Digest Property

Table of Contents
1. LEUNG YEE VS. STRONG MACHINERY (37 PHIL 644) .........................................................3

2. ANTONIO PUNZALAN ET. AL. VS. REMEDIOS LACSAMANA (GR NO. L-55729) .............................4
3. STANDARD OIL CO. VS. JARANILLO (44 PHIL 631) ...........................................................6
4. DAVAO SAWMILL CO. VS. CASTILLO (61 PHIL 709) ...........................................................7
5. BOARD OF ASSESSMENT APPEALS VS. MANILA ELECTRIC (10 SCRA 68) ...................................8
6. MAKATI LEASING AND FINANCE CORP. VS. WEAREVER TEXTILE MILLS, INC. (22 SCRA 296) ..........10
7. MINDANAO BUS COMPANY VS. CITY ASSESSOR (116 PHIL 501) ............................................12
8. CALTEX PHILIPPINES INC. VS. CENTRAL BOARD OF ASSESSMENT APPEALS AND CITY ASSESSOR OF
PASAY (GR NO. L-50466) .......................................................................................13
9. SERGS PRODCUTS, INC. AND SERGIO T. GOQUIOLAY VS. PCI LEASING AND FINANCE, INC. (GR NO.
137705) ..........................................................................................................16
10. TUMALAD VS. VICENCIO (GR NO. L-30173) .................................................................17
11. PASTOR D. AGO VS. THE HON. COURT OF APPEALS (GR NO. L-17898) ..................................18
12. THE UNITED STATES VS. IGNACIO CARLOS (GR NO. 6295) ................................................22
13. LUIS MARCOS LAUREL VS. HON. ZEUS ABROGAR (GR NO. 155076) ......................................23
14. MUNICIPALITY OF CAVITE VS. ROJAS (30 PHIL 20) .........................................................24
15. MANECLANG VS. IAC (144 SCRA 553) ........................................................................26
16. IGNACIO VS. DIRECTOR OF LANDS (108 PHIL 335) .........................................................27
17. MACASIANO VS. DIOKNO (GR NO. 97764) ...................................................................27
18. CEBU OXYGEN & ACETYLENE CO., INC. VS. BERCILLES (GR NO. L-40474) .............................32
19. LAUREL VS. GARCIA (GR NO. 92013) .........................................................................33
20. MANILA INTERNATIONAL AIRPORT AUTHORITY VS. COURT OF APPEALS, ET. AL. (GR NO. 155650)..36
21. PHILIPPINE PORTS AUTHORITY VS. CITY OF ILOILO (GR NO. 109791) ...................................47
22. PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY VS. CA (GR NO. 169836) ...........................49
23. IDEALS VS. PSALM (GR NO. 192088) ........................................................................51
24. WOODRIDGE SCHOOL, INC. ET. AL. VS. ARB CONSTRUCTION INC. (GR NO. 157285) ................51
25. THE CITY OF ANGELES, ET. AL. VS. COURT OF APPEALS (GR NO. 97882) .............................54
26. FRANCISCO CHAVEZ VS. PUBLIC ESTATES AUTHORITY (GR NO. 133250) ..............................56
27. FRANCISCO CHAVEZ VS. NATIONAL HOUSING AUTHORITY (GR NO. 164527) .......................... 59
28. ESTATE OF YUJUICO VS. REPUBLIC (GR NO. 168661) .................................................... 63
29. LAND BANK OF THE PHILIPPINES VS. REPUBLIC (GR NO. 150824) ......................................64
30. HEIRS OF MARIO MALABANAN VS. REPUBLIC (GR NO. 179987) .........................................68
31. DENR, ET. AL. VS. MAYOR YAP, ET. AL. (GR NO. 167707) ................................................71
32. VDA. TE TAN TOCO VS. MUNICIPAL COUNCIL OF ILOILO (49 PHIL 52) ..................................75
1 PROPERTY - CASE DIGESTS
33. PASAY CITY GOVERNMENT VS. CFI (GR NO. L-32162) .................................................... 76
34. ESPIRITU VS. MUNICIPAL COUNCIL OF POZORRUBIO (102 PHIL 867) ...................................79
35. PROVINCE OF ZAMBOANGA DEL NORTE VS. CITY OF ZAMBOANGA (GR NO. L-24440) ...............79
36. SALAS VS. JARENCIO (46 SCRA 734) ........................................................................82
37. MANILA LODGE NO. 761 VS. COURT OF APPEALS (73 SCRA 162) ........................................85
38. COMMISSIONER OF PUBLIC HIGHWAYS, ET. AL. VS. LOURDES SAN DIEGO, ET. AL. (GR NO. L-30098)
87
39. PHILIPPINE NATIONAL BANK VS. HON. JUDGE JAVIER PABALAN (GR NO. L-33112) ..................89
40. PROFESSIONAL VIDEO INC. VS. TESDA (GR NO. 155504) .................................................90
41. VILLA VS. HEIRS OF ALTAVAS (GR NO. 162028) ............................................................91
42. ESTATE OF SOLEDED MANANTAN VS. ANICETO SOMERA (GR NO. 145867) .............................93
43. IGLESIA NI CRISTO VS. HON. PONFERRADA (GR NO. 168943) ...........................................96
44. ROMAN CATHOLIC ARCHBISHOP OF MANILA, ET. AL. VS. COURT OF APPEALS (GR NO. 77425).....98
45. GERMAN MANAGEMENT & SERVICES, INC. VS. HON. COURT OF APPEALS (GR NO. 76216) ........ 100
46. AIR TRANSPORTATION OFFICE AND MACTAN-CEBU INTERNATIONAL AIRPORT VS. ANTIONIO
GOPUCO (GR NO. 158563) ........................................................................................102
47. HEIRS OF MORENO VS. MCIAA (GR NO. 156273) ......................................................... 104
48. MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY VS. LOZADA, ET. AL. (GR NO. 176625) ....107
49. APO FRUITS CORPORATION VS. COURT OF APPEALS (GR NO. 164195) ............................... 109
50. CITY OF MANILA, ET. AL. VS. HON. LAGUIO, ET. AL. (GR NO. 118127)............................... 111
51. NATIONAL POWER CORPORATION VS. LUCMAN IBRAHIM (GR NO. 168732) ..........................116
52. REPUBLIC VS. HON. COURT OF APPEALS AND JOSE DE LA ROSA (GR NO. L-43938) ................117
53. RIOSA VS. VERZOSA (26 PHIL 86) ..........................................................................118
54. VELASCO VS. ROSENBERG (32 PHIL 72) ...................................................................120
55. SARMIENTO VS. AGANA (129 SCRA 122) ...................................................................123
56. BALUCANAG VS. JUDGE FRANCISCO (GR NO. L-34199) ................................................124
57. FLOREZA VS. EVANGELISTA (96 SCRA 130) ................................................................125
58. FILIPINAS COLLEGES, INC. VS. TIMBANG (GR NO. L-12812) ...........................................129
59. PNB VS. DE JESUS (GR NO. 149295) .......................................................................131
60. PARILLA, ET. AL. VS. PILAR (GR NO. 167680) ............................................................ 132
61. ISMAEL MACASAET, ET. AL. VS. SPOUSES MACASAET (GR NOS. 154391-92) ..........................134
62. KILARIO VS. COURT OF APPEALS (GR NO. 134329) ......................................................139
63. IGNACIO VS. DIRECTOR OF LANDS AND VALERIANO (GR NO. L-12958) ............................... 142
64. DE BUYSER VS. DIRECTOR OF LANDS, ET. AL. (GR NO. L-22763) ......................................142
65. GRANDE, ET. AL. VS. HON. COURT OF APPEALS (GR NO. L-17652) ...................................144
66. REPUBLIC VS. COURT OF APPEALS, ET. AL. (GR NO. 61647) ...........................................145

67. DIONESIA BAGAIPO VS. COURT OF APPEALS (GR NO. 116290).........................................146
68. SPOUSES BAES VS. COURT OF APPEALS AND REPUBLIC (GR NO. 108065) ............................149
69. MARIO RONQUILLO VS. COURT OF APPEALS, ET. AL. (GR NO. 43346) ................................ 152
70. SIARY VALLEY ESTATES, INC. VS. LUCASAN AND HON. JUDGE ORTEGA (OCTOBER 31, 1957) ..... 154
71. GALLAR VS. HUSAIN (GR NO. L-20954) ...................................................................155
72. CORONEL VS. INTERMEDIATE APPELLATE COURT (GR NO. L-70191) .................................. 157
73. CARAGAY-LAYNO VS. COURT OF APPEALS (GR NO. 52064) .............................................158
74. ANASTACIA VDA. DE AVILES, ET. AL. VS. COURT OF APPEALS AND CAMILO AVILES ( GR. NO. 95748).
161
75. AZNAR BROTHERS REALTY COMPANY VS. AYING (458 SCRA 495) ......................................163
1. LEUNG YEE VS. STRONG MACHINERY (37 PHIL 644)

Facts:
The "Compaia Agricola Filipina" (CAF) bought a rice-cleaning machinery
from the defendant machinery company, and executed a chattel mortgage
including the building of strong materials in which the machinery was
installed to secure payment, without any reference to the land on which it
stood. The Chattel was foreclosed due to non-payment and the machinery,
including the building, was sold by the sheriff which was bought by Strong
Machinery. The said sale was annotated in the same registry on December
29, 1913. Later on, CAF sold the lot where the building stood to Strong
Machinery thru a deed of sale which was executed in a public document but
was not registered. Strong Machine took possession of the building and the
land.
Leung Yee, another creditor of CAF, bought the same building where the
machines were installed and registered in the land registry of the Province of
Cavite.
Issue: Was the property's nature changed by its registration in the Chattel
Mortgage Registry?
Held:
Where the interest conveyed is of the nature of real property, the placing of
the document on record in the Chattel Mortgage Registry is a futile act.
Chattel Mortgage refers to the mortgage of Personal Property executed in
the manner and form prescribed in the statute.
The building of strong materials in which the rice-cleaning machinery was
installed by the "Compaia Agricola Filipina" was real property, and the mere
fact that the parties seem to have dealt with it separate and apart from the
land on which it stood in no wise changed its character as real property. It
follows that neither the original registry in the chattel mortgage registry of
the instrument purporting to be a chattel mortgage of the building and the
machinery installed therein, nor the annotation in that registry of the sale of
the mortgaged property, had any effect whatever so far as the building was
concerned.
2. ANTONIO PUNZALAN ET. AL. VS. REMEDIOS LACSAMANA (GR NO.
L-55729)
FACTS: It appears that petitioner, Antonio Punsalan, Jr., was the former
registered owner of a parcel of land consisting of 340 square meters situated
in Bamban, Tarlac. In 1963, petitioner mortgaged said land to respondent
PNB (Tarlac Branch) in the amount of P10,000.00, but for failure to pay said
amount, the property was foreclosed on December 16, 1970. Respondent
PNB (Tarlac Branch) was the highest bidder in said foreclosure proceedings.
However, the bank secured title thereto only on December 14, 1977.
In the meantime, in 1974, while the properly was still in the alleged
possession of petitioner and with the alleged acquiescence of respondent
PNB (Tarlac Branch), and upon securing a permit from the Municipal Mayor,
petitioner constructed a warehouse on said property. Petitioner declared said
warehouse for tax purposes for which he was issued Tax Declaration No.
5619. Petitioner then leased the warehouse to one Hermogenes Sibal for a
period of 10 years starting January 1975.

On July 26, 1978, a Deed of Sale was executed between respondent PNB
(Tarlac Branch) and respondent Lacsamana over the property. This contract
was amended on July 31, 1978, particularly to include in the sale, the
building and improvement thereon.
On November 22, 1979, petitioner commenced suit for "Annulment of Deed
of Sale with Damages" against herein respondents PNB and Lacsamana
before respondent Court of First Instance of Rizal, Branch XXXI, Quezon City,
essentially impugning the validity of the sale of the building as embodied in
the Amended Deed of Sale.
On March 14, 1980, respondent PNB filed a Motion to Dismiss on the ground
that venue was improperly laid considering that the building was real
property under article 415 (1) of the New Civil Code and therefore section
2(a) of Rule 4 should apply. 4
Opposing said Motion to Dismiss, petitioner contended that the action for
annulment of deed of sale with damages is in the nature of a personal
action, which seeks to recover not the title nor possession of the property
but to compel payment of damages, which is not an action affecting title to
real property. On April 25, 1980, respondent Court granted respondent PNB's
Motion to Dismiss.
ISSUE: WON the building was real property under article 415 (1) of the New
Civil Code and WON related case should be dismissed on the ground of
improper venue
HELD: We affirm respondent Court's Order denying the setting for pre-trial.
The warehouse claimed to be owned by petitioner is an immovable or real
property as provided in article 415(l) of the Civil Code. Buildings are always
immovable under the Code. A building treated separately from the land on
which it stood is immovable property and the mere fact that the parties to a
contract seem to have dealt with it separate and apart from the land on
which it stood in no wise changed its character as immovable property.
While it is true that petitioner does not directly seek the recovery of title or
possession of the property in question, his action for annulment of sale and
his claim for damages are closely intertwined with the issue of ownership of
the building which, under the law, is considered immovable property, the
recovery of which is petitioner's primary objective. The prevalent doctrine is
that an action for the annulment or rescission of a sale of real property does
not operate to efface the fundamental and prime objective and nature of the
case, which is to recover said real property. It is a real action. 9
Respondent Court, therefore, did not err in dismissing the case on the
ground of improper venue (Section 2, Rule 4) 10, which was timely raised
(Section 1, Rule 16).
3. STANDARD OIL CO. VS. JARANILLO (44 PHIL 631)
Facts: On 27 November 1922, Gervasia de la Rosa Vda. de Vera was the
lessee of a parcel of land situated in the City of Manila and owner of the
house of strong materials built thereon, upon which date she executed a
document in the form of a chattel mortgage, purporting to convey to
Standard Oil Company of New York by way of mortgage both the leasehold
interest in said lot and the building which stands thereon. After said
document had been duly acknowledged and delivered, Standard Oil caused
the same to be presented to Joaquin Jaramillo, as register of deeds of the
City of Manila, for the purpose of having the same recorded in the book of
record of chattel mortgages. Upon examination of the instrument, Jaramillo
opined that it was not chattel mortgage, for the reason that the interest
therein mortgaged did not appear to be personal property, within the
meaning of the Chattel Mortgage Law, and registration was refused on this
ground only.
A petition for mandamus was filed against the register of deeds. The
Supreme Court ruled that the position taken by the register of deeds is
untenable. It is his duty to accept the proper fee and place the instrument
on record. The Court explained that "the duties of a register of deeds in
respect to the registration of chattel mortgages are of a purely ministerial
character, and no provision of law can be cited which confers upon him any
judicial or quasi-judicial power to determine the nature of any document of
which registration is sought as a chattel mortgage."

4. DAVAO SAWMILL CO. VS. CASTILLO (61 PHIL 709)
Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the
Government of the Philippine Islands. However, the land upon which the
business was conducted belonged to another person. On the land the
sawmill company erected a building which housed the machinery used by it.
Some of the implements thus used were clearly personal property, the
conflict concerning machines which were placed and mounted on
foundations of cement. In the contract of lease between the sawmill
company and the owner of the land there appeared the following provision:
That on the expiration of the period agreed upon, all the improvements and
buildings introduced and erected by the party of the second part shall pass
to the exclusive ownership of the lessor without any obligation on its part to
pay any amount for said improvements and buildings; which do not include
the machineries and accessories in the improvements.
In another action wherein the Davao Light & Power Co., Inc., was the
plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a judgment
was rendered in favor of the plaintiff in that action against the defendant; a
writ of execution issued thereon, and the properties now in question were
levied upon as personalty by the sheriff. No third party claim was filed for
such properties at the time of the sales thereof as is borne out by the record
made by the plaintiff herein.
It must be noted also that on number of occasion, Davao Sawmill treated
the machinery as personal property by executing chattel mortgages in favor
of third persons. One of such is the appellee by assignment from the original
mortgages.
The lower court rendered decision in favor of the defendants herein. Hence,
this instant appeal.
Issue:
WON the machineries and equipments were personal in nature.
Held:

Yes. The Supreme Court affirmed the decision of the lower court. It said
machinery which is movable in its nature only becomes immobilized when
placed in a plant by the owner of the property or plant, but not when so
placed by a tenant, a usufructuary, or any person having only a temporary
right, unless such person acted as the agent of the owner.
5. BOARD OF ASSESSMENT APPEALS VS. MANILA ELECTRIC (10 SCRA
68)
FACTS:
On October 20, 1902, the Philippine Commission enacted Act No. 484 which
authorized the Municipal Board of Manila to grant a franchise to construct,
maintain and operate an electric street railway and electric light, heat and
power system in the City of Manila and its suburbs to the person or persons
making the most favorable bid. Charles M. Swift was awarded the franchise
on March 1903, the terms and conditions of which were embodied in
Ordinance No. 44 approved on March 24, 1903. Respondent MERALCO
became the transferee and owner of the franchise.
MERALCO's electric power is generated by its hydro-electric plant located at
Botocan Falls, Laguna and is transmitted to the City of Manila by means of
electric transmission wires, running from the province of Laguna to the said
City. These electric transmission wires which carry high voltage current, are
fastened to insulators attached on steel towers constructed by respondent at
intervals, from its hydro-electric plant in the province of Laguna to the City
of Manila. The respondent Meralco has constructed 40 of these steel towers
within Quezon City, on land belonging to it.
On November 15, 1955, petitioner City Assessor of Quezon City declared the
steel towers for real property tax. After denying respondent's petition to
cancel the tax declarations, an appeal was taken by respondent to the Board
of Assessment Appeals of Quezon City, which required respondent to pay the
amount of P11,651.86 as real property tax on the steel towers for the years
1952 to 1956. Respondent paid the amount under protest, and filed a
petition for review with the Court of Tax Appeals (CTA). The CTA then
rendered a decision on December 29, 1958, ordering the cancellation of the

tax declarations and the petitioner City Treasurer of Quezon City to refund to
the respondent the sum of P11,651.86 stating that the steel towers are
personal properties not subject to real property tax. The motion for
reconsideration having been denied, the instant petition for review was filed.
ISSUE(S):
Whether or not the steel bars come in purview of real properties subject to
real property tax.
RULING:
The Court in upholding the assailed decision referred to Article 415 of the
Civil Code for the definition of an immovable property, as such was not
provided in the tax law. According to Article 415, the following are
immovable property: "(1) Land, buildings, roads, and constructions of all
kinds adhered to the soil; xxx xxx xxx (3) Everything attached to an
immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking the material or deterioration of the object; xxx
xxx xxx (5) Machinery, receptacles, instruments or implements intended by
the owner of the tenement for an industry or works which may be carried in
a building or on a piece of land, and which tends directly to meet the needs
of the said industry or works;" xxx xxx xxx
It was held that the steel towers or supports in question, do not come within
the objects mentioned in paragraph 1, because they do not constitute
buildings or constructions adhered to the soil. They are not constructions
analogous to buildings nor adhering to the soil. As per description, given by
the lower court, they are removable and merely attached to a square metal
frame by means of bolts, which when unscrewed could easily be dismantled
and moved from place to place. They cannot be included under paragraph 3,
as they are not attached to an immovable in a fixed manner, and they can
be separated without breaking the material or causing deterioration upon
the object to which they are attached. Each of the steel towers or supports
consists of steel bars or metal strips, joined together by means of bolts,
which can be disassembled by unscrewing the bolts and reassembled by
screwing the same. Also, the steel towers or supports do not fall under

paragraph 5, for they are not machineries or receptacles, instruments or
implements, and even if they were, they are not intended for industry or
works on the land as the petitioner is not engaged in an industry or works
on the land in which the steel supports or towers are constructed.
6. MAKATI LEASING AND FINANCE CORP. VS. WEAREVER TEXTILE
MILLS, INC. (22 SCRA 296)
Facts:
It appears that in order to obtain financial accommodations from herein
petitioner Makati Leasing and Finance Corporation, the private respondent
Wearever Textile Mills, Inc., discounted and assigned several receivables with
the former under a Receivable Purchase Agreement. To secure the collection
of the receivables assigned, private respondent executed a Chattel Mortgage
over certain raw materials inventory as well as a machinery described as an
Artos Aero Dryer Stentering Range.
Upon default, Makati Leasing filed a petition for judicial foreclosure of the
properties mortgaged. Acting on Makati Leasings application for replevin,
the lower court issued a writ of seizure. Pursuant thereto, the sheriff
enforcing the seizure order seized the machinery subject matter of the
mortgage. In a petition for certiorari and prohibition, the Court of Appeals
ordered the return of the machinery on the ground that the same can-not be
the subject of replevin because it is a real property pursuant to Article 415 of
the new Civil Code, the same being attached to the ground by means of
bolts and the only way to remove it from Wearever textiles plant would be
to drill out or destroy the concrete floor. When the motion for
reconsideration of Makati Leasing was denied by the Court of Appeals,
Makati Leasing elevated the matter to the Supreme Court.
Issue:
Whether or not the machinery in suit is real or personal property from the
point of view of the parties.
Held:

It is similar to that of the Tumalad v Vicencio case. If a house of strong
materials, like what was involved in the Tumalad case, may be considered as
personal property for purposes of executing a chattel mortgage thereon as
long as the parties to the contract so agree and no innocent third party will
be prejudiced thereby, there is absolutely no reason why a machinery, which
is movable in its nature and becomes immobilized only by destination or
purpose, may not be likewise treated as such. This is really because one who
has so agreed is estopped from the denying the existence of the chattel
mortgage.
In rejecting petitioners assertion on the applicability of the Tumalad
doctrine, the CA lays stress on the fact that the house involved therein was
built on a land that did not belong to the owner of such house. But the law
makes no distinction with respect to the ownership of the land on which the
house is built and we should not lay down distinctions not contemplated by
law.
It must be pointed out that the characterization by the private respondent is
indicative of the intention and impresses upon the property the character
determined by the parties. As stated in Standard Oil Co. of New York v.
Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may, by
agreement, treat as personal property that which by nature would be a real
property as long as no interest of third parties would be prejudiced thereby.
The status of the subject matter as movable or immovable property was not
raised as an issue before the lower court and the CA, except in a
supplemental memorandum in support of the petition filed in the appellate
court. There is no record showing that the mortgage has been annulled, or
that steps were taken to nullify the same. On the other hand, respondent
has benefited from the said contract.
Equity dictates that one should not benefit at the expense of another.
As such, private respondent could no longer be allowed to impugn the
efficacy of the chattel mortgage after it has benefited therefrom.
Therefore, the questioned machinery should be considered as personal
property.

7. MINDANAO BUS COMPANY VS. CITY ASSESSOR (116 PHIL 501)
Facts:
Mindanao Bus Company is a public utility engaged in transporting

passengers and cargoes by motor trucks in Mindanao Island;
City Assessor of Cagayan assessed the machineries of the respondent,
which are either sitting on cement or wooden platforms, as real properties
for P4,400. Petitioner is the owner of the land where it operates and garage
for its buses, a repair shop; blacksmith and carpentry shops where the buses
are made; body constructed and repaired for it to be serviceable. The said
machines were never used as industrial equipments to produce finished
products for sale or offered to the general public for business.
Issue:
WON the Honorable Court of tax Appeals erred in upholding respondents
contention that the questioned assessment are valid; and that the said tools,
equipments or machineries are immovable taxable real properties;
Held:
Respondents contend that said equipments, though movable, are
immobilized by destination, in accordance with paragraph 5 of Article 415 of
the New Civil Code which provides:
Art. 415. The following are immovable properties:
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be carried on in
a building or on a piece of land, and which tend directly to meet the needs
of the said industry or works. (Emphasis ours.)
Note that the stipulation expressly states that the equipments are placed
on wooden or cement platforms. They can be moved around and about in
petitioner's repair shop. The tools and equipments in question in this instant
case are, by their nature, not essential and principle municipal elements of
petitioner's business of transporting passengers and cargoes by motor
trucks. They are merely incidentals acquired as movables and used only

for expediency to facilitate and/or improve its service. Even without such
tools and equipments, its business may be carried on, as petitioner has
carried on, without such equipments, before the war. The transportation
business could be carried on without the repair or service shop if its rolling
equipment is repaired or serviced in another shop belonging to another.
The case at bar, the equipments in question are destined only to repair or
service the transportation business, which is not carried on in a building or
permanently on a piece of land, as demanded by the law. Said equipments
may not, therefore, be deemed real property.
We hold that the equipments in question are not absolutely essential to the
petitioner's transportation business, and petitioner's business is not carried
on in a building, tenement or on a specified land, so said equipment may not
be considered real estate within the meaning of Article 415 (c) of the Civil
Code.
8. CALTEX PHILIPPINES INC. VS. CENTRAL BOARD OF ASSESSMENT
APPEALS AND CITY ASSESSOR OF PASAY (GR NO. L-50466)
FACTS: This case is about the realty tax on machinery and equipment
installed by Caltex (Philippines) Inc. in its gas stations located on leased
land.
The machines and equipment consists of underground tanks, elevated tank,
elevated water tanks, water tanks, gasoline pumps, computing pumps, water
pumps, car washer, car hoists, truck hoists, air compressors and tireflators.
The said machines and equipment are loaned by Caltex to gas station
operators under an appropriate lease agreement or receipt. It is stipulated in
the lease contract that the operators, upon demand, shall return to Caltex
the machines and equipment in good condition as when received, ordinary
wear and tear excepted.
The lessor of the land, where the gas station is located, does not become
the owner of the machines and equipment installed therein. Caltex retains
the ownership thereof during the term of the lease.
The city assessor of Pasay City characterized the said items of gas station
equipment and machinery as taxable realty. The realty tax on said
equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of
tax appeals ruled that they are personalty. The assessor appealed to the
Central Board of Assessment Appeals.
ISSUE:
1. Whether the pieces of gas station equipment and machinery already
enumerated are subject to realty tax
2. Distinguish from the various applications of Art 415
HELD:
1. This issue has to be resolved primarily under the provisions of the
Assessment Law and the Real Property Tax Code.
Section 2 of the Assessment Law provides that the realty tax is due "on real
property, including land, buildings, machinery, and other improvements" not
specifically exempted in section 3 thereof. The Code contains the following
definitions in its section 3:
k) Improvements is a valuable addition made to property or an
amelioration in its condition, amounting to more than mere repairs or
replacement of waste, costing labor or capital and intended to enhance its
value, beauty or utility or to adapt it for new or further purposes.
m) Machinery shall embrace machines, mechanical contrivances,
instruments, appliances and apparatus attached to the real estate. It
includes the physical facilities available for production, as well as the
installations and appurtenant service facilities, together with all other
equipment designed for or essential to its manufacturing, industrial or
agricultural purposes (See sec. 3[f], Assessment Law).
We hold that the said equipment and machinery, as appurtenances to the
gas station building or shed owned by Caltex (as to which it is subject to
realty tax) and which fixtures are necessary to the operation of the gas
station, for without them the gas station would be useless, and which have
been attached or affixed permanently to the gas station site or embedded
therein, are taxable improvements and machinery within the meaning of the
Assessment Law and the Real Property Tax Code.

2. Caltex invokes the rule that machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner of the property or
plant but not when so placed by a tenant, a usufructuary, or any person
having only a temporary right, unless such person acted as the agent of the
owner (Davao Saw Mill Co. vs. Castillo, 61 Phil 709).
That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code
regarding machinery that becomes real property by destination. In the
Davao Saw Mills case the question was whether the machinery mounted on
foundations of cement and installed by the lessee on leased land should be
regarded as real property forpurposes of execution of a judgment against
the lessee. The sheriff treated the machinery as personal property. This
Court sustained the sheriff's action. (Compare with Machinery & Engineering
Supplies, Inc. vs. Court of Appeals, 96 Phil. 70, where in a replevin case
machinery was treated as realty).
Here, the question is whether the gas station equipment and machinery
permanently affixed by Caltex to its gas station and pavement (which are
indubitably taxable realty) should be subject to the realty tax. This question
is different from the issue raised in the Davao Saw Mill case.
Improvements on land are commonly taxed as realty even though for some
purposes they might be considered personalty (84 C.J.S. 181-2, Notes 40
and 41). "It is a familiar phenomenon to see things classed as real property
for purposes of taxation which on general principle might be considered
personal property" (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630,
633).
This case is also easily distinguishable from Board of Assessment Appeals vs.
Manila Electric Co., 119 Phil. 328, where Meralco's steel towers were
considered poles within the meaning of paragraph 9 of its franchise which
exempts its poles from taxation. The steel towers were considered
personalty because they were attached to square metal frames by means of
bolts and could be moved from place to place when unscrewed and
dismantled.

Nor are Caltex's gas station equipment and machinery the same as tools and
equipment in the repair shop of a bus company which were held to be
personal property not subject to realty tax (Mindanao Bus Co. vs. City
Assessor, 116 Phil. 501).
The Central Board of Assessment Appeals did not commit a grave abuse of
discretion in upholding the city assessor's is imposition of the realty tax on
Caltex's gas station and equipment.
9. SERGS PRODCUTS, INC. AND SERGIO T. GOQUIOLAY VS. PCI
LEASING AND FINANCE, INC. (GR NO. 137705)
Facts: Serg's Products, Inc. (SPI) and PCI Leasing & Finance, Inc. entered
into a lease agreement providing that the machines in question were to be
considered as personal property, although the same were essential and
principal elements in the chocolate-making business of SPI.
Subsequently, PCI filed a complaint against SPI for sum of money,
with an application for a writ of replevin. The sheriff then proceeded to seize
the machines in question. SPI contended that the subject machines used in
their factory were not proper subjects of the writ of replevin because they
were in fact real property having become immobilized by destination.
SPI went to the Court of Appeals via an original action for certiorari.
the Court of Appeals, however, sustained the writ and held that the
machines were personal property. Thus, SPI appealed to the Supreme Court.
Issue: Whether the said machines are personal, not immovable, property
which may be a proper subject of a writ of replevin
Held: The Court has held that contracting parties may validly stipulate that a
real property be considered as personal. After agreeing to such stipulation,
they are consequently estopped from claiming otherwise. Under the principle
of estoppel, a party to a contract is ordinarily precluded from denying the
truth of any material fact found therein.

In the present case, the Lease Agreement clearly provides that the
machines in question are to be considered as personal property. Specifically,
Section 12.1 of the Agreement reads as follows:
12.1 The PROPERTY is, and shall at all times be and remain, personal
property notwithstanding that the PROPERTY or any part thereof may now
be, or hereafter become, in any manner affixed or attached to or embedded
in, or permanently resting upon, real property or any building thereon, or
attached in any manner to what is permanent.
Clearly then, petitioners are estopped from denying the
characterization of the subject machines as personal property. Under the
circumstances, they are proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding that the machines
should be deemed personal property pursuant to the Lease Agreement is
good only insofar as the contracting parties are concerned. Hence, while the
parties are bound by the Agreement, third persons acting in good faith are
not affected by its stipulation characterizing the subject machinery as
personal. In any event, there is no showing that any specific third party
would be adversely affected.
10. TUMALAD VS. VICENCIO (GR NO. L-30173)
Facts:
On 1 September 1955 defendants-appellants executed a chattel mortgage in
favor of plaintiffs-appellees over their house of strong materials located at
No. 550 Int. 3, Quezon Boulevard, Quiapo, Manila, over Lot No. 6-B and 7-B,
Block No. 2554, which were being rented from Madrigal & Company, Inc.
The mortgage was registered in the Registry of Deeds of Manila on 2
September 1955. The herein mortgage was executed to guarantee a loan of
P4,800.00 received from plaintiffs-appellees, payable within one year at 12%
per annum. The mode of payment was P150.00 monthly, starting September,
1955, up to July 1956, and the lump sum of P3,150 was payable on or
before August, 1956.
Defendants-appellants defaulted in paying, the mortgage was extrajudicially
foreclosed, and on 27 March 1956, the house was sold at public auction

pursuant to the said contract. As highest bidder, plaintiffs-appellees were
issued the corresponding certificate of sale. Thereafter, on 18 April 1956,
plaintiffs-appellees commenced Civil Case No. 43073 in the municipal court
of Manila, praying, among other things, that the house be vacated and its
possession surrendered to them, and for defendants-appellants to pay rent
of P200.00 monthly from 27 March 1956 up to the time the possession is
surrendered.
Issue: WON the chattel mortgage executed upon an immovable valid?
Held: Yes. Citing Manarang and Manarang vs. Ofilada, the Court stated that
"it is undeniable that the parties to a contract may by agreement treat as
personal property that which by ,nature would be real property", citing
Standard Oil Company of New York vs. Jaramillo. Further, the doctrine of
estoppel applies in this case as against the defendants in which they are
estopped from taking an inconsistent ground by claiming otherwise. Having
previously treated such property as personal property and that they
themselves try to assail the validity as debtor-mortgagor (being privy to the
contract) and not third persons thus, doctrine of estoppel applies.
11. PASTOR D. AGO VS. THE HON. COURT OF APPEALS (GR NO.
L-17898)
FACTS:
In 1957, petitioner Pastor D. Ago bought sawmill machineries and
equipments from respondent Grace Park Engineering, Inc., executing a
chattel mortgage over said machineries and equipments to secure the
payment of a balance remaining unpaid totalling P32,000.00, to which
petitioner agreed to pay on installment basis.
Petitioner Ago defaulted in his payments and so, in 1958, respondent Grace
Park Engineering, Inc. instituted extrajudicial foreclosure proceedings on the
mortgage in the Court of First Instance of Agusan. The parties to the case
arrived at a compromise agreement which was submitted to the court in
writing, signed by both petitioner and respondent. The judge of the Court of
First Instance of Agusan then dictated a decision in open court on January
28, 1959.
When petitioner continued to default in his payments, Grace Park
Engineering, Inc. filed with the lower court a motion for execution, which
was granted on August 15, 1959. A writ of execution, dated September 23,
1959, later followed. The herein respondent Provincial Sheriff of Surigao,
acting upon the writ of execution issued by the lower court, levied upon and
ordered the sale of the sawmill machineries and equipments. These
machineries and equipments had been taken to and installed in a sawmill
building owned by the Golden Pacific Sawmill, Inc., to whom, petitioner
alleges, he had sold them on February 16, 1959 (a date after the decision of
the lower court but before levy by the Sheriff).
Having been advised by the sheriff that the public auction sale was set for
December 4, 1959, petitioner filed the petition for certiorari and prohibition
with preliminary injunction with respondent Court of Appeals on December
1, 1959, alleging: (1) that a copy of the aforementioned judgment given in
open court was served upon petitioners counsel only on September 25,
1959 when the writ of execution was dated September 23, 1959; (2) that
the order and writ of execution having been issued by the lower court before
petitioners counsel received a copy of the judgment, its resultant last order
that the "sheriff may now proceed with the sale of the properties levied"
constituted a grave abuse of discretion and was in excess of its jurisdiction;
and (3) that the respondent Provincial Sheriff of Surigao was acting illegally
upon the allegedly void writ of execution by levying the same upon the
sawmill machineries and equipments which have become real properties of
the Golden Pacific Sawmill, Inc.
The Court of Appeals issued a writ of preliminary injunction against the
sheriff on December 8, 1959. However, it turned out that the latter had
already sold at public auction the machineries on December 4, 1959. The
respondent Grace Park Engineering, Inc. was the only bidder for P15,000.00,
although the certificate of sale was not yet executed. The Court of Appeals
instructed the sheriff to suspend the issuance of a certificate of sale until the
final decision of the case. On November 9, 1960, the Court of Appeals
rendered a decision stating that the lower court did not exceed nor abuse its
jurisdiction in ordering the execution of the judgment.
Petitioner now alleges before this Court that the respondent Court of
Appeals erred (1) in holding that the rendition of the judgment on
compromise was a sufficient notice; and (2) in not resolving the other issues
raised before it, namely, (a) the legality of the public auction sale made by
the sheriff, and (b) the nature of the machineries in question, whether they
are movables or immovables.
ISSUE(S):
The nature of the machineries and equipments mortgaged and subsequently
sold in the public auction.
RULING:
It was held that the sawmill machineries and equipments are real estate
properties. The record shows that after petitioner had purchased the sawmill
machineries and equipments, he assigned the same to the Golden Pacific
Sawmill, Inc. in payment of his subscription to the shares of stock of said
corporation. Thereafter, the sawmill machineries and equipments were
installed in a building and permanently attached to the ground. By reason of
such installment in a building, the said sawmill machineries and equipments
became real estate properties in accordance with the provision of Art. 415
(5) of the Civil Code, thus: "The following are immovable property - xxx xxx
xxx (5) Machinery receptacles instruments or implements intended by the
owner of the tenement for an industry or works which may be carried on in
a building or on a piece of land, and which tend directly to meet the needs
of the said industry or works;" xxx xxx xxx
The Court interpreted a similar question raised before in the case of
Berkenkotter vs. Cu Unjieng e Hijos (61 Phil. 683) and held that the
installation of the machinery and equipment in the central of the Mabalacat
Sugar Co., Inc. for use in connection with the industry carried by that
company, converted the said machinery and equipment into real estate by
reason of their purpose. Paraphrasing the language of the said decision, the
Court held that by the installation of the sawmill machineries in the building
of the Golden Pacific Sawmill, Inc., for use in the sawing of logs carried on in
said building, the same became a necessary and permanent part of the

building or real estate on which the same was constructed, converting the
said machineries and equipments into real estate within the meaning of
Article 415 (5).
Considering that the machineries and equipments in question, valued at
more than P15,000.00, appear to have been sold without the necessary
advertisement of sale by publication in a newspaper, as required in Sec. 16
of Rule 39 of the Rules of Court, the sale made by the sheriff must be
declared null and void.

