Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-46245 May 31, 1982
MERALCO SECURITIES INDUSTRIAL CORPORATION, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT
APPEALS OF LAGUNA and PROVINCIAL ASSESSOR OF LAGUNA,
respondents.
AQUINO, J.:
In this special civil action of certiorari, Meralco Securities Industrial
Corporation assails the decision of the Central Board of Assessment
Appeals (composed of the Secretary of Finance as chairman and the
Secretaries of Justice and Local Government and Community Development
as members) dated May 6, 1976, holding that Meralco Securities' oil
pipeline is subject to realty tax.
The record reveals that pursuant to a pipeline concession issued under the
Petroleum Act of 1949, Republic Act No. 387, Meralco Securities installed
from Batangas to Manila a pipeline system consisting of cylindrical steel
pipes joined together and buried not less than one meter below the
surface along the shoulder of the public highway. The portion passing
through Laguna is about thirty kilometers long.
The pipes for white oil products measure fourteen inches in diameter by
thirty-six feet with a maximum capacity of 75,000 barrels daily. The pipes
for fuel and black oil measure sixteen inches by forty-eight feet with a
maximum capacity of 100,000 barrels daily.
The pipes are embedded in the soil and are firmly and solidly welded
together so as to preclude breakage or damage thereto and prevent
leakage or seepage of the oil. The valves are welded to the pipes so as to
make the pipeline system one single piece of property from end to end.
In order to repair, replace, remove or transfer segments of the pipeline,
the pipes have to be cold-cut by means of a rotary hard-metal pipe-cutter
after digging or excavating them out of the ground where they are buried.
In points where the pipeline traversed rivers or creeks, the pipes were laid
beneath the bed thereof. Hence, the pipes are permanently attached to
the land.
However, Meralco Securities notes that segments of the pipeline can be
moved from one place to another as shown in the permit issued by the
Secretary of Public Works and Communications which permit provides
that the government reserves the right to require the removal or transfer
of the pipes by and at the concessionaire's expense should they be
affected by any road repair or improvement.
Pursuant to the Assessment Law, Commonwealth Act No. 470, the
provincial assessor of Laguna treated the pipeline as real property and
issued Tax Declarations Nos. 6535-6537, San Pedro; 7473-7478, Cabuyao;
7967-7971, Sta. Rosa; 9882-9885, Bian and 15806-15810, Calamba,
containing the assessed values of portions of the pipeline.
Meralco Securities appealed the assessments to the Board of Assessment
Appeals of Laguna composed of the register of deeds as chairman and the
provincial auditor as member. That board in its decision of June 18, 1975
upheld the assessments (pp. 47-49, Rollo).
Meralco Securities brought the case to the Central Board of Assessment
Appeals. As already stated, that Board, composed of Acting Secretary of
Finance Pedro M. Almanzor as chairman and Secretary of Justice Vicente
Abad Santos and Secretary of Local Government and Community
Development Jose Roo as members, ruled that the pipeline is subject to
realty tax (p. 40, Rollo).
A copy of that decision was served on Meralco Securities' counsel on
August 27, 1976. Section 36 of the Real Property Tax Code, Presidential
Decree No. 464, which took effect on June 1, 1974, provides that the
Board's decision becomes final and executory after the lapse of fifteen
days from the date of receipt of a copy of the decision by the appellant.
Under Rule III of the amended rules of procedure of the Central Board of
Assessment Appeals (70 O.G. 10085), a party may ask for the
reconsideration of the Board's decision within fifteen days after receipt.
On September 7, 1976 (the eleventh day), Meralco Securities filed its
motion for reconsideration.
Secretary of Finance Cesar Virata and Secretary Roo (Secretary Abad
Santos abstained) denied the motion in a resolution dated December 2,
1976, a copy of which was received by appellant's counsel on May 24,
1977 (p. 4, Rollo). On June 6, 1977, Meralco Securities filed the instant
petition for certiorari.
The Solicitor General contends that certiorari is not proper in this case
because the Board acted within its jurisdiction and did not gravely abuse
its discretion and Meralco Securities was not denied due process of law.
Meralco Securities explains that because the Court of Tax Appeals has no
jurisdiction to review the decision of the Central Board of Assessment
Appeals and because no judicial review of the Board's decision is provided
for in the Real Property Tax Code, Meralco Securities' recourse is to file a
petition for certiorari.
We hold that certiorari was properly availed of in this case. It is a writ
issued by a superior court to an inferior court, board or officer exercising
judicial or quasi-judicial functions whereby the record of a particular case
is ordered to be elevated for review and correction in matters of law (14
C.J.S. 121-122; 14 Am Jur. 2nd 777).
The rule is that as to administrative agencies exercising quasi-judicial
power there is an underlying power in the courts to scrutinize the acts of
such agencies on questions of law and jurisdiction even though no right of
review is given by the statute (73 C.J.S. 506, note 56).
"The purpose of judicial review is to keep the administrative agency within
its jurisdiction and protect substantial rights of parties affected by its
decisions" (73 C.J.S. 507, See. 165). The review is a part of the system of
checks and balances which is a limitation on the separation of powers and
which forestalls arbitrary and unjust adjudications.
Judicial review of the decision of an official or administrative agency
exercising quasi-judicial functions is proper in cases of lack of jurisdiction,
error of law, grave abuse of discretion, fraud or collusion or in case the
administrative decision is corrupt, arbitrary or capricious (Mafinco Trading
Corporation vs. Ople, L-37790, March 25, 1976, 70 SCRA 139, 158; San
Miguel Corporation vs. Secretary of Labor, L-39195, May 16, 1975, 64
SCRA 56, 60, Mun. Council of Lemery vs. Prov. Board of Batangas, 56 Phil.
260, 268).
The Central Board of Assessment Appeals, in confirming the ruling of the
provincial assessor and the provincial board of assessment appeals that
Meralco Securities' pipeline is subject to realty tax, reasoned out that the
pipes are machinery or improvements, as contemplated in the Assessment
Law and the Real Property Tax Code; that they do not fall within the
category of property exempt from realty tax under those laws; that
articles 415 and 416 of the Civil Code, defining real and personal property,
have no application to this case; that even under article 415, the steel
pipes can be regarded as realty because they are constructions adhered to
the soil and things attached to the land in a fixed manner and that Meralco
Securities is not exempt from realty tax under the Petroleum Law (pp. 36-
40).
Meralco Securities insists that its pipeline is not subject to realty tax
because it is not real property within the meaning of article 415. This
contention is not sustainable under the provisions of the Assessment Law,
the Real Property Tax Code and the Civil 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. This
provision is reproduced with some modification in the Real Property Tax
Code which provides:
SEC. 38. Incidence of Real Property Tax. There shall be levied,
assessed and collected in all provinces, cities and municipalities an annual
ad valorem tax on real property, such as land, buildings, machinery and
other improvements affixed or attached to real property not hereinafter
specifically exempted. *
It is incontestable that the pipeline of Meralco Securities does not fall
within any of the classes of exempt real property enumerated in section 3
of the Assessment Law and section 40 of the Real Property Tax Code.
Pipeline means a line of pipe connected to pumps, valves and control
devices for conveying liquids, gases or finely divided solids. It is a line of
pipe running upon or in the earth, carrying with it the right to the use of
the soil in which it is placed (Note 21[10],54 C.J.S. 561).
Article 415[l] and [3] provides that real property may consist of
constructions of all kinds adhered to the soil and 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.
The pipeline system in question is indubitably a construction adhering to
the soil (Exh. B, p. 39, Rollo). It is attached to the land in such a way that it
cannot be separated therefrom without dismantling the steel pipes which
were welded to form the pipeline.
Insofar as the pipeline uses valves, pumps and control devices to maintain
the flow of oil, it is in a sense machinery within the meaning of the Real
Property Tax Code.
It should be borne in mind that what are being characterized as real
property are not the steel pipes but the pipeline system as a whole.
Meralco Securities has apparently two pipeline systems.
A pipeline for conveying petroleum has been regarded as real property for
tax purposes (Miller County Highway, etc., Dist. vs. Standard Pipe Line Co.,
19 Fed. 2nd 3; Board of Directors of Red River Levee Dist. No. 1 of
Lafayette County, Ark vs. R. F. C., 170 Fed. 2nd 430; 50 C. J. 750, note 86).
The other contention of Meralco Securities is that the Petroleum Law
exempts it from the payment of realty taxes. The alleged exemption is
predicated on the following provisions of that law which exempt Meralco
Securities from local taxes and make it liable for taxes of general
application:
ART. 102. Work obligations, taxes, royalties not to be changed. Work
obligations, special taxes and royalties which are fixed by the provisions of
this Act or by the concession for any of the kinds of concessions to which
this Act relates, are considered as inherent on such concessions after they
are granted, and shall not be increased or decreased during the life of the
concession to which they apply; nor shall any other special taxes or levies
be applied to such concessions, nor shall 0concessionaires under this Act
be subject to any provincial, municipal or other local taxes or levies; nor
shall any sales tax be charged on any petroleum produced from the
concession or portion thereof, manufactured by the concessionaire and
used in the working of his concession. All such concessionaires, however,
shall be subject to such taxes as are of general application in addition to
taxes and other levies specifically provided in this Act.
Meralco Securities argues that the realty tax is a local tax or levy and not a
tax of general application. This argument is untenable because the realty
tax has always been imposed by the lawmaking body and later by the
President of the Philippines in the exercise of his lawmaking powers, as
shown in section 342 et seq. of the Revised Administrative Code, Act No.
3995, Commonwealth Act No. 470 and Presidential Decree No. 464.
The realty tax is enforced throughout the Philippines and not merely in a
particular municipality or city but the proceeds of the tax accrue to the
province, city, municipality and barrio where the realty taxed is situated
(Sec. 86, P.D. No. 464). In contrast, a local tax is imposed by the municipal
or city council by virtue of the Local Tax Code, Presidential Decree No. 231,
which took effect on July 1, 1973 (69 O.G. 6197).
We hold that the Central Board of Assessment Appeals did not act with
grave abuse of discretion, did not commit any error of law and acted
within its jurisdiction in sustaining the holding of the provincial assessor
and the local board of assessment appeals that Meralco Securities'
pipeline system in Laguna is subject to realty tax.
WHEREFORE, the questioned decision and resolution are affirmed. The
petition is dismissed. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. Nos. L-10817-18 February 28, 1958
ENRIQUE LOPEZ, petitioner,
vs.
VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.
Nicolas Belmonte and Benjamin T. de Peralta for petitioner.
Tolentino & Garcia and D. R. Cruz for respondent Luzon Surety Co., Inc.
Jose B. Macatangay for respondent Plaza Theatre, Inc.
FELIX, J.:
Enrique Lopez is a resident of Balayan, Batangas, doing business under the
trade name of Lopez-Castelo Sawmill. Sometime in May, 1946, Vicente
Orosa, Jr., also a resident of the same province, dropped at Lopez' house
and invited him to make an investment in the theatre business. It was
intimated that Orosa, his family and close friends were organizing a
corporation to be known as Plaza Theatre, Inc., that would engage in such
venture. Although Lopez expressed his unwillingness to invest of the same,
he agreed to supply the lumber necessary for the construction of the
proposed theatre, and at Orosa's behest and assurance that the latter
would be personally liable for any account that the said construction might
incur, Lopez further agreed that payment therefor would be on demand
and not cash on delivery basis. Pursuant to said verbal agreement, Lopez
delivered the lumber which was used for the construction of the Plaza
Theatre on May 17, 1946, up to December 4 of the same year. But of the
total cost of the materials amounting to P62,255.85, Lopez was paid only
P20,848.50, thus leaving a balance of P41,771.35.
We may state at this juncture that the Plaza Theatre was erected on a
piece of land with an area of 679.17 square meters formerly owned by
Vicente Orosa, Jr., and was acquired by the corporation on September 25,
1946, for P6,000. As Lopez was pressing Orosa for payment of the
remaining unpaid obligation, the latter and Belarmino Rustia, the
president of the corporation, promised to obtain a bank loan by
mortgaging the properties of the Plaza Theatre., out of which said amount
of P41,771.35 would be satisfied, to which assurance Lopez had to accede.
Unknown to him, however, as early as November, 1946, the corporation
already got a loan for P30,000 from the Philippine National Bank with the
Luzon Surety Company as surety, and the corporation in turn executed a
mortgage on the land and building in favor of said company as counter-
security. As the land at that time was not yet brought under the operation
of the Torrens System, the mortgage on the same was registered on
November 16, 1946, under Act No. 3344. Subsequently, when the
corporation applied for the registration of the land under Act 496, such
mortgage was not revealed and thus Original Certificate of Title No. O-391
was correspondingly issued on October 25, 1947, without any
encumbrance appearing thereon.
Persistent demand from Lopez for the payment of the amount due him
caused Vicente Orosa, Jr. to execute on March 17, 1947, an alleged "deed
of assignment" of his 420 shares of stock of the Plaza Theater, Inc., at P100
per share or with a total value of P42,000 in favor of the creditor, and as
the obligation still remained unsettled, Lopez filed on November 12, 1947,
a complaint with the Court of First Instance of Batangas (Civil Case No.
4501 which later became R-57) against Vicente Orosa, Jr. and Plaza
Theater, Inc., praying that defendants be sentenced to pay him jointly and
severally the sum of P41,771.35, with legal interest from the firing of the
action; that in case defendants fail to pay the same, that the building and
the land covered by OCT No. O-391 owned by the corporation be sold at
public auction and the proceeds thereof be applied to said indebtedness;
or that the 420 shares of the capital stock of the Plaza Theatre, Inc.,
assigned by Vicente Orosa, Jr., to said plaintiff be sold at public auction for
the same purpose; and for such other remedies as may be warranted by
the circumstances. Plaintiff also caused the annotation of a notice of lis
pendens on said properties with the Register of Deeds.
Defendants Vicente Orosa, Jr. and Plaza Theatre, Inc., filed separate
answers, the first denying that the materials were delivered to him as a
promoter and later treasurer of the corporation, because he had
purchased and received the same on his personal account; that the land
on which the movie house was constructed was not charged with a lien to
secure the payment of the aforementioned unpaid obligation; and that the
420 shares of stock of the Plaza Theatre, Inc., was not assigned to plaintiff
as collaterals but as direct security for the payment of his indebtedness. As
special defense, this defendant contended that as the 420 shares of stock
assigned and conveyed by the assignor and accepted by Lopez as direct
security for the payment of the amount of P41,771.35 were personal
properties, plaintiff was barred from recovering any deficiency if the
proceeds of the sale thereof at public auction would not be sufficient to
cover and satisfy the obligation. It was thus prayed that he be declared
exempted from the payment of any deficiency in case the proceeds from
the sale of said personal properties would not be enough to cover the
amount sought to be collected.
Defendant Plaza Theatre, Inc., on the other hand, practically set up the
same line of defense by alleging that the building materials delivered to
Orosa were on the latter's personal account; and that there was no
understanding that said materials would be paid jointly and severally by
Orosa and the corporation, nor was a lien charged on the properties of the
latter to secure payment of the same obligation. As special defense,
defendant corporation averred that while it was true that the materials
purchased by Orosa were sold by the latter to the corporation, such
transactions were in good faith and for valuable consideration thus when
plaintiff failed to claim said materials within 30 days from the time of
removal thereof from Orosa, lumber became a different and distinct
specie and plaintiff lost whatever rights he might have in the same and
consequently had no recourse against the Plaza Theatre, Inc., that the
claim could not have been refectionary credit, for such kind of obligation
referred to an indebtedness incurred in the repair or reconstruction of
something already existing and this concept did not include an entirely
new work; and that the Plaza Theatre, Inc., having been incorporated on
October 14, 1946, it could not have contracted any obligation prior to said
date. It was, therefore, prayed that the complaint be dismissed; that said
defendant be awarded the sum P 5,000 for damages, and such other relief
as may be just and proper in the premises.
The surety company, in the meantime, upon discovery that the land was
already registered under the Torrens System and that there was a notice
of lis pendens thereon, filed on August 17, 1948, or within the 1-year
period after the issuance of the certificate of title, a petition for review of
the decree of the land registration court dated October 18, 1947, which
was made the basis of OCT No. O-319, in order to annotate the rights and
interests of the surety company over said properties (Land Registration
Case No. 17 GLRO Rec. No. 296). Opposition thereto was offered by
Enrique Lopez, asserting that the amount demanded by him constituted a
preferred lien over the properties of the obligors; that the surety company
was guilty of negligence when it failed to present an opposition to the
application for registration of the property; and that if any violation of the
rights and interest of said surety would ever be made, same must be
subject to the lien in his favor.
The two cases were heard jointly and in a decision dated October 30,
1952, the lower Court, after making an exhaustive and detailed analysis of
the respective stands of the parties and the evidence adduced at the trial,
held that defendants Vicente Orosa, Jr., and the Plaza Theatre, Inc., were
jointly liable for the unpaid balance of the cost of lumber used in the
construction of the building and the plaintiff thus acquired the
materialman's lien over the same. In making the pronouncement that the
lien was merely confined to the building and did not extend to the land on
which the construction was made, the trial judge took into consideration
the fact that when plaintiff started the delivery of lumber in May, 1946,
the land was not yet owned by the corporation; that the mortgage in favor
of Luzon Surety Company was previously registered under Act No. 3344;
that the codal provision (Art. 1923 of the old Spanish Civil Code) specifying
that refection credits are preferred could refer only to buildings which are
also classified as real properties, upon which said refection was made. It
was, however, declared that plaintiff's lien on the building was superior to
the right of the surety company. And finding that the Plaza Theatre, Inc.,
had no objection to the review of the decree issued in its favor by the land
registration court and the inclusion in the title of the encumbrance in favor
of the surety company, the court a quo granted the petition filed by the
latter company. Defendants Orosa and the Plaza Theatre, Inc., were thus
required to pay jointly the amount of P41,771.35 with legal interest and
costs within 90 days from notice of said decision; that in case of default,
the 420 shares of stock assigned by Orosa to plaintiff be sold at public
auction and the proceeds thereof be applied to the payment of the
amount due the plaintiff, plus interest and costs; and that the
encumbrance in favor of the surety company be endorsed at the back of
OCT No. O-391, with notation I that with respect to the building, said
mortgage was subject to the materialman's lien in favor of Enrique Lopez.
Plaintiff tried to secure a modification of the decision in so far as it
declared that the obligation of therein defendants was joint instead of
solidary, and that the lien did not extend to the land, but same was denied
by order the court of December 23, 1952. The matter was thus appealed
to the Court of appeals, which affirmed the lower court's ruling, and then
to this Tribunal. In this instance, plaintiff-appellant raises 2 issues: (1)
whether a materialman's lien for the value of the materials used in the
construction of a building attaches to said structure alone and does not
extend to the land on which the building is adhered to; and (2) whether
the lower court and the Court of Appeals erred in not providing that the
material mans liens is superior to the mortgage executed in favor surety
company not only on the building but also on the land.
It is to be noted in this appeal that Enrique Lopez has not raised any
question against the part of the decision sentencing defendants Orosa and
Plaza Theatre, Inc., to pay jointly the sum of P41,771.35, so We will not
take up or consider anything on that point. Appellant, however, contends
that the lien created in favor of the furnisher of the materials used for the
construction, repair or refection of a building, is also extended to the land
which the construction was made, and in support thereof he relies on
Article 1923 of the Spanish Civil Code, pertinent law on the matter, which
reads as follows:
ART. 1923. With respect to determinate real property and real rights of
the debtor, the following are preferred:
xxx xxx xxx
5. Credits for refection, not entered or recorded, with respect to the
estate upon which the refection was made, and only with respect to other
credits different from those mentioned in four preceding paragraphs.
It is argued that in view of the employment of the phrase real estate, or
immovable property, and inasmuch as said provision does not contain any
specification delimiting the lien to the building, said article must be
construed as to embrace both the land and the building or structure
adhering thereto. We cannot subscribe to this view, for while it is true that
generally, real estate connotes the land and the building constructed
thereon, it is obvious that the inclusion of the building, separate and
distinct from the land, in the enumeration of what may constitute real
properties1 could mean only one thing that a building is by itself an
immovable property, a doctrine already pronounced by this Court in the
case of Leung Yee vs. Strong Machinery Co., 37 Phil., 644. Moreover, and
in view of the absence of any specific provision of law to the contrary, a
building is an immovable property, irrespective of whether or not said
structure and the land on which it is adhered to belong to the same
owner.
A close examination of the provision of the Civil Code invoked by appellant
reveals that the law gives preference to unregistered refectionary credits
only with respect to the real estate upon which the refection or work was
made. This being so, the inevitable conclusion must be that the lien so
created attaches merely to the immovable property for the construction
or repair of which the obligation was incurred. Evidently, therefore, the
lien in favor of appellant for the unpaid value of the lumber used in the
construction of the building attaches only to said structure and to no other
property of the obligors.
Considering the conclusion thus arrived at, i.e., that the materialman's lien
could be charged only to the building for which the credit was made or
which received the benefit of refection, the lower court was right in,
holding at the interest of the mortgagee over the land is superior and
cannot be made subject to the said materialman's lien.
Wherefore, and on the strength of the foregoing considerations, the
decision appealed from is hereby affirmed, with costs against appellant. It
is so ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 106041 January 29, 1993
BENGUET CORPORATION, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT
APPEALS OF ZAMBALES, PROVINCIAL ASSESSOR OF ZAMBALES, PROVINCE
OF ZAMBALES, and MUNICIPALITY OF SAN MARCELINO, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
CRUZ, J.:
The realty tax assessment involved in this case amounts to
P11,319,304.00. It has been imposed on the petitioner's tailings dam and
the land thereunder over its protest.
The controversy arose in 1985 when the Provincial Assessor of Zambales
assessed the said properties as taxable improvements. The assessment
was appealed to the Board of Assessment Appeals of the Province of
Zambales. On August 24, 1988, the appeal was dismissed mainly on the
ground of the petitioner's "failure to pay the realty taxes that fell due
during the pendency of the appeal."
The petitioner seasonably elevated the matter to the Central Board of
Assessment Appeals, 1 one of the herein respondents. In its decision dated
March 22, 1990, the Board reversed the dismissal of the appeal but, on the
merits, agreed that "the tailings dam and the lands submerged thereunder
(were) subject to realty tax."
For purposes of taxation the dam is considered as real property as it
comes within the object mentioned in paragraphs (a) and (b) of Article 415
of the New Civil Code. It is a construction adhered to the soil which cannot
be separated or detached without breaking the material or causing
destruction on the land upon which it is attached. The immovable nature
of the dam as an improvement determines its character as real property,
hence taxable under Section 38 of the Real Property Tax Code. (P.D. 464).
Although the dam is partly used as an anti-pollution device, this Board
cannot accede to the request for tax exemption in the absence of a law
authorizing the same.
xxx xxx xxx
We find the appraisal on the land submerged as a result of the
construction of the tailings dam, covered by Tax Declaration Nos.
002-0260 and 002-0266, to be in accordance with the Schedule of Market
Values for Zambales which was reviewed and allowed for use by the
Ministry (Department) of Finance in the 1981-1982 general revision. No
serious attempt was made by Petitioner-Appellant Benguet Corporation to
impugn its reasonableness, i.e., that the P50.00 per square meter applied
by Respondent-Appellee Provincial Assessor is indeed excessive and
unconscionable. Hence, we find no cause to disturb the market value
applied by Respondent Appellee Provincial Assessor of Zambales on the
properties of Petitioner-Appellant Benguet Corporation covered by Tax
Declaration Nos. 002-0260 and 002-0266.
This petition for certiorari now seeks to reverse the above ruling.
The principal contention of the petitioner is that the tailings dam is not
subject to realty tax because it is not an "improvement" upon the land
within the meaning of the Real Property Tax Code. More particularly, it is
claimed
(1) as regards the tailings dam as an "improvement":
(a) that the tailings dam has no value separate from and
independent of the mine; hence, by itself it cannot be considered an
improvement separately assessable;
(b) that it is an integral part of the mine;
(c) that at the end of the mining operation of the petitioner
corporation in the area, the tailings dam will benefit the local community
by serving as an irrigation facility;
(d) that the building of the dam has stripped the property of any
commercial value as the property is submerged under water wastes from
the mine;
(e) that the tailings dam is an environmental pollution control
device for which petitioner must be commended rather than penalized
with a realty tax assessment;
(f) that the installation and utilization of the tailings dam as a
pollution control device is a requirement imposed by law;
(2) as regards the valuation of the tailings dam and the submerged
lands:
(a) that the subject properties have no market value as they
cannot be sold independently of the mine;
(b) that the valuation of the tailings dam should be based on its
incidental use by petitioner as a water reservoir and not on the alleged
cost of construction of the dam and the annual build-up expense;
(c) that the "residual value formula" used by the Provincial
Assessor and adopted by respondent CBAA is arbitrary and erroneous; and
(3) as regards the petitioner's liability for penalties for
non-declaration of the tailings dam and the submerged lands for realty tax
purposes:
(a) that where a tax is not paid in an honest belief that it is not
due, no penalty shall be collected in addition to the basic tax;
(b) that no other mining companies in the Philippines operating a
tailings dam have been made to declare the dam for realty tax purposes.
The petitioner does not dispute that the tailings dam may be considered
realty within the meaning of Article 415. It insists, however, that the dam
cannot be subjected to realty tax as a separate and independent property
because it does not constitute an "assessable improvement" on the mine
although a considerable sum may have been spent in constructing and
maintaining it.
To support its theory, the petitioner cites the following cases:
1. Municipality of Cotabato v. Santos (105 Phil. 963), where this
Court considered the dikes and gates constructed by the taxpayer in
connection with a fishpond operation as integral parts of the fishpond.
2. Bislig Bay Lumber Co. v. Provincial Government of Surigao (100
Phil. 303), involving a road constructed by the timber concessionaire in the
area, where this Court did not impose a realty tax on the road primarily for
two reasons:
In the first place, it cannot be disputed that the ownership of the road that
was constructed by appellee belongs to the government by right of
accession not only because it is inherently incorporated or attached to the
timber land . . . but also because upon the expiration of the concession
said road would ultimately pass to the national government. . . . In the
second place, while the road was constructed by appellee primarily for its
use and benefit, the privilege is not exclusive, for . . . appellee cannot
prevent the use of portions of the concession for homesteading purposes.
It is also duty bound to allow the free use of forest products within the
concession for the personal use of individuals residing in or within the
vicinity of the land. . . . In other words, the government has practically
reserved the rights to use the road to promote its varied activities. Since,
as above shown, the road in question cannot be considered as an
improvement which belongs to appellee, although in part is for its benefit,
it is clear that the same cannot be the subject of assessment within the
meaning of Section 2 of C.A.
No. 470.
Apparently, the realty tax was not imposed not because the road was an
integral part of the lumber concession but because the government had
the right to use the road to promote its varied activities.
3. Kendrick v. Twin Lakes Reservoir Co. (144 Pacific 884), an
American case, where it was declared that the reservoir dam went with
and formed part of the reservoir and that the dam would be "worthless
and useless except in connection with the outlet canal, and the water
rights in the reservoir represent and include whatever utility or value there
is in the dam and headgates."
4. Ontario Silver Mining Co. v. Hixon (164 Pacific 498), also from
the United States. This case involved drain tunnels constructed by plaintiff
when it expanded its mining operations downward, resulting in a
constantly increasing flow of water in the said mine. It was held that:
Whatever value they have is connected with and in fact is an integral part
of the mine itself. Just as much so as any shaft which descends into the
earth or an underground incline, tunnel, or drift would be which was used
in connection with the mine.
On the other hand, the Solicitor General argues that the dam is an
assessable improvement because it enhances the value and utility of the
mine. The primary function of the dam is to receive, retain and hold the
water coming from the operations of the mine, and it also enables the
petitioner to impound water, which is then recycled for use in the plant.
There is also ample jurisprudence to support this view, thus:
. . . 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. (Caltex [Phil.] Inc. v.
CBAA, 114 SCRA 296).
We hold that while the two storage tanks are not embedded in the land,
they may, nevertheless, be considered as improvements on the land,
enhancing its utility and rendering it useful to the oil industry. It is
undeniable that the two tanks have been installed with some degree of
permanence as receptacles for the considerable quantities of oil needed
by MERALCO for its operations. (Manila Electric Co. v. CBAA, 114 SCRA
273).
The pipeline system in question is indubitably a construction adhering to
the soil. It is attached to the land in such a way that it cannot be separated
therefrom without dismantling the steel pipes which were welded to form
the pipeline. (MERALCO Securities Industrial Corp. v. CBAA, 114 SCRA 261).
The tax upon the dam was properly assessed to the plaintiff as a tax upon
real estate. (Flax-Pond Water Co. v. City of Lynn, 16 N.E. 742).
The oil tanks are structures within the statute, that they are designed and
used by the owner as permanent improvement of the free hold, and that
for such reasons they were properly assessed by the respondent taxing
district as improvements. (Standard Oil Co. of New Jersey v. Atlantic City,
15 A 2d. 271)
The Real Property Tax Code does not carry a definition of "real property"
and simply says that the realty tax is imposed on "real property, such as
lands, buildings, machinery and other improvements affixed or attached to
real property." In the absence of such a definition, we apply Article 415 of
the Civil Code, the pertinent portions of which state:
Art. 415. The following are immovable property.
(1) Lands, buildings 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.
Section 2 of C.A. No. 470, otherwise known as the Assessment Law,
provides that the realty tax is due "on the real property, including land,
buildings, machinery and other improvements" not specifically exempted
in Section 3 thereof. A reading of that section shows that the tailings dam
of the petitioner does not fall under any of the classes of exempt real
properties therein enumerated.
Is the tailings dam an improvement on the mine? Section 3(k) of the Real
Property Tax Code defines improvement as follows:
(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 adopt it for new or further purposes.
The term has also been interpreted as "artificial alterations of the physical
condition of the ground that are reasonably permanent in character." 2
The Court notes that in the Ontario case the plaintiff admitted that the
mine involved therein could not be operated without the aid of the drain
tunnels, which were indispensable to the successful development and
extraction of the minerals therein. This is not true in the present case.
Even without the tailings dam, the petitioner's mining operation can still
be carried out because the primary function of the dam is merely to
receive and retain the wastes and water coming from the mine. There is
no allegation that the water coming from the dam is the sole source of
water for the mining operation so as to make the dam an integral part of
the mine. In fact, as a result of the construction of the dam, the petitioner
can now impound and recycle water without having to spend for the
building of a water reservoir. And as the petitioner itself points out, even if
the petitioner's mine is shut down or ceases operation, the dam may still
be used for irrigation of the surrounding areas, again unlike in the Ontario
case.
As correctly observed by the CBAA, the Kendrick case is also not applicable
because it involved water reservoir dams used for different purposes and
for the benefit of the surrounding areas. By contrast, the tailings dam in
question is being used exclusively for the benefit of the petitioner.
Curiously, the petitioner, while vigorously arguing that the tailings dam has
no separate existence, just as vigorously contends that at the end of the
mining operation the tailings dam will serve the local community as an
irrigation facility, thereby implying that it can exist independently of the
mine.
From the definitions and the cases cited above, it would appear that
whether a structure constitutes an improvement so as to partake of the
status of realty would depend upon the degree of permanence intended in
its construction and use. The expression "permanent" as applied to an
improvement does not imply that the improvement must be used
perpetually but only until the purpose to which the principal realty is
devoted has been accomplished. It is sufficient that the improvement is
intended to remain as long as the land to which it is annexed is still used
for the said purpose.
The Court is convinced that the subject dam falls within the definition of
an "improvement" because it is permanent in character and it enhances
both the value and utility of petitioner's mine. Moreover, the immovable
nature of the dam defines its character as real property under Article 415
of the Civil Code and thus makes it taxable under Section 38 of the Real
Property Tax Code.
The Court will also reject the contention that the appraisal at P50.00 per
square meter made by the Provincial Assessor is excessive and that his use
of the "residual value formula" is arbitrary and erroneous.
Respondent Provincial Assessor explained the use of the "residual value
formula" as follows:
A 50% residual value is applied in the computation because, while it is true
that when slime fills the dike, it will then be covered by another dike or
stage, the stage covered is still there and still exists and since only one face
of the dike is filled, 50% or the other face is unutilized.
In sustaining this formula, the CBAA gave the following justification:
We find the appraisal on the land submerged as a result of the
construction of the tailings dam, covered by Tax Declaration Nos.
002-0260 and 002-0266, to be in accordance with the Schedule of Market
Values for San Marcelino, Zambales, which is fifty (50.00) pesos per square
meter for third class industrial land (TSN, page 17, July 5, 1989) and
Schedule of Market Values for Zambales which was reviewed and allowed
for use by the Ministry (Department) of Finance in the 1981-1982 general
revision. No serious attempt was made by Petitioner-Appellant Benguet
Corporation to impugn its reasonableness, i.e, that the P50.00 per square
meter applied by Respondent-Appellee Provincial Assessor is indeed
excessive and unconscionable. Hence, we find no cause to disturb the
market value applied by Respondent-Appellee Provincial Assessor of
Zambales on the properties of Petitioner-Appellant Benguet Corporation
covered by Tax Declaration Nos. 002-0260 and 002-0266.
It has been the long-standing policy of this Court to respect the
conclusions of quasi-judicial agencies like the CBAA, which, because of the
nature of its functions and its frequent exercise thereof, has developed
expertise in the resolution of assessment problems. The only exception to
this rule is where it is clearly shown that the administrative body has
committed grave abuse of discretion calling for the intervention of this
Court in the exercise of its own powers of review. There is no such
showing in the case at bar.
We disagree, however, with the ruling of respondent CBAA that it cannot
take cognizance of the issue of the propriety of the penalties imposed
upon it, which was raised by the petitioner for the first time only on
appeal. The CBAA held that this "is an entirely new matter that petitioner
can take up with the Provincial Assessor (and) can be the subject of
another protest before the Local Board or a negotiation with the local
sanggunian . . ., and in case of an adverse decision by either the Local
Board or the local sanggunian, (it can) elevate the same to this Board for
appropriate action."
There is no need for this time-wasting procedure. The Court may resolve
the issue in this petition instead of referring it back to the local authorities.
We have studied the facts and circumstances of this case as above
discussed and find that the petitioner has acted in good faith in
questioning the assessment on the tailings dam and the land submerged
thereunder. It is clear that it has not done so for the purpose of evading or
delaying the payment of the questioned tax. Hence, we hold that the
petitioner is not subject to penalty for its
non-declaration of the tailings dam and the submerged lands for realty tax
purposes.
WHEREFORE, the petition is DISMISSED for failure to show that the
questioned decision of respondent Central Board of Assessment Appeals is
tainted with grave abuse of discretion except as to the imposition of
penalties upon the petitioner which is hereby SET ASIDE. Costs against the
petitioner. It is so ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-30173 September 30, 1971
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, plaintiffs-appellees,
vs.
ALBERTA VICENCIO and EMILIANO SIMEON, defendants-appellants.
Castillo & Suck for plaintiffs-appellees.
Jose Q. Calingo for defendants-appellants.
REYES, J.B.L., J.:
Case certified to this Court by the Court of Appeals (CA-G.R. No. 27824-R)
for the reason that only questions of law are involved.
This case was originally commenced by defendants-appellants in the
municipal court of Manila in Civil Case No. 43073, for ejectment. Having
lost therein, defendants-appellants appealed to the court a quo (Civil Case
No. 30993) which also rendered a decision against them, the dispositive
portion of which follows:
WHEREFORE, the court hereby renders judgment in favor of the plaintiffs
and against the defendants, ordering the latter to pay jointly and severally
the former a monthly rent of P200.00 on the house, subject-matter of this
action, from March 27, 1956, to January 14, 1967, with interest at the legal
rate from April 18, 1956, the filing of the complaint, until fully paid, plus
attorney's fees in the sum of P300.00 and to pay the costs.
It appears on the records that 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 Nos. 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.
It was also agreed that default in the payment of any of the amortizations,
would cause the remaining unpaid balance to becomeimmediately due
and Payable and
the Chattel Mortgage will be enforceable in accordance with the
provisions of Special Act No. 3135, and for this purpose, the Sheriff of the
City of Manila or any of his deputies is hereby empowered and authorized
to sell all the Mortgagor's property after the necessary publication in order
to settle the financial debts of P4,800.00, plus 12% yearly interest, and
attorney's fees... 2
When 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. 3 Thereafter,
on 18 April 1956, plaintiffs-appellant 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. 4 On 21 September 1956, the
municipal court rendered its decision
... ordering the defendants to vacate the premises described in the
complaint; ordering further to pay monthly the amount of P200.00 from
March 27, 1956, until such (time that) the premises is (sic) completely
vacated; plus attorney's fees of P100.00 and the costs of the suit. 5
Defendants-appellants, in their answers in both the municipal court and
court a quo impugned the legality of the chattel mortgage, claiming that
they are still the owners of the house; but they waived the right to
introduce evidence, oral or documentary. Instead, they relied on their
memoranda in support of their motion to dismiss, predicated mainly on
the grounds that: (a) the municipal court did not have jurisdiction to try
and decide the case because (1) the issue involved, is ownership, and (2)
there was no allegation of prior possession; and (b) failure to prove prior
demand pursuant to Section 2, Rule 72, of the Rules of Court. 6
During the pendency of the appeal to the Court of First Instance,
defendants-appellants failed to deposit the rent for November, 1956
within the first 10 days of December, 1956 as ordered in the decision of
the municipal court. As a result, the court granted plaintiffs-appellees'
motion for execution, and it was actually issued on 24 January 1957.
However, the judgment regarding the surrender of possession to plaintiffs-
appellees could not be executed because the subject house had been
already demolished on 14 January 1957 pursuant to the order of the court
in a separate civil case (No. 25816) for ejectment against the present
defendants for non-payment of rentals on the land on which the house
was constructed.
The motion of plaintiffs for dismissal of the appeal, execution of the
supersedeas bond and withdrawal of deposited rentals was denied for the
reason that the liability therefor was disclaimed and was still being
litigated, and under Section 8, Rule 72, rentals deposited had to be held
until final disposition of the appeal. 7
On 7 October 1957, the appellate court of First Instance rendered its
decision, the dispositive portion of which is quoted earlier. The said
decision was appealed by defendants to the Court of Appeals which, in
turn, certified the appeal to this Court. Plaintiffs-appellees failed to file a
brief and this appeal was submitted for decision without it.
Defendants-appellants submitted numerous assignments of error which
can be condensed into two questions, namely: .
(a) Whether the municipal court from which the case originated
had jurisdiction to adjudicate the same;
(b) Whether the defendants are, under the law, legally bound to
pay rentals to the plaintiffs during the period of one (1) year provided by
law for the redemption of the extrajudicially foreclosed house.
We will consider these questions seriatim.
(a) Defendants-appellants mortgagors question the jurisdiction of the
municipal court from which the case originated, and consequently, the
appellate jurisdiction of the Court of First Instance a quo, on the theory
that the chattel mortgage is void ab initio; whence it would follow that the
extrajudicial foreclosure, and necessarily the consequent auction sale, are
also void. Thus, the ownership of the house still remained with
defendants-appellants who are entitled to possession and not plaintiffs-
appellees. Therefore, it is argued by defendants-appellants, the issue of
ownership will have to be adjudicated first in order to determine
possession. lt is contended further that ownership being in issue, it is the
Court of First Instance which has jurisdiction and not the municipal court.
