislature,havingplenarycontrolofthelocalmunicipality,of itscreationandofallitsaffairs,hastherighttoauthorizeordirecttheexpendituresofmoneyinitstreasury, thoughraised,foraparticularpurpose,foranylegitimatemunicipalpurpose,ortoorderanddirectadistribution thereofuponadivisionoftheterritoryintoseparatemunicipalities....Thelocalmunicipalityhasnosuchvested rightinortoitspublicfunds,likethatwhichtheConstitutionprotectsintheindividualasprecludeslegislative interferences.Peoplevs.Power,25Ill.187;StateBoard(ofEducation)vs.City,56Miss.518.Asremarkedbythe supremecourtofMarylandinMayorvs.Sehner,37Md.180:"Itisoftheessenceofsuchacorporation,thatthe government has thesolerightastrusteeofthepublicinterest,atitsowngoodwillandpleasure,toinspect, regulate,control,anddirectthecorporation,itsfunds,andfranchises." Wethereforeholdthatc.500,inauthorizingthetransferoftheuseandpossessionofthemunicipalairporttothe

commissionwithoutcompensationtothecityortotheparkboard,doesnotviolatetheFourteenthAmendmentto theConstitutionoftheUnitedStates. TheCongresshasdealtwiththelandinvolvedasonereservedforcommunaluse(terrenocomunal).Theactofclassifying Statepropertycallsfortheexerciseofwidediscretionarylegislativepoweranditshouldnotbeinterferedwithbythecourts. ThisbringsUstothesecondquestionasregardsthevalidityofRepublicActNo.4118,viewedinthelightofArticleIII, Sections1,subsection(1)and(2)oftheConstitutionwhichordainthatnopersonshallbedeprivedofhispropertywithout dueprocessoflawandthatnoprivatepropertyshallbetakenforpublicusewithoutjustcompensation. II. ThetrialcourtdeclaredRepublicActNo.4118unconstitutionalforallegedlydeprivingtheCityofManilaofitsproperty withoutdueprocessoflawandwithoutpaymentofjustcompensation.Itisnowwellestablishedthatthepresumptionis alwaysinfavoroftheconstitutionalityofalaw(US.vs.TenYu,24Phil.1;GoChing,etal.vs.Dinglasan,etal.,45O.G. No.2,pp.703,705).Todeclarealawunconstitutional,therepugnancyofthatlawtotheConstitutionmustbeclearand unequivocal,forevenifalawisaimedattheattainmentofsomepublicgood,noinfringementofconstitutionalrightsis allowed.Tostrikedownalawtheremustbeaclearshowingthatwhatthefundamentallawcondemnsorprohibits,the statuteallowsittobedone(Morfevs.Mutuc,etal.,G.R.No.L20387,Jan.31,1968;22SCRA424).Thatsituationdoesnot obtaininthiscaseasthelawassaileddoesnotinanymannertrenchupontheconstitutionaswillhereafterbeshown. RepublicActNo.4118wasintendedtoimplementthesocialjusticepolicyoftheConstitutionandtheGovernmentprogram of"LandfortheLandless".TheexplanatorynoteofHouseBillNo.1453whichbecameRepublicActNo.4118,readsinpart asfollows: Approvalofthisbillwill implement thepolicyoftheadministrationof"landforthelandless" andtheFifth DeclarationofPrinciplesoftheConstitutionwhichstatesthat"thepromotionofsocialjusticetoinsurethewell beingandeconomicsecurityofallpeopleshouldbetheconcernoftheState."Wearereadyandwillingtoenact legislationpromotingthesocialandeconomicwellbeingofthepeoplewheneveranopportunityforenactingsuch kindoflegislationarises. TherespondentCourtheldthatRepublicActNo.4118,"byconvertingthelandinquestionwhichisthepatrimonial propertyoftheCityofManilaintodisposablealienablelandoftheStateandplacingitunderthedisposaloftheLand TenureAdministrationviolatestheprovisionsofArticleIII(Secs.1and2)oftheConstitutionwhichordainthat"private propertyshallnotbetakenforpublicusewithoutjustcompensation,andthatnopersonshallbedeprivedoflife,libertyor propertywithoutdueprocessoflaw".InsupportthereofrelianceisplacedontherulinginProvinceofZamboangadel Nortevs.CityofZamboanga,G.R.No.2440,March28,1968;22SCRA1334,whichholdsthatCongresscannotdeprivea municipalityofitsprivateorpatrimonialpropertywithoutdueprocessoflawandwithoutpaymentofjustcompensation sinceithasnoabsolutecontrolthereof.Thereisnoquarreloverthisruleifitisundisputedthatthepropertysoughttobe takenisinrealityaprivateorpatrimonialpropertyofthemunicipalityorcity.Butitwouldbesimplybeggingthequestion toclassifythelandinquestionassuch.Theproperty,ashasbeenpreviouslyshown,wasnotacquiredbytheCityofManila withitsownfundsinitsprivateorproprietarycapacity.Thatithasinitsnamearegisteredtitleisnotquestioned,butthis titleshouldbedeemedtobeheldintrustfortheStateasthelandcoveredtherebywaspartoftheterritoryoftheCityof Manila granted by the sovereign upon its creation. That the National Government, through the Director of Lands, representedbytheSolicitorGeneral,inthecadastralproceedingsdidnotcontesttheclaimoftheCityofManilathatthe landisitsproperty,doesnotdetractfromitscharacterasStatepropertyandinnowaydiveststhelegislatureofitspowerto dealwithitassuch,thestatenotbeingboundbythemistakesand/ornegligenceofitsofficers. OnedecisivefactthatshouldbenotedisthattheCityofManilaexpresslyrecognizedtheparamounttitleoftheStateover saidland whenbyits resolutionof September20,1960,theMunicipal Board,presided bythen ViceMayor Antonio Villegas,requested"HisExcellencythePresidentofthePhilippinestoconsiderthefeasibilityofdeclaringthecityproperty boundedbyFlorida,SanAndresandNebraskaStreets,underTransferCertificateofTitleNos.25545and25547,containing anareaof7,450squaremeters,aspatrimonialpropertyoftheCityofManilaforthepurposeofresellingtheselotstothe actualoccupantsthereof."(SeeAnnexE,PartialStipulationofFacts,CivilCaseNo.67945,CFI,Manila,p.121,Recordof theCase)[EmphasisSupplied] TheallegedpatrimonialcharacterofthelandundertheownershipoftheCityofManilaistotallybeliedbytheCity'sown officialact,whichisfataltoitsclaimsincetheCongressdidnotdoasbidden.Ifitwereitspatrimonialpropertywhyshould theCityofManilaberequestingthePresidenttomakerepresentationtothelegislaturetodeclareitassuchsoitcanbe disposedofinfavoroftheactualoccupants?Therecouldbenomoreblatantrecognitionofthefactthatsaidlandbelongsto theStateandwassimplygrantedinusufructtotheCityofManilaformunicipalpurposes.ButsincetheCitydidnot actuallyusesaidlandforanyrecognizedpublicpurposeandallowedittoremainidleandunoccupiedforalongtimeuntilit wasoverrunbysquatters,nopresumptionofStategrantofownershipinfavoroftheCityofManilamaybeacquiescedinto justifytheclaimthatitisitsownprivateorpatrimonialproperty(MunicipalityofTigbauanvs.DirectorofLands,35Phil. 798;CityofManilavs.InsularGovernment,10Phil.327;MunicipalityofLuzuriagavs.DirectorofLands,24Phil.193).

TheconclusionoftherespondentcourtthatRepublicActNo.4118convertedapatrimonialpropertyoftheCityofManila intoaparcelofdisposablelandoftheStateandtookitawayfromtheCitywithoutcompensationis,therefore,unfounded. InthelastanalysisthelandinquestionpertainstotheStateandtheCityofManilamerelyactedastrusteeforthebenefitof thepeoplethereinforwhomtheStatecanlegislateintheexerciseofitslegitimatepowers. RepublicActNo.4118wasneverintendedtoexpropriatethepropertyinvolvedbutmerelytoconfirmitscharacteras communallandoftheStateandtomakeitavailablefordispositionbytheNationalGovernment:Andthiswasdoneatthe instanceorupontherequestoftheCityofManilaitself.Thesubdivisionofthelandandconveyanceoftheresulting subdivisionlotstotheoccupantsbyCongressionalauthorizationdoesnotoperateasanexerciseofthepowerofeminent domainwithoutjustcompensationinviolationofSection1,subsection(2),ArticleIIIoftheConstitution,butsimplyasa manifestationofitsrightandpowertodealwithstateproperty. ItshouldbeemphasizedthatthelawassailedwasenacteduponformalwrittenpetitionoftheMunicipalBoardofManilain theformofalegallyapprovedresolution.ThecertificateoftitleoverthepropertyinthenameoftheCityofManilawas accordinglycancelledandanotherissuedtotheLandTenureAdministrationafterthevoluntarysurrenderoftheCity's duplicatecertificateoftitlebytheCityTreasurerwiththeknowledgeandconsentoftheCityMayor.Toimplementthe provisionsofRepublicActNo.4118,thethenDeputyGovernoroftheLandAuthoritysentaletter,datedFebruary18,1965, totheCityMayorfurnishinghimwithacopyofthe"proposedsubdivisionplanofthesaidlotaspreparedfortheRepublic ofthePhilippinesforsubdivisionandresalebytheLandAuthoritytobonafideapplicants."OnMarch2,1965,theMayor ofManila,throughhisExecutiveandTechnicalAdviser,acknowledgedreceiptofthesubdivisionplanandinformedthe LandAuthoritythathisOffice"willinterposenoobjectiontotheimplementationofsaidlawprovidedthatitsprovisionsare strictlycompliedwith."Theforegoingsequenceofevents,clearlyindicateapatternofregularityandobservanceofdue processinthereversionofthepropertytotheNationalGovernment.AllsuchactsweredoneinrecognitionbytheCityof ManilaoftherightandpoweroftheCongresstodisposeofthelandinvolved. Consequently,theCityofManilawasnotdeprivedofanythingitowns,eitherunderthedueprocessclauseorunderthe eminentdomainprovisionsoftheConstitution.IfitfailedtogetfromtheCongresstheconcessionitsoughtofhavingthe landinvolvedgiventoitasitspatrimonialproperty,theCourtspossessnopowertograntthatrelief.RepublicActNo.4118 doesnot,therefore,sufferfromanyconstitutionalinfirmity. WHEREFORE,theappealeddecisionisherebyreversed,andpetitionersshallproceedwiththefreeanduntrammeled implementationofRepublicActNo.4118withoutanyobstaclefromtherespondents.Withoutcosts. Concepcion,C.J.,Makalintal,Zaldivar,Castro,Fernando,TeehankeeandAntonio,JJ.,concur. BarredoandMakasiar,JJ.,tooknopart.