12. THE UNITED STATES VS. IGNACIO CARLOS (GR NO. 6295)
Facts:
Ignacio Carlos has been a consumer of electricity furnished by the Manila
Electric Railroal and Light Company for building containing residence of the
accused and 30 other residences. Representatives of the company believing
that more light is consumed than what is shown in the meter installed on
the pole outside Carlos house to compare actual consumption and found out
that the latter used a jumper.
Further, a jumper was found in a drawer of a small cabinet in the room the
of defendants house were a meter was installed. In the absence of any
explanation for Carlos possession of said device, the presumption raised was
that Carlos was the owner of the device whose purpose was to deflect the
current from the meter.
Thus he was charged with a crime of larceny/ theft amounting to 2,273 kw
of electric power.
Issue:
Whether or not the court erred in declaring that the electrical energy may be
stolen.
Held:
Based on this
Article 517 of the Penal Code above referred to reads as follows:
The following are guilty of larceny:
(1) Those who with intent of gain and without violence or intimidation
against the person, or force against things, shall take another's personal
property without the owner's consent.
It is true that electricity is no longer, as formerly regarded by electricians, as
fluid. But its manifestation and effects, like those of gas, may be seen and
felt. The true test of what may be stolen is not whether it is corporeal or
incorporeal, but whether, being possessed of value, a person other than the
owner, may appropriate the same. Electricity, like gas, is valuable
merchandise, and may thus be stolen.
13. LUIS MARCOS LAUREL VS. HON. ZEUS ABROGAR (GR NO. 155076)
Facts:
Laurel was charged with Theft under Art. 308 of the RPC for allegedly
taking, stealing, and using PLDT's international long distance calls by
conducting International Simple Resale (ISR) a method of outing and
completing international long-distance calls using lines, cables, antennae,
and/or air wave frequency which connect directly to the local/domestic
exchange facilities of the country where the call is destined. PLDT alleged
that this service was stolen from them using their own equipment and
caused damage to them amounting to P20,370,651.92;
The Court held that Amended Information does not contain material
allegations charging petitioner with theft of personal property since
international long distance calls and the business of providing
telecommunication or telephone services are not personal properties under
Article 308 of the Revised Penal Code.
Issue:
WON International Simple Resale (international long-distance calls) maybe
be considered as personal property, thus constituting theft
Held:
The elements of theft under Article 308 of the Revised Penal Code are as
follows: (1) that there be taking of personal property; (2) that said property
belongs to another; (3) that the taking be done with intent to gain; (4) that
the taking be done without the consent of the owner; and (5) that the taking
be accomplished without the use of violence against or intimidation of
persons or force upon things. SDHETI
Any personal property, tangible or intangible, corporeal or incorporeal,
capable of appropriation can be the object of theft. In Article 335 of the Civil
Code of Spain, "personal property" is defined as "anything susceptible of
appropriation and not included in the foregoing chapter (not real property)".
The only requirement for a personal property to be the object of theft under

the penal code is that it be capable of appropriation. It need not be capable
of "asportation", which is defined as "carrying away".
To appropriate means to deprive the lawful owner of the thing. The word
"take" in the Revised Penal Code includes any act intended to transfer
possession which, as held in the assailed Decision, may be committed
through the use of the offenders' own hands, as well as any mechanical
device, such as an access device or card as in the instant case. This includes
controlling the destination of the property stolen to deprive the owner of the
property, such as the use of a meter tampering, use of a device to
fraudulently obtain gas and the use of jumper to divert electricity. In the
instant case, the act of conducting ISR operations by illegally connecting
various equipment or apparatus to private respondent PLDT's telephone
system, through which petitioner is able to resell or re-route international
long distance calls using respondent PLDT's facilities constitutes all three
acts of subtraction mentioned above.
The business of providing telecommunication or telephone service is
likewise personal property which can be the object of theft under Article 308
of the Revised Penal Code. Article 414 of the Civil Code provides that all
things which are or may be the object of appropriation are considered either
real property or personal property. Business is likewise not enumerated as
personal property under the Civil Code. Just like interest in business,
however, it may be appropriated. Following the ruling in Strochecker v.
Ramirez, business should also be classified as personal property. Since it is
not included in the exclusive enumeration of real properties under Article
415, it is therefore personal property. As can be clearly gleaned from the
above disquisitions, petitioner's acts constitute theft of respondent PLDT's
business and service, committed by means of the unlawful use of the latter's
facilities.
14. MUNICIPALITY OF CAVITE VS. ROJAS (30 PHIL 20)
FACTS:
By an instrument dated December 5, 1911, afterwards amended on March
14,1912, the provincial fiscal of Cavite, representing the municipality of that
name, filed a complaint in the Court of First Instance of said province
alleging that the plaintiff municipal corporation, duly organized and
constituted in accordance with Act No. 82, and as the successor to the rights
said entity had under the late Spanish government, and by virtue of Act No.
1039, had exclusive right, control and administration over the streets, lanes,
plazas, and public places of the municipality of Cavite; that the defendants,
by virtue of a lease secured from the plaintiff municipality, occupy a parcel of
land 93 square meters in area that forms part of the public plaza known
under the name of Soledad, belonging to the municipality of Cavite, the
defendants having constructed thereon a house, through payment to the
plaintiff for occupation thereof of a rental of P5.58 a quarter in advance, said
defendants being furthermore obligated to vacate the leased land within
sixty days subsequent to plaintiff's demand to that effect; that the
defendants have been required by the municipality to vacate and deliver
possession of the said land, but more than the sixty days within which they
ought to have vacated it have elapsed without their having done so to date.
ISSUE: WON the lease of a public plaza of the said municipality in favor of a
private person is null and void
HELD: NULL & VOID
According to article 344 of the Civil Code: "Property for public use in
provinces and in towns comprises the provincial and town roads, the
squares, streets, fountains, and public waters, the promenades, and public
works of general service supported by said towns or provinces."
The said Plaza Soledad being a promenade for public use, the municipal
council of Cavite could not in 1907 withdraw or exclude from public use a
portion thereof in order to lease it for the sole benefit of the defendant
Hilaria Rojas. In leasing a portion of said plaza or public place to the
defendant for private use the plaintiffmunicipality exceeded its authority in
the exercise of its powers by executing a contract over a thing of which it
could not dispose, nor is it empowered so to do.
The Civil Code, article 1271, prescribes that everything which is not outside
the commerce of man may be the object of a contract, and plazas and
streets are outside of this commerce, as was decided by the supreme court

of Spain in its decision of February 12, 1895, which says: "Communal things
that cannot be sold because they are by their very nature outside of
commerce are those for public use, such as the plazas, streets, common
lands, rivers, fountains, etc."
Therefore, it must be concluded that the contract, Exhibit C, whereby the
municipality of Cavite leased to Hilaria Rojas a portion of the Plaza Soledad
is null and void and of no force or effect, because it is contrary to the law
and the thing leased cannot be the object of a contract. On the hypothesis
that the said lease is null and void in accordance with the provisions of
article 1303 of the Civil Code, the defendant must restore and deliver
possession of the land described in the complaint to themunicipality of
Cavite, which in its turn must restore to the said defendant all the sums it
may have received from her in the nature of rentals just as soon as she
restores the land improperly leased. For the same reasons as have been set
forth, and as said contract is null and void in its origin, it can produce no
effect and consequently the defendant is not entitled to claim that the
plaintiff municipality indemnify her for the damages she may suffer by the
removal of her house from the said land.
15. MANECLANG VS. IAC (144 SCRA 553)
Facts: Petitioners Adriano Maneclang, et. al. filed before the then Court of
First Instance of Pangasinan, Branch XI a complaint for quieting of title over
a certain fishpond located within the four [41 parcels of land belonging to
them situated in Barrio Salomague, Bugallon, Pangasinan, and the
annulment of Resolutions Nos. 38 and 95 of the Municipal Council of
Bugallon Pangasinan. The trial court dismissed the complaint in a decision
dated August 15, 1975 upon a finding that the body of water traversing the
titled properties of petitioners is a creek constituting a tributary of the Agno
River; therefore public in nature and not subject to private appropriation.
Petitioners appealed said decision to the Intermediate Appellate
Court, which affirmed the same on April 29, 1983. Hence, this petition for
review on certiorari.
Issue: WON the fishpond is public in nature

Held: YES. A creek, defined as a recess or arm extending from a river and
participating in the ebb and 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.
16. IGNACIO VS. DIRECTOR OF LANDS (108 PHIL 335)
Facts: Petitioner filed an application for registration of adjacent (mangrove)
land by claiming ownership by right of accretion located near the Manila Bay.
Such application was opposed by the Director of lands claiming that such
lands are part of public domain. Trial Court decided in favor of the
government holding it as public domain. Hence, present petition.
Issue: WON the land is part of public domain.
Held: Yes. Public Domain. First, right of accretion mentioned in Art. 457
applies only to gradual deposits on the BANKS OF RIVERS and not in such
case where accretion was due to the MANILA BAY thus it is public domain.
Second, as to the claim that even if it formed part of public domain, such
was no longer necessary for public use therefore disposable and available for
private ownership was untenable because SC reiterated that in interpreting
Art. 4 of Law of Waters there is a need of a positive declaration on the part
of the government (executive or legislative) that such land is not necessary
for public purpose thus subject to private ownership or to be A and D. Until
a positive declaration said land continue to be part of public domain. Third,
Acquisitive Prescription does not lie since lands of public domain are not
subject to ordinary prescription being outside of commerce of man.
17. MACASIANO VS. DIOKNO (GR NO. 97764)
FACTS:
On June 13, 1990, the respondent Municipality of Paraaque passed
Ordinance No. 86, Series of 1990 which authorized the closure of J.
Gabrielle, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets
located at Baclaran, Paraaque, Metro Manila and the establishment of a flea
market thereon. The ordinance was approved by the municipal council
pursuant to MCC Ordinance No. 2, Series of 1979, authorizing and regulating
the use of certain city and/or municipal streets, roads and open spaces
within Metropolitan Manila as sites for flea market and/or vending areas,
under certain terms and conditions.
On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No.
86, s. 1990 of the municipal council of the respondent municipality subject
to the following conditions: (1) that the streets are not used for vehicular
traffic and that the majority of the residents do not oppose the
establishment of the flea market/vending areas thereon; (2) that the 2-
meter middle road to be used as flea market/vending area shall be marked
distinctly and that the 2 meters on both sides of the road shall be used by
pedestrians; (3) that the time during which the vending area is to be used
shall be clearly designated; and (4) that the use of the vending areas shall
be temporary and shall be closed once the reclaimed areas are developed
and donated by the Public Estate Authority.
On June 20, 1990, the municipal council of Paraaque issued a resolution
authorizing the Paraaque Mayor to enter into a contract with any service
cooperative for the establishment, operation, maintenance and management
of flea markets and/or vending areas. Subsequently on August 8, 1990,
respondent municipality and respondent Palanyag, a service cooperative,
entered into an agreement whereby the latter shall operate, maintain and
manage the flea market in the aforementioned streets with the obligation to
remit dues to the treasury of the municipal government of Paraaque.
Thereafter, market stalls were put up by respondent Palanyag on the said
streets.
However, on September 13, 1990, petitioner Macasiano, PNP Superintendent
of the Metropolitan Traffic Command, ordered the destruction and
confiscation of stalls along G.G. Cruz and J. Gabrielle St. in Baclaran. These
stalls were later returned to respondent Palanyag. Petitioner then wrote a
letter, on October 16, 1990, to respondent Palanyag giving the latter ten (10)
days to discontinue the flea market; otherwise, the market stalls shall be
dismantled.

Hence, respondents municipality and Palanyag filed with the trial court a
joint petition for prohibition and mandamus with damages and prayer for
preliminary injunction. On October 24, 1990, the trial court issued a
temporary restraining order to enjoin petitioner from enforcing his letter-
order of October 16, 1990 pending the hearing on the motion for writ of
preliminary injunction. Thereafter, the trial court issued an order on
December 17, 1990, upholding the validity of Ordinance No. 86 s. 1990 of
the respondent municipality and enjoining the petitioner from enforcing his
letter-order against respondent Palayag.
This petition was then filed by the petitioner, thru the Office of the Solicitor
General, alleging grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the trial judge in issuing the assailed order. The
Solicitor General contends that municipal roads are used for public service
and are, therefore, public properties; that as such, they cannot be subject to
private appropriation or private contract by any person, even by the
respondent municipality. Petitioner submits that a property already dedicated
to public use cannot be used for another public purpose and that absent a
clear showing that the respondent municipality has been granted by the
legislature a specific authority to convert a property already in public use to
another public use, respondent municipality is, therefore, bereft of any
authority to close municipal roads for the establishment of a flea market.
ISSUE(S):
Whether or not an ordinance issued by the municipal council authorizing the
lease and use of public streets or thoroughfares as sites for flea markets is
valid.
RULING:
The Court held that the petitioners contention is meritorious.
The property of provinces, cities and municipalities is divided into property
for public use and patrimonial property as provided for in Art. 423 of the Civil
Code. As to what consists of property for public use, Article 424 of Civil Code
states: "Property for public use, in the provinces, cities and municipalities,
consists of the provincial roads, city streets, the squares, fountains, public
waters, promenades, and public works for public service paid for by said
provinces, cities or municipalities. All other property possessed by any of
them is patrimonial and shall be governed by this Code, without prejudice to
the provisions of special laws."
Based on the foregoing, J. Gabrielle G.G. Cruz, Bayanihan, Lt. Gacia
Extension and Opena streets are local roads used for public service and are
therefore considered public properties of respondent municipality. Properties
of the local government which are devoted to public service are deemed
public and are under the absolute control of Congress, as held in the case of
Province of Zamboanga del Norte v. City of Zamboanga. Hence, local
governments have no authority whatsoever to control or regulate the use of
public properties unless specific authority is vested upon them by Congress.
One example of this authority given by Congress to the local governments is
the power to close roads as provided in Section 10 of the Local Government
Code, which states: "A local government unit may likewise, through its head
acting pursuant to a resolution of its sangguniang and in accordance with
existing law and the provisions of this Code, close any barangay, municipal,
city or provincial road, street, alley, park or square. No such way or place or
any part thereof shall be closed without indemnifying any person prejudiced
thereby. A property thus withdrawn from public use may be used or
conveyed for any purpose for which other real property belonging to the
local unit concerned might be lawfully used or conveyed."
However, the aforestated legal provision which gives authority to local
government units to close roads and other similar public places should be
read and interpreted in accordance with basic principles already established
by law, which have the effect of limiting such authority of the province, city
or municipality to close a public street or thoroughfare. Article 424 of the
Civil Code lays down the basic principle that properties of public dominion
devoted to public use and made available to the public in general are outside
the commerce of man and cannot be disposed of or leased by the local
government unit to private persons. Aside from the requirement of due
process which should be complied with before closing a road, street or park,
the closure should be for the sole purpose of withdrawing the road or other
public property from public use when circumstances show that such property
is no longer intended or necessary for public use or public service. When it is
already withdrawn from public use, the property then becomes patrimonial
property of the local government unit concerned as provided for in Article
422 of the Civil Code and as held in the case of Cebu Oxygen, etc. et al. v.
Bercilles, et al. It is only then that the respondent municipality can "use or
convey them for any purpose for which other real property belonging to the
local unit concerned might be lawfully used or conveyed" in accordance with
the last sentence of Section 10 of the LGC.
In one case, the City Council of Cebu, through a resolution, declared the
terminal road of M. Borces Street, Mabolo, Cebu City as an abandoned road,
the same not being included in the City Development Plan. Thereafter, the
City Council passed another resolution authorizing the sale of the said
abandoned road through public bidding. We held therein that the City of
Cebu is empowered to close a city street and to vacate or withdraw the
same from public use. Such withdrawn portion becomes patrimonial property
which can be the object of an ordinary contract. However, those roads and
streets which are available to the public in general and ordinarily used for
vehicular traffic are still considered public property devoted to public use. In
such case, the local government has no power to use it for another purpose
or to dispose of or lease it to private persons.
This limitation on the authority of the local government over public
properties has been discussed and settled in the case of Francisco v.
Dacanay, wherein it was held that: "There is no doubt that the disputed
areas from which the private respondents' market stalls are sought to be
evicted are public streets, as found by the trial court in Civil Case No.
C-12921. A public street is property for public use hence outside the
commerce of man. Being outside the commerce of man, it may not be the
subject of lease or other contract. xxx xxx xxx As the stallholders pay fees to
the City Government for the right to occupy portions of the public street, the
City Government, contrary to law, has been leasing portions of the streets to
them. Such leases or licenses are null and void for being contrary to law.
The right of the public to use the city streets may not be bargained away
through contract. The interests of a few should not prevail over the good of
the greater number in the community whose health, peace, safety, good
order and general welfare, the respondent city officials are under legal
obligation to protect.
Even assuming that respondent municipality has the authority to pass the
disputed ordinance, the same cannot be validly implemented because it
cannot be considered approved by the Metropolitan Manila Authority due to
non-compliance by respondent municipality of the conditions imposed by the
former for the approval of the ordinance. Respondent municipality has not
shown any iota of proof that it has complied with the foregoing conditions
precedent to the approval of the ordinance.
Moreover, the powers of a local government unit are not absolute. They are
subject to limitations laid down by the Constitution and the laws such as our
Civil Code. Moreover, the exercise of such powers should be subservient to
paramount considerations of health and well-being of the members of the
community. As held in the Dacanay case, the general public have a legal
right to demand the demolition of the illegally constructed stalls in public
roads and streets and the officials of respondent municipality have the
corresponding duty arising from public office to clear the city streets and
restore them to their specific public purpose. Thus, the ordinance enacted by
respondent municipality is void and illegal for lack of basis and authority in
laws.
18. CEBU OXYGEN & ACETYLENE CO., INC. VS. BERCILLES (GR NO.
L-40474)
Facts:
In 1968, a terminal portion of a street in Cebu was excluded in the citys
development plan hence the council declared it as abandoned and was
subsequently opened for public bidding. Cebu Oxygen was the highest
bidder @P10,800.00. Cebu Oxygen applied for the lands registration before
CFI Cebu but the provincial fiscal denied it, so did the court later, alleging
that the road is part of the public domain hence beyond the commerce of
man.

Issue:
Whether or not Cebu Oxygen can validly own said land.
Held:
Yes. Under Cebus Charter (RA 3857), the city council may close any city
road, street or alley, boulevard, avenue, park or square. Property thus
withdrawn from public servitude may be used or conveyed for any purpose
for which other real property belonging to the City may be lawfully used or
conveyed. Since that portion of the city street subject of Cebu Oxygens
application for registration of title was withdrawn from public use, it follows
that such withdrawn portion becomes patrimonial property which can be the
object of an ordinary contract.
Article 422 of the Civil Code expressly provides that Property of public
dominion, when no longer intended for public use or for public service, shall
form part of the patrimonial property of the State.
19. LAUREL VS. GARCIA (GR NO. 92013)
Facts:
The subject property in this case is one of the four (4) properties in Japan
acquired by the Philippine government under the Reparations Agreement
entered into with Japan on May 9, 1956;
The properties and the capital goods and services procured from the
Japanese government for national development projects are part of the
indemnification to the Filipino people for their losses in life and property and
their suffering during World War II.
The Roponggi property consists of the land and building "for the Chancery of
the Philippine Embassy". As intended, it became the site of the Philippine
Embassy until the latter was transferred to Nampeidai on July 22, 1976
when the Roppongi building needed major repairs. Due to the failure of our
government to provide necessary funds, the Roppongi property has
remained undeveloped since that time.

A proposal was presented to President Corazon C. Aquino by former
Philippine Ambassador to Japan, Carlos J. Valdez, to make the property the
subject of a lease agreement with a Japanese firm Kajima. At the end of
the lease period, all the three leased buildings shall be occupied and used by
the Philippine government. No change of ownership or title shall occur. The
Philippine government retains the title all throughout the lease period and
thereafter. However, the government has not acted favorably on this
proposal which is pending approval and ratification between the parties. On
August 11, 1986, President Aquino created a committee to study the
disposition/utilization of Philippine government properties in Tokyo and Kobe,
Japan.
On July 25, 1987, the President issued Executive Order No. 296 entitling
non-Filipino citizens or entities to avail of reparations' capital goods and
services in the event of sale, lease or disposition. The four properties in
Japan including the Roppongi were specifically mentioned in the first
"Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the
government has been pushing, with great vigor, its decision to sell the
reparations properties starting with the Roppongi lot.
Issue:
WON the subject property can be alienated
Held:
The Roppongi site and the three related properties were acquired through
reparations agreements and the Poppongi site was specifically designated
under the Reparations Agreement to house the Philippine Embassy. The
nature of the Roppongi lot as property for public service is expressly spelled
out. It is dictated by the terms of the Reparations Agreement and the
corresponding contract of procurement which bind both the Philippine
government and the Japanese government. There can be no doubt that it is
of public dominion unless it is convincingly shown that the property has
become patrimonial.

As property of public dominion, the Roppongi lot is outside the commerce
of man. It cannot be alienated. Its ownership is a special collective
ownership for general use and enjoyment, an application to the satisfaction
of collective needs, and resides in the social group. The applicable provisions
of the Civil Code are:
"ART. 419.Property is either of public dominion or of private ownership.
"ART. 420.The following things are property of public dominion:
"(1)Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores, roadsteads, and
others of similar character;
(2)Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.
"ART. 421.All other property of the State, which is not of the character stated
in the preceding article, is patrimonial property."
The Roppongi property is correctly classified under paragraph 2 of Article
420 of the Civil Code as property belonging to the State and intended for
some public service. The fact that the Roppongi site has not been used for a
long time for actual Embassy service does not automatically convert it to
patrimonial property. Any such conversion happens only if the property is
withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66
SCRA 481 [1975]). A property continues to be part of the public domain, not
available for private appropriation or ownership "until there is a formal
declaration on the part of the government to withdraw it from being such
(Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public
officials insinuating a change of intention. We emphasize, however, that an
abandonment of the intention to use the Roppongi property for public
service and to make it patrimonial property under Article 422 of the Civil
Code must be definite. Abandonment cannot be inferred from the non-use
alone specially if the non-use was attributable not to the government's own
deliberate and indubitable will but to a lack of financial support to repair and
improve the property (See Heirs of Felino Santiago v. Lazarao, 166 SCRA 368
[1988]). Abandonment must be a certain and positive act based on correct
legal premises.
20. MANILA INTERNATIONAL AIRPORT AUTHORITY VS. COURT OF
APPEALS, ET. AL. (GR NO. 155650)
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy
Aquino International Airport (NAIA) Complex in Paraaque City under
Executive Order No. 903, otherwise known as the Revised Charter of the
Manila International Airport Authority ("MIAA Charter"). Executive Order No.
903 was issued on 21 July 1983 by then President Ferdinand E. Marcos.
Subsequently, Executive Order Nos. 909 1 and 298 2 amended the MIAA
Charter.
As operator of the international airport, MIAA administers the land,
improvements and equipment within the NAIA Complex. The MIAA Charter
transferred to MIAA approximately 600 hectares of land, 3 including the
runways and buildings ("Airport Lands and Buildings") then under the
Bureau of Air Transportation. 4 The MIAA Charter further provides that no
portion of the land transferred to MIAA shall be disposed of through sale or
any other mode unless specifically approved by the President of the
Philippines. 5
On 21 March 1997, the Office of the Government Corporate Counsel (OGCC)
issued Opinion No. 061. The OGCC opined that the Local Government Code
of 1991 withdrew the exemption from real estate tax granted to MIAA under
Section 21 of the MIAA Charter. Thus, MIAA negotiated with respondent City
of Paraaque to pay the real estate tax imposed by the City. MIAA then paid
some of the real estate tax already due.
On 28 June 2001, MIAA received Final Notices of Real Estate Tax
Delinquency from the City of Paraaque for the taxable years 1992 to 2001.
On 17 July 2001, the City of Paraaque, through its City Treasurer, issued
notices of levy and warrants of levy on the Airport Lands and Buildings. The
Mayor of the City of Paraaque threatened to sell at public auction the
Airport Lands and Buildings should MIAA fail to pay the real estate tax
delinquency. MIAA thus sought a clarification of OGCC Opinion No. 061.

On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC
Opinion No. 061. The OGCC pointed out that Section 206 of the Local
Government Code requires persons exempt from real estate tax to show
proof of exemption. The OGCC opined that Section 21 of the MIAA Charter is
the proof that MIAA is exempt from real estate tax.
MIAA admits that the MIAA Charter has placed the title to the Airport Lands
and Buildings in the name of MIAA. However, MIAA points out that it cannot
claim ownership over these properties since the real owner of the Airport
Lands and Buildings is the Republic of the Philippines. The MIAA Charter
mandates MIAA to devote the Airport Lands and Buildings
for the benefit of the general public. Since the Airport Lands and Buildings
are devoted to public use and public service, the ownership of these
properties remains with the State. The Airport Lands and Buildings are thus
inalienable and are not subject to real estate tax by local governments.
MIAA also points out that Section 21 of the MIAA Charter specifically
exempts MIAA from the payment of real estate tax. MIAA insists that it is
also exempt from real estate tax under Section 234 of the Local Government
Code because the Airport Lands and Buildings are owned by the Republic. To
justify the exemption, MIAA invokes the principle that the government
cannot tax itself. MIAA points out that the reason for tax exemption of public
property is that its taxation would not inure to any public advantage, since in
such a case the tax debtor is also the tax creditor.
Respondents invoke Section 193 of the Local Government Code, which
expressly withdrew the tax exemption privileges of "government-owned and-
controlled corporations" upon the effectivity of the Local Government Code.
Respondents also argue that a basic rule of statutory construction is that the
express mention of one person, thing, or act excludes all others. An
international airport is not among the exceptions mentioned in Section 193
of the Local Government Code. Thus, respondents assert that MIAA cannot
claim that the Airport Lands and Buildings are exempt from real estate tax.
Respondents also cite the ruling of this Court in Mactan International Airport
v. Marcos 8 where we held that the Local Government Code has withdrawn
the exemption from real estate tax granted to international airports.
Respondents further argue that since MIAA has already paid some of the
real estate tax assessments, it is now estopped from claiming that the
Airport Lands and Buildings are exempt from real estate tax.
ISSUE: Whether the Airport Lands and Buildings of MIAA are exempt from
real estate tax under existing laws. If so exempt, then the real estate tax
assessments issued by the City of Paraaque, and all proceedings taken
pursuant to such assessments, are void.
HELD: We rule that MIAA's Airport Lands and Buildings are exempt from real
estate tax imposed by local governments.
First, MIAA is not a government-owned or controlled corporation but an
instrumentality of the National Government and thus exempt from local
taxation. Second, the real properties of MIAA are owned by the Republic of
the Philippines and thus exempt from real estate tax.
1.MIAA is Not a Government-Owned or Controlled Corporation

Respondents argue that MIAA, being a government-owned or controlled
corporation, is not exempt from real estate tax. Respondents claim that the
deletion of the phrase "any government-owned or controlled so exempt by
its charter" in Section 234(e) of the Local Government Code withdrew the
real estate tax exemption of government-owned or controlled corporations.
The deleted phrase appeared in Section 40(a) of the 1974 Real Property Tax
Code enumerating the entities exempt from real estate tax.
There is no dispute that a government-owned or controlled corporation is
not exempt from real estate tax. However, MIAA is not a government-owned
or controlled corporation. Section 2(13) of the Introductory Provisions of the
Administrative Code of 1987 defines a government-owned or controlled
corporation as follows:
A government-owned or controlled corporation must be "organized as a
stock or non-stock corporation." MIAA is not organized as a stock or non-
stock corporation. MIAA is not a stock corporation because it has no capital
stock divided into shares. MIAA has no stockholders or voting shares
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not
qualify as a government-owned or controlled corporation. What then is the
legal status of MIAA within the National Government?
MIAA is a government instrumentality vested with corporate powers to
perform efficiently its governmental functions. MIAA is like any other
government instrumentality, the only difference is that MIAA is vested with
corporate powers. Section 2(10) of the Introductory Provisions of the
Administrative Code defines a government "instrumentality" as follows:
SEC. 2.General Terms Defined. . . .
(10)Instrumentality refers to any agency of the National Government, not
integrated within the department framework, vested with special functions
or jurisdiction by law, endowed with some if not all corporate powers,
administering special funds, and enjoying operational autonomy, usually
through a charter. . . . (Emphasis supplied)
A government instrumentality like MIAA falls under Section 133(o) of the

Local Government Code, which states:
SEC. 133.Common Limitations on the Taxing Powers of Local Government
Units. Unless otherwise provided herein, the exercise of the taxing powers
of provinces, cities, municipalities, and barangays shall not extend to the
levy of the following:
xxx xxx xxx
(o)Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities and local government units.
There is also no reason for local governments to tax national government
instrumentalities for rendering essential public services to inhabitants of local
governments. The only exception is when the legislature clearly intended to
tax government instrumentalities for the delivery of essential public services
for sound and compelling policy considerations. There must be express
language in the law empowering local governments to tax national
government instrumentalities. Any doubt whether such power exists is
resolved against local governments.

Thus, Section 133 of the Local Government Code states that "unless
otherwise provided" in the Code, local governments cannot tax national
government instrumentalities. As this Court held in Basco v. Philippine
Amusements and Gaming Corporation:
The states have no power by taxation or otherwise, to retard, impede,
burden or in any manner control the operation of constitutional laws enacted
by Congress to carry into execution the powers vested in the federal
government. (MC Culloch v. Maryland, 4 Wheat 316, 4 L Ed. 579)
2.Airport Lands and Buildings of MIAA are Owned by the Republic

a.Airport Lands and Buildings are of Public Dominion
The Airport Lands and Buildings of MIAA are property of public dominion and
therefore owned by the State or the Republic of the Philippines. The Civil
Code provides:
ARTICLE 419.Property is either of public dominion or of private ownership.
ARTICLE 420.The following things are property of public dominion:
(1)Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores, roadsteads, and
others of similar character;
wealth. (Emphasis supplied)
No one can dispute that properties of public dominion mentioned in Article
420 of the Civil Code, like "roads, canals, rivers, torrents, ports and bridges
constructed by the State," are owned by the State. The term "ports" includes
seaports and airports. The MIAA Airport Lands and Buildings constitute a
"port" constructed by the State. Under Article 420 of the Civil Code, the
MIAA Airport Lands and Buildings are properties of public dominion and thus
owned by the State or the Republic of the Philippines.
The Airport Lands and Buildings are devoted to public use because they are
used by the public for international and domestic travel and transportation.
The fact that the MIAA collects terminal fees and other charges from the
public does not remove the character of the Airport Lands and Buildings as
properties for public use. The operation by the government of a tollway does
not change the character of the road as one for public use. Someone must
pay for the maintenance of the road, either the public indirectly through the
taxes they pay the government, or only those among the public who actually
use the road through the toll fees they pay upon using the road. The tollway
system is even a more efficient and equitable manner of taxing the public for
the maintenance of public roads.
The Airport Lands and Buildings of MIAA, which its Charter calls the
"principal airport of the Philippines for both international and domestic air
traffic," 22 are properties of public dominion because they are intended for
public use. As properties of public dominion, they indisputably belong to the
State or the Republic of the Philippines.
b.Airport Lands and Buildings are Outside the Commerce of Man

The Airport Lands and Buildings of MIAA are devoted to public use and thus
are properties of public dominion. As properties of public dominion, the
Airport Lands and Buildings are outside the commerce of man.
The Court has also ruled that property of public dominion, being outside the
commerce of man, cannot be the subject of an auction sale. 25
Properties of public dominion, being for public use, are not subject to levy,
encumbrance or disposition through public or private sale. Any
encumbrance, levy on execution or auction sale of any property of public
dominion is void for being contrary to public policy. Essential public services
will stop if properties of public dominion are subject to encumbrances,
foreclosures and auction sale. This will happen if the City of Paraaque can
foreclose and compel the auction sale of the 600-hectare runway of the
MIAA for non-payment of real estate tax.
Before MIAA can encumber 26 the Airport Lands and Buildings, the President
must first withdraw from public use the Airport Lands and Buildings.
c.MIAA is a Mere Trustee of the Republic
MIAA is merely holding title to the Airport Lands and Buildings in trust for
the Republic. Section 48, Chapter 12, Book I of the Administrative Code

allows instrumentalities like MIAA to hold title to real properties owned by
the Republic, thus:
SEC. 48.Official Authorized to Convey Real Property. Whenever real
property of the Government is authorized by law to be conveyed, the deed
of conveyance shall be executed in behalf of the government by the
following:
(1)For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly
vested by law in another officer.
(2)For property belonging to the Republic of the Philippines but titled in the
name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)
In MIAA's case, its status as a mere trustee of the Airport Lands and
Buildings is clearer because even its executive head cannot sign the deed of
conveyance on behalf of the Republic. Only the President of the Republic can
sign such deed of conveyance. 28
The transfer of the Airport Lands and Buildings from the Bureau of Air
Transportation to MIAA was not meant to transfer beneficial ownership of
these assets from the Republic to MIAA. The purpose was merely to
reorganize a division in the Bureau of Air Transportation into a separate and
autonomous body. The Republic remains the beneficial owner of the Airport
Lands and Buildings. MIAA itself is owned solely by the Republic. No party
claims any ownership rights over MIAA's assets adverse to the Republic.
The MIAA Charter expressly provides that the Airport Lands and Buildings
"shall not be disposed through sale or through any other mode unless
specifically approved by the President of the Philippines." This only means
that the Republic retained the beneficial ownership of the Airport Lands and
Buildings because under Article 428 of the Civil Code, only the "owner has
the right to . . . dispose of a thing." Since MIAA cannot dispose of the Airport
Lands and Buildings, MIAA does not own the Airport Lands and Buildings.

e.Real Property Owned by the Republic is Not Taxable
Section 234(a) of the Local Government Code exempts from real estate tax
any "[r]eal property owned by the Republic of the Philippines." Section
234(a) provides:
SEC. 234.Exemptions from Real Property Tax. The following are exempted
from payment of the real property tax:
(a)Real property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof has been
granted, for consideration or otherwise, to a taxable person;
xxx xxx xxx. (Emphasis supplied)
This exemption should be read in relation with Section 133(o) of the same
Code, which prohibits local governments from imposing "[t]axes, fees or
charges of any kind on the National Government, its agencies and
instrumentalities . . . ."
3.Refutation of Arguments of Minority
The minority asserts that the MIAA is not exempt from real estate tax
because Section 193 of the Local Government Code of 1991 withdrew the
tax exemption of "all persons, whether natural or juridical" upon the
effectivity of the Code. Section 193 provides:
SEC. 193.Withdrawal of Tax Exemption Privileges Unless otherwise

provided in this Code, tax exemptions or incentives granted to, or presently
enjoyed by all persons, whether natural or juridical, including government-
owned or controlled corporations, except local water districts, cooperatives
duly registered under R.A. No. 6938, non-stock and non-profit hospitals and
educational institutions are hereby withdrawn upon effectivity of this Code.
(Emphasis supplied) ESacHC
The minority states that MIAA is indisputably a juridical person. The minority
argues that since the Local Government Code withdrew the tax exemption of
all juridical persons, then MIAA is not exempt from real estate tax. Thus, the
minority declares:
It is evident from the quoted provisions of the Local Government Code that
the withdrawn exemptions from realty tax cover not just GOCCs, but all
persons. To repeat, the provisions lay down the explicit proposition that the
withdrawal of realty tax exemption applies to all persons. The reference to or
the inclusion of GOCCs is only clarificatory or illustrative of the explicit
provision.
The term "All persons" encompasses the two classes of persons recognized
under our laws, natural and juridical persons. Obviously, MIAA is not a
natural person. Thus, the determinative test is not just whether MIAA is a
GOCC, but whether MIAA is a juridical person at all. (Emphasis and
underscoring in the original)
The minority's theory violates Section 133(o) of the Local Government Code
which expressly prohibits local governments from imposing any kind of tax
on national government instrumentalities. Section 133(o) does not
distinguish between national government instrumentalities with or without
juridical personalities. Where the law does not distinguish, courts should not
distinguish. Thus, Section 133(o) applies to all national government
instrumentalities, with or without juridical personalities. The determinative
test whether MIAA is exempt from local taxation is not whether MIAA is a
juridical person, but whether it is a national government instrumentality
under Section 133(o) of the Local Government Code. Section 133(o) is the
specific provision of law prohibiting local governments from imposing any
kind of tax on the national government, its agencies and instrumentalities.
The exception to the exemption in Section 234(a) is the only instance when
the national government, its agencies and instrumentalities are subject to
any kind of tax by local governments. The exception to the exemption
applies only to real estate tax and not to any other tax. The justification for
the exception to the exemption is that the real property, although owned by
the Republic, is not devoted to public use or public service but devoted to
the private gain of a taxable person.
----

To summarize, MIAA is not a government-owned or controlled corporation
under Section 2(13) of the Introductory Provisions of the Administrative
Code because it is not organized as a stock or non-stock corporation. Neither
is MIAA a government-owned or controlled corporation under Section 16,
Article XII of the 1987 Constitution because MIAA is not required to meet
the test of economic viability. MIAA is a government instrumentality vested
with corporate powers and performing essential public services pursuant to
Section 2(10) of the Introductory Provisions of the Administrative Code. As a
government instrumentality, MIAA is not subject to any kind of tax by local
governments under Section 133(o) of the Local Government Code. The
exception to the exemption in Section 234(a) does not apply to MIAA
because MIAA is not a taxable entity under the Local Government Code.
Such exception applies only if the beneficial use of real property owned by
the Republic is given to a taxable entity.
Finally, the Airport Lands and Buildings of MIAA are properties devoted to
public use and thus are properties of public dominion. Properties of public
dominion are owned by the State or the Republic. Article 420 of the Civil
Code provides:
Art. 420.The following things are property of public dominion:
(1)Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores, roadsteads,
andothers of similar character;
wealth. (Emphasis supplied)
The term "ports . . . constructed by the State" includes airports and
seaports. The Airport Lands and Buildings of MIAA are intended for public
use, and at the very least intended for public service. Whether intended for
public use or public service, the Airport Lands and Buildings are properties of
public dominion. As properties of public dominion, the Airport Lands and
Buildings are owned by the Republic and thus exempt from real estate tax
under Section 234(a) of the Local Government Code.