Defendants-appellants predicate their theory of nullity of the chattel
mortgage on two grounds, which are: (a) that, their signatures on the
chattel mortgage were obtained through fraud, deceit, or trickery; and (b)
that the subject matter of the mortgage is a house of strong materials,
and, being an immovable, it can only be the subject of a real estate
mortgage and not a chattel mortgage.
On the charge of fraud, deceit or trickery, the Court of First Instance found
defendants-appellants' contentions as not supported by evidence and
accordingly dismissed the charge, 8 confirming the earlier finding of the
municipal court that "the defense of ownership as well as the allegations
of fraud and deceit ... are mere allegations." 9
It has been held in Supia and Batiaco vs. Quintero and Ayala 10 that "the
answer is a mere statement of the facts which the party filing it expects to
prove, but it is not evidence; 11 and further, that when the question to be
determined is one of title, the Court is given the authority to proceed with
the hearing of the cause until this fact is clearly established. In the case of
Sy vs. Dalman, 12 wherein the defendant was also a successful bidder in an
auction sale, it was likewise held by this Court that in detainer cases the
aim of ownership "is a matter of defense and raises an issue of fact which
should be determined from the evidence at the trial." What determines
jurisdiction are the allegations or averments in the complaint and the
relief asked for. 13
Moreover, even granting that the charge is true, fraud or deceit does not
render a contract void ab initio, and can only be a ground for rendering
the contract voidable or annullable pursuant to Article 1390 of the New
Civil Code, by a proper action in court. 14 There is nothing on record to
show that the mortgage has been annulled. Neither is it disclosed that
steps were taken to nullify the same. Hence, defendants-appellants' claim
of ownership on the basis of a voidable contract which has not been
voided fails.
It is claimed in the alternative by defendants-appellants that even if there
was no fraud, deceit or trickery, the chattel mortgage was still null and
void ab initio because only personal properties can be subject of a chattel
mortgage. The rule about the status of buildings as immovable property is
stated in Lopez vs. Orosa, Jr. and Plaza Theatre Inc., 15 cited in Associated
Insurance Surety Co., Inc. vs. Iya, et al. 16 to the effect that
... it is obvious that the inclusion of the building, separate and distinct from
the land, in the enumeration of what may constitute real properties (art.
415, New Civil Code) could only mean one thing that a building is by
itself an immovable property irrespective of whether or not said structure
and the land on which it is adhered to belong to the same owner.
Certain deviations, however, have been allowed for various reasons. In the
case of Manarang and Manarang vs. Ofilada, 17 this 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. 18 In the latter case, the
mortgagor conveyed and transferred to the mortgagee by way of
mortgage "the following described personal property." 19 The "personal
property" consisted of leasehold rights and a building. Again, in the case of
Luna vs. Encarnacion, 20 the subject of the contract designated as Chattel
Mortgage was a house of mixed materials, and this Court hold therein that
it was a valid Chattel mortgage because it was so expressly designated and
specifically that the property given as security "is a house of mixed
materials, which by its very nature is considered personal property." In the
later case of Navarro vs. Pineda, 21 this Court stated that
The view that parties to a deed of chattel mortgage may agree to consider
a house as personal property for the purposes of said contract, "is good
only insofar as the contracting parties are concerned. It is based, partly,
upon the principle of estoppel" (Evangelista vs. Alto Surety, No. L-11139,
23 April 1958). In a case, a mortgaged house built on a rented land was
held to be a personal property, not only because the deed of mortgage
considered it as such, but also because it did not form part of the land
(Evangelists vs. Abad, [CA]; 36 O.G. 2913), for it is now settled that an
object placed on land by one who had only a temporary right to the same,
such as the lessee or usufructuary, does not become immobilized by
attachment (Valdez vs. Central Altagracia, 222 U.S. 58, cited in Davao
Sawmill Co., Inc. vs. Castillo, et al., 61 Phil. 709). Hence, if a house
belonging to a person stands on a rented land belonging to another
person, it may be mortgaged as a personal property as so stipulated in the
document of mortgage. (Evangelista vs. Abad, Supra.) It should be noted,
however that the principle is predicated on statements by the owner
declaring his house to be a chattel, a conduct that may conceivably estop
him from subsequently claiming otherwise. (Ladera vs. C.N. Hodges, [CA]
48 O.G. 5374): 22
In the contract now before Us, the house on rented land is not only
expressly designated as Chattel Mortgage; it specifically provides that "the
mortgagor ... voluntarily CEDES, SELLS and TRANSFERS by way of Chattel
Mortgage 23 the property together with its leasehold rights over the lot
on which it is constructed and participation ..." 24 Although there is no
specific statement referring to the subject house as personal property, yet
by ceding, selling or transferring a property by way of chattel mortgage
defendants-appellants could only have meant to convey the house as
chattel, or at least, intended to treat the same as such, so that they should
not now be allowed to make an inconsistent stand by claiming otherwise.
Moreover, the subject house stood on a rented lot to which defendats-
appellants merely had a temporary right as lessee, and although this can
not in itself alone determine the status of the property, it does so when
combined with other factors to sustain the interpretation that the parties,
particularly the mortgagors, intended to treat the house as personalty.
Finally unlike in the Iya cases, Lopez vs. Orosa, Jr. and Plaza Theatre, Inc.
25 and Leung Yee vs. F. L. Strong Machinery and Williamson, 26 wherein
third persons assailed the validity of the chattel mortgage, 27 it is the
defendants-appellants themselves, as debtors-mortgagors, who are
attacking the validity of the chattel mortgage in this case. The doctrine of
estoppel therefore applies to the herein defendants-appellants, having
treated the subject house as personalty.
(b) Turning to the question of possession and rentals of the
premises in question. The Court of First Instance noted in its decision that
nearly a year after the foreclosure sale the mortgaged house had been
demolished on 14 and 15 January 1957 by virtue of a decision obtained by
the lessor of the land on which the house stood. For this reason, the said
court limited itself to sentencing the erstwhile mortgagors to pay plaintiffs
a monthly rent of P200.00 from 27 March 1956 (when the chattel
mortgage was foreclosed and the house sold) until 14 January 1957 (when
it was torn down by the Sheriff), plus P300.00 attorney's fees.
Appellants mortgagors question this award, claiming that they were
entitled to remain in possession without any obligation to pay rent during
the one year redemption period after the foreclosure sale, i.e., until 27
March 1957. On this issue, We must rule for the appellants.
Chattel mortgages are covered and regulated by the Chattel Mortgage
Law, Act No. 1508. 28 Section 14 of this Act allows the mortgagee to have
the property mortgaged sold at public auction through a public officer in
almost the same manner as that allowed by Act No. 3135, as amended by
Act No. 4118, provided that the requirements of the law relative to notice
and registration are complied with. 29 In the instant case, the parties
specifically stipulated that "the chattel mortgage will be enforceable in
accordance with the provisions of Special Act No. 3135 ... ." 30 (Emphasis
supplied).
Section 6 of the Act referred to 31 provides that the debtor-mortgagor
(defendants-appellants herein) may, at any time within one year from and
after the date of the auction sale, redeem the property sold at the extra
judicial foreclosure sale. Section 7 of the same Act 32 allows the purchaser
of the property to obtain from the court the possession during the period
of redemption: but the same provision expressly requires the filing of a
petition with the proper Court of First Instance and the furnishing of a
bond. It is only upon filing of the proper motion and the approval of the
corresponding bond that the order for a writ of possession issues as a
matter of course. No discretion is left to the court. 33 In the absence of
such a compliance, as in the instant case, the purchaser can not claim
possession during the period of redemption as a matter of right. In such a
case, the governing provision is Section 34, Rule 39, of the Revised Rules of
Court 34 which also applies to properties purchased in extrajudicial
foreclosure proceedings. 35 Construing the said section, this Court stated
in the aforestated case of Reyes vs. Hamada.
In other words, before the expiration of the 1-year period within which the
judgment-debtor or mortgagor may redeem the property, the purchaser
thereof is not entitled, as a matter of right, to possession of the same.
Thus, while it is true that the Rules of Court allow the purchaser to receive
the rentals if the purchased property is occupied by tenants, he is,
nevertheless, accountable to the judgment-debtor or mortgagor as the
case may be, for the amount so received and the same will be duly
credited against the redemption price when the said debtor or mortgagor
effects the redemption. Differently stated, the rentals receivable from
tenants, although they may be collected by the purchaser during the
redemption period, do not belong to the latter but still pertain to the
debtor of mortgagor. The rationale for the Rule, it seems, is to secure for
the benefit of the debtor or mortgagor, the payment of the redemption
amount and the consequent return to him of his properties sold at public
auction. (Emphasis supplied)
The Hamada case reiterates the previous ruling in Chan vs. Espe. 36
Since the defendants-appellants were occupying the house at the time of
the auction sale, they are entitled to remain in possession during the
period of redemption or within one year from and after 27 March 1956,
the date of the auction sale, and to collect the rents or profits during the
said period.
It will be noted further that in the case at bar the period of redemption
had not yet expired when action was instituted in the court of origin, and
that plaintiffs-appellees did not choose to take possession under Section 7,
Act No. 3135, as amended, which is the law selected by the parties to
govern the extrajudicial foreclosure of the chattel mortgage. Neither was
there an allegation to that effect. Since plaintiffs-appellees' right to
possess was not yet born at the filing of the complaint, there could be no
violation or breach thereof. Wherefore, the original complaint stated no
cause of action and was prematurely filed. For this reason, the same
should be ordered dismissed, even if there was no assignment of error to
that effect. The Supreme Court is clothed with ample authority to review
palpable errors not assigned as such if it finds that their consideration is
necessary in arriving at a just decision of the cases. 37
It follows that the court below erred in requiring the mortgagors to pay
rents for the year following the foreclosure sale, as well as attorney's fees.
FOR THE FOREGOING REASONS, the decision appealed from is reversed
and another one entered, dismissing the complaint. With costs against
plaintiffs-appellees.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-11658 February 15, 1918
LEUNG YEE, plaintiff-appellant,
vs.
FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON,
defendants-appellees.
Booram and Mahoney for appellant.
Williams, Ferrier and SyCip for appellees.
CARSON, J.:
The "Compaia Agricola Filipina" bought a considerable quantity of rice-
cleaning machinery company from the defendant machinery company,
and executed a chattel mortgage thereon to secure payment of the
purchase price. It included in the mortgage deed the building of strong
materials in which the machinery was installed, without any reference to
the land on which it stood. The indebtedness secured by this instrument
not having been paid when it fell due, the mortgaged property was sold by
the sheriff, in pursuance of the terms of the mortgage instrument, and
was bought in by the machinery company. The mortgage was registered in
the chattel mortgage registry, and the sale of the property to the
machinery company in satisfaction of the mortgage was annotated in the
same registry on December 29, 1913.
A few weeks thereafter, on or about the 14th of January, 1914, the
"Compaia Agricola Filipina" executed a deed of sale of the land upon
which the building stood to the machinery company, but this deed of sale,
although executed in a public document, was not registered. This deed
makes no reference to the building erected on the land and would appear
to have been executed for the purpose of curing any defects which might
be found to exist in the machinery company's title to the building under
the sheriff's certificate of sale. The machinery company went into
possession of the building at or about the time when this sale took place,
that is to say, the month of December, 1913, and it has continued in
possession ever since.
At or about the time when the chattel mortgage was executed in favor of
the machinery company, the mortgagor, the "Compaia Agricola Filipina"
executed another mortgage to the plaintiff upon the building, separate
and apart from the land on which it stood, to secure payment of the
balance of its indebtedness to the plaintiff under a contract for the
construction of the building. Upon the failure of the mortgagor to pay the
amount of the indebtedness secured by the mortgage, the plaintiff
secured judgment for that amount, levied execution upon the building,
bought it in at the sheriff's sale on or about the 18th of December, 1914,
and had the sheriff's certificate of the sale duly registered in the land
registry of the Province of Cavite.
At the time when the execution was levied upon the building, the
defendant machinery company, which was in possession, filed with the
sheriff a sworn statement setting up its claim of title and demanding the
release of the property from the levy. Thereafter, upon demand of the
sheriff, the plaintiff executed an indemnity bond in favor of the sheriff in
the sum of P12,000, in reliance upon which the sheriff sold the property at
public auction to the plaintiff, who was the highest bidder at the sheriff's
sale.
This action was instituted by the plaintiff to recover possession of the
building from the machinery company.
The trial judge, relying upon the terms of article 1473 of the Civil Code,
gave judgment in favor of the machinery company, on the ground that the
company had its title to the building registered prior to the date of registry
of the plaintiff's certificate.
Article 1473 of the Civil Code is as follows:
If the same thing should have been sold to different vendees, the
ownership shall be transfer to the person who may have the first taken
possession thereof in good faith, if it should be personal property.
Should it be real property, it shall belong to the person acquiring it who
first recorded it in the registry.
Should there be no entry, the property shall belong to the person who first
took possession of it in good faith, and, in the absence thereof, to the
person who presents the oldest title, provided there is good faith.
The registry her referred to is of course the registry of real property, and it
must be apparent that the annotation or inscription of a deed of sale of
real property in a chattel mortgage registry cannot be given the legal
effect of an inscription in the registry of real property. By its express
terms, the Chattel Mortgage Law contemplates and makes provision for
mortgages of personal property; and the sole purpose and object of the
chattel mortgage registry is to provide for the registry of "Chattel
mortgages," that is to say, mortgages 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 of the building
and the machinery installed therein, not the annotation in that registry of
the sale of the mortgaged property, had any effect whatever so far as the
building was concerned.

We conclude that the ruling in favor of the machinery company cannot be
sustained on the ground assigned by the trial judge. We are of opinion,
however, that the judgment must be sustained on the ground that the
agreed statement of facts in the court below discloses that neither the
purchase of the building by the plaintiff nor his inscription of the sheriff's
certificate of sale in his favor was made in good faith, and that the
machinery company must be held to be the owner of the property under
the third paragraph of the above cited article of the code, it appearing that
the company first took possession of the property; and further, that the
building and the land were sold to the machinery company long prior to
the date of the sheriff's sale to the plaintiff.
It has been suggested that since the provisions of article 1473 of the Civil
Code require "good faith," in express terms, in relation to "possession"
and "title," but contain no express requirement as to "good faith" in
relation to the "inscription" of the property on the registry, it must be
presumed that good faith is not an essential requisite of registration in
order that it may have the effect contemplated in this article. We cannot
agree with this contention. It could not have been the intention of the
legislator to base the preferential right secured under this article of the
code upon an inscription of title in bad faith. Such an interpretation placed
upon the language of this section would open wide the door to fraud and
collusion. The public records cannot be converted into instruments of
fraud and oppression by one who secures an inscription therein in bad
faith. The force and effect given by law to an inscription in a public record
presupposes the good faith of him who enters such inscription; and rights
created by statute, which are predicated upon an inscription in a public
registry, do not and cannot accrue under an inscription "in bad faith," to
the benefit of the person who thus makes the inscription.
Construing the second paragraph of this article of the code, the supreme
court of Spain held in its sentencia of the 13th of May, 1908, that:
This rule is always to be understood on the basis of the good faith
mentioned in the first paragraph; therefore, it having been found that the
second purchasers who record their purchase had knowledge of the
previous sale, the question is to be decided in accordance with the
following paragraph. (Note 2, art. 1473, Civ. Code, Medina and Maranon
[1911] edition.)
Although article 1473, in its second paragraph, provides that the title of
conveyance of ownership of the real property that is first recorded in the
registry shall have preference, this provision must always be understood
on the basis of the good faith mentioned in the first paragraph; the
legislator could not have wished to strike it out and to sanction bad faith,
just to comply with a mere formality which, in given cases, does not obtain
even in real disputes between third persons. (Note 2, art. 1473, Civ. Code,
issued by the publishers of the La Revista de los Tribunales, 13th edition.)
The agreed statement of facts clearly discloses that the plaintiff, when he
bought the building at the sheriff's sale and inscribed his title in the land
registry, was duly notified that the machinery company had bought the
building from plaintiff's judgment debtor; that it had gone into possession
long prior to the sheriff's sale; and that it was in possession at the time
when the sheriff executed his levy. The execution of an indemnity bond by
the plaintiff in favor of the sheriff, after the machinery company had filed
its sworn claim of ownership, leaves no room for doubt in this regard.
Having bought in the building at the sheriff's sale with full knowledge that
at the time of the levy and sale the building had already been sold to the
machinery company by the judgment debtor, the plaintiff cannot be said
to have been a purchaser in good faith; and of course, the subsequent
inscription of the sheriff's certificate of title must be held to have been
tainted with the same defect.
Perhaps we should make it clear that in holding that the inscription of the
sheriff's certificate of sale to the plaintiff was not made in good faith, we
should not be understood as questioning, in any way, the good faith and
genuineness of the plaintiff's claim against the "Compaia Agricola
Filipina." The truth is that both the plaintiff and the defendant company
appear to have had just and righteous claims against their common
debtor. No criticism can properly be made of the exercise of the utmost
diligence by the plaintiff in asserting and exercising his right to recover the
amount of his claim from the estate of the common debtor. We are
strongly inclined to believe that in procuring the levy of execution upon
the factory building and in buying it at the sheriff's sale, he considered that
he was doing no more than he had a right to do under all the
circumstances, and it is highly possible and even probable that he thought
at that time that he would be able to maintain his position in a contest
with the machinery company. There was no collusion on his part with the
common debtor, and no thought of the perpetration of a fraud upon the
rights of another, in the ordinary sense of the word. He may have hoped,
and doubtless he did hope, that the title of the machinery company would
not stand the test of an action in a court of law; and if later developments
had confirmed his unfounded hopes, no one could question the legality of
the propriety of the course he adopted.
But it appearing that he had full knowledge of the machinery company's
claim of ownership when he executed the indemnity bond and bought in
the property at the sheriff's sale, and it appearing further that the
machinery company's claim of ownership was well founded, he cannot be
said to have been an innocent purchaser for value. He took the risk and
must stand by the consequences; and it is in this sense that we find that
he was not a purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of title
in his vendor cannot claim that he has acquired title thereto in good faith
as against the true owner of the land or of an interest therein; and the
same rule must be applied to one who has knowledge of facts which
should have put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor. A
purchaser cannot close his eyes to facts which should put a reasonable
man upon his guard, and then claim that he acted in good faith under the
belief that there was no defect in the title of the vendor. His mere refusal
to believe that such defect exists, or his willful closing of his eyes to the
possibility of the existence of a defect in his vendor's title, will not make
him an innocent purchaser for value, if afterwards develops that the title
was in fact defective, and it appears that he had such notice of the defects
as would have led to its discovery had he acted with that measure of
precaution which may reasonably be acquired of a prudent man in a like
situation. Good faith, or lack of it, is in its analysis a question of intention;
but in ascertaining the intention by which one is actuated on a given
occasion, we are necessarily controlled by the evidence as to the conduct
and outward acts by which alone the inward motive may, with safety, be
determined. So it is that "the honesty of intention," "the honest lawful
intent," which constitutes good faith implies a "freedom from knowledge
and circumstances which ought to put a person on inquiry," and so it is
that proof of such knowledge overcomes the presumption of good faith in
which the courts always indulge in the absence of proof to the contrary.
"Good faith, or the want of it, is not a visible, tangible fact that can be seen
or touched, but rather a state or condition of mind which can only be
judged of by actual or fancied tokens or signs." (Wilder vs. Gilman, 55 Vt.,
504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098;
Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)
We conclude that upon the grounds herein set forth the disposing part of
the decision and judgment entered in the court below should be affirmed
with costs of this instance against the appellant. So ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-20329 March 16, 1923
THE STANDARD OIL COMPANY OF NEW YORK, petitioner,
vs.
JOAQUIN JARAMILLO, as register of deeds of the City of Manila,
respondent.
Ross, Lawrence and Selph for petitioner.
City Fiscal Revilla and Assistant City Fiscal Rodas for respondent.
STREET, J.:
This cause is before us upon demurrer interposed by the respondent,
Joaquin Jaramillo, register of deeds of the City of Manila, to an original
petition of the Standard Oil Company of New York, seeking a peremptory
mandamus to compel the respondent to record in the proper register a
document purporting to be a chattel mortgage executed in the City of
Manila by Gervasia de la Rosa, Vda. de Vera, in favor of the Standard Oil
Company of New York.
It appears from the petition that on November 27, 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 the petitioner by way of mortgage both the
leasehold interest in said lot and the building which stands thereon.
The clauses in said document describing the property intended to be thus
mortgage are expressed in the following words:
Now, therefore, the mortgagor hereby conveys and transfer to the
mortgage, by way of mortgage, the following described personal property,
situated in the City of Manila, and now in possession of the mortgagor, to
wit:
(1) All of the right, title, and interest of the mortgagor in and to the
contract of lease hereinabove referred to, and in and to the premises the
subject of the said lease;
(2) The building, property of the mortgagor, situated on the aforesaid
leased premises.
After said document had been duly acknowledge and delivered, the
petitioner caused the same to be presented to the respondent, 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, the respondent was of the opinion
that it was not a 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.
We are of the opinion that the position taken by the respondent is
untenable; and it is his duty to accept the proper fee and place the
instrument on record. The duties of a register of deeds in respect to the
registration of chattel mortgage 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.
The original provisions touching this matter are contained in section 15 of
the Chattel Mortgage Law (Act No. 1508), as amended by Act No. 2496;
but these have been transferred to section 198 of the Administrative
Code, where they are now found. There is nothing in any of these
provisions conferring upon the register of deeds any authority whatever in
respect to the "qualification," as the term is used in Spanish law, of chattel
mortgage. His duties in respect to such instruments are ministerial only.
The efficacy of the act of recording a chattel mortgage consists in the fact
that it operates as constructive notice of the existence of the contract, and
the legal effects of the contract must be discovered in the instrument itself
in relation with the fact of notice. Registration adds nothing to the
instrument, considered as a source of title, and affects nobody's rights
except as a specifies of notice.
Articles 334 and 335 of the Civil Code supply no absolute criterion for
discriminating between real property and personal property for purpose of
the application of the Chattel Mortgage Law. Those articles state rules
which, considered as a general doctrine, are law in this jurisdiction; but it
must not be forgotten that under given conditions property may have
character different from that imputed to it in said articles. It is undeniable
that the parties to a contract may by agreement treat as personal property
that which by nature would be real property; and 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. Other situations are constantly arising, and from time to time
are presented to this court, in which the proper classification of one thing
or another as real or personal property may be said to be doubtful.
The point submitted to us in this case was determined on September 8,
1914, in an administrative ruling promulgated by the Honorable James A.
Ostrand, now a Justice of this Court, but acting at that time in the capacity
of Judge of the fourth branch of the Court of First Instance of the Ninth
Judicial District, in the City of Manila; and little of value can be here added
to the observations contained in said ruling. We accordingly quote
therefrom as follows:
It is unnecessary here to determine whether or not the property described
in the document in question is real or personal; the discussion may be
confined to the point as to whether a register of deeds has authority to
deny the registration of a document purporting to be a chattel mortgage
and executed in the manner and form prescribed by the Chattel Mortgage
Law.
Then, after quoting section 5 of the Chattel Mortgage Law (Act No. 1508),
his Honor continued:
Based principally upon the provisions of section quoted the Attorney-
General of the Philippine Islands, in an opinion dated August 11, 1909,
held that a register of deeds has no authority to pass upon the capacity of
the parties to a chattel mortgage which is presented to him for record. A
fortiori a register of deeds can have no authority to pass upon the
character of the property sought to be encumbered by a chattel mortgage.
Of course, if the mortgaged property is real instead of personal the chattel
mortgage would no doubt be held ineffective as against third parties, but
this is a question to be determined by the courts of justice and not by the
register of deeds.
In Leung Yee vs. Frank L. Strong Machinery Co. and Williamson (37 Phil.,
644), this court held that where the interest conveyed is of the nature of
real, property, the placing of the document on record in the chattel
mortgage register is a futile act; but that decision is not decisive of the
question now before us, which has reference to the function of the
register of deeds in placing the document on record.
In the light of what has been said it becomes unnecessary for us to pass
upon the point whether the interests conveyed in the instrument now in
question are real or personal; and we declare it to be the duty of the
register of deeds to accept the estimate placed upon the document by the
petitioner and to register it, upon payment of the proper fee.
The demurrer is overruled; and unless within the period of five days from
the date of the notification hereof, the respondent shall interpose a
sufficient answer to the petition, the writ of mandamus will be issued, as
prayed, but without costs. So ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-17870 September 29, 1962
MINDANAO BUS COMPANY, petitioner,
vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of
Cagayan de Oro City, respondents.
Binamira, Barria and Irabagon for petitioner.
Vicente E. Sabellina for respondents.
LABRADOR, J.:
This is a petition for the review of the decision of the Court of Tax Appeals
in C.T.A. Case No. 710 holding that the petitioner Mindanao Bus Company
is liable to the payment of the realty tax on its maintenance and repair
equipment hereunder referred to.
Respondent City Assessor of Cagayan de Oro City assessed at P4,400
petitioner's above-mentioned equipment. Petitioner appealed the
assessment to the respondent Board of Tax Appeals on the ground that
the same are not realty. The Board of Tax Appeals of the City sustained the
city assessor, so petitioner herein filed with the Court of Tax Appeals a
petition for the review of the assessment.
In the Court of Tax Appeals the parties submitted the following stipulation
of facts:
Petitioner and respondents, thru their respective counsels agreed to the
following stipulation of facts:
1. That petitioner is a public utility solely engaged in transporting
passengers and cargoes by motor trucks, over its authorized lines in the
Island of Mindanao, collecting rates approved by the Public Service
Commission;
2. That petitioner has its main office and shop at Cagayan de Oro City. It
maintains Branch Offices and/or stations at Iligan City, Lanao; Pagadian,
Zamboanga del Sur; Davao City and Kibawe, Bukidnon Province;
3. That the machineries sought to be assessed by the respondent as real
properties are the following:
(a) Hobart Electric Welder Machine, appearing in the attached
photograph, marked Annex "A";
(b) Storm Boring Machine, appearing in the attached photograph, marked
Annex "B";
(c) Lathe machine with motor, appearing in the attached photograph,
marked Annex "C";
(d) Black and Decker Grinder, appearing in the attached photograph,
marked Annex "D";
(e) PEMCO Hydraulic Press, appearing in the attached photograph, marked
Annex "E";
(f) Battery charger (Tungar charge machine) appearing in the attached
photograph, marked Annex "F"; and
(g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph,
marked Annex "G".
4. That these machineries are sitting on cement or wooden platforms as
may be seen in the attached photographs which form part of this agreed
stipulation of facts;
5. That petitioner is the owner of the land where it maintains and operates
a garage for its TPU motor trucks; a repair shop; blacksmith and carpentry
shops, and with these machineries which are placed therein, its TPU trucks
are made; body constructed; and same are repaired in a condition to be
serviceable in the TPU land transportation business it operates;
6. That these machineries have never been or were never used as
industrial equipments to produce finished products for sale, nor to repair
machineries, parts and the like offered to the general public
indiscriminately for business or commercial purposes for which petitioner
has never engaged in, to date.1awphl.nt
The Court of Tax Appeals having sustained the respondent city assessor's
ruling, and having denied a motion for reconsideration, petitioner brought
the case to this Court assigning the following errors:
1. The Honorable Court of Tax Appeals erred in upholding respondents'
contention that the questioned assessments are valid; and that said tools,
equipments or machineries are immovable taxable real properties.
2. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of
the New Civil Code, and holding that pursuant thereto the movable
equipments are taxable realties, by reason of their being intended or
destined for use in an industry.
3. The Court of Tax Appeals erred in denying petitioner's contention that
the respondent City Assessor's power to assess and levy real estate taxes
on machineries is further restricted by section 31, paragraph (c) of
Republic Act No. 521; and
4. The Tax Court erred in denying petitioner's motion for reconsideration.
Respondents contend that said equipments, tho 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 equipment are placed
on wooden or cement platforms. They can be moved around and about in
petitioner's repair shop. In the case of B. H. Berkenkotter vs. Cu Unjieng,
61 Phil. 663, the Supreme Court said:
Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the
character of real property to "machinery, liquid containers, instruments or
implements intended by the owner of any building or land for use in
connection with any industry or trade being carried on therein and which
are expressly adapted to meet the requirements of such trade or
industry."
If the installation of the machinery and equipment in question in the
central of the Mabalacat Sugar Co., Inc., in lieu of the other of less capacity
existing therein, for its sugar and industry, converted them into real
property by reason of their purpose, it cannot be said that their
incorporation therewith was not permanent in character because, as
essential and principle elements of a sugar central, without them the sugar
central would be unable to function or carry on the industrial purpose for
which it was established. Inasmuch as the central is permanent in
character, the necessary machinery and equipment installed for carrying
on the sugar industry for which it has been established must necessarily be
permanent. (Emphasis ours.)
So that movable equipments to be immobilized in contemplation of the
law must first be "essential and principal elements" of an industry or
works without which such industry or works would be "unable to function
or carry on the industrial purpose for which it was established." We may
here distinguish, therefore, those movable which become immobilized by
destination because they are essential and principal elements in the
industry for those which may not be so considered immobilized because
they are merely incidental, not essential and principal. Thus, cash
registers, typewriters, etc., usually found and used in hotels, restaurants,
theaters, etc. are merely incidentals and are not and should not be
considered immobilized by destination, for these businesses can continue
or carry on their functions without these equity comments. Airline
companies use forklifts, jeep-wagons, pressure pumps, IBM machines, etc.
which are incidentals, not essentials, and thus retain their movable nature.
On the other hand, machineries of breweries used in the manufacture of
liquor and soft drinks, though movable in nature, are immobilized because
they are essential to said industries; but the delivery trucks and adding
machines which they usually own and use and are found within their
industrial compounds are merely incidental and retain their movable
nature.
Similarly, 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 law that governs the determination of the question at issue is as
follows:
Art. 415. 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; (Civil Code of the Phil.)
Aside from the element of essentiality the above-quoted provision also
requires that the industry or works be carried on in a building or on a piece
of land. Thus in the case of Berkenkotter vs. Cu Unjieng, supra, the
"machinery, liquid containers, and instruments or implements" are found
in a building constructed on the land. A sawmill would also be installed in a
building on land more or less permanently, and the sawing is conducted in
the land or building.
But in 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.
Resuming what we have set forth above, 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.
WHEREFORE, the decision subject of the petition for review is hereby set
aside and the equipment in question declared not subject to assessment
as real estate for the purposes of the real estate tax. Without costs.
So ordered.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-50466 May 31, 1982
CALTEX (PHILIPPINES) INC., petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF PASAY,
respondents.
AQUINO, J.:
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 city assessor described the said equipment and
machinery in this manner:
A gasoline service station is a piece of lot where a building or shed is
erected, a water tank if there is any is placed in one corner of the lot, car
hoists are placed in an adjacent shed, an air compressor is attached in the
wall of the shed or at the concrete wall fence.
The controversial underground tank, depository of gasoline or crude oil, is
dug deep about six feet more or less, a few meters away from the shed.
This is done to prevent conflagration because gasoline and other
combustible oil are very inflammable.
This underground tank is connected with a steel pipe to the gasoline pump
and the gasoline pump is commonly placed or constructed under the shed.
The footing of the pump is a cement pad and this cement pad is imbedded
in the pavement under the shed, and evidence that the gasoline
underground tank is attached and connected to the shed or building
through the pipe to the pump and the pump is attached and affixed to the
cement pad and pavement covered by the roof of the building or shed.
The building or shed, the elevated water tank, the car hoist under a
separate shed, the air compressor, the underground gasoline tank, neon
lights signboard, concrete fence and pavement and the lot where they are
all placed or erected, all of them used in the pursuance of the gasoline
service station business formed the entire gasoline service-station.
As to whether the subject properties are attached and affixed to the
tenement, it is clear they are, for the tenement we consider in this
particular case are (is) the pavement covering the entire lot which was
constructed by the owner of the gasoline station and the improvement
which holds all the properties under question, they are attached and
affixed to the pavement and to the improvement.
The pavement covering the entire lot of the gasoline service station, as
well as all the improvements, machines, equipments and apparatus are
allowed by Caltex (Philippines) Inc. ...
The underground gasoline tank is attached to the shed by the steel pipe to
the pump, so with the water tank it is connected also by a steel pipe to the
pavement, then to the electric motor which electric motor is placed under
the shed. So to say that the gasoline pumps, water pumps and
underground tanks are outside of the service station, and to consider only
the building as the service station is grossly erroneous. (pp. 58-60, Rollo).
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.
The Board, which was composed of Secretary of Finance Cesar Virata as
chairman, Acting Secretary of Justice Catalino Macaraig, Jr. and Secretary
of Local Government and Community Development Jose Roo, held in its
decision of June 3, 1977 that the said machines and equipment are real
property within the meaning of sections 3(k) & (m) and 38 of the Real
Property Tax Code, Presidential Decree No. 464, which took effect on June
1, 1974, and that the definitions of real property and personal property in
articles 415 and 416 of the Civil Code are not applicable to this case.
The decision was reiterated by the Board (Minister Vicente Abad Santos
took Macaraig's place) in its resolution of January 12, 1978, denying
Caltex's motion for reconsideration, a copy of which was received by its
lawyer on April 2, 1979.
On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for
the setting aside of the Board's decision and for a declaration that t he said
machines and equipment are personal property not subject to realty tax
(p. 16, Rollo).
The Solicitor General's contention that the Court of Tax Appeals has
exclusive appellate jurisdiction over this case is not correct. When
Republic act No. 1125 created the Tax Court in 1954, there was as yet no
Central Board of Assessment Appeals. Section 7(3) of that law in providing
that the Tax Court had jurisdiction to review by appeal decisions of
provincial or city boards of assessment appeals had in mind the local
boards of assessment appeals but not the Central Board of Assessment
Appeals which under the Real Property Tax Code has appellate jurisdiction
over decisions of the said local boards of assessment appeals and is,
therefore, in the same category as the Tax Court.
Section 36 of the Real Property Tax Code provides that the decision of the
Central Board of Assessment Appeals shall become final and executory
after the lapse of fifteen days from the receipt of its decision by the
appellant. Within that fifteen-day period, a petition for reconsideration
may be filed. The Code does not provide for the review of the Board's
decision by this Court.
Consequently, the only remedy available for seeking a review by this Court
of the decision of the Central Board of Assessment Appeals is the special
civil action of certiorari, the recourse resorted to herein by Caltex
(Philippines), Inc.
The issue is whether the pieces of gas station equipment and machinery
already enumerated are subject to realty tax. 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. This
provision is reproduced with some modification in the Real Property Tax
Code which provides:
SEC. 38. Incidence of Real Property Tax. There shall be levied,
assessed and collected in all provinces, cities and municipalities an annual
ad valorem tax on real property, such as land, buildings, machinery and
other improvements affixed or attached to real property not hereinafter
specifically exempted.

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.
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 for purposes 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.
WHEREFORE, the questioned decision and resolution of the Central Board
of Assessment Appeals are affirmed. The petition for certiorari is dismissed
for lack of merit. No costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 137705. August 22, 2000]
SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs. PCI
LEASING AND FINANCE, INC., respondent.
DECISION
PANGANIBAN, J.:
After agreeing to a contract stipulating that a real or immovable property
be considered as personal or movable, a party is estopped from
subsequently claiming otherwise. Hence, such property is a proper subject
of a writ of replevin obtained by the other contracting party.
The Case
Before us is a Petition for Review on Certiorari assailing the January 6,
1999 Decision[1] of the Court of Appeals (CA)[2] in CA-GR SP No. 47332
and its February 26, 1999 Resolution[3] denying reconsideration. The
decretal portion of the CA Decision reads as follows:
WHEREFORE, premises considered, the assailed Order dated February 18,
1998 and Resolution dated March 31, 1998 in Civil Case No. Q-98-33500
are hereby AFFIRMED. The writ of preliminary injunction issued on June
15, 1998 is hereby LIFTED.[4]
In its February 18, 1998 Order,[5] the Regional Trial Court (RTC) of Quezon
City (Branch 218)[6] issued a Writ of Seizure.[7] The March 18, 1998
Resolution[8] denied petitioners Motion for Special Protective Order,
praying that the deputy sheriff be enjoined from seizing immobilized or
other real properties in (petitioners) factory in Cainta, Rizal and to return
to their original place whatever immobilized machineries or equipments
he may have removed.[9]
The Facts
The undisputed facts are summarized by the Court of Appeals as
follows:[10]
On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI
Leasing for short) filed with the RTC-QC a complaint for [a] sum of money
(Annex E), with an application for a writ of replevin docketed as Civil Case
No. Q-98-33500.
On March 6, 1998, upon an ex-parte application of PCI Leasing,
respondent judge issued a writ of replevin (Annex B) directing its sheriff to
seize and deliver the machineries and equipment to PCI Leasing after 5
days and upon the payment of the necessary expenses.
On March 24, 1998, in implementation of said writ, the sheriff proceeded
to petitioners factory, seized one machinery with [the] word that he
[would] return for the other machineries.
On March 25, 1998, petitioners filed a motion for special protective order
(Annex C), invoking the power of the court to control the conduct of its
officers and amend and control its processes, praying for a directive for
the sheriff to defer enforcement of the writ of replevin.
This motion was opposed by PCI Leasing (Annex F), on the ground that the
properties [were] still personal and therefore still subject to seizure and a
writ of replevin.
In their Reply, petitioners asserted that the properties sought to be seized
[were] immovable as defined in Article 415 of the Civil Code, the parties
agreement to the contrary notwithstanding. They argued that to give
effect to the agreement would be prejudicial to innocent third parties.
They further stated that PCI Leasing [was] estopped from treating these
machineries as personal because the contracts in which the alleged
agreement [were] embodied [were] totally sham and farcical.
On April 6, 1998, the sheriff again sought to enforce the writ of seizure and
take possession of the remaining properties. He was able to take two
more, but was prevented by the workers from taking the rest.
On April 7, 1998, they went to [the CA] via an original action for certiorari.
Ruling of the Court of Appeals
Citing the Agreement of the parties, the appellate court held that the
subject machines were personal property, and that they had only been
leased, not owned, by petitioners. It also ruled that the words of the
contract are clear and leave no doubt upon the true intention of the
contracting parties. Observing that Petitioner Goquiolay was an
experienced businessman who was not unfamiliar with the ways of the
trade, it ruled that he should have realized the import of the document he
signed. The CA further held:
Furthermore, to accord merit to this petition would be to preempt the trial
court in ruling upon the case below, since the merits of the whole matter
are laid down before us via a petition whose sole purpose is to inquire
upon the existence of a grave abuse of discretion on the part of the [RTC]
in issuing the assailed Order and Resolution. The issues raised herein are
proper subjects of a full-blown trial, necessitating presentation of
evidence by both parties. The contract is being enforced by one, and [its]
validity is attacked by the other a matter x x x which respondent court is in
the best position to determine.
Hence, this Petition.[11]
The Issues
In their Memorandum, petitioners submit the following issues for our
consideration:
A. Whether or not the machineries purchased and imported by SERGS
became real property by virtue of immobilization.
B. Whether or not the contract between the parties is a loan or a
lease.[12]
In the main, the Court will resolve whether the said machines are
personal, not immovable, property which may be a proper subject of a
writ of replevin. As a preliminary matter, the Court will also address briefly
the procedural points raised by respondent.