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L24950March25,1926 VIUDADETANTOCO,plaintiffappellant, vs. THEMUNICIPALCOUNCILOFILOILO,defendantappellee. Arroyo&Evangelistaforappellant. ProvincialFiscalBorromeoVelosoforappelle. VILLAMOR,J.: It appears from the record that the widow of Tan Toco had sued the municipal council of Iloilo for the amount of P42,966.40,beingthepurchasepriceoftwostripsofland,oneonCalleJ.M.Basaconsistingof592squaremeters,andthe otheronCalleAldiguerconsistingof59squaremeters,whichthemunicipalityofIloilohadappropriatedforwideningsaid street.TheCourtofFirstInstanceofIloilosentencedthesaidmunicipalitytopaytheplaintifftheamountsoclaimed,plus theinterest,andthesaidjudgmentwasonappealaffirmedbythiscourt.1 OnaccountoflackoffundsthemunicipalityofIloilowasunabletopaythesaidjudgment,whereforeplaintiffhadawritof executionissueagainstthepropertyofthesaidmunicipality,byvirtueofwhichthesheriffattachedtwoautotrucksusedfor streetsprinkling,onepolicepatrolautomobile,thepolicestationsonMabinistreet,andinMoloandMandurriaoandthe concretestructures,withthecorrespondinglots,usedasmarketsbyIloilo,Molo,andMandurriao. Afternoticeofthesaleofsaidpropertyhadbeenmade,andafewdaysbeforethesale,theprovincialfiscalofIloilofileda motionwhichtheCourt ofFirstInstanceprayingthat theattachmentonthesaidpropertybedissolved,thatthesaid attachmentbedeclarednullandvoidasbeingillegalandviolativeoftherightsofthedefendantmunicipality. Plaintiffscounselobjectedothefiscal'smotionbutthecourt,byorderofAugust12,1925,declaredtheattachmentlevied upontheaforementionedpropertyofthedefendantmunicipalitynullandvoid,therebydissolvingthesaidattachment. Fromthisordertheplaintiffhasappealedbybillofexceptions.Thefundamentalquestionraisedbyappellantinherfour assignmentsoferroriswhetherornotthepropertylevieduponisexemptfromexecution. Themunicipallaw,section2165oftheAdministrativeCode,providesthat: Municipalitiesarepoliticalbodiescorporate,andassuchareendowedwiththefacultiesofmunicipalcorporations, tobeexercisedbyandthroughtheirrespectivemunicipalgovernmentinconformitywithlaw. Itshallbecompetentforthem,intheirpropercorporatename,tosueandbesued,tocontractandbecontracted with,toacquireandholdrealandpersonalpropertyformunicipalpurposes,andgenerallytoexercisethepowers hereinafterspecifiedorotherwiseconferreduponthembylaw. Forthepurposesofthematterhereinquestion,theAdministrativeCodedoesnotspecifythekindofpropertythata municipality may acquire. However, article 343 of the Civil Code divides the property of provinces and towns (municipalities)intopropertyforpublicuseandpatrimonialproperty.Accordingtoarticle344ofthesameCode,provincial roadsandfootpath,squares,streets,fountainsandpublicwaters,drivesandpublicimprovementsofgeneralbenefitbuiltat theexpenseofthesaidtownsorprovinces,arepropertyforpublicuse. Allotherpropertypossessedbythesaidtownsandprovincesispatrimonialandshallbesubjecttotheprovisionsofthe CivilCodeexceptasprovidedbyspeciallaws. Commentinguponarticle344,Mr.Manresasaysthat"Inaccordancewithadministrativelegislation"(Spanish)wemust distinguish,astothepatrimonialpropertyofthetowns,"betweenthatacommonbenefitandthatwhichisprivateproperty ofthetown.Thefirstdiffersfrompropertyforpublicuseinthatgenerallyitsenjoymentisless,asitislimitedtoneighbors ortoagrouporclassthereof;and,furthermore,suchuse,moreorlessgeneral,isnotintrinsicwiththiskindofproperty,for

byitsverynatureitmaybeenjoyedasthoughitwereprivateproperty.Thethirdgroup,thatis,privateproperty,isusedin thenameofthetownorprovincebytheentitiesrepresentingitand,likeandprivateproperty,givingasourceofrevenue." Suchdistinction,however,isoflittlepracticalimportanceinthisjurisdictioninviewofthedifferentprinciplesunderlying thefunctionsofamunicipalityundertheAmericanrule.Notwithstandingthis,webelievethattheprinciplegoverning propertyofthepublicdomainoftheStateisapplicabletopropertyforpublicuseofthemunicipalitiesassaidmunicipalis similarincharacter.TheprincipleisthatthepropertyforpublicuseoftheStateisnotwithinthecommerceofmanand, consequently,isinalienableandnotsubjecttoprescription.Likewise,propertyforpublicofthemunicipalityisnotwithin thecommerceofmansolongasitisusedbythepublicand,consequently,saidpropertyisalsoinalienable. TheAmericanLawismoreexplicitaboutthismatterasexpoundedbyMcquilininMunicipalCorporations,volume3, paragraph1160,wherehesaysthat: Statesstatutesoftenprovidethecourthouses,jailsandotherbuildingsownedbymunicipalitiesandthelotson whichtheystandshallbeexemptfromattachmentandexecution.Butindependentofexpressstatutoryexemption, asageneralproposition,property,realandpersonal,heldbymunicipalcorporations,intrustforthebenefitoftheir inhabitants,andusedforpublicpurposes,isexempt. Forexample,publicbuildings,schoolhouses,streets,squares,parks,wharves,enginesandenginehouses,andthe like,arenotsubjecttoexecution.Socitywaterworks,andastockofliquorscarriedinatowndispensary,are exempt.Thereasonfortheexemptionisobvious.Municipalcorporationsarecreatedforpublicpurposesandfor the good of the citizens in their aggregate or public capacity. That they may properly discharge such public functionscorporatepropertyandrevenuesareessential,andtodenythemthesemeanstheverypurposeoftheir creationwouldbemateriallyimpeded,andinsomeinstancespracticallydestroyit.Respectingthissubjectthe SupremeCourtofLouisianaremarked:"Onthefirstviewofthisquestionthereissomethingveryrepugnanttothe moralsenseintheideathatamunicipalcorporationshouldcontractdebts,andthat,havingnoresourcesbutthe taxeswhichareduetoit,theseshouldnotbesubjectedbylegalprocesstothesatisfactionofitscreditors.This consideration,deducedfromtheprinciplesofmoralequityhasonlygivenwaytothemoreenlargedcontemplation ofthegreatandparamountinterestsofpublicorderandtheprinciplesofgovernment." Itisgenerallyheldthatpropertyownedbyamunicipality,wherenotusedforapublicpurposebutforquasiprivate purposes,issubjecttoexecutiononajudgmentagainstthemunicipality,andmaybesold.Thisruleappliesto sharesofstockownedbyamunicipalcorporation,andthelike.Butthemerefactthatcorporatepropertyheldfor publicusesisbeingtemporarilyusedforprivatepurposesdoesnotmakeitsubjectexecution. Ifmunicipalpropertyexemptfromexecutionisdestroyed,theinsurancemoneystandsinlieuthereofandisalso exempt. The members or inhabitants of a municipal corporation proper are not personally liable for the debts of the municipality, except that in the New England States the individual liability of the inhabitant is generally maintained. InCorpusJuris,vol23,page355,thefollowingisfound: Where property of a municipal or other public corporation is sough to be subjected to execution to satisfy judgmentsrecoveredagainstsuchcorporation,thequestionastowhethersuchpropertyisleviableornotistobe determinedbytheusageandpurposesforwhichitisheld.Theruleisthatpropertyheldforpublicuses,suchas publicbuildings,streets,squaresparks,promenades,wharves,landingplacesfireengines,hoseandhosecarriages, enginehouses,publicmarkets,hospitals,cemeteries,andgenerallyeverythingheldforgovernmentalpurposes,is notsubjecttolevyandsaleunderexecutionagainstsuchcorporation.Therulealsoappliestofundsinthehandsof apublicofficer.Likewiseithasbeenheldthattaxesduetoamunicipalcorporationorcountrycannotbeseized underexecutionbyacreditorofsuchcorporation.Butwhereamunicipal corporationorcountryowns inits proprietary,asdistinguishedfromitspublicorgovernmentalcapacity,propertynotusefulorusedforapublic purpose but for quasi private purposes, the general rule is that such property may be seized and sold under executionagainstthecorporation,preciselyassimilarpropertyofindividualsisseizedandsold.Butpropertyheld forpublicpurposesisnotsubjecttoexecutionmerelybecauseitistemporarilyusedforprivatepurposes,although ifthepublicuseiswhollyabandoneditbecomessubjecttoexecution.Whetherornotpropertyheldaspublic propertyisnecessaryforthepublicuseisapolitical,ratherthanajudicialquestion. InthecaseofCityofNewOrleansvs.LouisianaConstructionCo.,Ltd.(140U.S.,654;35Law.ed.,556),itwasheldthata wharfforunloadingsugarandmolasses,opentothepublic,waspropertyforthepublicuseoftheCityofNewOrleansand