4.Conclusion
Under Section 2(10) and (13) of the Introductory Provisions of the
Administrative Code, which governs the legal relation and status of
government units, agencies and offices within the entire government
machinery, MIAA is a government instrumentality and not a government-
owned or controlled corporation. Under Section 133(o) of the Local
Government Code, MIAA as a government instrumentality is not a taxable
person because it is not subject to "[t]axes, fees or charges of any kind" by
local governments. The only exception is when MIAA leases its real property
to a "taxable person" as provided in Section 234(a) of the Local Government
Code, in which case the specific real property leased becomes subject to real
estate tax. Thus, only portions of the Airport Lands and Buildings leased to
taxable persons like private parties are subject to real estate tax by the City
of Paraaque.
Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA,
being devoted to public use, are properties of public dominion and thus
owned by the State or the Republic of the Philippines. Article 420 specifically
mentions "ports . . . constructed by the State," which includes public airports
and seaports, as properties of public dominion and owned by the Republic.
As properties of public dominion owned by the Republic, there is no doubt
whatsoever that the Airport Lands and Buildings are expressly exempt from
real estate tax under Section 234(a) of the Local Government Code. This
Court has also repeatedly ruled that properties of public dominion are not
subject to execution or foreclosure sale.
WHEREFORE, we GRANT the petition. We SET ASIDE the assailed
Resolutions of the Court of Appeals of 5 October 2001 and 27 September
2002 in CA-G.R. SP No. 66878. We DECLARE the Airport Lands and Buildings
of the Manila International Airport Authority EXEMPT from the real estate tax
imposed by the City of Paraaque. We declare VOID all the real estate tax
assessments, including the final notices of real estate tax delinquencies,
issued by the City of Paraaque on the Airport Lands and Buildings of the
Manila International Airport Authority, except for the portions that the Manila

International Airport Authority has leased to private parties. We also declare
VOID the assailed auction sale, and all its effects, of the Airport Lands and
Buildings of the Manila International Airport Authority
21. PHILIPPINE PORTS AUTHORITY VS. CITY OF ILOILO (GR NO.
109791)
Facts: Petitioner Philippine Ports Authority (PPA) is asking the court on
Petition for Review on Certiorari to set aside the ruling ordering it to pay real
property and business taxes to respondent City of Iloilo.
The City of Iloilo filed an action for recovery of sum of money against
PPA, seeking to collect real property taxes as well as business taxes,
computed from the last quarter of 1984 to the fourth quarter of 1988.
It was alleged that the PPA is engaged in the business of arrastre
services, stevedoring services, leasing of real estate, and a registered owner
of a wharehouse which is used in the operation of its business. From these,
PPA was alleged to be obligated to pay business taxes and real property
taxes.
The Regional Trial Court (RTC) of Iloilo held PPA liable for the
payment of real property taxes and for business taxes. However, it held that
the City of Iloilo may not collect business taxes on PPAs arrastre and
stevedoring services, as these form part of PPAs governmental functions.
The following issues were raised on appeal:
1. Whether or not the RTC erred in decreeing a property of public
dominion (port facility) as subject to realty taxes just because the mentioned
property is being administered by what it perceives to be a taxable
government corporation.
2. Whether or not the petitioner is subject to business taxes for
leasing to private entities real estate without considering that the petitioner
is not engaged in business.
The City countered by stating in its Comment that PPA changed its
theory of the case on appeal citing that the allegation regarding the subject
property as public dominion which was never raised during trial nor in its
memorandum filed with the lower court.

Issues: 1. Whether or not a party can change its theory of the case on
appeal.
2. Whether or not improvements introduced by PPA on public
properties are exempted from tax.
Held: As a rule, a party who deliberately adopts a certain theory upon which
the case is tried and decided by the lower court will not be permitted to
change theory on appeal. Points of law, theories, issues and arguments not
brought to the attention of the lower court need not be, and ordinarily will
not be, considered by a reviewing court, as these cannot be raised for the
first time at such late stage. However, there is an exception to the rule as
enunciated in Lianga Lumber Co. vs. Lianga Timber Co. Inc., 76 SCRA 197,
where the court said;
In the interest of justice and within the sound discretion of the
appellate court, a party may change theory on appeal only when the factual
bases thereof would not require presentation of any further evidence by the
adverse party in order to enable it to properly meet the issue raised in the
new theory.
But this exception is not applicable in this case. It must be
emphasized that the enumeration of properties of public dominion under
Article 420 of the New Civil Code specifically states ports constructed by
the State. Thus, in order to consider the port in this case as falling under the
said classification, the fact that the port was constructed by the State must
first be established by sufficient evidence. Here, there was no proof adduced
to establish that the port was constructed by the State, hence, the court
cannot just automatically conclude that the property is of public dominion.
It is also noted that the PPA failed to raise the issue of ownership
during the pre-trial. The pretrial is primarily intended to make certain that
all issues necessary to the disposition of the case are properly raised.
Consequently, the determination of issues at a pre-trial conference bars the
consideration of other questions on appeal. In the case at bar, the fact that
the issue of ownership is outside of what has been delimited during the pre-
trial further justifies the disallowance of PPAs new theory. Hence, PPA may
not be permitted to change its theory on appeal.
Granting that the petitioners present theory is allowed, the court still
found its contentions untenable. It must be stressed that what is being taxed
in the present case is PPAs warehouse, which, although located within the
port is distinct from the port itself.
Considering the warehouses separable nature as an improvement
upon the port, and the fact that it is not open for use by everyone and freely
accessible to the public, it is not part of the port as stated in Article 420 of
the Civil Code. In the same way that it was ruled that the exemption of
public property from taxation does not extend to improvements made
thereon by homesteaders or occupants at their own expense. Also, it was
held that the taxability of the warehouse in this case, it being a mere
improvement built on an alleged property of public dominion.
As regards the second issue raised by PPA regarding the lease of its
property to private persons, the Court ruled that its own admission that it
leases out to private persons for convenience and not necessarily as part of
its governmental function of administering port operations is an admission
that the act was a corporate power, which, is actually expressly stated as so
in its charter. Any income or profit generated by an entity, even of a
corporation organized without any intention of realizing profit in the conduct
of its activities, is subject to tax (CIR vs. CA, 329 SCRA 237). What matters
is the established fact that it leased out its building to private entities from
which it regularly earned substantial income. Thus, in the absence of any
proof of exemption therefrom, PPA is declared liable for the assessed
business taxes.
The petition is denied.
22. PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY VS. CA (GR
NO. 169836)
Facts: Petitioner is an instrumentality of government which was a recipient of
the lands and buildings of Iloilo Fishing Port Complex (IFPC) which was
reclaimed by the Ministry of Public Works and Highways. Portions of the IFPC
were leased by PFDA to private firms and individuals engaged in fish related
businesses. In 1988, the LGU of Iloilo taxed the entire IFPC with real
property tax, and delinquency amounted to P5M thus City of Iloilo auctioned
IFPC to satisfy such delinquency. Authority sought for tax exemption but was
rejected by the City assessor thus elevated the question to DOF which
favored the taxation but as to the auction the properties of PFDA should be
ones auctioned and not IFPC because it was owned by government. Office of
the Pres., RTC and CA affirmed such decisions but opined that IFPC may
then be sold at public auction to satisfy the delinquency.
Issues:
(1) Is PFDA liable to pay real property tax?
(2) Is IPFC a property of public dominion thus cannot be auctioned?
Held:
(1) PFDA is not a GOCC but an INSTRUMENTALITY of the government thus
generally EXEMPTED from payment of real property tax. PFDA is
characterized as not a Govt Owned and Controlled Corp. (GOCC) on the
basis of the MIAA vs. CA which stated that for one to be a GOCC two reqs
must concur: (1) that it has capital stock divided into shares, and (2) that it
is authorized to distribute dividends and allotments of surplus and profits to
its stockholders; which is absent in the case at bar. Pursuant to Sec. 133 (o)
of LGC, instrumentalities of the national government, like MIAA, are exempt
from local taxes. However, submits of an exception, Section 234 (a) of the
LGC, the Court ruled that when an instrumentality of the national
government grants to a taxable person the beneficial use of a real property
owned by the Republic, said instrumentality becomes liable to pay real
property tax. The Authority should be classified as an instrumentality of the
national government which is liable to pay taxes only with respect to the
portions of the property, the beneficial use of which were vested in private
entities. The real property tax assessments issued by the City of Iloilo should
be upheld only with respect to the portions leased to private persons.
(2) Yes, it cannot be auctioned in case PDF fails to pay real property tax due
them. Taking basis from Chavez vs. PEA, reclaimed lands are lands of public
domain and thus cannot be subject of sale , WITHOUT CONGRESSIONAL
authorization. SC said, In the same vein, the port built by the State in the
Iloilo fishing complex is a property of the public dominion and cannot
therefore be sold at public auction.
23. IDEALS VS. PSALM (GR NO. 192088)
24. WOODRIDGE SCHOOL, INC. ET. AL. VS. ARB CONSTRUCTION INC.
(GR NO. 157285)
Facts:
Javier, is the registered owner of the adjacent lot to that of Woodridge.
Respondent ARB Construction is the owner and developer of Soldiers Hills
Subdivision in Bacoor, Cavite, which is composed of four phases. Phase 1 of
the subdivision was already accessible from the Marcos Alvarez Avenue. To
provide the same accessibility to the residents of Phase II of the subdivision,
ARB constructed the disputed road to link the two phases.
Petitioners properties sit right in the middle of several estates: Phase 1 of
Soldiers Hills Subdivision in the north, a creek in the east and Green Valley
Subdivision in the farther east, a road within Soldiers Hills Subdivision IV
which leads to the Marcos Alvarez Avenue in the west, and Phase III of
Soldiers Hills Subdivision in the south. Petitioners offered to pay ARB
P50,000 as indemnity for the use of the road. ARB refused the offer and
fenced the perimeter of the road fronting the properties of petitioners, thus,
cutting off petitioners access to and from the public highway.
After failing to settle the matter amicably, petitioners jointly filed a
complaint in the RTC to enjoin ARB from depriving them of the use of the
disputed subdivision road and to seek a compulsory right of way after
payment of proper indemnity. The RTC rendered its decision in favor of
petitioners relying on the ruling of the Supreme Court in White Plains
Association, Inc. vs. Legaspi (193 SCRA 765) stating that the government
automatically becomes the owner of the subdivisions roads the moment the
subdivision plan is approved, and thus is open to public use without any
need for compensation.
Respondent ARB elevated the case to the Court of Appeals. The appellate
court reversed the Trial Courts decision and stating that the ruling of the
Supreme Court in the 1991 case of White Plains Subdivision is not applicable
as it was not similarly situated as in the present case. However the appellate
court went on to rule that a compulsory right of way exists in favor of
petitioners as there is no other existing adequate outlet to and from
petitioners properties to the Marcos Alvarez Avenue other than the subject
existing road lot belonging to ARB. In addition, it awarded P500,000 to ARB
as compensation for the wear and tear that petitioners use of the road
would contribute to.
Unsatisfied with the ruling of the appellate court, petitioners elevated the
matter to the Supreme Court arguing that ARB is not entitled to be paid any
indemnity since the contested road lot is a property of public dominion
pursuant to Article 420 of the Civil Code because the disputed road falls
under the category of others of similar character which is the last clause of
Article 420 (1). Hence, it is a property of public dominion which can be used
by the general public without need for compensation. Petitioners also assert
that their initial offer of P50,000 should be sufficient compensation for the
right of way. Further, they should not be held accountable for the increase
in the value of the property since the delay was attributable to the stubborn
refusal of ARB to accept their offer.
Issues:
Whether the disputed road is a property of public dominion pursuant to the
last clause of Article 420 (1), and, as such, is not a valid subject for legal
easement.
Whether the offer of petitioners amounting to P50,000 is a sufficient

compensation for their use of the road.
Held:
With regard to the first issue, the Supreme Court says, no.
The Court held that the road lots in a private subdivision are private
property, hence, the local government should first acquire them by donation,
purchase, or expropriation, if they are to be utilized as a public road.
Otherwise, they remain to be private properties of the owner developer. The
use of the subdivision roads by the general public does not strip it of its
private character.
The road is not converted into public property by mere tolerance of the
subdivision owner of the public's passage through it. The local government
should first acquire them by donation, purchase, or expropriation, if they are
to be utilized as a public road. In the present case, since no donation has
been made in favor of any local government and the title to the road lot is
still registered in the name of ARB, the disputed property remains private.
With regard to the second issue, the Supreme Court again says, no.
In order to be entitled to a legal easement of right of way, the following
requisites must concur:
(1) the dominant estate is surrounded by other immovables and has no
adequate outlet to a public highway;
(2) payment of proper indemnity;
(3) The isolation was not due to acts of the proprietor of the dominant
estate and;
(4) the right of way claimed is at the point least prejudicial to the servient
estate.
In the present case, all of the requisites are present except for number two.
The appellate and trial courts found that the properties of petitioners are
enclosed by other estates without any adequate access to a public highway
except the subject road lot which leads to Marcos Alvarez Avenue. Although
it was shown that the shortest distance from the properties to the highway is
toward the east across a creek, this alternative route does not provide an
adequate outlet for the students of the proposed school. The Civil Code
categorically provides for the measure by which the proper indemnity may
be computed. Under Article 649, paragraph 2, it is stated:
Should this easement be established in such a manner that its use may be
continuous for all the needs of the dominant estate, establishing a
permanent passage, the indemnity shall consist of the value of the land
occupied and the amount of the damage caused to the servient estate.

Having settled the legal issues, the Supreme Court ordered the remand of
the case to the trial court for the reception of evidence and determination of
the limits of the property to be covered by the easement, the proper
indemnity to be paid and the respective contributions of petitioners. The
petition was PARTIALLY GRANTED.
25. THE CITY OF ANGELES, ET. AL. VS. COURT OF APPEALS (GR NO.
97882)
Facts:
Private Respondent, owner/developer of the Timog Park Subdivision in
Angeles City donated 51 parcels of land with an aggregate area of 50,676
sq. meters (more or less) with a condition that the said lots shall be devoted
and utilized solely for the site of the Angeles City Sports Center, excluding
cockfighting, where any change/modification in the basic design or concept
of the Sports Center must have prior written consent from the Donor. It was
also stipulated that any substantial breach of the foregoing provisos shall
entitle the DONOR to revoke or rescind this Deed of Donation, and in such
eventuality, the DONEE agrees to vacate and return the premises, together
with all improvements, to the DONOR peacefully without necessity of judicial
action.
Petitioners started the construction of a drug rehabilitation center which the
private respondent protested such action for being violative of the terms and
conditions of the donation.
Issue:
Whether a subdivision owner/developer is legally bound under Presidential
Decree No. 1216 to donate to the city or municipality the "open space"
allocated exclusively for parks, playground and recreational use.
Whether the donation by of the "open space" of its subdivision in favor of
petitioner City of Angeles may be revoked for alleged violation of the
Amended Deed of Donation.
Held:
A. Developer legally bound to donate open space
Sec. 31 of P.D. 957, after it has been amended, in its last paragraph:

o "Upon their completion . . ., the roads, alleys, sidewalks and playgrounds
shall be donated by the owner or developer to the city or municipality and it
shall be mandatory for the local government to accept; provided, however,
that the parks and playgrounds may be donated to the Homeowners
Association of the project with the consent of the city or municipality
concerned. . . ."
It is clear from the aforequoted amendment that it is no longer optional on
the part of the subdivision owner/developer to donate the open space for
parks and playgrounds; rather there is now a legal obligation to donate the
same. Although there is a proviso that the donation of the parks and
playgrounds may be made to the homeowners association of the project
with the consent of the city of municipality concerned, nonetheless, the
owner/developer is still obligated under the law to donate. Such option does
not change the mandatory character of the provision. The donation has to
be made regardless of which donee is picked by the owner/developer.
B. Impositions of Conditions in Donation of Open Space
The general law on donations does not prohibit the imposition of
conditions on a donation so long as the conditions are not illegal or
impossible. It further declares that such open space devoted to parks,
playgrounds and recreational areas are non-alienable public land and non-
buildable. However, there is no prohibition in either P.D. 957 or P.D. 1216
against imposing conditions on such donation.
We hold that any condition may be imposed in the donation, so long as the
same is not contrary to law, morals, good customs, public order or public
policy.
P.D. 1216 clearly requires that the 3.5% to 9% of the gross area allotted
for parks and playgrounds is "non-buildable", then the obvious question
arises whether or not such condition was validly imposed and is binding on
the donee. It is clear that the "non-buildable" character applies only to the
3.5% to 9% area set by law. If there is any excess land over and above the
3.5% to 9% required by the decree, which is also used or allocated for
parks, playgrounds and recreational purposes, it is obvious that such excess
area is not covered by the non-buildability restriction. In the instant case, if
there be an excess, then the donee would not be barred from developing
and operating a sports complex thereon, and the condition in the amended
deed would then be considered valid and binding.
The subdivision in question is a "medium-density or economic housing"
subdivision based on the sizes of the family lots donated in the amended
deed, 14 for which category the decree mandates that not less than 7% of
gross area be set aside. Since the donated land constitutes only a little more
than 5% of the gross area of the subdivision, which is less than the area
required to be allocated for non-buildable open space, therefore there is no
"excess land" to speak of. This then means that the condition to build a
sports complex on the donated land is contrary to law and should be
considered as not imposed.
C. Revocation of a Mandatory Donation Because of Non-compliance with

an illegal condition
There is no legal basis whatsoever to revoke the donation of the subject
open space and to return the donated land to private respondent. The
donated land should remain with the donee as the law clearly intended such
open spaces to be perpetually part of the public domain, non-alienable and
permanently devoted to public use as such parks, playgrounds or recreation
areas.
26. FRANCISCO CHAVEZ VS. PUBLIC ESTATES AUTHORITY (GR NO.
133250)
This is an original Petition for Mandamus with prayer for a writ of preliminary
injunction and a temporary restraining order. The petition seeks to compel
the Public Estates Authority ("PEA" for brevity) to disclose all facts on PEA's
then on-going renegotiations with Amari Coastal Bay and Development
Corporation ("AMARI" for brevity) to reclaim portions of Manila Bay. The
petition further seeks to enjoin PEA from signing a new agreement with
AMARI involving such reclamation.
On November 20, 1973, the government, through the Commissioner of
Public Highways, signed a contract with the Construction and Development
Corporation of the Philippines ("CDCP' for brevity) to reclaim certain
foreshore and offshore areas of Manila Bay. The contract also included the
construction of Phases I and II of the Manila-Cavite Coastal Road. CDCP
obligated itself to carry out all the works in consideration of fifty percent of
the total reclaimed land.
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for
brevity) with AMARI, a private corporation, to develop the Freedom Islands.
The JVA also required the reclamation of an additional 250 hectares of
submerged areas surrounding these islands to complete the configuration in
the Master Development Plan of the Southern Reclamation Project-MCCRRP.
PEA and AMARI entered into the JVA through negotiation without public
bidding. 4 On April 28, 1995, the Board of Directors of PEA, in its Resolution
No. 1245, confirmed the JVA. 5 On June 8, 1995, then President Fidel V.
Ramos, through then Executive Secretary Ruben Torres, approved the JVA. 6
On November 29, 1996, then Senate President Ernesto Maceda delivered a
privilege speech in the Senate and denounced the JVA as the "grandmother
of all scams." As a result, the Senate Committee on Government
Corporations and Public Enterprises, and the Committee on Accountability of
Public Officers and Investigations, conducted a joint investigation. The
Senate Committees reported the results of their investigation in Senate
Committee Report No. 560 dated September 16, 1997. 7 Among the
conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer
to AMARI under the JVA are lands of the public domain which the
government has not classified as alienable lands and therefore PEA cannot
alienate these lands; (2) the certificates of title covering the Freedom Islands
are thus void, and (3) the JVA itself is illegal.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential
Decree No. 1084 creating PEA. PD No. 1084 tasked PEA "to reclaim land,
including foreshore and submerged areas," and "to develop, improve,
acquire, . . . lease and sell any and all kinds of lands." 1 On the same date,
then President Marcos issued Presidential Decree No. 1085 transferring to
PEA the "lands reclaimed in the foreshore and offshore of the Manila Bay " 2
under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).

On December 29, 1981, then President Marcos issued a memorandum
directing PEA to amend its contract with CDCP, so that "[A]ll future works in
MCCRRP . . . shall be funded and owned by PEA." Accordingly, PEA and
CDCP executed a Memorandum of Agreement dated December 29, 1981.
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a
taxpayer, filed the instant Petition for Mandamus with Prayer for the
Issuance of a Writ of Preliminary Injunction and Temporary Restraining
Order. Petitioner assails the sale to AMARI of lands of the public domain as a
blatant violation of Section 3, Article XII of the 1987 Constitution prohibiting
the sale of alienable lands of the public domain to private corporations.
ISSUE: WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE
AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN LANDS,
RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987
CONSTITUTION
HELD: NULL & VOID
We can now summarize our conclusions as follows;
1.The 157.84 hectares of reclaimed lands comprising the Freedom Islands,
now covered by certificates of title in the name of PEA, are alienable lands of
the public domain. PEA may lease these lands to private corporations but
may not sell or transfer ownership of these lands to private corporations.
PEA may only sell these lands to Philippine citizens, subject to the ownership
limitations in the 1987 Constitution and existing laws.
2.The 592.15 hectares of submerged areas of Manila Bay remain inalienable
natural resources of the public domain until classified as alienable or
disposable lands open to disposition and declared no longer needed for
public service. The government can make such classification and declaration
only after PEA has reclaimed these submerged areas. Only then can these
lands qualify as agricultural lands of the public domain, which are the only
natural resources the government can alienate. In their present state, the
592.15 hectares of submerged areas are inalienable and outside the
commerce of man.

3.Since the Amended JVA seeks to transfer to AMARI, a private corporation,
ownership of 77.34 hectares of the Freedom Islands, such transfer is void for
being contrary to Section 3, Article XII of the 1987 Constitution which
prohibits private corporations from acquiring any kind of alienable land of
the public domain.
4.Since the Amended JVA also seeks to transfer to AMARI ownership of
290.156 hectares 111 of still submerged areas of Manila Bay, such transfer is
void for being contrary to Section 2, Article XII of the 1987 Constitution
which prohibits the alienation of natural resources other than agricultural
lands of the public domain. PEA may reclaim these submerged areas.
Thereafter, the government can classify the reclaimed lands as alienable or
disposable, and further declare them no longer needed for public service.
Still, the transfer of such reclaimed alienable lands of the public domain to
AMARI will be void in view of Section 3, Article XII of the 1987 Constitution
which prohibits private corporations from acquiring any kind of alienable land
of the public domain.
Clearly the Amended JVA violates glaringly Sections 2 and 3, Article XII of
the 1987 Constitution. under Article 1409 112 of the Civil Code, contracts
whose "object or purpose is contrary to law," or whose "object is outside the
commerce of men," are "inexistent and void from the beginning." The Court
must perform its duty to defend and uphold the Constitution, and therefore
declares the Amended JVA null and void ab initio.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and
Amari Coastal Bay Development Corporation are PERMANENTLY ENJOINED
from implementing the Amended Joint Venture Agreement which is hereby
declared NULL and VOID ab initio.
27. FRANCISCO CHAVEZ VS. NATIONAL HOUSING AUTHORITY (GR NO.
164527)
Facts: Petitioner Francisco Chavez in his capacity as taxpayer seeks to
declare null and void the Joint Venture Agreement (JVA) between the NHA
and R-II Builders Inc (RBI) for being unconstitutional and invalid, and to
enjoin respondents particularly respondent NHA from implementing and/

or enforcing the said project and other agreements related thereto. On
March 1, 1988, then President Corazon C. Aquino issued Memorandum Order
No. 161 (MO 161) approving and directing the implementation of the
Comprehensive and Integrated Metropolitan Manila Waste Management
Plan. Specifically, respondent NHA was ordered to conduct feasibility studies
and develop low-cost housing projects at the dumpsite and absorb
scavengers in NHA resettlement/low-cost housing projects.
Pursuant to MO 161-A, NHA prepared the feasibility studies which
resulted in the formulation of the Smokey Mountain Development Plan and
Reclamation of the Area Across R-10 or the Smokey Mountain Development
and Reclamation Project (SMDRP). SMDRP aimed to convert the Smokey
Mountain dumpsite into a habitable housing project, inclusive of the
reclamation of the area across R-10, adjacent to the Smokey Mountain as
the enabling component of the project. Once finalized, the Plan was
submitted to President Aquino for her approval.
On January 17, 1992, President Aquino proclaimed MO 415,
approving and directing the implementation of the SMDRP through a private
sector joint venture. Said MO stipulated that the land area covered by the
Smokey Mountain dumpsite is conveyed to the NHA as well as the area to be
reclaimed across R-10. In the same MO 415, President Aquino created an
Executive Committee (EXECOM) to oversee the implementation of the Plan
and an inter-agency technical committee (TECHCOM) was created composed
of the technical representatives of the EXECOM. Based on the evaluation of
the pre-qualification documents, the EXECOM declared the New San Jose
Builders, Inc. and RBI as top two contractors. Thereafter, TECHCOM
submitted its recommendation to the EXECOM to approve the RBI proposal
which garnered the highest score.
On October 7, 1992, President Ramos authorized NHA to enter into a
JVA with RBI. Afterwards, President Ramos issued Proclamation No. 465
increasing the proposed area for reclamation across R-10 from 40 hectares
to 79 hectares. On September 1, 1994, pursuant to Proclamation No. 39, the
DENR issued Special Patent No. 3591 conveying in favor of NHA an area of
211,975 square meters covering the Smokey Mountain Dumpsite. The land

reclamation was completed in August 1996. Sometime later in 1996,
pursuant likewise to Proclamation No. 39, the DENR issued Special Patent
No. 3598 conveying in favor of NHA an additional 390,000 square meter
area. After some time, the JVA was terminated. RBI demanded the payment
of just compensation for all accomplishments and costs incurred in
developing the SMDRP plus a reasonable rate of return. In a Memorandum
of Agreement (MOA) executed by NHA and RBI, both parties agreed to
terminate the JVA and other subsequent agreements, which stipulated,
among others, that unpaid balance may be paid in cash, bonds or through
the conveyance of properties or any combination thereof.
Issues:
1. Whether RBI can acquire reclaimed foreshore and submerged land
areas because they are allegedly inalienable lands of the public domain
2. Whether RBI can acquire reclaimed lands when there was no
declaration that said lands are no longer needed for public use.
3. Whether RBI, being a private corporation, is barred from the
Constitution to acquire lands of the public domain.
Held:
1. Yes. The reclaimed lands across R-10 were classified alienable and
disposable lands of public domain of the State. First, there were three
presidential proclamations classifying the reclaimed lands across R-10 as
alienable or disposable hence open to disposition or concession. These were
MO 415 issued by President Aquino, Proclamation No. 39 and Proclamation
No. 465 both issued by President Ramos. Secondly, Special Patents Nos.
3591, 3592, and 3598 issued by the DENR classified the reclaimed areas as
alienable and disposable.
Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and
465 are explicit declarations that the lands to be reclaimed are classified as
alienable and disposable. We find however that such conclusion is derived
and implicit from the authority given to the NHA to transfer the reclaimed
lands to qualified beneficiaries. In line with the ruling in Chavez v. PEA, the
court held that MO 415 and Proclamations Nos. 39 and 465 cumulatively and
jointly taken together with Special Patent Nos. 3591, 3592, and 3598 more
than satisfy the requirement in PEA that [t]here must be a law or
presidential proclamation officially classifying these reclaimed lands as
alienable or disposable and open to disposition or concession.
2. Yes. Even if it is conceded that there was no explicit declaration that

the lands are no longer needed for public use or public service, there was
however an implicit executive declaration that the reclaimed areas R-10 are
not necessary anymore for public use or public service. President Aquino
through MO 415 conveyed the same to the NHA partly for housing project
and related commercial/industrial development intended for disposition to
and enjoyment of certain beneficiaries and not the public in general and
partly as enabling component to finance the project. Also, President Ramos,
in issuing Proclamation No. 39, declared, though indirectly, that the
reclaimed lands of the Smokey Mountain project are no longer required for
public use or service. In addition, President Ramos issued Proclamation No.
465 increasing the area to be reclaimed from forty (40) hectares to seventy-
nine (79) hectares, elucidating that said lands are undoubtedly set aside for
the beneficiaries of SMDRP and not the public. MO 415 and Proclamations
Nos. 39 and 465 are declarations that proclaimed the non-use of the
reclaimed areas for public use or service as the SMDRP cannot be
successfully implemented without the withdrawal of said lands from public
use or service.
3. Yes. When Proclamations Nos. 39 and 465 were issued, inalienable

lands covered by said proclamations were converted to alienable and
disposable lands of public domain. When the titles to the reclaimed lands
were transferred to the NHA, said alienable and disposable lands of public
domain were automatically classified as lands of the private domain or
patrimonial properties of the State because the NHA is an agency NOT
tasked to dispose of alienable or disposable lands of public domain. The only
way it can transfer the reclaimed land in conjunction with its projects and to