The Courts Ruling
The Petition is not meritorious.
Preliminary Matter:Procedural Questions
Respondent contends that the Petition failed to indicate expressly
whether it was being filed under Rule 45 or Rule 65 of the Rules of Court.
It further alleges that the Petition erroneously impleaded Judge Hilario
Laqui as respondent.
There is no question that the present recourse is under Rule 45. This
conclusion finds support in the very title of the Petition, which is Petition
for Review on Certiorari.[13]
While Judge Laqui should not have been impleaded as a respondent,[14]
substantial justice requires that such lapse by itself should not warrant the
dismissal of the present Petition. In this light, the Court deems it proper to
remove, motu proprio, the name of Judge Laqui from the caption of the
present case.
Main Issue: Nature of the Subject Machinery
Petitioners contend that the subject machines used in their factory were
not proper subjects of the Writ issued by the RTC, because they were in
fact real property. Serious policy considerations, they argue, militate
against a contrary characterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for
the recovery of personal property only.[15] Section 3 thereof reads:
SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond,
the court shall issue an order and the corresponding writ of replevin
describing the personal property alleged to be wrongfully detained and
requiring the sheriff forthwith to take such property into his custody.
On the other hand, Article 415 of the Civil Code enumerates immovable or
real property as follows:
ART. 415. The following are immovable property:
x x x....................................x x x....................................x x x
(5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be carried on
in a building or on a piece of land, and which tend directly to meet the
needs of the said industry or works;
x x x....................................x x x....................................x x x
In the present case, the machines that were the subjects of the Writ of
Seizure were placed by petitioners in the factory built on their own land.
Indisputably, they were essential and principal elements of their
chocolate-making industry. Hence, although each of them was movable or
personal property on its own, all of them have become immobilized by
destination because they are essential and principal elements in the
industry.[16] In that sense, petitioners are correct in arguing that the said
machines are real, not personal, property pursuant to Article 415 (5) of the
Civil Code.[17]
Be that as it may, we disagree with the submission of the petitioners that
the said machines are not proper subjects of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real
property be considered as personal.[18] After agreeing to such stipulation,
they are consequently estopped from claiming otherwise. Under the
principle of estoppel, a party to a contract is ordinarily precluded from
denying the truth of any material fact found therein.
Hence, in Tumalad v. Vicencio,[19] the Court upheld the intention of the
parties to treat a house as a personal property because it had been made
the subject of a chattel mortgage. The Court ruled:
x x x. Although there is no specific statement referring to the subject
house as personal property, yet by ceding, selling or transferring a
property by way of chattel mortgage defendants-appellants could only
have meant to convey the house as chattel, or at least, intended to treat
the same as such, so that they should not now be allowed to make an
inconsistent stand by claiming otherwise.
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v.
Wearever Textile Mills[20] also held that the machinery used in a factory
and essential to the industry, as in the present case, was a proper subject
of a writ of replevin because it was treated as personal property in a
contract. Pertinent portions of the Courts ruling are reproduced
hereunder:
x x x. If a house of strong materials, like what was involved in the above
Tumalad case, may be considered as personal property for purposes of
executing a chattel mortgage thereon as long as the parties to the contract
so agree and no innocent third party will be prejudiced thereby, there is
absolutely no reason why a machinery, which is movable in its nature and
becomes immobilized only by destination or purpose, may not be likewise
treated as such. This is really because one who has so agreed is estopped
from denying the existence of the chattel mortgage.
In the present case, the Lease Agreement clearly provides that the
machines in question are to be considered as personal property.
Specifically, Section 12.1 of the Agreement reads as follows:[21]
12.1 The PROPERTY is, and shall at all times be and remain, personal
property notwithstanding that the PROPERTY or any part thereof may now
be, or hereafter become, in any manner affixed or attached to or
embedded in, or permanently resting upon, real property or any building
thereon, or attached in any manner to what is permanent.
Clearly then, petitioners are estopped from denying the characterization
of the subject machines as personal property. Under the circumstances,
they are proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that the machines
should be deemed personal property pursuant to the Lease Agreement is
good only insofar as the contracting parties are concerned.[22] Hence,
while the parties are bound by the Agreement, third persons acting in
good faith are not affected by its stipulation characterizing the subject
machinery as personal.[23] In any event, there is no showing that any
specific third party would be adversely affected.
Validity of the Lease Agreement
In their Memorandum, petitioners contend that the Agreement is a loan
and not a lease.[24] Submitting documents supposedly showing that they
own the subject machines, petitioners also argue in their Petition that the
Agreement suffers from intrinsic ambiguity which places in serious doubt
the intention of the parties and the validity of the lease agreement
itself.[25] In their Reply to respondents Comment, they further allege that
the Agreement is invalid.[26]
These arguments are unconvincing. The validity and the nature of the
contract are the lis mota of the civil action pending before the RTC. A
resolution of these questions, therefore, is effectively a resolution of the
merits of the case. Hence, they should be threshed out in the trial, not in
the proceedings involving the issuance of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA,[27] the Court explained that the
policy under Rule 60 was that questions involving title to the subject
property questions which petitioners are now raising -- should be
determined in the trial. In that case, the Court noted that the remedy of
defendants under Rule 60 was either to post a counter-bond or to
question the sufficiency of the plaintiffs bond. They were not allowed,
however, to invoke the title to the subject property. The Court ruled:
In other words, the law does not allow the defendant to file a motion to
dissolve or discharge the writ of seizure (or delivery) on ground of
insufficiency of the complaint or of the grounds relied upon therefor, as in
proceedings on preliminary attachment or injunction, and thereby put at
issue the matter of the title or right of possession over the specific chattel
being replevied, the policy apparently being that said matter should be
ventilated and determined only at the trial on the merits.[28]
Besides, these questions require a determination of facts and a
presentation of evidence, both of which have no place in a petition for
certiorari in the CA under Rule 65 or in a petition for review in this Court
under Rule 45.[29]
Reliance on the Lease Agreement
It should be pointed out that the Court in this case may rely on the Lease
Agreement, for nothing on record shows that it has been nullified or
annulled. In fact, petitioners assailed it first only in the RTC proceedings,
which had ironically been instituted by respondent. Accordingly, it must be
presumed valid and binding as the law between the parties.
Makati Leasing and Finance Corporation[30] is also instructive on this
point. In that case, the Deed of Chattel Mortgage, which characterized the
subject machinery as personal property, was also assailed because
respondent had allegedly been required to sign a printed form of chattel
mortgage which was in a blank form at the time of signing. The Court
rejected the argument and relied on the Deed, ruling as follows:
x x x. Moreover, even granting that the charge is true, such fact alone does
not render a contract void ab initio, but can only be a ground for rendering
said contract voidable, or annullable pursuant to Article 1390 of the new
Civil Code, by a proper action in court. There is nothing on record to show
that the mortgage has been annulled. Neither is it disclosed that steps
were taken to nullify the same. x x x
Alleged Injustice Committed on the Part of Petitioners
Petitioners contend that if the Court allows these machineries to be
seized, then its workers would be out of work and thrown into the
streets.[31] They also allege that the seizure would nullify all efforts to
rehabilitate the corporation.
Petitioners arguments do not preclude the implementation of the Writ. As
earlier discussed, law and jurisprudence support its propriety. Verily, the
above-mentioned consequences, if they come true, should not be blamed
on this Court, but on the petitioners for failing to avail themselves of the
remedy under Section 5 of Rule 60, which allows the filing of a counter-
bond. The provision states:
SEC. 5. Return of property. -- If the adverse party objects to the sufficiency
of the applicants bond, or of the surety or sureties thereon, he cannot
immediately require the return of the property, but if he does not so
object, he may, at any time before the delivery of the property to the
applicant, require the return thereof, by filing with the court where the
action is pending a bond executed to the applicant, in double the value of
the property as stated in the applicants affidavit for the delivery thereof to
the applicant, if such delivery be adjudged, and for the payment of such
sum to him as may be recovered against the adverse party, and by serving
a copy bond on the applicant.
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court
of Appeals AFFIRMED. Costs against petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-17898 October 31, 1962
PASTOR D. AGO, petitioner,
vs.
THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the
Court of First Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO
and GRACE PARK ENGINEERING, INC., respondents.
Jose M. Luison for petitioner.
Norberto J. Quisumbing for respondent Grace Park Engineering, Inc.
The Provincial Fiscal of Surigao for respondent Sheriff of Surigao.
LABRABOR, J.:
Appeal by certiorari to review the decision of respondent Court of Appeals
in CA-G.R. No. 26723-R entitled "Pastor D. Ago vs. The Provincial Sheriff of
Surigao, et al." which in part reads:
In this case for certiorari and prohibition with preliminary injunction, it
appears from the records that the respondent Judge of the Court of First
Instance of Agusan rendered judgment (Annex "A") in open court on
January 28, 1959, basing said judgment on a compromise agreement
between the parties.
On August 15, 1959, upon petition, the Court of First Instance issued a writ
of execution.
Petitioner's motion for reconsideration dated October 12, 1959 alleges
that he, or his counsel, did not receive a formal and valid notice of said
decision, which motion for reconsideration was denied by the court below
in the order of November 14, 1959.
Petitioner now contends that the respondent Judge exceeded in his
jurisdiction in rendering the execution without valid and formal notice of
the decision.
A compromise agreement is binding between the parties and becomes the
law between them. (Gonzales vs. Gonzales G.R. No. L-1254, May 21, 1948,
81 Phil. 38; Martin vs. Martin, G.R. No. L-12439, May 22, 1959) .
It is a general rule in this jurisdiction that a judgment based on a
compromise agreement is not appealable and is immediately executory,
unless a motion is filed on the ground fraud, mistake or duress. (De los
Reyes vs. Ugarte, 75 Phil. 505; Lapena vs. Morfe, G.R. No. L-10089, July 31,
1957)
Petitioner's claim that he was not notified or served notice of the decision
is untenable. The judgment on the compromise agreement rendered by
the court below dated January 28, 1959, was given in open court. This
alone is a substantial compliance as to notice. (De los Reyes vs. Ugarte,
supra)
IN VIEW THEREOF, we believe that the lower court did not exceed nor
abuse its jurisdiction in ordering the execution of the judgment. The
petition for certiorari is hereby dismissed and the writ of preliminary
injunction heretofore dissolved, with costs against the petitioner.
IT IS SO ORDERED.
The facts of the case may be briefly stated as follows: In 1957, petitioner
Pastor D. Ago bought sawmill machineries and equipments from
respondent Grace Park Engineer domineering, Inc., executing a chattel
mortgage over said machineries and equipments to secure the payment of
balance of the price remaining unpaid of P32,000.00, which petitioner
agreed to pay on installment basis.
Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace
Park Engineering, Inc. instituted extra-judicial foreclosure proceedings of
the mortgage. To enjoin said foreclosure, petitioner herein instituted
Special Civil Case No. 53 in the Court of First Instance of Agusan. The
parties to the case arrived at a compromise agreement and submitted the
same in court in writing, signed by Pastor D. Ago and the Grace Park
Engineering, Inc. The Hon. Montano A. Ortiz, Judge of the Court of First
Instance of Agusan, then presiding, dictated a decision in open court on
January 28, 1959.
Petitioner continued to default in his payments as provided in the
judgment by compromise, so Grace Park Engineering, Inc. filed with the
lower court a motion for execution, which was granted by the court 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 in question. These
machineries and equipments had been taken to and installed in a sawmill
building located in Lianga, Surigao del Sur, and 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, on December 1, 1959, filed the petition for
certiorari and prohibition with preliminary injunction with respondent
Court of Appeals, alleging that a copy of the aforementioned judgment
given in open court on January 28, 1959 was served upon counsel for
petitioner only on September 25, 1959 (writ of execution is dated
September 23, 1959); that the order and writ of execution having been
issued by the lower court before counsel for petitioner 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 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., and is about to proceed in selling the same without prior
publication of the notice of sale thereof in some newspaper of general
circulation as required by the Rules of Court.
The Court of Appeals, on December 8, 1959, issued a writ of preliminary
injunction against the sheriff but it turned out that the latter had already
sold at public auction the machineries in question, on December 4, 1959,
as scheduled. The respondent Grace Park Engineering, Inc. was the only
bidder for P15,000.00, although the certificate sale was not yet executed.
The Court of Appeals constructed the sheriff to suspend the issuance of a
certificate of sale of the said sawmill machineries and equipment sold by
him on December 4, 1959 until the final decision of the case. On
November 9, 1960 the Court of Appeals rendered the aforequoted
decision.
Before this Court, petitioner alleges that the Court of Appeals erred (1) in
holding that the rendition of judgment on compromise in open court on
January 1959 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.
The Court of Appeals held that as a judgment was entered by the court
below in open court upon the submission of the compromise agreement,
the parties may be considered as having been notified of said judgment
and this fact constitutes due notice of said judgment. This raises the
following legal question: Is the order dictated in open court of the
judgment of the court, and is the fact the petitioner herein was present in
open court was the judgment was dictated, sufficient notice thereof? The
provisions of the Rules of Court decree otherwise. Section 1 of Rule 35
describes the manner in which judgment shall be rendered, thus:
SECTION 1. How judgment rendered. All judgments
determining the merits of cases shall be in writing personally and directly
prepared by the judge, and signed by him, stating clearly and distinctly the
facts and the law on which it is based, filed with the clerk of the court.
The court of first instance being a court of record, in order that a judgment
may be considered as rendered, must not only be in writing, signed by the
judge, but it must also be filed with the clerk of court. The mere
pronouncement of the judgment in open court with the stenographer
taking note thereof does not, therefore, constitute a rendition of the
judgment. It is the filing of the signed decision with the clerk of court that
constitutes rendition. While it is to be presumed that the judgment that
was dictated in open court will be the judgment of the court, the court
may still modify said order as the same is being put into writing. And even
if the order or judgment has already been put into writing and signed,
while it has not yet been delivered to the clerk for filing it is still subject to
amendment or change by the judge. It is only when the judgment signed
by the judge is actually filed with the clerk of court that it becomes a valid
and binding judgment. Prior thereto, it could still be subject to
amendment and change and may not, therefore, constitute the real
judgment of the court.
Regarding the notice of judgment, the mere fact that a party heard the
judge dictating the judgment in open court, is not a valid notice of said
judgment. If rendition thereof is constituted by the filing with the clerk of
court of a signed copy (of the judgment), it is evident that the fact that a
party or an attorney heard the order or judgment being dictated in court
cannot be considered as notice of the real judgment. No judgment can be
notified to the parties unless it has previously been rendered. The notice,
therefore, that a party has of a judgment that was being dictated is of no
effect because at the time no judgment has as yet been signed by the
judge and filed with the clerk.
Besides, the Rules expressly require that final orders or judgments be
served personally or by registered mail. Section 7 of Rule 27 provides as
follows:
SEC. 7. Service of final orders or judgments. Final orders or
judgments shall be served either personally or by registered mail.
In accordance with this provision, a party is not considered as having been
served with the judgment merely because he heard the judgment dictating
the said judgment in open court; it is necessary that he be served with a
copy of the signed judgment that has been filed with the clerk in order
that he may legally be considered as having been served with the
judgment.
For all the foregoing, the fact that the petitioner herein heard the trial
judge dictating the judgment in open court, is not sufficient to constitute
the service of judgement as required by the above-quoted section 7 of
Rule 2 the signed judgment not having been served upon the petitioner,
said judgment could not be effective upon him (petitioner) who had not
received it. It follows as a consequence that the issuance of the writ of
execution null and void, having been issued before petitioner her was
served, personally or by registered mail, a copy of the decision.
The second question raised in this appeal, which has been passed upon by
the Court of Appeals, concerns the validity of the proceedings of the
sheriff in selling the sawmill machineries and equipments at public auction
with a notice of the sale having been previously published.
The record shows that after petitioner herein Pastor D. Ago 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 machinery 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 equipment became real estate properties in accordance
with the provision of Art. 415 (5) of the Civil Code, thus:
ART. 415. The following are immovable property:
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements tended 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;
This Court in interpreting a similar question raised before it in the case of
Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil. 683, held that the installation
of the machine and equipment in the central of the Mabalacat Sugar Co.,
Inc. for use in connection with the industry carried by the company,
converted the said machinery and equipment into real estate by reason of
their purpose. Paraphrasing language of said decision we hold that by the
installment of the sawmill machineries in the building of the Gold 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) above-quoted of the Civil Code of the Philippines.
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, which is as follows:
SEC. 16. Notice of sale of property on execution. Before the sale of
property on execution, notice thereof must be given as follows:
xxx xxx xxx
(c) In case of real property, by posting a similar notice particularly
describing the property for twenty days in three public places in the
municipality or city where the property is situated, and also where the
property is to be sold, and, if the assessed value of the property exceeds
four hundred pesos, by publishing a copy of the notice once a week, for
the same period, in some newspaper published or having general
circulation in the province, if there be one. If there are newspapers
published in the province in both the English and Spanish languages, then
a like publication for a like period shall be made in one newspaper
published in the English language, and in one published in the Spanish
language.
the sale made by the sheriff must be declared null and void.
WHEREFORE, the decision of the Court of Appeals sought to be reviewed is
hereby set aside and We declare that the issuance of the writ of execution
in this case against the sawmill machineries and equipments purchased by
petitioner Pastor D. Ago from the Grace Park Engineering, Inc., as well as
the sale of the same by the Sheriff of Surigao, are null and void. Costs shall
be against the respondent Grace Park Engineering, Inc.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-41643 July 31, 1935
B.H. BERKENKOTTER, plaintiff-appellant,
vs.
CU UNJIENG E HIJOS, YEK TONG LIN FIRE AND MARINE INSURANCE
COMPANY, MABALACAT SUGAR COMPANY and THE PROVINCE SHERIFF OF
PAMPANGA, defendants-appellees.
Briones and Martinez for appellant.
Araneta, Zaragoza and Araneta for appellees Cu Unjieng e Hijos.
No appearance for the other appellees.
VILLA-REAL, J.:
This is an appeal taken by the plaintiff, B.H. Berkenkotter, from the
judgment of the Court of First Instance of Manila, dismissing said plaintiff's
complaint against Cu Unjiengs e Hijos et al., with costs.
In support of his appeal, the appellant assigns six alleged errors as
committed by the trial court in its decision in question which will be
discussed in the course of this decision.
The first question to be decided in this appeal, which is raised in the first
assignment of alleged error, is whether or not the lower court erred in
declaring that the additional machinery and equipment, as improvement
incorporated with the central are subject to the mortgage deed executed
in favor of the defendants Cu Unjieng e Hijos.
It is admitted by the parties that on April 26, 1926, the Mabalacat Sugar
Co., Inc., owner of the sugar central situated in Mabalacat, Pampanga,
obtained from the defendants, Cu Unjieng e Hijos, a loan secured by a first
mortgage constituted on two parcels and land "with all its buildings,
improvements, sugar-cane mill, steel railway, telephone line, apparatus,
utensils and whatever forms part or is necessary complement of said
sugar-cane mill, steel railway, telephone line, now existing or that may in
the future exist is said lots."
On October 5, 1926, shortly after said mortgage had been constituted, the
Mabalacat Sugar Co., Inc., decided to increase the capacity of its sugar
central by buying additional machinery and equipment, so that instead of
milling 150 tons daily, it could produce 250. The estimated cost of said
additional machinery and equipment was approximately P100,000. In
order to carry out this plan, B.A. Green, president of said corporation,
proposed to the plaintiff, B.H. Berkenkotter, to advance the necessary
amount for the purchase of said machinery and equipment, promising to
reimburse him as soon as he could obtain an additional loan from the
mortgagees, the herein defendants Cu Unjieng e Hijos. Having agreed to
said proposition made in a letter dated October 5, 1926 (Exhibit E), B.H.
Berkenkotter, on October 9th of the same year, delivered the sum of
P1,710 to B.A. Green, president of the Mabalacat Sugar Co., Inc., the total
amount supplied by him to said B.A. Green having been P25,750.
Furthermore, B.H. Berkenkotter had a credit of P22,000 against said
corporation for unpaid salary. With the loan of P25,750 and said credit of
P22,000, the Mabalacat Sugar Co., Inc., purchased the additional
machinery and equipment now in litigation.
On June 10, 1927, B.A. Green, president of the Mabalacat Sugar Co., Inc.,
applied to Cu Unjieng e Hijos for an additional loan of P75,000 offering as
security the additional machinery and equipment acquired by said B.A.
Green and installed in the sugar central after the execution of the original
mortgage deed, on April 27, 1927, together with whatever additional
equipment acquired with said loan. B.A. Green failed to obtain said loan.
Article 1877 of the Civil Code provides as follows.
ART. 1877. A mortgage includes all natural accessions, improvements,
growing fruits, and rents not collected when the obligation falls due, and
the amount of any indemnities paid or due the owner by the insurers of
the mortgaged property or by virtue of the exercise of the power of
eminent domain, with the declarations, amplifications, and limitations
established by law, whether the estate continues in the possession of the
person who mortgaged it or whether it passes into the hands of a third
person.
In the case of Bischoff vs. Pomar and Compaia General de Tabacos (12
Phil., 690), cited with approval in the case of Cea vs. Villanueva (18 Phil.,
538), this court laid shown the following doctrine:
1. REALTY; MORTGAGE OF REAL ESTATE INCLUDES IMPROVEMENTS AND
FIXTURES. It is a rule, established by the Civil Code and also by the
Mortgage Law, with which the decisions of the courts of the United States
are in accord, that in a mortgage of real estate, the improvements on the
same are included; therefore, all objects permanently attached to a
mortgaged building or land, although they may have been placed there
after the mortgage was constituted, are also included. (Arts. 110 and 111
of the Mortgage Law, and 1877 of the Civil Code; decision of U.S. Supreme
Court in the matter of Royal Insurance Co. vs. R. Miller, liquidator, and
Amadeo [26 Sup. Ct. Rep., 46; 199 U.S., 353].)
2. ID.; ID.; INCLUSION OR EXCLUSION OF MACHINERY, ETC. In order that
it may be understood that the machinery and other objects placed upon
and used in connection with a mortgaged estate are excluded from the
mortgage, when it was stated in the mortgage that the improvements,
buildings, and machinery that existed thereon were also comprehended, it
is indispensable that the exclusion thereof be stipulated between the
contracting parties.
The appellant contends that the installation of the machinery and
equipment claimed by him in the sugar central of the Mabalacat Sugar
Company, Inc., was not permanent in character inasmuch as B.A. Green, in
proposing to him to advance the money for the purchase thereof, made it
appear in the letter, Exhibit E, that in case B.A. Green should fail to obtain
an additional loan from the defendants Cu Unjieng e Hijos, said machinery
and equipment would become security therefor, said B.A. Green binding
himself not to mortgage nor encumber them to anybody until said plaintiff
be fully reimbursed for the corporation's indebtedness to him.
Upon acquiring the machinery and equipment in question with money
obtained as loan from the plaintiff-appellant by B.A. Green, as president of
the Mabalacat Sugar Co., Inc., the latter became owner of said machinery
and equipment, otherwise B.A. Green, as such president, could not have
offered them to the plaintiff as security for the payment of his credit.
Article 334, paragraph 5, of the Civil Code gives the character of real
property to "machinery, liquid containers, instruments or implements
intended by the owner of any building or land for use in connection with
any industry or trade being carried on therein and which are expressly
adapted to meet the requirements of such trade or industry.
If the installation of the machinery and equipment in question in the
central of the Mabalacat Sugar Co., Inc., in lieu of the other of less capacity
existing therein, for its sugar industry, converted them into real property
by reason of their purpose, it cannot be said that their incorporation
therewith was not permanent in character because, as essential and
principal elements of a sugar central, without them the sugar central
would be unable to function or carry on the industrial purpose for which it
was established. Inasmuch as the central is permanent in character, the
necessary machinery and equipment installed for carrying on the sugar
industry for which it has been established must necessarily be permanent.
Furthermore, the fact that B.A. Green bound himself to the plaintiff B.H.
Berkenkotter to hold said machinery and equipment as security for the
payment of the latter's credit and to refrain from mortgaging or otherwise
encumbering them until Berkenkotter has been fully reimbursed therefor,
is not incompatible with the permanent character of the incorporation of
said machinery and equipment with the sugar central of the Mabalacat
Sugar Co., Inc., as nothing could prevent B.A. Green from giving them as
security at least under a second mortgage.
As to the alleged sale of said machinery and equipment to the plaintiff and
appellant after they had been permanently incorporated with sugar
central of the Mabalacat Sugar Co., Inc., and while the mortgage
constituted on said sugar central to Cu Unjieng e Hijos remained in force,
only the right of redemption of the vendor Mabalacat Sugar Co., Inc., in
the sugar central with which said machinery and equipment had been
incorporated, was transferred thereby, subject to the right of the
defendants Cu Unjieng e Hijos under the first mortgage.
For the foregoing considerations, we are of the opinion and so hold: (1)
That the installation of a machinery and equipment in a mortgaged sugar
central, in lieu of another of less capacity, for the purpose of carrying out
the industrial functions of the latter and increasing production, constitutes
a permanent improvement on said sugar central and subjects said
machinery and equipment to the mortgage constituted thereon (article
1877, Civil Code); (2) that the fact that the purchaser of the new
machinery and equipment has bound himself to the person supplying him
the purchase money to hold them as security for the payment of the
latter's credit, and to refrain from mortgaging or otherwise encumbering
them does not alter the permanent character of the incorporation of said
machinery and equipment with the central; and (3) that the sale of the
machinery and equipment in question by the purchaser who was supplied
the purchase money, as a loan, to the person who supplied the money,
after the incorporation thereof with the mortgaged sugar central, does not
vest the creditor with ownership of said machinery and equipment but
simply with the right of redemption.
Wherefore, finding no error in the appealed judgment, it is affirmed in all
its parts, with costs to the appellant. So ordered.
THIRD DIVISION
[G.R. NO. 171346 : October 19, 2007]
JAIME SANCHEZ, JR., Petitioner, v. ZENAIDA F. MARIN, JESUS NICASIO F.
MARIN, JOSE DAVID F. MARIN, MARIA BERNADETTE F. MARIN, PAUL
PETER F. MARIN and PHILIP LUIS F. MARIN, Respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997
Revised Rules of Civil Procedure seeking to reverse and set aside (1) the
Decision1 of the Court of Appeals in CA-G.R. SP No. 61955, dated 23 May
2005, which granted in part the petition filed before it by herein
respondents and thereby annulled and set aside the Decision2 rendered
by the Department of Agrarian Reform Adjudication Board (DARAB) dated
25 September 2000 in DARAB Cases No. 3799 (Reg. Case No. IV-QI-0175-
91) and No. 3800 (Reg. Case No. IV-QI-0167-91); and (2) the Resolution3 of
the appellate court, dated 25 January 2006, which denied herein
petitioner's Motion for Reconsideration.
Herein petitioner Jaime Sanchez, Jr. is an agricultural tenant of a 10-
hectare fishpond sited at Barangay Talao-Talao, Lucena City, which was
previously owned by David Felix, the ascendant of herein respondents.
Herein respondent Zenaida F. Marin is the civil law lessee of the subject
fishpond and the mother of respondents Jesus Nicasio, Jose David, Maria
Bernadette, Paul Peter and Philip Luis, all surnamed Marin, who are now
the registered owners4 of the said fishpond.
The controversy in this case arose from the following facts:
In 1977, the petitioner was instituted as a tenant of the subject fishpond
by its previous registered owner David Felix. The sharing agreement was
on a 50/50 basis after deducting the expenses from the gross harvest. A
few years thereafter, David Felix sold and transferred ownership of the
subject fishpond to respondents Jesus Nicasio, Jose David, Maria
Bernadette, Paul Peter and Philip Luis, all surnamed Marin, to whom a
Transfer Certificate of Title (TCT) No. T-43289,5 covering the subject
fishpond, was issued. The aforesaid respondents, as the new owners of
the fishpond, entered into a civil law lease agreement dated 24 June 1985
with their mother and co-respondent Zenaida F. Marin, which was
renewable yearly.
Subsequently, Zenaida F. Marin, as a lessee of the subject fishpond, made
an arrangement with the petitioner wherein the latter would receive a
regular salary and a 20% share in the net profit of the fishpond from
January 1985 to June 1986. The reason why the agreement was with a
period was to be consistent with the lease agreement entered into
between respondent Zenaida F. Marin and her children, herein
respondents Jesus Nicasio, Jose David, Maria Bernadette, Paul Peter and
Philip Luis, all surnamed Marin.6 However, after the expiration of the first
lease agreement between respondent Zenaida F. Marin and her children,
and before a new lease agreement could be made, the petitioner was
ordered by Zenaida F. Marin to vacate the premises but he refused to do
so. He asserted that he was a tenant of the fishpond and not a mere
contractual worker; hence, he had the right to its peaceful possession and
security of tenure.
On 21 July 1986, the petitioner filed a Complaint before the Regional Trial
Court (RTC) of Lucena City, Branch 53, which was docketed as Agrarian
Case No. 86-8, in which he asked the court to declare him as a tenant of
the subject fishpond. On 20 July 1987, the RTC of Lucena City rendered a
Decision7 in favor of the petitioner, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring the [herein
petitioner] as the agricultural tenant, not a hired contractual worker on
the [subject fishpond], and therefore, entitled to the security of tenure
under Section 78 of Republic Act No. 11999 and to continue possession of
the premises and shall enjoy the rights and privileges accorded by law.10
(Emphasis supplied.)
Dissatisfied, the aforesaid Decision was appealed by respondent Zenaida F.
Marin to the appellate court, in which it was docketed as CA-G.R. SP (CAR)
No. 14421. In a Decision11 dated 11 September 1989, the appellate court
affirmed in toto the Decision of the RTC of Lucena City. No other recourse
being taken therefrom, the said Decision of the Court of Appeals later
became final and executory.
Having been declared as an agricultural tenant on the subject fishpond,
the petitioner, on 15 March 1991, filed before the Provincial Agrarian
Reform Adjudicator (PARAD) Region IV a Petition for the fixing of the
leasehold rentals for his use of the subject fishpond at P30,000.00 per
annum, docketed as DARAB Case No. IV-QI-0175-91. It was alleged therein
by the petitioner that under Section 12 of Republic Act No. 665712 and
Department of Agrarian Reform (DAR) Administrative Order No. 4, Series
of 1989, he had the option to convert his status as share-crop tenant into
an agricultural lessee by paying a fixed lease rental on the fishpond. He
further claimed that the respondents posited no objection to the amount
of P30,000.00 as a yearly lease rental. Yet, in an Answer filed by the
respondents, they insisted that fishponds, like the subject matter of this
case, were not yet within the purview of the law on leasehold. They
likewise refuted the fact that they agreed to fix the lease rental at
P30,000.00 per annum. Although they admitted that the petitioner was
indeed declared as an agricultural tenant of the fishpond, they, however,
argued that the petitioner should already be ejected therefrom for his
failure to pay the rent.
Thus, on 17 April 1991, respondent Zenaida F. Marin filed a Complaint
before the PARAD Region IV, docketed as DARAB Case No. IV-QI-0167-91,
primarily to eject the petitioner from the fishpond because of the latter's
failure to pay the rent and to make an accounting, in violation of Sections
17 and 50 of Republic Act No. 1199. She also sought to compel the
petitioner to pay the total amount of P650,000.00 representing the lease
rentals from 1 July 1985 to 30 June 1991 and to make an accounting of the
total production or income of the subject fishpond from 1 August 1987 to
25 October 1991.
The petitioner denied having any liability to respondent Zenaida F. Marin
in the amount of P650,000.00 as rental arrears. He stressed that he failed
to pay the lease rentals from July 1987 to July 1989 because he failed to
harvest anything from the fishpond during the said period due to
respondent Zenaida F. Marin's refusal to defray the expenses of
production. Accordingly, he cannot be evicted on the basis of non-
payment of rent because his obligation to pay the same merely depends
on the actual harvest made. Similarly, the petitioner emphasized that from
March 1989 to September 1990, he deposited the rent due respondent
Zenaida F. Marin in Philippine National Bank (PNB) Account No. 6637513
under the name of the Deputy Sheriff of the RTC of Lucena City, Branch 53,
and respondent Zenaida F. Marin withdrew the said amount.
Considering that the two cases involved the same parties and the same
subject matter, the Provincial Adjudicator consolidated the same. On 2
March 1993, he rendered a Decision14 in favor of the petitioner. Its
dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby rendered:
xxx
3. Ordering that [petitioner] be maintained in the peaceful possession of
subject farm-holding.15
Respondents moved for the reconsideration of the aforementioned
Decision but the same was denied in a Joint Order,16 dated 15 May 1995,
rendered by the Regional Agrarian Reform Adjudicator (RARAD).
Aggrieved, respondents appealed the PARAD Decision dated 2 March 1993
to the DARAB, reiterating their position that the fishpond was excluded
from the coverage of the Comprehensive Agrarian Reform Program (CARP)
of the government. The cases before the DARAB were docketed as DARAB
Cases No. 3799 (Reg. Case No. IV-QI-0175-91) and No. 3800 (Reg. Case No.
IV-QI-0167-91).
On 25 September 2000, the DARAB rendered a Decision affirming in toto
the Decision of the Provincial Adjudicator dated 2 March 1993.
Still refusing to admit defeat, respondents filed with the Court of Appeals a
Petition for Review of the aforesaid DARAB Decision maintaining that the
DARAB grossly erred in not finding that substantial evidence exists to
warrant the dispossession of the petitioner from the subject fishpond.
On 23 May 2005, the appellate court rendered its assailed Decision
wherein it granted in part the Petition of the respondents by annulling and
setting aside the DARAB Decision dated 25 September 2000 on the ground
of lack of jurisdiction. The appellate court ruled that Section 2 of Republic
Act No. 7881,17 amending Section 10 of Republic Act No. 6657, excluded
private lands actually, directly and exclusively used for prawn farms and
fishponds from the coverage of the Comprehensive Agrarian Reform Law
(CARL); clearly then, the operation of a fishpond is no longer considered an
agricultural activity, and a parcel of land devoted to fishpond operation is
not anymore an agricultural land. Additionally, the appellate court
declared that under Section 1, Rule II of the 2003 DARAB Rules of
Procedure, governing proceedings before the DARAB and its different
regional and provincial adjudicators, the DARAB et al.'s jurisdictions were
limited only to agrarian disputes or controversies and matters or incidents
involving the implementation of Republic Act No. 6657, Republic Act No.
3844 and other agrarian laws. Consequently, the disputes involved in
DARAB Cases No. 3799 and No. 3800 were not agrarian disputes, and since
the DARAB, et al. then acted without jurisdiction when they heard and
adjudicated the aforesaid cases, their decisions and orders therein were
null and void. There is, however, no obstacle for the opposing parties to
institute the proper action before the regular courts. Lastly, the appellate
court held that the petitioner cannot avail himself of the protection under
Section 2(b) of Republic Act No. 7881, which protects vested rights of
those who have already been issued a CLOA, for the reason that the
petitioner had not shown that he had been issued a CLOA to the subject
fishpond as an agrarian reform beneficiary.
Petitioner moved for the reconsideration of the aforesaid Decision, but it
was denied in a Resolution dated 25 January 2006.
Hence, this Petition.
Petitioner presents the following issues for this Court's resolution:
I. Whether the burden of proof to show that a fishpond is not an
agricultural land rests on the agricultural lessor.
II. Whether this burden was sufficiently discharged by the respondents.
III. Whether the Office of the Secretary of the Department of Agrarian
Reform should first determine the exclusion of a fishpond from the
coverage of CARP before it could be finally said that it is indeed excluded
therefrom.
IV. Whether the subject fishpond is covered by the [CARL].
V. Assuming that the fishpond is not covered by the CARL, whether the
[DARAB] has jurisdiction over the case.
Petitioner maintains his contention that Section 10 of Republic Act No.
6657, as amended by Republic Act No. 7881, which was the basis of the
appellate court in declaring that the subject fishpond was not an
agricultural land, does not mention any presumption as regards the
exemption of prawn farms and fishponds from the coverage of the CARL.
According to him, before a fishpond can be considered exempted from the
coverage of Republic Act No. 6657, two things must concur, to wit: (1) the
fishpond has not been distributed; and (2) a CLOA has been issued to the
agrarian reform beneficiaries under the CARP. And the burden of proof to
establish the existence of the aforesaid elements falls upon the
agricultural lessor. Absent any of these two elements, the fishpond will
remain within the coverage of Republic Act No. 6657. He also argues that
Section 10 of Republic Act No. 6657, as amended by Republic Act No.
7881, cannot be given retroactive effect. Neither can it prevail over a right
which has already been vested in him by virtue of the final and executory
Decision dated 11 September 1989 of the Court of Appeals, affirming the
Decision dated 20 July 1987 of the Lucena City RTC, which declared him as
an agricultural tenant of the subject fishpond and therefore entitled to
security of tenure. Similarly, petitioner contends that respondents'
unsubstantiated claim that no CLOA had been issued to him was not
enough to discharge their burden of proving that the subject fishpond was
already exempted from the coverage of the CARL.
Petitioner further avers that although Section 10 of Republic Act No. 6657
already provides that prawn farms and fishponds are exempted from the
coverage of the CARL, the said provision of law still has to be construed in
relation to Section 3, Rule II of the 2003 DARAB Rules of Procedure, which
requires an application for exemption to be filed before the Office of the
Secretary of the DAR to determine if prawn farms and fishponds are
indeed excluded from the coverage of the CARL. And considering that the
respondents failed to file the said application for exemption, petitioner
then alleges that the subject fishpond cannot be considered excluded from
the coverage of the CARL.
Finally, petitioner argues that granting arguendo that the subject fishpond
was excluded from the coverage of the CARL, still, the DARAB had
jurisdiction over his case. Petitioner asserts that his status as an
agricultural tenant of the subject fishpond has long been settled. And
being a tenant, he has various rights which are recognized and protected
under the law, among which is his right to security of tenure. Thus, when
the respondents filed a Complaint before DARAB Region IV to eject him
from the fishpond, in violation of his rights, it cannot be denied that an
agrarian dispute arose between him and the respondents and the same
properly fell within the jurisdiction of the DARAB. And so, even though the
fishpond was excluded from the coverage of the CARL, the petitioner
asserts that it does not necessarily follow that no tenancy relation existed
between him and the respondents and it cannot be used as basis to
deprive the DARAB of its jurisdiction over the present case.
In sum, the issues in this case may be summarized as follows:
I. Whether the subject fishpond is exempted/excluded from the coverage
of the Comprehensive Agrarian Reform Program of the government by
virtue of the amendments introduced by R.A. No. 7881 to R.A. No. 6657.
II. Granting that the subject fishpond is exempted/excluded from the
coverage of the CARL, whether the DARAB has jurisdiction over the case.
The Petition is meritorious. The Court of Appeals grounded its Decision on
this Court's pronouncements in Romero v. Tan.18 In the said case, this
Court traced the classification of fishponds for agrarian reform purposes.