wasnotsubjecttoattachmentforthepaymentofthedebtsofthesaidcity. InthatcaseitwasproventhatthesaidwharfwasaparceloflandadjacenttotheMississippiRiverwhereallshipmentsof sugarandmolassestakentoNewOrleanswereunloaded. ThatcityleasedthesaidwharftotheLouisianaConstructionCompany,Ltd.,inorderthatitmighterectwarehousessothat themerchandiseupondischargemightnotbespoiledbytheelements.Thesaidcompanywasgiventheprivilegeofcharging certainfeesforstoringmerchandiseinthesaidwarehousesandthepublicingeneralhadtherighttounloadsugarand molassestherebypayingtherequiredfees,10percentofwhichwasturnedovertothecitytreasury. TheUnitedStatesSupremeCourtonanappealheldthatthewharfwaspublicproperty,thatitneverceasedtobesuchin ordertobecomeprivatepropertyofthecity;whereforethecompanycouldnotlevyexecutionuponthewharfinorderto collecttheamountofthejudgmentrenderedinfavorthereof. InthecaseofKleinvs.CityofNewOrleans(98U.S.,149;25Law.ed.,430),theSupremeCourtoftheUnitedStatesthata publicwharfonthebanksoftheMississippiRiverwaspublicpropertyandnotsubjecttoexecutionforthepaymentofa debtoftheCityofNewOrleanswheresaidwharfwaslocated. InthiscaseaparceloflandadjacenttotheMississippiRiver,whichformerlywastheshoreoftheriverandwhichlater enlargeditselfbyaccession,wasconvertedintoawharfbythecityforpublicuse,whochargedacertainfeeforitsuse. Itwasheldthatthelandwaspublicpropertyasnecessaryasapublicstreetandwasnotsubjecttoexecutiononaccountof thedebtsofthecity.Itwasfurtherheldthatthefeescollectedwherealsoexemptfromexecutionbecausetheywereapartof theincomeofthecity. InthecaseofTufexisvs.OlagueraandMunicipalCouncilofGuinobatan(32Phil.,654),thequestionraisedwaswhether forthepaymentofadebttoathirdpersonbytheconcessionaireofapublicmarket,thesaidpublicmarketcouldbeattached andsoldatpublicauction.TheSupremeCourtheldthat: Eventhoughacreditorisunquestionablyentitledtorecoveroutofhisdebtor'sproperty,yetwhenamongsuch propertythereisincludedthespecialrightgrantedbytheGovernmentofusufructinabuildingintendedfora publicservice,andwhenthisprivilegeiscloselyrelatedtoaserviceofapubliccharacter,suchrightofthecreditor tothecollectionofadebtowedhimbythedebtorwhoenjoysthesaidspecialprivilegeofusufructinapublic marketisnotabsoluteandmaybeexercisedonlythroughtheactionofcourtofjusticewithrespecttotheprofitsor revenueobtainedunderthespecialrightofusufructenjoyedbydebtor. Thespecialconcessionoftherightofusufructinapublicmarketcannotbeattachedlikeanyordinaryright, becausethatwouldbetopermitapersonwhohascontractedwiththestateorwiththeadministrativeofficials thereoftoconductandmanageaserviceofapubliccharacter,tobesubstituted,withouttheknowledgeandconsent oftheadministrativeauthorities,byonewhotooknopartinthecontract,thusgivingrisetothepossibilityofthe regularcourseofapublicservicebeingdisturbedbythemoreorlesslegalactionofagrantee,totheprejudiceof thestateandthepublicinterests. Theprivilegeorfranchisegrantedtoaprivatepersontoenjoytheusufructofapublicmarketcannotlawfullybe attachedandsold,andacreditorofsuchpersoncanrecoverhisdebtonlyoutoftheincomeorrevenueobtainedby thedebtorfromtheenjoymentorusufructofthesaidprivilege,inthesamemannerthattherightsofsuchcreditors ofarailroadcompanycanbeexercisedandtheircreditcollectedonlyoutofthegrossreceiptsremainingafter deductionhasbeenmadetherefromoftheoperatingexpensesoftheroad.(LawofNovember12,1896,extendedto theoverseasprovincesbytheroyalorderofAugust3,1886.) Forthereasonscontainedintheauthoritiesabovequotedwebelievethatthiscourtwouldhavereachedthesameconclusion ifthedebtorhadbeenmunicipalityofGuinobatanandthepublicmarkethadbeenlevieduponbyvirtueoftheexecution. Itisevidentthatthemovableandimmovablepropertyofamunicipality,necessaryforgovernmentalpurpose,maynotbe attachedandsoldforthepaymentofajudgmentagainstthemunicipality.Thesupremereasonforthisruleisthecharacter ofthepublicusetowhichsuchkindofpropertyisdevoted.Thenecessityforgovernmentservicejustifiesthattheproperty of public of the municipality be exempt from execution just as it is necessary to exempt certain property of private individualsinaccordancewithsection452oftheCodeofCivilProcedure. Eventhemunicipalincome,accordingtotheabovequotedauthorities,isexemptfromlevyandexecution.Involume1,page 467,MunicipalCorporationsbyDillonwefindthat: Municipalcorporationsareinstitutedbythesupremeauthorityofastateforthepublicgood.Theyexercise,by

delegationfromthelegislature,aportionofthesovereignpower.Themainobjectoftheircreationistoactas administrativeagenciesforthestate,andtoprovideforthepoliceandlocalgovernmentofcertaindesignatedcivil divisionsofitsterritory.Tothisendtheyareinvestedwithcertaingovernmentalpowersandchargedwithcivil, political,andmunicipalduties.Toenablethembeneficiallytoexercisethesepowersanddischargetheseduties, theyareclothedwiththeauthoritytoraiserevenues,chieflybytaxation,andsubordinatelybyothermodesasby licenses,fines,andpenalties.Therevenueofthepubliccorporationistheessentialmeansbywhichitisenabledto perform its appointed work. Deprived of its regular and adequate supply of revenue, such a corporation is practicallydestroyedandtheendsofitserectionthwarted.Baseduponconsiderationsofthischaracter,itisthe settleddoctrineofthelawthatonlythepublicpropertybutalsothetaxesandpublicrevenuesofsuchcorporations cannotbeseizedunderexecutionagainstthem,eitherinthetreasuryorwhenintransittoit.Judgmentsrenderedfor taxes,andtheproceedsofsuchjudgmentsinthehandsofofficersofthelaw,arenotsubjecttoexecutionunlessso declaredbystatute.Thedoctrineoftheinviolabilityofthepublicrevenuesbythecreditorismaintained,although thecorporationisindebt,andhasnomeansofpaymentbutthetaxeswhichitisauthorizedtocollect. Anothererrorassignedbycounselforappellantistheholdingofthecourtaquothattheproperremedyforcollectingthe judgmentinfavoroftheplaintiffwasbywayormandamus. Whilethisquestionisnotnecessarilyincludedintheonewhichisthesubjectofthisappeal,yetwebelievethattheholding ofthecourt,assignedaserrorbyappellant'scounsel,istruewhen,afterajudgmentisrenderedagainstamunicipality,ithas nopropertysubjecttoexecution.ThisdoctrineismaintainedbyDillon(MunicipalCorporations,vol.4,par.1507,5thed.) baseduponthedecisionsofseveralStatesoftheUnionupholdingthesameprincipleandwhicharecitedonpage2679of theaforesaidwork.Inthissensethisassignmentoferror,webelieve,isgroundless. Byvirtueofalltheforegoing,thejudgmentappealedfromshouldbeandisherebyaffirmedwithcostsagainsttheappellant. Soordered. Avancea,C.J.,Street,Malcolm,Ostrand,Johns,RomualdezandVillaReal.,JJ.,concur.

RepublicofthePhilippines SUPREMECOURT Manila ENBANC G.R.No.L5013March11,1909 JEREMIAHJ.HARTY,RomanCatholicArchbishopofManila,plaintiffappellee, vs. THEMUNICIPALITYOFVICTORIA,ProvinceofTarlac,defendantappellant. F.Buencaminoforappellant. HartiganandRohdeforappellee. TORRES,J.: OnJanuary17,1908,therepresentativeofMgr.JeremiahJ.Harty,archbishopoftheRomanCatholicChurch,asthelegal administratorofallthepropertiesandrightsoftheCatholicChurchwithinthearchbishopricofManila,filedawritten complaintintheCourtofFirstInstanceofTarlacagainstthemunicipalityofVictoria,allegingthattheparishofthesaid townhadbeenandwasthentheownerofaparceloflandwithinthesaidmunicipality,knownastheplazaofthechurchof Victoria;thatithadacquiredsaidparceloflandmorethansixtyyearspreviously,andhadcontinuedtopossessthesame eversinceupto1901,inwhichyearthedefendantmunicipalityunlawfullyandforciblyseizedthesaidproperty,claimingto beentitledtheretoandretainingittothepresentday.Forthepurposesofthecomplaint,adescriptionofthemetersand boundsofthelandinquestionwassetforthinthewriting,andplaintiffprayedthat,inviewofwhatwasthereinsetforth, judgmentbeenteredholdingthatthesaidlandwasthepropertyoftheparishofVictoria,oftheRomanCatholicApostolic Church,andthatthedefendantbeorderedtovacatethesameandtopaythecostsoftheaction. Thedefendantmunicipalityansweredthecomplaintthroughitsattorneyandofferedageneraldenialofallthefactsstated therein,especiallyofthosenumbered4,5,6,and7;inspecialdefenseitallegedthattheplazadescribedinNo.4ofthe complaintwasfoundedwhenthesitiodenominatedCanarum,abarrioofthetownofTarlac,wasconvertedintoaciviltown in1855;thattheparishofTarlacwasestablishedmanyyearsaftertheciviltown,andthattherefore,itneitherhadthen,nor hasnowanytitletothe plaza claimed,andthatthecomplaintinjuredthedefendant,andforthisreasonitprayedthat judgmentbeenteredabsolvingthedefendantofthecomplaintwithcostsanddamagesagainsttheplaintiff. Evidencewasadducedbybothparties,andthedocumentsexhibited,tooneofwhichtheplaintiffobjected,weremadeof record;thetrialcourtrenderedjudgmentonthe15thofJune,1908,holdingthattheparishofVictoriaoftheRoman CatholicApostolicChurch,hadabetterrighttothepossessionofthelanddescribedinthecomplaint,andsentencedthe defendanttovacatethesameandtopaythecosts.Tosaidjudgmenttherepresentativeofthedefendantexceptedandmoved foranewtrialonthegroundthatitwascontrarytotheweightoftheevidence,andhenotifiedthecourtthat,ifhismotion wereoverruled,hewouldappealtotheSupremeCourt.Themotionforanewtrialwasoverruled;thedefendantexcepted, andpresentedthecorrespondingbillofexceptionswhich,afterreceiptofacopyhadbeenacknowledgedbytheadverse party,wasapproved.Onthe1stofSeptemberlast,theappellantwasorderedtofurnishbondinthesumofP1,000toinsure thefulfillmentofthejudgmentintheeventthatitshouldbetotallyorpartiallyaffirmed.Tosaidorderthedefendant excepted,butfurnishedthebondasdirectedbythecourt. InviewofthenatureoftheactionbroughtbytheplaintiffagainstthemunicipalityofVictoria,ProvinceofTarlac,the questionthathasarisenbetweenthecontendingpartiesconsistsonlyindeterminingwhoistheownerandproprietorofthe parceloflandthatsurroundstheparishchurchofthesaidtown,andwhichiscalledthepublicplazaofthesame. Article339oftheCivilCodereads: Propertyofpublicownershipis: 1.Thatdestinedtothepublicuse,suchasroads,canals,rivers,torrents,ports,andbridgesconstructedbytheState, andbanks,shores,roadsteads,andthatofasimilarcharacter. Article344ofsaidcodealsoreads:

Propertyforpublicuseinprovincesandintownscomprisestheprovincialandtownroads,thesquares,streets, fountains,andpublicwaters,thepromenades,andpublicworksofgeneralservicesupportedbythesaidtownsor provinces. FromtheevidencepresentedbybothpartiesitappearsthatthetownofVictoria,whichwasformerlyonlyabarrioofthe townofTarlacandknownasCanarum,wasconvertedintoatownin1855,andnamedVictoria;tothisendtheymusthave laidoutthestreetsandtheplazaofthetown,inthecenterofwhichweresituatedthechurchandparishhousefromthe commencement,andattheexpirationofabouttwelveyearstheparishofsaidtownwasconstitutedandtheparishwhowas toperformtheofficeofcuratewasappointed;thatfromtheverybeginning,thelargetractoflandthatsurroundsthechurch andtheparishhousewasknownasapublic plaza,destinedtotheuseofalltheresidentsoftherecentlyfoundedtown; publicperformancesandreligiousprocessionswereheldthereonwithouthindranceeitheronthepartofthelocalauthorities orofthecurateofsaidtown. Itmustbeassumedthattheprincipalresidentsoftheoldbarrio,beinginterestedintheconversionofthebarriointoacivil town,arrangedinsuchawaythatthebarrio,asthecenterofthefuturetownwhichwassubsequentlycalledVictoria,should havestreetsandapublicplazawithitschurchandparishhouse,andalsoatribunalorbuildingdestinedfortheuseofthe municipalityandthelocalofficialatthattimecalledthegobernadorcilloandlateroncapitnmunicipal,ashasoccurredin thefoundationofallthetownsintheseIslands,undertheoldadministrativelaws. ItmaybetruethatthefatherofthewitnessCasimiroTaedo,whoownedthespaceoflandwherethechurchandparish housewereerected,hadvoluntarilydonatedittotheCatholicChurch,theonlyoneknownatthetime,butproperproofis lackingthatthedonationaffirmedbythesaidTaedocomprehendedthewholeofthelargetractwhichatthepresenttime constitutetheplazaofthetown. ItwasacustomobservedbyallthetownsestablishedadministrativelyintheseIslandsundertheoldLawsoftheIndies,that ontheircreation,acertainamountoflandwasalwaysreservedforplazas,commons,andspecialandcommunalproperty, andasitisunquestionablethatthesaidlargespaceoflandwasleftvacantinthecenterofthetownofVictoriawhenitwas constitutedasaciviltown,morethantwelveyearspriortotheappointmentofapermanentcuratetherein,therearegood groundstosupposethatthelateVicenteTaedodonatedthelandnowoccupiedbythechurchandtheparishhouseinsaid municipalityforreligiouspurposes,ortothechurch,butnottotheparishcuratebecauseatthetimetherewasnocurateat thenewtownofVictoria. EventhoughalltheremainingspaceoflandwhichnowformsthegreatplazaofthetownofVictoriahadbeenownedbythe saidTaedo,itmustbepresumedthathewaivedhisrighttheretoforthebenefitofthetownspeople,sincefromthecreation orestablishmentofthetown,downtothepresentday,alltheresidents,includingthecurateofsaidtown,haveenjoyedthe freeuseofsaidplaza;ithasnotbeensatisfactorilyshownthatthemunicipalityortheprincipalesofthetownofVictoria haddonatedthewholeofsaidlandtothecurateofVictoriaortotheCatholicChurch,asalleged,norcouldithavebeenso donated,itbeingapublic plaza destinedtopublicuseandwasnotofprivateownership,orpatrimonyofthetownof Victoria,oroftheProvinceofTarlac. Itshouldbenotedthat,amongotherthings, plazasdestinedtothepublicusearenotsubjecttoprescription.(Art.1936, CivilCode.) Thatboththecuratesandthegobernadorcillosofthesaidtownprocuredfruittreesandplantstobesetoutintheplaza, doesnotconstituteanactofprivateownership,butevidencesthepublicusethereof,orperhapstheintentiontoimproveand embellishthesaidplazaforthebenefitofthetownspeople. CertainitisthattheplaintiffhasnotproventhattheCatholicChurchortheparishofVictoriawastheownerorproprietorof thesaidextensivepieceoflandwhichnowformsthepublicplazaofsaidtown,northatitwasinpossessionthereofunder theformandconditionsrequiredbylaw,inasmuchasithasbeenfullyproventhatsaidplazahasbeenusedwithoutletor hindrancebythepublicandtheresidentsofthetownofVictoriaeversinceitscreation.Fortheabovereasonsitisour opinionthatthejudgmentappealedfromshouldbereversed,andthatitshouldbeheld,aswedoherebyhold,thatthewhole ofthelandnotoccupiedbythechurchofthetownofVictoriaanditsparishhouse,isapublicplazaofthesaidtown,of publicuse,andthatinconsequencethereof,thedefendantisabsolvedofthecomplaintwithoutanyspecialrulingastothe costsofbothinstances. Arellano,C.J.,Mapa,Johnson,Carson,andWillard,JJ.,concur.

RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.L39272May4,1988 EUGENIASALAMATVDA.DEMEDINA,petitioner, vs. HONORABLE'FERNANDOA.CRUZ,asPresidingJudgeofBranchXII,CourtofFirstInstanceofRizal,and REMEDIOSMAGBANUA,respondents, FernandoV.Domingoforpetitioner. IldefonsoDeGuzmanMendiolaforrespondents. PARAS,J.: Thisisapetitionforreviewoncertiorariandinjunctionwithprayerforrestrainingorder,seekingtoannulandtosetaside thewritofdemolitionissuedbyorderoftherespondentjudgeoftheCourtofFirstInstanceofRizal,BranchXII,Caloocan City,inCivilCaseNo.C120entitled"BenedictaMangahas,etal.vs.ThePhilippineRealtyCorporation,etal.,"dated April4,1974,withprayerforarestrainingorder"enjoiningtheenforcementofsaidwritofdemolition."Theaforementioned orderreads: Actingonthe"MotionforDemolition/RemovalofImprovements,"filedbydefendantonMarch11,1974,towhich plaintiff filed no oppposition, the Court finds that the same should be as it is hereby granted, and plaintiff Mangahasisherebygiventwenty(20)daysfromreceiptofthisorderwithinwhichtoremovetheimprovements introducedbyherontheLotinquestionandthereaftersurrenderpossessionofthepremisestothedefendant. Shouldtheplaintifffailtodoso,letthecorrespondingwritofdemolitionbeissued. SOORDERED. Theantecedentfactsofthecaseareasfollows: This casestemmedfrom Civil CaseNo.C120ofthecourt below.ThequestionedLot 6,GraceParkSubdivisionin CaloocanCityhadbeenbroughtsincetheyear1916undertheoperationoftheLandRegistrationActNo.496,coveredby OriginalCertificateofTitleNo.868,G.L.R.RecordNo.11267whichhadbeenissuedpursuanttoDecreeNo.20302inthe nameofpredecessorininterestofthePhilippineRealtyCorporation.In1949BenedictaMangahasandFranciscoRamos occupiedthesaidlotandbuilttheirhouseswithouttheconsentofthePhilippineRealtyCorporation,thethenregistered ownerofthelot.OnApril27,1959,theowner,PhilippineRealtyCorporationexecutedaContracttoSellofsaidlotinfavor ofRemediosMagbanuaforP19,500.00oninstallment.OnFebruary3,1964,MangahasandRamosinstitutedCivilCaseNo. C120ofthecourtbelowagainstthePhilippineRealtyCorporationandRemediosMagbanuaforannulmentofthesaleand forexecutionofanotherintheirfavor.OnJuly18,1969,CivilCaseNo.C120wasdecidedbythecourtbelowinfavorof defendantsPhilippineRealtyCorporationandRemediosMagbanua,dismissingthecomplaintandorderingMangahasand Ramos"tovacatethelotandsurrenderpossessionthereoftoRemediosMagbanua." OnAugust6,1969,aforesaiddecisionwasappealedbytheplaintiffstotheCourtofAppealsanddocketedasG.R.CANo. 44769,whichwaslaterdismissedonMarch2,1973.OnMarch24,1973,thecasewaselevatedtothisCourtbypetitionfor reviewoncertiorariandwasdocketedasSCG.R.No.L36542.TheaforesaidpetitionwasdeniedonApril26,1973.Three motionsforreconsiderationfiledbyMangahasandRamoswerealldeniedbythisCourt;thelastmotionforleavetofile fourthmotionforreconsiderationwasMalabananEXPUNGEDfromtherecordsofthecasebyresolutionofthisCourt datedAugust2,1973.FinaljudgmentwasenteredonMay28,1973andonAugust22,1973,therecordsofthecasewere remandedtothecourtbelowforexecution.Thus,onNovember9,1973afteralltheinstallmentshadbeenfullypaid,the PhilippineRealtyCorporationexecutedtheDeedofSaleofLot6infavorofRemediosMagbanuaandTCTNo.52262 (CaloocanCity)wasissuedinthenameofthelatter(MemoforRespondent,pp.59;Rollo,pp.309313). OnOctober16,1973,petitioner,EugeniaSalamatvda.deMedinapurchasedfromtheHeirsofDonMarianoSanPedroy Esteban,thesameparceloflanddescribedasLot6,BlockNo.116,GraceParkSubdivision,GracePark,CaloocanCity.A deedofAbsoluteSalewasexecutedinherfavorbytheHeirsoftheEstateofDonMarianoSanPedroyEstebanrepresented byitsAdministratorandAttorneyinfact,PrudencioG.Falcis(Rollo,p.13). OnNovember29,1973,apetitionforawritofexecutionwasfiledinthecourtbelowbythedefendantRemediosMagbanua (hereinafterreferredtoasprivaterespondent),andthepetitionwasgrantedinanOrderdatedDecember14,1973.The aforesaidwritofexecutionwasissuedonDecember20,1973,andwasservedbythesheriffontheplaintiffMangahasand RamosonJanuary14and15,1979,respectively.Thesheriffreturnedthewrittothecourtbelowuponplaintiffs'refusalto