attain its goals is when it is automatically converted to patrimonial properties
of the State. Being patrimonial or private properties of the State, then it has
the power to sell the same to any qualified personunder the Constitution,
Filipino citizens as private corporations, 60% of which is owned by Filipino
citizens like RBI.
28. ESTATE OF YUJUICO VS. REPUBLIC (GR NO. 168661)
Facts: Land in question was originally owned by a certain Fermina Castro
which she sought to register on 1973 which was opposed by the OSG but
was then dismissed and as such attaining finality (Dir. Of lands did not
appeal) then an OCT was subsequently issued in Castros favor. The said
land was then sold to Jesus Yujuico which then was subdivided into two, one
for him and the other portion sold to a certain Carpio (also petitioner in said
case). Sometime in 1997, Pub. Estates Authority (PEA) was established for
reclamation purposes and then was tasked to create the Manila Coastal
Road. Both Y and C discovered that in the plan, it overlapped their land and
a portion of their lands were sold by PEA to Manila Bay Dev Corp (MDBC). Y
and C filed a petition for quieting title with damages but in 1998, parties
entered into a Compromise Agreement approved by the RTC. A deed of
exchange of property transpired where a 1.4 has of PEA land will be
conveyed to Y and C in exchange for a combined property of 1.7 has.
Subsequently, a new PEA GM was appointed, such held in abeyance the
compromise agreement which led to the filing of a petition for relief which
reached the SC, however was dismissed for being filed out of time. In 2001,
however, the OSG filed a petition for annulment and cancellation was filed
claiming that the land surveyed for Fermina Castro in 1973 was part of the
Manila Bay thus claiming further that Castro had no registrable rights on said
land because it forms part of public dominion. RTC held that action was
barred by res judicata however, it was overturned by the CA claiming that
res judicata does not apply to lands of Public Domain.
Issue: WON Equitable Estoppel applies in said case?
Held: Yes. GR is that Estoppel does not operate against the state, certain
deviation has been allowed citing the case of Manila Lodge No. 761 vs. CA
where it stated: Nevertheless, the government must not be allowed to deal
dishonorably or capriciously with its citizens, and must not play an ignoble
part or do a shabby thing; and subject to limitations, the doctrine of
equitable estoppel may be invoked against public authorities as well as
against private individuals. SC said EE may be invoked against public
authorities when said land was already alienated to innocent purchasers of
value. Not only was the land barred by estoppel but by laches as well
because Yujuico acquired the land from Castro in 1974 or more than 27
years have lapsed until the case for reversion was filed in 2001. Another law
cited is Sec. 32 of PD 1529 which recognizes the rights of innocent
purchasers for value, it states but in no case shall such petition be
entertained by the court where an innocent purchaser for value has acquired
the land or an interest therein, whose rights may be prejudiced. According
to SC, Yujuico relied on the clean title of Castro and acquired it through good
faith and for value, and there was no showing that he acquired such
fraudulently. Thus, he should be protected under the Torrens system as well
as subsequent buyer Carpio. Aside from such grounds, SC relied on the
grounds of res judicata and Laches. On RJ, a similar case existed thus
applying Doctrine of Precedent plus by virtue of the Comp Agreement govt
recognized ownership of Yujuico of said disputed land. On laches, 27 years.
29. LAND BANK OF THE PHILIPPINES VS. REPUBLIC (GR NO. 150824)
FACTS:
On September 26, 1969, Angelito C. Bugayong was issued OCT No. P-2823,
which emanated from Sales Patent No. 4576 issued on September 22, 1969.
It covered a parcel of land located in Bocana, Kabacan, Davao City, with an
area of 41,276 square meters. It was originally surveyed as Lot No. 4159
and identified as marshy and under water during high tide and that it used
to be a portion of a dry river bed near the mouth of Davao River.
The land was initially subdivided into four lots under Subdivision Plan (LRC)
Psd-139511 approved by the Commissioner of Land Registration on April 23,
1971, as follows: Lot Nos. 4159-A, 4159-B, 4159-C and 4159-D.
Consequently, OCT No. P-2823 was cancelled and new Transfer Certificates
of Title (TCTs) replaced it, all in the name of Bugayong. All four lots were
then sold by Bugayong to different persons. Lot No. 4159-A, which was then
under TCT No. T-32769, was sold to spouses Lourdes and Candido Du. The
said TCT was then cancelled and replaced by TCT No. T-42166 in the name
of spouses Du.
Afterwards, the spouses Du further caused the subdivision of their land into
two lots. They sold one of said lots to spouses Felix and Guadalupe Dayola,
who were issued TCT No. T-45586. The other remaining lot, registered
under TCT No. T-45587, was retained by and registered in the names of
spouses Du. Subsequently, Du spouses' TCT No. T-45587 was cancelled and
was replaced by TCT No. T-57348 registered in the name of Lourdes Farms,
Inc., who subsequently mortgaged the property to petitioner LBP on April
14, 1980.
The validity of OCT No. P-2823, as well as its derivative TCTs, remained
undisturbed until some residents of the land it covered filed a formal petition
before the Bureau of Lands on July 15, 1981. Investigation and ocular
inspection were conducted by the Bureau of Lands to check the legitimacy of
OCT No. P-2823. It was found out that: (1) at the time Sales Patent No.
4576 was issued to Bugayong, the land it covered was still within the forest
zone, classified under Project No. 1, LC-47 dated August 6, 1923; it was
released as alienable and disposable land only on March 25, 1981, pursuant
to BFD Administrative Order No. 4-1585 and to the provisions of Section 13,
Presidential Decree (P.D.) No. 705; (2) the land was marshy and covered by
sea water during high tide; and (3) Bugayong was never in actual possession
of the land. Considering such findings, the Bureau of Lands resolved that the
sales patent in favor of Bugayong was improperly and illegally issued and
that the Director of Lands had no jurisdiction to dispose of the subject land.
Upon recommendation of the Bureau of Lands, the Republic of the
Philippines represented by the Director of Lands, through the Office of the
Solicitor General (OSG), instituted a complaint before the RTC in Davao,
Branch 15, for the cancellation of title/patent and reversion of the land
covered by OCT No. P-2823 into the mass of public domain. Such complaint
was filed against Bugayong and the other present owners and mortgagees
of the land, such as Lourdes Farms, Inc. and the latter's mortgagee,
petitioner LBP.
The RTC then rendered a decision, which was affirmed by the CA, declaring
OCT No. P-2823 as well as its derivative transfer certificate of titles as null
and void.
ISSUE(S):
Whether or not the CA erred in not finding the petitioner a mortgagee in
good faith and for value.
RULING:
The contention that LBP has an interest over the subject land as a
mortgagee has no merit. The mortgagor, Lourdes Farms, Inc. from which
LBP supposedly obtained its alleged interest has never been the owner of
the mortgaged land. Acquisition of the subject land by Lourdes Farms, Inc. is
legally impossible as the land was released as alienable and disposable only
on March 25, 1981. Even at present, no one could have possessed the same
under a claim of ownership for the period of thirty (30) years required under
Section 48 (b) of Commonwealth Act No. 141, as amended. Hence, LBP
acquired no rights over the land.
Under Article 2085 of the Civil Code, it is essential that the mortgagor be the
absolute owner of the thing mortgaged. Since Lourdes Farms, Inc. is not the
owner of the land, it does not have the capacity to mortgage it to LBP.
Even assuming that LBP was able to obtain its own TCT over the property by
means of its mortgage contract with Lourdes Farms, Inc., the title must also
be cancelled as it was derived from OCT No. P-2823 which was not validly
issued to Bugayong. Forest lands cannot be owned by private persons. It is
not registerable whether the title is a Spanish title or a Torrens title. 46 It is
well settled that a certificate of title is void when it covers property of public
domain classified as forest or timber or mineral land. Any title issued
covering non-disposable lots even in the hands of an alleged innocent
purchaser for value shall be cancelled.
Further, the same issue was already addressed by the Court in its Resolution
of November 14, 2001 on the petition filed by the Philippine National Bank
(PNB) in G.R. No. 149568 entitled Philippine National Bank v. Republic of the
Philippines represented by the Director of Lands. In this case, PNB is also a
mortgagee of another derivative TCT of the same OCT No. 2823. The Court
in this case held that the petitioner does not dispute that its predecessor-in-
interest, Angelito C. Bugayong, had the subject property registered in his
name when it was forest land. Indeed, even if the subject property had been
eventually segregated from the forest zone, neither petitioner nor its
predecessors-in-interest could have possessed the same under claim of
ownership for the requisite period of thirty (30) years because it was
released as alienable and disposable only on March 25, 1981. The Court also
rejected the petitioners contention that respondents action for reversion is
barred by prescription for having been filed nearly two decades after the
issuance of Bugayong's sales patent. It was held that prescription does not
lie against the State for reversion of property which is part of the public
forest or of a forest reservation registered in favor of any party. Public land
registered under the Land Registration Act may be recovered by the State at
any time.
Contrary to the argument of LBP, since the title is void, it could not have
become incontrovertible. Even prescription may not be used as a defense
against the Republic. On this aspect, the Court in Reyes v. Court of Appeals,
citing Republic v. Court of Appeals, held that: Petitioners' contention that
the government is now estopped from questioning the validity of OCT No.
727 issued to them, considering that it took the government 45 years to
assail the same, is erroneous. We have ruled in a host of cases that
prescription does not run against the government. In point is the case of
Republic v. Court of Appeals, wherein we declared that in so far as the
timeliness of the action of the Government is concerned, it is basic that
prescription does not run against the State. xxx xxx xxx When the
government is the real party in interest, and is proceeding mainly to assert
its own rights and recover its own property, there can be no defense on the
ground of laches or limitation. xxx xxx xxx Public land fraudulently included
in patents or certificates of title may be recovered or reverted to the State in
accordance with Section 101 of the Public Land Act. Prescription does not lie
against the State in such cases for the Statute of Limitations does not run

against the State. The right of reversion or reconveyance to the State is not
barred by prescription.
Moreover, the constitutional guarantee of non-impairment of contracts may
not likewise be used by LBP to validate its interest over the land as
mortgagee. The State's restraint upon the right to have an interest or
ownership over forest lands does not violate the constitutional guarantee of
non-impairment of contracts. Said restraint is a valid exercise of the police
power of the State.
30. HEIRS OF MARIO MALABANAN VS. REPUBLIC (GR NO. 179987)
Facts:
On 20 February 1998, Mario Malabanan filed an application for land
registration before the RTC of Cavite-Tagaytay, covering a parcel of land
situated in Silang Cavite, consisting of 71,324 square meters. Malabanan
claimed that he had purchased the property from Eduardo Velazco, and that
he and his predecessors-in-interest had been in open, notorious, and
continuous adverse and peaceful possession of the land for more than thirty
(30) years. Velazco testified that the property was originally belonged to a
twenty-two hectare property owned by his great-grandfather, Lino Velazco.
Lino had four sons Benedicto, Gregorio, Eduardo and Estebanthe fourth
being Aristedess grandfather. Upon Linos death, his four sons inherited the
property and divided it among themselves. But by 1966, Estebans wife,
Magdalena, had become the administrator of all the properties inherited by
the Velazco sons from their father, Lino. After the death of Esteban and
Magdalena, their son Virgilio succeeded them in administering the
properties, including Lot 9864-A, which originally belonged to his uncle,
Eduardo Velazco. It was this property that was sold by Eduardo Velazco to
Malabanan.
Among the evidence presented by Malabanan during trial was a Certification
dated June 11, 2001, issued by the Community Environment & Natural
Resources Office, Department of Environment and Natural Resources
(CENRO-DENR), which stated that the subject property was verified to be
within the Alienable or Disposable land per Land Classification Map No. 3013
established under Project No. 20-A and approved as such under FAO 4-1656
on March 15, 1982. On 3 December 2002, the RTC approved the application
for registration.
The Republic interposed an appeal to the Court of Appeals, arguing that
Malabanan had failed to prove that the property belonged to the alienable
and disposable land of the public domain, and that the RTC had erred in
finding that he had been in possession of the property in the manner and for
the length of time required by law for confirmation of imperfect title. On 23
February 2007, the Court of Appeals reversed the RTC ruling and dismissed
the appliocation of Malabanan.
Issues:
1. In order that an alienable and disposable land of the public domain
may be registered under Section 14(1) of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree, should the land be
classified as alienable and disposable as of June 12, 1945 or is it sufficient
that such classification occur at any time prior to the filing of the applicant
for registration provided that it is established that the applicant has been in
open, continuous, exclusive and notorious possession of the land under a
bona fide claim of ownership since June 12,1945 or earlier?
2. For purposes of Section 14(2) of the Property Registration Decree may a

parcel of land classified as alienable and disposable be deemed private land
and therefore susceptible to acquisition by prescription in accordance with
the Civil Code?
Held:
The Petition is denied.
1.) In connection with Section 14(1) of the Property Registration Decree,

Section 48(b) of the Public Land Act recognizes and confirms that those

who by themselves or through their predecessors in interest have been in
open, continuous, exclusive, and notorious possession and occupation of
alienable and disposable lands of the public domain, under a bona fide claim
of acquisition of ownership, since June 12, 1945 have acquired ownership
of, and registrable title to, such lands based on the length and quality of
their possession.
(a) Since Section 48(b) merely requires possession since 12
June 1945 and does not require that the lands should have been alienable
and disposable during the entire period of possession, the possessor is
entitled to secure judicial confirmation of his title thereto as soon as it is
declared alienable and disposable, subject to the timeframe imposed by
Section 47 of the Public Land Act.
(b) The right to register granted under Section 48(b) of the
Public Land Act is further confirmed by Section 14(1) of the Property
Registration Decree.
2.) In complying with Section 14(2) of the Property Registration Decree,

consider that under the Civil Code, prescription is recognized as a mode of
acquiring ownership of patrimonial property. However, public domain lands
become only patrimonial property not only with a declaration that these are
alienable or disposable. There must also be an express government
manifestation that the property is already patrimonial or no longer retained
for public service or the development of national wealth, under Article 422 of
the Civil Code. And only when the property has become patrimonial can the
prescriptive period for the acquisition of property of the public dominion
begin to run.
(a) Patrimonial property is private property of the government.
The person acquires ownership of patrimonial property by prescription under
the Civil Code is entitled to secure registration thereof under Section 14(2) of
the Property Registration Decree.
(b) There are two kinds of prescription by which patrimonial
property may be acquired, one ordinary and other extraordinary. Under
ordinary acquisitive prescription, a person acquires ownership of a
patrimonial property through possession for at least ten (10) years, in good
faith and with just title. Under extraordinary acquisitive prescription, a
persons uninterrupted adverse possession of patrimonial property for at
least thirty (30) years, regardless of good faith or just title, ripens into
ownership.
It is clear that the evidence of petitioners is insufficient to establish that

Malabanan has acquired ownership over the subject property under Section
48(b) of the Public Land Act. There is no substantive evidence to establish
that Malabanan or petitioners as his predecessors-in-interest have been in
possession of the property since 12 June 1945 or earlier. The earliest that
petitioners can date back their possession, according to their own evidence
the Tax Declarations they presented in particularis to the year 1948.
Thus, they cannot avail themselves of registration under Section 14(1) of the
Property Registration Decree.
Neither can petitioners properly invoke Section 14(2) as basis for
registration. While the subject property was declared as alienable or
disposable in 1982, there is no competent evidence that is no longer
intended for public use service or for the development of the national
evidence, conformably with Article 422 of the Civil Code. The classification of
the subject property as alienable and disposable land of the public domain
does not change its status as property of the public dominion under Article
420(2) of the Civil Code. Thus, it is insusceptible to acquisition by
prescription.
31. DENR, ET. AL. VS. MAYOR YAP, ET. AL. (GR NO. 167707)
Facts:
On November 10, 1978, then President Marcos issued Proc. No. 1801
declaring Boracay Island, among other islands, caves and peninsulas in the
Philippines, as tourist zones and marine reserves under the administration of
the Philippine Tourism Authority (PTA). President Marcos later approved the
issuance of PTA Circular 3-82 dated September 3, 1982, to implement
Proclamation No. 1801.

Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded
them from filing an application for judicial confirmation of imperfect title or
survey of land for titling purposes, respondents-claimants Mayor . Yap, Jr.,
and others filed a petition for declaratory relief with the RTC in Kalibo,
Aklan.
In their petition, respondents-claimants alleged that Proc. No. 1801 and PTA
Circular No. 3-82 raised doubts on their right to secure titles over their
occupied lands. They declared that they themselves, or through their
predecessors-in-interest, had been in open, continuous, exclusive, and
notorious possession and occupation in Boracay since June 12, 1945, or
earlier since time immemorial. They declared their lands for tax purposes
and paid realty taxes on them. Respondents-claimants posited that
Proclamation No. 1801 and its implementing Circular did not place Boracay
beyond the commerce of man. Since the Island was classified as a tourist
zone, it was susceptible of private ownership. Under Section 48(b) of the
Public Land Act, they had the right to have the lots registered in their names
through judicial confirmation of imperfect titles.
The Republic, through the OSG, opposed the petition for declaratory relief.
The OSG countered that Boracay Island was an unclassified land of the
public domain. It formed part of the mass of lands classified as public
forest, which was not available for disposition pursuant to Section 3(a) of
the Revised Forestry Code, as amended. The OSG maintained that
respondents-claimants reliance on PD No. 1801 and PTA Circular No. 3-82
was misplaced. Their right to judicial confirmation of title was governed by
Public Land Act and Revised Forestry Code, as amended. Since Boracay
Island had not been classified as alienable and disposable, whatever
possession they had cannot ripen into ownership.
On July 14, 1999, the RTC rendered a decision in favor of respondents-

claimants, declaring that, PD 1810 and PTA Circular No. 3-82 Revised
Forestry Code, as amended.

The OSG moved for reconsideration but its motion was denied. The Republic
then appealed to the CA. On In 2004, the appellate court affirmed in toto
the RTC decision. Again, the OSG sought reconsideration but it was similarly
denied. Hence, the present petition under Rule 45.
On May 22, 2006, during the pendency the petition in the trial court,
President Gloria Macapagal-Arroyo issued Proclamation No. 1064 classifying
Boracay Island partly reserved forest land (protection purposes) and partly
agricultural land (alienable and disposable).
On August 10, 2006, petitioners-claimants Sacay, and other landowners in

Boracay filed with this Court an original petition for prohibition, mandamus,
and nullification of Proclamation No. 1064. They alleged that the
Proclamation infringed on their prior vested rights over portions of Boracay.
They have been in continued possession of their respective lots in Boracay
since time immemorial.
On November 21, 2006, this Court ordered the consolidation of the two
petitions
Issue:
WON private claimants have a right to secure titles over their occupied
portions in Boracay
Held:
Except for lands already covered by existing titles, Boracay was an
unclassified land of the public domain prior to Proclamation No. 1064. Such
unclassified lands are considered public forest under PD No. 705.
PD No. 705 issued by President Marcos categorized all unclassified lands of
the public domain as public forest. Section 3(a) of PD No. 705 defines a
public forest as a mass of lands of the public domain which has not been
the subject of the present system of classification for the determination of

which lands are needed for forest purpose and which are not. Applying PD
No. 705, all unclassified lands, including those in Boracay Island, are ipso
facto considered public forests. PD No. 705, however, respects titles already
existing prior to its effectivity.
The 1935 Constitution classified lands of the public domain into agricultural,
forest or timber, such classification modified by the 1973 Constitution. The
1987 Constitution reverted to the 1935 Constitution classification with one
addition: national parks. Of these, only agricultural lands may be alienated.
Prior to Proclamation No. 1064 of May 22, 2006, Boracay Island had never
been expressly and administratively classified under any of these grand
divisions. Boracay was an unclassified land of the public domain.
A positive act declaring land as alienable and disposable is required. In

keeping with the presumption of State ownership, the Court has time and
again emphasized that there must be a positive act of the government, such
as a presidential proclamation or an executive order; an administrative
action; investigation reports of Bureau of Lands investigators; and a
legislative act or a statute. The applicant may also secure a certification from
the government that the land claimed to have been possessed for the
required number of years is alienable and disposable. The burden of proof in
overcoming such presumption is on the person applying for registration (or
claiming ownership), who must prove that the land subject of the application
is alienable or disposable.
In the case at bar, no such proclamation, executive order, administrative

action, report, statute, or certification was presented to the Court. The
records are bereft of evidence showing that, prior to 2006, the portions of
Boracay occupied by private claimants were subject of a government
proclamation that the land is alienable and disposable. Matters of land
classification or reclassification cannot be assumed. They call for proof.

Proc. No. 1801 cannot be deemed the positive act needed to classify Boracay
Island as alienable and disposable land. If President Marcos intended to
classify the island as alienable and disposable or forest, or both, she would
have identified the specific limits of each, as President Arroyo did in
Proclamation No. 1064. This was not done in Proclamation No. 1801.
32. VDA. TE TAN TOCO VS. MUNICIPAL COUNCIL OF ILOILO (49 PHIL
52)
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, being the purchase
price of two strips of land, one on Calle J. M. Basa consisting of 592 square
meters, and the other on Calle Aldiguer consisting of 59 square meters,
which the municipality of Iloilo had appropriated for widening said street.
The Court of First Instance of Iloilo sentenced the said municipality to pay
the plaintiff the amount so claimed, plus the interest, and the said judgment
was on appeal affirmed by this court.
On account of lack of funds the municipality of Iloilo was unable to pay the
said judgment, wherefore plaintiff had a writ of execution issue against the
property of the said municipality, by virtue of which the sheriff attached two
auto trucks used for street sprinkling, one police patrol automobile, the
police stations on Mabini street, and in Molo and Mandurriao and the
concrete structures, with the corresponding lots, used as markets by Iloilo,
Molo, and Mandurriao.
ISSUE: Whether or not the property levied upon is exempt from execution.
HELD:
The principle is that the property for public use of the State is not within the
commerce of man and, consequently, is unalienable and not subject to
prescription. Likewise, property for public use of the municipality is not
within the commerce of man so long as it is used by the public and,
consequently, said property is also inalienable.
It is evident that the movable and immovable property of a municipality,
necessary for governmental purposes, may not be attached and sold for the
payment of a judgment against the municipality. The supreme reason for
this rule is the character of the public use to which such kind of property is
devoted. The necessity for government service justifies that the property of
public use of the municipality be exempt from execution just as it is
necessary to exempt certain property of private individuals in accordance
with section 452 of the Code of Civil Procedure.
33. PASAY CITY GOVERNMENT VS. CFI (GR NO. L-32162)
Facts: This is a petition for review on certiorari of the order rendered by the
Court of First Instance of Manila, Branch X, presided by Honorable Judge
Jose L. Moya on July 23, 1969.
On August 12, 1964, respondent-appellee V.D. Isip, Sons & Associates
represented by Vicente David Isip entered into a contract with the City of
Pasay represented by the then Mayor Pablo Cuneta. The contract entitled
"Contract and Agreement" was for the construction of a new Pasay City Hall
at F.B. Harrison St., Pasay City.
The respondentappellee accomplished under various stages of
construction the amount of work (including supplies and materials)
equivalent to an estimated value of P1,713,096.00 of the total contract price
of P4,914,500.80. The appellants paid only the total amount of
P1,100,000.00 to the respondent-appellee leaving an amount of P613,096.00
immediately due from the petitioner-appellants to the respondent-appellee.
Notwithstanding demands for payment thereof, the petitioner-appellants
failed to remit the aforesaid amount of P613,096.00 to the respondent-
appellee.
The parties arrived at a draft of amicable agreement which was
submitted to the Municipal Board of Pasay City for its consideration. On
February 25, 1969, the Municipal Board of Pasay enacted Ordinance No.
1012 which approved the Compromise Agreement and also authorized and
empowered the incumbent City Mayor Jovito Claudio to represent the
appellant Pasay City Government, subject to the final approval of the
respondent Court herein. On March 12, 1969, the respondent Court
approved the said Compromise Agreement including a Manifestation and
Addendum thereto.

On April 10, 1969, the appellants filed an urgent motion seeking a
declaration of legality of the original contract and agreement dated August 4,
1964 from the respondent Court. On May 10, 1969, the respondent Court
issued an order declaring that the original contract is legal and valid. On
June 21, 1969, at the instance of the appellee, the respondent Court granted
an order of execution pursuant to which a writ of execution dated June 25,
1969 was issued. On July 9, 1969, an application for and notice of
garnishment were made and effected upon the funds of appellant Pasay City
Government with the Philippine National Bank.
On July 11, 1969, the appellant filed an urgent motion to set aside
the respondent Court's order of June 21, 1969 and to quash the writ of
execution issued pursuant thereto upon the following grounds: 1) that the
execution sought was then still premature, the period of 90 days stipulated
not having elapsed as yet; 2) that the obligations of the parties under the
Compromise Agreement were reciprocal and the appellee not having put up
a new performance bond in the sufficient amount equivalent to 20% of the
remaining cost of construction as per agreement, the appellants cannot be
obliged to pay the sum due appellee as yet; 3) that the Sheriff has no power
or authority to levy or garnish on execution the general funds, especially
more so, the trust funds of the defendant Pasay City. On July 19, 1969, the
respondent Court issued an order stating that inasmuch as the defendant
has not yet paid the plaintiff as of this date then "the writ of execution and
of garnishment are declared to be again in full force and effect ..."
Issue: WON the funds of the Pasay City Government which were garnished
by the City Sheriff are by law exempt from execution and/or garnishment.
Held: A compromise has upon the parties the effect and authority of res
judicata; but there shall be no execution except in compliance with a judicial
compromise. A compromise agreement not contrary to law, public order,
public policy, morals or good customs is a valid contract which is the law
between the parties themselves. A judgment on a compromise is a final and
executory. It is immediately executory in the absence of a motion to set the
same aside on the ground of fraud, mistake or duress. In fact in the herein
case before Us, execution has already been issued. Considering this in the
light of Article 2041 of the New Civil Code, to wit: Art. 2041. If one of the
parties fails or refuses to abide by the compromise, the other party may
either enforce the compromise or regard it as rescinded and insist upon his
original demand.
It is obvious that the respondent-appellee did not only succeed in
enforcing the compromise but said plaintiff-appellee likewise wants to
rescind the said compromise. It is clear from the language of the law,
specifically Article 2041 of the New Civil Code that one of the parties to a
compromise has two options: 1) to enforce the compromise; or 2) to rescind
the same and insist upon his original demand. The respondent-appellee in
the case herein before Us wants to avail of both of these options. This can
not be done. The respondent-appellee cannot ask for rescission of the
compromise agreement after it has already enjoyed the first option of
enforcing the compromise by asking for a writ of execution resulting thereby
in the garnishment of the Pasay City funds deposited with the Philippine
National Bank which eventually was delivered to the respondent-appellee.
Upon the issuance of the writ of execution, the petitioner-appellants
moved for its quashal alleging among other things the exemption of the
government from execution. This move on the part of the petitioner-
appellant is at first glance laudable for "all government funds deposited with
the Philippine National Bank by any agency or instrumentality of the
government, whether by way of general or special deposit, remain
government funds and may not be subject to garnishment or levy. But,
inasmuch as an ordinance has already been enacted expressly appropriating
the amount of P613,096.00 of payment to the respondent-appellee, then the
herein case is covered by the exception to the general nile stated in the case
of Republic vs. Palacio (L-20322, 23 SCRA 899 [May 29,1968]), to wit:
Judgments against a State in cases where it has consented to be sued,
generally operate merely to liquidate and establish plaintiff's claim in the
absence of express provision; otherwise they cannot be enforced by

processes of the law; and it is for the legislature to provide for the payment
in such manner as it sees fit.
Hence, the respondent Court was correct in refusing to quash the writ
of execution it has issued.
34. ESPIRITU VS. MUNICIPAL COUNCIL OF POZORRUBIO (102 PHIL
867)
Facts: The town plaza of Pozzorubio was subjected to lease by the municipal
council to market vendors who created small make-shift stalls and some
even small residences on said land. This was evidenced by the collection of
the municipal treasurer of P.25/ per sq. meter. It was questioned by some
civic organizations which then called the attention of the Provincial Board
and the Secretary of Interior which declared such action as illegal. Thus, said
Council passed Reso. No. 209 (S. 1951) which asked for the removal of said
stalls within 60 days. Some of the Stall owners opposed such resolution and
filed a prohibition in CFI Pangasinan.
Issue: WON Town Plazas are properties of Public Domain thus cannot be
subjected to sale nor lease?
Held: Town Plazas are properties of Public Domain and cannot be a subject
of contract either for sale or for lease. Such are devoted for public use and
made available for public in general thus it is outside the commerce of man.
The use of the plaza in the case at bar was temporarily tolerated due to the
emergency caused by the aftermath of the war, since the emergency has
ceased, temporary occupation must likewise cease.
35. PROVINCE OF ZAMBOANGA DEL NORTE VS. CITY OF ZAMBOANGA
(GR NO. L-24440)
FACTS:
Prior to its incorporation as a chartered city, the Municipality of Zamboanga
used to be the provincial capital of the then Zamboanga Province. On
October 12, 1936, Commonwealth Act 39 was approved converting the
Municipality of Zamboanga into Zamboanga City. Sec. 50 of the Act also
provided that buildings and properties which the province shall abandon,
upon the transfer of the capital to another place, will be acquired and paid
for by the City of Zamboanga at a price to be fixed by the Auditor General.
The properties and buildings referred to consisted of 50 lots and some
buildings constructed thereon, located in the City of Zamboanga and covered
individually by Torrens certificates of title in the name of Zamboanga
Province. Based on the records, such properties were being utilized as
capitol site, school site, hospital site, leprosarium, highschool playground
and hydroelectric site, among others. The Appraisal Committee formed by
the Auditor General, pursuant to CA 39, fixed the value of the properties and
buildings in question left by Zamboanga Province in Zamboanga City at
P1,294,244.00.
On June 6, 1952, Republic Act 711 was approved dividing the province of
Zamboanga into two (2): Zamboanga del Norte and Zamboanga del Sur. As
to how the assets and obligations of the old province were to be divided
between the two new ones, Sec. 6 of the law provided that the funds, assets
and other properties and the obligations of the province of Zamboanga shall
be divided equitably between the Province of Zamboanga del Norte and the
Province of Zamboanga del Sur by the President of the Philippines, upon the
recommendation of the Auditor General.
Pursuant to such provision, the Auditor General, on January 11, 1955,
apportioned the assets and obligations of the defunct Province of
Zamboanga as follows: 54.39% for Zamboanga del Norte and 45.61% for
Zamboanga del Sur. Zamboanga del Norte therefore became entitled to
54,39% of P1,294,244.00, the total value of the lots and buildings in
question, or P704,220.05 payable by Zamboanga City.
The Secretary of Finance then authorized the Commissioner of Internal
Revenue (CIR) to deduct from the regular internal revenue allotment for the
City of Zamboanga for several fiscal quarters totaling P57,373.46, which was
credited to the province of Zamboanga del Norte, in partial payment of the
P704,220,05 due it. However, on June 17, 1961, Republic Act 3039 was
approved amending Sec. 50 of Commonwealth Act 39 by providing that all
buildings, properties and assets belonging to the former province of
Zamboanga and located within the City of Zamboanga are hereby
transferred, free of charge, in favor of the said City of Zamboanga.
Consequently, the Secretary of Finance ordered the CIR to stop from
effecting further payments to Zamboanga del Norte and to return to
Zamboanga City the sum paid and taken from the internal revenue allotment
of the latter. Of the total amount paid by Zamboanga City, a total of
P43,030.11 has already been returned to it.
This prompted the petitioner Zamboanga del Norte to file, on March 5, 1962,
a complaint entitled "Declaratory Relief with Preliminary Mandatory
Injunction" in the Court of First Instance against defendants Zamboanga
City, the Secretary of Finance and the CIR, praying that: (a) Republic Act
3039 be declared unconstitutional for depriving the province of property
without due process and just compensation; (b) plaintiff's rights and
obligations under said law be declared; (c) the Secretary of Finance and the
CIR be enjoined from reimbursing the sum of 57,373.46 to defendant City;
and (d) the latter be ordered to continue paying the balance of P704,220.05.
After trial, the lower court held rendered a decision in favor of the
petitioners. Prior to the perfection of defendants' appeal, petitioner filed a
motion to reconsider praying that Zamboanga City be ordered instead to pay
the P704,220.05 in lump sum with 6% interest per annum, which was
subsequently granted by the lower court.
ISSUE(S):
Whether or not Republic Act 3039 is unconstitutional.
RULING:
The validity of the law ultimately depends on the nature of the properties in
question. If the property is owned by the municipality in its public and
governmental capacity, the property is public and Congress has absolute
control over it. But if the property is owned in its private or proprietary
capacity, then it is patrimonial and Congress has no absolute control; the
municipality cannot be deprived of it without due process and payment of
just compensation. The capacity in which the property is held is, however,
dependent on the use to which it is intended and devoted.
In this case, the Court applied the norm obtaining under the principles
constituting the law of Municipal Corporations, which states that, to be
considered public, it is enough that the property be held and devoted for
governmental purposes like local administration, public education, public
health, etc. Thus, all those of the 50 properties in question, which are
devoted to public service are deemed public; the rest remain patrimonial.
Following such classification, the Court upheld the validity of Republic Act
3039 insofar as it affects the lots used as capitol site, school sites and its
grounds, hospital and leprosarium sites and the high school playground
sites, or a total of 24 lots, since these were held by the former Zamboanga
province in its governmental capacity and therefore are subject to the
absolute control of Congress. However, Republic Act 3039 cannot be applied
to deprive Zamboanga del Norte of its share in the value of the rest of the
26 remaining lots which are patrimonial properties since they are not being
utilized for distinctly governmental purposes.
It results then that Zamboanga del Norte is still entitled to collect from the
City of Zamboanga the former's 54.39% share in the 26 properties which are
patrimonial in nature, said share to be computed on the basis of the
valuation of said 26 properties as contained in Resolution No. 7, dated March
26, 1949, of the Appraisal Committee formed by the Auditor General.
Petitioner's share, however, cannot be paid in lump sum, except as to the
P43,030.11 already returned to defendant City. The return of said amount to
defendant was without legal basis. Republic Act 3039 took effect only on
June 17, 1961 after a partial payment of P57,373.46 had already been made.
Since the law did not provide for retroactivity, it could not have validly
affected a completed act. Hence, the amount of P43,030.11 should be
immediately returned by defendant City to petitioner province. The
remaining balance, if any, in the amount of plaintiff's 54.39% share in the 26
lots should then be paid by defendant City in the same manner originally
adopted by the Secretary of Finance and the CIR, and not in lump sum.
36. SALAS VS. JARENCIO (46 SCRA 734)
Facts:
February 24, 1919the 4th Branch of the Court of First Instance of Manila,
acting asa land registration court, rendered judgment in Case No. 18,