Section 166(1) of Republic Act No. 384419 defined an agricultural land as
land devoted to any growth, including but not limited to crop lands, salt
beds, fish ponds, idle land and abandoned land. Thus, it is beyond cavil
that under this law, fishponds were considered agricultural lands. Even
when Republic Act No. 6657 entitled, "Comprehensive Agrarian Reform
Law of 1988," took effect on 15 June 1988, fishponds were still considered
as agricultural land. However, when Republic Act No. 7881 was passed by
Congress on 20 February 1995, it amended several provisions of Republic
Act No. 6657. Section 2 of Republic Act No. 7881 amended Section 10 of
Republic Act No. 6657 by expressly exempting/excluding private lands
actually, directly and exclusively used for prawn farms and fishponds from
the coverage of the CARL. Section 3(c) of Republic Act No. 6657, as
amended, now defines agricultural land as land devoted to agricultural
activity and not otherwise classified as mineral, forest, residential,
commercial or industrial land. As to what constitutes an agricultural
activity is defined by Section 3(b) of Republic Act No. 6657, as amended, as
the cultivation of the soil, planting of crops, growing of fruit trees,
including the harvesting of such farm products, and other farm activities
and practices performed by a farmer in conjunction with such farming
operations done by persons whether natural or juridical. By virtue of the
foregoing amendments, the operation of fishponds is no longer considered
an agricultural activity, and a parcel of land devoted to fishpond operation
is no longer an agricultural land.20
Section 10 of Republic Act No. 6657, as amended by Republic Act No.
7881, explicitly provides:
SEC. 10. Exemptions and Exclusions.'
x x x x.
b) Private lands actually, directly and exclusively used for prawn farms and
fishponds shall be exempt from the coverage of this Act: Provided, That
said prawn farms and fishponds have not been distributed and Certificate
of Land Ownership Award (CLOA) issued to agrarian reform beneficiaries
under the Comprehensive Agrarian Reform Program.
In cases where the fishponds or prawn farms have been subjected to the
Comprehensive Agrarian Reform Law, by voluntary offer to sell, or
commercial farms deferment or notices of compulsory acquisition, a
simple and absolute majority of the actual regular workers or tenants
must consent to the exemption within one (1) year from the effectivity of
this Act. When the workers or tenants do not agree to this exemption, the
fishponds or prawn farms shall be distributed collectively to the workers-
beneficiaries or tenants who shall form a cooperative or association to
manage the same
In cases where the fishponds or prawn farms have not been subjected to
the Comprehensive Agrarian Reform Law, the consent of the farm workers
shall no longer be necessary; however, the provision of Section 32-A
hereof on incentives shall apply. (Emphasis supplied.)
From the afore-quoted provision, it is crystal clear that fishponds are
excluded/exempted from the coverage of the CARL. This Court affirmed
such exemption/exclusion in Atlas Fertilizer Corp. v. Secretary,
Department of Agrarian Reform.21 In view of the foregoing, it is beyond
doubt that the subject fishpond is indeed now exempted/excluded from
the coverage of the CARL. Thus, the contention of the petitioner that the
subject fishpond cannot be exempted/excluded from CARL coverage
because respondents failed to prove that the fishpond has not yet been
distributed and a CLOA has been issued to the beneficiary of the agrarian
reform, as required by Section 10 of Republic Act No. 6657, as amended by
Republic Act No. 7881, is now unavailing. Moreover, this Court notes that
the DARAB already made a finding in its Decision that no CLOA had been
issued to the petitioner as a beneficiary of the fishpond. Neither was the
fishpond voluntarily offered for sale to the petitioner. Section 54 of
Republic Act No. 6657, as amended, expressly states that the findings of
fact of the DARAB shall be final and conclusive if based on substantial
evidence. Since the issue as to whether a CLOA has been issued to the
petitioner is a question of fact, and being convinced that the findings of
the DARAB on such issue was not based on mere surmises or conjectures,
this Court upholds the same. Similarly, in this case, the character of the
land was never put in issue as it has long been settled that the 10-hectare
lot was indeed used actually, directly and exclusively as fishponds. Hence,
it is not necessary for the respondents to file an application for the
exemption of the subject fishpond from the coverage of the CARL,
contrary to the claim of the petitioner.
Even as we recognize that the fishpond is not covered by the CARL,
pursuant to Section 10 of Republic Act No. 6657, as amended by Republic
Act No. 7881, this Court, nonetheless, does not agree in the conclusion
arrived at by the Court of Appeals that since the subject fishpond is no
longer an agricultural land, it follows then that there can be no tenurial
arrangement affecting the parties in this case. And in view of the fact that
there is no agrarian dispute cognizable by the DARAB, then the DARAB had
no jurisdiction to resolve petitioner's case.
It bears emphasis that the status of the petitioner as a tenant in the
subject fishpond and his right to security of tenure were already previously
settled in the Decision dated 20 July 1987 of the RTC of Lucena City in
Agrarian Case No. 86-8, which was affirmed by the Court of Appeals in its
Decision dated 11 September 1989. Having been declared as a tenant with
the right to security of tenure as provided in Section 3522 of Republic Act
No. 3844 in relation to Section 7 of Republic Act No. 1199, the law
enforced at the time of the filing of the Complaint before the RTC of
Lucena City, the petitioner has acquired a vested right over the subject
fishpond, which right or interest has become fixed and established and is
no longer open to doubt or controversy.23 Therefore, even if fishponds,
like the subject matter of this case, were later excluded/exempted from
the coverage of the CARL as expressly provided in Section 10 of Republic
Act No. 6657, as amended by Republic Act No. 7881, and despite the fact
that no CLOA has been issued to the petitioner, the same cannot defeat
the aforesaid vested right already granted and acquired by the petitioner
long before the passage of Republic Act No. 7881. And being in the nature
of a substantive law, the amendments introduced by Republic Act No.
7881 to Republic Act No. 6657 in the year 1995 cannot be given a
retroactive application as to deprive the petitioner of his rights under the
previous agrarian legislation.24
Verily, DAR Administrative Order No. 3, Series of 1995, expressly respects
and acknowledges the tenancy relationship that existed between the
parties prior to the amendments made to Republic Act No. 6657 by
Republic Act No. 7881, that is, before fishponds and prawn farms were
exempted/excluded from the coverage of the CARL. The aforesaid DAR
Administrative Order provides:
II. POLICY STATEMENT
D. Acts of harassment by landowners intended to eject or remove the
workers or tenants or the loss of their rights, benefits and privileges to
which they are entitled shall be sanctioned and dealt with under existing
laws, rules and regulations.
E. Fishpond or prawn farmworkers affected by exemption/exclusion have
the option to remain as workers or become beneficiaries in other
agricultural lands.
A worker who chooses to remain in the exempted area shall remain therin
and shall be entitled to such rights, benefits and privileges granted to
farmworkers under existing laws, decrees, and executive orders.
(Emphasis supplied.)
Indubitably, despite the amendments to Section 10 of Republic Act No.
6657, the petitioner's right to tenancy and security of tenure over the
subject fishpond must still be honored.
This Court likewise affirms that the DARAB correctly assumed jurisdiction
over the case, contrary to the declaration made by the appellate court in
its Decision. Notably, the present case was instituted as early as 1991
when the petitioner filed a Petition before the PARAD for the fixing of his
lease rental on the subject fishpond. Respondents subsequently filed a
countercharge against the petitioner for the accounting, collection of sums
of money, and dispossession. At such point, the law applicable was
Republic Act No. 6657, wherein fishponds and prawn farms were not yet
exempted/excluded from the CARL coverage. Evidently, there was an
agrarian dispute existing between the petitioner and the respondents,
cognizable by the PARAD at the time it rendered its Decision on 2 March
1993 in favor of the petitioner. On 20 February 1995, however, Republic
Act No. 7881 came into being which expressly exempted/excluded
fishponds and prawn farms from the coverage of the CARL. In effect, cases
involving fishponds and prawn farms are no longer considered agrarian
disputes as to make the case fall within the jurisdiction of the DARAB or its
Adjudicators. Nevertheless, considering that prior to the enactment of
Republic Act No. 7881, this case was already pending appeal before the
DARAB, the aforesaid amendments then cannot be made to apply as to
divest the DARAB of its jurisdiction over the case. It is well-settled that
once jurisdiction is acquired by the court, it remains with it until the full
termination of the case.25
WHEREFORE, premises considered, the instant Petition is hereby
GRANTED. The Decision and the Resolution of the Court of Appeals in CA-
G.R. SP No. 61955, dated 23 May 2005 and 25 January 2006, respectively,
which annulled and set aside the Decision of the DARAB, dated 25
September 2000, for lack of jurisdiction, are hereby REVERSED AND SET
ASIDE. Thus, the said Decision of the DARAB dated 25 September 2000 is
hereby REINSTATED and AFFIRMED. No costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 79167. May 7, 1992.]
THE HEIRS OF PROCESO BAUTISTA represented by PEDRO BAUTISTA,
Petitioners, v. SPOUSES SEVERO BARZA and ESTER P. BARZA, and COURT
OF APPEALS, Respondent.
Miguel and Valenson Law Offices, for Petitioners.
Rogelio A. Barba and Aguinaldo, Barza & Associates for Private
Respondents.
SYLLABUS
1. ADMINISTRATIVE LAW; PUBLIC LANDS; ONLY DISPOSABLE OR
ALIENABLE PORTION THEREOF SUBJECT TO LEASE, GRANT, SALE OR OTHER
DISPOSITION; CASE AT BAR. Until timber or forest lands are released as
disposable or alienable, neither the Bureau of Lands nor the Bureau of
Fisheries has authority to lease, grant, sell, or otherwise dispose of these
lands for homesteads, sales patents, leases for grazing purposes, fishpond
leases and other modes of utilization. On October 25, 1946 when Bautista
filed Fishpond Application No. 1205, the area applied for could not yet be
granted to him as it was yet to be released for public utilization. The
situation, however, changed when Barza filed Fishpond Application No.
2984 for the area had, by then, been opened for fishpond purposes.
2. ID.; ID.; FISHERIES ADMINISTRATIVE ORDER NO. 14; PRIORITY
RULE ON APPLICATIONS APPLICABLE ONLY TO PUBLIC LANDS DECLARED
AVAILABLE FOR FISHPOND PURPOSES. The priority rule under Fisheries
Administrative Order No. 14 applies only to public lands already released
by the Bureau of Fisheries. Until such lands had been properly declared
available for fishpond purposes, any application is ineffective because
there is no disposable land to speak of.
3. ID.; ADMINISTRATIVE DECISIONS ENTITLED TO GREAT WEIGHT
AND RESPECT; RULE THAT ADMINISTRATIVE DECISIONS SET ASIDE ONLY
ON PROOF OF GROSS ABUSE OF JURISDICTION, FRAUD OR ERROR OF LAW
WELL-SETTLED; CASE AT BAR. Although an administrative decision does
not necessarily bind us, it is entitled to great weight and respect. It should
be stressed that the function of administering and disposing of lands of
the public domain in the manner prescribed by law is not entrusted to the
courts but to executive officials. Matters involved in the grant,
cancellation, reinstatement and revision of fishpond licenses and permits
are vested under the executive supervision of the appropriate department
head who in this case is the Secretary of Agriculture and Natural
Resources. As such, his discretion must be respected in the absence of a
clear showing of abuse. This is in consonance with our well settled ruling
that administrative decisions on matters within the jurisdiction of the
executive department can only be set aside on proof of gross abuse of
jurisdiction, fraud or error of law. As earlier noted, and there being no
motion for its reconsideration, the decision of the Secretary of Agriculture
and Natural Resources became final on July 3, 1959, thirty (30) days from
receipt by the parties of copies of the decision
4. CIVIL LAW; POSSESSION; CESSATION OF GOOD FAITH; CASE AT
BAR. Although Bautista was in possession of the area for quite a
number of years, he ceased to become a bona fide possessor upon receipt
of the decision of the Director of Fisheries granting due course to Barzas
fishpond application. Under Art. 528 of the Civil Code," (p)ossession
acquired in good faith does not lose its character except in the case and
from the moment facts exist which show that the possessor is not
unaware that he possesses the thing improperly or wrongfully."
DECISION
ROMERO, J.:
The facts of this case began as far back as 1946, when the Philippines was
still a new republic and frontier lands and bountiful natural resources
down south beckoned the adventurous-like Proceso Bautista and Ester
Barza.
It was on October 25, 1946, to be exact, when Proceso Bautista applied for
a fishpond permit over a thirty-hectare parcel of marshy public land
located in Sitio Central, Lupon, Davao (Fishpond Application No. 1205).
The application was acknowledged on December 12, 1946, by the then
Division of Fisheries. Said application was, however, rejected by the same
office on November 9, 1948 because the area applied for was needed for
firewood production as certified to by the Bureau of Forestry. The
rejection covered an area of 49 hectares as against the 30 hectares applied
for by Proceso Bautista. 1 Between October 25, 1946 and November 9,
1948, Bautista occupied an area which extended beyond the boundary of
the one he had applied for and introduced improvements thereon. 2
On September 23, 1948, Ester Barza filed a fishpond application covering
an area of approximately 14.85 hectares at Sitio Bundas, Lupon, Davao
(Fishpond Application. No. 2984). Subsequent investigation revealed that
the portion applied for by Barza overlapped the area originally applied for
by Proceso Bautista. 3
Despite the rejection of his application, Proceso Bautista filed another
fishpond application on February 8, 1949 with the Bureau of Fisheries
(Fishpond Application No. 3346). The 49 hectares applied for was in Sitio
Bundas instead of Sitio Central. 4
The records of the Bureau of Fisheries further show that While 14.85
hectares applied for by Barza in Fishpond Application No. 2984 had been
released by the Bureau of Forestry as available for fishpond purposes, the
49 hectares applied for by Bautista in Fishpond Application No. 3346 had
not yet been similarly released by the said bureau. It must be emphasized
that the area, including the portion applied for by Barza had been greatly
improved by Proceso Bautista. 5 As expected, an administrative case
involving the two applicants arose.chanrobles law library : red
On September 19, 1953, the Director of Fisheries ruled in favor of Ester
Barza. The dispositive portion 6 of his order reads:jgc:chanrobles.com.ph
"IN VIEW OF THE FOREGOING, Fp. A. No. 2984 of Ester F. Barza should be,
as hereby it is, GIVEN DUE COURSE, subject however to the
reimbursement of the amounts of improvements in the area to Proceso
Bautista within a period of sixty days from the date hereof, the said
amounts to be appraised and determined by the District Fishery Officer at
Davao City; and Fp. A. No. 3346 of Proceso Bautista should be, as hereby it
is, REJECTED.
SO ORDERED."cralaw virtua1aw library
Bautista appealed the said order to the Secretary of Agriculture and
Natural Resources (DANR Case No. 836). In a decision dated April 28, 1954,
the Secretary, through Undersecretary Jaime M. Ferrer, dismissed the
appeal and affirmed in toto the order of the Director of Fisheries giving
due course to the fishpond application of Barza. 7 Bautista moved for
reconsideration but the same was denied on October 8, 1954. 8
It was not until February 2, 1955, that the Director of Fisheries, in
pursuance of the order of September 19, 1953, required Ester Barza to
remit the amount of P3,391.34 which represented the value of the
improvements introduced by Bautista. 9 This figure was protested by Mrs.
Barza in her letter dated March 6, 1955 where she expressed her
willingness to pay the amount of P1,763.31 only. On April 18, 1955, the
Director of Fisheries advised her to remit a reappraised amount of
P2,263.33. Subsequent reappraisals on the value of the improvements
became necessary in view of Bautistas claim that the improvements were
worth P14,000. 10
Meanwhile, since the parties could not agree on the amount of
reimbursement, on October 13, 1956, Bautista moved for the rejection of
the fishpond application of Barza in view of her non-compliance with the
order of the Director of Fisheries dated September 19, 1953 mandating
Barzas deposit of the value of the improvements. 11 Bautista appealed to
the then Secretary of Agriculture and Natural Resources, who, in his
decision dated May 5, 1959 denied Bautistas appeal thereby enforcing the
Director of Fisheries order of September 19, 1953. 12
On October 19, 1960, Jose Montilla, Assistant Director of Fisheries,
ordered Ester Barza by letter to reimburse Bautista P1,789.18, the total
value of the improvements pursuant to the appraisal report of District
Fishery Officer Crispin Mondragon dated October 31, 1958. 13 On
December 22, 1960, Barza, agreeing to said appraisal, consigned the sum
of P1,789.18 with the then Justice of the Peace of Lupon, Davao. 14
Bautista, however, refused to accept the same. On July 11, 1961, another
reappraisal of the improvements was made establishing the value of the
dikes, dams, trees and houses in the area involved to be P14,569.08. 15 On
December 12, 1962, this amount was reduced to P9,514.33 in view of the
finding that certain improvements were suitable for agricultural and not
for fishpond purposes. 16 In the meantime, the decision of the Secretary
of Agriculture and Natural Resources dated May 5, 1955 became final. 17
More than seven years after the last reappraisal of the improvements or
on December 12, 1968, Ester Barza and her husband, Engr. Severo H.
Barza, filed in the then Court of First Instance of Davao Oriental, an action
against Bautista praying for recovery of possession over the 14.85-hectare
fishpond area she had applied for, a declaration of the validity of the
consignation made before the Justice of the Peace of Lupon, and damages
and attorneys fees. On January 30, 1971, while the case was pending
resolution, Proceso Bautista died. 18 Consequently, his heirs were
substituted as party defendants.chanrobles.com : virtual law library
The lower court at first dismissed the case for lack of jurisdiction but later,
it reconsidered the dismissal. 19 After a protracted trial, on November 15,
1983, the Regional Trial Court of Davao Oriental, 20 rendered a decision 21
in favor of defendant Bautista. While disagreeing with the Bautistas that
the priority rule in applications for permits was inapplicable because
Proceso Bautistas application was made before the area was declared
available for fishpond purposes, the lower court ruled that the Barzas had
not acquired a vested right to possess the areas concerned as they had not
complied with the "condition precedent" to such possession the
reimbursement of the value of the improvements made by Bautista.
Hence, the court ruled, it was premature for the Barzas to demand
possession of the area.
On whether the action for recovery of possession had prescribed, 22 the
lower court said:jgc:chanrobles.com.ph
". . . Besides, a review of the established facts and circumstances would
show that Proceso Bautista started to possess the property adversely as
early as 1946. It was only on September 23, 1948 when Ester Barza filed
her application and protested Bautistas entry. Under Article 2253 of the
New Civil Code, the Civil Code of 1899 and other previous laws shall
govern rights originating, under said laws, from acts done or events which
took place under their regime, even though this Code may regulate them
in a different manner or may not recognize them. Prescription therefore
which started prior to the effectivity of the New Civil Code on August 30,
1950 should be governed by the law prior to the effectivity of the New
Civil Code, which was the Code of Civil Procedure, under which the action
of recovery of (possession) prescribed within ten (10) years. In this case,
the adverse possession of Proceso Bautista which could be a basis for
prescription was interrupted with the filing of the application of Ester
Barza and her protest against the acts of the former which she lodged with
the Bureau of Fisheries in 1948. When the decision of the Department of
Agriculture and Natural Resources dated May 5, 1959 became final on July
4, 1959 as per Exhibit D and as in fact admitted by the parties, the said
prescription by adverse possession continued (sic). This is clear from the
provision of Art. 1123 of the New Civil Code which provides that civil
interruption of possession for the purpose of prescription is produced by
the judicial summons to the possessor which, in the conflict between the
parties, took the form of the fishpond application and the protest filed by
Ester Barza with the Bureau of Fisheries in 1948. From July 4, 1959 to
December 12, 1968, a period of more than nine (9) years elapsed, and as
the same should be tacked with the period of almost two (2) years which
elapsed from 1946 to 1948, when Proceso Bautista started to adversely
possess the area and when, on September 23, 1948, Ester Barza filed her
application, more than ten (10) years had expired and therefore by reason
of prescription, the recovery of possession is also barred."cralaw
virtua1aw library
Emphasizing that Barzas failure to reimburse Bautista for the
improvements introduced on the area was inconsistent with good faith,
the lower court held that the order of the Director of Fisheries giving due
course to her fishpond application and the decision of the Secretary of
Agriculture and Natural Resources "had all become stale." Moreover, the
consignation of the amount of P1,789.18 was illegal as it was not in
accordance with Art. 1258 of the New Civil Code and, the court added,
Barzas failure to pay the sum required of her and to file the necessary
action within ten years was tantamount to a non-user of her rights under
the September 19, 1953 order of the Director of Fisheries. Citing by
analogy Art. 506 of the Civil Code providing that the right to make use of
public waters is extinguished by the lapse of the concession and by non-
user for five (5) years, the lower court held that the cancellation of Barzas
application, as recommended by Fishery Product Examiner Abdul Bakir,
was proper.chanrobles virtual lawlibrary
On the other hand, the lower court ruled that Bautistas right to retain
possession over his improvements was implied by the order of September
19, 1953 while Barzas failure to pay the value of the improvements was
"unfair and unsporting" and violative of Art. 19 of the New Civil Code. The
lower court believed that P9,514.33 was the "right amount" that Barza
should have properly consigned. The dispositive portion of the decision 23
reads:jgc:chanrobles.com.ph
"WHEREFORE, judgment is hereby rendered in favor of the defendants and
against the plaintiffs, dismissing the complaint and the plaintiffs are
hereby directed to pay defendants the sum of P10,000 by way of litigation
expenses and P10,000 by way of attorneys fees and to pay the costs.
SO ORDERED."cralaw virtua1aw library
The Barzas appealed to the Court of Appeals. On June 30, 1986 said court
reversed the decision of the lower court. 24 It interpreted the decision of
the Secretary of Agriculture and Natural Resources as an "official
imprimatur" on the application of Barza and as an implication that Bautista
had no right to continue possession over the 49 hectares covered by
Fishpond Application No. 3346.
While stating that consignation in an action for recovery of possession of
realty is not required by law and that the reimbursement of the of the
improvements is not an obligation, the appellate court nonetheless held
that the consignation of P1,789.18 was "proper and effective." 25 It found
that Bautista was not a possessor in good faith nor a planter in good faith
because he filed Fishpond Application No. 3346 after Barza had filed
Fishpond Application No. 2984. It concluded that Bautistas claim to
prescriptive rights, acquired or vested, did not arise "because it infringe(d)
on the rights of other(s) like Barza whose Fishpond Application No. 2984
was given due course by the proper officials of the government." 26 It
disposed of the case as follows:jgc:chanrobles.com.ph
"Wherefore, the decision a quo is hereby set aside and reversed and
another one is rendered ordering the heirs of Proceso Bautista to accept
or withdraw the sum of P1,789.18 from the Municipal Trial Court Lupon,
Davao, Oriental (formerly Municipal Court of Lupon, Davao Oriental)
representing the value of the improvements introduced on the
controverted area and to surrender possession of the contested area to
the heirs of Ester Barza both within 10 days from receipt of the entry of
judgment. No damages and cost.
SO ORDERED." (Rollo, p. 55)
On July 29, 1986, petitioners filed a motion for reconsideration of the
decision of the Court of Appeals but the same was denied on June 18,
1987. 27
Hence, this recourse. Petitioners contend that the private respondents
cannot be given the right to possess the fishpond in question as they
themselves did not comply with the Director of Fisheries order to
reimburse Bautista for the improvements thereon. They assert that
whatever rights the Barzas had under their fishpond application had
become stale by non-user.
At the outset, it should be remembered that until timber or forest lands
are released as disposable or alienable, neither the Bureau of Lands nor
the Bureau of Fisheries has authority to lease, grant, sell, or otherwise
dispose of these lands for homesteads, sales patents, leases for grazing
purposes, fishpond leases and other modes of utilization. 28 On October
25, 1946 when Bautista filed Fishpond Application No. 1205, the area
applied for could not yet be granted to him as it was yet to be released for
public utilization. The situation, however, changed when Barza filed
Fishpond Application No. 2984 for the area had, by then, been opened for
fishpond purposes.chanrobles.com : virtual law library
Thus, even if Bautista were ahead of Barza by two years in terms of
occupation, possession and introduction of substantial improvements, he
was not placed in a better position than Barza. The priority rule under
Fisheries Administrative Order No. 14 applies only to public lands already
released by the Bureau of Fisheries. Until such lands had been properly
declared available for fishpond purposes, any application is ineffective
because there is no disposable land to speak of. 29 Accordingly, Bautistas
application was premature and the ruling of the Director of Fisheries on
this matter was, therefore, correct.
Although an administrative decision does not necessarily bind us, it is
entitled to great weight and respect. It should be stressed that the
function of administering and disposing of lands of the public domain in
the manner prescribed by law is not entrusted to the courts but to
executive officials. 30 Matters involved in the grant, cancellation,
reinstatement and revision of fishpond licenses and permits are vested
under the executive supervision of the appropriate department head who
in this case is the Secretary of Agriculture and Natural Resources. As such,
his discretion must be respected in the absence of a clear showing of
abuse. 31 This is in consonance with our well settled ruling that
administrative decisions on matters within the jurisdiction of the executive
department can only be set aside on proof of gross abuse of jurisdiction,
fraud or error of law. 32 As earlier noted, and there being no motion for its
reconsideration, the decision of the Secretary of Agriculture and Natural
Resources became final on July 3, 1959, thirty (30) days from receipt by
the parties of copies of the decision. 33
Petitioners contention that the action for recovery of possession had
prescribed when the Barzas filed it on December 12, 1968 is erroneous for
it was filed within the ten-year period for enforcing a judgment, which in
this case is the May 5, 1959 decision of the Secretary of Agriculture and
Natural Resources, as provided for in Art. 1144 of the Civil Code. Hence,
the ultimate issue in this case is whether or not the Barzas may rightfully
seek enforcement of the decision of the Director of Fisheries and that of
the Secretary of Agriculture and Natural Resources, notwithstanding their
refusal to reimburse the Bautistas for the improvements in the area. We
find that the peculiar circumstances of this case compel as to rule in the
affirmative.
Although Bautista was in possession of the area for quite a number of
years, he ceased to become a bona fide possessor upon receipt of the
decision of the Director of Fisheries granting due course to Barzas
fishpond application. Under Art. 528 of the Civil Code," (p)ossession
acquired in good faith does not lose its character except in the case and
from the moment facts exist which show that the possessor is not
unaware that he possesses the thing improperly or wrongfully." Thus,
Bautista should have desisted from introducing improvements on the
property when he learned that Barzas application had been
approved.chanrobles lawlibrary : rednad
However, Bautista may not be solely faulted for holding on to the area
notwithstanding that he had no right over it. The Barzas, after receiving
the administrative decision in the favor, should have complied with its
directive to reimburse the Bautistas for the improvements introduced
thereon. This is not to say, however, that such failure to abide by the
decision of the Director of Fisheries rendered "stale" the said decision.
There is also the established fact that Bautista refused the payments
tendered by the Barzas. However, the Barzas failure to question the last
reappraisal of the improvements constituted inaction on their part, for
which they should bear its consequences.
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED
subject to the modification that the petitioners shall be REIMBURSED the
amount of P9,514.33 (inclusive of the consigned amount of P1,789.18)
with legal interest from December 12, 1962 until fully paid. Upon payment
of said reimbursement, the Bautistas shall SURRENDER possession of the
14.85 hectares, including the improvements thereon, for which the Barzas
had been granted the right to operate as fishpond. This decision is
immediately executory. No costs.
SO ORDERED.
SPECIAL FIRST DIVISION
[G.R. No. 124293. January 31, 2005]
J.G. SUMMIT HOLDINGS, INC., petitioner, vs. COURT OF APPEALS;
COMMITTEE ON PRIVATIZATION, its Chairman and Members; ASSET
PRIVATIZATION TRUST; and PHILYARDS HOLDINGS, INC., respondents.
RESOLUTION
PUNO, J.:
For resolution before this Court are two motions filed by the petitioner,
J.G. Summit Holdings, Inc. for reconsideration of our Resolution dated
September 24, 2003 and to elevate this case to the Court En Banc. The
petitioner questions the Resolution which reversed our Decision of
November 20, 2000, which in turn reversed and set aside a Decision of the
Court of Appeals promulgated on July 18, 1995.
I. Facts
The undisputed facts of the case, as set forth in our Resolution of
September 24, 2003, are as follows:
On January 27, 1997, the National Investment and Development
Corporation (NIDC), a government corporation, entered into a Joint
Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe,
Japan (KAWASAKI) for the construction, operation and management of the
Subic National Shipyard, Inc. (SNS) which subsequently became the
Philippine Shipyard and Engineering Corporation (PHILSECO). Under the
JVA, the NIDC and KAWASAKI will contribute P330 million for the
capitalization of PHILSECO in the proportion of 60%-40% respectively. One
of its salient features is the grant to the parties of the right of first refusal
should either of them decide to sell, assign or transfer its interest in the
joint venture, viz:
1.4 Neither party shall sell, transfer or assign all or any part of its interest
in SNS [PHILSECO] to any third party without giving the other under the
same terms the right of first refusal. This provision shall not apply if the
transferee is a corporation owned or controlled by the GOVERNMENT or
by a KAWASAKI affiliate.
On November 25, 1986, NIDC transferred all its rights, title and interest in
PHILSECO to the Philippine National Bank (PNB). Such interests were
subsequently transferred to the National Government pursuant to
Administrative Order No. 14. On December 8, 1986, President Corazon C.
Aquino issued Proclamation No. 50 establishing the Committee on
Privatization (COP) and the Asset Privatization Trust (APT) to take title to,
and possession of, conserve, manage and dispose of non-performing
assets of the National Government. Thereafter, on February 27, 1987, a
trust agreement was entered into between the National Government and
the APT wherein the latter was named the trustee of the National
Government's share in PHILSECO. In 1989, as a result of a quasi-
reorganization of PHILSECO to settle its huge obligations to PNB, the
National Government's shareholdings in PHILSECO increased to 97.41%
thereby reducing KAWASAKI's shareholdings to 2.59%.
In the interest of the national economy and the government, the COP and
the APT deemed it best to sell the National Government's share in
PHILSECO to private entities. After a series of negotiations between the
APT and KAWASAKI, they agreed that the latter's right of first refusal
under the JVA be "exchanged" for the right to top by five percent (5%) the
highest bid for the said shares. They further agreed that KAWASAKI would
be entitled to name a company in which it was a stockholder, which could
exercise the right to top. On September 7, 1990, KAWASAKI informed APT
that Philyards Holdings, Inc. (PHI)[1] would exercise its right to top.
At the pre-bidding conference held on September 18, 1993, interested
bidders were given copies of the JVA between NIDC and KAWASAKI, and of
the Asset Specific Bidding Rules (ASBR) drafted for the National
Government's 87.6% equity share in PHILSECO. The provisions of the ASBR
were explained to the interested bidders who were notified that the
bidding would be held on December 2, 1993. A portion of the ASBR reads:
1.0 The subject of this Asset Privatization Trust (APT) sale through public
bidding is the National Government's equity in PHILSECO consisting of
896,869,942 shares of stock (representing 87.67% of PHILSECO's
outstanding capital stock), which will be sold as a whole block in
accordance with the rules herein enumerated.
xxx xxx xxx
2.0 The highest bid, as well as the buyer, shall be subject to the final
approval of both the APT Board of Trustees and the Committee on
Privatization (COP).
2.1 APT reserves the right in its sole discretion, to reject any or all bids.
3.0 This public bidding shall be on an Indicative Price Bidding basis. The
Indicative price set for the National Government's 87.67% equity in
PHILSECO is PESOS: ONE BILLION THREE HUNDRED MILLION
(P1,300,000,000.00).
xxx xxx xxx
6.0 The highest qualified bid will be submitted to the APT Board of
Trustees at its regular meeting following the bidding, for the purpose of
determining whether or not it should be endorsed by the APT Board of
Trustees to the COP, and the latter approves the same. The APT shall
advise Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS]
Holdings, Inc., that the highest bid is acceptable to the National
Government. Kawasaki Heavy Industries, Inc. and/or [PHILYARDS]
Holdings, Inc. shall then have a period of thirty (30) calendar days from the
date of receipt of such advice from APT within which to exercise their
"Option to Top the Highest Bid" by offering a bid equivalent to the highest
bid plus five (5%) percent thereof.
6.1 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings,
Inc. exercise their "Option to Top the Highest Bid," they shall so notify the
APT about such exercise of their option and deposit with APT the amount
equivalent to ten percent (10%) of the highest bid plus five percent (5%)
thereof within the thirty (30)-day period mentioned in paragraph 6.0
above. APT will then serve notice upon Kawasaki Heavy Industries, Inc.
and/or [PHILYARDS] Holdings, Inc. declaring them as the preferred bidder
and they shall have a period of ninety (90) days from the receipt of the
APT's notice within which to pay the balance of their bid price.
6.2 Should Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings,
Inc. fail to exercise their "Option to Top the Highest Bid" within the thirty
(30)-day period, APT will declare the highest bidder as the winning bidder.
xxx xxx xxx
12.0 The bidder shall be solely responsible for examining with appropriate
care these rules, the official bid forms, including any addenda or
amendments thereto issued during the bidding period. The bidder shall
likewise be responsible for informing itself with respect to any and all
conditions concerning the PHILSECO Shares which may, in any manner,
affect the bidder's proposal. Failure on the part of the bidder to so
examine and inform itself shall be its sole risk and no relief for error or
omission will be given by APT or COP. . . .
At the public bidding on the said date, petitioner J.G. Summit Holdings,
Inc.[2] submitted a bid of Two Billion and Thirty Million Pesos
(P2,030,000,000.00) with an acknowledgment of KAWASAKI/[PHILYARDS']
right to top, viz:
4. I/We understand that the Committee on Privatization (COP) has up to
thirty (30) days to act on APT's recommendation based on the result of
this bidding. Should the COP approve the highest bid, APT shall advise
Kawasaki Heavy Industries, Inc. and/or its nominee, [PHILYARDS] Holdings,
Inc. that the highest bid is acceptable to the National Government.
Kawasaki Heavy Industries, Inc. and/or [PHILYARDS] Holdings, Inc. shall
then have a period of thirty (30) calendar days from the date of receipt of
such advice from APT within which to exercise their "Option to Top the
Highest Bid" by offering a bid equivalent to the highest bid plus five (5%)
percent thereof.
As petitioner was declared the highest bidder, the COP approved the sale
on December 3, 1993 "subject to the right of Kawasaki Heavy Industries,
Inc./[PHILYARDS] Holdings, Inc. to top JGSMI's bid by 5% as specified in the
bidding rules."
On December 29, 1993, petitioner informed APT that it was protesting the
offer of PHI to top its bid on the grounds that: (a) the KAWASAKI/PHI
consortium composed of KAWASAKI, [PHILYARDS], Mitsui, Keppel, SM
Group, ICTSI and Insular Life violated the ASBR because the last four (4)
companies were the losing bidders thereby circumventing the law and
prejudicing the weak winning bidder; (b) only KAWASAKI could exercise
the right to top; (c) giving the same option to top to PHI constituted
unwarranted benefit to a third party; (d) no right of first refusal can be
exercised in a public bidding or auction sale; and (e) the JG Summit
consortium was not estopped from questioning the proceedings.
On February 2, 1994, petitioner was notified that PHI had fully paid the
balance of the purchase price of the subject bidding. On February 7, 1994,
the APT notified petitioner that PHI had exercised its option to top the
highest bid and that the COP had approved the same on January 6, 1994.
On February 24, 1994, the APT and PHI executed a Stock Purchase
Agreement. Consequently, petitioner filed with this Court a Petition for
Mandamus under G.R. No. 114057. On May 11, 1994, said petition was
referred to the Court of Appeals. On July 18, 1995, the Court of Appeals
denied the same for lack of merit. It ruled that the petition for mandamus
was not the proper remedy to question the constitutionality or legality of
the right of first refusal and the right to top that was exercised by
KAWASAKI/PHI, and that the matter must be brought "by the proper party
in the proper forum at the proper time and threshed out in a full blown
trial." The Court of Appeals further ruled that the right of first refusal and
the right to top are prima facie legal and that the petitioner, "by
participating in the public bidding, with full knowledge of the right to top
granted to KAWASAKI/[PHILYARDS] isestopped from questioning the
validity of the award given to [PHILYARDS] after the latter exercised the
right to top and had paid in full the purchase price of the subject shares,
pursuant to the ASBR." Petitioner filed a Motion for Reconsideration of
said Decision which was denied on March 15, 1996. Petitioner thus filed a
Petition for Certiorari with this Court alleging grave abuse of discretion on
the part of the appellate court.
On November 20, 2000, this Court rendered x x x [a] Decision ruling among
others that the Court of Appeals erred when it dismissed the petition on
the sole ground of the impropriety of the special civil action of mandamus
because the petition was also one of certiorari. It further ruled that a
shipyard like PHILSECO is a public utility whose capitalization must be sixty
percent (60%) Filipino-owned. Consequently, the right to top granted to
KAWASAKI under the Asset Specific Bidding Rules (ASBR) drafted for the
sale of the 87.67% equity of the National Government in PHILSECO is
illegal not only because it violates the rules on competitive bidding but
more so, because it allows foreign corporations to own more than 40%
equity in the shipyard. It also held that "although the petitioner had the
opportunity to examine the ASBR before it participated in the bidding, it
cannot be estopped from questioning the unconstitutional, illegal and
inequitable provisions thereof." Thus, this Court voided the transfer of the
national government's 87.67% share in PHILSECO to Philyard[s] Holdings,
Inc., and upheld the right of JG Summit, as the highest bidder, to take title
to the said shares, viz:
WHEREFORE, the instant petition for review on certiorari is GRANTED. The
assailed Decision and Resolution of the Court of Appeals are REVERSED
and SET ASIDE. Petitioner is ordered to pay to APT its bid price of Two
Billion Thirty Million Pesos (P2,030,000,000.00), less its bid deposit plus
interests upon the finality of this Decision. In turn, APT is ordered to:
(a) accept the said amount of P2,030,000,000.00 less bid deposit and
interests from petitioner;
(b) execute a Stock Purchase Agreement with petitioner;
(c) cause the issuance in favor of petitioner of the certificates of stocks
representing 87.6% of PHILSECO's total capitalization;
(d) return to private respondent PHGI the amount of Two Billion One
Hundred Thirty-One Million Five Hundred Thousand Pesos
(P2,131,500,000.00); and
(e) cause the cancellation of the stock certificates issued to PHI.
SO ORDERED.
In separate Motions for Reconsideration, respondents submit[ted] three
basic issues for x x x resolution: (1) Whether PHILSECO is a public utility;
(2) Whether under the 1977 JVA, KAWASAKI can exercise its right of first
refusal only up to 40% of the total capitalization of PHILSECO; and (3)
Whether the right to top granted to KAWASAKI violates the principles of
competitive bidding.[3] (citations omitted)
In a Resolution dated September 24, 2003, this Court ruled in favor of the
respondents. On the first issue, we held that Philippine Shipyard and
Engineering Corporation (PHILSECO) is not a public utility, as by nature, a
shipyard is not a public utility[4] and that no law declares a shipyard to be
a public utility.[5] On the second issue, we found nothing in the 1977 Joint
Venture Agreement (JVA) which prevents Kawasaki Heavy Industries, Ltd.
of Kobe, Japan (KAWASAKI) from acquiring more than 40% of PHILSECOs
total capitalization.[6] On the final issue, we held that the right to top
granted to KAWASAKI in exchange for its right of first refusal did not
violate the principles of competitive bidding.[7]
On October 20, 2003, the petitioner filed a Motion for Reconsideration[8]
and a Motion to Elevate This Case to the Court En Banc.[9] Public
respondents Committee on Privatization (COP) and Asset Privatization
Trust (APT), and private respondent Philyards Holdings, Inc. (PHILYARDS)
filed their Comments on J.G. Summit Holdings, Inc.s (JG Summits) Motion
for Reconsideration and Motion to Elevate This Case to the Court En Banc
on January 29, 2004 and February 3, 2004, respectively.