vacatethelotandtoaffixtheirsignaturesontheoriginalcopyofthewrit(Rollo,p.314), Meanwhile, on January 21,1974, petitioner purchased six (6) houses, standing on the land subject matter of the aforementionedsaleforP7,600.00fromRicardodeGuzmanandEufrociniadeGuzman.ADeedofAbsoluteSalewas thereforeissuedinherbehalf(Rollo,p.15). ButonJanuary22,1974,petitionerhavingreceivedinformationthatthehousespurchasedwereinvolvedinalitigation, docketedasCivilCaseNo.C120,andentitledBenedictaMangahasandFranciscoRamos(PlaintiffsinCivilCaseNo.C 120)versusthePhilippineRealtyCorporationandRemediosMagbanuaintheCourtofFirstInstanceofRizal,BranchXII, CaloocanCity,filedanaffidavitandnoticeofthirdpartyclaim(Rollo,p.17). ImpededbytherefusalofMangahasandRamostovacatethelot,RemediosMagbanuafiledamotionfordemolitionand removalofimprovementsallegingthat thequestionedlotis aregisteredpropertyinthenameofdefendant Remedios Magbanua,underTransferCertificateofTitleNo.52262(CaloocanCityRegistryofDeeds)whichwas derivedfrom TransferCertificateofTitleNo.22104(ofsameRegistryofDeeds)inthenameofthePhilippineRealtyCorporationand fromOriginalCertificateofTitleNo.0868.AtthehearingMangahasandRamosmovedforandweregrantedaperiodof five(5)daystofiletheiropposition.OnMarch25,1974,itwasEugeniaSalamatvda.deMedina,hereinpetitionerwhofiled heroppositionattachingthereto;(1)copyoftheallegedDeedofSaleofLot6inquestion;(2)TaxDeclarationNo.19114; (3)TaxDeclarationNo.19115;and(4)allegedDeedofAssignmentofRightstothehousesexistingonsaidlot.Petitioner allegedthatsheisthepresentownerofthequestionedlotandthesixhousessoughttobedemolished. OnMarch30,1974,privaterespondentRemediosMagbanuafiledananswertotheoppositiondatedMarch25,1974(Rollo, p.150).<re||an1w> OnApril5,1974,therespondentJudgeissuedanOrdergrantingthewritofdemolition(Rollo,p.24). OnMay9,1974,petitionerfiledaMotionforReconsiderationoftheorder(Rollo,p.25)reiteratingthereinthatsheisthe ownerbypurchaseingoodfaithandforvalueofthesix(6)housesonLot6,Block116.Onthesamedate,petitionerfileda complaintforrecoveryofownershipentitledEugeniaSalamatVda.deMedinavs.ThePhilippineRealtyCorporationand RemediosMagbanuabeforetheCourtofFirstInstanceofRizal,BranchXXXIII,CaloocanCitydocketedthereinasCivil CaseNo.3174(Rollo,p.29).ThecomplaintallegedthatbyvirtueoftheintestacyofthelateDonMarianoSanPedroy Estebanoruponhisdeathin1903,theabovenamedplaintiffsheirssucceeded,inheritedandbecamelegalownersandthe presentassessorsandactualoccupantsofhisestateembracedinTitulodeComposicionMalabananConElEstadoNumber 4136,datedApril29,1894whichhasbeendescribedasavasttractofagriculturallands,beingagratuitouscomposicion titlegrantedtoDonMarianoSanPedroyEstebanbytheSpanishGovernmentinthePhilippines;thatsometimeinJune, 1972,spousesRicardodeGuzmanandEufrociniadeGuzmanacquiredbypurchasethehouseserectedonsaidLot6,Block 116fromBenedictaMangahasandFranciscoRamos,whointurnsoldittotheplaintiffEugeniaSalamatVda.deMedina andthatsometimeinOctober1973,plaintiffsheirssoldtoplaintiffEugeniaSalamatvda.deMedinatheabovementioned Lot6,Block116,8thAvenue,GracePark,CaloocanCity,evidencedbythedeedofsaleexecutedbytheHeirsoftheEstate ofDonMariano. Avoluntaryexecutionand/orvacationdatedMay17,1974,wasexecutedbyplaintiffsBenedictaMangahasandFrancisco Ramos(PlaintiffinCivilCaseNo.C120)infavorofEugeniaSalamatvda.deMedina(Rollo,p.165). AmanifestationandexpartemotiondatedJune3,1974,wasfiledbytheprivaterespondent(defendant)informingtheCourt thatdespitetheOrderofApril4,1974MangahasandRamoshavenotremovedtheirhousesandimprovementsandpraying that a writ of demolition be issued, followed by a memorandum dated June 26, 1974 in support of the aforesaid manifestationandexpartepetition(Rollo,p.170)andanOppositiondatedJuly16,1974toMotionforReconsideration datedMay9,1974(Rollo,p.170). OnJuly17,1974,anorderwasissuedbyrespondentJudge,denyingtheMotionforReconsiderationdatedMay9,1974for lackofmerit(Rollo,p.184). OnJuly29,1974,respondentJudgeanorderdirectingthesherifftodemolishtheimprovementsonthelotinquestion (Rollo,p.39). ThedispositiveportionoftheaforementionedOrderreads: WHEREAS,theplaintiffsaregiven10daysfromreceiptthereoftoremovetheimprovementsonthelotin questionandshouldtheyfailtodoso,thesheriffisherebyorderedtodemolishthesame. SOORDERED. Oppositormovant,EugeniaSalamatVda.deMedina(petitionerherein)filedaSecondMotiontoquashthewritofexecution andorderofdemolition(datedApril4,1974andJuly29,1974),datedAugust6,1974(Rollo,p.150).Thepetitioneralleged thatthecourtdidnotacquirejurisdictionoverthehereinpetitioner,claimingthatsheisnotapartytotheoriginalAction, andthatconsequently,shecannotbeconsidered"apersonclaimingunder"theplaintiffFranciscoRamosandBenedicta Mangahas." OnAugust12,1974,asheriffsreturnwasexecutedbytheExOfficioCitySheriffEmmaC.Ona,declaringthattheorder datedJuly29,1974wasdulyserved,butunsatisfied(Rollo,p.185).Onthesamedate,respondentRemediosMagbanuafiled

anExpartemotionfortheimmediateissuanceofthewritofdemolition(Rollo,p.40). Thereafter,onAugust28,1974,therespondentJudgeissuedanorderfortheimmediateissuanceofthewritofdemolition (Rollo,p.43).Accordingly,onAugust30,1974,pursuanttothecourtorder,theBranchClerkofCourt,BranchXII,ofthe CourtofFirstInstanceofCaloocanCityissuedawritofdemolition(Rollo,p.44),andonAugust31,1974,aNoticeof Demolitionissued,addressedtoBenedictaMangahasandFranciscoRamosandotheroccupantsofthehousesNos.142and 144MariaClaraSt.,GracePark,CaloocanCityanddirectingthemtovacatethelandandremovetheimprovementsor constructions onthepremises,voluntarilywithinseven(7)days,otherwisetheywouldbedemolished(Rollo,pp.43 45).<re||an1w> Hence,thispetition. OnSeptember16,1974,thisCourtissuedatemporaryrestrainingorder(Rollo.p.47). Respondents filedtheir memorandum onOctober 21,1975(Rollo,p.255)whilepetitioner filed her memorandum on November10,1975(Rollo,p.356). OnDecember3,1975,thisCourtresolvedtoconsiderthiscasesubmittedfordecision(Rollo,p.350). Inhermemorandumpetitionerraisedthefollowingissues,towit: MAYTHEDECISIONINCIVILCASENO.C120FORCANCELLATIONOFASALE,NOTFOREJECTMENT, "DISMISSINGTHECOMPLAINTANDORDERINGTHEPLAINTTIFFSORANYBODYOCCUPYINGTHELOTIN QUESTIONINPLAINTIFFS'BEHALF,TOVACATETHESAMETOSURRENDERPOSSESSIONTHEREOFTOTHE DEFENDANT..."BEENFORCEDAGAINSTTHEPETITIONERWHOISNOTAPARTYTHEREINANDWHO: a)PURCHASEDTHEIMPROVEMENTSSIX(6)HOUSESONTHELOTINGOODFAITH,FOR VALUEANDWITHOUTNOTICE,FROMTHEPLAINTIFFS. b)PURCHASEDTHESAIDLOTALSOINGOODFAITHFORVALUEANDWITHOUTNOTICE FROMATHIRDPERSONWHOCLAIMEDOWNERSHIPOFTHELOT. ThecrucialissueinthiscaseiswhetherornotthedecisioninCivilCaseNo.C120whichhaslongbecomefinaland executory,canbeenforcedagainstthepetitionerwhoisnotapartytotheaforementionedcase. PetitionerallegedinhermemorandumthatsheisnotaffectedbythedecisionrenderedinCivilCaseNo.C120aspersons whoarenotpartiestoasuitarenotboundbythejudgementandthatshepurchasedthelotingoodfaithfromanentirely differentpersontheHeirsofDonMarianoSanPedroyEstebanandnotfromeithertheplaintiffsordefendantsinthe aforesaidcase. Itisagenerallyacceptedprinciple"thatnomanshallbeaffectedbyanyproceedingtowhichheisastranger"(Ed.A.Keller & Co.v.Edlerman& Buckmall StratemshipCo.,38Phil.514,520Gatchalianv.Arlegui,75SCRA234[1977],and strangerstoacasearenotboundbyjudgmentrenderedbythecourt(Bienv.Sunga,117SCRA249[1982]).Inthesame manneranexecutioncasecanbeissuedonlyagainstapartyandnotagainstonewhodidnothavethisdayincourt(Galang etal.v.Uytiepo,92Phil.344;Castaedav.deLeon,55O.G.625;Martinezetal.v.Villacete,etal.,G.R.No.L18696, August31,1962.InthecaseofLorenzanav.Cayetano,78SCRA485[1977]),thisCourtheldthatonlyrealpartiesin interestinanactionareboundbyjudgmentthereinandbywritsofexecutionanddemolitionissuedpursuantthereto. Itwillbenoted,however,ascontendedbyrespondent,thatthehousesexistingonLot6inquestionwereformerlyownedby BenedictaMangahasandFranciscoRamoswhosoldthesametothespousesRicardodeGuzmanandEufrocinadeGuzman whointurnfinallysoldthemtothehereinpetitioner.Underthecircumstances,thereisnoquestionthatthepetitioneris privytothetwojudgmentdebtorsMangahasandRamos,andbeingaprivy,thepetitionercanbereachedbytheorderof executionandWritofDemolition. Finally,RemediosMagbanuaistheregisteredownerundertheTorrensSystemofthequestionedlot.Undeniably,aTorrens Titleisgenerallyaconclusiveevidenceoftheownershipofthelandreferredtotherein(Section49,Act496);andastrong presumption exists that Torrens Titles were regularly issued and that they are valid (Salao v. Salao, 70 SCRA 65 [1976]).<re||an1w>ATorrensTitleisincontrovertibleagainstany"informacionpossessoria"ortitleexistingpriortothe issuancethereofnotannotatedonthetitle(J.M.TuasonandCo.Inc.v.Jurillo,76SCRA346[1977]).Itisawellsettledrule thatallpersonsdealingwithpropertycoveredbyTorrensCertificateofTitlearenotrequiredtogobeyondwhatappearson thefaceofthetitle(Centenov.C.A.,139SCRA545[1985]). Inthecaseatbar,petitionerfurtherclaimsownershipofthelotinquestionbecauseofthepaymentoftaxes.Itmustbenoted however,thatpaymentofthelandtaxisnotanevidenceofownershipofaparceloflandforwhichpaymentismade(Reyes v.Sierra,93SCRA472[1979];DirectorofLandsv.C.A.,133SCRA701[1984];Ferrerv.Lopez,150SCRA393[1987]) especiallywhentheparceloflandiscoveredbyaTorrensTitleinthenameofanother(Masaganav.MalabananArgamora, 109SCRA53[198]). PREMISESCONSIDERED,thepetitionisDISMISSEDforlackofmerit,andtheassailedjudgmentoftheCourtofFirst InstanceofRizal,BranchXII,CaloocanCityis herebyAFFIRMED.Thisdecisionisimmediatelyexecutory,andthe restrainingorderpreviouslyissuedisherebyLIFTED.Letthedemolitionbecarriedoutimmediately. SOORDERED.