G.L.R.O. Record No. 111,declaring the City of Manila the owner in fee simple
of a parcel of land known as LotNo. 1, Block 557 of the Cadastral Survey of
the City of Mani1a, containing an area of 9,689.8 square meters, more or
less.
August 21, 1920 Title No. 4329 issued on in favor of the City of Manila after
the landin question was registered in the City's favor. The Torrens Title
expressly states thatthe City of Manila was the owner in 'fee simple' of the
said land
September 20, 1960the Municipal Board, presided by then Vice-Mayor
Antonio Villegas, requested "His Excellency the President of the Philippines
to consider the feasibility of declaring the city property bounded by Florida,
San Andres andNebraska Streets, under Transfer Certificate of Title Nos.
25545 and 25547, containing an area of 7,450 square meters, as patrimonial
property of the City of Manila for the purpose of reselling these lots to the
actual occupants thereof
The said resolution of the Municipal Board of the City of Manila was
officiallytransmitted to the President of the Philippines the following day, to
which a copy wasfurnished to the Senate and House of Representatives of
the Congress of the Philippines.
June 20, 1964RA 4118 was passed by the Senate and approved by the
President pursuant to the request. Such bill was enacted for social justice
purposes, that they be sold to their currently landless occupants.
But due to reasons which do not appear in the record, the City of Manila
made a complete turn-about, for on December 20, 1966, Antonio J. Villegas,
in his capacity asthe City Mayor of Manila and the City of Manila as a duly
organized publiccorporation, brought an action for injunction and/or
prohibition with preliminaryinjunction to restrain, prohibit and enjoin the
herein appellants, particularly the Governor of the Land Authority and the
Register of Deeds of Manila, from further implementing Republic Act No.
4118, and praying for the declaration of Republic Act No. 4118 as
unconstitutional.
Issue:
1.Whether or not the property involved is a private or patrimonial property of
the City of Manila.
2.Whether or not Republic Act No. 4118 valid and not repugnant to the
Constitution.
Held:
1. NO, it is the property of the State.
The rule is that when it comes to property of the municipality which it did
not acquire in itsprivate or corporate capacity with its own funds, the
legislature can transfer itsadministration and disposition to an agency of the
National Government to be disposed of according to its discretion.
The possession of a municipality, excepting those acquired with its own
funds in its private or corporate capacity, such property is held in trust for
the State for the benefit of its inhabitants, whether it be for governmental or
proprietary purposes. The City of Manila, although declared by the Cadastral
Court as owner in fee simple, has not shown by any shred of evidence in
what manner it acquired said land as its private or patrimonial property. The
presumption is that such land came from the State upon the creation of the
municipality. That it has in its name a registered title is not questioned, but
this title should be deemed to be held in trust for the State as the land
covered thereby was part of the territory of the City of Manila granted by the
sovereign upon its creation Therefore, the land in question pertains to the
State and the City of Manila merely acted as trustee for the benefit of the
people therein for whom the State can legislate in the exercise of its
legitimate powers.
2. Yes, it is valid.
Consequently, the City of Manila was not deprived of anything it owns, either
under the dueprocess clause or under the eminent domain provisions of the
Constitution. If it failed to getfrom the Congress the concession it sought of
having the land involved given to it as its patrimonial property, the Courts
possess no power to grant that relief. Republic Act No. 4118 does not,
therefore, suffer from any constitutional infirmity
37. MANILA LODGE NO. 761 VS. COURT OF APPEALS (73 SCRA 162)
Facts:
June 26, 1905, Philippine Commission enacted Act No. 1360 authorizing
the city of Manila to reclaim a portion of Manila Bay. It was to form part of
Luneta extension. It was stipulated that the reclaimed area shall be the
property of the City of Manila and that the city of Manila is hereby
authorized to set aside a tract not to exceed 500 ft. x 600 ft. for a hotel site
for lease with a term not to exceed 99 years.
Act No. 1657 was enacted to amend Act No. 1360 which authorize the city
of Manila either to lease or to sell the portion set aside as a hotel site.
The reclaimed area, 25 hectares, was registered and on January 20, 1911
OCT No. 1909 was issued in the name of the city of Manila.
The City of Manila conveyed 5,543.07sq.m. of reclaimed area to Manila
Lodge No. 761 which was then sold to Tarlac Development Corporation
together with all the improvements.
Issue:
WON the said subject land is part of the public domain
Held:
We hold that it is of public dominion, intended for public use.
Firstly, if the reclaimed area was granted to the City of Manila as its
patrimonial property, the City could, by virtue of its ownership, dispose of
the whole reclaimed area without need of authorization to do so from the
lawmaking body. Thus Article 348 of the Civil Code of Spain provides that
"ownership is the right to enjoy and dispose of a thing without further
limitations than those established by law." 36 The right to dispose ( jus
disponendi) of one's property is an attribute of ownership. Act No. 1360, as
amended, however, provides by necessary implication, that the City of Manila
could not dispose of the reclaimed area without being authorized by the
lawmaking body. If the reclaimed area were patrimonial property of the City,
the latter could dispose of it without need of the authorization provided by
the statute, and the authorization to set aside . . . lease . . . or sell . . . given

by the statute would indeed be superfluous. To authorize means to
empower, to give a right to act. 38 Act No. 1360 furthermore qualifies the
verb "authorize" with the adverb "hereby," which means "by means of this
statue or section." Hence without the authorization expressly given by Act
No. 1360, the City of Manila could not lease or sell even the northern
portion; much less could it dispose of the whole reclaimed area.
Consequently, the reclaimed area was granted to the City of Manila, not as
its patrimonial property. At most, only the northern portion reserved as a
hotel site could be said to be patrimonial property, for, by express statutory
provision it could be disposed of, and the title thereto would revert to the
City should the grantee fail to comply with the terms provided by the
statute.
Secondly, the reclaimed area is an "extension to the Luneta in the City of
Manila." 40 If the reclaimed area is an extension of the Luneta, then it is of
the same nature or character as the old Luneta. It is not disputed that the
old Luneta is a public park or plaza and it is so considered by Section 859 of
the Revised Ordinances of the City of Manila. 42 Hence the "extension to the
Luneta" must be also a public park or plaza and for public use.
Thirdly, the reclaimed area was formerly a part of the Manila Bay. A bay is
nothing more than an inlet of the sea. Pursuant to Article 1 of the Law of
Waters of 1866, bays, roadsteads, coast sea, inlets and shores are parts of
the national domain open to public use. These are also property of public
ownership devoted to public use, according to Article 339 of the Civil Code of
Spain.When the shore or part of the bay is reclaimed, it does not lose its
character of being property for public use.
Fourthly, Act 1360, as amended, authorized the lease or sale of the northern
portion of the reclaimed area as a hotel site. The subject property is not that
northern portion authorized to be leased or sold; the subject property is the
southern portion. Hence, applying the rule of expresio unius est exlusio
alterius, the City of Manila was not authorized to sell the subject property.
The application of this principle of statutory construction becomes the more
imperative in the case at bar inasmuch as not only must the public grant of
the reclaimed area to the City of Manila be, as above stated, strictly

construed against the City of Manila, but also because a grant of power to a
municipal corporation, as happens in this case where the city is authorized to
lease or sell the northern portion of the Luneta extension, is strictly limited
to such as are expressly or impliedly authorized or necessarily incidental to
the objectives of the corporation.
Fifthly, Article 344 of the Civil Code of Spain provides that "property of public
use, in provinces and in towns, comprises the provincial and town roads, the
squares, streets, fountains, and public waters, the promenades, and public
works of general service paid for by such towns or provinces." A park or
plaza, such as the extension to the Luneta, is undoubtedly comprised in said
article.
38. COMMISSIONER OF PUBLIC HIGHWAYS, ET. AL. VS. LOURDES SAN
DIEGO, ET. AL. (GR NO. L-30098)
FACTS: On or about November 20, 1940, the Government of the Philippines
filed a complaint for eminent domain in the Court of First Instance of Rizal 1
for the expropriation of a parcel of land belonging to N. T. Hashim, with an
area of 14,934 square meters, needed to construct a public road, now
known as Epifanio de los Santos Avenue. On November 25,1940, the
Government took possession of the property upon deposit with the City
Treasurer of the sum of P23,413.64 fixed by the Court therein as the
provisional value of all the lots needed to construct the road, including
Hashim's property. The records of the expropriation case were destroyed and
lost during the second world war, and neither party took any step thereafter
to reconstitute the proceedings.
On November 7, 1966, the Compromise Agreement subscribed by counsel
for respondent estate and by then Solicitor General Antonio P. Barredo, now
a member of this Court, was submitted to the lower Court and under date of
November 8, 1966, respondent judge, as prayed for, rendered judgment
approving the Compromise Agreement and ordering petitioners, as
defendants therein, to pay respondent estate as plaintiff therein, the total
sum of P209,076.00 for the expropriated lot.
October 14, 1968, respondent Garcia, as special sheriff, forthwith served a
Notice of Garnishment, together with the writ of execution dated October
14, 1968, issued by respondent Manuela C. Florendo as Deputy Clerk of
Court, on respondent Philippine National Bank, notifying said bank that levy
was thereby made upon funds of petitioners Bureau of Public Highways and
the Auditor General on deposit, with the bank to cover the judgment of
P209,076.00 in favor of respondent estate, and requesting the bank to reply
to the garnishment within five days. On October 16, 1968, three days before
the expiration of the five-day deadline, respondent Benjamin V. Corua in his
capacity as Chief, Documentation Staff, of respondent bank's Legal
Department, allegedly acting in excess of his authority and without the
knowledge and consent of the Board of Directors and other ranking officials
of respondent bank, replied to the notice of garnishment that in compliance
therewith, the bank was holding the amount of P209,076.00 from the
account of petitioner Bureau of Public Highways. Respondent bank alleged
that when it was served with Notice to Deliver Money signed by respondent
Garcia, as special sheriff, on October 17, 1968, it sent a letter to the officials
of the Bureau of Public Highways notifying them of the notice of
garnishment.
Under date of October 16, 1968, respondent estate further filed with the
lower Court an ex-parte motion for the issuance of an order ordering
respondent bank to release and deliver to the special sheriff, respondent
Garcia, the garnished amount of P209,076.00 deposited under the account
of petitioner Bureau, which motion was granted by respondent judge in an
order of October 18, 1968. On the same day, October 18, 1968, respondent
Corua, allegedly taking advantage of his position, authorized the issuance
of a cashier's check of the bank in the amount of P209,076.00, taken out of
the funds of petitioner Bureau deposited in current account with the bank
and paid the same to respondent estate, without notice to said petitioner
ISSUE: WON respondent Court's two questioned orders (1) for execution of
the judgment, in pursuance whereof respondent deputy clerk issued the
corresponding writ of execution and respondent special sheriff issued the
notice of garnishment, and (2) for delivery of the garnished amount of
P209,076.00 to respondent estate as judgment creditor through respondent
special sheriff, are null and void

HELD: Null and void on the fundamental ground that government funds are
not subject to execution or garnishment.
As early as 1919, the Court has pointed out that although the Government,
as plaintiff in expropriation proceedings, submits itself to the jurisdiction of
the Court and thereby waives its immunity from suit, the judgment that is
thus rendered requiring its payment of the award determined as just
compensation for the condemned property as a condition precedent to the
transfer to the title thereto in its favor, cannot be realized upon execution. 12
The Court there added that it is incumbent upon the legislature to
appropriate any additional amount, over and above the provisional deposit,
that may be necessary to pay the award determined in the judgment, since
the Government cannot keep the land and dishonor the judgment. The
universal rule that where the State gives its consent to be sued by private
parties either by general or special law, it may limit claimant's action "only
up to the completion of proceedings anterior to the stage of execution" and
that the power of the Courts ends when the judgment is rendered, since
government funds and properties may not be seized under writs of execution
or garnishment to satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of public funds must be
covered by the corresponding appropriation as required by law. The
functions and public services rendered by the State cannot be allowed to be
paralyzed or disrupted by the diversion of public funds from their legitimate
and specific objects, as appropriated by law.
39. PHILIPPINE NATIONAL BANK VS. HON. JUDGE JAVIER PABALAN
(GR NO. L-33112)
Facts: On 17 Dec 1970, Judge Pabalan issued a writ of execution followed
thereafter by a notice of garnishment of the funds of Philippine Virginia
Tobacco Administration (PVTA) in the sum of P12,724.66 deposited with the
petitioner bank. PNB La Union filed an administrative complaint against
Pabalan for grave abuse of discretion, alleging that the latter failed to
recognize that the questioned funds are of public character and therefore
may not be garnished, attached or levied upon. The PNB La Union Branch

invoked the doctrine of non suability, putting a bar on the notice of
garnishment.
ISSUE: Whether or not PNB may be sued.
HELD: Funds of public corporations which can sue and be sued are not
exempt from garnishment. PVTA is also a public corporation with the same
attributes, a similar outcome is attributed. The government has entered with
them into a commercial business hence it has abandoned its sovereign
capacity and has stepped down to the level of a corporation. Therefore, it is
subject to rules governing ordinary corporations and in effect can be sued.
Therefore, the petition of PNB La Union is denied.
40. PROFESSIONAL VIDEO INC. VS. TESDA (GR NO. 155504)
Facts: TESDA procured the services of PROVI for the creation of polyvinyl
(PVC) Identification Cards which TESDA issues to trainees who passed its
certification process. TESDA failed to pay an outstanding balance of P35M
which led PROVI to file a complaint with RTC for sum of money with
damages against TESDA which also prayed for a Writ of Attachment/
garnishment against TESDA. RTC granted the PROVIs Writ against the
properties of TESDA amounting to P35M. The CA reversed the RTC which
stated that TESDAs funds are public in nature thus exempt from
garnishment and second, purchase of PVC Cards was a necessary incident
of its govt function.
Issue: WON the writ of attachment against TESDA and its funds, to cover
PROVI's claim against TESDA, is valid.
Held: INVALID. SC upheld CA. First, TESDA as an unincorporated
instrumentality of the government operating under a specific charter and
performing governmental functions, STATE IMMUNITY apply to it. By reason
of Public Policy, performance of governmental function cannot be hindered
or delayed by suits, nor can these suits control the use and disposition of the
means for the performance of governmental functions. Second, selling of the
PVC cards does not characterize such transaction as industrial or business

but rather part of TESDAs general govtal function as they are undertaken
to discharge such functions. Third, TESDA's funds are still public in nature
and, thus, cannot be the valid subject of a writ of garnishment or
attachment. Under Section 33 of the TESDA Act, the TESDA budget for the
implementation of the Act shall be included in the annual General
Appropriation Act; hence, TESDA funds, being sourced from the Treasury,
are moneys belonging to the government, or any of its departments, in the
hands of public officials. As reiterated in many cases, public funds cannot be
the object of garnishment proceedings even if the consent to be sued had
been previously granted and the state liability adjudged. Thus, there should
be a specific appropriation covering such payment for PROVI to be able to
garnish.
41. VILLA VS. HEIRS OF ALTAVAS (GR NO. 162028)
FACTS:
On November 26, 1997, respondents filed a Complaint for ejectment with
the MCTC petitioner together with Virginia Bermejo and Rolito Roxas,
alleging that respondents are heirs of the registered owner of two parcels of
fishpond designated as Lot No. 2816 and Lot No. 2817, who have been in
actual possession through their administrator, overseer and representative,
the late councilor Mussolini C. Bermejo, the husband of Virgina. It was
further alleged that on January 31, 1994, after the death of Mussolini,
Virgina took over the possession of the premises in question without the
consent or permission of respondents. Virginia leased in favor of petitioner a
portion of about five hectares of Lot No. 2816, without any right to do so.
On October 21, 1997, respondents through counsel formally sent demand
letters to Virginia and petitioner to vacate the respective portions occupied
by them; however, despite said demands, they persisted in continuing their
illegal possession of the premises.
The MCTC subsequently rendered a decision in favor of the respondents,
declaring them the rightful owners and legal possessors of the subject
parcels of land. Aggrieved by the Decision of the MCTC, petitioner and
Virginia filed an appeal with the RTC; however, the RTC dismissed the appeal
of petitioner for her failure to file her appeal memorandum, while, the RTC
dismissed Virginia's appeal because of the latters withdrawal of the appeal.
Petitioner then filed a Motion for Reconsideration but the same was denied
by the RTC. Petitioner filed a special civil action for certiorari with the CA
contending that the RTC committed grave abuse of discretion in dismissing
her appeal on technical ground. This was, however, dismissed by the CA and
the orders of the RTC were affirmed by the CA.
In this petition for certiorari, petitioner avers that respondents failed to
establish that they are in actual possession of the lots in question; that, in
fact, they have not proven that they are the owners of the said properties;
and that petitioner has a valid contract of lease with Virginia which entitles
her to the possession of Lot No. 2817. Petitioner further argues that
respondents have no cause of action against her as they are not lessors,
vendors or persons with whom petitioner has a contract, express or implied
and that respondents failed to aver facts constitutive of either forcible entry
or unlawful detainer. As such, the MCTC did not acquire jurisdiction over the
case.
ISSUE(S):
Whether or not petitioner has claim over the subject property.
RULING:
Petitioners contention is without merit.
The Court reiterated the well-settled rule that the trial courts findings of
fact, especially when affirmed by the CA are generally binding and
conclusive. In the case at bar, the CA sustained the following findings of the
MCTC, to wit: that respondents' predecessor, Enrique Altavas, was not
divested of his ownership of the subject lots; that the titles over the subject
properties remain in his name; that, not being the owner or administrator of
the said lots, Virginia has no right to enter into any contract for the lease of
the said properties; and that petitioner's possession of portions of the
disputed properties is merely upon tolerance of respondents.
Petitioner failed to show that any of the following exceptions to the general
rules was present in this case: (1) the conclusion is grounded on
speculations, surmises or conjectures; (2) the inference is manifestly
mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4)
the judgment is based on a misapprehension of facts; (5) the findings of fact
are conflicting; (6) there is no citation of specific evidence on which the
factual findings are based; (7) the finding of absence of facts is contradicted
by the presence of evidence on record; (8) the findings of the CA are
contrary to the findings of the trial court; (9) the CA manifestly overlooked
certain relevant and undisputed facts that, if properly considered, would
justify a different conclusion; (10) the findings of the CA are beyond the
issues of the case; and (11) such findings are contrary to the admissions of
both parties. Thus, it does not warrant a review of the findings of fact of the
lower courts.
As to respondents' ownership and right of possession of the subject
properties, records show that the MCTC based its Decision not only on the
Position Paper of respondents but also on the pieces of evidence submitted
by them. Respondents attached the Original Certificates of Title Nos.
RO-4326 and RO-4327 in the name of Enrique, covering Lot Nos. 2816 and
2817, respectively, as evidence of their ownership and right to possess the
disputed properties.
Moreover, being a mere lessee, petitioner steps into the shoes of her lessor,
Virginia. However, Virginia's claim of ownership was not sustained by the
MCTC, which instead found that she was not the owner of and had no right
to possess the disputed property or to transfer possession of the same,
through lease, in favor of another person. Virginia later withdrew her appeal
filed with the RTC. By reason of such withdrawal, she is bound by the
findings of the MCTC.
42. ESTATE OF SOLEDED MANANTAN VS. ANICETO SOMERA (GR NO.
145867)
Facts:
Manantan alleged in her Complaint that she was the owner of a 214- square
meter parcel of land. After causing a relocation survey of the subject
property, she discovered that respondent and Tavera occupied certain
portions thereof [disputed portions]. Manantan advised respondent and
Tavera to vacate the disputed portions as soon as she would decide to sell
the subject property to an interested buyer. Later, a prospective buyer
approached Manantan about the subject property. However, upon learning
that respondent and Tavera occupied some portions of the subject property,
the prospective buyer decided not to proceed with the sale until after
respondent and Tavera vacated the same. Manantan repeatedly requested
respondent and Tavera to abandon the disputed portions of the subject
property, but the two refused. Hence, Manantan hired the services of a
lawyer who immediately sent a formal letter of demand to respondent and
Tavera requesting them to leave the disputed portions. Respondent and
Tavera, however, ignored the demand letter.
In her Complaint in Civil Case, Manantan prayed that respondent, Tavera,
and all persons claiming rights under them, be ordered to vacate the
portions of the subject property they were occupying. Respondent and
Tavera filed a Joint Answer to Manantans Complaint, he averred that the
MTCC had no jurisdiction over the case, because it was neither an action for
forcible entry nor for unlawful detainer. The Complaint did not allege that
Manantan was deprived of possession of the disputed portions by force,
intimidation, threat, strategy, or stealth, which would make a case for
forcible entry. It also did not state that respondent and Tavera withheld
possession of the disputed portions from Manantan after expiration or
termination of the right to hold possession of the same by virtue of an
express or implied contract, which would build a case for unlawful detainer.
Respondent and Tavera argued that even if there was dispossession, it was
evident from the face of the Complaint that it was not committed through
any of the means enumerated under Rule 70 of the Rules of Court and, thus,
forcible entry or unlawful detainer could not be the proper remedy for
Manantan.
Issue:
Whether or not the MTCC had jurisdiction over the action?
Held:

A case for unlawful detainer must be instituted before the proper municipal
trial court or metropolitan trial court within one year from unlawful
withholding of possession. Such one year period should be counted from
the date of plaintiffs last demand on defendant to vacate the real property,
because only upon the lapse of that period does the possession become
unlawful. Well-settled is the rule that the jurisdiction of the court, as well as
the nature of the action, are determined by the allegations in the complaint.
To vest the court with the jurisdiction to effect the ejectment of an occupant
from the land in an action for unlawful detainer, it is necessary that the
complaint should embody such a statement of facts clearly showing
attributes of unlawful detainer cases, as this proceeding is summary in
nature. The complaint must show on its face enough ground to give the
court jurisdiction without resort to parol testimony.
In the case at bar, the Complaint does not allege facts showing compliance
with the prescribed one year period to file an action for unlawful detainer. It
does not state the material dates that would have established that it was
filed within one year from the date of Manantans last demand upon
respondent to vacate the disputed portion of land. Such allegations are
jurisdictional and crucial, because if the complaint was filed beyond the
prescribed one year period, then it cannot properly qualify as an action for
unlawful detainer over which the MTCC can exercise jurisdiction. It may be
an accion publiciana or accion reivindicatoria.
Thus, in order that a municipal trial court or metropolitan trial court may
acquire jurisdiction in an action for unlawful detainer, it is essential that the
complaint specifically allege the facts constitutive of unlawful detainer. The
jurisdictional facts must appear on the face of the complaint. When the
complaint fails to aver facts constitutive of unlawful detainer, an action for
unlawful detainer is not a proper remedy and, thus, the municipal trial court
or metropolitan trial court has no jurisdiction over the case.
Further, it appears from the allegations in the Complaint that the
respondent was already in possession of the disputed portion at the time
Manantan bought the subject property from the Bayot family, and it was only
after the conduct of a relocation survey, which supposedly showed that

respondent was encroaching on the subject property, did Manantan begin
asserting her claim of ownership over the portion occupied and used by
respondent. Clearly, respondents possession of the disputed portion was
not pursuant to any contract, express or implied, with Manantan, and,
resultantly, respondents right of possession over the disputed portion is not
subject to expiration or termination. At no point can it be said that
respondents possession of the disputed portion ceased to be legal and
became an unlawful withholding of the property from Manantan.
Since the Complaint in Civil Case No. 10467 failed to satisfy on its face the
jurisdictional requirements for an action for unlawful detainer, the Court of
Appeals was correct in holding that the MTCC had no jurisdiction over the
said Complaint and should have dismissed the same.
43. IGLESIA NI CRISTO VS. HON. PONFERRADA (GR NO. 168943)
Facts:
Enrique Santos, owner of a 936-square-meter parcel of land located in
Tandang Sora, Quezon City covered by Transfer Certificate of Title (TCT) No.
57272 issued on July 27, 1961 which cancelled TCT No. 57193-289, had
been in possession of the owner's duplicate of said title and had been in
continuous, open, adverse and peaceful possession of the property.
Died on February 9, 1970 and was survived by his wife, Alicia Santos, and
other plaintiffs, who were their children. The Register of Deeds had the title
reconstituted as TCT No. RT-110323, based on the owner's duplicate of TCT
No. 57272 due to the fire that burned down the ROD on June 11, 1988.
Sometime in February 1996, plaintiffs learned that defendant was claiming
ownership over the property based on TCT No. 321744 issued on September
18, 1984 which, on its face, cancelled TCT No. 320898, under the name of
the Philippine National Bank, which allegedly cancelled TCT No. 252070 in
the names of the spouses Marcos and Romana dela Cruz.
Enrique Santos, during his lifetime, and his heirs, after his death, never
encumbered or disposed the property. In 1996, plaintiffs had the property
fenced but defendant deprived them of the final use and enjoyment of their
property.
Issue:
WON the action, either Quieting of title or Accion Reinvindicatoria had
prescribed
Held:
The contention of petitioner has no merit. The nature of an action is
determined by the material allegations of the complaint and the character of
the relief sought by plaintiff, and the law in effect when the action was filed
irrespective of whether he is entitled to all or only some of such relief. 37 As
gleaned from the averments of the complaint, the action of respondents was
one for quieting of title under Rule 64 of the Rules of Court, in relation to
Article 476 of the New Civil Code. The latter provision reads:
Art. 476.Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or
proceeding which is apparently valid or effective but is, in truth and in fact,
invalid, ineffective, voidable, or unenforceable, and may be prejudicial to
said title, an action may be brought to remove such cloud or to quiet the
title.
An action may also be brought to prevent a cloud from being cast upon title
to real property or any interest therein.
A cloud is said to be a semblance of a title, either legal or equitable, or a
cloud of an interest in land appearing in some legal form but which is, in
fact, unfounded, or which it would be inequitable to enforce. 38 An action
for quieting of title is imprescriptible until the claimant is ousted of his
possession. 39
The owner of a real property is entitled to the relief of quieting of title even
if, at the time of the commencement of his action, he was not in actual
possession of real property. After all, under Article 477 of the New Civil
Code, the owner need not be in possession of the property. If on the face of
TCT No. 321744 under the name of plaintiff, its invalidity does not appear
but rests partly in pais, an action for quieting of title is proper.
Admittedly, respondents interposed the alternative reinvindicatory action
against petitioner. An accion reinvindicatoria does not necessarily presuppose
that the actual and material possession of the property is on defendant and
that plaintiff seeks the recovery of such possession from defendant. It bears
stressing that an accion reinvindicatoria is a remedy seeking the recovery of
ownership and includes jus possidendi, jus utendi, and jus fruendi as well. It
is an action whereby a party claims ownership over a parcel of land and
seeks recovery of its full possession. 41 Thus, the owner of real property in
actual and material possession thereof may file an accion reinvindicatoria
against another seeking ownership over a parcel of land including jus
vindicandi, or the right to exclude defendants from the possession thereof.
In this case, respondents filed an alternative reinvindicatory action claiming
ownership over the property and the cancellation of TCT No. 321744 under
the name of petitioner. In fine, they sought to enforce their jus utendi and
jus vindicandi when petitioner claimed ownership and prevented them from
fencing the property.
Since respondents were in actual or physical possession of the property
when they filed their complaint against petitioner on October 24, 2001, the
prescriptive period for the reinvindicatory action had not even commenced to
run, even if petitioner was able to secure TCT No. 321744 over the property
in 1984. The reason for this is that
. . . one who is in actual possession of a piece of land claiming to be the
owner thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek
the aid of a court of equity to ascertain and determine the nature of the
adverse claim of a third party and its effect on his own title, which right can
be claimed only by one who is in possession.
44. ROMAN CATHOLIC ARCHBISHOP OF MANILA, ET. AL. VS. COURT OF
APPEALS (GR NO. 77425)
In 1930, the spouses Eusebio de Castro and Martina Rieta, executed a deed
of donation in favor of the Roman Catholic Archbishop of Manila covering a
parcel of land located at Kawit, Cavite. The deed of donation provides that
the donee shall not dispose or sell the property within a period of 100 years
from the execution of the deed of donation, otherwise a violation of such
condition would render ipso facto null and void the deed of donation and the
property would revert to the estate of the donors. In 1980, and while still
within the prohibited period, the Roman Catholic Bishop of Imus, sold the
property to spouses Florencio and Soledad Ignao. When the heirs of Eusebio
Castro and Martina Rieta learned about the sale, they fi led an action for the
nullifi cation of the deed of donation, rescission of the sale in favor of the
spouses Ignao and reconveyance of the property. When the case was
elevated to the Supreme Court, the Court declared the prohibition imposed
on the donation as contrary to public policy. Applying the provisions of
Article 727 of the Code, the Court further held that such condition shall be
considered as not imposed. The Court explained
The cause of action of private respondents is based on the alleged breach
by petitioners of the resolutory condition in the deed of donation that the
property donated should not be sold within a period of one hundred (100)
years from the date of execution of the deed of donation. Said condition, in
our opinion, constitutes anundue restriction on the rights arising from
ownership of petitioners and is, therefore, contrary to public policy.
Donation, as a mode of acquiring ownership, results in an effective transfer
of title over the property from the donor to the donee. Once a donation is
accepted, the donee becomes the absolute owner of the property donated.
Although the donor may impose certain conditions in the deed of donation,
the same must not be contrary to law, morals, good customs, public order
and public policy. The condition imposed in the deed of donation in the case
before us constitutes a patently unreasonable and undue restriction on the
right of the donee to dispose of the property donated, which right is an
indispensable attribute of ownership. Such a prohibition against alienation, in
order to be valid, must not be perpetual or for an unreasonable period of
time.
Certain provisions of the Civil Code illustrative of the aforesaid policy may be
considered applicable by analogy. Under the third paragraph of Article 494, a
donor or testator may prohibit partition for a period which shall not exceed
twenty (20) years. Article 870, on its part, declares that the dispositions of
the testator declaring all or part of the estate inalienable for more than
twenty (20) years are void.

It is signifi cant that the provisions therein regarding a testator also
necessarily involve, in the main, the devolution of property by gratuitous title
hence, as is generally the case of donations, being an act of liberality, the
imposition of an unreasonable period of prohibition to alienate the property
should be deemed anathema to the basic and actual intent of either the
donor or testator. For that reason, the regulatory arm of the law is or must
be interposed to prevent an unreasonable departure from the normative
policy expressed in the aforesaid Articles 494 and 870 of the Code.
In the case at bar, we hold that the prohibition in the deed of donation
against the alienation of the property for an entire century, being an
unreasonable emasculation and denial of an integral attribute of ownership,
should be declared as an illegal or impossible condition within the
contemplation of Article 727 of the Civil Code. Consequently, as specifically
stated in said statutory provision, such condition shall be considered as not
imposed. No reliance may accordingly be placed on said prohibitory
paragraph in the deed of donation. The net result is that, absent said
proscription, the deed of sale supposedly constitutive of the cause of action
for the nullification of the deed of donation is not in truth violative of the
latter hence, for lack of cause of action, the case for private respondents
must fail.
45. GERMAN MANAGEMENT & SERVICES, INC. VS. HON. COURT OF
APPEALS (GR NO. 76216)
Facts: Spouses Jose are residents of Pennsylvania, Philadelphia, USA are
owners of the land situated in Sitio Inarawan, San Isidro, Antipolo, Rizal (the
land being disputed in the case at bar.) The spouses Jose executed a special
power of attorney authorizing petitioner German Management Services to
develop their property. They have already acquired the proper permits to do
so but they discovered that the land was occupied by the respondent with
20 other farmers (members of the Concerned of Farmers Association.)
These farmers have occupied the land for the last twelve to fifteen years
prior to the issuance of the permits and they already have their crops all
over the property. In short, they are in actual possession of the land.

Petitioners tried to forcibly drive the farmers away and; demolish and
bulldoze their crops and property. The respondents filed in CFI because they
were deprived of their property without due process of law by trespassing,
demolishing and bulldozing their crops and property situated in the land. CFI
and RTC denied it but CA reversed the decision. Petitioners tried to appeal
the decision in CA but were denied thus this appeal.
Issue: WON private respondents are entitled to file a forcible entry case
against petitioner.
Held: YES, they are entitled to file a forcible entry case. Since private
respondents were in actual possession of the property at the time they were
forcibly ejected by petitioner, private respondents have a right to commence
an action for forcible entry regardless of the legality or illegality of
possession.
Private respondents, as actual possessors, can commence a forcible
entry case against petitioner because ownership is not in issue. Forcible
entry is merely a quieting process and never determines the actual title to an
estate. Title is not involved, only actual possession. It is undisputed that
private respondents were in possession of the property and not the
petitioners nor the spouses Jose. Although the petitioners have a valid claim
over ownership this does not in any way justify their act of forcible entry.
It must be stated that regardless of the actual condition of the title to
the property the party in peaceable quiet possession shall not be turned out
by a strong hand, violence or terror. Thus, a party who can prove prior
possession can recover such possession even against the owner
himself.Whatever may be the character of his possession, if he has in his
favor priority in time, he has the security that entitles him to remain on the
property until he is lawfully ejected by a person having a better right by
accion publiciana or accion reivindicatoria. The doctrine of self help, which
the petitioners were using to justify their actions, are not applicable in the
case because it can only be exercised at the time of actual or threatened
dispossession which is absent in the case at bar (in fact they are the ones
who are threatening to remove the respondents with the use of force.)
Article 536 basically tells us that the owner or a person who has a better
right over the land must resort to judicial means to recover the property
from another person who possesses the land.
When possession has already been lost, the owner must resort to
judicial process for the recovery of property. As clearly stated in Article 536-
In no case may possession be acquired through force or intimidation as
long as there is a possessor who objects thereto. He who believes that he
has an action or right to deprive another of the holding of a thing must
invoke the aid of the competent court, if holder should refuse to deliver the
thing.
46. A I R T R A N S P O R T A T I O N O F F I C E A N D M A C T A N - C E B U
INTERNATIONAL AIRPORT VS. ANTIONIO GOPUCO (GR NO.
158563)
Facts: Eminent Domain case where original owner Gapuco sought for the
recovery of a portion of a land which previously constituted the LAHUG
Airport. In 1949, landowners surrounding the vicinity of Lahug airport were
informed of an expropriation of their lands for the purpose of expansion with
reassurance that they would be able to repurchase the same when said
airport would be abandoned. Defendant was one of the few who refused.
However, CFI promulgated a decision in favor of Civil Aeronautics Authority
(CAA) which approved the lawful expropriation proceedings that was not
appealed by Gopuco thus attaining finality. However, Lahug was
subsequently abandoned due to the creation of the MIA. A law was then
passed that created MCIAA upon which the assets of Lahug Airport was
transferred thus including the titles to such lands. Gapuco then wanted to
get back his land by asserting that by closure of the Lahug Airport, the
original purpose for which the property was expropriated had ceased or
otherwise been abandoned, and title to the property had therefore should be
reverted to him. Furthermore, he claims that he agreed to a compromise
settlement that assured that such expropriated lots will be resold to them at
the same price as it was expropriated in the event the lahug airport will be
abandoned. RTC dismissed Gapucos claim but CA reversed the RTC and
upheld the reconveyance to Gapuco. RTCs claim that the fact of
abandonment does not ipso facto give the original owner to recover the
same. CAs claim was about the existence of genuine necessity, that when it
ceases to exist govt interest must yield to the private rights of the original
owner.
Issue:
(1) When private land is expropriated for a particular public use, and that
particular public use is abandoned, does its former owner acquire a cause of
action for recovery of the property?
(2) WON Gapuco had the right to get back his land.
Held:
(1) It depends upon the character of the title acquired by expropriator. SC
said, If, for example, land is expropriated for a particular purpose, with the
condition that when that purpose is ended or abandoned the property shall
return to its former owner, then, of course, when the purpose is terminated
or abandoned the former owner reacquires the property so expropriated. On
the other hand, when land has been acquired for public use in fee simple,
unconditionally, either by the exercise of eminent domain or by purchase,
the former owner retains no rights in the land, and the public use may be
abandoned or the land may be devoted to a different use, without any
impairment of the estate or title acquired, or any reversion to the former
owner.
(2) No. The SC enunciated that Gapucos case was similar to that of
CHIONGBIAN where, there was no condition imposed to the effect that the
lot would return to CHIONGBIAN or that CHIONGBIAN had a right to
repurchase the same if the purpose for which it was expropriated is ended or
abandoned or if the property was to be used other than as the Lahug
Airport. What the SC simply imply was that there was complete absence of
PREPONDERANT EVIDENCE to prove that he had the right to repurchase
that could have been proven by virtue of the COMPROMISE SETTLEMENT he
was claiming.

47. HEIRS OF MORENO VS. MCIAA (GR NO. 156273)
FACTS:
Petitioners are the successors-in-interest of the former registered owners of
two parcels of land situated in Lahug, Cebu City, designated as Lot No. 916
and Lot No. 920. In 1949, the National Airport Corporation (NAC), as the
predecessor agency of respondent Mactan-Cebu International Airport
Authority (MCIAA), wanted to acquire Lots Nos. 916 and 920 among other
parcels of land for the proposed expansion of Lahug Airport. The
government assured the landowners that they could repurchase their lands
once Lahug Airport was closed or its operations transferred to Mactan
Airport. Despite such offer, the landowners of the subject properties refused
because the payment was perceived to be way below the market price.
As the negotiations for the purchase of the lots necessary irredeemably
broke down, the Civil Aeronautics Administration (CAA), as the successor
agency of the NAC, filed a complaint with the Court of First Instance for the
expropriation of Lots Nos. 916 and 920 and other subject realties. On
December 29, 1961 the trial court promulgated its decision condemning the
subject lots for public use upon payment of just compensation. No appeal
was taken from the decision and the judgment of condemnation became
final and executory. Thereafter, the certificates of title for these parcels of
land were issued in the name of the Republic of the Philippines, which were
later transferred in favor of respondent MCIAA under Republic Act 6958 in
1990.
Soon after the subject lots were transferred to MCIAA, Lahug Airport ceased
operations as the Mactan Airport was opened for incoming and outgoing
flights. Thus, the properties which had been expropriated for the extension
of Lahug Airport were not utilized since no expansion of Lahug Airport was
undertaken by MCIAA and its predecessors-in-interest. As a result,
petitioners wrote then President Ramos and the airport manager begging
them for the exercise of their alleged right to repurchase; however, their
pleas were not heeded.