II. Issues
Based on the foregoing, the relevant issues to resolve to end this litigation
are the following:
1. Whether there are sufficient bases to elevate the case at bar to the
Court en banc.
2. Whether the motion for reconsideration raises any new matter or
cogent reason to warrant a reconsideration of this Courts Resolution of
September 24, 2003.
Motion to Elevate this Case to the
Court En Banc
The petitioner prays for the elevation of the case to the Court en banc on
the following grounds:
1. The main issue of the propriety of the bidding process involved in the
present case has been confused with the policy issue of the supposed fate
of the shipping industry which has never been an issue that is
determinative of this case.[10]
2. The present case may be considered under the Supreme Court
Resolution dated February 23, 1984 which included among en banc cases
those involving a novel question of law and those where a doctrine or
principle laid down by the Court en banc or in division may be modified or
reversed.[11]
3. There was clear executive interference in the judicial functions of the
Court when the Honorable Jose Isidro Camacho, Secretary of Finance,
forwarded to Chief Justice Davide, a memorandum dated November 5,
2001, attaching a copy of the Foreign Chambers Report dated October 17,
2001, which matter was placed in the agenda of the Court and noted by it
in a formal resolution dated November 28, 2001.[12]
Opposing J.G. Summits motion to elevate the case en banc, PHILYARDS
points out the petitioners inconsistency in previously opposing PHILYARDS
Motion to Refer the Case to the Court En Banc. PHILYARDS contends that
J.G. Summit should now be estopped from asking that the case be referred
to the Court en banc. PHILYARDS further contends that the Supreme Court
en banc is not an appellate court to which decisions or resolutions of its
divisions may be appealed citing Supreme Court Circular No. 2-89 dated
February 7, 1989.[13] PHILYARDS also alleges that there is no novel
question of law involved in the present case as the assailed Resolution was
based on well-settled jurisprudence. Likewise, PHILYARDS stresses that the
Resolution was merely an outcome of the motions for reconsideration
filed by it and the COP and APT and is consistent with the inherent power
of courts to amend and control its process and orders so as to make them
conformable to law and justice. (Rule 135, sec. 5)[14] Private respondent
belittles the petitioners allegations regarding the change in ponente and
the alleged executive interference as shown by former Secretary of
Finance Jose Isidro Camachos memorandum dated November 5, 2001
arguing that these do not justify a referral of the present case to the Court
en banc.
In insisting that its Motion to Elevate This Case to the Court En Banc
should be granted, J.G. Summit further argued that: its Opposition to the
Office of the Solicitor Generals Motion to Refer is different from its own
Motion to Elevate; different grounds are invoked by the two motions;
there was unwarranted executive interference; and the change in ponente
is merely noted in asserting that this case should be decided by the Court
en banc.[15]
We find no merit in petitioners contention that the propriety of the
bidding process involved in the present case has been confused with the
policy issue of the fate of the shipping industry which, petitioner
maintains, has never been an issue that is determinative of this case. The
Courts Resolution of September 24, 2003 reveals a clear and definitive
ruling on the propriety of the bidding process. In discussing whether the
right to top granted to KAWASAKI in exchange for its right of first refusal
violates the principles of competitive bidding, we made an exhaustive
discourse on the rules and principles of public bidding and whether they
were complied with in the case at bar.[16] This Court categorically ruled
on the petitioners argument that PHILSECO, as a shipyard, is a public utility
which should maintain a 60%-40% Filipino-foreign equity ratio, as it was a
pivotal issue. In doing so, we recognized the impact of our ruling on the
shipbuilding industry which was beyond avoidance.[17]
We reject petitioners argument that the present case may be considered
under the Supreme Court Resolution dated February 23, 1984 which
included among en banc cases those involving a novel question of law and
those where a doctrine or principle laid down by the court en banc or in
division may be modified or reversed. The case was resolved based on
basic principles of the right of first refusal in commercial law and estoppel
in civil law. Contractual obligations arising from rights of first refusal are
not new in this jurisdiction and have been recognized in numerous
cases.[18] Estoppel is too known a civil law concept to require an
elongated discussion. Fundamental principles on public bidding were
likewise used to resolve the issues raised by the petitioner. To be sure,
petitioner leans on the right to top in a public bidding in arguing that the
case at bar involves a novel issue. We are not swayed. The right to top was
merely a condition or a reservation made in the bidding rules which was
fully disclosed to all bidding parties. In Bureau Veritas, represented by
Theodor H. Hunermann v. Office of the President, et al., [19]we dealt with
this conditionality, viz:
x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v.
Aytona, et al., (L-18751, 28 April 1962, 4 SCRA 1245), that in an "invitation
to bid, there is a condition imposed upon the bidders to the effect that the
bidding shall be subject to the right of the government to reject any and all
bids subject to its discretion. In the case at bar, the government has made
its choice and unless an unfairness or injustice is shown, the losing bidders
have no cause to complain nor right to dispute that choice. This is a well-
settled doctrine in this jurisdiction and elsewhere."
The discretion to accept or reject a bid and award contracts is vested in
the Government agencies entrusted with that function. The discretion
given to the authorities on this matter is of such wide latitude that the
Courts will not interfere therewith, unless it is apparent that it is used as a
shield to a fraudulent award (Jalandoni v. NARRA, 108 Phil. 486 [1960]). x x
x The exercise of this discretion is a policy decision that necessitates prior
inquiry, investigation, comparison, evaluation, and deliberation. This task
can best be discharged by the Government agencies concerned, not by the
Courts. The role of the Courts is to ascertain whether a branch or
instrumentality of the Government has transgressed its constitutional
boundaries. But the Courts will not interfere with executive or legislative
discretion exercised within those boundaries. Otherwise, it strays into the
realm of policy decision-making.
It is only upon a clear showing of grave abuse of discretion that the Courts
will set aside the award of a contract made by a government entity. Grave
abuse of discretion implies a capricious, arbitrary and whimsical exercise
of power (Filinvest Credit Corp. v. Intermediate Appellate Court, No.
65935, 30 September 1988, 166 SCRA 155). The abuse of discretion must
be so patent and gross as to amount to an evasion of positive duty or to a
virtual refusal to perform a duty enjoined by law, as to act at all in
contemplation of law, where the power is exercised in an arbitrary and
despotic manner by reason of passion or hostility (Litton Mills, Inc. v.
Galleon Trader, Inc., et al[.], L-40867, 26 July 1988, 163 SCRA 489).
The facts in this case do not indicate any such grave abuse of discretion on
the part of public respondents when they awarded the CISS contract to
Respondent SGS. In the "Invitation to Prequalify and Bid" (Annex "C,"
supra), the CISS Committee made an express reservation of the right of
the Government to "reject any or all bids or any part thereof or waive any
defects contained thereon and accept an offer most advantageous to the
Government." It is a well-settled rule that where such reservation is made
in an Invitation to Bid, the highest or lowest bidder, as the case may be, is
not entitled to an award as a matter of right (C & C Commercial Corp. v.
Menor, L-28360, 27 January 1983, 120 SCRA 112). Even the lowest Bid or
any Bid may be rejected or, in the exercise of sound discretion, the award
may be made to another than the lowest bidder (A.C. Esguerra & Sons v.
Aytona, supra, citing 43 Am. Jur., 788). (emphases supplied)
Like the condition in the Bureau Veritas case, the right to top was a
condition imposed by the government in the bidding rules which was
made known to all parties. It was a condition imposed on all bidders
equally, based on the APTs exercise of its discretion in deciding on how
best to privatize the governments shares in PHILSECO. It was not a
whimsical or arbitrary condition plucked from the ether and inserted in
the bidding rules but a condition which the APT approved as the best way
the government could comply with its contractual obligations to
KAWASAKI under the JVA and its mandate of getting the most
advantageous deal for the government. The right to top had its history in
the mutual right of first refusal in the JVA and was reached by agreement
of the government and KAWASAKI.
Further, there is no executive interference in the functions of this Court by
the mere filing of a memorandum by Secretary of Finance Jose Isidro
Camacho. The memorandum was merely noted to acknowledge its filing. It
had no further legal significance. Notably too, the assailed Resolution
dated September 24, 2003 was decided unanimously by the Special First
Division in favor of the respondents.
Again, we emphasize that a decision or resolution of a Division is that of
the Supreme Court[20] and the Court en banc is not an appellate court to
which decisions or resolutions of a Division may be appealed.[21]
For all the foregoing reasons, we find no basis to elevate this case to the
Court en banc.
Motion for Reconsideration
Three principal arguments were raised in the petitioners Motion for
Reconsideration. First, that a fair resolution of the case should be based on
contract law, not on policy considerations; the contracts do not authorize
the right to top to be derived from the right of first refusal.[22] Second,
that neither the right of first refusal nor the right to top can be legally
exercised by the consortium which is not the proper party granted such
right under either the JVA or the Asset Specific Bidding Rules (ASBR).[23]
Third, that the maintenance of the 60%-40% relationship between the
National Investment and Development Corporation (NIDC) and KAWASAKI
arises from contract and from the Constitution because PHILSECO is a
landholding corporation and need not be a public utility to be bound by
the 60%-40% constitutional limitation.[24]
On the other hand, private respondent PHILYARDS asserts that J.G.
Summit has not been able to show compelling reasons to warrant a
reconsideration of the Decision of the Court.[25] PHILYARDS denies that
the Decision is based mainly on policy considerations and points out that it
is premised on principles governing obligations and contracts and
corporate law such as the rule requiring respect for contractual
stipulations, upholding rights of first refusal, and recognizing the
assignable nature of contracts rights.[26] Also, the ruling that shipyards
are not public utilities relies on established case law and fundamental
rules of statutory construction. PHILYARDS stresses that KAWASAKIs right
of first refusal or even the right to top is not limited to the 40% equity of
the latter.[27] On the landholding issue raised by J.G. Summit, PHILYARDS
emphasizes that this is a non-issue and even involves a question of fact.
Even assuming that this Court can take cognizance of such question of fact
even without the benefit of a trial, PHILYARDS opines that landholding by
PHILSECO at the time of the bidding is irrelevant because what is essential
is that ultimately a qualified entity would eventually hold PHILSECOs real
estate properties.[28] Further, given the assignable nature of the right of
first refusal, any applicable nationality restrictions, including landholding
limitations, would not affect the right of first refusal itself, but only the
manner of its exercise.[29] Also, PHILYARDS argues that if this Court takes
cognizance of J.G. Summits allegations of fact regarding PHILSECOs
landholding, it must also recognize PHILYARDS assertions that PHILSECOs
landholdings were sold to another corporation.[30] As regards the right of
first refusal, private respondent explains that KAWASAKIs reduced
shareholdings (from 40% to 2.59%) did not translate to a deprivation or
loss of its contractually granted right of first refusal.[31] Also, the bidding
was valid because PHILYARDS exercised the right to top and it was of no
moment that losing bidders later joined PHILYARDS in raising the purchase
price.[32]
In cadence with the private respondent PHILYARDS, public respondents
COP and APT contend:
1. The conversion of the right of first refusal into a right to top by 5% does
not violate any provision in the JVA between NIDC and KAWASAKI.
2. PHILSECO is not a public utility and therefore not governed by the
constitutional restriction on foreign ownership.
3. The petitioner is legally estopped from assailing the validity of the
proceedings of the public bidding as it voluntarily submitted itself to the
terms of the ASBR which included the provision on the right to top.
4. The right to top was exercised by PHILYARDS as the nominee of
KAWASAKI and the fact that PHILYARDS formed a consortium to raise the
required amount to exercise the right to top the highest bid by 5% does
not violate the JVA or the ASBR.
5. The 60%-40% Filipino-foreign constitutional requirement for the
acquisition of lands does not apply to PHILSECO because as admitted by
petitioner itself, PHILSECO no longer owns real property.
6. Petitioners motion to elevate the case to the Court en banc is baseless
and would only delay the termination of this case.[33]
In a Consolidated Comment dated March 8, 2004, J.G. Summit countered
the arguments of the public and private respondents in this wise:
1. The award by the APT of 87.67% shares of PHILSECO to PHILYARDS with
losing bidders through the exercise of a right to top, which is contrary to
law and the constitution is null and void for being violative of substantive
due process and the abuse of right provision in the Civil Code.
a. The bidders[] right to top was actually exercised by losing bidders.
b. The right to top or the right of first refusal cannot co-exist with a
genuine competitive bidding.
c. The benefits derived from the right to top were unwarranted.
2. The landholding issue has been a legitimate issue since the start of this
case but is shamelessly ignored by the respondents.
a. The landholding issue is not a non-issue.
b. The landholding issue does not pose questions of fact.
c. That PHILSECO owned land at the time that the right of first refusal was
agreed upon and at the time of the bidding are most relevant.
d. Whether a shipyard is a public utility is not the core issue in this case.
3. Fraud and bad faith attend the alleged conversion of an inexistent right
of first refusal to the right to top.
a. The history behind the birth of the right to top shows fraud and bad
faith.
b. The right of first refusal was, indeed, effectively useless.
4. Petitioner is not legally estopped to challenge the right to top in this
case.
a. Estoppel is unavailing as it would stamp validity to an act that is
prohibited by law or against public policy.
b. Deception was patent; the right to top was an attractive nuisance.
c. The 10% bid deposit was placed in escrow.
J.G. Summits insistence that the right to top cannot be sourced from the
right of first refusal is not new and we have already ruled on the issue in
our Resolution of September 24, 2003. We upheld the mutual right of first
refusal in the JVA.[34] We also ruled that nothing in the JVA prevents
KAWASAKI from acquiring more than 40% of PHILSECOs total
capitalization.[35] Likewise, nothing in the JVA or ASBR bars the
conversion of the right of first refusal to the right to top. In sum, nothing
new and of significance in the petitioners pleading warrants a
reconsideration of our ruling.
Likewise, we already disposed of the argument that neither the right of
first refusal nor the right to top can legally be exercised by the consortium
which is not the proper party granted such right under either the JVA or
the ASBR. Thus, we held:
The fact that the losing bidder, Keppel Consortium (composed of Keppel,
SM Group, Insular Life Assurance, Mitsui and ICTSI), has joined PHILYARDS
in the latter's effort to raise P2.131 billion necessary in exercising the right
to top is not contrary to law, public policy or public morals. There is
nothing in the ASBR that bars the losing bidders from joining either the
winning bidder (should the right to top is not exercised) or KAWASAKI/PHI
(should it exercise its right to top as it did), to raise the purchase price. The
petitioner did not allege, nor was it shown by competent evidence, that
the participation of the losing bidders in the public bidding was done with
fraudulent intent. Absent any proof of fraud, the formation by
[PHILYARDS] of a consortium is legitimate in a free enterprise system. The
appellate court is thus correct in holding the petitioner estopped from
questioning the validity of the transfer of the National Government's
shares in PHILSECO to respondent.[36]
Further, we see no inherent illegality on PHILYARDS act in seeking funding
from parties who were losing bidders. This is a purely commercial decision
over which the State should not interfere absent any legal infirmity. It is
emphasized that the case at bar involves the disposition of shares in a
corporation which the government sought to privatize. As such, the
persons with whom PHILYARDS desired to enter into business with in
order to raise funds to purchase the shares are basically its business. This
is in contrast to a case involving a contract for the operation of or
construction of a government infrastructure where the identity of the
buyer/bidder or financier constitutes an important consideration. In such
cases, the government would have to take utmost precaution to protect
public interest by ensuring that the parties with which it is contracting
have the ability to satisfactorily construct or operate the infrastructure.
On the landholding issue, J.G. Summit submits that since PHILSECO is a
landholding company, KAWASAKI could exercise its right of first refusal
only up to 40% of the shares of PHILSECO due to the constitutional
prohibition on landholding by corporations with more than 40% foreign-
owned equity. It further argues that since KAWASAKI already held at least
40% equity in PHILSECO, the right of first refusal was inutile and as such,
could not subsequently be converted into the right to top. [37] Petitioner
also asserts that, at present, PHILSECO continues to violate the
constitutional provision on landholdings as its shares are more than 40%
foreign-owned.[38] PHILYARDS admits that it may have previously held
land but had already divested such landholdings.[39] It contends,
however, that even if PHILSECO owned land, this would not affect the
right of first refusal but only the exercise thereof. If the land is retained,
the right of first refusal, being a property right, could be assigned to a
qualified party. In the alternative, the land could be divested before the
exercise of the right of first refusal. In the case at bar, respondents assert
that since the right of first refusal was validly converted into a right to top,
which was exercised not by KAWASAKI, but by PHILYARDS which is a
Filipino corporation (i.e., 60% of its shares are owned by Filipinos), then
there is no violation of the Constitution.[40] At first, it would seem that
questions of fact beyond cognizance by this Court were involved in the
issue. However, the records show that PHILYARDS admits it had owned
land up until the time of the bidding.[41] Hence, the only issue is whether
KAWASAKI had a valid right of first refusal over PHILSECO shares under the
JVA considering that PHILSECO owned land until the time of the bidding
and KAWASAKI already held 40% of PHILSECOs equity.
We uphold the validity of the mutual rights of first refusal under the JVA
between KAWASAKI and NIDC. First of all, the right of first refusal is a
property right of PHILSECO shareholders, KAWASAKI and NIDC, under the
terms of their JVA. This right allows them to purchase the shares of their
co-shareholder before they are offered to a third party. The agreement of
co-shareholders to mutually grant this right to each other, by itself, does
not constitute a violation of the provisions of the Constitution limiting land
ownership to Filipinos and Filipino corporations. As PHILYARDS correctly
puts it, if PHILSECO still owns land, the right of first refusal can be validly
assigned to a qualified Filipino entity in order to maintain the 60%-40%
ratio. This transfer, by itself, does not amount to a violation of the Anti-
Dummy Laws, absent proof of any fraudulent intent. The transfer could be
made either to a nominee or such other party which the holder of the
right of first refusal feels it can comfortably do business with.
Alternatively, PHILSECO may divest of its landholdings, in which case
KAWASAKI, in exercising its right of first refusal, can exceed 40% of
PHILSECOs equity. In fact, it can even be said that if the foreign
shareholdings of a landholding corporation exceeds 40%, it is not the
foreign stockholders ownership of the shares which is adversely affected
but the capacity of the corporation to own land that is, the corporation
becomes disqualified to own land. This finds support under the basic
corporate law principle that the corporation and its stockholders are
separate juridical entities. In this vein, the right of first refusal over shares
pertains to the shareholders whereas the capacity to own land pertains to
the corporation. Hence, the fact that PHILSECO owns land cannot deprive
stockholders of their right of first refusal. No law disqualifies a person
from purchasing shares in a landholding corporation even if the latter will
exceed the allowed foreign equity, what the law disqualifies is the
corporation from owning land. This is the clear import of the following
provisions in the Constitution:
Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural lands, all other
natural resources shall not be alienated. The exploration, development,
and utilization of natural resources shall be under the full control and
supervision of the State. The State may directly undertake such activities,
or it may enter into co-production, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or associations at least
sixty per centum of whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and
conditions as may be provided by law. In cases of water rights for
irrigation, water supply, fisheries, or industrial uses other than the
development of water power, beneficial use may be the measure and limit
of the grant.
xxx xxx xxx
Section 7. Save in cases of hereditary succession, no private lands shall be
transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain.[42]
(emphases supplied)
The petitioner further argues that an option to buy land is void in itself
(Philippine Banking Corporation v. Lui She, 21 SCRA 52 [1967]). The right of
first refusal granted to KAWASAKI, a Japanese corporation, is similarly
void. Hence, the right to top, sourced from the right of first refusal, is also
void.[43] Contrary to the contention of petitioner, the case of Lui She did
not that say an option to buy land is void in itself, for we ruled as follows:
x x x To be sure, a lease to an alien for a reasonable period is valid. So is an
option giving an alien the right to buy real property on condition that he is
granted Philippine citizenship. As this Court said in Krivenko vs. Register of
Deeds:
[A]liens are not completely excluded by the Constitution from the use of
lands for residential purposes. Since their residence in the Philippines is
temporary, they may be granted temporary rights such as a lease contract
which is not forbidden by the Constitution. Should they desire to remain
here forever and share our fortunes and misfortunes, Filipino citizenship is
not impossible to acquire.
But if an alien is given not only a lease of, but also an option to buy, a
piece of land, by virtue of which the Filipino owner cannot sell or
otherwise dispose of his property, this to last for 50 years, then it becomes
clear that the arrangement is a virtual transfer of ownership whereby the
owner divests himself in stages not only of the right to enjoy the land (jus
possidendi, jus utendi, jus fruendi and jus abutendi) but also of the right to
dispose of it (jus disponendi) rights the sum total of which make up
ownership. It is just as if today the possession is transferred, tomorrow,
the use, the next day, the disposition, and so on, until ultimately all the
rights of which ownership is made up are consolidated in an alien. And yet
this is just exactly what the parties in this case did within this pace of one
year, with the result that Justina Santos'[s] ownership of her property was
reduced to a hollow concept. If this can be done, then the Constitutional
ban against alien landholding in the Philippines, as announced in Krivenko
vs. Register of Deeds, is indeed in grave peril.[44] (emphases supplied;
Citations omitted)
In Lui She, the option to buy was invalidated because it amounted to a
virtual transfer of ownership as the owner could not sell or dispose of his
properties. The contract in Lui She prohibited the owner of the land from
selling, donating, mortgaging, or encumbering the property during the 50-
year period of the option to buy. This is not so in the case at bar where the
mutual right of first refusal in favor of NIDC and KAWASAKI does not
amount to a virtual transfer of land to a non-Filipino. In fact, the case at
bar involves a right of first refusal over shares of stock while the Lui She
case involves an option to buy the land itself. As discussed earlier, there is
a distinction between the shareholders ownership of shares and the
corporations ownership of land arising from the separate juridical
personalities of the corporation and its shareholders.
We note that in its Motion for Reconsideration, J.G. Summit alleges that
PHILSECO continues to violate the Constitution as its foreign equity is
above 40% and yet owns long-term leasehold rights which are real
rights.[45] It cites Article 415 of the Civil Code which includes in the
definition of immovable property, contracts for public works, and
servitudes and other real rights over immovable property.[46] Any existing
landholding, however, is denied by PHILYARDS citing its recent financial
statements.[47] First, these are questions of fact, the veracity of which
would require introduction of evidence. The Court needs to validate these
factual allegations based on competent and reliable evidence. As such, the
Court cannot resolve the questions they pose. Second, J.G. Summit
misreads the provisions of the Constitution cited in its own pleadings, to
wit:
29.2 Petitioner has consistently pointed out in the past that private
respondent is not a 60%-40% corporation, and this violates the
Constitution x x x The violation continues to this day because under the
law, it continues to own real property
xxx xxx xxx
32. To review the constitutional provisions involved, Section 14, Article XIV
of the 1973 Constitution (the JVA was signed in 1977), provided:
Save in cases of hereditary succession, no private lands shall be
transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public domain.
32.1 This provision is the same as Section 7, Article XII of the 1987
Constitution.
32.2 Under the Public Land Act, corporations qualified to acquire or hold
lands of the public domain are corporations at least 60% of which is
owned by Filipino citizens (Sec. 22, Commonwealth Act 141, as amended).
(emphases supplied)
As correctly observed by the public respondents, the prohibition in the
Constitution applies only to ownership of land.[48] It does not extend to
immovable or real property as defined under Article 415 of the Civil Code.
Otherwise, we would have a strange situation where the ownership of
immovable property such as trees, plants and growing fruit attached to
the land[49] would be limited to Filipinos and Filipino corporations only.
III.
WHEREFORE, in view of the foregoing, the petitioners Motion for
Reconsideration is DENIED WITH FINALITY and the decision appealed from
is AFFIRMED. The Motion to Elevate This Case to the Court En Banc is
likewise DENIED for lack of merit.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15260 August 18, 1920
FAUSTO RUBISO, plaintiff-appellant,
vs.
FLORENTINO RIVERA, ET AL., defendants-appellees.
Canillas and Cardenas for appellant.
M. P. Leuterio for appellees.
VILLAMOR, J.:
About April, 1915, Fausto Rubiso and Florentino Rivera had a litigation
concerning the ownership of the pilot boat Valentina. Rivera acquired it on
January 4, 1915, from its original owner the Chinaman Sy Qui, but did not
inscribe his title in the mercantile registry according to article 573 of the
Code of Commerce in relation to article 2 of Act No. 1900. Subsequently
Rubiso bought said pilot boat in a sale at public auction for the sum of
P55.45 on January 23, 1915, and inscribed his title in the mercantile
registry on March 4th of the same year. The suit was decided by the Court
of First Instance of Manila in favor of the plaintiff Rubiso on September 6,
1915. On the 11th day of said month the court issued a writ of execution,
upon the petition of the plaintiff, in order to proceed, as said plaintiff
alleged, to the salvage of the pilot boat which at that time was stranded in
the sitio of Tingloy, Batangas. The order of execution was stayed upon the
filing of a bond for P1,800 by the defendant Rivera who alleged in support
of his objection, that the pilot boat was already salvaged and had been
taken to Maricaban, Batangas. The judgment having been brought to this
court by appeal it was affirmed in a judgment rendered on October 30,
1917 (R.G. N. 11407).1 The cause having been sent to the Court of First
Instance for the execution of judgment the sheriff of Batangas who
undertook to enforce the writ of execution was able to deliver to the
plaintiff Rubiso nothing but the pilot boat itself in a seriously damaged
condition and two useless sails.
Such are the facts which gave rise to the present action for the recovery of
the damages in the sum of P1,200 which the plaintiff and appellant Fausto
Rubiso alleges he has suffered by the destruction and loss of the pilot boat
Valentina and its equipment which were caused, according to the
complaint, by the fault and negligence of the defendants Florentino Rivera
and others.
The answer having been filed and the trial having taken place, the court
rendered judgment in favor of the defendants without any special
pronouncement as to costs. From this judgment the plaintiff appealed.
The motion for new trial having been overruled, the appellant presented
the corresponding bill of exceptions assigning in his brief the following a
errors: (a) The finding that there was not sufficient evidence to establish
the amount of the expenses sought to be recovered; (b) the finding that
the pilot boat Valentina had no legal value in August, 1915; (c) in rendering
judgment absolving the defendants in this case; and (d) in overruling the
motion for new trial presented by the plaintiff on the ground that the
judgment is against the weight of the evidence.
In a series of uninterrupted decision before and after the promulgation of
the Civil Code, the doctrine has been established that all judgment for
damages whether arising from a breach of contract or resulting from some
provision of law, must be based upon satisfactory evidence of the real
existence of the damages alleged to have been suffered. (Sanz vs. Lavin
and Bros., 6 Phil., 299.)
Has the existence of the damages sought to be recovered in this case been
satisfactorily established? The court below decided this question of fact
adversely to the plaintiff and we are of the opinion that this findings is
sustained by the evidence. Plaintiff declares that in February, 1915, he
visited and examined the pilot boat Valentina in the barrio of Tingloy and
that on said day he found it in good condition, and that he saw all of its
tackle and rigging; but on cross-examination by the attorney for the
defendants he admitted that on said date he was unable to take
possession of the vessel because the person in charge of it would not
permit him even to approach. Estanislao Jili who accompanied Fausto
Rubiso in order to see the pilot boat Valentina in February, 1915, affirms
that they did not go on board the vessel because the person in charge of it
would not permit them to do so. This same witness and Jose Soriano as a
witness of the plaintiff state that at that time the boat was not in a
seaworthy condition, because its bottom was damaged and it had no
equipments.
If what has been said is not yet sufficient to find that the pretense of the
appellant as to his first assignment of error is unsustainable, we still have
the uncontradicted testimony of Juan Velino, Irineo Martinez and Mariano
Villas, witnesses for the defendants, who declared on the seriously
damaged condition of the pilot boat long before its acquisition by the
appellant.
Juan Velino declared that in August, 1914, the boat was aground in
Dayhagan, Mindoro; it was somewhat repaired and about November of
the same year it sailed from that place and suffered on the way such
damages and troubles that it had to be taken to Tingloy for new repair,
some vessels' tools and equipments having been borrowed from another
boat because those of the Valentina had been destroyed; and the storm
destroyed the vessel so much that it could not be taken to the Island of
Maricaban except by means of rafts. To the same effect is the testimony of
Irineo Martinez. Mariano Villas testified that in December, 1914, the
Valentina anchored in Tingloy alongside his vessel and as he was
interested in the purchase of this pilot boat, the sale of which was
advertised in Manila, he examined it and then saw that he would not buy
it even for P400, because it was completely destroyed. There can be no
doubt as to the competency of this witness to testify on the question of
the price of the pilot boat Valentina because according to him he had
ordered the construction of boats of the same size and condition during
that period. The lower court declares in its judgment that this witness
appears to it as sufficiently trustworthy, and we find no basis whatever on
the record to doubt the correctness of the finding of the trial judge who
saw and observed him while he was testifying.
We, therefore, are of the opinion that the finding of the court that there
was not sufficient proof to establish the amount of the defendants' claim
is in accordance with the merits of the case.
As to the second error assigned by the appellant it should be noted that,
as appears in the record the pilot boat Valentina was stranded in Tingloy
since the month of November, 1914, that is, two months before it had
been acquired by the plaintiff at public auction and ten months before the
judgment declaring him to be the owner thereof, was rendered. The
appellant, in his first complaint of April 10, 1915, for the recovery of the
pilot boat Valentina, affirms that the boat was then in the same worthless
condition in which it was in 1914, and the evidence we have examined in
this case show that in fact in August or September, 1915, it was in the
worse of conditions and was utterly worthless. Without attempting to
determine the durability of a boat made of wood stranded for a period of
ten months, as is the case with the boat in question, we are of the opinion,
and so declare, that according to the proofs adduced in this case, the court
did not err in declaring in its judgment that the pilot boat Valentina did not
have any legal value in August, 1915.
The defendant in his brief interposes the defense of res judicata based
upon the judgment of this court in the action between Fausto Rubiso et al.
and Florentino Rivera who are the parties in the present case.
In that case it was held:
With respect to the indemnification for damages claimed by the plaintiff,
besides the fact [that according to the proceedings taken subsequently to
the date on which the judgment appealed from was rendered, it appears
that the pilot boat has already left in good condition the place where it
had been stranded and is at present found anchored in the port of
Maricaban,] the truth is that the record does not offer positive proof of
the amount of the damages caused, and on the other hand it cannot be
declared that the defendant had acted in bad faith for he acquired the
vessel previous to its acquisition at public auction by the plaintiff Rubiso
who, for the reason already given, is the true and sole owner of said pilot
boat. (Decision of October 30, 1917, R. G. No. 11407 [Rubiso and Gelito vs.
Rivera, 37 Phil., 72].)
It having been declared in a previous action that the defendant Rivera did
not act in bad faith and that therefore he was not liable for damages, it
would be necessary to show in the present case that the destruction of the
boat and the loss of its equipments took place after the final judgment
was rendered in that case and by reason of the fault and negligence of the
defendants, which is not the case here. What appears from the evidence
presented by the defendant and uncontradicted by that presented by the
adverse parties, is that from September, 1915, to March 7, 1918, which
was the date of the execution of the judgment of this court affirming that
of the lower court, the boat continued aground in the Island of Maricaban
awaiting the final judgment in the action with respect to ownership and
naturally exposed to the action of sea water and the inclemencies of the
weather, things which were beyond the control of the defendant Rivera.
It thus now appears that the damages claimed by the plaintiff are the
same damages that he claimed in the first action. To speak more
accurately, the appellant first sued for the recovery of the vessel and
damages in the sum of P1,750. Judgment was rendered as to the first in
his favor but against him as to the second. And now he comes back again
claiming damages.
The case now under consideration is analogous to that of Palanca
Tanguinlay vs. Quiros (10 Phil., 360). In that case the question was
extensively discussed whether a previous judgment constitutes an
adjudication of the subject-matter of a new suit between the same parties
to such extent that it can not again be tried anew. It was held that
according to articles 306 and 307 of the Code of Civil Procedure, a
judgment rendered in an action for the recovery damages for property lost
is a bar to any other action between the same parties for the recovery of
the same property or its value. In the course of the decision the court
held:
The American books are full of similar cases, an instance being Hatch vs.
Coddington (32 Minn., 92), in which it was held that a former action
between the same parties to recover damages for a wrongful conversion
of personal property was a bar to a subsequent suit to recover possession
of the specific property itself, notwithstanding the difference of form and
that the relief sought and the subject-matter of the cause of action were
regarded as the same. Nor is it altogether clear that the law of Spain was
different. Seor Manresa, in his commentary on article 1252 of the Civil
Code, cites a decision of the supreme court of 25th of April, 1900 (vol. 8, p.
555), holding that in a real action a judgment in a former personal suit
between the same parties for indemnity for the use of the same property
operated as cosa juzgada.
From what has been said the judgment appealed from should be, and is
hereby, affirmed, with costs against the appellant. So ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 205728 January 21, 2015
THE DIOCESE OF BACOLOD, REPRESENTED BY THE MOST REV. BISHOP
VICENTE M. NAVARRA and THE BISHOP HIMSELF IN HIS PERSONAL
CAPACITY, Petitioners,
vs.
COMMISSION ON ELECTIONS AND THE ELECTION OFFICER OF BACOLOD
CITY, ATTY. MAVIL V. MAJARUCON, Respondents.
DECISION
LEONEN, J.:
"The Philippines is a democratic and republican State. Sovereignty resides
in the people and all government authority emanates from them."
Article II, Section 1, Constitution
All governmental authority emanates from our people. No unreasonable
restrictions of the fundamental and preferred right to expression of the
electorate during political contests no matter how seemingly benign will
be tolerated.
This case defines the extent that our people may shape the debates during
elections. It is significant and of first impression. We are asked to decide
whether the Commission on Elections (COMELEC) has the competence to
limit expressions made by the citizens who are not candidates during
elections.
Before us is a special civil action for certiorari and prohibition with
application for preliminary injunction and temporary restraining order1
under Rule 65 of the Rules of Court seeking to nullify COMELECs Notice to
Remove Campaign Materials2 dated February 22, 2013 and letter3 issued
on February 27, 2013.
The facts are not disputed.
On February 21, 2013, petitioners posted two (2) tarpaulins within a
private compound housing the San Sebastian Cathedral of Bacolod. Each
tarpaulin was approximately six feet (6') by ten feet (10') in size. They were
posted on the front walls of the cathedral within public view. The first
tarpaulin contains the message "IBASURA RH Law" referring to the
Reproductive Health Law of 2012 or Republic Act No. 10354. The second
tarpaulin is the subject of the present case.4 This tarpaulin contains the
heading "Conscience Vote" and lists candidates as either "(Anti-RH) Team
Buhay" with a check mark, or "(Pro-RH) Team Patay" with an "X" mark.5
The electoral candidates were classified according to their vote on the
adoption of Republic Act No. 10354, otherwise known as the RH Law.6
Those who voted for the passing of the law were classified by petitioners
as comprising "Team Patay," while those who voted against it form "Team
Buhay":7
TEAM BUHAY TEAM PATAY
Estrada, JV Angara, Juan Edgardo
Honasan, Gregorio Casio, Teddy
Magsaysay, Mitos Cayetano, Alan Peter
Pimentel, Koko Enrile, Jackie
Trillanes, Antonio Escudero, Francis
Villar, Cynthia Hontiveros, Risa
Party List Buhay Legarda, Loren
Party List Ang Pamilya Party List Gabriela
Party List Akbayan
Party List Bayan Muna
Party List Anak Pawis
During oral arguments, respondents conceded that the tarpaulin was
neither sponsored nor paid for by any candidate. Petitioners also
conceded that the tarpaulin contains names ofcandidates for the 2013
elections, but not of politicians who helped in the passage of the RH Law
but were not candidates for that election.
On February 22, 2013, respondent Atty. Mavil V. Majarucon, in her
capacity as Election Officer of Bacolod City, issued a Notice to Remove
Campaign Materials8 addressed to petitioner Most Rev. Bishop Vicente M.
Navarra. The election officer ordered the tarpaulins removal within three
(3) days from receipt for being oversized. COMELEC Resolution No. 9615
provides for the size requirement of two feet (2) by three feet (3).9
On February 25, 2013, petitioners replied10 requesting, among others,
that (1) petitioner Bishop be given a definite ruling by COMELEC Law
Department regarding the tarpaulin; and (2) pending this opinion and the
availment of legal remedies, the tarpaulin be allowed to remain.11
On February 27, 2013, COMELEC Law Department issued a letter12
ordering the immediate removal of the tarpaulin; otherwise, it will be
constrained to file an election offense against petitioners. The letter of
COMELEC Law Department was silenton the remedies available to
petitioners. The letter provides as follows:
Dear Bishop Navarra:
It has reached this Office that our Election Officer for this City, Atty. Mavil
Majarucon, had already given you notice on February 22, 2013 as regards
the election propaganda material posted on the church vicinity promoting
for or against the candidates and party-list groups with the following
names and messages, particularly described as follows:
Material size : six feet (6) by ten feet (10)
Description : FULL COLOR TARPAULIN
Image of : SEE ATTACHED PICTURES
Message : CONSCIENCE VOTE (ANTI RH) TEAM
BUHAY; (PRO RH) TEAM PATAY
Location : POSTED ON THE CHURCH VICINITY
OF THE DIOCESE OF BACOLOD CITY
The three (3) day notice expired on February 25, 2013.
Considering that the above-mentioned material is found to be in violation
of Comelec Resolution No. 9615 promulgated on January 15, 2013
particularly on the size (even with the subsequent division of the said
tarpaulin into two), as the lawful size for election propaganda material is
only two feet (2) by three feet (3), please order/cause the immediate
removal of said election propaganda material, otherwise, we shall be
constrained to file an election offense case against you.
We pray that the Catholic Church will be the first institution to help the
Commission on Elections inensuring the conduct of peaceful, orderly,
honest and credible elections.
Thank you and God Bless!
[signed]
ATTY. ESMERALDA AMORA-LADRA
Director IV13
Concerned about the imminent threatof prosecution for their exercise of
free speech, petitioners initiated this case through this petition for
certiorari and prohibition with application for preliminary injunction and
temporary restraining order.14 They question respondents notice dated
February 22, 2013 and letter issued on February 27, 2013. They pray that:
(1) the petition be given due course; (2) a temporary restraining order
(TRO) and/or a writ of preliminary injunction be issued restraining
respondents from further proceeding in enforcing their orders for the
removal of the Team Patay tarpaulin; and (3) after notice and hearing, a
decision be rendered declaring the questioned orders of respondents as
unconstitutional and void, and permanently restraining respondents from
enforcing them or any other similar order.15
After due deliberation, this court, on March 5, 2013, issued a temporary
restraining order enjoining respondents from enforcing the assailed notice
and letter, and set oral arguments on March 19, 2013.16
On March 13, 2013, respondents filed their comment17 arguing that (1) a
petition for certiorari and prohibition under Rule 65 of the Rules of Court
filed before this court is not the proper remedy to question the notice and
letter of respondents; and (2) the tarpaulin is an election propaganda
subject to regulation by COMELEC pursuant to its mandate under Article
IX-C, Section 4 of the Constitution. Hence, respondents claim that the
issuances ordering its removal for being oversized are valid and
constitutional.18
During the hearing held on March 19, 2013, the parties were directed to
file their respective memoranda within 10 days or by April 1, 2013, taking
into consideration the intervening holidays.19
The issues, which also served as guide for the oral arguments, are:20
I.