Yap,C.J.,MelencioHerreraandSarmiento,JJ.,concur. Padilla,J.,tooknopart. RepublicofthePhilippines SUPREMECOURT Manila SECONDDIVISION G.R.No.126000October7,1998 METROPOLITANWATERWORKSANDSEWERAGESYSTEM(MWSS),petitioner, vs. COURT OF APPEALS, HON. PERCIVAL LOPEZ, AYALA CORPORATION and AYALA LAND, INC., respondents. G.R.No.128520October7,1998 METROPOLITANWATERWORKSANDSEWERAGESYSTEM,petitioner, vs. HON. PERCIVAL MANDAP LOPEZ, CAPITOL HILLS GOLF AND COUNTRY CLUB INC., SILHOUETTE TRADINGCORPORATION,andPABLOROMANJR.,respondents. MARTINEZ,J.: TheseareconsolidatedpetitionsforreviewemanatingfromCivilCaseNo.Q9315266oftheRegionalTrialCourtof QuezonCity,Branch78,entitled"MetropolitanWaterworksandSewerageSystem(hereafterMWSS)vs.CapitolHillsGolf &CountryClubInc.(hereafter,CHGCCI),STC(hereafter,SILHOUETTE),AyalaCorporation,AyalaLand,Inc.(hereafter AYALA)PabloRoman,Jr.,JosefinaA.Roxas,JesusHipolito,AlfredoJuinito,NationalTreasurerofthePhilippinesandthe RegisterofDeedsofQuezonCity." Fromthevoluminouspleadingsandotherdocumentssubmittedbythepartiesandtheirdivergentstylesinthepresentation ofthefacts,thebasicantecedentsattendanthereinareasfollows: Sometimein1965,petitionerMWSS(thenknownasNAWASA)leasedaroundonehundredtwentyeight(128)hectaresof itsland(hereafter,subjectproperty)torespondentCHGCCI(formerlytheInternationalSportsDevelopmentCorporation) fortwentyfive(25)yearsandrenewableforanotherfifteen(15)yearsoruntiltheyear2005,withthestipulationallowing thelattertoexercisearightoffirstrefusalshouldthesubjectpropertybemadeopenforsale.Thetermsandconditionsof respondentCHGCCI'spurchasethereofshallnonethelessbesubjecttopresidentialapproval. PursuanttoLetterofinstruction(LOI)No.440issuedonJuly29,1976bythenPresidentFerdinandE.Marcosdirecting petitionerMWSStonegotiatethecancellationoftheMWSSCHGCCIleaseagreementforthedispositionofthesubject property,OscarIlustre,thenGeneralManagerofpetitionerMWSS,sometimeinNovemberof1980informedrespondent CHGCCI,throughitspresidenthereinrespondentPabloRoman,Jr.,ofitspreferentialrighttobuythesubjectproperty whichwasupforsale.ValuationthereofwastobemadebyanappraisalcompanyofpetitionerMWSS'choice,theAsian Appraisal Co.,Inc.which,onJanuary30,1981,peggedafairmarketvalueofP40.00persquaremeteroratotalof P53,800,000.00forthesubjectproperty. UponbeinginformedthatpetitionerMWSSandrespondentCHGCCIhadalreadyagreedinprincipleonthepurchaseofthe subjectproperty,PresidentMarcosexpressedhisapprovalofthesaleasshowninhismarginalnoteonthelettersentby respondentsJoseRoxasandPabloRoman,Jr.datedDecember20,1982. TheBoardofTrusteesofpetitionerMWSSthereafterpassedResolution3683,approvingthesaleofthesubjectpropertyin favorofrespondentSILHOUETTE,asassigneeofrespondentCHGCCI,attheappraisedvaluegivenbyAsianAppraisal Co.,Inc.SaidBoardResolutionreads: NOW,THEREFORE,BEITRESOLVED,asitisherebyresolved,thatinaccordancewithSection3,Par.(g)ofthe MWSSCharterandsubjecttotheapprovalofthePresidentofthePhilippines,thesaleofaparceloflandlocatedin Balara,QuezonCity,coveredbyTCTNo.36069oftheRegistryofDeedsofQuezonCity,containinganareaof ONEHUNDREDTWENTYSEVEN(127.313)hectaresmoreorless,whichistheremainingportionofthearea underleaseaftersegregatingaBUFFERZONEalreadysurveyedalongtheundevelopedareanearthetreatment plantandthedevelopedportionoftheCHGCCIgolfcourse,toSILHOUETTETRADINGCORPORATIONas AssigneeofCapitolHillsGolf&CountryClub,Inc.,atFORTY(P40.00)PESOSpersquaremeter,beandis herebyapproved. BEITRESOLVEDFURTHER,thattheGeneralManagerbeauthorized,asheisherebyauthorizedtosignforand

inbehalfoftheMWSSthecontractpapersandotherpertinentdocumentsrelativethereto. TheMWSSSILHOUETTEsalesagreementeventuallypushedthrough.PertheAgreementdatedMay11,1983covering saidpurchase,thetotalpriceforthesubjectpropertyisP50,925,200,P25MillionofwhichwastobepaiduponPresident Marcos'approvalofthecontractandthebalancetobepaidwithinone(1)yearfromthetransferofthetitletorespondent SILHOUETTEasvendeewithinterestat12%perannum.Thebalancewasalsosecuredbyanirrevocableletterofcredit.A Supplemental Agreement was forgedbetweenpetitionerMWSS andrespondent SILHOUETTEonAugust11,1983to accuratelyidentifythesubjectproperty. Subsequently,respondentSILHOUETTE,underadeedofsaledatedJuly26,1984,soldtorespondentAYALAaboutsixty seven(67)hectaresofthesubjectpropertyatP110.00persquaremeter.OfthetotalpriceofaroundP74Million,P25 MillionwastobepaidbyrespondentAYALAdirectlytopetitionerMWSSforrespondentSILHOUETTE'saccountandP2 MilliondirectlytorespondentSILHOUETTE.P11,600,000wastobepaidupontheissuanceoftitleinfavorofrespondent AYALA,andtheremainingbalancetobepayablewithinone(1)yearwith12%perannuminterest. Respondent AYALA developed the land it purchased into a prime residential area now known as the Ayala Heights Subdivision. Almostadecadelater,petitionerMWSSonMarch26,1993filedanactionagainstallhereinnamedrespondentsbeforethe RegionalTrialCourtofQuezonCityseekingforthedeclarationofnullityoftheMWSSSILHOUETTEsalesagreement andallsubsequentconveyancesinvolvingthesubjectproperty,andfortherecoverythereofwithdamages. Respondent AYALA filed its answer pleading the affirmative defenses of (1) prescription, (2) laches, (3) waiver/estoppel/ratification,(4)nocauseofaction,(5)nonjoinderofindispensableparties,and(6)nonjurisdictionofthe courtfornonspecificationofamountofdamagessought. OnJune10,1993;thetrialcourtissuedanOrderdismissingthecomplaintofpetitionerMWSSongroundsofprescription, laches,estoppelandnonjoinderofindispensableparties. PetitionerMWSS'smotionforreconsiderationofsuchOrderwasdenied,forcingittoseekrelieffromtherespondentCourt whereitsappealwasdocketedasCAG.R.CVNo.50654.Itassignedaserrorsthefollowing: I.Thecourtaquocommittedmanifestseriouserrorandgravelyabuseditsdiscretionwhenit ruledthatplaintiffscauseofactionisforannulmentofcontractwhichhasalreadyprescribedin thefaceoftheclearandunequivocalrecitationofsixcausesofactioninthecomplaint,noneof whichisforannulment. II.Thelowercourterredandexceededitsjurisdictionwhen,contrarytotherulesofcourtand jurisprudence, it treated and considered the affirmative defenses of Ayalas defenses not categorizedbytherulesasgroundsforamotiontodismissasgroundsofamotiontodismiss whichjustifythedismissalofthecomplaint. III.Thelowercourtabuseditsdiscretionandexceededitsjurisdictionwhenitfavorablyactedon Ayala'smotionforpreliminaryhearingofaffirmativedefenses(motiontodismiss)bydismissing thecomplaintwithoutconductingahearingorotherwiserequiringtheAyalastopresentevidence onthefactualmooringsoftheirmotion. IV.Thelowercourtactedwithoutjurisdictionandcommittedmanifesterrorwhenitresolved factualissuesandmadefindingsandconclusionsoffactsallinfavoroftheAyalasintheabsence ofanyevidencepresentedbytheparties. V.Thecourtaquoerredwhen,contrarytotherulesandjurisprudence,itprematurelyruledthat lachesandestoppelbarthecomplaintasagainstAyalasorthatotherwisetheallegedfailureto impleadindispensablepartiesdictatesthedismissalofthecomplaint. Inthemeantime,respondentsCHGCCIandRomanfiledtheirownmotionstoheartheiraffirmativedefenseswhichwereidenticalto thoseadducedbyrespondentAYALA.Foritspart,respondentSILHOUETTEfiledasimilarlygroundedmotiontodismiss. Ruling upon these motions, the trial court issued an order dated December 13, 1993 denying all of them. The motions for reconsiderationoftherespondentsconcernedmetasimilarfateintheMay9,1994Orderofthetrialcourt.Theythusfiledspecial civilactionsforcertioraribeforetherespondentCourtwhichweredocketedasCAG.R.SPNos.34605,34718and35065and thereafterconsolidatedwithCAG.R.CVNo.50694fordisposition. Respondentcourt,onAugust19,1996,renderedtheassaileddecision,thedispositiveportionofwhichreads: WHEREFORE,judgmentisrendered: 1.)DENYINGthepetitionsforwritofcertiorariforlackofmerit;and 2.)AFFIRMINGtheorderofthelowercourtdismissingthecomplaintagainsttheappelleesAyalas. SOORDERED. PetitionerMWSSappealedtothisCourtthatportionoftherespondentCourt'sdecisionaffirmingthetrialcourt'sdismissal ofitscomplaintagainstrespondentAYALA,docketedasG.R.No.126000.Theportiondismissingthepetitionforcertiorari (CAGRNos.34605,347718and35065)ofrespondentsRoman,CHGCCIandSILHOUETTE,however,becamefinaland

executoryfortheirfailuretoappealtherefrom.Nonetheless,theserespondentswereabletothereafterfilebeforethetrial courtanothermotiontodismissgrounded,again,onprescriptionwhichthetrialcourtinanOrderofOctober1996granted. ThispromptedpetitionerMWSStofileanotherpetitionforreviewofsaidtrialcourtOrderbeforethisCourtanddocketed asG.R.No.128520.OnmotionofpetitionerMWSS,thisCourtinaResolutiondatedDecember3,1997directedthe consolidationofG.R.Nos.126000and128520. TheerrorsassignedbypetitionerMWSSinCAGRNo.126000are: I. Inholding,perthequestionedDecisiondated19August1996,thatplaintiffscauseofactionisforannulmentof contractwhichhasalreadyprescribedinthefaceoftheclearandunequivocalrecitationofsixcausesofactionin thecomplaint,noneofwhichisforannulment,andineffectaffirmingthedismissalbytherespondentjudgeofthe complaintagainstrespondentAyalas.ThisconclusionofrespondentCHis,withduerespect,manifestlymistaken andlegallyabsurd. II. Infailingtoconsiderthatthecomplaintrecitedsixalternativecausesofaction,suchthattheinsufficiencyofone causeassumingthereissuchinsufficiencydoesnotrenderinsufficienttheothercausesandthecomplaint itself.ThecontraryrulinginthisregardbyrespondentCAisfoundedentirelyonspeculationandconjectureandis constitutiveofgraveabuseofdiscretion. InG.R.No.128520,petitionerMWSSaversthat: I. The court of origin erred in belatedly granting respondent's motions to dismiss which are but a rehash, a disqualification,oftheirearliermotionforpreliminaryhearingofaffirmativedefense/motiontodismiss.These previousmotionsweredeniedbythelowercourt,whichdenialtherespondentsraisedtotheCourtofAppealsby wayofperfectionforcertiorari,whichpetitionsinturnweredismissedforlackofmeritbythelattercourt.The correctnessandvalidityofthelowercourt'spreviousordersdenyingmovant'smotionforpreliminaryhearingof affirmativedefense/motiontodismisshasaccordinglybeensettledalreadywithfinalityandcannotbedisturbedor challengedanewatthisinstanceofdefendant'snewbutsimilarlyanchoredmotionstodismiss,withoutcommitting proceduralheresycausativeofmiscarriageofjustice. II. ThelowercourterredinnotimplementingcorrectlythedecisionoftheCourtofAppeal.Afterall,respondents' ownpetitionsforcertiorariquestioningtheearlierdenialoftheirmotionforpreliminaryhearingofaffirmative defense/motiontodismissweredismissedbytheCourtofAppeal,intheprocessofaffirmingthevalidityand legality of such denial by the court a quo. The dismissal of the respondents' petitions are embodied in the dispositiveportionofthesaiddecisionoftheCourtofAppealsdated19August1996.Thelowercourtcannot choosetodisregardsuchdecretalaspectofthedecisionandinsteadimplementanobiterdictum. III. ThatpartofthedecisionofthedecisionoftheCourtofAppealsresolvingtheissueofprescriptionattendanttothe appealofplaintiffagainsttheAyalas,hasbeenappealedbyplaintifftotheSupremeCourtbywayofapetitionfor reviewoncertiorari.Notyetbeingfinalandexecutory,thelowercourterredinmakingcapitaloutofthesameto dismissthecaseagainsttheotherdefendants,whoaretherespondentsherein. IV. Thelowercourterredinholding,perthequestionedorders,thatplaintiff'scauseofactionisforannulmentof contractwhichhasalreadyprescribedinthefaceoftheclearandunequivocalrecitationofsixcausesofactionin thecomplaint,noneofwhichisforannulment.Thisconclusionofpublicrespondentismanifestlymistakenand legallyabsurd. V. Thecourtaquoerredinfailingtoconsiderthecomplaintrecitessixalternativecausesofaction,suchthatthe insufficiencyofonecauseassumingthereissuchinsufficiencydoesnotrenderinsufficienttheothercause andthecomplaintitself.Thecontraryrulinginthisregardbypublicrespondentisfoundedentirelyonspeculation andconjectureandisconstitutiveofgraveabuseofdiscretion. Indisposingoftheinstantpetition,thisCourtshalldwellonthemorecrucialgroundsuponwhichthetrialcourtand respondentbasedtheirrespectiverulingsunfavorabletopetitionerMWSS;i.e.,prescription,laches,estoppel/ratificationand nonjoinderofindispensableparties. RE:Prescription PetitionerMWSSclaimsaserroneousboththelowercourts'uniformfindingthattheactionhasprescribed,arguingthatits complaintisonetodeclaretheMWSSSILHOUETTEsale,andallsubsequentconveyancesofthesubjectproperty,void whichisimprescriptible.