On 11 March 1997 petitioners filed a complaint for reconveyance and
damages with the RTC against respondent MCIAA to compel the repurchase
of the subject lots. Petitioners averred that they had been convinced by the
officers of the predecessor agency of respondent MCIAA not to oppose the
expropriation proceedings since in the future they could repurchase the
properties if the airport expansion would not push through. Such allegation
was not objected to by respondent MCIAA. When the civil case was pending,
others alleging to have interest over the said properties through deeds of
assignment or lease contract, filed motions to intervene in the case.
On 12 April 1999, the RTC found merit in the claims of petitioners and
granted them the right to repurchase the properties at the amount pegged
as just compensation but subject to the alleged property rights of those who
intervened. The trial court opined that the expropriation became illegal or
functus officio when the purpose for which it was intended was no longer
there.
This decision, however, was subsequently reversed by the Court of Appeals
on December 20, 2001 on the ground that the judgment of condemnation
was unconditional so that the rights gained therefrom by respondent MCIAA
were indicative of ownership in fee simple.
ISSUE(S):
Whether or not the petitioners are entitled to a right to repurchase their
properties.
RULING:
The Court held in the affirmative. In the case of Fery v. Municipality of
Cabanatuan, citing the case of Reyes v. Court of Appeals, it was held that
the government acquires only such rights in expropriated parcels of land as
may be allowed by the character of its title over the properties, to wit: If the
land is expropriated for a particular purpose, with the condition that when
that purpose is ended or abandoned the property shall return to its former
owner, then, when the purpose is terminated or abandoned the former, the
owner reacquires the property so expropriated. If, upon the contrary,
however, the decree of expropriation gives to the entity a fee simple title,
then, the land becomes the absolute property of the expropriator and the
non-user does not have the effect of defeating the title acquired by the
expropriation proceedings. When land has been acquired for public use in
fee simple, unconditionally, either by the exercise of eminent domain or by
purchase, the former owner retains no rights in the land, and the public use
may be abandoned, or the land may be devoted to a different use, without
any impairment of the estate or title acquired, or any reversion to the former
owner.
The respondents contention, in stating that one would not find an express
statement in the decision to the effect that the condemned lot would return
to the landowner or that the landowner had a right to repurchase the same
if the purpose for which it was expropriated ended or abandoned or if the
property was to be used other than as the Lahug Airport, was upheld by the
Court. However, the Court opined that such is not fatal to the cause of the
petitioners since the return or repurchase of the condemned properties of
petitioners could be readily justified as the manifest legal effect or
consequence of the trial court's underlying presumption that "Lahug Airport
will continue to be in operation" when it granted the complaint for eminent
domain and the airport discontinued its activities.
Hence, respondent MCIAA as representative of the State is obliged to
reconvey the lots to the petitioners, who shall hold the same subject to
existing liens established. In return, petitioners must restore to respondent
MCIAA what they received as just compensation with consequential
damages by way of legal interest from November 16, 1947. Petitioners must
likewise pay respondent MCIAA the necessary expenses it may have incurred
in sustaining the properties and the monetary value of its services in
managing them to the extent that petitioners will be benefited thereby. The
government, however, may keep whatever income or fruits it may have
obtained from the parcels of land, in the same way that petitioners need not
account for the interests that the amounts they received as just
compensation may have earned in the meantime. As a matter of justice and
convenience, the law considers the fruits and interests as the equivalent of
each other.
Petitioners need not also pay for improvements introduced by third parties
as the disposition of these properties is governed by existing contracts and
relevant provisions of law. As for the improvements that respondent MCIAA
may have made, if any, petitioners must pay respondent their prevailing free
market price in case petitioners opt to buy them and respondent decides to
sell. In other words, if petitioners do not want to appropriate such
improvements or respondent does not choose to sell them, the
improvements would have to be removed without any obligation on the part
of petitioners to pay any compensation to respondent MCIAA for whatever it
may have tangibly introduced therein.
48. MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY VS.
LOZADA, ET. AL. (GR NO. 176625)
Facts:
Subject of this case is a lot (Lot No. 88) located in Lahug, Cebu City. Its
original owner was Anastacio Deiparine when the same was subject to
expropriation proceedings, initiated by Republic, represented by the then
Civil Aeronautics Administration (CAA), for the expansion and improvement
of the Lahug Airport.
During the pendency of the expropriation proceedings, respondent Bernardo
L. Lozada, Sr. acquired Lot No. 88 from Deiparine. The trial court ruled for
the Republic and ordered the latter to pay Lozada the fair market value of
the lot. However, the projected improvement and expansion plan of the old
Lahug Airport, however, was not pursued. The plaintiff-respondents initiated
a complaint for the recovery of possession and reconveyance of ownership
the subject lot.
On the other hand, the petitioners asked for the immediate dismissal of the
complaint. They specifically denied that the Government had made
assurances to reconvey Lot No. 88 to respondents in the event that the
property would no longer be needed for airport operations. Petitioners
instead asserted that the judgment of condemnation was unconditional, and
respondents were, therefore, not entitled to recover the expropriated
property notwithstanding non-use or abandonment thereof. The lower court
ruled for herein plaintiff-respondents, which decision was affirmed by the
Court of Appeals. In this petition, the petitioners argued that the judgment
in Civil Case No. R-1881 was absolute and unconditional, giving title in fee
simple to the Republic.
Issue:
Whether or not a constructive trust was constituted in this case, and as
such, the respondents herein are entitled to the restitution of the
expropriated property which was not used for a public purpose.
Held:
YES. Art. 1454 of the Civil Code provides: If an absolute conveyance of
property is made in order to secure the performance of an obligation of the
grantor toward the grantee, a trust by virtue of law is established. If the
fulfilment of the obligation is offered by the grantor when it becomes due,
he may demand the reconveyance of the property to him.
Constructive trusts are fictions of equity which are bound by no unyielding
formula when they are used by courts as devices to remedy any situation in
which the holder of legal title may not in good conscience retain the
beneficial interest.
In constructive trusts, the arrangement is temporary and passive in which
the trustees sole duty is to transfer the title and possession over the
property to the plaintiff-beneficiary. Of course, the wronged party seeking
the aid of a court of equity in establishing a constructive trust must himself
do equity. Accordingly, the court will exercise its discretion in deciding what
acts are required of the plaintiff-beneficiary as conditions precedent to
obtaining such decree and has the obligation to reimburse the trustee the
consideration received from the latter just as the plaintiff-beneficiary would if
he proceeded on the theory of rescission. In the good judgment of the court,
the trustee may also be paid the necessary expenses he may have incurred
in sustaining the property, his fixed costs for improvements thereon, and the
monetary value of his services in managing the property to the extent that
plaintiff-beneficiary will secure a benefit from his acts.

The rights and obligations between the constructive trustee and the
beneficiary, in this case, respondent MCIAA and petitioners over Lots Nos.
916 and 920, are echoed in Art. 1190 of the Civil Code, When the
conditions have for their purpose the extinguishment of an obligation to
give, the parties, upon the fulfillment of said conditions, shall return to each
other what they have received x x x In case of the loss, deterioration or
improvement of the thing, the provisions which, with respect to the debtor,
are laid down in the preceding article shall be applied to the party who is
bound to return x x x.
49. APO FRUITS CORPORATION VS. COURT OF APPEALS (GR NO.
164195)
Facts:
Apo Fruits Corp. (AFC) and Hijo Plantation Inc. (HPI) were owners of 5
parcels of land (1,338.60 has.) located in San Isidro, Tagum, Davao. On 12
October 1995, the two voluntarily offered to sell the properties to the DAR.
DAR offered P86.9M for AFCs land and P164.40M for HPIs land. AFC, HPI
and DAR cannot agree on the price hence the Complaint for Determination
of Just Compensation was filed before the DAR Adjudication Board on 14
February 1997.
The DARAB failed to render a decision on the valuation of the land for three
years. But nevertheless, the government deposited P26M into AFCs account
and P45M into HPIs account as down payment in 1996. The DAR also
caused the titling of the land in the name of the Republic of the Philippines.
Later, titles were given to farmers under the CARP.
Due to DARABs failure to adjudicate, AFC and HPI filed a complaint for
determination of just compensation before the RTC of Davao which rendered
a decision in favor of AFC and HPI. The RTC ruled, based on the reports it
gathered from assessors, that the purchase price should be higher than
what was offered by DAR; that the purchase price should be at P103.33/ sq.
m; that DAR is to pay AFC and HPI a total of P1.38B.
Upon MR, the RTC modified its earlier ruling and added that the DAR should,
in addition to the amount of just compensation, pay AFC and HPI interest at

a rate of 12% per annum computed from the time the complaint was filed
until the finality of the decision.
DAR appealed to the CA, the CA reversed the RTC.
The case was then elevated to the SC Third Division where the Court
reversed the CA ruling and affirmed the RTC decision with a slight
modification that the order to pay interest at 12% per annum be deleted in
its entirety.
Hence this Motion for Reconsideration
Issue:
WON AFC and HPI were entitled to the payment of interest in addition to the
amount of just compensation that is due them
Held:
The taking of property under the CARL is an exercise by the State of the
power of eminent domain. A basic limitation on the States power of eminent
domain is the constitutional directive that private property shall not be taken
for public use without just compensation
Just compensation refers to the sum equivalent to the market value of the
property, broadly described to be the price fixed by the seller in open market
in the usual and ordinary course of legal action and competition, or the fair
value of the property as between one who receives and one who desires to
sell. It is fixed at the time of the actual taking by the State. Thus, if property
is taken for public use before compensation is deposited with the court
having jurisdiction over the case, the final compensation must include
interests on its just value, to be computed from the tine the property is
taken up to the time when compensation is actually paid or deposited with
the court. In fine, between the taking of the property and the actual
payment, legal interests accrue in order to place the owner in a position as
good as (but not better than) the position he was before the taking
occurred.
It is explicit from LBP v. Wycoco that interest on the just compensation is
imposed only in case of delay in the payment thereof which must be
sufficiently established. Given the foregoing, we find that the imposition of

interest on the award of just compensation is not justified and should
therefore be deleted.
It must be emphasized that "pertinent amounts were deposited in favor of
AFC and HPI within fourteen months after the filing by the latter of the
Complaint for determination of just compensation before the RTC". 24 It is
likewise true that AFC and HPI already collected P149.6 and P262 million,
respectively, representing just compensation for the subject properties.
Clearly, there is no unreasonable delay in the payment of just compensation
which should warrant the award of 12% interest per annum in AFC and
HPI's favor.
50. CITY OF MANILA, ET. AL. VS. HON. LAGUIO, ET. AL. (GR NO.
118127)
FACTS:The pivotal issue in this Petition 1 under Rule 45 (then Rule 42) of
the Revised Rules on Civil Procedure seeking the reversal of the Decision 2 in
Civil Case No. 93-66511 of the Regional Trial Court (RTC) of Manila, Branch
18 (lower court), 3 is the validity of Ordinance No. 7783 (the Ordinance) of
the City of Manila. 4
The antecedents are as follows:
Private respondent Malate Tourist Development Corporation (MTDC) is a
corporation engaged in the business of operating hotels, motels, hostels and
lodging houses. 5 It built and opened Victoria Court in Malate which was
licensed as a motel although duly accredited with the Department of Tourism
as a hotel. 6 On 28 June 1993, MTDC filed a Petition for Declaratory Relief
with Prayer for a Writ of Preliminary Injunction and/or Temporary Restraining
Order 7 (RTC Petition)with the lower court impleading as defendants, herein
petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza,
and the members of the City Council of Manila (City Council). MTDC prayed
that the Ordinance, insofar as it includes motels and inns as among its
prohibited establishments, be declared invalid and unconstitutional. 8
Enacted by the City Council 9 on 9 March 1993 and approved by petitioner
City Mayor on 30 March 1993, the said Ordinance is entitled
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF
B U S I N E S S E S P R O V I D I N G C E RTA I N F O R M S O F A M U S E M E N T,
ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE
AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR
OTHER PURPOSES. 10
In the Petition and in its Memorandum, 33 petitioners in essence repeat the

assertions they made before the lower court. They contend that the
assailedOrdinance was enacted in the exercise of the inherent and plenary
power of the State and the general welfare clause exercised by local
government units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter
of Manila and conjunctively, Section 458 (a) 4 (vii) of the Code. 34 They
allege that the Ordinance is a valid exercise of police power; it does not
contravene P.D. 499; and that it enjoys the presumption of validity. 35
ISSUE: Validity of Ordinance No. 7783 (the Ordinance) of the City of Manila.
HELD: NOT VALID
The tests of a valid ordinance are well established. A long line of decisions
has held that for an ordinance to be valid, it must not only be within the
corporate powers of the local government unit to enact and must be passed
according to the procedure prescribed by law, it must also conform to the
following substantive requirements: (1) must not contravene the Constitution
or any statute; (2) must not be unfair or oppressive; (3) must not be partial
or discriminatory; (4) must not prohibit but may regulate trade; (5) must be
general and consistent with public policy; and (6) must not be unreasonable.
The Ordinance was passed by the City Council in the exercise of its police
power, an enactment of the City Council acting as agent of Congress. Local
government units, as agencies of the State, are endowed with police power
in order to effectively accomplish and carry out the declared objects of their
creation. 41 This delegated police power is found in Section 16 of the Code,
known as the general welfare clause, viz:

SECTION 16.General Welfare. Every local government unit shall exercise
the powers expressly granted, those necessarily implied therefrom, as well
as powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government
units shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.
Requisites for the valid exercise

of Police Power are not met
To successfully invoke the exercise of police power as the rationale for the
enactment of the Ordinance, and to free it from the imputation of
constitutional infirmity, not only must it appear that the interests of the
public generally, as distinguished from those of a particular class, require an
interference with private rights, but the means adopted must be reasonably
necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals. 60 It must be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. A
reasonable relation must exist between the purposes of the police measure
and the means employed for its accomplishment, for even under the guise of
protecting the public interest, personal rights and those pertaining to private
property will not be permitted to be arbitrarily invaded. 61
Lacking a concurrence of these two requisites, the police measure shall be
struck down as an arbitrary intrusion into private rights 62 a violation of
the due process clause.
The object of the Ordinance was, accordingly, the promotion and protection
of the social and moral values of the community. Granting for the sake of
argument that the objectives of the Ordinance are within the scope of the
City Council's police powers, the means employed for the accomplishment
thereof were unreasonable and unduly oppressive.
The closing down and transfer of businesses or their conversion into

businesses "allowed" under the Ordinance have no reasonable relation to the
accomplishment of its purposes. Otherwise stated, the prohibition of the
enumerated establishments will not per se protect and promote the social
and moral welfare of the community; it will not in itself eradicate the alluded
social ills of prostitution, adultery, fornication nor will it arrest the spread of
sexual disease in Manila.
This is not warranted under the accepted definitions of these terms. The
enumerated establishments are lawful pursuits which are not per se
offensive to the moral welfare of the community.
The problem, it needs to be pointed out, is not the establishment, which by

its nature cannot be said to be injurious to the health or comfort of the
community and which in itself is amoral, but the deplorable human activity
that may occur within its premises. While a motel may be used as a venue
for immoral sexual activity, it cannot for that reason alone be punished. It
cannot be classified as a house of ill-repute or as a nuisance per se on a
mere likelihood or a naked assumption.
Means employed are constitutionally infirm
It is readily apparent that the means employed by the Ordinance for the
achievement of its purposes, the governmental interference itself, infringes
on the constitutional guarantees of a person's fundamental right to liberty
and property.
Modality employed is unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it substantially
divests the respondent of the beneficial use of its property.
An ordinance which permanently restricts the use of property that it can not
be used for any reasonable purpose goes beyond regulation and must be

recognized as a taking of the property without just compensation. 77 It is
intrusive and violative of the private property rights of individuals. EHTCAa
The Constitution expressly provides in Article III, Section 9, that "private
property shall not be taken for public use without just compensation." The
provision is the most important protection of property rights in the
Constitution.
There are two different types of taking that can be identified. A "possessory"
taking occurs when the government confiscates or physically occupies
property. A "regulatory" taking occurs when the government's regulation
leaves no reasonable economically viable use of the property.
What is crucial in judicial consideration of regulatory takings is that
government regulation is a taking if it leaves no reasonable economically
viable use of property in a manner that interferes with reasonable
expectations for use. 83 A regulation that permanently denies all
economically beneficial or productive use of land is, from the owner's point
of view, equivalent to a "taking" unless principles of nuisance or property law
that existed when the owner acquired the land make the use prohibitable.
Petitioners cannot take refuge in classifying the measure as a zoning
ordinance. A zoning ordinance, although a valid exercise of police power,
which limits a "wholesome" property to a use which can not reasonably be
made of it constitutes the taking of such property without just
compensation. Private property which is not noxious nor intended for
noxious purposes may not, by zoning, be destroyed without compensation.
Such principle finds no support in the principles of justice as we know them.
The police powers of local government units which have always received
broad and liberal interpretation cannot be stretched to cover this particular
taking.
Distinction should be made between destruction from necessity and eminent

domain. It needs restating that the property taken in the exercise of police
power is destroyed because it is noxious or intended for a noxious purpose
while the property taken under the power of eminent domain is intended for
a public use or purpose and is therefore "wholesome."
The foregoing premises show that the Ordinance is an unwarranted and
unlawful curtailment of property and personal rights of citizens. For being
unreasonable and an undue restraint of trade, it cannot, even under the
guise of exercising police power, be upheld as valid.
51. NATIONAL POWER CORPORATION VS. LUCMAN IBRAHIM (GR NO.
168732)
Facts: The National Power Corporation constructed underground tunnels on
several parcels of land owned in common by Ibrahim and his co-owners
situated in Lanao del Sur. NAPOCOR constructed the tunnels in 1978 but its
existence was discovered by the land owners only in 1992. The tunnels were
apparently being used by the NAPOCOR in siphoning the water of Lake
Lanao and in the operation of NAPOCOR's other projects located in other
parts of Mindanao.
The existence of the tunnels came to the attention of the co-owners
only when one of them applied for a permit with the Marawi City Water
District to construct and/or install a motorized deep well. The application
was denied on the ground that the construction of the deep well would
cause danger to lives and properties because Marawi City lies in the area of
volcanic and tectonic activity and because of the existence of tunnels
underneath the surface of their property. He was then informed that
underneath the land are underground tunnels of the NAPOCOR. Upon such
discovery, the co-owners filed an action against NAPOCOR for recovery of
land and damages.
The trial court denied the prayer of the co-owners for the dismantling
of the tunnels but ordered NAPOCOR to pay them just compensation since
there was "taking" of their property. the Court of Appeals sustained the
decision of the trial court. Hence, NAPOCOR elevated the matter to the
Supreme Court.
NAPOCOR maintains that the sub-terrain portion where the
underground tunnels were constructed does not belong to Ibrahim and his
co-owners even if they owned the property because their right to subsoil
does not extend beyond what is necessary to enable them to obtain all the
utility and convenience that such property can normally give. NAPOCOR also
asserts that Ibrahim and his co-owners were still able to use the subject
property even with the existence of the tunnels.
Held: The Supreme Court held that pursuant to Article 437 of the Civil Code,
the ownership of the land extends to the surface as well as to the subsoil
under it. The Court explained that the argument by the petitioner that the
landowner's right extends to the subsoil insofar as necessary for their
practical interests serves only to further weaken its case because the theory
would limit the right to the subsoil upon the economic utility which such area
offer to the surface owners.
Presumably, according to the Court, the landowner's right extends to
such height or depth where it is possible for them to obtain some benefit or
enjoyment, and it is extinguished beyond such limit as there would be no
more interest protected by law.
In this case, the landowners could have dug upon their property
motorized deep wells but were prevented from doing so by the authorities
precisely because of the construction and existence of the tunnels
underneath the surface of their property. Hence, the landowners still had a
legal interest in the sub-terrain portion insofar as they could have excavated
the same for the construction of the deep well.
There was, therefore, in this case, "taking" of private respondents'
property which entitled the latter to the payment of just compensation.
52. REPUBLIC VS. HON. COURT OF APPEALS AND JOSE DE LA ROSA
(GR NO. L-43938)
Facts: Jose De la Rosa sought for the registration of a parcel of land from
Sps. Babaliao and Alberto who claims to have acquired it through
prescription. However, Benguet Consolidated, Inc. and Atok Wedge Mining
Company opposed such registration by virtue of their Mining Claims which
they acquired through purchase on 1934 and 1931, respectively. Bureau of
Forestry also opposed claiming that it was part of Forest Reserves under
Proc. 217 on Feb. 1929. Trial court denied the application due to failure to
prove their claim of ownership. CA however, reversed the TC, approving the
application of JDR but subject to the rights of BENGUET and ATOK. B and A
appealed claiming Superior rights while Republic claims that neither JDC nor
A and B had valid claims because it is not Alienable and Disposable. The CAs
claim is that there were no Conflict of Interest between JDR and A and B, it
enunciated that under the aforesaid ruling, the land is classified as mineral
underneath and agricultural on the surface, subject to separate claims of
title. Such doctrine of CA because as commonly applied, SC said for it is a
well-known principle that the owner of a piece of land has rights not only to
its surface but also to everything underneath and the airspace above it up to
a reasonable height.
Issue: WON the doctrine enunciated by the CA proper?
Held: No. (1) By virtue of the Mining Claim, the land which was originally
classified as forest land ceased to be so and became mineral and
completely mineral once the mining claims were perfected. Benguet and
Atok have exclusive rights to the property in question by virtue of their
respective mining claims which they validly acquired before the Constitution
of 1935 prohibited the alienation of all lands of the public domain except
agricultural lands, subject to vested rights existing at the time of its
adoption.
(2) REGALIAN DOCTRINE which simply reserves to the State all minerals
that may be found in public and even private land devoted to "agricultural,
industrial, commercial, residential or (for) any purpose other than mining."
Thus, if a person is the owner of agricultural land in which minerals are
discovered, his ownership of such land does not give him the right to extract
or utilize the said minerals without the permission of the State to which such
minerals belong. Furthermore, once minerals are discovered in the land,
whatever the use to which it is being devoted at the time, such use may be
discontinued by the State to enable it to extract the minerals therein in the
exercise of its sovereign prerogative. Thus, JDR with his successors-in-
interests could not have validly acquired such lands through prescription
neither could they share simultaneously with the mining companies.
53. RIOSA VS. VERZOSA (26 PHIL 86)
FACTS:

Sometime prior to December 1, 1909, a judgment was rendered against
defendant Verzosa for the sum of P320.87. An execution was made upon
said judgment, in which the property subject of the execution was purchased
by plaintiff Riosa. Subsequently, on January 25, 1910, plaintiff Riosa
commenced an action against the defendants, the purpose of which was to
secure an injunction to prevent the defendants form harvesting and
destroying the growing hemp upon a certain parcel of land, to recover
damages in the sum of P500 for injuries already committed upon such land
and to require the defendants to deposit the hemp already harvested with
the deputy sheriff.
Upon the presentation of said petition, the judge granted a temporary
injunction in conformity with the prayer of the petition. The defendants were
duly served with a summons and a copy of the petition, as well as with a
copy of the injunction granted by the court. However, the defendants failed
to appear and answer the complaint within the time prescribed by law and
by reason of such failure, the plaintiff, on the March 21, 1910, presented a
motion asking that a judgment by default be rendered against them. Such
motion was granted on the April 2, 1910.
The defendants appeared on April 15, 1910, by their attorney, and the cause
was duly brought to trial April 20, 1910. After hearing the evidence, the
judge granted a permanent injunction against the defendants, restraining
them from cultivating or harvesting the crops upon the said land or from
doing anything thereon which would tend to injure its value, and also found
that the defendants had caused damages to the plaintiff in the sum of P300.
On September 11, 1910, the defendants were able to redeem the land, in
the manner provided for by law, and later on renewed their motion to have
the judgment by default set aside. Trial was duly brought for the motion on
September 17, 1910 to which the judge rendered a decision setting aside the
judgment rendered on Aril 1910. On April 3, 1911, the judge held that the
plaintiff was not entitled to the remedy prayed for in the petition and
subsequently dismissed the cause of action with costs against the
defendants.
ISSUE(S):
Whether or not the plaintiff has a right to the damages being prayed for in
the petition.
RULING:
The Court held that inasmuch as the law permits the owner of the land
which has been sold under an execution to redeem the same within a period
of twelve months, the purchaser of the land sold at a public auction under a
writ of execution only has an inchoate right in the property, subject to be
defeated and terminated within the said period of twelve months from the
date of sale, by a redemption on the part of the owner. As held in De la Rosa
v. Santos, the purchaser, where the land was in possession of the owner and
not a tenant, is not entitled to recover the rents and profits of the land sold
during the period within which the owner might redeem.
In the present case, the property was in the possession of the owner and
the inchoate right of the purchaser was subject to be defeated at any
moment during the period of redemption. The owner was entitled to remain
in the possession of the land sold for the statutory term of twelve months,
and she might at any time defeat the inchoate right obtained by the
purchaser by proper redemption within that period. Under the law it would
seem to be difficult to fully understand the right of the plaintiff to interfere in
the manner in which he has attempted to interfere with the owner of the
land before the expiration of the twelve months within which the owner had
a right to redeem the land.
The defendants, having redeemed the land in accordance with the provisions
of law and within the legal period, it must follow that the plaintiff was not
entitled to the remedy prayed for in his petition and is, therefore, not
entitled to damages resulting from the use and occupation by the
defendants.
54. VELASCO VS. ROSENBERG (32 PHIL 72)
FACTS:
On July 14, 1913, plaintiff commenced an action against the defendant in
the Court of First Instance of the city of Manila, with the purpose to recover
from the defendant corporation the possession of a certain parcel of land
together with the buildings thereon, more particularly described in the third
paragraph of the complaint, and together with the sum of P500, for each
and every month from July 1, 1912, until the same is delivered to the
plaintiff. It was further petitioned by the plaintiff for the appointment of a
receiver to take charge of and conserve the property in litigation during the
pendency of the action.
In accordance with the prayer of the petition, on July 14, 1913, a receiver
was appointed, who took possession of the property.
The defendant set up a general and denied that the plaintiff is entitled to the
possession of the property in question. The defendant alleged that the
receiver not only took possession of the property described in the third
paragraph of the complaint, but other properties as well. The defendant
further alleged that the plaintiff, through its receiver, fraudulently used the
name of Rosenberg, and did solicit and obtain business from the public by
the use of such name, to the damage of the defendant in the sum of
P20,000. The defendant also alleged that he had been damaged by the
appointment of the receiver in the sum of P5,000, together with other
damages which the defendant claims to have received from the action of the
plaintiff, and prayed for a judgment against the plaintiff in the sum of
P29,350.
After hearing the evidence on trial, the presiding judge found that during the
time the plaintiff occupied the property in question, through its receiver, and
used the trade name of the defendant, the latter was damaged in the sum of
P500. The court further found that the receiver took possession of certain
personal properties and retained the same to the damage of the defendant
in the sum of P350. Thereafter, the judge rendered the following judgment:
(1) that the plaintiff was entitled to the possession of the parcel of land,
together with the buildings thereon, particularly described in said paragraph
three; and (2) that a judgment be rendered in favor of the defendant and
against the plaintiff in the sum of P850.
ISSUE(S):

1. Whether or not the purchaser at an execution sale has a right to the
rents and profits of the property sold.
2. Whether or not the defendant has a right to recover damages
resulting from a continuance of the business sold under execution.
RULING:
With reference to the first question, the Court reiterated the principle
discussed in the case of De la Rosa vs. Revita Santos in so far as the right of
the purchaser is concerned to collect rent for the property during the period
of redemption when the execution debtor is in possession of the property. In
that case, the Court held: "That, inasmuch as, under the law, the rents
received by the purchaser during the period allowed for redemption must be
applied on account of the redemption price, the judgment debtor in
possession of such property should not be required to pay rent, inasmuch as
he would thereby imply be paying rent to himself."
With reference to the damage caused to the defendant by the receiver in
continuing in the business, the Court held that inasmuch as the receiver was
an officer of the court, appointed thereby for the purpose of conserving the
property, there is a right to assume that he was authorized to do so. That
being true, the question of damages should have been settled in the
receivers final accounting to the court. There is nothing in the record in the
present case which justifies that part of the judgment of the lower court,
therefore, that part of the judgment in favor of the defendant and against
the plaintiff for the sum of P500 must be revoked.
With reference to that part of the judgment of the lower court relating to the
P350, the Court held that there is nothing in the record which shows that the
properties taken were not part of those turned over to the receiver. If it
were, then the receiver should have rendered an account for the same in his
final report to the court. If the receiver has not properly reported the same
or accounted therefor, an objection might properly have then been made
being that the receiver should be held responsible in case of loss through
negligence or by bad administration of the property given into his care.
There is nothing in the record which shows that the properties have not

been properly accounted for or have been negligently lost. Therefore,
nothing in the record justifies the judgment against the plaintiff and in favor
of the defendant for its value and the same must also be revoked.
55. SARMIENTO VS. AGANA (129 SCRA 122)
Facts:
When Ernesto was still courting his wife, the latter's mother had told him the
couple could build a residential houseon the land which Ernesto did at a cost
of P8,000.00 to P10,000.00. He assumed that the wife's mother was the
owner of the land and it would be transferred to the spouses.
It subsequently turned out that the land had been titled in the name of Mr. &
Mrs. Jose C. Santo, Jr. who, sold the same to petitioner Sarmiento.
SARMIENTO filed an Ejectment suit against them. In the evidentiary
hearings before the Municipal Court, Sarmiento submitted the deed of sale
of the land in her favor, which showed the price to beP15,000.00.
On the other hand, Ernesto testified that the then cost of the residential
house would be from P30,000.00 to P40,000.00.Sarmiento refuse to pay and
give option to buy the property.
Issue:
1. Whether or not Ernesto was in good faith.
2. Whether or not Sarmiento could exercise both refusal to pay the spouses
and give option to purchase.
Held:
1.Yes. The Court agree that Ernesto and wife were builders in good faith in
view of the peculiar circumstances under which they had constructed the
residential house. As far as they knew, the LAND was owned by Ernesto's
mother-in-law who, having stated they could build on the property, could
reasonably be expected to later on give them the land.
In regards to builders in good faith, Article 448 of the Code provides:
ART. 448.

The owner of the land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing
or planting, after payment of the indemnity provided for in articles 546and
548, or to oblige the one who built or planted to pay the price of the land,
and the one who sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably more than that
of the building or trees. In such case, he shall pay reasonable rent, if the
owner of the land does not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.
2. No. The owner of the building erected in good faith on a land owned
by another, is entitled to retain the possession of the land until he is paid the
value of his building, under article 453 (now Article 546).
The owner, of the land upon, the other hand, has the option, under article
361 (now Article 448),either to pay for the building or to sell his land to the
owner of the building.
But he cannot, as respondents here did, refuse both to pay for the building
and to sell the land
and compel the owner of the building to remove it from the land where it is
erected. He is entitled to such remotion only when, after having chosen to
sell his land, the other party fails to pay for the same. We hold, therefore,
that the order of Judge Natividad compelling defendants-petitioners to
remove their buildings from the land belonging to plaintiffs-respondents only
because the latter chose neither to pay for such buildings nor to sell the
land, is null and void, for it amends substantially the judgment sought to be
executed and is, furthermore, offensive to articles 361 (nowArticle 448) and
453 (now Article 546) of the Civil Code.
56. BALUCANAG VS. JUDGE FRANCISCO (GR NO. L-34199)
Facts:
Balucanag bought the land from Mrs. Charvet that was leased by Richard
Stohner for a period of 5 years with the following agreements: 40.00
monthly rental to be paid in advance during the first 10 days of the month,
and that Stohner may make such improvements to the leased land provided
that he should remove that improvements within a period of 2 months after
the expiration of the agreement otherwise, the lessor may remove the said
buildings/improvements at the expense of the lessee.
During the existence of the lease, Stohner made some fillings and built a
house. Said improvements were valued at 35,000;
When Stohner failed to pay his rents, the counsel of Balucanag wrote a
demand letter that he vacate the premises. Stohner replied thru his counsel
that he was a builder in good faith.
Issue:
WON Stohner is a builder in good faith
Held:
Respondent Stohner cannot be considered a builder in good faith Article
448 of the Civil Code, relied upon by respondent judge, applies only to a
case where one builds on land in the belief that he is the owner thereof and
it does not apply where one's only interest in the land is that of a lessee
under a rental contract. In the case at bar, there is no dispute that the
relation between Balucanag and Stohner is that of lessor and lessee, the
former being the successor in interest of the original owner of the lot.
". . . the principle of possessor in good faith refers only to a party who
occupies or possess property in the belief that he is the owner thereof and
said good faith ends only when he discovers a flaw in his title so as to
reasonably advise or inform him that after all he may not be the legal owner
of said property. It cannot apply to a lessee because as such lessee he
knows that he is not the owner of he leased premises. Neither can he deny
the ownership or title of his lessor. . . . A lessee who introduces
improvements in the leased premises, does so at his own risk in the sense
that he cannot recover their value from the lessor, much less retain the
premises until such reimbursement. . . ."
57. FLOREZA VS. EVANGELISTA (96 SCRA 130)
Plaintiffs Maria de Evangelista and Sergio Evangelista, who are mother and
son, (the EVANGELISTAS, for short) are the owners of a residential lot

located at Sumilang St., Tanay, Rizal, with an area of 204.08 sq. ms.,
assessed at P410.00.
In May 1945, the EVANGELISTAS borrowed from FLOREZA the amount of
P100.00. On or about November 1945, with the consent of the
EVANGELISTAS, FLOREZA occupied the above residential lot and built
thereon a house of light materials (barong-barong) without any agreement
as to payment for the use of said residential lot owing to the fact that the
EVANGELISTAS has then a standing loan of P100.00 in favor of FLOREZA. 1
On the following dates, the EVANGELISTAS again borrowed the indicated
amounts: September 16, 1946 - P100.00; 2 August 17, 1947 P200.00; 3
January 30, 1949 P200.00; 4 April 1, 1949 P140.00, 5 or a total of
P740.00 including the first loan. The last three items are evidenced by
private documents stating that the residential lot stands as security therefor
and that the amounts covered thereunder are payable within six years from
date, without mention of interest. The document executed on September 16,
1946 stated specifically that the loan was without interest "walang anumang
patubo."
On January 10, 1949, FLOREZA demolished this house of light materials and
in its place constructed one of strong materials assessed in his name at
P1,410.00 under Tax Declaration No. 4448. FLOREZA paid no rental as
before.
On August 1, 1949, the EVANGELISTAS, for and in consideration of
P1,000.00 representing the total outstanding loan of P740.00 plus P260.00
in cash, sold their residential lot to FLOREZA, with a right to repurchase
within a period of 6 years from date, or up to August 1, 1955, as evidenced
by a notarial document, Exh. B, registered under Act 3344 on December 6,
1949, as Inscription No. 2147. 7
On January 2, 1955, or seven months before the expiry of the repurchase
period, the EVANGELISTAS paid in full the repurchase price of P1,000.00.
On April 25, 1956, the EVANGELISTAS, through their counsel, wrote
FLOREZA a letter 8 asking him to vacate the premises as they wanted to
make use of their residential lot besides the fact that FLOREZA had already
been given by them more than one year within which to move his house to
another site. On May 4, 1956, the EVANGELISTAS made a formal written
demand to vacate, within five days from notice, explaining that they had
already fully paid the consideration for the repurchase of the lot. 9 FLOREZA
refused to vacate unless he was first reimbursed the value of his house.
Hence, the filing of this Complaint on May 18, 1956 by the EVANGELISTAS.
During the pendency of this appeal, petitioner Maria D. de Evangelista died
and was ordered substituted by her son, petitioner Sergio, as her legal
representative, in a Resolution dated May 14, 1976. On October 20, 1978,
the EVANGELISTAS filed a Motion to Dismiss stating that FLOREZA had since
died and that his heirs had voluntarily vacated the residential lot in question.
The date FLOREZA passed away and the date his heirs had voluntarily
vacated the property has not been stated.
ISSUES:
1. WON petitioner Floreza was a builder in bad faith and WON the
EVANGELISTAS should also be held in bad faith, so that both of them being
in bad faith, Article 453 of the Civil Code should apply
2. WON petitioner IS entitled to reimbursement for the value of his
house and WON he should remove the same at his expense
3. WON petitioner should vacate respondents' lot in question and to pay
rentals commencing until he shall have vacated the premises
HELD:
1. We uphold the Court of Appeals in its conclusion that Article 448 of
the Civil Code is inapplicable to the factual milieu herein. Said codal provision
applies only when the builder, planter, or sower believes he had the right so
to build, plant or sow because he thinks he owns the land or believes himself
to have a claim of title. 13 In this case, petitioner makes no pretensions of
ownership whatsoever.
Petitioner concedes that he was a builder in bad faith but maintains that the
EVANGELISTAS should also be held in bad faith, so that both of them being
in bad faith, Article 453 of the Civil Code 14 should apply. By the same
token, however, that Article 448 of the same Code is not applicable, neither
is Article 453 under the ambiance of this case.