WHETHER THE 22 FEBRUARY 2013 NOTICE/ORDER BY ELECTION OFFICER
MAJARUCON AND THE 27 FEBRUARY 2013 ORDER BY THE COMELEC LAW
DEPARTMENT ARE CONSIDERED JUDGMENTS/FINAL
ORDERS/RESOLUTIONS OF THE COMELEC WHICH WOULD WARRANT A
REVIEW OF THIS COURT VIA RULE 65 PETITION[;]
A. WHETHER PETITIONERS VIOLATED THE HIERARCHY OF COURTS
DOCTRINE AND JURISPRUDENTIAL RULES GOVERNING APPEALS FROM
COMELEC DECISIONS;
B. ASSUMING ARGUENDO THAT THE AFOREMENTIONED ORDERS ARE NOT
CONSIDERED JUDGMENTS/FINAL ORDERS/RESOLUTIONS OF THE
COMELEC, WHETHER THERE ARE EXCEPTIONAL CIRCUMSTANCES WHICH
WOULD ALLOW THIS COURT TO TAKE COGNIZANCE OF THE CASE[;]
II.
WHETHER IT IS RELEVANT TODETERMINE WHETHER THE TARPAULINS ARE
"POLITICAL ADVERTISEMENT" OR "ELECTION PROPAGANDA"
CONSIDERING THAT PETITIONER IS NOT A POLITICAL CANDIDATE[;]
III.
WHETHER THE TARPAULINS ARE A FORM OR EXPRESSION (PROTECTED
SPEECH), OR ELECTION PROPAGANDA/POLITICAL ADVERTISEMENT[;]
A. ASSUMING ARGUENDO THAT THE TARPAULINS ARE A FORM OF
EXPRESSION, WHETHER THE COMELEC POSSESSES THE AUTHORITY TO
REGULATE THE SAME[;]
B. WHETHER THIS FORM OF EXPRESSION MAY BE REGULATED[;]
IV.

WHETHER THE 22 FEBRUARY 2013 NOTICE/ ORDER BY ELECTION OFFICER
MAJARUCON AND THE 27 FEBRUARY 2013 ORDER BY THE COMELEC LAW
DEPARTMENT VIOLATES THE PRINCIPLE OF SEPARATION OF CHURCH AND
STATE[;] [AND]
V.
WHETHER THE ACTION OF THE PETITIONERS IN POSTING ITS TARPAULIN
VIOLATES THE CONSTITUTIONAL PRINCIPLE OF SEPARATION OF CHURCH
AND STATE.
I 5) The need for relief is extremely urgent and certiorari is the only
PROCEDURAL ISSUES
I.A
This courts jurisdiction over COMELEC cases
Respondents ask that this petition be dismissed on the ground that the
notice and letter are not final orders, decisions, rulings, or judgments of
the COMELEC En Banc issued in the exercise of its adjudicatory powers,
reviewable via Rule 64 of the Rules of Court.21
Rule 64 is not the exclusive remedy for all acts of the COMELEC. Rule 65 is
applicable especially to raise objections relating to a grave abuse of
discretion resulting in the ouster of jurisdiction.22 As a special civil action,
there must also be a showing that there be no plain, speedy, and adequate
remedy in the ordinary course of the law.
Respondents contend that the assailed notice and letter are not subject to
review by this court, whose power to review is "limited only to final
decisions, rulings and orders of the COMELEC En Banc rendered in the
exercise of its adjudicatory or quasi-judicial power."23 Instead,
respondents claim that the assailed notice and letter are reviewable only
by COMELEC itself pursuant to Article IX-C, Section 2(3) of the
Constitution24 on COMELECs power to decide all questions affecting
elections.25 Respondents invoke the cases of Ambil, Jr. v. COMELEC,26
Repol v. COMELEC,27 Soriano, Jr. v. COMELEC,28 Blanco v. COMELEC,29
and Cayetano v. COMELEC,30 to illustrate how judicialintervention is
limited to final decisions, orders, rulings and judgments of the COMELEC
En Banc.31
These cases are not applicable.
In Ambil, Jr. v. COMELEC, the losing party in the gubernatorial race of
Eastern Samar filed the election protest.32 At issue was the validity of the
promulgation of a COMELEC Division resolution.33 No motion for
reconsideration was filed to raise this issue before the COMELEC En Banc.
This court declared that it did not have jurisdiction and clarified:
We have interpreted [Section 7, Article IX-A of the Constitution]34 to
mean final orders, rulings and decisionsof the COMELEC rendered in the
exercise of its adjudicatory or quasi-judicial powers." This decision must be
a final decision or resolution of the Comelec en banc, not of a division,
certainly not an interlocutory order of a division.The Supreme Court has
no power to review viacertiorari, an interlocutory order or even a final
resolution of a Division of the Commission on Elections.35 (Emphasis in
the original, citations omitted)
However, in the next case cited by respondents, Repol v. COMELEC, this
court provided exceptions to this general rule. Repolwas another election
protest case, involving the mayoralty elections in Pagsanghan, Samar.36
This time, the case was brought to this court because the COMELEC First
Division issued a status quo ante order against the Regional Trial Court
executing its decision pending appeal.37 This courts ponencia discussed
the general rule enunciated in Ambil, Jr. that it cannot take jurisdiction to
review interlocutory orders of a COMELEC Division.38 However, consistent
with ABS-CBN Broadcasting Corporation v. COMELEC,39 it clarified the
exception:
This Court, however, has ruled in the past that this procedural
requirement [of filing a motion for reconsideration] may be glossed over
to prevent miscarriage of justice, when the issue involves the principle of
social justice or the protection of labor, when the decision or resolution
sought to be set aside is a nullity, or when the need for relief is extremely
urgent and certiorari is the only adequate and speedy remedy available.40
Based on ABS-CBN, this court could review orders and decisions of
COMELEC in electoral contests despite not being reviewed by the
COMELEC En Banc, if:
1) It will prevent the miscarriage of justice;
2) The issue involves a principle of social justice;
3) The issue involves the protection of labor;
4) The decision or resolution sought tobe set aside is a nullity; or
adequate and speedy remedy available.
Ultimately, this court took jurisdiction in Repoland decided that the status
quo anteorder issued by the COMELEC Division was unconstitutional.
Respondents also cite Soriano, Jr. v. COMELEC.This case was also an
election protest case involving candidates for the city council of
Muntinlupa City.41 Petitioners in Soriano, Jr.filed before this court a
petition for certiorari against an interlocutory order of the COMELEC First
Division.42 While the petition was pending in this court, the COMELEC
First Division dismissed the main election protest case.43 Sorianoapplied
the general rule that only final orders should be questioned with this
court. The ponencia for this court, however, acknowledged the exceptions
to the general rule in ABS-CBN.44
Blanco v. COMELEC, another case cited by respondents, was a
disqualification case of one of the mayoralty candidates of Meycauayan,
Bulacan.45 The COMELEC Second Division ruled that petitioner could not
qualify for the 2007 elections due to the findings in an administrative case
that he engaged in vote buying in the 1995 elections.46 No motion for
reconsideration was filed before the COMELEC En Banc. This court,
however, took cognizance of this case applying one of the exceptions in
ABS-CBN: The assailed resolution was a nullity.47
Finally, respondents cited Cayetano v. COMELEC, a recent election protest
case involving the mayoralty candidates of Taguig City.48 Petitioner
assailed a resolution of the COMELEC denying her motion for
reconsideration to dismiss the election protest petition for lack of form
and substance.49 This court clarified the general rule and refused to take
cognizance of the review of the COMELEC order. While recognizing the
exceptions in ABS-CBN, this court ruled that these exceptions did not
apply.50
Ambil, Jr., Repol, Soriano, Jr., Blanco, and Cayetano cited by respondents
do not operate as precedents to oust this court from taking jurisdiction
over this case. All these cases cited involve election protests or
disqualification cases filed by the losing candidate against the winning
candidate.
In the present case, petitioners are not candidates seeking for public
office. Their petition is filed to assert their fundamental right to
expression.
Furthermore, all these cases cited by respondents pertained to COMELECs
exercise of its adjudicatory or quasi-judicial power. This case pertains to
acts of COMELEC in the implementation of its regulatory powers. When it
issued the notice and letter, the COMELEC was allegedly enforcingelection
laws.
I.B
Rule 65, grave abuse of discretion,
and limitations on political speech
The main subject of thiscase is an alleged constitutional violation: the
infringement on speech and the "chilling effect" caused by respondent
COMELECs notice and letter.
Petitioners allege that respondents committed grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing the notice51 dated
February 22,2013 and letter52 dated February 27, 2013 ordering the
removal of the tarpaulin.53 It is their position that these infringe on their
fundamental right to freedom of expression and violate the principle of
separation of church and state and, thus, are unconstitutional.54
The jurisdiction of this court over the subject matter is determined from
the allegations in the petition. Subject matter jurisdiction is defined as the
authority "to hear and determine cases of the general class to which the
proceedings in question belong and is conferred by the sovereign
authority which organizes the court and defines its powers."55 Definitely,
the subject matter in this case is different from the cases cited by
respondents.
Nothing less than the electorates political speech will be affected by the
restrictions imposed by COMELEC. Political speech is motivated by the
desire to be heard and understood, to move people to action. It is
concerned with the sovereign right to change the contours of power
whether through the election of representatives in a republican
government or the revision of the basic text of the Constitution. The zeal
with which we protect this kind of speech does not depend on our
evaluation of the cogency of the message. Neither do we assess whether
we should protect speech based on the motives of COMELEC. We evaluate
restrictions on freedom of expression from their effects. We protect both
speech and medium because the quality of this freedom in practice will
define the quality of deliberation in our democratic society.
COMELECs notice and letter affect preferred speech. Respondents acts
are capable of repetition. Under the conditions in which it was issued and
in view of the novelty of this case,it could result in a "chilling effect" that
would affect other citizens who want their voices heard on issues during
the elections. Other citizens who wish to express their views regarding the
election and other related issues may choose not to, for fear of reprisal or
sanction by the COMELEC. Direct resort to this court is allowed to avoid
such proscribed conditions. Rule 65 is also the procedural platform for
raising grave abuse of discretion.
Both parties point to constitutional provisions on jurisdiction. For
petitioners, it referred to this courts expanded exercise of certiorari as
provided by the Constitution as follows:
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether ornot there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the Government.56 (Emphasis
supplied)
On the other hand, respondents relied on its constitutional mandate to
decide all questions affectingelections. Article IX-C, Section 2(3) of the
Constitution, provides:
Sec. 2. The Commission on Elections shall exercise the following powers
and functions:
....
(3) Decide, except those involving the right to vote, all questions affecting
elections, including determination of the number and location of polling
places, appointment of election officials and inspectors, and registration of
voters.
Respondents reliance on this provision is misplaced.
We are not confronted here with the question of whether the COMELEC,
in its exercise of jurisdiction, gravely abused it. We are confronted with
the question as to whether the COMELEC had any jurisdiction at all with its
acts threatening imminent criminal action effectively abridging meaningful
political speech.
It is clear that the subject matter of the controversy is the effect of
COMELECs notice and letter on free speech. This does not fall under
Article IX-C, Section 2(3) of the Constitution. The use of the word
"affecting" in this provision cannot be interpreted to mean that COMELEC
has the exclusive power to decide any and allquestions that arise during
elections. COMELECs constitutional competencies during elections should
not operate to divest this court of its own jurisdiction.
The more relevant provision for jurisdiction in this case is Article VIII,
Section 5(1) of the Constitution.This provision provides for this courts
original jurisdiction over petitions for certiorari and prohibition. This
should be read alongside the expanded jurisdiction of the court in Article
VIII, Section 1 of the Constitution.
Certainly, a breach of the fundamental right of expression by COMELEC is
grave abuse of discretion. Thus, the constitutionality of the notice and
letter coming from COMELEC is within this courts power to review.
During elections, we have the power and the duty to correct any grave
abuse of discretion or any act tainted with unconstitutionality on the part
of any government branch or instrumentality. This includes actions by the
COMELEC. Furthermore, it is this courts constitutional mandate to protect
the people against governments infringement of their fundamental rights.
This constitutional mandate out weighs the jurisdiction vested with the
COMELEC.
It will, thus, be manifest injustice if the court does not take jurisdiction
over this case.
I.C
Hierarchy of courts
This brings us to the issue of whether petitioners violated the doctrine of
hierarchy of courts in directly filing their petition before this court.
Respondents contend that petitioners failure to file the proper suit with a
lower court of concurrent jurisdiction is sufficient ground for the dismissal
of their petition.57 They add that observation of the hierarchy of courts is
compulsory, citing Heirs of Bertuldo Hinog v. Melicor.58 While
respondents claim that while there are exceptions to the general rule on
hierarchy of courts, none of these are present in this case.59
On the other hand, petitioners cite Fortich v. Corona60 on this courts
discretionary power to take cognizance of a petition filed directly to it if
warranted by "compelling reasons, or [by] the nature and importance of
the issues raised. . . ."61 Petitioners submit that there are "exceptional
and compelling reasons to justify a direct resort [with] this Court."62
In Baez, Jr. v. Concepcion,63 we explained the necessity of the
application of the hierarchy of courts:
The Court must enjoin the observance of the policy on the hierarchy of
courts, and now affirms that the policy is not to be ignored without serious
consequences. The strictness of the policy is designed to shield the Court
from having to deal with causes that are also well within the competence
of the lower courts, and thus leave time to the Court to deal with the more
fundamental and more essential tasks that the Constitution has assigned
to it. The Court may act on petitions for the extraordinary writs of
certiorari, prohibition and mandamus only when absolutely necessary or
when serious and important reasons exist to justify an exception to the
policy.64
In Baez, we also elaborated on the reasons why lower courts are allowed
to issue writs of certiorari, prohibition, and mandamus, citing Vergara v.
Suelto:65
The Supreme Court is a court of lastresort, and must so remain if it is to
satisfactorily perform the functions assigned to it by the fundamental
charter and immemorial tradition. It cannot and should not be burdened
with the task of dealing with causes in the first instance. Its original
jurisdiction to issue the so-called extraordinary writs should be exercised
only where absolutely necessary or where serious and important reasons
exist therefore. Hence, that jurisdiction should generally be exercised
relative to actions or proceedings before the Court of Appeals, or before
constitutional or other tribunals, bodies or agencies whose acts for some
reason or another are not controllable by the Court of Appeals. Where the
issuance of an extraordinary writ is also within the competence of the
Court of Appeals or a Regional Trial Court, it is in either of these courts
that the specific action for the writs procurement must be presented. This
is and should continue to be the policy in this regard, a policy that courts
and lawyers must strictly observe.66 (Emphasis omitted)
The doctrine that requires respect for the hierarchy of courts was created
by this court to ensure that every level of the judiciary performs its
designated roles in an effective and efficient manner. Trial courts do not
only determine the facts from the evaluation of the evidence presented
before them. They are likewise competent to determine issues of law
which may include the validity of an ordinance, statute, or even an
executive issuance in relation to the Constitution.67 To effectively perform
these functions, they are territorially organized into regions and then into
branches. Their writs generally reach within those territorial boundaries.
Necessarily, they mostly perform the all-important task of inferring the
facts from the evidence as these are physically presented before them. In
many instances, the facts occur within their territorial jurisdiction, which
properly present the actual case that makes ripe a determination of the
constitutionality of such action. The consequences, of course, would be
national in scope. There are, however, some cases where resort to courts
at their level would not be practical considering their decisions could still
be appealed before the higher courts, such as the Court of Appeals.
The Court of Appeals is primarily designed as an appellate court that
reviews the determination of facts and law made by the trial courts. It is
collegiate in nature. This nature ensures more standpoints in the review of
the actions of the trial court. But the Court of Appeals also has original
jurisdiction over most special civil actions. Unlike the trial courts, its writs
can have a nationwide scope. It is competent to determine facts and,
ideally, should act on constitutional issues thatmay not necessarily be
novel unless there are factual questions to determine.
This court, on the other hand, leads the judiciary by breaking new ground
or further reiterating in the light of new circumstances or in the light of
some confusions of bench or bar existing precedents. Rather than a
court of first instance or as a repetition of the actions of the Court of
Appeals, this court promulgates these doctrinal devices in order that it
truly performs that role.
In other words, the Supreme Courts role to interpret the Constitution and
act in order to protect constitutional rights when these become exigent
should not be emasculated by the doctrine in respect of the hierarchy of
courts. That has never been the purpose of such doctrine.
Thus, the doctrine of hierarchy of courts is not an iron-clad rule.68 This
court has "full discretionary power to take cognizance and assume
jurisdiction [over] special civil actions for certiorari . . .filed directly with it
for exceptionally compelling reasons69 or if warranted by the nature of
the issues clearly and specifically raised in the petition."70 As correctly
pointed out by petitioners,71 we have provided exceptions to this
doctrine:
First, a direct resort to this court is allowed when there are genuine issues
of constitutionality that must be addressed at the most immediate time. A
direct resort to this court includes availing of the remedies of certiorari
and prohibition toassail the constitutionality of actions of both legislative
and executive branches of the government.72
In this case, the assailed issuances of respondents prejudice not only
petitioners right to freedom of expression in the present case, but also of
others in future similar cases. The case before this court involves an active
effort on the part of the electorate to reform the political landscape. This
has become a rare occasion when private citizens actively engage the
public in political discourse. To quote an eminent political theorist:
[T]he theory of freedom of expression involves more than a technique for
arriving at better social judgments through democratic procedures. It
comprehends a vision of society, a faith and a whole way of life. The
theory grew out of an age that was awakened and invigorated by the idea
of new society in which man's mind was free, his fate determined by his
own powers of reason, and his prospects of creating a rational and
enlightened civilization virtually unlimited. It is put forward as a
prescription for attaining a creative, progressive, exciting and intellectually
robust community. It contemplates a mode of life that, through
encouraging toleration, skepticism, reason and initiative, will allow man to
realize his full potentialities.It spurns the alternative of a society that is
tyrannical, conformist, irrational and stagnant.73
In a democracy, the citizens right tofreely participate in the exchange of
ideas in furtherance of political decision-making is recognized. It deserves
the highest protection the courts may provide, as public participation in
nation-building isa fundamental principle in our Constitution. As such,
their right to engage in free expression of ideas must be given immediate
protection by this court.
A second exception is when the issuesinvolved are of transcendental
importance.74 In these cases, the imminence and clarity of the threat to
fundamental constitutional rights outweigh the necessity for prudence.
The doctrine relating to constitutional issues of transcendental importance
prevents courts from the paralysis of procedural niceties when clearly
faced with the need for substantial protection.
In the case before this court, there is a clear threat to the paramount right
of freedom of speech and freedom of expression which warrants
invocation of relief from this court. The principles laid down in this
decision will likely influence the discourse of freedom of speech in the
future, especially in the context of elections. The right to suffrage not only
includes the right to vote for ones chosen candidate, but also the right to
vocalize that choice to the public in general, in the hope of influencing
their votes. It may be said that in an election year, the right to vote
necessarily includes the right to free speech and expression. The
protection of these fundamental constitutional rights, therefore, allows for
the immediate resort to this court.
Third, cases of first impression75 warrant a direct resort to this court. In
cases of first impression, no jurisprudence yet exists that will guide the
lower courts on this matter. In Government of the United States v.
Purganan,76 this court took cognizance of the case as a matter of first
impression that may guide the lower courts:
In the interest of justice and to settle once and for all the important issue
of bail in extradition proceedings, we deem it best to take cognizance of
the present case. Such proceedings constitute a matter of first impression
over which there is, as yet, no local jurisprudence to guide lower courts.77
This court finds that this is indeed a case of first impression involving as it
does the issue of whether the right of suffrage includes the right of
freedom of expression. This is a question which this court has yet to
provide substantial answers to, through jurisprudence. Thus, direct resort
to this court is allowed.
Fourth, the constitutional issues raisedare better decided by this court. In
Drilon v. Lim,78 this court held that:
. . . it will be prudent for such courts, if only out of a becoming modesty, to
defer to the higher judgmentof this Court in the consideration of its
validity, which is better determined after a thorough deliberation by a
collegiate body and with the concurrence of the majority of those who
participated in its discussion.79 (Citation omitted)
In this case, it is this court, with its constitutionally enshrined judicial
power, that can rule with finality on whether COMELEC committed grave
abuse of discretion or performed acts contrary to the Constitution through
the assailed issuances.
Fifth, the time element presented in this case cannot be ignored. This case
was filed during the 2013 election period. Although the elections have
already been concluded, future cases may be filed that necessitate
urgency in its resolution. Exigency in certain situations would qualify as an
exception for direct resort to this court.
Sixth, the filed petition reviews the act of a constitutional organ. COMELEC
is a constitutional body. In Albano v. Arranz,80 cited by petitioners, this
court held that "[i]t is easy to realize the chaos that would ensue if the
Court of First Instance ofeach and every province were [to] arrogate itself
the power to disregard, suspend, or contradict any order of the
Commission on Elections: that constitutional body would be speedily
reduced to impotence."81
In this case, if petitioners sought to annul the actions of COMELEC through
pursuing remedies with the lower courts, any ruling on their part would
not have been binding for other citizens whom respondents may place in
the same situation. Besides, thiscourt affords great respect to the
Constitution and the powers and duties imposed upon COMELEC. Hence, a
ruling by this court would be in the best interest of respondents, in order
that their actions may be guided accordingly in the future.
Seventh, petitioners rightly claim that they had no other plain, speedy, and
adequate remedy in the ordinary course of law that could free them from
the injurious effects of respondents acts in violation of their right to
freedom of expression.
In this case, the repercussions of the assailed issuances on this basic right
constitute an exceptionally compelling reason to justify the direct resort to
this court. The lack of other sufficient remedies in the course of law alone
is sufficient ground to allow direct resort to this court.
Eighth, the petition includes questionsthat are "dictated by public welfare
and the advancement of public policy, or demanded by the broader
interest of justice, or the orders complained of were found to be patent
nullities, or the appeal was consideredas clearly an inappropriate
remedy."82 In the past, questions similar to these which this court ruled
on immediately despite the doctrine of hierarchy of courts included
citizens right to bear arms,83 government contracts involving
modernization of voters registration lists,84 and the status and existence
of a public office.85
This case also poses a question of similar, if not greater import. Hence, a
direct action to this court is permitted.
It is not, however, necessary that all of these exceptions must occur at the
same time to justify a direct resort to this court. While generally, the
hierarchy of courts is respected, the present case falls under the
recognized exceptions and, as such, may be resolved by this court directly.
I.D
The concept of a political question
Respondents argue further that the size limitation and its reasonableness
is a political question, hence not within the ambit of this courts power of
review. They cite Justice Vitugs separate opinion in Osmea v.
COMELEC86 to support their position:
It might be worth mentioning that Section 26, Article II, of the Constitution
also states that the "State shall guarantee equal access to opportunities
for public service, and prohibit political dynasties as may be defined by
law." I see neither Article IX (C)(4) nor Section 26, Article II, of the
Constitution to be all that adversarial or irreconcilably inconsistent with
the right of free expression. In any event, the latter, being one of general
application, must yield to the specific demands of the Constitution. The
freedom of expression concededly holds, it is true, a vantage point in
hierarchy of constitutionally-enshrined rights but, like all fundamental
rights, it is not without limitations.
The case is not about a fight between the "rich" and the "poor" or
between the "powerful" and the "weak" in our society but it is to me a
genuine attempt on the part of Congress and the Commission on Elections
to ensure that all candidates are given an equal chance to media coverage
and thereby be equally perceived as giving real life to the candidates right
of free expression rather than being viewed as an undue restriction of that
freedom. The wisdom in the enactment of the law, i.e., that which the
legislature deems to be best in giving life to the Constitutional mandate, is
not for the Court to question; it is a matter that lies beyond the normal
prerogatives of the Court to pass upon.87
This separate opinion is cogent for the purpose it was said. But it is not in
point in this case.
The present petition does not involve a dispute between the rich and
poor, or the powerful and weak, on their equal opportunities for media
coverage of candidates and their right to freedom of expression. This case
concerns the right of petitioners, who are non-candidates, to post the
tarpaulin in their private property, asan exercise of their right of free
expression. Despite the invocation of the political question doctrine by
respondents, this court is not proscribed from deciding on the merits of
this case.
In Taada v. Cuenco,88 this court previously elaborated on the concept of
what constitutes a political question:
What is generally meant, when it is said that a question is political, and not
judicial, is that it is a matter which is to be exercised by the people in their
primary political capacity, or that it has been specifically delegated to
some other department or particular officer of the government,
withdiscretionary power to act.89 (Emphasis omitted)
It is not for this court to rehearse and re-enact political debates on what
the text of the law should be. In political forums, particularly the
legislature, the creation of the textof the law is based on a general
discussion of factual circumstances, broadly construed in order to allow
for general application by the executive branch. Thus, the creation of the
law is not limited by particular and specific facts that affect the rights of
certain individuals, per se.
Courts, on the other hand, rule on adversarial positions based on existing
facts established on a specific case-to-case basis, where parties affected by
the legal provision seek the courts understanding of the law.
The complementary nature of the political and judicial branches of
government is essential in order to ensure that the rights of the general
public are upheld at all times. In order to preserve this balance, branches
of government must afford due respectand deference for the duties and
functions constitutionally delegated to the other. Courts cannot rush to
invalidate a law or rule. Prudence dictates that we are careful not to veto
political acts unless we can craft doctrine narrowly tailored to the
circumstances of the case.
The case before this court does not call for the exercise of prudence or
modesty. There is no political question. It can be acted upon by this court
through the expanded jurisdiction granted to this court through Article
VIII, Section 1 of the Constitution.
A political question arises in constitutional issues relating to the powers or
competence of different agencies and departments of the executive or
those of the legislature. The political question doctrine is used as a
defense when the petition asks this court to nullify certain acts that are
exclusively within the domain of their respective competencies, as
provided by the Constitution or the law. In such situation, presumptively,
this court should act with deference. It will decline to void an act unless
the exercise of that power was so capricious and arbitrary so as to amount
to grave abuse of discretion.
The concept of a political question, however, never precludes judicial
review when the act of a constitutional organ infringes upon a
fundamental individual or collective right. Even assuming arguendo that
the COMELEC did have the discretion to choose the manner of regulation
of the tarpaulin in question, it cannot do so by abridging the fundamental
right to expression.
Marcos v. Manglapus90 limited the use of the political question doctrine:
When political questions are involved, the Constitution limits the
determination to whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the
official whose action is being questioned. If grave abuse is not established,
the Court will not substitute its judgment for that of the official concerned
and decide a matter which by its nature or by law is for the latter alone to
decide.91
How this court has chosen to address the political question doctrine has
undergone an evolution since the timethat it had been first invoked in
Marcos v. Manglapus. Increasingly, this court has taken the historical and
social context of the case and the relevance of pronouncements of
carefully and narrowly tailored constitutional doctrines. This trend was
followed in cases such as Daza v. Singson92 and Coseteng v. Mitra Jr.93
Daza and Coseteng involved a question as to the application of Article VI,
Section 18 of the 1987 Constitution involving the removal of petitioners
from the Commission on Appointments. In times past, this would have
involved a quint essentially political question as it related to the
dominance of political parties in Congress. However, in these cases, this
court exercised its power of judicial review noting that the requirement of
interpreting the constitutional provision involved the legality and not the
wisdom of a manner by which a constitutional duty or power was
exercised. This approach was again reiterated in Defensor Santiago v.
Guingona, Jr.94
In Integrated Bar of the Philippines v. Zamora,95 this court declared again
that the possible existence ofa political question did not bar an
examination of whether the exercise of discretion was done with grave
abuse of discretion. In that case, this court ruled on the question of
whether there was grave abuse of discretion in the Presidents use of his
power to call out the armed forces to prevent and suppress lawless
violence.
In Estrada v. Desierto,96 this court ruled that the legal question as to
whether a former President resigned was not a political question even if
the consequences would be to ascertain the political legitimacy of a
successor President.
Many constitutional cases arise from political crises. The actors in such
crises may use the resolution of constitutional issues as leverage. But the
expanded jurisdiction of this court now mandates a duty for it to exercise
its power of judicial review expanding on principles that may avert
catastrophe or resolve social conflict.
This courts understanding of the political question has not been static or
unbending. In Llamas v. Executive Secretary Oscar Orbos,97 this court
held:
While it is true that courts cannot inquire into the manner in which the
President's discretionary powers are exercised or into the wisdom for its
exercise, it is also a settled rule that when the issue involved concerns the
validity of such discretionary powers or whether said powers are within
the limits prescribed by the Constitution, We will not decline to exercise
our power of judicial review. And such review does not constitute a
modification or correction of the act of the President, nor does it
constitute interference with the functions of the President.98
The concept of judicial power in relation to the concept of the political
question was discussed most extensively in Francisco v. HRET.99 In this
case, the House of Representatives arguedthat the question of the validity
of the second impeachment complaint that was filed against former Chief
Justice Hilario Davide was a political question beyond the ambit of this
court. Former Chief Justice Reynato Puno elaborated on this concept in his
concurring and dissenting opinion:
To be sure, the force to impugn the jurisdiction of this Court becomes
more feeble in light of the new Constitution which expanded the definition
of judicial power as including "the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the Government." As well observed by
retired Justice Isagani Cruz, this expanded definition of judicial power
considerably constricted the scope of political question. He opined that
the language luminously suggests that this duty (and power) is available
even against the executive and legislative departments including the
President and the Congress, in the exercise of their discretionary
powers.100 (Emphasis in the original, citations omitted)
Francisco also provides the cases which show the evolution of the political
question, as applied in the following cases:
In Marcos v. Manglapus, this Court, speaking through Madame Justice
Irene Cortes, held: The present Constitution limits resort to the political
question doctrine and broadens the scope of judicial inquiry into areas
which the Court,under previous constitutions, would have normally left to
the political departments to decide. x x x
In Bengzon v. Senate Blue Ribbon Committee, through Justice Teodoro
Padilla, this Court declared:
The "allocation of constitutional boundaries" is a task that this Court must
perform under the Constitution. Moreover, as held in a recent case, "(t)he
political question doctrine neither interposes an obstacle to judicial
determination of the rival claims. The jurisdiction to delimit constitutional
boundaries has been given to this Court. It cannot abdicate that obligation
mandated by the 1987 Constitution, although said provision by no means
does away with the applicability of the principle in appropriate cases."
(Emphasis and italics supplied)
And in Daza v. Singson, speaking through Justice Isagani Cruz, this Court
ruled:
In the case now before us, the jurisdictional objection becomes even less
tenable and decisive. The reason is that, even if we were to assume that
the issue presented before us was political in nature, we would still not be
precluded from resolving it under the expanded jurisdiction conferred
upon us that now covers, in proper cases, even the political question.x x x
(Emphasis and italics supplied.)
....
In our jurisdiction, the determination of whether an issue involves a truly
political and non-justiciable question lies in the answer to the question of
whether there are constitutionally imposed limits on powers or functions
conferred upon political bodies. If there are, then our courts are duty-
bound to examine whether the branch or instrumentality of the
government properly acted within such limits.101 (Citations omitted)
As stated in Francisco, a political question will not be considered
justiciable if there are no constitutionally imposed limits on powers or
functions conferred upon political bodies. Hence, the existence of
constitutionally imposed limits justifies subjecting the official actions of
the body to the scrutiny and review of this court.
In this case, the Bill of Rights gives the utmost deference to the right to
free speech. Any instance that this right may be abridged demands judicial
scrutiny. It does not fall squarely into any doubt that a political question
brings.
I.E
Exhaustion of administrative remedies
Respondents allege that petitioners violated the principle of exhaustion of
administrative remedies. Respondents insist that petitioners should have
first brought the matter to the COMELEC En Banc or any of its
divisions.102
Respondents point out that petitioners failed to comply with the
requirement in Rule 65 that "there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law."103 They add that the
proper venue to assail the validity of the assailed issuances was in the
course of an administrative hearing to be conducted by COMELEC.104 In
the event that an election offense is filed against petitioners for posting
the tarpaulin, they claim that petitioners should resort to the remedies
prescribed in Rule 34 of the COMELEC Rules of Procedure.105
The argument on exhaustion of administrative remedies is not proper in
this case.
Despite the alleged non-exhaustion of administrative remedies, it is clear
that the controversy is already ripe for adjudication. Ripeness is the
"prerequisite that something had by then been accomplished or
performed by either branch [or in this case, organ of government] before a
court may come into the picture."106
Petitioners exercise of their rightto speech, given the message and their
medium, had understandable relevance especially during the elections.
COMELECs letter threatening the filing of the election offense against
petitioners is already an actionable infringement of this right. The
impending threat of criminal litigation is enough to curtail petitioners
speech.
In the context of this case, exhaustion of their administrative remedies as
COMELEC suggested in their pleadings prolongs the violation of their
freedom of speech.
Political speech enjoys preferred protection within our constitutional
order. In Chavez v. Gonzales,107 Justice Carpio in a separate opinion
emphasized: "[i]f everthere is a hierarchy of protected expressions,
political expression would occupy the highest rank, and among different
kinds of political expression, the subject of fair and honest elections would
be at the top."108 Sovereignty resides in the people.109 Political speech is
a direct exercise of the sovereignty. The principle of exhaustion of
administrative remedies yields in order to protect this fundamental right.
Even assuming that the principle of exhaustion of administrative remedies
is applicable, the current controversy is within the exceptions to the
principle. In Chua v. Ang,110 this court held:
On the other hand, prior exhaustion of administrative remedies may be
dispensed with and judicial action may be validly resorted to immediately:
(a) when there is a violation of due process; (b) when the issue involved is
purely a legal question; (c) when the administrative action is patently
illegal amounting to lack or excess of jurisdiction; (d) when there is
estoppel on the part ofthe administrative agency concerned; (e) when
there is irreparable injury; (f) when the respondent is a department
secretary whose acts as analter ego of the President bear the implied and
assumed approval of the latter; (g) when to require exhaustion of
administrative remedies would be unreasonable; (h) when it would
amount to a nullification of a claim; (i) when the subject matter is a private
land in land case proceedings; (j) whenthe rule does not provide a plain,
speedy and adequate remedy; or (k) when there are circumstances
indicating the urgency of judicial intervention."111 (Emphasis supplied,
citation omitted)
The circumstances emphasized are squarely applicable with the present
case. First, petitioners allegethat the assailed issuances violated their right
to freedom of expression and the principle of separation of church and
state. This is a purely legal question. Second, the circumstances of the
present case indicate the urgency of judicial intervention considering the
issue then on the RH Law as well as the upcoming elections. Thus, to
require the exhaustion of administrative remedies in this case would be
unreasonable.
Time and again, we have held that this court "has the power to relax or
suspend the rules or to except a case from their operation when
compelling reasons so warrant, or whenthe purpose of justice requires it,
[and when] [w]hat constitutes [as] good and sufficient cause that will
merit suspension of the rules is discretionary upon the court".112
Certainly, this case of first impression where COMELEC has threatenedto
prosecute private parties who seek to participate in the elections by calling
attention to issues they want debated by the publicin the manner they
feel would be effective is one of those cases.
II
SUBSTANTIVE ISSUES
II.A
COMELEC had no legal basis to regulate expressions made by private
citizens
Respondents cite the Constitution, laws, and jurisprudence to support
their position that they had the power to regulate the tarpaulin.113
However, all of these provisions pertain to candidates and political parties.
Petitioners are not candidates. Neither do theybelong to any political
party. COMELEC does not have the authority to regulate the enjoyment of
the preferred right to freedom of expression exercised by a non-candidate
in this case.
II.A.1
First, respondents cite Article IX-C, Section 4 of the Constitution, which
provides:
Section 4. The Commission may,during the election period, supervise or
regulate the enjoyment or utilization of all franchises or permits for the
operation of transportation and other public utilities, media of
communication or information, all grants, special privileges, or
concessions granted by the Government or any subdivision, agency, or
instrumentality thereof, including any government-owned or controlled
corporation or its subsidiary. Such supervision or regulation shall aim to
ensure equal opportunity, time, and space, and the right to reply,
including reasonable, equal rates therefor, for public information
campaigns and forums among candidates in connection with the objective
of holding free, orderly, honest, peaceful, and credible elections.114
(Emphasis supplied)
Sanidad v. COMELEC115 involved the rules promulgated by COMELEC
during the plebiscite for the creation of the Cordillera Autonomous
Region.116 Columnist Pablito V. Sanidad questioned the provision
prohibiting journalists from covering plebiscite issues on the day before
and on plebiscite day.117 Sanidad argued that the prohibition was a
violation of the "constitutional guarantees of the freedom of expression
and of the press. . . ."118 We held that the "evil sought to be prevented by
this provision is the possibility that a franchise holder may favor or give
any undue advantage to a candidate in terms of advertising space or radio
or television time."119 This court found that "[m]edia practitioners
exercising their freedom of expression during plebiscite periods are
neither the franchise holders nor the candidates[,]"120 thus, their right to
expression during this period may not be regulated by COMELEC.121
Similar to the media, petitioners in the case at bar are neither franchise
holders nor candidates. II.A.2
Respondents likewise cite Article IX-C, Section 2(7) of the Constitution as
follows:122
Sec. 2. The Commission on Elections shall exercise the following powers
and functions:
....
(7) Recommend to the Congress effective measures to minimize election
spending, including limitation of places where propaganda materials shall
be posted, and to prevent and penalize all forms of election frauds,
offenses, malpractices, and nuisance candidates. (Emphasis supplied)
Based on the enumeration made on actsthat may be penalized, it will be
inferred that this provision only affects candidates.
Petitioners assail the "Notice to Remove Campaign Materials" issued by
COMELEC. This was followed bythe assailed letter regarding the "election
propaganda material posted on the church vicinity promoting for or
against the candidates and party-list groups. . . ."123
Section 9 of the Fair Election Act124 on the posting of campaign materials
only mentions "parties" and "candidates":
Sec. 9. Posting of Campaign Materials. - The COMELEC may authorize
political parties and party-list groups to erect common poster areas for
their candidates in not more than ten (10) public places such as plazas,
markets, barangay centers and the like, wherein candidates can post,
display or exhibit election propaganda: Provided, That the size ofthe
poster areas shall not exceed twelve (12) by sixteen (16) feet or its
equivalent. Independent candidates with no political parties may likewise
be authorized to erect common poster areas in not more than ten (10)
public places, the size of which shall not exceed four (4) by six (6) feet or
its equivalent. Candidates may post any lawful propaganda material in
private places with the consent of the owner thereof, and in public places
or property which shall be allocated equitably and impartially among the
candidates. (Emphasis supplied)
Similarly, Section 17 of COMELEC Resolution No. 9615, the rules and
regulations implementing the Fair Election Act, provides as follows:
SECTION 17. Posting of Campaign Materials. - Parties and candidates may
post any lawful campaign material in:
a. Authorized common poster areasin public places subject to the
requirements and/or limitations set forth in the next following section;
and
b. Private places provided it has the consent of the owner thereof.