Wedisagree. TheveryallegationsinpetitionerMWSS'complaintshowthatthesubjectpropertywassoldthroughcontractswhich,at most,canbeconsideredonlyasvoidable,andnotvoid.Paragraph12ofthecomplaintreadsinpart: 12..... Theplaintiffhasbeenincontinuous,peacefulandpublicpossessionandownershipoftheaforedescribed properties,thetitle(TCTNo.[36069]199170)thereto,includingitsderivativetitlesTCTNos.213872and 307655,havingbeendulyissuedinitsname.However,asaresultoffraudulentandillegalactsofherein defendants,asdescribedintheparagraphshereinafterfollowing,theoriginalofsaidtitle/swerecancelledand inlieuthereofnewtitleswereissuedtocorporatedefendant/scoveringsubject127.9271hectares..... Paragraph34alleges: 34.Sometimethereafter,clearlyinfluencedbytheprematureifnotquestionableapprovalbyMr.Marcosofa nonexistentagreement,anddespitefullknowledgethatboththeassessedandmarketvalueofsubjectproperty weremuchhigher,theMWSSBoardofTrustiesillegallypassedanundatedresolution("ResolutionNo.36 83"),approvingthe"sale"ofthepropertytoCHGCCIatP40/sq.m.andillegallyauthorizingGeneralManager Ilustretosignthecoveringcontract. This"resolution"wassignedbyMessrs.JesusHipolitoasChairman;OscarIlustre,asViceChairman;Aflredo Junio,asMember;andSilvestrePayoyo,asMember;.... Paragraph53states: 53. Defendants Pablo Roman, Jr., Josefino Cenizal, and Jose Roxas as well as defendant corporations (CHGCCI,STCandAyala)whoactedthroughtheformerandtheirotherprincipalofficers,knowinglyinduced andcausedthenPresidentMarcosandtheformerofficersofplaintiffMWSStoenterintotheaforesaidundated "Agreement"whicharemanifestlyandgrosslydisadvantageoustothegovernmentandwhichgavethesame defendantsunwarrantedbenefits,i.e.,theownershipanddominionoftheaforedescribedpropertyofplaintiff. Paragraph54avers: 54.DefendantsJesusHipolitoandAlfredoJunio,thenpublicofficers,togetherwiththeotherpublicofficers whoarenowdeceased(FerdinandMarcos,OscarIlustre,andSivestrePayoyo)knowinglyallowedthemselves tobepersuaded,inducedandinfluencedtoapproveand/orenterintotheaforementioned"Agreements"which aregrosslyandmanifestlydisadvantageoustotheMWSS/governmentandwhichbestowedupontheother defendantstheunwarrantedbenefit/ownershipofsubjectproperty. Thethreeelementsofacontractconsent,theobject,andthecauseofobligation1areallpresent.Itcannotbeotherwise arguedthatthecontracthadforitsobjectthesaleofthepropertyandthecauseorconsiderationthereofwasthepricetobe paid(onthepartofrespondents CHGCCI/SILHOUETTE)andthelandtobesold(onthepartofpetitionerMWSS). Likewise,petitionerMWSS'consenttotheMay11,1983andAugust11,1983Agreementsispatentonthefaceofthese documentsandonitsownresolutionNo.3683. Asnotedbybothlowercourts,petitionerMWSSadmitsthatitconsentedtothesaleoftheproperty,withthequalification thatsuchconsentwasallegedlyundulyinfluencedbythePresidentMarcos.Takingsuchallegationtobehypotheticallytrue, suchwouldhaveresultedinonlyvoidablecontractsbecauseallthreeelementsofacontract,stillobtainednonetheless.The allegedvitiationofMWSS'consentdidnotmakethesalenullandvoidabinitio.Thus,"acontractwhereconsentisgiven throughmistake,violence,intimidation,undueinfluenceorfraud,isvoidable"2.Contracts"whereconsentisvitiatedby mistake,violence,intimidation,undueinfluenceorfraud"arevoidableorannullable3.Thesearenotvoidas ConceptsofVoidableContracts.Voidableoranullablecontractsareexistent,valid,andbinding,althoughthey canbeannulledbecauseofwantofcapacityorvitiatedconsentoftheoneoftheparties,butbeforeannulment,they areeffectiveandobligatorybetweenparties.Hence,itisvaliduntilitissetasideanditsvaliditymaybeassailed onlyinanactionforthatpurpose.Theycanbeconfirmedorratified.4 Asthecontractswerevoidableatthemost,thefouryearprescriptiveperiodunderArt.1391oftheNewCivilCodewill apply.Thisarticleprovidesthattheprescriptiveperiodshallbegininthecasesofintimidation,violenceorundueinfluence, fromthetimethedefectoftheconsentceases",and"incaseofmistakeorfraud,fromthetimeofthediscoveryofthesame time". HypotheticallyadmittingthatPresidentMarcosundulyinfluencedthesale,theprescriptiveperiodtoannulthesamewould havebegunonFebruary26,1986whichthisCourttakesjudicialnoticeofasthedatePresidentMarcoswasdeposed. PrescriptionwouldhavesetinbyFebruary26,1990ormorethanthreeyearsbeforepetitionerMWSS'complaintwasfailed. However,ifpetitionerMWSS'consentwasvitiatedbyfraud,thentheprescriptiveperiodcommencedupondiscovery. Discoverycommencedfromthedateoftheexecutionofthesaledocumentsaspetitionerwaspartythereto.Attheleast, discoveryisdeemedtohavetakenplaceonthedateofregistrationofthedeedswiththeregisterofDeedsasregistrationis constructivenoticetotheworld.5Giventhesetwoprinciplesondiscovery,theprescriptiveperiodcommencedin1983as petitionerMWSSactuallyknewofthesale,or,in1984whentheagreementswereregisteredandtitlesthereafterwereissued

to respondent SILHOUTTE. At the latest, the action would have prescribed by 1988, or about five years before the complaintwasinstituted.Thus,inAznarvs.Bernard6,thisCourtheldthat: Lastly,evenassumingthatthepetitionershadindeedfailedtoraisetheaffirmativedefenseofprescriptionina motiontodismissorinanappropriatepleading(answer,oramendedorsupplementalanswer)andanamendment would no longer be feasible, still prescription, if apparent on the face of the complaint, may be favorably considered.Inthecaseatbar,theprivaterespondentsadmitintheircomplaintthatthecontractorrealestate mortgagewhichtheyallegedtobefraudulentandwhichhadbeenforeclosed,givingrisetothiscontroversywith thepetitioners,wasexecutedonJuly17,1978,ormorethaneightlongyearsbeforethecommencementofthesuit inthecourtaquo,onSeptember15,1986.Andanactiondeclareacontractnullandvoidonthegroundoffraud mustbeinstitutedwithinfouryears.Extinctiveprescriptionisthusapparentonthefaceofthecomplaintitselfas resolvedbytheCourt. PetitionerMWSSfurthercontends thatprescriptiondoesnotapplyasitscomplaintprayednotforthenullificationof voidablecontractsbutforthedeclarationofnullityofvoidabinitiocontractswhichareimprescriptible.Thisisincorrect,as theprayersinacomplaintarenotdeterminativeofwhatlegalprincipleswilloperatebasedonthefactualallegationsofthe complaint.Andthesefactualallegations,assumingtheirtruth,showthatMWSSconsentedtothesale,onlythatsuch consentwaspurportedlyvitiatedbyundueinfluenceorfraud.Therefore,therulesonprescriptionwilloperate.Evenif petitionerMWSSaskedforthedeclarationofnullityofthesecontracts,theprayerswillnotbecontrollingasonlythefactual allegations in the complaint determine relief. "(I)t is the material allegations of fact in the complaint, not the legal conclusionmadethereinortheprayerthatdeterminestherelieftowhichtheplaintiffisentitled"7.Respondentcourtisthus correctinholdingthat: xxxxxxxxx Thetotalitythenofthoseallegationsinthecomplaintmakesupacaseofavoidablecontractofsalenotavoid one.ThedeterminativeallegationsarethosethatpointoutthattheconsentofMWSSintheAgreementofSalewas vitiatedeitherbyfraudorundueforthedeclarationofnullityofthesaidcontractbecausetheComplaintsaysno. BasicistherulehoweverthatitisthebodyandnotthecaptionnortheprayeroftheComplaintthatdeterminesthe natureoftheaction.True,thecaptionandprayeroftheComplaintstatethattheactionisforajudicialdeclaration ofnullityofacontract,butalas,asalreadypointedout,itsbodyunmistakablyallegesonlyavoidablecontract.One cannotchangetherealnatureofanactionadoptingadifferentnomenclatureanymorethanonecanchangegininto whiskybyjustreplacingthelabelonthebottlewiththatofthelatter'sandcallingitwhisky.Nomatterwhat,the liquidinsideremainsgin. xxxxxxxxx Petitioner MWSS also theorizes that the May 11, 1983 MWSSSILHOUTTE Agreement and the August 11, 1983 SupplementalAgreementwerevoidabinitiobecausethe"initialagreement"fromwhichtheseagreementsemanatedwas executed"withouttheknowledge,muchlesstheapproval"ofpetitionerMWSSthroughitsBoardofTrustees.The"initial agreement"referredtoinpetitionerMWSS'argumentistheDecember20,1982letterofrespondentsRoxasandRoman,Jr. to President Marcos where the authors mentioned that they had reached an agreement with petitioner's then general manager,Mr.OscarIlustre.PetitionerMWSSmaintains thatMr.Ilustrewasnot authorizedtoenterintosuch"initial agreement",contrarytoArt.1874oftheNewCivilCodewhichprovidesthat"whenasaleofaparceloflandoranyinterest thereinisthroughanagent,theauthorityofthelattershallbeinwritingotherwisethesaleshallbevoid."Itthenconcludes thatsinceitsRes.No.3683andtheMay11,1983andAugust11,1983Agreementsare"fruits"ofthe"initialagreement" (forwhichMr.Ilustrewasallegedlynotauthorizedinwriting),allofthesewouldhavebeenalsovoidunderArt.1422of NCC,whichprovidesthatacontractwhichisthedirectresultofapronouncedillegalcontract,isalsovoidandinexistent." Theargumentdoesnotimpress.The"initialagreement"reflectedintheDecember20,1982letterofrespondentRomanto Pres.Marcos,isnotasaleunderArt.1874.Sincethenatureofthe"initialagreement"iscrucial,we quotes8theletterinfull: WerespectfullyapproachYourExcellencyinallhumilityandinthespiritoftheYuletideSeason.Wehaveexplainedto YourExcellencywhenyouallowedusthehonortoseeyou,thatthenegotiationswithMWSSwhichthelatePabloR. Romaninitiatedwaybackin1975,withyourkindapproval,willfinallybeconcluded. WehaveagreedinprinciplewithMr.OscarIlustreonthetermsofthesaleasevidencedbythefollowing: 1.OurwrittenagreementtohireAsianAppraisalCompanytoappraisetheentire leasedareawhichthenbethebasisforthenegotiationsofthepurchasepriceofthe property;and 2. Our exchange of communications wherein made a counteroffer and our acceptancecounteroffer. However,wewereinformedbyMr.IlustrethatonlywritteninstructionfromYourExcellencywillallowustofinally signtheAgreement.