2. Would petitioner, as vendee a retro, then be entitled to the rights
granted in Article 1616 of the Civil Code (Art. 1518 of the old Code)? To
quote:
"Art. 1616.The vendor cannot avail himself of the right of repurchase without
returning to the vendee the price of the sale, and in addition:
(1)The expenses of the contract, and any other legitimate payments made
by reason of the sale;
(2)The necessary and useful expenses made on the thing sold."
The question again calls for a negative answer. It should be noted that
petitioner did not construct his house as a vendee a retro. The house had
already been constructed as far back as 1949 (1945 for the house of light
materials) even before the pacto de retro sale in 1949. Petitioner incurred no
useful expense, therefore, after that sale. The house was already there at
the tolerance of the EVANGELISTAS in consideration of the several loans
extended to them. Since petitioner cannot be classified as a builder in good
faith within the purview of Article 448 of the Civil Code, nor as a vendee a
retro, who made useful improvements during the lifetime of the pacto de
retro, petitioner has no right to reimbursement of the value of the house
which he had erected on the residential lot of the EVANGELISTAS, much less
to retention of the premises until he is reimbursed. The rights of petitioner
are more akin to those of a usufructuary who, under Article 579 of the Civil
Code (Art. 487 of the old- Code), may make on the property useful
improvements but with no right to be indemnified therefor. He may, however,
remove such improvements should it be possible to do so without damage to
the property: For if the improvements made by the usufructuary were
subject to indemnity, we would have a dangerous and unjust situation in
which the usufructuary could dispose of the owner's funds by compelling him
to pay for improvements which perhaps he would not have made.
3. We come now to the issue of rentals. It is clear that from the date
that the redemption price had been paid by the EVANGELISTAS on January
2, 1955, petitioner's right to the use of the residential lot without charge had
ceased. Having retained the property although a redemption had been
made, he should be held liable for damages in the form of rentals for the
continued use of the subject residential lot 16 at the rate of P10.00 monthly
from January 3, 1955, and not merely from the date of demand on May 4,
1956, as held by the Court of Appeals, until the house was removed and the
property vacated by petitioner or his heirs.
58. FILIPINAS COLLEGES, INC. VS. TIMBANG (GR NO. L-12812)
Facts: This is an appeal taken from an order of the Court of First Instance of
Manila dated May 10, 1957 (a) declaring from the Sheriff's certificate of sale
covering a school building sold at public auction null and void within 15 days
from notice of said order. The successful bidders, defendant-appellants,
spouses Maria Garcia Timbang and Marcelino Timbang shall pay to, appelle,
Maria Gervacio Blas directly or through the Sheriff of Manila, the sum of
Php5,750, that the spouses Timbang had bid for the building at the Sheriff's
sale; (b) that the other appelle Filipinas Colleges, Inc. owner of
34,500/3,285,934 undivided interest in Lot 2-A covered by certificate of title
no. 45970 on which the building sold in auction sale is situated; and (c)
ordering the sale in public auction of the said undivided interest of the
Filipinas Colleges, Inc. in the amount of Php8,200 minus the sum of
Php5,750 mentioned in (a) above. The order appealed from is the result of
three motions filed in court a quo in the course of the execution of a final
judgment of the Court of Appeals rendered in 2 cases appealed to it in which
the spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blas
were the parties. The spouses Timbang presented their opposition to each
and all of this motion. In assailing the order of the court a quo directing the
appellants to pay the appellee Blas the amount of their bid (Php5,750) made
at the public auction, the appellants' counsel has presented a novel albeit
ingenious, argument. They contend that since the builder in good faith has
failed to pay the price of the land after the owners thereof exercised their
option under Article 448 of the Civil Code, the builder has lost his right and
the appellants as owners of the land became the owners ipso facto.
Issue:

1. WON the contention of the appellants is valid. If not, what are the
remedies left to the owners of the land if the builder fails to pay?
2.WON the appellants, as owners of the land, may seek the recovery of
the value of their land by writ of execution; levy the house of the builder and
sell it in public auction.
Held/Rationale:
NO, the appellants contention is superfluous. There is nothing in the
language of these two articles 448 & 546, which would justify the conclusion
of the appellants, that, upon the failure of the builder to pay the value of the
land, when such is demanded by the landowner, the latter becomes
automatically the owner of the improvement under Article 445. Although it is
true, it was declared therein that in the event of the failure of the builder to
pay the land after the owner thereof has chosen this alternative, the
builder's right of retention provided in Article 546 is lost, nevertheless there
was nothing said that as a consequence thereof, the builder loses entirely all
rights over his own building. The remedy left to the parties in such
eventuality in which the builder fails to pay the value of the land, though the
Code is silent on this Court, a builder in good may not be required to pay
rentals. He has right to retain the land on which he has built in good faith
until he is reimbursed with the expenses incurred by him. Possibly he might
be made to pay rental only when the owner of the land chooses not to
appropriate the improvements and requires the builder in good faith to pay
for the land but that the builder is unwilling or unable to pay the land, and
they decide to leave things as they are and assume the relation of lessor-
lessee, and should they disagree as to the amount of rental then they could
to the court to fix that amount.
The second contention was without merit. In the instant case, the
Court of Appeals has already adjudged that appellee Blas is entitled to the
payment of the unpaid balance of the purchase price of the school building.
With respect to the order of the court declaring appellee Filipinas Colleges,
Inc., part owner of the land to the extent of the value of its personal
properties sold at public auction in favor of the Timbangs. This Court
likewise finds the same as justified, for such represents, in effect, a partial
payment of the value of the land. Failure of the Timbang spouses to pay to
the Sheriff or to Maria Gervacio Blas said sum of Php5,750 within 15 days
from notice of the final judgment, an order of execution shall issue in favor
of Maria Gervacio Blas to be levied upon all the properties of the Timbang
spouses not exempt from execution as satisfaction for the said amount.
59. PNB VS. DE JESUS (GR NO. 149295)
Facts: Respondent filed a case in the RTC for recovery of ownership and
possession, with damages over a portion of the land it owns that is being
encroached to an extent of 124 sq.m. by petitioners building. Petitioners,
on the other hand, claimed that when it acquired the said building from a
certain Mayor Ignacio, he was informed that said building encroached a
portion of said land, and to remedy it, such portion was also sold to him and
latter accepted. Such sale did not materialize because said land was
mortgage to DBP without petitioners consent. The RTC promulgated a
decision in favor of respondents and was affirmed by the CA.
Issue:
(1) WON PNB is in good faith as it claims to be?
(2) WON Art. 448 is applicable to this case?
Held:
(1) No, PNB is not in good faith. SC said, petitioner was quite aware, and
indeed advised, prior to its acquisition of the land and building from Ignacio
that a part of the building sold to it stood on the land not covered by the
land conveyed to it. Contrary, GOOD FAITH under Art. 448 one is
considered in good faith if he is not aware that there exists in his title or
mode of acquisition any flaw which invalidates it. Its essence lies in an
honest belief in the validity of one's right, ignorance of a superior claim, and
absence of intention to overreach another.
(2) Not applicable. Article 448, of the Civil Code refers to a piece of land
whose ownership is claimed by two or more parties, one of whom has built
some works (or sown or planted something) and NOT to a case where the
owner of the land is the builder, sower, or planter who then later loses
ownership of the land by sale or otherwise for, elsewise stated, "where the
true owner himself is the builder of works on his own land, the issue of good
faith or bad faith is entirely irrelevant." In this case, petitioner was not the
one who built the building but rather it was already built by Mayor Ignacio
when it acquired, thus such case does not fall in Art. 448.
60. PARILLA, ET. AL. VS. PILAR (GR NO. 167680)
FACTS:
Petitioners, as dealers of Pilipinas Shell Petroleum Corporation, have been in
possession of a parcel of land in Ilocos Sur, which was leased to it by the
respondent under a 10-year Lease Agreement entered into in 1990. When
the lease contract between Pilipinas Shell and the respondent expired in
2000, petitioners remained in possession of the property on which they built
improvements consisting of a billiard hall and a restaurant, maintained a
sari-saristore and allowed the use of a portion thereof as parking lot. Despite
demands to vacate, petitioners and the other occupants remained in the
property.
Hence, respondent who has been residing in the United States, through his
attorney-in-fact, filed on February 4, 2002 a complaint for ejectment before
the MTC with prayer for the issuance of a writ of preliminary injunction with
damages against petitioners and the other occupants of the property. The
MTC, by its decision on February 3, 2003, ordered the petitioners and their
co-defendants and all persons claiming rights under them to vacate the
property and to pay the respondent the amount of P50,000 as reasonable
compensation for the use of the property and P10,000 as attorneys fees and
to pay cost of suit. It also ordered the respondent to reimburse the
defendants the amount of P2,000,000 representing the value of the
improvements introduced on the property.
The respondent appealed to the RTC part of the MTCs decision which
ordered him to reimburse the petitioners for the value of the improvements.
In setting aside the questioned order, the RTC, applying Article 546 of the
New Civil Code (NCC), held that the petitioners tolerated occupancy could
not be interpreted to mean that they are builders or possessors in good faith

and that for one to be a builder in good faith, it is assumed that he claims
title to the property which is not the case of the petitioners.
Petitioners, in their petition for review to the SC, argue that since neither the
respondent nor his agents or representatives performed any act to prevent
them from introducing the improvements, the applicable provision in this
case would be Article 453 of the NCC. Petitioners further allege that being
builders in good faith, until they are reimbursed of the value of the
improvements they had introduced on the property, they have the right of
retention or occupancy thereof pursuant to Article 448, in relation to Article
546, of the New Civil Code, otherwise, respondent would be unjustly
enriched at their expense.
ISSUE(S):
Whether or not the petitioners have the right to retain the property until
reimbursement of the value of the improvements is made by respondent.
RULING:
The petition should fail.
It was shown that in 1960, a lease contract over the property was forged
between Shell Company of the Philippines Limited and respondent's
predecessors-in-interest. In 1990, the lease contract was renewed by
Pilipinas Shell and respondent. Petitioners, being dealers of Pilipinas Shell's
petroleum products, were allowed to occupy the property. Petitioners are
thus considered agents of Pilipinas Shell. The facts of the instant case calls
then for the application of the provisions on lease under the New Civil Code.
The right of the lessor upon the termination of a lease contract with respect
to useful improvements introduced on the leased property by a lessee is
covered by Article 1678 of the NCC which reads: If the lessee makes, in
good faith, useful improvements which are suitable to the use for which the
lease is intended, without altering the form or substance of the property
leased, the lessor upon the termination of the lease shall pay the lessee one-
half of the value of the improvements at that time. Should the lessor refuse
to reimburse said amount, the lessee may remove the improvements, even
though the principal thing may suffer damage thereby. He shall not,
however, cause any more impairment upon the property leased than is
necessary.
The above provision is a modification of the Old Code under which the
lessee had no right at all to be reimbursed for the improvements introduced
on the leased property, since the lessee is being entitled merely to the rights
of a usufructuary - right of removal and set-off, but not of reimbursement.
The modificiation introduced in the NCC on partial reimbursement was
intended to prevent unjust enrichment on the part of the lessor which now
has to pay one-half of the value of the improvements at the time the lease
terminates because the lessee has already enjoyed the same, whereas the
lessor could enjoy them indefinitely thereafter.
Since the law on lease under the NCC has specific rules concerning useful
improvements introduced by a lessee on the property leased, it is erroneous
to apply Article 448, in relation to Article 546. As jurisprudence would show,
Article 448 covers only cases in which builders, sowers or planters believe
themselves to be owners of the land, or at least, have a claim of title
thereto, but not when the interest is merely that of a holder, such as a mere
tenant, agent or usufructuary. A tenant cannot be said to be a builder in
good faith as he has no pretension to be owner.
Thus, in the case at bar, it is the lessor, applying Article 1678, who is given
the option upon termination of the lease contract either to appropriate the
useful improvements by paying one-half of the value of their value at that
time, or to allow the lessee to remove the improvements.
61. ISMAEL MACASAET, ET. AL. VS. SPOUSES MACASAET (GR NOS.
154391-92)
Facts:
Petitioners Ismael and Teresita Macasaet and respondents Vicente and
Rosario Macasaet are first-degree relatives. Ismael is the son of respondents,
and Teresita is his wife.
On December 10, 1997, the parents filed with the Municipal Trial Court in
Cities (MTCC) of Lipa City an ejectment suit against the children.
Respondents alleged that they were the owners of two (2) parcels of land

covered by Transfer Certificate of Title (TCT) Nos. T-78521 and T-103141,
situated at Banay-banay, Lipa City; that by way of a verbal lease agreement,
Ismael and Teresita occupied these lots in March 1992 and used them as
their residence and the situs of their construction business; and that despite
repeated demands, petitioners failed to pay the agreed rental of P500 per
week
Ismael and Teresita denied the existence of any verbal lease agreement.
They claimed that respondents had invited them to construct their residence
and business on the subject lots in order that they could all live near one
other, employ Marivic (the sister of Ismael), and help in resolving the
problems of the family. They added that it was the policy of respondents to
allot the land they owned as an advance grant of inheritance in favor of their
children. Thus, they contended that the lot covered by TCT No. T-103141
had been allotted to Ismael as advance inheritance. On the other hand, the
lot covered by TCT No. T-78521 was allegedly given to petitioners as
payment for construction materials used in the renovation of respondents'
house.
Issue: (related to the subject)

Whether or not Article 1678 of the Civil Code should apply to the case on
the matters of improvements, or is it Article 447 of the Civil Code in relation
to the Article 453 and 454 thereof that should apply, if ever to apply the Civil
Code
Held:
To better understand the main issue, it is important to note that the
possession of the petitioner is not merely a tolerated possession.
The Court has consistently held that those who occupy the land of another
at the latter's tolerance or permission, without any contract between them,
are necessarily bound by an implied promise that the occupants will vacate
the property upon demand. A summary action for ejectment is the proper
remedy to enforce this implied obligation. The unlawful deprivation or

withholding of possession is to be counted from the date of the demand to
vacate.
Toleration is defined as "the act or practice of permitting or enduring
something not wholly approved of."
We hold that the facts of the present case rule out the finding of possession
by mere tolerance. Petitioners were able to establish that respondents had
invited them to occupy the subject lots in order that they could all live near
one other and help in resolving family problems. By occupying those lots,
petitioners demonstrated their acceptance of the invitation. Hence, there
was a meeting of minds, and an agreement regarding possession of the lots
impliedly arose between the parties.
Main Issue (related to our subject)

As applied to the present case, accession refers to the right of the owner to
everything that is incorporated or attached to the property. 60 Accession
industrial building, planting and sowing on an immovable is governed
by Articles 445 to 456 of the Civil Code.
Articles 447 and 1678 of the Civil Code Inapplicable

To buttress their claim of reimbursement for the improvements introduced
on the property, petitioners cite Article 447. 61 They allege that the CA erred
in applying Article 1678, since they had no lease agreement with
respondents.
We clarify. Article 447 is not applicable, because it relates to the rules that
apply when the owner of the property uses the materials of another. It does
not refer to the instance when a possessor builds on the property of another,
which is the factual milieu here.
In view of the unique factual setting of the instant case, the contention of
petitioners regarding the inapplicability of Article 1678 deserves attention.
The CA applied the provisions on lease, because it found their possession by
mere tolerance comparable with that of a lessee, per the pronouncement in
Calubayan v. Pascual, from which we quote:

". . . It has been held that a person who occupies the land of another at the
latter's tolerance or permission, without any contract between them, is
necessarily bound by an implied promise that he will vacate upon demand,
failing which a summary action for ejectment is the proper remedy against
them. The status of defendant is analogous to that of a lessee or tenant
whose term of lease has expired but whose occupancy continued by
tolerance of the owner. In such a case, the unlawful deprivation or
withholding of possession is to be counted from the date of the demand to
vacate."
Ismael and Teresita's possession of the two lots was not by mere tolerance,
a circumstance that negates the applicability of Calubayan case.
Article 448 Applicable

On the other hand, when a person builds in good faith on the land of
another, the applicable provision is Article 448, which reads:
"Article 448. The owner of the land on which anything has been built, sown
or planted in good faith, shall have the right to appropriate as his own the
works, sowing or planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the
builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate
the building or trees after proper indemnity. The parties shall agree upon the
terms of the lease and in case of disagreement, the court shall fix the terms
thereof."
This Court has ruled that this provision covers only cases in which the
builders, sowers or planters believe themselves to be owners of the land or,
at least, to have a claim of title thereto. It does not apply when the interest
is merely that of a holder, such as a mere tenant, agent or usufructuary.
From these pronouncements, good faith is identified by the belief that the
land is owned; or that by some title one has the right to build, plant, or
sow thereon.
However, in some special cases, this Court has used Article 448 by
recognizing good faith beyond this limited definition. Thus, in Del Campo v.
Abesia, this provision was applied to one whose house despite having
been built at the time he was still co-owner overlapped with the land of
another. This article was also applied to cases wherein a builder had
constructed improvements with the consent of the owner. The Court ruled
that the law deemed the builder to be in good faith. In Sarmiento v. Agana,
the builders were found to be in good faith despite their reliance on the
consent of another, whom they had mistakenly believed to be the owner of
the land.
Based on the aforecited special cases, Article 448 applies to the present
factual milieu. The established facts of this case show that respondents fully
consented to the improvements introduced by petitioners. In fact, because
the children occupied the lots upon their invitation, the parents certainly
knew and approved of the construction of the improvements introduced
thereon. Thus, petitioners may be deemed to have been in good faith when
they built the structures on those lots.
The instant case is factually similar to Javier v. Javier. In that case, this Court
deemed the son to be in good faith for building the improvement (the
house) with the knowledge and consent of his father, to whom belonged the
land upon which it was built. Thus, Article 448 was applied.
Rule on Useful Expenses

The structures built by petitioners were "useful" improvements, because
they augmented the value or income of the bare lots. Thus, the indemnity to
be paid by respondents under Article 448 is provided for by Article 546,
which we quote:
"Art. 546.Necessary expenses shall be refunded to every possessor; but only
the possessor in good faith may retain the thing until he has been
reimbursed therefor.
"Useful expenses shall be refunded only to the possessor in good faith with
the same right of retention, the person who has defeated him in the
possession having the option of refunding the amount of the expenses or of
paying the increase in value which the thing may have acquired by reason
thereof."
Consequently, respondents have the right to appropriate as their own
the building and other improvements on the subject lots, but only after (1)
refunding the expenses of petitioners or (2) paying the increase in value
acquired by the properties by reason thereof. They have the option to oblige
petitioners to pay the price of the land, unless its value is considerably more
than that of the structures in which case, petitioners shall pay reasonable
rent.
In accordance with Depra v. Dumlao, this case must be remanded to the trial
court to determine matters necessary for the proper application of Article
448 in relation to Article 546. Such matters include the option that
respondents would take and the amount of indemnity that they would pay,
should they decide to appropriate the improvements on the lots. We
disagree with the CA's computation of useful expenses, which were based
only on petitioners' bare allegations in their Answer.
Ruling on Improvement Justified

While, ordinarily, the jurisdiction of the MTCC on ejectment proceedings is
limited to the issue of physical or material possession of the property in
question, this Court finds it necessary to abbreviate the issue on the
improvements in relation to Article 448. First, the determination of the
parties' right to those improvements is intimately connected with the MTCC
proceedings in the light of the ejectment of petitioners. Second, there is no
dispute that while they constructed the improvements, respondents owned
the land. Third, both parties raised no objection when the RTC and the CA
ruled accordingly on this matter.
Equitable considerations compel us to settle this point immediately, pro hoc
vice, to avoid needless delay. Both parties have already been heard on this
issue; to dillydally or equivocate would not serve the cause of substantial
justice.
62. KILARIO VS. COURT OF APPEALS (GR NO. 134329)
Facts:
One Jacinto Pada had six (6) children, namely, Marciano, Ananias, Amador,
Higino, Valentina and Ruperta. He died intestate. His estate included a parcel
of land of residential and coconut land located at Poblacion, Matalom, Leyte,
denominated as Cadastral Lot No. 5581 with an area of 1,301.92 square
meters. It is the northern portion of Cadastral Lot No. 5581 which is the
subject of the instant controversy.
During the lifetime of Jacinto Pada, his half-brother, Feliciano Pada, obtained
permission from him to build a house on the northern portion of Cadastral
Lot No. 5581. When Feliciano died, his son, Pastor, continued living in the
house together with his eight children. Petitioner Verona Pada-Kilario, one of
Pastor's children, has been living in that house since 1960.
Sometime in May, 1951, the heirs of Jacinto Pada entered into an extra-
judicial partition of his estate. For this purpose, they executed a private
document which they, however, never registered in the Office of the
Registrar of Deeds of Leyte.
At the execution of the extra-judicial partition, Ananias was himself present
while his other brothers were represented by their children. Their sisters,
Valentina and Ruperta, both died without any issue. Marciano was
represented by his daughter, Maria; Amador was represented by his
daughter, Concordia; and Higino was represented by his son, Silverio who is
the private respondent in this case. It was to both Ananias and Marciano,
represented by his daughter, Maria, that Cadastral Lot No. 5581 was
allocated during the said partition. When Ananias died, his daughter, Juanita,
succeeded to his right as co-owner of said property.
Later on, it was contended that the extra-judicial partition of the estate of
Jacinto Pada executed in 1951 was invalid and ineffectual since no special
power of attorney was executed by either Marciano, Amador or Higino in
favorof their respective children who represented them in the extra-judicial
partition. Moreover, it was effectuated only through a private document that
was never registered in the office of the Registrar of Deeds of Leyte.
Issue:
WON Petitioner is a co-owner of the controversial property given that the
heirs of Jacinto Pada donated to the Petitioner
WON petitioners are builders in good faith
HELD:
The extrajudicial partition of the estate of Jacinto Pada among his heirs
made in 1951 is valid, albeit executed in an unregistered private document.
No law requires partition among heirs to be in writing and be registered in
order to be valid. The requirement in Sec. 1, Rule 74 of the Revised Rules of
Court that a partition be put in a public document and registered, has for its
purpose the protection of creditors and the heirs themselves against tardy
claims. The object of registration is to serve as constructive notice to others.
It follows then that the intrinsic validity of partition not executed with the
prescribed formalities is not undermined when no creditors are involved.
Without creditors to take into consideration, it is competent for the heirs of
an estate to enter into an agreement for distribution thereof in a manner
and upon a plan different from those provided by the rules from which, in
the first place, nothing can be inferred that a writing or other formality is
essential for the partition to be valid. The partition of inherited property
need not be embodied in a public document so as to be effective as regards
the heirs that participated therein. The requirement of Article 1358 of the
Civil Code that acts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property, must
appear in a public instrument, is only for convenience, non-compliance with
which does not affect the validity or enforceability of the acts of the parties
as among themselves. And neither does the Statute of Frauds under Article
1403 of the New Civil Code apply because partition among heirs is not
legally deemed a conveyance of real property, considering that it involves
not a transfer of property from one to the other but rather, a confirmation or
ratification of title or right of property that an heir is renouncing in favor of
another heir who accepts and receives the inheritance. The extrajudicial
partition which the heirs of Jacinto Pada executed voluntarily and
spontaneously in 1951 has produced a legal status. When they discussed
and agreed on the division of the estate of Jacinto Pada, it is presumed that
they did so in furtherance of their mutual interests. As such, their division is
conclusive, unless and until it is shown that there were debts existing

against the estate which had not been paid. No showing, however, has been
made of any unpaid charges against the estate of Jacinto Pada. Thus, there
is no reason why the heirs should not be bound by their voluntary acts.
Considering that petitioners were in possession of the subject property by
sheer tolerance of its owners, they knew that their occupation of the
premises may be terminated any time. Persons who occupy the land of
another at the latter's tolerance or permission, without any contract between
them, is necessarily bound by an implied promise that they will vacate the
same upon demand, failing in which a summary action for ejectment is the
proper remedy against them. Thus, they cannot be considered possessors
nor builders in good faith. It is well-settled that both Article 448 and Article
546 of the New Civil Code which allow full reimbursement of useful
improvements and retention of the premises until reimbursement is made,
apply only to a possessor in good faith, i.e., one who builds on land with the
belief that he is the owner thereof. Verily, persons whose occupation of a
realty is by sheer tolerance of its owners are not possessors in good faith.
63. IGNACIO VS. DIRECTOR OF LANDS AND VALERIANO (GR NO.
L-12958)
*See Case No. 16 (108 Phil 335)
64. DE BUYSER VS. DIRECTOR OF LANDS, ET. AL. (GR NO. L-22763)
FACTS: This is an appeal, perfected before the effectivity of Republic Act
5440, from the decision of the Court of First Instance of Surigao, declaring a
parcel of land formed along the shore by the action of the sea as part of the
public domain.
Plaintiff-appellant is the registered owner of Lot No. 4217 of the Surigao
Cadastre, which borders the Surigao Strait. Contiguous to said lot is a parcel
of land which was formed by accretion from the sea, the subject-matter of
this controversy. Defendants Ignacio Tandayag and his wife CANDIDA
Tandayag have been occupying this foreshore land order a Revocable Permit
issued by the Director of Lands. For the use and occupation thereof, said
spouses paid the Bureau of Lands the amount of P6.50 annually. They have
a house on said lot, which plaintiff alleged had been purchased by the
Tandayags from one Francisco Macalinao, a former lessee of the plaintiff. llcd
Claiming ownership of the said land, plaintiff filed an action against the
spouses Tandayag in the Court of First Instance of Surigao to recover
possession of this land as well as rents in arrears for a period of six years.
The complaint was subsequently amended to implead the Director of Land
as defendant, allegedly for having illegally issued a revocable permit to the
Tandayags.
ISSUE: WON plaintiff has a claim of ownership over the land in question
HELD:
The plaintiff's claim of ownership over the land in question is bereft of legal
basis. Such alluvial formation along the seashore is part of the public domain
and, therefore, not open to acquisition by adverse possession by private
persons. It is outside the commerce of man, unless otherwise declared by
either the executive or legislative branch of the government. 1
In asserting the right of ownership over the land, plaintiff invokes Article 4 of
the Spanish Law of Waters of August 3, 1866 which provides:
"Art. 4.Lands added to the shore by accretion and alluvial deposits caused by
the action of the sea, form part of the public domain, when they are no
longer washed by the waters of the sea, and are not necessary for purposes
of public utility, or for the establishment of special industries, or for the
coastguard service, the Government shall declare them to be the property of
the owners of the estate adjacent thereto and as an increment thereof."
Plaintiff's reliance on the above article is quite misplaced. The true
construction of the cited provision is that the State shall grant these lands to
the adjoining owners only when they are no longer needed for the purposes
mentioned therein. In the case at bar, the trial court found that plaintiff's
evidence failed to prove that the land in question is no longer needed by the
government, or that the essential conditions for such grant under Article 4 of
the Spanish Law of Waters, exists. prcd
Plaintiff, however, argues that the approval by the Director of Lands of the
defendants' Revocable Permit Application is tantamount to an implied
declaration on the part of the Director of Lands of the fact that the disputed
lot is no longer needed for public use. We fail to see such implication. In his
letter, dated June 16, 1955, approving the defendants' Revocable Permit
Application, the Director of Lands did not declare the land as no longer
needed for public use.
Since the land is admittedly property of public dominion, its disposition falls
under the exclusive supervision and control of the Bureau of Lands. 3 Under
the Public Land Act, an application for the sale or lease of lands enumerated
under Section 59 thereof, should be filed with the Bureau of Lands. 4 In
compliance therewith, the spouses Tandayag filed the appropriate
application, while plaintiff did not. In fine, the grant of a Revocable Permit to
the defendants Tandayag for the temporary use and occupation of the
disputed land is valid, having been legally issued by the Bureau of Lands,
acting for and in behalf of the Secretary (now Minister) of Agriculture and
Natural Resources who is empowered to grant revocable permits under
Section 68 of the Public Land Act which we quote:
"The Secretary of Agriculture and Natural Resources may grant to qualified
persons temporary permission upon the payment of a reasonable charge, for
the use of any portion of the lands covered by this chapter for any lawful
private purpose, subject to revocation, at any time when, in his judgment
the public interest shall require."
65. GRANDE, ET. AL. VS. HON. COURT OF APPEALS (GR NO. L-17652)
Facts: The Grandes are owners of a parcel of land in Isabela, by inheritance
from their deceased mother, Patricia Angui, who likewise, inherited it from
her parents. In the early 1930s, the Grandes decided to have their land
surveyed for registration purposes. The land was described to have Cagayan
River as the northeastern boundary, as stated in the title.
By 1958, a gradual accretion took place due to the action of the
current of the river, and an alluvial deposit of almost 20,000 sq.m. was
added to the registered area. The Grandes filed an action for quieting of title
against the Calalungs, stating that they were in peaceful and continuous
possession of the land created by the alluvial deposit until 1948, when the
Calalungs allegedly trespassed into their property. The Calalungs, however,
stated that they were the rightful owners since prior to 1933.

The CFI found for the Grandes and ordered the Calalungs to vacate
the premises and pay for damages. Upon appeal to the CA, however, the
decision was reversed.
Issue: Whether or not the alluvium deposited land automatically belongs to

the riparian owners?
Held: Art. 457 dictates that alluvium deposits on land belong to the owners
of the adjacent land. However, this does not ipso jure become theirs merely
believing that said land have become imprescriptible. The land of the
Grandes only specifies a specific portion, of which the alluvial deposits are
not included, and are thus, subject to acquisition by prescription.
Since the Calalungs proved that they have been in possession of the
land since 1934 via two credible witnesses, as opposed to the Grandes
single witness who claims that the Calalungs only entered the land in 1948,
the Calalungs have been held to have acquired the land created by the
alluvial deposits by prescription. This is because the possession took place in
1934, when the law to be followed was Act 190, and not the New Civil Code,
which only took effect in 1950.
66. REPUBLIC VS. COURT OF APPEALS, ET. AL. (GR NO. 61647)
Facts: Respondents Tancincos claim as Riparian owners sought for the
registration of lots 2 & 3 as accretions to their adjacent lands (fishponds)
found near the Meycauayan River. Both the RTC and the CA had the same
findings and approved the applications of said respondents. On the other
hand, petitioner Republic claims that there was no accretion to speak of
under Art. 457 but rather it was artificial and man-made due to respondents
transfer of dikes near the river bed thus falling short of the requirement of
Art. 457 that accretion should be natural.
Issue: WON there was accretion under Art. 457?
Held: NO accretion. For Art. 457 to apply, it requires the concurrence of
three requisites before an accretion covered by this particular provision is
said to have taken place: (1) that the deposit be gradual and imperceptible;
(2) that it be made through the effects of the current of the water; and (3)
that the land where accretion takes place is adjacent to the banks of rivers.
The SC claimed that there is no evidence whatsoever to prove that the
addition to the said property was made gradually through the effects of the
current of the Meycauayan and Bocaue rivers. SC also refuted the claim of
the lone witness of the respondents that if the accretion of 4 hectares took
place on 1939 and she testified on same year, then the accretion could have
been SUDDEN which was impossible. Furthermore, what the SC gave more
credence is that there was evidence that the alluvial deposits were MAN-
MADE and ARTIFICIAL, it claimed, the alleged alluvial deposits came into
being not because of the sole effect of the current of the rivers but as a
result of the transfer of the dike towards the river and encroaching upon it.
SC simply states that what transpired in this case is not accretion but rather
an encroachment of a portion of the river by reclamation. In this light, the
Riparian owner CANNOT CLAIM the additions to his lands caused by SPECIAL
WORKS EXPRESSLY INTENDED OR DESIGNED TO BRING ABOUT
ACCRETION.
67. DIONESIA BAGAIPO VS. COURT OF APPEALS (GR NO. 116290)
FACTS:
Petitioner Bagaipo is the registered owner of Lot No. 415, a 146,900 square
meter agricultural land situated in Ma-a, Davao City under TCT No. T-15757
and bounded on the southeast by the Davao River. Private respondent
Lozano, on the other hand, is the owner of a registered parcel of land
located across and opposite the southeast portion of the petitioners lot
facing the Davao River. Lozano acquired and occupied her property in 1962
when his wife inherited the land from her father who died that year.
On May 26, 1989, Bagaipo filed a complaint for Recovery of Possession with
Mandatory Writ of Preliminary Injunction and Damages against Lozano for:
(1) the surrender of possession by Lozano of a certain portion of land
measuring 29,162 square meters which is supposedly included in the area
belonging to Bagaipo under TCT No. T-15757; and (2) the recovery of a land
area measuring 37,901 square meters which Bagaipo allegedly lost when the
Davao River traversed her property. Bagaipo contended that as a result of a
change in course of the said river, her property became divided into three
lots, namely: Lots 415-A, 415-B and 415-C.
Bagaipo then commissioned a resurvey of Lot 415 and presented before the
trial court a survey plan prepared by Geodetic Engineer Magno. The survey
plan allegedly showed that: a) the area presently occupied by Bagaipo,
identified as Lot 415-A, now had an area of only 79,843 square meters; b)
Lot 415-B, with an area measuring 37,901 square meters, which cut across
Bagaipo's land was taken up by the new course of the Davao River; and c)
an area of 29,162 square meters designated as Lot 415-C was illegally
occupied by respondent Lozano. The combined area of the lots described in
the survey plan tallied with the technical description of Bagaipo's land under
TCT No. T-15757; thus, it was concluded that the land presently located
across the river and parallel to Bagaipo's property still belonged to the latter
and not to Lozano, who planted some 350 fruit-bearing trees on Lot 415-C
and the old abandoned river bed.
For his part, Lozano insisted that the land claimed by Bagaipo is actually an
accretion to their titled property. He asserted that the Davao River did not
change its course and that the reduction in Bagaipo's domain was caused by
gradual erosion due to the current of the Davao River. Lozano added that it
is also because of the river's natural action that silt slowly deposited and
added to his land over a long period of time. He further averred that this
accretion continues up to the present and that registration proceedings
instituted by him over the alluvial formation could not be concluded precisely
because it continued to increase in size.
On April 5, 1991, the trial court conducted an ocular inspection and,
thereafter, dismissed the complaint holding that the applicable law in the
case is Article 457 and that the reduction in the land area of the petitioner
was caused by erosion and not by change in course of the Davao River. This
decision was subsequently confirmed by the CA.
ISSUE(S):
Whether or not private respondent owned Lot 415-C in accordance with the
principle of accretion under Article 457.