The posting of campaign materials in public places outside of the
designated common poster areas and those enumerated under Section 7
(g) of these Rules and the like is prohibited. Persons posting the same shall
be liable together with the candidates and other persons who caused the
posting. It will be presumed that the candidates and parties caused the
posting of campaign materials outside the common poster areas if they do
not remove the same within three (3) days from notice which shall be
issued by the Election Officer of the city or municipality where the
unlawful election propaganda are posted or displayed.
Members of the PNP and other law enforcement agencies called upon by
the Election Officeror other officials of the COMELEC shall apprehend the
violators caught in the act, and file the appropriate charges against them.
(Emphasis supplied)
Respondents considered the tarpaulin as a campaign material in their
issuances. The above provisions regulating the posting of campaign
materials only apply to candidates and political parties, and petitioners are
neither of the two.
Section 3 of Republic Act No. 9006on "Lawful Election Propaganda" also
states that these are "allowed for all registered political parties, national,
regional, sectoral parties or organizations participating under the party-list
elections and for all bona fide candidates seeking national and local
elective positions subject to the limitation on authorized expenses of
candidates and political parties. . . ." Section 6 of COMELEC Resolution No.
9615 provides for a similar wording. These provisions show that election
propaganda refers to matter done by or on behalf of and in coordination
with candidates and political parties. Some level of coordination with the
candidates and political parties for whom the election propaganda are
released would ensure that these candidates and political parties maintain
within the authorized expenses limitation.
The tarpaulin was not paid for byany candidate or political party.125 There
was no allegation that petitioners coordinated with any of the persons
named in the tarpaulin regarding its posting. On the other hand,
petitioners posted the tarpaulin as part of their advocacy against the RH
Law. Respondents also cite National Press Club v. COMELEC126 in arguing
that its regulatory power under the Constitution, to some extent, set a
limit on the right to free speech during election period.127
National Press Club involved the prohibition on the sale and donation of
space and time for political advertisements, limiting political
advertisements to COMELEC-designated space and time. This case was
brought by representatives of mass media and two candidates for office in
the 1992 elections. They argued that the prohibition on the sale and
donation of space and time for political advertisements is tantamount to
censorship, which necessarily infringes on the freedom of speech of the
candidates.128
This court upheld the constitutionality of the COMELEC prohibition in
National Press Club. However, this case does not apply as most of the
petitioners were electoral candidates, unlike petitioners in the instant
case. Moreover, the subject matter of National Press Club, Section 11(b) of
Republic Act No. 6646,129 only refers to a particular kind of media such as
newspapers, radio broadcasting, or television.130 Justice Feliciano
emphasized that the provision did not infringe upon the right of reporters
or broadcasters to air their commentaries and opinions regarding the
candidates, their qualifications, and program for government. Compared
to Sanidadwherein the columnists lost their ability to give their
commentary on the issues involving the plebiscite, National Press
Clubdoes not involve the same infringement.
In the case at bar, petitioners lost their ability to give a commentary on the
candidates for the 2013 national elections because of the COMELEC notice
and letter. It was not merelya regulation on the campaigns of candidates
vying for public office. Thus, National Press Clubdoes not apply to this
case.
Finally, Section 79 of Batas Pambansa Blg. 881, otherwise known as the
Omnibus Election Code, defines an"election campaign" as follows:
....
(b) The term "election campaign" or "partisan political activity" refers to
an act designed to promote the election or defeat of a particular candidate
or candidates to a public office which shall include:
(1) Forming organizations, associations, clubs, committees or other groups
of persons for the purpose of soliciting votes and/or undertaking any
campaign for or against a candidate;
(2) Holding political caucuses, conferences, meetings, rallies, parades, or
other similar assemblies, for the purpose of soliciting votes and/or
undertaking any campaign or propaganda for or against a candidate;
(3) Making speeches, announcements or commentaries, or holding
interviews for or against the election of any candidate for public office;
(4) Publishing or distributing campaign literature or materials designed to
support or oppose the election of any candidate; or
(5) Directly or indirectly soliciting votes, pledges or support for or against a
candidate.
The foregoing enumerated acts ifperformed for the purpose of enhancing
the chances of aspirants for nomination for candidacy to a public office by
a political party, aggroupment, or coalition of parties shall not be
considered as election campaign or partisan election activity. Public
expressions or opinions or discussions of probable issues in a forthcoming
electionor on attributes of or criticisms against probable candidates
proposed to be nominated in a forthcoming political party convention
shall not be construed as part of any election campaign or partisan
political activity contemplated under this Article. (Emphasis supplied)
True, there is no mention whether election campaign is limited only to the
candidates and political parties themselves. The focus of the definition is
that the act must be "designed to promote the election or defeat of a
particular candidate or candidates to a public office."
In this case, the tarpaulin contains speech on a matter of public concern,
that is, a statement of either appreciation or criticism on votes made in
the passing of the RH law. Thus, petitioners invoke their right to freedom
of expression.
II.B
The violation of the constitutional right
to freedom of speech and expression
Petitioners contend that the assailed notice and letter for the removal of
the tarpaulin violate their fundamental right to freedom of expression.
On the other hand, respondents contend that the tarpaulin is an election
propaganda subject to their regulation pursuant to their mandate under
Article IX-C, Section 4 of the Constitution. Thus, the assailed notice and
letter ordering itsremoval for being oversized are valid and
constitutional.131
II.B.1
Fundamental to the consideration of this issue is Article III, Section 4 of the
Constitution:
Section 4. No law shall be passed abridging the freedom of speech, of
expression, or of the press, or the right of the people peaceably to
assemble and petition the government for redress of grievances.132
No law. . .
While it is true that the present petition assails not a law but an opinion by
the COMELEC Law Department, this court has applied Article III, Section 4
of the Constitution even to governmental acts.
In Primicias v. Fugoso,133 respondent Mayor applied by analogy Section
1119 of the Revised Ordinances of 1927 of Manila for the public meeting
and assembly organized by petitioner Primicias.134 Section 1119 requires
a Mayors permit for the use of streets and public places for purposes such
as athletic games, sports, or celebration of national holidays.135 What was
questioned was not a law but the Mayors refusal to issue a permit for the
holding of petitioners public meeting.136 Nevertheless, this court
recognized the constitutional right to freedom of speech, to peaceful
assembly and to petition for redress of grievances, albeit not absolute,137
and the petition for mandamus to compel respondent Mayor to issue the
permit was granted.138
In ABS-CBN v. COMELEC, what was assailed was not a law but COMELEC En
Banc Resolution No. 98-1419 where the COMELEC resolved to approve the
issuance of a restraining order to stop ABS-CBN from conducting exit
surveys.139 The right to freedom of expression was similarly upheld in this
case and, consequently, the assailed resolution was nullified and set
aside.140
. . . shall be passed abridging. . .
All regulations will have an impact directly or indirectly on expression. The
prohibition against the abridgment of speech should not mean an absolute
prohibition against regulation. The primary and incidental burden on
speech must be weighed against a compelling state interest clearly
allowed in the Constitution. The test depends on the relevant theory of
speech implicit in the kind of society framed by our Constitution.
. . . of expression. . .
Our Constitution has also explicitly included the freedom of expression,
separate and in addition to the freedom of speech and of the press
provided in the US Constitution. The word "expression" was added in the
1987 Constitution by Commissioner Brocka for having a wider scope:
MR. BROCKA: This is a very minor amendment, Mr. Presiding Officer. On
Section 9, page 2, line 29, it says: "No law shall be passed abridging the
freedom of speech." I would like to recommend to the Committee the
change of the word "speech" to EXPRESSION; or if not, add the words AND
EXPRESSION after the word "speech," because it is more expansive, it has
a wider scope, and it would refer to means of expression other than
speech.
THE PRESIDING OFFICER (Mr.Bengzon): What does the Committee say?
FR. BERNAS: "Expression" is more broad than speech. We accept it.
MR. BROCKA: Thank you.
THE PRESIDING OFFICER (Mr.Bengzon): Is it accepted?
FR. BERNAS: Yes.
THE PRESIDING OFFICER (Mr.Bengzon): Is there any objection? (Silence)
The Chair hears none; the amendment is approved.
FR. BERNAS: So, that provision will now read: "No law shall be passed
abridging the freedom of speech, expression or of the press . . . ."141
Speech may be said to be inextricably linked to freedom itself as "[t]he
right to think is the beginning of freedom, and speech must be protected
from the government because speech is the beginning of thought."142
II.B.2
Communication is an essential outcome of protected speech.143
Communication exists when "(1) a speaker, seeking to signal others, uses
conventional actions because he orshe reasonably believes that such
actions will be taken by the audience in the manner intended; and (2) the
audience so takes the actions."144 "[I]n communicative action[,] the
hearer may respond to the claims by . . . either accepting the speech acts
claims or opposing them with criticism or requests for justification."145
Speech is not limited to vocal communication. "[C]onduct is treated as a
form of speech sometimes referred to as symbolic speech[,]"146 such
that "when speech and nonspeech elements are combined in the same
course of conduct, the communicative element of the conduct may be
sufficient to bring into play the [right to freedom of expression]."147
The right to freedom of expression, thus, applies to the entire continuum
of speech from utterances made to conduct enacted, and even to inaction
itself as a symbolic manner of communication.
In Ebralinag v. The Division Superintendent of Schools of Cebu,148
students who were members of the religious sect Jehovahs Witnesses
were to be expelled from school for refusing to salute the flag, sing the
national anthem, and recite the patriotic pledge.149 In his concurring
opinion, Justice Cruz discussed how the salute is a symbolic manner of
communication and a valid form of expression.150 He adds that freedom
of speech includes even the right to be silent:
not enough votes for a ruling of grave abuse of discretion in the
classification made by the Board.157
II.B.3
Size does matter
The form of expression is just as important as the information conveyed
that it forms part of the expression. The present case is in point.
It is easy to discern why size matters.
First, it enhances efficiency in communication. A larger tarpaulin allows
larger fonts which make it easier to view its messages from greater
distances. Furthermore, a larger tarpaulin makes it easier for passengers
inside moving vehicles to read its content. Compared with the pedestrians,
the passengers inside moving vehicles have lesser time to view the
content of a tarpaulin. The larger the fonts and images, the greater the
probability that it will catch their attention and, thus, the greater the
possibility that they will understand its message.
Second, the size of the tarpaulin may underscore the importance of the
message to the reader. From an ordinary persons perspective, those who
post their messages in larger fonts care more about their message than
those who carry their messages in smaller media. The perceived
importance given by the speakers, in this case petitioners, to their cause is
also part of the message. The effectivity of communication sometimes
relies on the emphasis put by the speakers and onthe credibility of the
speakers themselves. Certainly, larger segments of the public may tend to
be more convinced of the point made by authoritative figures when they
make the effort to emphasize their messages.
Third, larger spaces allow for more messages. Larger spaces, therefore,
may translate to more opportunities to amplify, explain, and argue points
which the speakers might want to communicate. Rather than simply
placing the names and images of political candidates and an expression of
support, larger spaces can allow for brief but memorable presentations of
the candidates platforms for governance. Larger spaces allow for more
precise inceptions of ideas, catalyze reactions to advocacies, and
contribute more to a more educated and reasoned electorate. A more
educated electorate will increase the possibilities of both good governance
and accountability in our government.

Freedom of speech includes the right to be silent. Aptly has it been said
that the Bill of Rights that guarantees to the individual the liberty to utter
what is in his mind also guarantees to him the liberty not to utter what is
not in his mind. The salute is a symbolic manner of communication that
conveys its messageas clearly as the written or spoken word. As a valid
form of expression, it cannot be compelled any more than it can be
prohibited in the face of valid religious objections like those raised in this
petition. To impose it on the petitioners is to deny them the right not to
speak when their religion bids them to be silent. This coercion of
conscience has no place in the free society.
The democratic system provides for the accommodation of diverse ideas,
including the unconventional and even the bizarre or eccentric. The will of
the majority prevails, but it cannot regiment thought by prescribing the
recitation by rote of its opinions or proscribing the assertion of
unorthodox or unpopular views as inthis case. The conscientious
objections of the petitioners, no less than the impatience of those who
disagree with them, are protected by the Constitution. The State cannot
make the individual speak when the soul within rebels.151
Even before freedom "of expression" was included in Article III, Section 4
of the present Constitution,this court has applied its precedent version to
expressions other than verbal utterances.
These points become more salient when it is the electorate, not the
candidates or the political parties, that speaks. Too often, the terms of
public discussion during elections are framed and kept hostage by brief
and catchy but meaningless sound bites extolling the character of the
candidate. Worse, elections sideline political arguments and privilege the
endorsement by celebrities. Rather than provide obstacles to their speech,
government should in fact encourage it. Between the candidates and the
electorate, the latter have the better incentive to demand discussion of
the more important issues. Between the candidates and the electorate,
the former have better incentives to avoid difficult political standpoints
and instead focus on appearances and empty promises.
Large tarpaulins, therefore, are not analogous to time and place.158 They
are fundamentally part of expression protected under Article III, Section 4
of the Constitution.
II.B.4
There are several theories and schools of thought that strengthen the
need to protect the basic right to freedom of expression.
First, this relates to the right ofthe people to participate in public affairs,
including the right to criticize government actions.

In the 1985 case of Gonzalez v. Chairman Katigbak,152 petitioners
objected to the classification of the motion picture "Kapit sa Patalim" as
"For Adults Only." They contend that the classification "is without legal
and factual basis and is exercised as impermissible restraint of artistic
expression."153 This court recognized that "[m]otion pictures are
important both as a medium for the communication of ideas and the
expression of the artistic impulse."154 It adds that "every writer,actor, or
producer, no matter what medium of expression he may use, should be
freed from the censor."155 This court found that "[the Boards] perception
of what constitutes obscenity appears to be unduly restrictive."156
However, the petition was dismissed solely on the ground that there were
Proponents of the political theory on "deliberative democracy" submit
that "substantial, open, [and] ethical dialogue isa critical, and indeed
defining, feature of a good polity."159 This theory may be considered
broad, but it definitely "includes [a] collective decision making with the
participation of all who will beaffected by the decision."160 It anchors on
the principle that the cornerstone of every democracy is that sovereignty
resides in the people.161 To ensure order in running the states affairs,
sovereign powers were delegated and individuals would be elected or
nominated in key government positions to represent the people. On this
note, the theory on deliberative democracy may evolve to the right of the
people to make government accountable. Necessarily, this includes the
right of the people to criticize acts made pursuant to governmental
functions.
Speech that promotes dialogue on publicaffairs, or airs out grievances and
political discontent, should thus be protected and encouraged.
Borrowing the words of Justice Brandeis, "it is hazardous to discourage
thought, hope and imagination; that fear breeds repression; that
repression breeds hate; that hate menaces stable government; that the
path of safety lies in the opportunity to discuss freely supposed grievances
and proposed remedies."162
In this jurisdiction, this court held that "[t]he interest of society and the
maintenance of good government demand a full discussion of public
affairs."163 This court has, thus, adopted the principle that "debate on
public issues should be uninhibited, robust,and wide open . . . [including
even] unpleasantly sharp attacks on government and public officials."164
Second, free speech should be encouraged under the concept of a market
place of ideas. This theory was articulated by Justice Holmes in that "the
ultimate good desired is better reached by [the] free trade in ideas:"165
When men have realized that time has upset many fighting faiths, they
may come to believe even more than they believe the very foundations of
their own conduct that the ultimate good desired is better reached by free
trade in ideas - that the best test of truth is the power of the thought to
get itself accepted in the competition of the market, and that truth is the
only ground upon which their wishes safely can be carried out.166
The way it works, the exposure to the ideas of others allows one to
"consider, test, and develop their own conclusions."167 A free, open, and
dynamic market place of ideas is constantly shaping new ones. This
promotes both stability and change where recurring points may crystallize
and weak ones may develop. Of course, free speech is more than the right
to approve existing political beliefs and economic arrangements as it
includes, "[t]o paraphrase Justice Holmes, [the] freedom for the thought
that we hate, no less than for the thought that agrees with us."168 In fact,
free speech may "best serve its high purpose when it induces a condition
of unrest, creates dissatisfaction with conditions as they are, or even stirs
people to anger."169 It is in this context that we should guard against any
curtailment of the peoples right to participate in the free trade of ideas.
Third, free speech involves self-expression that enhances human dignity.
This right is "a means of assuring individual self-fulfillment,"170 among
others. In Philippine Blooming Mills Employees Organization v. Philippine
Blooming Mills Co., Inc,171 this court discussed as follows:
The rights of free expression, free assembly and petition, are not only civil
rights but also political rights essential to man's enjoyment of his life, to
his happiness and to his full and complete fulfillment.Thru these freedoms
the citizens can participate not merely in the periodic establishment of the
government through their suffrage but also in the administration of public
affairs as well as in the discipline of abusive public officers. The citizen is
accorded these rights so that he can appeal to the appropriate
governmental officers or agencies for redress and protection as well as for
the imposition of the lawful sanctions on erring public officers and
employees.172 (Emphasis supplied)
Fourth, expression is a marker for group identity. For one, "[v]oluntary
associations perform [an] important democratic role [in providing] forums
for the development of civil skills, for deliberation, and for the formation
of identity and community spirit[,] [and] are largely immune from [any]
governmental interference."173 They also "provide a buffer between
individuals and the state - a free space for the development of individual
personality, distinct group identity, and dissident ideas - and a potential
source of opposition to the state."174 Free speech must be protected as
the vehicle to find those who have similar and shared values and ideals, to
join together and forward common goals.
Fifth, the Bill of Rights, free speech included, is supposed to "protect
individuals and minorities against majoritarian abuses perpetrated
through [the] framework [of democratic governance]."175 Federalist
framers led by James Madison were concerned about two potentially
vulnerable groups: "the citizenry at large - majorities - who might be
tyrannized or plundered by despotic federal officials"176 and the
minorities who may be oppressed by "dominant factions of the electorate
[that] capture [the] government for their own selfish ends[.]"177
According to Madison, "[i]t is of great importance in a republic not only to
guard the society against the oppression of its rulers, but to guard one
part of the society against the injustice of the other part."178 We should
strive to ensure that free speech is protected especially in light of any
potential oppression against those who find themselves in the fringes on
public issues.
Lastly, free speech must be protected under the safety valve theory.179
This provides that "nonviolent manifestations of dissent reduce the
likelihood of violence[.]"180 "[A] dam about to burst . . . resulting in the
banking up of a menacing flood of sullen anger behind the walls of
restriction"181 has been used to describe the effect of repressing
nonviolent outlets.182 In order to avoid this situation and prevent people
from resorting to violence, there is a need for peaceful methods in making
passionate dissent. This includes "free expression and political
participation"183 in that they can "vote for candidates who share their
views, petition their legislatures to [make or] change laws, . . . distribute
literature alerting other citizens of their concerns[,]"184 and conduct
peaceful rallies and other similar acts.185 Free speech must, thus, be
protected as a peaceful means of achieving ones goal, considering the
possibility that repression of nonviolent dissent may spill over to violent
means just to drive a point.
II.B.5
Every citizens expression with political consequences enjoys a high degree
of protection. Respondents argue that the tarpaulinis election
propaganda, being petitioners way of endorsing candidates who voted
against the RH Law and rejecting those who voted for it.186 As such, it is
subject to regulation by COMELEC under its constitutional mandate.187
Election propaganda is defined under Section 1(4) of COMELEC Resolution
No. 9615 as follows: SECTION 1. Definitions . . .
....
4. The term "political advertisement" or "election propaganda" refers to
any matter broadcasted, published, printed, displayed or exhibited, in any
medium, which contain the name, image, logo, brand, insignia, color
motif, initials, and other symbol or graphic representation that is capable
of being associated with a candidate or party, and is intended to draw the
attention of the public or a segment thereof to promote or oppose,
directly or indirectly, the election of the said candidate or candidates to a
public office. In broadcast media, political advertisements may take the
form of spots, appearances on TV shows and radio programs, live or taped
announcements, teasers, and other forms of advertising messages or
announcements used by commercial advertisers. Political advertising
includes matters, not falling within the scope of personal opinion, that
appear on any Internet website, including, but not limited to, social
networks, blogging sites, and micro-blogging sites, in return for
consideration, or otherwise capable of pecuniary estimation.
On the other hand, petitioners invoke their "constitutional right to
communicate their opinions, views and beliefs about issues and
candidates."188 They argue that the tarpaulin was their statement of
approval and appreciation of the named public officials act of voting
against the RH Law, and their criticism toward those who voted in its
favor.189 It was "part of their advocacy campaign against the RH Law,"190
which was not paid for by any candidate or political party.191 Thus, "the
questioned orders which . . . effectively restrain[ed] and curtail[ed] [their]
freedom of expression should be declared unconstitutional and void."192
This court has held free speech and other intellectual freedoms as "highly
ranked in our scheme of constitutional values."193 These rights enjoy
precedence and primacy.194 In Philippine Blooming Mills, this court
discussed the preferred position occupied by freedom of expression:
Property and property rights can belost thru prescription; but human
rights are imprescriptible. If human rights are extinguished by the passage
of time, then the Bill of Rights is a useless attempt to limit the power of
government and ceases to be an efficacious shield against the tyranny of
officials, of majorities, ofthe influential and powerful, and of oligarchs -
political, economic or otherwise.
In the hierarchy of civil liberties, the rights of free expression and of
assembly occupy a preferred position as they are essential to the
preservation and vitality of our civil and political institutions; and such
priority "gives these liberties the sanctity and the sanction not permitting
dubious intrusions."195 (Citations omitted)
This primordial right calls for utmost respect, more so "when what may be
curtailed is the dissemination of information to make more meaningful the
equally vital right of suffrage."196 A similar idea appeared in our
jurisprudence as early as 1969, which was Justice Barredos concurring and
dissenting opinion in Gonzales v. COMELEC:197
I like to reiterate over and over, for it seems this is the fundamental point
others miss, that genuine democracy thrives only where the power and
right of the people toelect the men to whom they would entrust the
privilege to run the affairs of the state exist. In the language of the
declaration of principles of our Constitution, "The Philippines is a
republican state. Sovereignty resides in the people and all government
authority emanates from them" (Section 1, Article II). Translating this
declaration into actuality, the Philippines is a republic because and solely
because the people in it can be governed only by officials whom they
themselves have placed in office by their votes. And in it is on this
cornerstone that I hold it tobe self-evident that when the freedoms of
speech, press and peaceful assembly and redress of grievances are being
exercised in relation to suffrage or asa means to enjoy the inalienable right
of the qualified citizen to vote, they are absolute and timeless. If our
democracy and republicanism are to be worthwhile, the conduct of public
affairs by our officials must be allowed to suffer incessant and unabating
scrutiny, favorable or unfavorable, everyday and at all times. Every holder
of power in our government must be ready to undergo exposure any
moment of the day or night, from January to December every year, as it is
only in this way that he can rightfully gain the confidence of the people. I
have no patience for those who would regard public dissection of the
establishment as an attribute to be indulged by the people only at certain
periods of time. I consider the freedoms of speech, press and peaceful
assembly and redress of grievances, when exercised in the name of
suffrage, as the very means by which the right itself to vote can only be
properly enjoyed.It stands to reason therefore, that suffrage itself would
be next to useless if these liberties cannot be untrammelled [sic] whether
as to degree or time.198 (Emphasis supplied)
Not all speech are treated the same. In Chavez v. Gonzales, this court
discussed that some types of speech may be subject to regulation:
Some types of speech may be subjected to some regulation by the State
under its pervasive police power, in order that it may not be injurious to
the equal right of others or those of the community or society. The
difference in treatment is expected because the relevant interests of one
type of speech, e.g., political speech, may vary from those of another, e.g.,
obscene speech. Distinctionshave therefore been made in the treatment,
analysis, and evaluation ofthe permissible scope of restrictions on various
categories of speech. We have ruled, for example, that in our jurisdiction
slander or libel, lewd and obscene speech, as well as "fighting words" are
not entitled to constitutional protection and may be penalized.199
(Citations omitted)
We distinguish between politicaland commercial speech. Political speech
refers to speech "both intended and received as a contribution to public
deliberation about some issue,"200 "foster[ing] informed and civicminded
deliberation."201 On the other hand, commercial speech has been defined
as speech that does "no more than propose a commercial transaction."202
The expression resulting from the content of the tarpaulin is, however,
definitely political speech. In Justice Brions dissenting opinion, he
discussed that "[t]he content of the tarpaulin, as well as the timing of its
posting, makes it subject of the regulations in RA 9006 and Comelec
Resolution No. 9615."203 He adds that "[w]hile indeed the RH issue, by
itself,is not an electoralmatter, the slant that the petitioners gave the issue
converted the non-election issue into a live election one hence, Team
Buhay and Team Patay and the plea to support one and oppose the
other."204
While the tarpaulin may influence the success or failure of the named
candidates and political parties, this does not necessarily mean it is
election propaganda. The tarpaulin was not paid for or posted "in return
for consideration" by any candidate, political party, or party-list group.
The second paragraph of Section 1(4) of COMELEC Resolution No. 9615, or
the rules and regulations implementing Republic Act No. 9006 as an aid to
interpret the law insofar as the facts of this case requires, states:
4. The term "political advertisement" or "election propaganda" refers to
any matter broadcasted, published, printed, displayed or exhibited, in any
medium, which contain the name, image, logo, brand, insignia, color
motif, initials, and other symbol or graphic representation that is capable
of being associated with a candidate or party, and is intended to draw the
attention of the public or a segment thereof to promote or oppose,
directly or indirectly, the election of the said candidate or candidates to a
public office. In broadcast media, political advertisements may take the
form of spots, appearances on TV shows and radio programs, live or taped
announcements, teasers, and other forms of advertising messages or
announcements used by commercial advertisers. Political advertising
includes matters, not falling within the scope of personal opinion, that
appear on any Internet website, including, but not limited to, social
networks, blogging sites, and micro-blogging sites, in return for
consideration, or otherwise capable of pecuniary estimation. (Emphasis
supplied)
It is clear that this paragraph suggests that personal opinions are not
included, while sponsored messages are covered.
Thus, the last paragraph of Section 1(1) of COMELEC Resolution No. 9615
states:
SECTION 1. Definitions - As used in this Resolution:
1. The term "election campaign" or "partisan political activity" refers to an
act designed to promote the election or defeat of a particular candidate or
candidates to a public office, and shall include any of the following:
....
Personal opinions, views, and preferences for candidates, contained in
blogs shall not be considered acts of election campaigning or partisan
politicalactivity unless expressed by government officials in the Executive
Department, the Legislative Department, the Judiciary, the Constitutional
Commissions, and members of the Civil Service.
In any event, this case does not refer to speech in cyberspace, and its
effects and parameters should be deemed narrowly tailored only in
relation to the facts and issues in this case. It also appears that such
wording in COMELEC Resolution No. 9615 does not similarly appear in
Republic Act No. 9006, the law it implements.
We should interpret in this manner because of the value of political
speech.
As early as 1918, in United States v. Bustos,205 this court recognized the
need for full discussion of public affairs. We acknowledged that free
speech includes the right to criticize the conduct of public men:
The interest of society and the maintenance of good government demand
a full discussion of public affairs. Complete liberty to comment on the
conduct of public men is a scalpel in the case of free speech. The sharp
incision of its probe relieves the abscesses of official dom. Men in public
life may suffer under a hostile and an unjust accusation; the wound can be
assuaged with the balm of a clear conscience. A public officer must not be
too thin-skinned with reference to comment upon his official acts. Only
thus can the intelligence and dignity of the individual be exalted.206
Subsequent jurisprudence developed the right to petition the government
for redress of grievances, allowing for criticism, save for some
exceptions.207 In the 1951 case of Espuelas v. People,208 this court noted
every citizens privilege to criticize his or her government, provided it is
"specific and therefore constructive, reasoned or tempered, and not a
contemptuous condemnation of the entire government set-up."209
The 1927 case of People v. Titular210 involved an alleged violation of the
Election Law provision "penaliz[ing] the anonymous criticism of a
candidate by means of posters or circulars."211 This court explained that it
is the posters anonymous character that is being penalized.212 The
ponente adds that he would "dislike very muchto see this decision made
the vehicle for the suppression of public opinion."213
In 1983, Reyes v. Bagatsing214 discussed the importance of allowing
individuals to vent their views. According to this court, "[i]ts value may lie
in the fact that there may be something worth hearing from the dissenter
[and] [t]hat is to ensurea true ferment of ideas."215
Allowing citizens to air grievances and speak constructive criticisms against
their government contributes to every societys goal for development. It
puts forward matters that may be changed for the better and ideas that
may be deliberated on to attain that purpose. Necessarily, it also makes
the government accountable for acts that violate constitutionally
protected rights.
In 1998, Osmea v. COMELEC found Section 11(b) of Republic Act No.
6646, which prohibits mass media from selling print space and air time for
campaign except to the COMELEC, to be a democracy-enhancing
measure.216 This court mentioned how "discussion of public issues and
debate on the qualifications of candidates in an election are essential to
the proper functioning of the government established by our
Constitution."217
As pointed out by petitioners, "speech serves one of its greatest public
purposes in the context of elections when the free exercise thereof
informs the people what the issues are, and who are supporting what
issues."218 At the heart of democracy is every advocates right to make
known what the people need to know,219 while the meaningful exercise
of ones right of suffrage includes the right of every voter to know what
they need to know in order to make their choice.
Thus, in Adiong v. COMELEC,220 this court discussed the importance of
debate on public issues, and the freedom of expression especially in
relation to information that ensures the meaningful exercise of the right of
suffrage:
We have adopted the principle that debate on public issues should be
uninhibited, robust, and wide open and that it may well include vehement,
caustic and sometimes unpleasantly sharp attacks on government and
public officials. Too many restrictions will deny to people the robust,
uninhibited, and wide open debate, the generating of interest essential if
our elections will truly be free, clean and honest.
We have also ruled that the preferred freedom of expression calls all the
more for the utmost respect when what may be curtailed is the
dissemination of information to make more meaningful the equally vital
right of suffrage.221 (Emphasis supplied, citations omitted)
Speech with political consequences isat the core of the freedom of
expression and must be protected by this court.
Justice Brion pointed out that freedomof expression "is not the god of
rights to which all other rights and even government protection of state
interest must bow."222
The right to freedom of expression isindeed not absolute. Even some
forms of protected speech are still subjectto some restrictions. The degree
of restriction may depend on whether the regulation is content-based or
content-neutral.223 Content-based regulations can either be based on the
viewpoint of the speaker or the subject of the expression.
II.B.6
Content-based regulation
COMELEC contends that the order for removal of the tarpaulin is a
content-neutral regulation. The order was made simply because
petitioners failed to comply with the maximum size limitation for lawful
election propaganda.224
On the other hand, petitioners argue that the present size regulation is
content-based as it applies only to political speech and not to other forms
of speech such as commercial speech.225 "[A]ssuming arguendo that the
size restriction sought to be applied . . . is a mere time, place, and manner
regulation, its still unconstitutional for lack of a clear and reasonable
nexus with a constitutionally sanctioned objective."226
The regulation may reasonably be considered as either content-neutral or
content-based.227 Regardless, the disposition of this case will be the
same. Generally, compared with other forms of speech, the proposed
speech is content-based.
As pointed out by petitioners, the interpretation of COMELEC contained in
the questioned order applies only to posters and tarpaulins that may
affect the elections because they deliver opinions that shape both their
choices. It does not cover, for instance, commercial speech.
Worse, COMELEC does not point to a definite view of what kind of
expression of non-candidates will be adjudged as "election paraphernalia."
There are no existing bright lines to categorize speech as election-related
and those that are not. This is especially true when citizens will want to
use their resources to be able to raise public issues that should be tackled
by the candidates as what has happened in this case. COMELECs
discretion to limit speech in this case is fundamentally unbridled.
Size limitations during elections hit ata core part of expression. The
content of the tarpaulin is not easily divorced from the size of its medium.
Content-based regulation bears a heavy presumption of invalidity, and this
court has used the clear and present danger rule as measure.228 Thus, in
Chavez v. Gonzales:
A content-based regulation, however, bears a heavy presumption of
invalidity and is measured against the clear and present danger rule. The
latter will pass constitutional muster only if justified by a compelling
reason, and the restrictions imposedare neither overbroad nor vague.229
(Citations omitted)
Under this rule, "the evil consequences sought to be prevented must be
substantive, extremely serious and the degree of imminence extremely
high."230 "Only when the challenged act has overcome the clear and
present danger rule will it pass constitutional muster, with the
government having the burden of overcoming the presumed
unconstitutionality."231
Even with the clear and present danger test, respondents failed to justify
the regulation. There is no compelling and substantial state interest
endangered by the posting of the tarpaulinas to justify curtailment of the
right of freedom of expression. There is no reason for the state to
minimize the right of non-candidate petitioners to post the tarpaulin in
their private property. The size of the tarpaulin does not affect anyone
elses constitutional rights.
Content-based restraint or censorship refers to restrictions "based on the
subject matter of the utterance or speech."232 In contrast, content-
neutral regulation includes controls merely on the incidents of the speech
such as time, place, or manner of the speech.233
This court has attempted to define "content-neutral" restraints starting
with the 1948 case of Primicias v. Fugoso.234 The ordinance in this case
was construed to grant the Mayor discretion only to determine the public
places that may be used for the procession ormeeting, but not the power
to refuse the issuance of a permit for such procession or meeting.235 This
court explained that free speech and peaceful assembly are "not absolute
for it may be so regulated that it shall not beinjurious to the equal
enjoyment of others having equal rights, nor injurious to the rights of the
community or society."236
The earlier case of Calalang v. Williams237 involved the National Traffic
Commission resolution that prohibited the passing of animal-drawn
vehicles along certain roads at specific hours.238 This court similarly
discussed police power in that the assailed rules carry outthe legislative
policy that "aims to promote safe transit upon and avoid obstructions on
national roads, in the interest and convenience of the public."239
As early as 1907, United States v. Apurado240 recognized that "more or
less disorder will mark the public assembly of the people to protest against
grievances whether real or imaginary, because on such occasions feeling is
always wrought to a high pitch of excitement. . . ."241 It is with this
backdrop that the state is justified in imposing restrictions on incidental
matters as time, place, and manner of the speech.
In the landmark case of Reyes v. Bagatsing, this court summarized the
steps that permit applicants must follow which include informing the
licensing authority ahead of time as regards the date, public place, and
time of the assembly.242 This would afford the public official time to
inform applicants if there would be valid objections, provided that the
clear and present danger test is the standard used for his decision and the
applicants are given the opportunity to be heard.243 This ruling was
practically codified in Batas Pambansa No. 880, otherwise known as the
Public Assembly Act of 1985.
Subsequent jurisprudence have upheld Batas Pambansa No. 880 as a valid
content-neutral regulation. In the 2006 case of Bayan v. Ermita,244 this
court discussed how Batas Pambansa No. 880 does not prohibit
assemblies but simply regulates their time, place, and manner.245 In
2010, this court found in Integrated Bar of the Philippines v. Atienza246
that respondent Mayor Atienza committed grave abuse of discretion when
he modified the rally permit by changing the venue from Mendiola Bridge
to Plaza Miranda without first affording petitioners the opportunity to be
heard.247
We reiterate that the regulation involved at bar is content-based. The
tarpaulin content is not easily divorced from the size of its medium.
II.B.7
Justice Carpio and Justice Perlas-Bernabe suggest that the provisions
imposing a size limit for tarpaulins are content-neutral regulations as these
"restrict the mannerby which speech is relayed but not the content of
what is conveyed."248
If we apply the test for content-neutral regulation, the questioned acts of
COMELEC will not pass the three requirements for evaluating such
restraints on freedom of speech.249 "When the speech restraints take the
form of a content-neutral regulation, only a substantial governmental
interest is required for its validity,"250 and it is subject only to the
intermediate approach.251
This intermediate approach is based on the test that we have prescribed in
several cases.252 A content-neutral government regulation is sufficiently
justified:
[1] if it is within the constitutional power of the Government; [2] if it
furthers an important or substantial governmental interest; [3] if the
governmental interest is unrelated to the suppression of free expression;
and [4] if the incident restriction on alleged [freedom of speech &
expression] is no greater than is essential to the furtherance of that
interest.253
On the first requisite, it is not within the constitutional powers of the
COMELEC to regulate the tarpaulin. As discussed earlier, this is protected
speech by petitioners who are non-candidates. On the second
requirement, not only must the governmental interest be important or
substantial, it must also be compelling as to justify the restrictions made.
Compelling governmental interest would include constitutionally declared
principles. We have held, for example, that "the welfare of children and
the States mandate to protect and care for them, as parens patriae,254
constitute a substantial and compelling government interest in regulating .
. . utterances in TV broadcast."255
Respondent invokes its constitutional mandate to ensure equal
opportunity for public information campaigns among candidates in
connection with the holding of a free, orderly, honest, peaceful, and
credible election.256
Justice Brion in his dissenting opinion discussed that "[s]ize limits to
posters are necessary to ensure equality of public information campaigns
among candidates, as allowing posters with different sizes gives
candidates and their supporters the incentive to post larger posters[,]
[and] [t]his places candidates with more money and/or with deep-pocket
supporters at an undue advantage against candidates with more humble
financial capabilities."257
First, Adiong v. COMELEC has held that this interest is "not as important as
the right of [a private citizen] to freely express his choice and exercise his
right of free speech."258 In any case, faced with both rights to freedom of
speech and equality, a prudent course would be to "try to resolve the
tension in a way that protects the right of participation."259
Second, the pertinent election lawsrelated to private property only require
that the private property owners consent be obtained when posting
election propaganda in the property.260 This is consistent with the
fundamental right against deprivation of property without due process of
law.261 The present facts do not involve such posting of election
propaganda absent consent from the property owner. Thus, this
regulation does not apply in this case.
Respondents likewise cite the Constitution262 on their authority to
recommend effective measures to minimize election spending.
Specifically, Article IX-C, Section 2(7) provides:
Sec. 2. The Commission on Elections shall exercise the following powers
and functions:
....
(7) Recommend to the Congress effective measures to minimize election
spending, including limitation of places where propaganda materials shall
be posted, and to prevent and penalize all forms of election frauds,
offenses, malpractices, and nuisance candidates. (Emphasis supplied) This
does not qualify as a compelling and substantial government interest to
justify regulation of the preferred right to freedom of expression.
The assailed issuances for the removal of the tarpaulin are based on the
two feet (2) by three feet (3) size limitation under Section 6(c) of
COMELEC Resolution No. 9615. This resolution implements the Fair
Election Act that provides for the same size limitation.263
This court held in Adiong v. COMELEC that "[c]ompared to the paramount
interest of the State in guaranteeing freedom of expression, any financial
considerations behind the regulation are of marginal significance."264 In
fact, speech with political consequences, as in this case, should be
encouraged and not curtailed. As petitioners pointed out, the size
limitation will not serve the objective of minimizing election spending
considering there is no limit on the number of tarpaulins that may be
posted.265
The third requisite is likewise lacking. We look not only at the legislative
intent or motive in imposing the restriction, but more so at the effects of
such restriction, if implemented. The restriction must not be narrowly
tailored to achieve the purpose. It must be demonstrable. It must allow
alternative avenues for the actor to make speech.
In this case, the size regulation is not unrelated to the suppression of
speech. Limiting the maximum sizeof the tarpaulin would render
ineffective petitioners message and violate their right to exercise freedom
of expression.