Insum,ourAgreementisforthepurchasepriceofFIFTYSEVENMILLIONTWOHUNDREDFORTYTHOUSAND PESOS(P57,240,000)fortheentireleasedareaof135hectares;TWENTYSEVENMILLIONPESOS(P27,000,000) payableuponapprovalofthecontractbyYourExcellencyandthebalanceofTHIRTYMILLIONTWOHUNDRED FORTYTHOUSANDPESOS(P30,240,000)afterone(1)yearinclusiveofa12%interest. Webelievethatthisarrangementisfairandequitabletobothpartiesconsideringthatthevalueofthelandwasappraised byareputablecompanyandindependent appraisalcompanyjointlycommissionedbybothpartiesandconsidering furtherthatCapitolHillshasstilla23yearlienonthepropertybyvirtueofitsexistingleasecontractwithMWSS. Wehumblyseekyourinstruction,YourExcellencyandpleaseacceptourfamilies'sincerewishforaMerryChristmas andaHappyNewYeartoyouandtheFirstFamily. Theforegoingdoesnotdocumentasale,butatmost,onlytheconditionsproposedbyrespondentRomantoenterintoone. Bythetermsthereof,itrefersonlytoan"agreementinprinciple".Reflectingafutureconsummation,thelettermentions "negotiationswithMWSS(which)withyour(Marcos)kindapproval,willfinallybeconcluded".Itmustlikewisebenoted thatpresidentialapprovalhadyettobeobtained.Thus,the"initialagreement"wasnotasaleasitdidnotinanywaytransfer ownershipovertheproperty.TheproposedtermshadyettobeapprovalbythePresidentandtheagreementinprinciplestill hadtobeformalizedinadeedofsale.WrittenauthorityasisrequiredunderArt.1834oftheNewCivilCode,wasnot neededatthepointofthe"initialagreement". Verily,theprincipleonprescriptionofactionsisdesignedtocoversituationssuchasthecaseatbar,wheretherehavebeena seriesoftransferstoinnocentpurchasersforvalue.Tosetasidethesetransactionsonlytoaccommodateapartywhohas sleptonhisrightsisanathematogoodorder.9 RE:Laches Evenassuming,forargument'ssake,thattheallegationsinthecomplaintestablishtheabsolutenullityoftheassailed contractsandhenceimprescriptible,thecomplaintcanstillbedismissedonthegroundoflacheswhichisdifferentfrom prescription.ThisCourt,asearlyas1966,hasdistinguishedthesetwoconceptsinthiswise: ...(T)hedefenseoflachesappliesindependentlyofprescription.Lachesisdifferentfromthestatuteoflimitations. Prescriptionisconcernedwiththefactofdelay,whereaslaches,isconcernedwiththeeffectofdelay.Prescription isamatteroftime;lachesisprincipallyaquestionofinequityofpermittingaclaimtobeenforced,thisinequity beingfoundedonsomechangeintheconditionofthepropertyortherelationoftheparties.Prescriptionis statutory;lachesisnot.Lachesappliesininequity,whereasprescriptionappliesatlaw.Prescriptionisbasedon fixedtime;lachesisnot.10 Thus,theprevailingdoctrineisthattherighttohaveacontractdeclaredvoidabinitiomaybebarredbylachesalthough notbarredbyprescription.11 Ithas,forallitselementsarepresent,viz: (1)conductonthepartofthedefendant,oroneunderwhomheclaims,givingriseto thesituationthatledtothecomplaintandforwhichthecomplaintseeksaremedy; (2)delayinassertingthecomplainant'srights,havinghadknowledgeornoticeofthe defendant'sconductandhavingbeenaffordedanopportunitytoinstituteasuit; (3)lackofknowledgeornoticeonthepartofthedefendantthatthecomplainant wouldasserttherightonwhichhebaseshissuit;and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant,orthesuitisnotheldbarred.12 Thereisnoquestiononthepresenceofthefirstelement.themainthrustofpetitionerMWSS'scomplaintistobringtothe forewhatitclaimsasfraudulentand/orillegalactsoftherespondentsintheacquisitionofthesubjectproperty. Thesecondelementofdelayisevidentfromthefactthatpetitionertarriedforalmostten(10)yearsfromtheconclusionof thesalesometimein1983beforeformallylayingclaimtothesubjectpropertyin1993. ThethirdelementispresentascanbededucedfromtheallegationsinthecomplaintthatpetitionerMWSS(a)demandedfor adownpaymentfornolessthanthreetimes;(b)accepteddownpaymentforP25Million;and(c)acceptedaletterofcredit forthebalance.Thepertinentparagraphsinthecomplaintthusread: 38.InaletterdatedSeptember19,1983,forfailureofCHGCCItopayontime,Mr.Ilustredemanded paymentofthedownpaymentofP25Millionwhichwasdueasof18April1983.Acopyofthisletteris heretoattachedasAnnex"X"; 39.Again,inaletterdatedFebruary7,1984,thenMWSSActingGeneralManagerAberCanlasdemanded paymentfromCHGCCIofthepurchasepricelongoverdue.Acopyofthisletterisheretoattachedas Annex"Y"; 40.Likewise,inaletterdatedMarch14,1984,Mr.CanlasagaindemandedfromCHGCCIpaymentofthe price.AcopyofthisdemandletterisheretoattachedasAnnex"Z"; 41.Thereafter,inaletterdatedJuly27,1984,anotherentity,defendantAyalaCorporation,throughSVP

Renato de la Fuente, paid with a check the long overdue downpayment of P25,000,000.00 of STC/CHGCCI.LikewiseadomesticstandbyletterofcreditforthebalancewasissuedinfavorofMWSS; Copiesofthesaidletter,checkandletterofcreditareheretoattachedasAnnexes"AA","BB",and"CC", respectively. UnderthesefactssuppliedbypetitionerMWSSitself,respondentshaveeverygoodreasontobelievethatpetitioner was honoring the validity of the conveyances of the subject property, and that the sudden institution of the complaintin1993allegingthenullityofsuchconveyanceswassurelyanunexpectedturnofeventsforrespondents. Hence,petitionerMWSScannotescapetheeffectoflaches. RE:Ratification PertinenttothisissueistheclaimofpetitionerMWSSthatMr.IlustrewasnevergiventheauthoritybyitsBoardofTrustees toenterintothe"initialagreement"ofDecember20,1982andtherefore,thesaleofthesubjectpropertyisinvalid. PetitionerMWSSmissesthepaint.Theperceivedinfirmityinthe"initialagreement"canbecuredbyratification.Sosettled isthepreceptthatratificationcanbemadebythecorporateboardeitherexpresslyorimpliedly.Impliedratificationmay takevariousformslikesilenceoracquiescence;byactsshowingapprovaloradoptionofthecontract;orbyacceptance andretentionofbenefitsflowingtherefrom.13Bothmodesofratificationhavebeenmadeinthiscase. TherewasexpressratificationmadebytheBoardofpetitionerMWSSwhenitpassedResolutionNo.3683approvingthe saleofthesubjectpropertytorespondentSILHOUETTEandauthorizingMr.Ilustre,asGeneralManager,"tosignforand inbehalfoftheMWSSthecontractpapersandotherpertinentdocumentsrelativethereto."Impliedratificationby"silence oracquiescence"isrevealedfromtheactsofpetitionerMWSSin(a)sendingthree(3)demandlettersforthepaymentofthe purchase price, (b) accepting P25 Million as downpayment, and (c) accepting a letter of credit for the balance, as hereinbeforementioned.ItmaywellbepointedoutalsothatnowhereinpetitionerMWSS'complaintisitallegedthatit returnedtheamounts,oranypartthereof,coveringthepurchasepricetoanyoftherespondentsvendeesatanypointin time.ThisisonlyindicativeofpetitionerMWSS'acceptanceandretentionofbenefitsflowingfromthesalestransactions whichisanotherformofimpliedratification. RE:Nonjoinderofindispensableparties ThereisnodenyingthatpetitionerMWSS'actionagainsthereinrespondentsfortherecoveryofthesubjectpropertynow convertedintoaprimeresidentialsubdivisionwouldultimatelyaffecttheproprietaryrightsofthemanylotownerstowhom thelandhasalreadybeenparceledout.Theyshouldhavebeenincludedinthesuitaspartiesdefendants,for"itiswell establishedthatownersofpropertyoverwhichreconveyanceisassertedareindispensablepartieswithoutwhomnoreliefis availableandwithoutwhomthecourtcanrendernovalidjudgment."14Beingindispensableparties,theabsenceofthese lotownersinthesuitrendersallsubsequentactionsofthetrialcourtnullandvoidforwantofauthoritytoact,notonlyasto theabsentpartiesbutevenastothosepresent.15Thus,whenindispensablepartiesarenotbeforethecourt,theaction shouldbedismissed.16 WHEREFORE,inviewoftheforegoing,theconsolidatedpetitionsareherebyDENIED. SOORDERED. RegaladoandMendoza,JJ.,concur. MeloandPuno,JJ.,tooknopart.