RULING:
The Court held that factual findings of the trial court and of the appellate
court, after observation during ocular inspection conducted by the trial
judge, that the decrease in land area was brought about erosion and not a
change in the rivers course, are conclusive unless there are strong and
exceptional reasons or they are unsupported by the evidence on record or
the judgment itself is based on a misapprehension of facts. In the absence
of such, the Court held that there is no convincing reason to disregard or
disbelieve such factual findings.
Since the decrease in petitioner's land area and the corresponding expansion
of respondent's property were the combined effect of erosion and accretion
respectively, Article 461 of the Civil Code is inapplicable. Petitioner cannot
claim ownership over the old abandoned riverbed because the same is
inexistent. The riverbed's former location cannot even be pinpointed with
particularity since the movement of the Davao River took place gradually
over an unspecified period of time, up to the present.
The rule is well-settled that accretion benefits a riparian owner when the
following requisites are present: 1) that the deposit be gradual and
imperceptible; 2) that it resulted from the effects of the current of the water;
and 3) that the land where accretion takes place is adjacent to the bank of
the river. These requisites were sufficiently proven in favor of respondents.
In the absence of evidence that the change in the course of the river was
sudden or that it occurred through avulsion, the presumption is that the
change was gradual and was caused by alluvium and erosion.
As to the petitioners assertion that Lot 415-C forms part of her property
under TCT No. T-15757, the Court reiterated the principle held in the case of
C.N. Hodges v. Garcia, to wit: . . . The fact that the accretion to his land
used to pertain to plaintiff's estate, which is covered by a Torrens certificate
of title, cannot preclude him (defendant) from being the owner thereof.
Registration does not protect the riparian owner against the diminution of
the area of his land through gradual changes in the course of the adjoining
stream. Accretions which the banks of rivers may gradually receive from the
effect of the current become the property of the owners of the banks (Art.
366 of the old Civil Code; Art. 457 of the new). Such accretions are natural
incidents to land bordering on running streams and the provisions of the
Civil Code in that respect are not affected by the Land Registration Act.
Petitioner did not demonstrate that Lot 415-C allegedly comprising 29,162
square meters was within the boundaries of her titled property. The survey
plan commissioned by petitioner, which was not approved by the Director of
Lands, was properly discounted by the appellate court. In view of the
foregoing, the Court rendered judgment in favor of the respondent.
68. SPOUSES BAES VS. COURT OF APPEALS AND REPUBLIC (GR NO.
108065)
Facts:
In 1962, the government dug a canal on a private parcel of land covering an
area of P33,902 sq.m., to streamline the Tripa de Gallina creek.
This lot was later acquired by Felix Baes, who registered it in his name. He
subdividedit into three lots, namely: (a) Lot 2958-A, with an area of 28,889
sq.m.; (b) Lot 2958-B, with an area of 3,588 sq.m.; and (c) Lot 2958-C, with
an area of 452 sq.m.,
In 1970, in exchange for Lot 2958-B (SECOND LOT), which was totally
occupied by the canal, the government gave Baes a lot with exactly the
same area as Lot 2958-B through a Deed of Exchange of Real Property .
Baes had Lot 2958-C and a portion of Lot 2958-A designated as Lot 1, Blk.,
4, resurveyed and subdivided however, it was found out that there were
errors in respect of their bearings and distances.
The resurvey-subdivision plan was approved by the Court of First Instance
of Pasay City. As a result, the old TCTs covering the said lots were cancelled
and new ones were issued, to wit: (a) Lot 1-A, Blk. 4, with 672 sq. m., under
TCT No. T-14404; (b) Lot 1-B, with 826 sq. m., representing the increase in
area after the resurvey, under TCT No. T-14405; (c) Lot 2958-C-1, with 452
sq.m., under TCT No. T-14406; and (d) Lot 2958-C-2,with 2,770 sq. m.
representing the increase after resurvey, under TCT No. T-14407.
Lots 2958-C-1 and 2958-C-2 were later consolidated and this time further
subdivided into four (4) lots, namely, Lot 1, with an area of 147 sq. m.; Lot

2, with an area of 950 sq. m.; Lot 3, with an area of 257 sq. m.; and Lot 4,
with an area of 1,868sq.m., which were respectively issued TCT Nos. 29592,
29593, 29594, and 29595.
The Republic of the Philippines discovered that Lot 1-B (with TCT No.
14405and an area of 826 sq.m.), on which the petitioners had erected an
apartment building, covered Lot 3611 of the Pasay Cadastre, which is a
filled-up portion of the Tripa de Gallina creek.Moreover, Lot 2958-C had been
unlawfully enlarged.
Thus, it filed a petition for cancellation of TCT Nos. 14405 and 29592
to29595. Baes did not object in his answer to the cancellation of TCT 29592,
29594 and 29595and was not able to prove during the trial that the
government utilized a portion of Lot2 under TCT 29593.
The Lower court and court of appeals rendered the TCTs null and void and
ordered the Register of deeds to cancel and issue new ones.
Issues:
Whether or not Baes is the owners of the lot, because of article 461?
Whether or not the owner, Baes, is entitled to compensation?
Held:
The dispute relates to Lot 1-B which the petitioners, relying on Article461
of the Civil Code, are claiming as their own.
Article 461 of the Civil Code states:
River beds which are abandoned through the natural change in the course of
the waters ipso facto belong to the owners whose lands are occupied by the
new course in proportion to the area lost. However, the owners of the land
adjoining the old bed shall have the right to acquire the same by paying the
value thereof, which value shall not exceed the value of the area occupied by
the new bed.
A portion of the Tripa de Gallina creek was diverted to a man-made canal
which totallyoccupied Lot 2958-B (with an area of 3,588 sq.m.) belonging to
Felix Baes. Thus, the petitioners claim that they became the owners of the

old bed (which was eventually filled up by soil excavated from Lot 2958-B)
by virtue of Article 461.
The petitioners rely heavily on Dr. Arturo M. Tolentino's interpretation of
this Article, to wit:
This article (461) refers to a natural change in the course of a stream. If the
change of the course is due to works constructed by concessioners
authorized by the government, the concession may grant the abandoned
river bed to the concessioners. If there is no such grant, then, by analogy,
the abandoned river bed will belong to the owners of the land covered by
the waters, as provided in this article, without prejudice to a superior right of
third persons with sufficient title. (Citing 3 Manresa 251-252; 2 Navarro
Amandi, 100-101; 3 Sanchez Roman 148)
The Court agreed with this interpretation but, as the government avers, the
petitioners had already been fully compensated for it on June 20, 1970 when
they agreed to exchange their Lot 2958-B with Lot 3271-A belonging to the
government. This makes the difference as Baes had receive something in
exchange thereof.
Thus, with the second issue, Baes is not also entitled for compensation.
If the riparian owner is entitled to compensation for the damage to or loss
of his property due to natural causes, there is all the more reason to
compensate him when the change in the course of the river is effected
through artificial means. The loss to the petitioners of the land covered by
the canal was the result of a deliberate act on the part of the government
when it sought to improve the flow of the Tripa de Gallina creek. It was
therefore obligated to compensate the Baeses for their loss.
We find, however, that the petitioners have already been so compensated.
Felix Baes was given Lot 3271-A in exchange for the affected Lot 2958-B
through the Deed of Exchange of Real Property dated June 20, 1970.
This was a fair exchange because the two lots were of the same area and
value and the agreement was freely entered into by the parties. The
petitioners cannot now claim additional compensation because, as correctly
observed by the Solicitor General. Baes cannot claim additional
compensation because allowing Baes to acquire ownership of the dried-up
portion of the creek would be a clear case of double compensation and
unjust enrichment at the expense of the state.
69. MARIO RONQUILLO VS. COURT OF APPEALS, ET. AL. (GR NO.
43346)
Facts:
Rosendo del Rosario was a registered owner of a parcel of land known as
Lot 34, Block 9, Sulucan Subdivision, situated at Sampaloc, Manila and
covered by Transfer Certificate of Title No. 34797 of the Registry of Deeds of
Manila. The other plaintiffs Florencia and Amparo del Rosario were
daughters of said Rosendo del Rosario. Adjoining said lot is a dried-up
portion of the old Estero Calubcub occupied by the defendant since 1945
which is the subject matter of the present action.
.That said property of the plaintiffs abuts and is adjacent to the dried-up
river bed of Estero Calubcub, Sampaloc, Manila;
After a relocation survey of the land in question sometime in 1960,
plaintiffs learned that defendant was occupying a portion of their land and
thus demanded defendant to vacate said land when the latter refused to pay
the reasonable rent for its occupancy. However, despite said demand
defendant refused to vacate.
Defendant on the other hand claims that sometime before 1945 he lived
with his sister who was renting plaintiffs' titled lot. In 1945 he built his house
on the disputed dried-up portion of the Estero Calubcub with a small portion
thereof on the titled lot of plaintiffs. Later in 1961, the house was destroyed
by a fire and rebuilt the house this time it was built only on the dried-up
portion of the old Estero Calubcub without touching any part of plaintiffs'
titled land. He further claims that said dried-up portion is a land of public
domain.
That the plaintiffs and defendant have both filed with the Bureau of Lands
miscellaneous sales application for the purchase of the abandoned river bed
known as Estero Calubcub and their sales applications, dated August 5, 1958
and October 13, 1959, respectively, are still pending action before the
Bureau of Lands;

On December 26, 1962, the court rendered judgment ordering the
defendant to deliver the said portion of land which was occupied by him and
to pay for rental at the rate of 5.00 per month from the date of filing until he
surrenders and that the Del Rosarios are the owner of the dried-up portion
of estero Calubcub.
On appeal, CA affirmed the decision of the trial court on 25 September
1975 and declared that since Estero Calubcub had already dried-up way
back in 1930 due to the natural change in the course of the waters, under
Article 370 of the old Civil Code which it considers applicable to the present
case, the abandoned river bed belongs to the Del Rosarios as riparian
owners. Consequently, respondent court opines, the dried-up river bed is
private land and does not form part of the land of the public domain. It
stated further that even assuming for the sake of argument that said estero
did not change its course but merely dried up or disappeared, said dried-up
estero would still belong to the riparian owner, thus upholding its declaration
that the del Rosarios are the rightful owner. Hence, petition for review.
Issue:
WON the del Rosarios are the rightful owner of the dried-up portion of
Estero Calubcub
Held:
Art. 370 which states that The beds of rivers, which are abandoned because
of a natural change in the course of the waters, belong to the owners of the
riparian lands throughout the respective length of each. If the abandoned
bed divided tenements belonging to different owners the new dividing line
shall be equidistant from one and the other." Is no longer applicable given
after careful perusal of evidence presented by both parties revealed that the
change in the course of Estero Calubcub was caused, not by natural forces,
but due to the dumping of garbage therein by the people of the surrounding
neighborhood. The relocation plan, which also formed the basis of
respondent court's ruling, merely reflects the change in the course of Estero
Calubcub but it is not clear therefrom as to what actually brought about such
change. The inescapable conclusion is that the dried-up portion of Estero
Calubcub was occasioned, not by a natural change in the course of the
waters, but through the active intervention of man. The rules on alluvion do
not apply to man-made or artificial accretions nor to accretions to lands that
adjoin canals or esteros or artificial drainage systems. Hence, the del
Rosarios cannot be entitled as the riparian owners and that dried-up portion
of Estero Calubcub should be considered as public domain which cannot be
subject to acquisition by private ownership.
70. SIARY VALLEY ESTATES, INC. VS. LUCASAN AND HON. JUDGE
ORTEGA (OCTOBER 31, 1957)
The Siari Valley Estate Inc. started raising livestock on its 950-hectare ranch,
in 1921, with 7 native cattle. In 1923 it acquired 30 native cattle and two
Indian bulls. It also introduced native stock into its herd thru a native black
bull. Male offspring of this bull were castrated.
Prior to the Japanese occupation, the fence enclosing plaintiff's pasture was
well kept. However in 1943 a portion thereof was destroyed, with the result
that some cattle strayed into the adjoining unfenced range of defendant
Lucasan. And taking advantage of the situation several men in the employ of
defendant willfully and deliverately rounded up and drove many animals
from the Siari pasture towards Lucasan's grazing land.
The defendant, admitted that some cattle of the Siari Valley Estate did enter
his ranch. He says however that thru the good offices of Fiscal Ubay the
company rounded up and drove away from his ranch 98 head of cattle in
November 1946; and that in May 1947 plaintiff's herdsmen took away 5
more head of cattle. He affirmed that as of December 1951 he had 400 head
on his ranch all belonging to him, after deducting 200 head which he had
disposed of.
After going thru the record, we have no doubt that hundreds of cattle
belonging to plaintiff have been driven, into or wandered into defendant's
land. Defendant himself admitted such commixtion although, he says,
plaintiff had already retrieved its animals.
ISSUE: WON Defendant acted in bad faith and WON he is liable
No actual evidence exists that all these missing animals (823) were taken by
defendant or his men; but in view of proof that his men on two occasions
drove away more than 30 heads of cattle, it is not erroneous to believe that
the others must have also been driven away on subsequent or prior
occasions, applying , by analogy, the principle that one who stole a part of
the stolen money must have taken also the larger sum lost by the offended
party. (People vs. Fernandez, 58 Phil. 674; People vs. Buada, 60 Phil. 363).
Art. 473. If by the will of only one owner, but in good faith, two things of
the same or different kinds are mixed or confused, the rights of the owners
shall be determined by the provisions of the preceding article.
If the one who caused the mixture or confusion acted in bad faith, he shall
lose the thing belonging to him thus mixed or confused, besides being
obliged to pay indemnity for the damages caused to the owner of the other
thing with which his own was mixed.
Did defendant act in bad faith? The circumstances disclosed in this record
answer the question in the affirmative: his cowboys -and even his sons
Rafael and Vicente- rounded up and drove plaintiff's cattle into his pasture;
he knew he had plaintiff's cattle, but refused to return them despite
demands by plaintiff; he even threatened plaintiff's men when the latter
tried to retrieve its animals; he harassed them with false prosecutions for
their attempts to get back the company's animals; he wouldn't allow plaintiff'
s cowboys to get into his pasture to identify its flock; he rebranded several
Siari Valley cattle with his own brand; he sold cattle without registering the
sales; after some cattle impounded were entrusted to his custody as trustee,
he disposed of not less than 5 head of cattle among those he received as
such trustee; lastly, he disposed of much more cattle than he had a right to.
The circumstances disclosed in the record show that defendant acted in bad
faith. Under the Civil Code if commingling of two things is made in bad
faith, the one responsible for it will lose his share
71. GALLAR VS. HUSAIN (GR NO. L-20954)
Facts: Husains in this case are the heirs of Teodoro Husain. Teodoro Husain
sold the land under dispute for 30 pesos to Serapio Chichirita with the right
to repurchase within 6 years. Teodoro transferred his right to his sister,
Graciana Husain. Graciana paid the redemption price and later sold the land
to Elias Gallar for a cattle.

Possession of the land, together with the owner's duplicate of the
certificate of title of Teodoro Husain, was delivered on the same occasion to
Gallar, who since then has been in possession of the land. A couple of years
after, Gallar filed this suit in the Court of Instance of Iloilo on October 10,
1960 to compel Hermenegilda and Bonifacio Husain, as heirs of Teodoro
Husain, to execute a deed of conveyance in his favor so that he could get a
transfer certificate of title. He also asked for damages. The Husains
countered by saying that Graciana already paid the redemption price thus
their father had already reacquired ownership over the same. They also
claim that the action of Elias has already PRESCRIBED.
ISSUE:
1) Whether or not ownership was transferred to Gallar?
2) Whether or not the action has already prescribed?
RULING:
1) YES, ownership has been transferred to Gallar. The right of
repurchase may be exercised only by the vendor in whom the right is
recognized by contract or by any person to whom the right may have been
transferred. Graciana Husain must, therefore, be deemed to have acquired
the land in her own right, subject only to Teodoro Husain's right of
redemption. As the new owner she had a perfect right to dispose of the land
as she in fact did when she exchanged it for a cattle with Gallar.
2) NO, the action is imprescriptible. This action is not for specific

performance; all it seeks is to quiet title, to remove the cloud cast on
appellee's ownership as a result of appellant's refusal to recognize the sale
made by their predecessor. And, as plaintiff-appellee is in possession of the
land, the action is imprescriptible. Appellant's argument that the action has
prescribed would be correct if they were in possession as the action to quiet
title would then be an action for recovery of real property which must be
brought within the statutory period of limitation governing such actions.

72. CORONEL VS. INTERMEDIATE APPELLATE COURT (GR NO. L-70191)
Facts: The lot involved in this case is the 2/8 share of the NAIC ESTATE of
Bernabela Lontoc which was subdivided into 3 portions: 1/3, Bernardino
Merlan (Grandson), 1/3, Jose and Brigido Merlan (defendants), 1/3, Daniel
and Paz Anuat (grandchildren). Sometime in 1950, the 2/3 share of
BERNARDINO and DANIEL&PAZ s undivided portion of BERNABELA of the
NAIC ESTATE was sold to IGNACIO MANALO became Lot 1950 which was
later subdivided and became Lot 1950-A containing 12, 189 sq. m. IGNACIO
subsequently sold it (Lot 1950-A) to MARIANO MANALO. The OCT issued in
favor of MARIANO did not mention of the 1/3 share of the defendants (JOSE
and BRIGIDO) which was NOT sold to them because what was sold was
merely 2/3 (BERNARDINO and D& P). Petitioner (CORONEL) subsequently
bought Lot. 1950-A from MARIANO and it became T-75543. What is clear is
that respondents never sold their 1/3 portion over Lot 1950-A of the NAIC
Estate. There was a mistake when TCT 75543 was issued to Mariano
because such covered the entire Lot 1950-A. Respondents was in peaceful
possession of said land even before first sale in 1950 until 1975 when the
complaint was filed against them. Petitioner contends respondents are
barred by prescription since 25 years has already elapsed when registration
of Lot. 1950-A took place and further claims that annulment should have
been brought within 4 years. Petitioner further alleges he was purchaser in
good faith.
Issue: (1)WON respondents are barred by prescription.
(2) The Issue of Good Faith.
Held: (1) Respondents are not barred by prescription. The facts of the case
show that the private respondents have always been in peaceful possession
of the 1/3 portion of the subject lot, exercising ownership thereto for more
than 25 years disrupted only in 1975. It was only at that time that the
statutory period of prescription may be said to have commenced to run
against them. It was only at this point that private respondents knew about
the supposed sale of their 1/3 portion of Lot 1950-A of the Naic Estate and
they immediately resisted.

(2) SC said, this notwithstanding we cannot close our eyes to the fact that
neither the private respondents nor their co-owners of the subject parcel of
land sold the former's share of the lot. Further, The point is that the 1/3
undivided portion of the private respondents over Lot No. 1950-A was
mistakenly included in the transfer certificate of title of Mariano Manalo. The
SC claimed that there is a countervailing doctrine which militates against the
harshness of the iron-clad doctrine of giving full faith and credit to a Torrens
title and that is FAIRNESS and EQUITY. Moreover, it said, simple possession
of a certificate of title, under the Torrens System, does not necessarily make
the possessor a true owner of all the property described therein.
Final note: The 1/3 portion of the land was segregated to JOSE and
BRIGIDO and was issued a new OCT and the 2/3 to said petitioner was also
issued a new OCT after cancelling T-75543.
73. CARAGAY-LAYNO VS. COURT OF APPEALS (GR NO. 52064)
FACTS:
The disputed portion, as established by a relocation survey, is a 3,732
square meter area of a bigger parcel of sugar and coconut land (with a total
area of 8,752 square meters) situated in Calasiao, Pangasinan. The entire
parcel is covered by OCT No. 63, which includes the adjoining Lots 2 and 3,
issued on September 11, 1947 in the name of Mariano M. De Vera. The
latter died in 1951, without issue, and his intestate estate was administered
by his widow then by her nephew, private respondent Estrada.
Petitioner Caragay and the decedent De Vera were first cousins and were
both orphans, who lived together under one roof in the care of a common
aunt. As Administratrix, De Vera's widow filed with the former Court of First
Instance of Pangasinan, an Inventory of all properties of the deceased,
which included a parcel of land in Calasiao, Pangasinan, containing an area
of more or less 5,417 square meters, and covered by Tax Declaration No.
12664.
Because of the discrepancy in area mentioned in the Inventory as 5,147
square meters and that in the title as 8,752 square meters, private
respondent Estrada repaired to the Disputed Property and found that the
northwestern portion, subsequently surveyed to be 3,732 square meters,
was occupied by petitioner spouses. Private respondent demanded that they
vacate the Disputed Portion since it was titled in the name of the deceased
De Vera, but petitioners refused claiming that the land belonged to them
and, before them, to Juliana Caragay's, father Juan Caragay.
Private respondent then instituted suit against petitioner for the recovery of
the Disputed Portion. The latter resisted, mainly on the ground that the
Disputed Portion had been fraudulently or mistakenly included in OCT No.
63, so that an implied or constructive trust existed in her favor. Petitioner
then counterclaimed for reconveyance of property in the sense that title be
issued in her favor.
After hearing, the Trial Court rendered judgment ordering petitioner to
vacate the Disputed Portion. This was subsequently affirmed by the
respondent Appellate Court, which held that the petitioners claim for
reconveyance based on implied or constructive trust has prescribed after ten
years from the date when De Veras land was registered on September 11,
1947 since it was only on March 28, 1967 when the petitioner sought for the
reconveyance of the property.
ISSUE(S):
Whether or not the CA was correct in rendering judgment in favor of the
respondent.
RULING:
The Court held in the negative.
The evidence discloses that the Disputed Portion was originally possessed
openly, continuously and uninterruptedly in the concept of an owner by Juan
Caragay, the deceased father of the petitioner, and had been declared in his
name under tax declarations since 1921. Upon the demise of the petitioners
father in 1914, petitioner adjudicated the property to herself as his sole heir
in 1968 and declared it in her name under tax declarations since 1959.
Realty taxes were also religiously paid from 1938 to 1972. Taking the
previous possession of petitioners father to her own, they had been in
actual, open, continuous and uninterrupted possession in the concept of
owner for about forty five (45) years, until said possession was disturbed in
1966 when the private respondent Estrada informed petitioner that the
Disputed Portion was registered in Mariano De Vera's name.
To substantiate her claim of fraud in the inclusion of the Disputed Portion in
OCT No. 68, the petitioner declared that Mariano De Vera, during his
lifetime, borrowed from the former, the tax declaration of her land
purportedly to be used as collateral for the latters loan and sugar quota
application. Relying on De Vera's assurances, petitioner acceded to the
request and was made to sign some documents, the contents of which was
unknown to her because of her ignorance and that she discovered the
fraudulent inclusion of the Disputed Portion in OCT No. 63 only in 1966
when Estrada sought to eject them.
The Court made significance of the fact, as disclosed by the evidence, that
for twenty years from the date of registration of title in 1947 up to 1967
when this suit for recovery of possession was instituted, neither the
deceased De Vera, up to the time of his death in 1951, nor his successors-in-
interest, had taken steps to possess or lay adverse claim to the Disputed
Portion. They may, therefore be said to be guilty of laches as would
effectively derail their cause of action. Administrator Estrada tackles interest
in recovering the said portion only when he noticed the discrepancy in areas
in the Inventory of Property and in the title. In view of such fact and that
petitioner had been in actual, continuous and open possession thereof to the
exclusion of all, the inescapable inference is, fraud having been
unsubstantiated, that it had been erroneously included in OCT No. 63. The
mistake is confirmed by the fact that deducting 3,732 square meters (the
area of the Disputed Portion) from 8,752 square meters (the area of Lot 1 in
OCT No. 63), the difference is 5,020 square meters, which closely
approximates the area of 5,147 square meters, indicated in the Inventory of
Property of De Vera.
The Court held that such conclusion does not necessarily wreak havoc on
the indefeasibility of a Torrens title. For mere possession of a certificate of
title under the Torrens System is not conclusive as to the holder's true
ownership of all the property described therein as he does not, by virtue of
said certificate alone, become the owner of the land illegally included. Thus,
petitioner, whose property had been wrongfully registered in the name of
another, but which had not yet passed into the hands of third parties, can
properly seek its reconveyance.
It was further held that prescription cannot be invoked against the petitioner
for the reason that as lawful possessor and owner of the Disputed Portion,
her cause of action for reconveyance which, in effect, seeks to quiet title to
the property, falls within settled jurisprudence that an action to quiet title to
property in one's possession is imprescriptible. Her undisturbed possession
over a period of fifty two years gave her a continuing right to seek the aid of
a Court of equity to determine the nature of the adverse claim of a third
party and the effect on her own title. Besides, under the circumstances,
petitioner's right to quiet title, to seek reconveyance, and to annul OCT. No.
63 accused only in 1966 when she was made aware of a claim adverse to
her own. It was only then that the statutory period of prescription may be
said to have commenced to run against her, following the pronouncement in
Faja v. Court of Appeals, to wit: There is settled jurisprudence that one who
is in actual possession of a piece of land claiming to be owner thereof may
wait until his possession is disturbed or his title is attacked before taking
steps to vindicate his right, the reason for the rule being, that his
undisturbed possession gives him a continuing right to seek the aid of a
court of equity to ascertain and determine the nature of the adverse claim of
third party and its effect on his own title, which right can be claimed only by
one who is in possession.
74. ANASTACIA VDA. DE AVILES, ET. AL. VS. COURT OF APPEALS AND
CAMILO AVILES ( GR. NO. 95748)
Facts:
Eduardo Aviles, the predecessor of the petitioners is the bother of defendant
Camilo. They inherited their lands from their parents and have agreed to
subdivide the same amongst themselves. The area allotted to Eduardo Aviles
is 16,111 square meters more or less, to Anastacio Aviles is 16,214 square
meters more or less, while the area alloted to defendant Camilo Aviles is
14,470 square meters more or less.
Defendants land composed of the rice land portion of his land is 13,290
square meters, the fishpond portion is 500 square meters and the residential
portion is 680 square meters, or a total of 14,470 square meters.
The Petitioners claim that they are the owners of the fish pond which they
claim is within their area. Defendant Camilo Aviles asserted a color of title
over the northern portion of the property with an area of approximately
1,200 square meters by constructing a bamboo fence and moving the
earthen dikes, thereby molesting and disturbing the peaceful possession of
the plaintiffs over said portion.
Petitioners say that the fences were created to unduly encroach to their
property but the defendant said that he merely reconstructed the same.
Petitioners brought an action to quiet title but were denied thus this case.
Issue:
Whether or not petitioners filed the right action
Ruling:
No, Petitioners filed the wrong action. This is obviously a boundary dispute
and as such the action must fail.
Art. 476. Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or
proceeding which is apparently valid or effective but is, in truth and in fact,
invalid, ineffective, voidable, or unenforceable, and may be prejudicial to
said title, an action may be brought to remove such cloud or to quiet the
title.
An action may also be brought to prevent a cloud from being cast upon a
title to real property or any interest therein.
Petitioners fail to point out any instrument, record, claim, encumbrance or

proceeding that could been a cloud to their title. In fact, both plaintiffs and
defendant admitted the existence of the agreement of partition dated June

8, 1957 and in accordance therewith, a fixed area was allotted to them and
that the only controversy is whether these lands were properly measured.
A special civil action for quieting of title is not the proper remedy for settling
a boundary dispute, and that petitioners should have instituted an ejectment
suit instead. An action for forcible entry, whenever warranted by the period
prescribed in Rule 70, or for recovery of possession de facto, also within the
prescribed period, may be availed of by the petitioners, in which proceeding
the boundary dispute may be fully threshed out.
75. AZNAR BROTHERS REALTY COMPANY VS. AYING (458 SCRA 495)
FACTS:
The disputed property is Lot No. 4399 with an area of 34,325 square meters,
to which Crisanta Maloloy-on petitioned for the issuance of a cadastral
decree in her favor. After her death in 1930, the Cadastral Court issued a
Decision directing the issuance of a decree in the name of her eight children,
namely: Juan, Celedonio, Emiliano, Francisco, Simeon, Bernabe, Roberta and
Fausta, all surnamed Aying. The certificate of title was, however, lost during
the war.
Subsequently, all the heirs of the Aying siblings conveyed the subject parcel
of land to petitioner Aznar Brothers Realty Company by executed an Extra-
Judicial Partition of Real Estate with Deed of Absolute Sale dated March 3,
1964, which was registered with the Register of Deeds on March 6, 1964
under Act No. 3344. Since then, the petitioner had been religiously paying
real property taxes on said property.
In 1988, petitioner filed a Petition for Reconstitution of the Original Title.
This was granted by the Court on April 12, 1988 in its decision directing the
Register of Deeds to issue a reconstituted title in the name of the
abovementioned Aying siblings. Consequently, OCT No. RO-2856 was issued.
Petitioner, claiming to be the rightful owner of the subject property, sent out
in 1991 notices to vacate, addressed to persons occupying the property.
Unheeded, the petitioner then filed a complaint for ejectment against the
occupants before the MTC. On February 1, 1994, the MTC ordered the
occupants to vacate the property. The case eventually reached this Court,
which promulgated on March 7, 2000,a decision in favor of herein petitioner,
declaring it as the rightful possessor of the parcel of land in question.
Meanwhile, herein respondents, along with other persons claiming to be
descendants of the eight Aying siblings, totaling approximately 220 persons,
filed a complaint for cancellation of the Extra-Judicial Partition with Absolute
Sale, recovery of ownership, injunction and damages with the RTC. However,
the complaint was dismissed twice without prejudice. In their amended
complaint, herein respondents allege among others: (1) that they are co-
owners of subject property, being descendants of the registered owners
thereof under OCT No. RO-2856; (2) that they had been in actual, peaceful,
physical, open, adverse, continuous and uninterrupted possession in concept
of owner of subject parcel of land since time immemorial; and (3) that the
extra-judicial partition of real estate with deed of absolute sale, entered into
by the petitioner, is a fraud and is null and void ab initio because not all the
co-owners of subject property affixed their signature on said document and
some of the co-owners who supposedly signed said document had been
dead at the time of the execution thereof.
Petitioner, in its answer, denied that respondents are the lawful owners of
subject parcel of land by virtue of their being descendants or heirs of the
registered owners of subject property. Instead, petitioner alleged that it had
been in actual possession of subject land as owner thereof by virtue of the
extra-judicial partition of real property and deed of absolute sale executed in
its favor; and that in fact, it had been paying taxes thereon religiously.
Petitioner then raised the affirmative defenses of failure to state cause of
action and prescription, as it took respondents 27 years, 10 months and 27
days to file the action to recover subject property, when an action to recover
property based on an implied trust should be instituted within 4 years from
discovery of the fraud.
On July 4, 1997, the RTC rendered a Decision ruling that respondents'
evidence failed to prove that the extra-judicial partition with deed of
absolute sale was a totally simulated or fictitious contract and concluded that
said document is valid, thus, effectively conveying to petitioner the property
in question. It further held that respondents' action, being considered as one
for reconveyance based on implied or constructive trust, had prescribed in
10 years from the registration of the deed on March 6, 1964; and if the
action is considered as one for annulment of contract on the ground of
fraud, it should have been filed within 4 years from discovery of the fraud.
The trial court also ruled that respondents failed to present any admissible
proof of filiation, hence, they were not able to prove that they are indeed
heirs of the eight Aying siblings who appear as the registered owners under
OCT No. RO-2856.
Upon appeal, the CA affirmed and modified the RTCs decision and held that
the heirs of Emiliano Aying, Simeon Aying and Roberta Aying are hereby
declared as the lawful owners of the contested property but equivalent only
to 3/8. The CA held that "an action for recovery of possession of registered
land never prescribes in view of the provision of Section 44, Act No. 496
(now Sec. 47, PD 1520), to the effect that no title to registered land in
derogation to that of a registered owner shall be acquired by prescription."
Even if the action is deemed to be based on implied trust, prescription did
not begin to run since there is no evidence that positive acts of repudiation
were made known to the heirs who did not participate in the execution of
the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. Thus,
striking down the RTC's ruling that the respondents' complaint is dismissible
on the ground of prescription, the CA held instead that herein respondents'
action had not prescribed but upheld the validity of the Extra-Judicial
Partition of Real Estate with Deed of Absolute Sale, except as to the shares
of the heirs of Emiliano, Simeon and Roberta, who did not participate in the
execution of said document.
ISSUE(S):
1. Whether or not the respondents cause of action is imprescriptible.
2. If the action is indeed imprescriptible, whether or not the principle of
laches apply.
RULING:
The Court held that the RTC and the CA that were correct in ruling that the
Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is valid and
binding only as to the heirs who participated in the execution thereof, hence,
the heirs of Emiliano, Simeon and Roberta Aying, who undisputedly did not
participate therein, cannot be bound by said document.
The Court emphasized the facts shown on record show that petitioner
acquired the entire parcel of land with the mistaken belief that all the heirs
have executed the subject document. Thus, it was correct for the trial court
to apply Article 1456 of the Civil Code, which states that If property is
acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from
whom the property comes.
The concept of constructive trusts was discussed in Philippine National Bank
v. Court of Appeals, to wit: xxx On the other hand, constructive trusts are
created by the construction of equity in order to satisfy the demands of
justice and prevent unjust enrichment. They arise contrary to intention
against one who, by fraud, duress or abuse of confidence, obtains or holds
the legal right to property which he ought not, in equity and good
conscience, to hold.
Based on such concept of constructive trusts, the Court ruled in said case
that: The rule that a trustee cannot acquire by prescription ownership over
property entrusted to him until and unless he repudiates the trust, applies to
express trusts and resulting implied trusts. However, in constructive implied
trusts, prescription may supervene even if the trustee does not repudiate the
relationship. Necessarily, repudiation of said trust is not a condition
precedent to the running of the prescriptive period.
In Amerol v. Bagumbaran, the Court held that as to the prescriptive period
within which to bring an action for reconveyance of property based on
implied or constructive trust, Article 1144 of the Civil Code is applicable, to
wit: The following actions must be brought within ten years from the time
the right of action accrues - (1) Upon a written contract; (2) Upon an
obligation created by law; (3) Upon a judgment.

An action for reconveyance based on an implied or constructive trust must
perforce prescribe in ten years and not otherwise. Undoubtedly, it is now
well-settled that an action for reconveyance based on an implied or
constructive trust prescribes in ten years from the issuance of the Torrens
title over the property. It has also been ruled that the ten-year prescriptive
period begins to run from the date of registration of the deed or the date of
the issuance of the certificate of title over the property, but if the person
claiming to be the owner thereof is in actual possession of the property, the
right to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe.
In ruling that the prescriptive period applies to the respondents, the Court
made notice of the fact that the respondents in the present case all testified
that they have never occupied or been in possession of the land in dispute.
As to the period from which prescription will start to run, the Court held that
since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale
was registered under Act No. 3344 and not under Act No. 496, said
document is deemed not registered. Accordingly, the ten-year prescriptive
period cannot be reckoned from March 6, 1964, the date of registration of
the subject document under Act No. 3344. The prescriptive period only
began to run from the time respondents had actual notice of the Extra-
Judicial Partition of Real Estate with Deed of Absolute Sale.
Respondents filed their Amended Complaint on December 6, 1993. 24 Thus,
with regard to respondent heirs of Roberta Aying who had knowledge of the
conveyance as far back as 1967, their cause of action is already barred by
prescription when said amended complaint was filed as they only had until
1977 within which to bring action. As to the respondent heirs of Emiliano
and Simeon Aying, they were able to initiate their action for reconveyance of
property based on implied or constructive trust well within the ten-year
prescriptive period reckoned from 1991 when they were sent by petitioner a
notice to vacate the subject property. Evidently, laches cannot be applied
against respondent heirs of Emiliano and Simeon Aying, as they took action
to protect their interest well within the period accorded them by law.

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Table of Contents

1. LEUNG YEE VS. STRONG MACHINERY (37 PHIL 644) .........................................................3

2 PROPERTY - CASE DIGESTS

1. LEUNG YEE VS. STRONG MACHINERY (37 PHIL 644)

4 PROPERTY - CASE DIGESTS

6 PROPERTY - CASE DIGESTS

7 PROPERTY - CASE DIGESTS

8 PROPERTY - CASE DIGESTS

9 PROPERTY - CASE DIGESTS

10 PROPERTY - CASE DIGESTS

11 PROPERTY - CASE DIGESTS

Mindanao Bus Company is a public utility engaged in transporting

12 PROPERTY - CASE DIGESTS

14 PROPERTY - CASE DIGESTS

15 PROPERTY - CASE DIGESTS

16 PROPERTY - CASE DIGESTS

17 PROPERTY - CASE DIGESTS

20 PROPERTY - CASE DIGESTS

21 PROPERTY - CASE DIGESTS

23 PROPERTY - CASE DIGESTS

25 PROPERTY - CASE DIGESTS

Issue: WON the fishpond is public in nature

28 PROPERTY - CASE DIGESTS

32 PROPERTY - CASE DIGESTS

33 PROPERTY - CASE DIGESTS

34 PROPERTY - CASE DIGESTS

36 PROPERTY - CASE DIGESTS

1.MIAA is Not a Government-Owned or Controlled Corporation

A government instrumentality like MIAA falls under Section 133(o) of the

39 PROPERTY - CASE DIGESTS

2.Airport Lands and Buildings of MIAA are Owned by the Republic

b.Airport Lands and Buildings are Outside the Commerce of Man

41 PROPERTY - CASE DIGESTS

42 PROPERTY - CASE DIGESTS

SEC. 193.Withdrawal of Tax Exemption Privileges Unless otherwise

44 PROPERTY - CASE DIGESTS

45 PROPERTY - CASE DIGESTS

46 PROPERTY - CASE DIGESTS

47 PROPERTY - CASE DIGESTS

Whether the offer of petitioners amounting to P50,000 is a sufficient

53 PROPERTY - CASE DIGESTS

54 PROPERTY - CASE DIGESTS

C. Revocation of a Mandatory Donation Because of Non-compliance with

57 PROPERTY - CASE DIGESTS

58 PROPERTY - CASE DIGESTS

59 PROPERTY - CASE DIGESTS

60 PROPERTY - CASE DIGESTS

2. Yes. Even if it is conceded that there was no explicit declaration that

3. Yes. When Proclamations Nos. 39 and 465 were issued, inalienable

62 PROPERTY - CASE DIGESTS

67 PROPERTY - CASE DIGESTS

2. For purposes of Section 14(2) of the Property Registration Decree may a

1.) In connection with Section 14(1) of the Property Registration Decree,

69 PROPERTY - CASE DIGESTS

2.) In complying with Section 14(2) of the Property Registration Decree,

It is clear that the evidence of petitioners is insufficient to establish that

71 PROPERTY - CASE DIGESTS

On July 14, 1999, the RTC rendered a decision in favor of respondents-

72 PROPERTY - CASE DIGESTS

On August 10, 2006, petitioners-claimants Sacay, and other landowners in

73 PROPERTY - CASE DIGESTS

A positive act declaring land as alienable and disposable is required. In

In the case at bar, no such proclamation, executive order, administrative

74 PROPERTY - CASE DIGESTS