The COMELECs act of requiring the removal of the tarpaulin has the effect
of dissuading expressions with political consequences. These should be
encouraged, more so when exercised to make more meaningful the
equally important right to suffrage.
The restriction in the present case does not pass even the lower test of
intermediate scrutiny for content-neutral regulations.
The action of the COMELEC in thiscase is a strong deterrent to further
speech by the electorate. Given the stature of petitioners and their
message, there are indicators that this will cause a "chilling effect" on
robust discussion during elections.
The form of expression is just as important as the message itself. In the
words of Marshall McLuhan, "the medium is the message."266 McLuhans
colleague and mentor Harold Innis has earlier asserted that "the materials
on which words were written down have often counted for more than the
words themselves."267
III
Freedom of expression and equality
III.A
The possibility of abuse
Of course, candidates and political parties do solicit the help of private
individuals for the endorsement of their electoral campaigns.
On the one extreme, this can take illicit forms such as when endorsement
materials in the form of tarpaulins, posters, or media advertisements are
made ostensibly by "friends" but in reality are really paid for by the
candidate or political party. This skirts the constitutional value that
provides for equal opportunities for all candidates.
However, as agreed by the parties during the oral arguments in this case,
this is not the situation that confronts us. In such cases, it will simply be a
matter for investigation and proof of fraud on the part of the COMELEC.
The guarantee of freedom of expression to individuals without any
relationship to any political candidate should not be held hostage by the
possibility of abuse by those seeking to be elected. It is true that there can
be underhanded, covert, or illicit dealings so as to hide the candidates real
levels of expenditures. However, labelling all expressions of private parties
that tend to have an effect on the debate in the elections as election
paraphernalia would be too broad a remedy that can stifle genuine speech
like in this case. Instead, to address this evil, better and more effective
enforcement will be the least restrictive means to the fundamental
freedom.
On the other extreme, moved by the credentials and the message of a
candidate, others will spend their own resources in order to lend support
for the campaigns. This may be without agreement between the speaker
and the candidate or his or her political party. In lieu of donating funds to
the campaign, they will instead use their resources directly in a way that
the candidate or political party would have doneso. This may effectively
skirt the constitutional and statutory limits of campaign spending.
Again, this is not the situation in this case.
The message of petitioners in thiscase will certainly not be what
candidates and political parties will carry in their election posters or media
ads. The message of petitioner, taken as a whole, is an advocacy of a social
issue that it deeply believes. Through rhetorical devices, it communicates
the desire of Diocese that the positions of those who run for a political
position on this social issue be determinative of how the public will vote. It
primarily advocates a stand on a social issue; only secondarily even
almost incidentally will cause the election or non-election of a
candidate.
The twin tarpaulins consist of satire of political parties. Satire is a "literary
form that employs such devices as sarcasm, irony and ridicule to deride
prevailing vices or follies,"268 and this may target any individual or group
in society, private and government alike. It seeks to effectively
communicate a greater purpose, often used for "political and social
criticism"269 "because it tears down facades, deflates stuffed shirts, and
unmasks hypocrisy. . . . Nothing is more thoroughly democratic than to
have the high-and-mighty lampooned and spoofed."270 Northrop Frye,
wellknown in this literary field, claimed that satire had two defining
features: "one is wit or humor founded on fantasy or a sense of the
grotesque and absurd, the other is an object of attack."271 Thus, satire
frequently uses exaggeration, analogy, and other rhetorical devices.
The tarpaulins exaggerate. Surely, "Team Patay" does not refer to a list of
dead individuals nor could the Archbishop of the Diocese of Bacolod have
intended it to mean that the entire plan of the candidates in his list was to
cause death intentionally. The tarpaulin caricatures political parties and
parodies the intention of those in the list. Furthermore, the list of "Team
Patay" is juxtaposed with the list of "Team Buhay" that further emphasizes
the theme of its author: Reproductive health is an important marker for
the church of petitioners to endorse.
The messages in the tarpaulins are different from the usual messages of
candidates. Election paraphernalia from candidates and political parties
are more declarative and descriptive and contain no sophisticated literary
allusion to any social objective. Thus, they usually simply exhort the public
to vote for a person with a brief description of the attributes of the
candidate. For example "Vote for [x], Sipag at Tiyaga," "Vote for [y], Mr.
Palengke," or "Vote for [z], Iba kami sa Makati."
This courts construction of the guarantee of freedom of expression has
always been wary of censorship or subsequent punishment that entails
evaluation of the speakers viewpoint or the content of ones speech. This
is especially true when the expression involved has political consequences.
In this case, it hopes to affect the type of deliberation that happens during
elections. A becoming humility on the part of any human institution no
matter how endowed with the secular ability to decide legal controversies
with finality entails that we are not the keepers of all wisdom.
Humanitys lack of omniscience, even acting collectively, provides space
for the weakest dissent. Tolerance has always been a libertarian virtue
whose version is embedded in our Billof Rights. There are occasional
heretics of yesterday that have become our visionaries. Heterodoxies have
always given us pause. The unforgiving but insistent nuance that the
majority surely and comfortably disregards provides us with the checks
upon reality that may soon evolve into creative solutions to grave social
problems. This is the utilitarian version. It could also be that it is just part
of human necessity to evolve through being able to express or
communicate.
However, the Constitution we interpret is not a theoretical document. It
contains other provisions which, taken together with the guarantee of free
expression, enhances each others value. Among these are the provisions
that acknowledge the idea of equality. In shaping doctrine construing
these constitutional values, this court needs to exercise extraordinary
prudence and produce narrowly tailored guidance fit to the facts as given
so as not to unwittingly cause the undesired effect of diluting freedoms as
exercised in reality and, thus, render them meaningless.
III.B.
Speech and equality:
Some considerations We first establish that there are two paradigms of
free speech that separate at the point of giving priority to equality vis--vis
liberty.272
In an equality-based approach, "politically disadvantaged speech prevails
over regulation[,] but regulation promoting political equality prevails over
speech."273 This view allows the government leeway to redistribute or
equalize speaking power, such as protecting, even implicitly subsidizing,
unpopular or dissenting voices often systematically subdued within
societys ideological ladder.274 This view acknowledges that there are
dominant political actors who, through authority, power, resources,
identity, or status, have capabilities that may drown out the messages of
others. This is especially true in a developing or emerging economy that is
part of the majoritarian world like ours.
The question of libertarian tolerance
This balance between equality and the ability to express so as to find ones
authentic self or to participate in the self determination of ones
communities is not new only to law. It has always been a philosophical
problematique.
In his seminal work, Repressive Tolerance, philosopher and social theorist
Herbert Marcuse recognized how institutionalized inequality exists as a
background limitation, rendering freedoms exercised within such
limitation as merely "protect[ing] the already established machinery of
discrimination."275 In his view, any improvement "in the normal course of
events" within an unequal society, without subversion, only strengthens
existing interests of those in power and control.276
In other words, abstract guarantees of fundamental rights like freedom of
expression may become meaningless if not taken in a real context. This
tendency to tackle rights in the abstract compromises liberties. In his
words:
Liberty is self-determination, autonomythis is almost a tautology, but a
tautology which results from a whole series of synthetic judgments. It
stipulates the ability to determine ones own life: to be able to determine
what to do and what not to do, what to suffer and what not. But the
subject of this autonomy is never the contingent, private individual as that
which he actually is or happens to be; it is rather the individual as a human
being who is capable of being free with the others. And the problem of
making possible such a harmony between every individual liberty and the
other is not that of finding a compromise between competitors, or
between freedom and law, between general and individual interest,
common and private welfare in an established society, but of creating the
society in which man is no longer enslaved by institutions which vitiate
self-determination from the beginning. In other words, freedom is still to
be created even for the freest of the existing societies.277 (Emphasis in
the original)
Marcuse suggests that the democratic argument with all opinions
presented to and deliberated by the people "implies a necessary
condition, namely, that the people must be capable of deliberating and
choosing on the basis of knowledge, that they must have access to
authentic information, and that, on this basis, their evaluation must be the
result of autonomous thought."278 He submits that "[d]ifferent opinions
and philosophies can no longer compete peacefully for adherence and
persuasion on rational grounds: the marketplace of ideas is organized
and delimited by those who determine the national and the individual
interest."279 A slant toward left manifests from his belief that "there is a
natural right of resistance for oppressed and overpowered minorities to
use extralegal means if the legal ones have proved to be inadequate."280
Marcuse, thus, stands for an equality that breaks away and transcends
from established hierarchies, power structures, and indoctrinations. The
tolerance of libertarian society he refers to as "repressive tolerance."
Legal scholars
The 20th century also bears witness to strong support from legal scholars
for "stringent protections of expressive liberty,"281 especially by political
egalitarians. Considerations such as "expressive, deliberative, and
informational interests,"282 costs or the price of expression, and
background facts, when taken together, produce bases for a system of
stringent protections for expressive liberties.283
Many legal scholars discuss the interest and value of expressive liberties.
Justice Brandeis proposed that "public discussion is a political duty."284
Cass Sustein placed political speech on the upper tier of his twotier model
for freedom of expression, thus, warranting stringent protection.285 He
defined political speech as "both intended and received as a contribution
to public deliberation about some issue."286
But this is usually related also tofair access to opportunities for such
liberties.287 Fair access to opportunity is suggested to mean substantive
equality and not mere formal equalitysince "favorable conditions for
realizing the expressive interest will include some assurance of the
resources required for expression and some guarantee that efforts to
express views on matters of common concern will not be drowned out by
the speech of betterendowed citizens."288 Justice Brandeis solution is to
"remedy the harms of speech with more speech."289 This view moves
away from playing down the danger as merely exaggerated, toward
"tak[ing] the costs seriously and embrac[ing] expression as the preferred
strategy for addressing them."290 However, in some cases, the idea of
more speech may not be enough. Professor Laurence Tribe observed the
need for context and "the specification of substantive values before
[equality] has full meaning."291 Professor Catherine A. MacKinnon adds
that "equality continues to be viewed in a formal rather than a substantive
sense."292 Thus, more speech can only mean more speech from the few
who are dominant rather than those who are not.
Our jurisprudence
This court has tackled these issues.
Osmea v. COMELEC affirmed National Press Club v. COMELEC on the
validity of Section 11(b) ofthe Electoral Reforms Law of 1987.293 This
section "prohibits mass media from selling or giving free of charge print
space or air time for campaign or other political purposes, except to the
Commission on Elections."294 This court explained that this provision only
regulates the time and manner of advertising in order to ensure media
equality among candidates.295 This court grounded this measure on
constitutional provisions mandating political equality:296 Article IX-C,
Section 4
Section 4. The Commission may, during the election period, supervise or
regulate the enjoyment or utilization of all franchises or permits for the
operation of transportation and other public utilities, media of
communication or information, all grants, special privileges, or
concessions granted by the Government or any subdivision, agency, or
instrumentality thereof, including any government-owned or controlled
corporation or its subsidiary. Such supervision or regulation shall aim to
ensure equal opportunity, time, and space, and the right to reply,
including reasonable, equal rates therefor, for public information
campaigns and forums among candidates in connection with the objective
of holding free, orderly, honest, peaceful, and credible elections.
(Emphasis supplied)
Article XIII, Section 1
Section 1. The Congress shall give highest priorityto the enactment of
measures that protect and enhance the right of all the people to human
dignity, reducesocial, economic, and political inequalities, and remove
cultural inequities by equitably diffusing wealth and political power for the
common good.
To this end, the State shall regulate the acquisition, ownership, use, and
disposition of property and its increments. (Emphasis supplied)
Article II, Section 26
Section 26. The State shall guarantee equal access to opportunities for
public service, and prohibit political dynasties as may be defined by law.
(Emphasis supplied)
Thus, in these cases, we have acknowledged the Constitutions guarantee
for more substantive expressive freedoms that take equality of
opportunities into consideration during elections.
The other view
However, there is also the other view. This is that considerations of
equality of opportunity or equality inthe ability of citizens as speakers
should not have a bearing in free speech doctrine. Under this view,
"members of the public are trusted to make their own individual
evaluations of speech, and government is forbidden to intervene for
paternalistic or redistributive reasons . . . [thus,] ideas are best left to a
freely competitive ideological market."297 This is consistent with the
libertarian suspicion on the use of viewpoint as well as content to evaluate
the constitutional validity or invalidity of speech.
The textual basis of this view is that the constitutional provision uses
negative rather than affirmative language. It uses speech as its subject
and not speakers.298 Consequently, the Constitution protects free
speech per se, indifferent to the types, status, or associations of its
speakers.299 Pursuant to this, "government must leave speakers and
listeners in the private order to their own devices in sorting out the
relative influence of speech."300
Justice Romeros dissenting opinion in Osmea v. COMELEC formulates
this view that freedom of speech includes "not only the right to express
ones views, but also other cognate rights relevant to the free
communication [of] ideas, not excluding the right to be informed on
matters of public concern."301 She adds:
And since so many imponderables may affect the outcome of elections
qualifications of voters and candidates, education, means of
transportation, health, public discussion, private animosities, the weather,
the threshold of a voters resistance to pressure the utmost ventilation
of opinion of men and issues, through assembly, association and
organizations, both by the candidate and the voter, becomes a sine qua
non for elections to truly reflect the will of the electorate.302 (Emphasis
supplied)
Justice Romeros dissenting opinion cited an American case, if only to
emphasize free speech primacy such that"courts, as a rule are wary to
impose greater restrictions as to any attempt to curtail speeches with
political content,"303 thus:
the concept that the government may restrict the speech of some
elements in our society in order to enhance the relative voice of the others
is wholly foreign to the First Amendment which was designed to "secure
the widest possible dissemination of information from diverse and
antagonistic sources" and "to assure unfettered interchange of ideas for
the bringing about of political and social changes desired by the
people."304
This echoes Justice Oliver Wendell Holmes submission "that the market
place of ideas is still the best alternative to censorship."305
Parenthetically and just to provide the whole detail of the argument, the
majority of the US Supreme Court in the campaign expenditures case of
Buckley v. Valeo "condemned restrictions (even if content-neutral) on
expressive liberty imposed in the name of enhanc[ing] the relative voice
of others and thereby equaliz[ing] access to the political arena."306 The
majority did not use the equality-based paradigm.
One flaw of campaign expenditurelimits is that "any limit placed on the
amount which a person can speak, which takes out of his exclusive
judgment the decision of when enough is enough, deprives him of his free
speech."307
Another flaw is how "[a]ny quantitative limitation on political campaigning
inherently constricts the sum of public information and runs counter to
our profound national commitment that debate on public issues should
be uninhibited, robust, and wide-open."308
In fact, "[c]onstraining those who have funds or have been able to raise
funds does not ease the plight of those without funds in the first place . . .
[and] even if ones main concern isslowing the increase in political costs, it
may be more effective torely on market forces toachieve that result than
on active legal intervention."309 According to Herbert Alexander, "[t]o
oppose limitations is not necessarily to argue that the skys the limit
[because in] any campaign there are saturation levels and a point where
spending no longer pays off in votes per dollar."310
III. C.
When private speech amounts
to election paraphernalia
The scope of the guarantee of free expression takes into consideration the
constitutional respect for human potentiality and the effect of speech. It
valorizes the ability of human beings to express and their necessity to
relate. On the other hand, a complete guarantee must also take into
consideration the effects it will have in a deliberative democracy. Skewed
distribution of resources as well as the cultural hegemony of the majority
may have the effect of drowning out the speech and the messages of
those in the minority. In a sense, social inequality does have its effect on
the exercise and effect of the guarantee of free speech. Those who have
more will have better access to media that reaches a wider audience than
those who have less. Those who espouse the more popular ideas will have
better reception than the subversive and the dissenters of society.To be
really heard and understood, the marginalized view normally undergoes
its own degree of struggle.
The traditional view has been to tolerate the viewpoint of the speaker and
the content of his or her expression. This view, thus, restricts laws or
regulation that allows public officials to make judgments of the value of
such viewpoint or message content. This should still be the principal
approach.
However, the requirements of the Constitution regarding equality in
opportunity must provide limits to some expression during electoral
campaigns.
Thus clearly, regulation of speech in the context of electoral campaigns
made by candidates or the members of their political parties or their
political parties may be regulated as to time, place, and manner. This is the
effect of our rulings in Osmea v. COMELEC and National Press Club v.
COMELEC.
Regulation of speech in the context of electoral campaigns made by
persons who are not candidates or who do not speak as members of a
political party which are, taken as a whole, principally advocacies of a
social issue that the public must consider during elections is
unconstitutional. Such regulation is inconsistent with the guarantee of
according the fullest possible range of opinions coming from the
electorate including those that can catalyze candid, uninhibited, and
robust debate in the criteria for the choice of a candidate.
This does not mean that there cannot be a specie of speech by a private
citizen which will not amount toan election paraphernalia to be validly
regulated by law.
Regulation of election paraphernalia will still be constitutionally valid if it
reaches into speech of persons who are not candidates or who do not
speak as members of a political party if they are not candidates, only if
what is regulated is declarative speech that, taken as a whole, has for its
principal object the endorsement of a candidate only. The regulation (a)
should be provided by law, (b) reasonable, (c) narrowly tailored to meet
the objective of enhancing the opportunity of all candidates to be heard
and considering the primacy of the guarantee of free expression, and (d)
demonstrably the least restrictive means to achieve that object. The
regulation must only be with respect to the time, place, and manner of the
rendition of the message. In no situation may the speech be prohibited or
censored onthe basis of its content. For this purpose, it will notmatter
whether the speech is made with or on private property.
This is not the situation, however, in this case for two reasons. First, as
discussed, the principal message in the twin tarpaulins of petitioners
consists of a social advocacy.
Second, as pointed out in the concurring opinion of Justice Antonio Carpio,
the present law Section 3.3 of Republic Act No. 9006 and Section 6(c) of
COMELEC Resolution No. 9615 if applied to this case, will not pass the
test of reasonability. A fixed size for election posters or tarpaulins without
any relation to the distance from the intended average audience will be
arbitrary. At certain distances, posters measuring 2 by 3 feet could no
longer be read by the general public and, hence, would render speech
meaningless. It will amount to the abridgement of speech with political
consequences.
IV
Right to property
Other than the right to freedom of expression311 and the meaningful
exercise of the right to suffrage,312 the present case also involves ones
right to property.313
Respondents argue that it is the right of the state to prevent the
circumvention of regulations relating to election propaganda by applying
such regulations to private individuals.314 Certainly, any provision or
regulation can be circumvented. But we are not confronted with this
possibility. Respondents agree that the tarpaulin in question belongs to
petitioners. Respondents have also agreed, during the oral arguments,
that petitioners were neither commissioned nor paid by any candidate or
political party to post the material on their walls.
Even though the tarpaulin is readily seen by the public, the tarpaulin
remains the private property of petitioners. Their right to use their
property is likewise protected by the Constitution.
In Philippine Communications Satellite Corporation v. Alcuaz:315
Any regulation, therefore, which operates as an effective confiscation of
private property or constitutes an arbitrary or unreasonable infringement
of property rights is void, because it is repugnant to the constitutional
guaranties of due process and equal protection of the laws.316 (Citation
omitted)
This court in Adiong held that a restriction that regulates where decals and
stickers should be posted is "so broad that it encompasses even the
citizens private property."317 Consequently, it violates Article III, Section
1 of the Constitution which provides thatno person shall be deprived of his
property without due process of law. This court explained:
Property is more than the mere thing which a person owns, it includes the
right to acquire, use, and dispose of it; and the Constitution, in the 14th
Amendment, protects these essential attributes.
Property is more than the mere thing which a person owns. It is
elementary that it includes the right to acquire, use, and dispose of it. The
Constitution protects these essential attributes of property. Holden v.
Hardy, 169 U.S. 366, 391, 41 L. ed. 780, 790, 18 Sup. Ct. Rep. 383. Property
consists of the free use, enjoyment, and disposal of a persons acquisitions
without control or diminution save by the law of the land. 1 Cooleys Bl.
Com. 127. (Buchanan v. Warley 245 US 60 [1917])318
This court ruled that the regulation in Adiong violates private property
rights:
The right to property may be subject to a greater degree of regulation but
when this right is joined by a "liberty" interest, the burden of justification
on the part of the Government must be exceptionally convincing and
irrefutable. The burden is not met in this case.
Section 11 of Rep. Act 6646 is so encompassing and invasive that it
prohibits the posting or display of election propaganda in any place,
whether public or private, except inthe common poster areas sanctioned
by COMELEC. This means that a private person cannot post his own
crudely prepared personal poster on his own front dooror on a post in his
yard. While the COMELEC will certainly never require the absurd, there are
no limits to what overzealous and partisan police officers, armed with a
copy of the statute or regulation, may do.319 Respondents ordered
petitioners, who are private citizens, to remove the tarpaulin from their
own property. The absurdity of the situation is in itself an indication of the
unconstitutionality of COMELECs interpretation of its powers.
Freedom of expression can be intimately related with the right to
property. There may be no expression when there is no place where the
expression may be made. COMELECs infringement upon petitioners
property rights as in the present case also reaches out to infringement on
their fundamental right to speech.
Respondents have not demonstrated thatthe present state interest they
seek to promote justifies the intrusion into petitioners property rights.
Election laws and regulations must be reasonable. It must also
acknowledge a private individuals right to exercise property rights.
Otherwise, the due process clause will be violated.
COMELEC Resolution No. 9615 and the Fair Election Act intend to prevent
the posting of election propaganda in private property without the
consent of the owners of such private property. COMELEC has incorrectly
implemented these regulations. Consistent with our ruling in Adiong, we
find that the act of respondents in seeking to restrain petitioners from
posting the tarpaulin in their own private property is an impermissible
encroachments on the right to property.
V As aptly argued by COMELEC, however, the tarpaulin, on its face, "does
Tarpaulin and its message are not religious speech
We proceed to the last issues pertaining to whether the COMELEC in
issuing the questioned notice and letter violated the right of petitioners to
the free exercise of their religion.
At the outset, the Constitution mandates the separation of church and
state.320 This takes many forms. Article III, Section 5 of the Constitution,
for instance provides:
Section 5. No law shall be made respecting an establishment of religion, or
prohibiting the free exercise thereof. The free exercise and enjoyment of
religious profession and worship, without discrimination or preference,
shall forever be allowed. Noreligious test shall be required for the exercise
of civil or political rights.
There are two aspects of this provision.321 The first is the none
stablishment clause.322 Second is the free exercise and enjoyment of
religious profession and worship.323
The second aspect is atissue in this case.
Clearly, not all acts done by those who are priests, bishops, ustadz, imams,
or any other religious make such act immune from any secular
regulation.324 The religious also have a secular existence. They exist
within a society that is regulated by law.
The Bishop of Bacolod caused the posting of the tarpaulin. But not all acts
of a bishop amounts to religious expression. This notwithstanding
petitioners claim that "the views and position of the petitioners, the
Bishop and the Diocese of Bacolod, on the RH Bill is inextricably connected
to its Catholic dogma, faith, and moral teachings. . . ."325
The difficulty that often presents itself in these cases stems from the
reality that every act can be motivated by moral, ethical, and religious
considerations. In terms of their effect on the corporeal world, these acts
range from belief, to expressions of these faiths, to religious ceremonies,
and then to acts of a secular character that may, from the point of view of
others who do not share the same faith or may not subscribe to any
religion, may not have any religious bearing.
Definitely, the characterizations ofthe religious of their acts are not
conclusive on this court. Certainly, our powers of adjudication cannot be
blinded by bare claims that acts are religious in nature.
Petitioners erroneously relied on the case of Ebralinag v. The Division
Superintendent of Schools of Cebu326 in claiming that the court
"emphatically" held that the adherents ofa particular religion shall be the
ones to determine whether a particular matter shall be considered
ecclesiastical in nature.327 This court in Ebralinagexempted Jehovahs
Witnesses from participating in the flag ceremony "out of respect for their
religious beliefs, [no matter how] "bizarre" those beliefsmay seem to
others."328 This court found a balance between the assertion of a
religious practice and the compelling necessities of a secular command. It
was an early attempt at accommodation of religious beliefs.
In Estrada v. Escritor,329 this court adopted a policy of benevolent
neutrality:
With religion looked upon with benevolence and not hostility, benevolent
neutrality allows accommodation of religion under certain circumstances.
Accommodations are government policies that take religion specifically
intoaccount not to promote the governments favored form of religion,
but to allow individuals and groups to exercise their religion without
hindrance. Their purpose or effect therefore is to remove a burden on, or
facilitate the exercise of, a persons or institutions religion. As Justice
Brennan explained, the "government [may] take religion into account . . .
to exempt, when possible, from generally applicable governmental
regulation individuals whose religious beliefs and practices would
otherwise thereby be infringed, or to create without state involvement an
atmosphere in which voluntary religious exercise may flourish."330
This court also discussed the Lemon test in that case, such that a
regulation is constitutional when: (1) it has a secular legislative purpose;
(2) it neither advances nor inhibits religion; and (3) it does not foster an
excessive entanglement with religion.331
not convey any religious doctrine of the Catholic church."332 That the
position of the Catholic church appears to coincide with the message of
the tarpaulin regarding the RH Law does not, by itself, bring the expression
within the ambit of religious speech. On the contrary, the tarpaulin clearly
refers to candidates classified under "Team Patay" and "Team Buhay"
according to their respective votes on the RH Law.
The same may be said of petitioners reliance on papal encyclicals to
support their claim that the expression onthe tarpaulin is an ecclesiastical
matter. With all due respect to the Catholic faithful, the church doctrines
relied upon by petitioners are not binding upon this court. The position of
the Catholic religion in the Philippines as regards the RH Law does not
suffice to qualify the posting by one of its members of a tarpaulin as
religious speech solely on such basis. The enumeration of candidates on
the face of the tarpaulin precludes any doubtas to its nature as speech
with political consequences and not religious speech.
Furthermore, the definition of an "ecclesiastical affair" in Austria v.
National Labor Relations Commission333 cited by petitioners finds no
application in the present case. The posting of the tarpaulin does not fall
within the category of matters that are beyond the jurisdiction of civil
courts as enumerated in the Austriacase such as "proceedings for
excommunication, ordinations of religious ministers, administration of
sacraments and other activities withattached religious significance."334
A FINAL NOTE
We maintain sympathies for the COMELEC in attempting to do what it
thought was its duty in this case. However, it was misdirected.
COMELECs general role includes a mandate to ensure equal opportunities
and reduce spending among candidates and their registered political
parties. It is not to regulate or limit the speech of the electorate as it
strives to participate inthe electoral exercise.
The tarpaulin in question may be viewed as producing a caricature of
those who are running for public office.Their message may be construed
generalizations of very complex individuals and party-list organizations.
They are classified into black and white: as belonging to "Team Patay" or
"Team Buhay."
But this caricature, though not agreeable to some, is still protected
speech.
That petitioners chose to categorize them as purveyors of death or of life
on the basis of a single issue and a complex piece of legislation at that
can easily be interpreted as anattempt to stereo type the candidates
and party-list organizations. Not all may agree to the way their thoughts
were expressed, as in fact there are other Catholic dioceses that chose not
to follow the example of petitioners.
Some may have thought that there should be more room to consider
being more broad-minded and non-judgmental. Some may have expected
that the authors would give more space to practice forgiveness and
humility.
But, the Bill of Rights enumerated in our Constitution is an enumeration of
our fundamental liberties. It is not a detailed code that prescribes good
conduct. It provides space for all to be guided by their conscience, not only
in the act that they do to others but also in judgment of the acts of others.
Freedom for the thought we can disagree with can be wielded not only by
those in the minority. This can often be expressed by dominant
institutions, even religious ones. That they made their point dramatically
and in a large way does not necessarily mean that their statements are
true, or that they have basis, or that they have been expressed in good
taste.
Embedded in the tarpaulin, however, are opinions expressed by
petitioners. It is a specie of expression protected by our fundamental law.
It is an expression designed to invite attention, cause debate, and
hopefully, persuade. It may be motivated by the interpretation of
petitioners of their ecclesiastical duty, but their parishioners actions will
have very real secular consequences. Certainly, provocative messages do
matter for the elections.
What is involved in this case is the most sacred of speech forms:
expression by the electorate that tends to rouse the public to debate
contemporary issues. This is not speechby candidates or political parties to
entice votes. It is a portion of the electorate telling candidates the
conditions for their election. It is the substantive content of the right to
suffrage.
This. is a form of speech hopeful of a quality of democracy that we should
all deserve. It is protected as a fundamental and primordial right by our
Constitution. The expression in the medium chosen by petitioners
deserves our protection.
WHEREFORE, the instant petition is GRANTED. The temporary restraining
order previously issued is hereby made permanent. The act of the
COMELEC in issuing the assailed notice dated February 22, 2013 and letter
dated February 27, 2013 is declared unconstitutional.
SO ORDERED.
FIRST DIVISION
[G.R. No. 156295. September 23, 2003]
MARCELO R. SORIANO, petitioner, vs. SPOUSES RICARDO and ROSALINA
GALIT, respondents.
DECISION
YNARES-SANTIAGO, J.:
Petitioner was issued a writ of possession in Civil Case No. 6643[1] for Sum
of Money by the Regional Trial Court of Balanga, Bataan, Branch 1. The
writ of possession was, however, nullified by the Court of Appeals in CA-
G.R. SP No. 65891[2] because it included a parcel of land which was not
among those explicitly enumerated in the Certificate of Sale issued by the
Deputy Sheriff, but on which stand the immovables covered by the said
Certificate. Petitioner contends that the sale of these immovables
necessarily encompasses the land on which they stand.
Dissatisfied, petitioner filed the instant petition for review on certiorari.
Respondent Ricardo Galit contracted a loan from petitioner Marcelo
Soriano, in the total sum of P480,000.00, evidenced by four promissory
notes in the amount of P120,000.00 each dated August 2, 1996;[3] August
15, 1996;[4] September 4, 1996[5] and September 14, 1996.[6] This loan
was secured by a real estate mortgage over a parcel of land covered by
Original Certificate of Title No. 569.[7] After he failed to pay his obligation,
Soriano filed a complaint for sum of money against him with the Regional
Trial Court of Balanga City, Branch 1, which was docketed as Civil Case No.
6643.[8]
Respondents, the Spouses Ricardo and Rosalina Galit, failed to file their
answer. Hence, upon motion of Marcelo Soriano, the trial court declared
the spouses in default and proceeded to receive evidence for petitioner
Soriano ex parte.
On July 7, 1997, the Regional Trial Court of Balanga City, Branch 1
rendered judgment[9] in favor of petitioner Soriano, the dispositive
portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and
against the defendant ordering the latter to pay:
1. the plaintiff the amount of P350,000.00 plus 12% interest to be
computed from the dates of maturity of the promissory notes until the
same are fully paid;
2. the plaintiff P20,000.00, as attorneys fees; and
3. the costs of suit.
SO ORDERED.[10]
The judgment became final and executory. Accordingly, the trial court
issued a writ of execution in due course, by virtue of which, Deputy Sheriff
Renato E. Robles levied on the following real properties of the Galit
spouses:
1. A parcel of land covered by Original Certificate of Title No. T-569
(Homestead Patent No. 14692) situated in the Bo. of Tapulac, Orani,
Bataan. Bounded on the SW, along line 1-2 by Lot No. 3, Cad. 145;
containing an area of THIRTY FIVE THOUSAND SEVEN HUNDRED FIFTY
NINE (35,759) SQUARE METERS, more or less x x x;
2. STORE/HOUSE CONSTRUCTED on Lot No. 1103 made of strong materials
G.I. roofing situated at Centro I, Orani, Bataan, x x x containing an area of
30 sq. meters, more or less x x x (constructed on TCT No. T40785);
3. BODEGA constructed on Lot 1103, made of strong materials, G.I.
roofing, situated in Centro I, Orani, Bataan, x x x with a floor area of 42.75
sq. m. more or less x x x.[11]
At the sale of the above-enumerated properties at public auction held on
December 23, 1998, petitioner was the highest and only bidder with a bid
price of P483,000.00. Accordingly, on February 4, 1999, Deputy Sheriff
Robles issued a Certificate of Sale of Execution of Real Property,[12] which
reads:
CERTIFICATE OF SALE ON EXECUTION OF REAL PROPERTY
TO ALL WHO MAY SEE THESE PRESENTS:
GREETINGS:
I HEREBY that (sic) by virtue of the writ of execution dated October 16,
1998, issued in the above-entitled case by the HON. BENJAMIN T.
VIANZON, ordering the Provincial Sheriff of Bataan or her authorized
Deputy Sheriff to cause to be made (sic) the sum of P350,000.00 plus 12%
interest to be computed from the date of maturity of the promissory notes
until the same are fully paid; P20,000.00 as attorneys fees plus legal
expenses in the implementation of the writ of execution, the undersigned
Deputy Sheriff sold at public auction on December 23, 1998 the rights and
interests of defendants Sps. Ricardo and Rosalina Galit, to the plaintiff
Marcelo Soriano, the highest and only bidder for the amount of FOUR
HNDRED EIGHTY THREE THOUSAND PESOS (P483,000.00, Philippine
Currency), the following real estate properties more particularly described
as follows :
ORIGINAL CERTIFICATE OF TITLE NO. T-569
A parcel of land (Homestead Patent No. 14692) situated in the Bo. of
Tapulac, Orani, Bataan, x x x. Bounded on the SW., along line 1-2 by Lot
No. 3, Cad. 145, containing an area of THIRTY FIVE THOUSAND SEVEN
HUNDRED FIFTY NINE (35,759) SQUARE METERS, more or less x x x
TAX DEC. NO. PROPERTY INDEX NO. 018-09-001-02
STOREHOUSE constructed on Lot 1103, made of strong materials G.I.
roofing situated at Centro I, Orani, Bataan x x x containing an area of 30 sq.
meters, more or less x x (constructed on TCT No. 40785)
TAX DEC. NO. 86 PROPERTY INDEX No. 018-09-001-02
BODEGA constructed on Lot 1103, made of strong materials G.I. roofing
situated in Centro I, Orani, Bataan, x x x with a floor area of 42.75 sq. m.
more or less x x x
IT IS FURTHER CERTIFIED, that the aforesaid highest and lone bidder,
Marcelo Soriano, being the plaintiff did not pay to the Provincial Sheriff of
Bataan the amount of P483,000.00, the sale price of the above-described
property which amount was credited to partial/full satisfaction of the
judgment embodied in the writ of execution.
The period of redemption of the above described real properties together
with all the improvements thereon will expire One (1) year from and after
the registration of this Certificate of Sale with the Register of Deeds.
This Certificate of Sheriffs Sale is issued to the highest and lone bidder,
Marcelo Soriano, under guarantees prescribed by law.

Balanga, Bataan, February 4, 1999.
On April 23, 1999, petitioner caused the registration of the Certificate of
Sale on Execution of Real Property with the Registry of Deeds.
The said Certificate of Sale registered with the Register of Deeds includes
at the dorsal portion thereof the following entry, not found in the
Certificate of Sale on file with Deputy Sheriff Renato E. Robles:[13]
ORIGINAL CERTIFICATE OF TITLE NO. T-40785
A parcel of land (Lot No. 1103 of the Cadastral Survey of Orani) , with the
improvements thereon, situated in the Municipality of Orani, Bounded on
the NE; by Calle P. Gomez; on the E. by Lot No. 1104; on the SE by Calle
Washington; and on the W. by Lot 4102, containing an area of ONE
HUNDRED THIRTY NINE (139) SQUARE METERS, more or less. All points
referred to are indicated on the plan; bearing true; declination 0 deg. 40E.,
date of survey, February 191-March 1920.
On February 23, 2001, ten months from the time the Certificate of Sale on
Execution was registered with the Registry of Deeds, petitioner moved[14]
for the issuance of a writ of possession. He averred that the one-year
period of redemption had elapsed without the respondents having
redeemed the properties sold at public auction; thus, the sale of said
properties had already become final. He also argued that after the lapse of
the redemption period, the titles to the properties should be considered,
for all legal intents and purposes, in his name and favor.[15]
On June 4, 2001, the Regional Trial Court of Balanga City, Branch 1 granted
the motion for issuance of writ of possession.[16] Subsequently, on July
18, 2001, a writ of possession[17] was issued in petitioners favor which
reads:
WRIT OF POSSESSION
Mr. Renato E. Robles
Deputy Sheriff
RTC, Br. 1, Balanga City
Greetings :
WHEREAS on February 3, 2001, the counsel for plaintiff filed Motion for
the Issuance of Writ of Possession;
WHEREAS on June 4, 2001, this court issued an order granting the issuance
of the Writ of Possession;
WHEREFORE, you are hereby commanded to place the herein plaintiff
Marcelo Soriano in possession of the property involved in this case
situated (sic) more particularly described as:
1. STORE HOUSE constructed on Lot No. 1103 situated at Centro 1, Orani,
Bataan covered by TCT No. 40785;
2. BODEGA constructed on Lot No. 1103 with an area of 42.75 square
meters under Tax Declaration No. 86 situated at Centro 1, Orani, Bataan;
3. Original Certificate of Title No. 40785 with an area of 134 square meters
known as Lot No. 1103 of the Cadastral Survey of Orani
against the mortgagor/former owners Sps. Ricardo and Rosalinda (sic)
Galit, her (sic) heirs, successors, assigns and all persons claiming rights and
interests adverse to the petitioner and make a return of this writ every
thirty (30) days from receipt hereof together with all the proceedings
thereon until the same has been fully satisfied.
WITNESS THE HONORABLE BENJAMIN T. VIANZON, Presiding Judge, this
18th day of July 2001, at Balanga City.
(Sgd) GILBERT S. ARGONZA
OIC
Respondents filed a petition for certiorari with the Court of Appeals, which
was docketed as CA-G.R. SP No. 65891, assailing the inclusion of the parcel
of land covered by Transfer Certificate of Title No. T-40785 among the list
of real properties in the writ of possession.[18] Respondents argued that
said property was not among those sold on execution by Deputy Sheriff
Renato E. Robles as reflected in the Certificate of Sale on Execution of Real
Property.
In opposition, petitioner prayed for the dismissal of the petition because
respondent spouses failed to move for the reconsideration of the assailed
order prior to the filing of the petition. Moreover, the proper remedy
against the assailed order of the trial court is an appeal, or a motion to
quash the writ of possession.
On May 13, 2002, the Court of Appeals rendered judgment as follows:
WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the
writ of possession issued by the Regional Trial Court of Balanga City,
Branch 1, on 18 July 2001 is declared NULL and VOID.
In the event that the questioned writ of possession has already been
implemented, the Deputy Sheriff of the Regional Trial Court of Balanga
City, Branch 1, and private respondent Marcelo Soriano are hereby
ordered to cause the redelivery of Transfer Certificate of Title No. T-40785
to the petitioners.
SO ORDERED.[19]
Aggrieved, petitioner now comes to this Court maintaining that
1.) THE SPECIAL CIVIL ACTION OF CERTIORARI UNDER RULE 65 IS NOT THE
PLAIN, SPEEDY AND ADEQUATE REMEDY OF THE RESPONDENTS IN
ASSAILING THE WRIT OF POSSESSION ISSUED BY THE LOWER COURT BUT
THERE WERE STILL OTHER REMEDIES AVAILABLE TO THEM AND WHICH
WERE NOT RESORTED TO LIKE THE FILING OF A MOTION FOR
RECONSIDERATION OR MOTION TO QUASH OR EVEN APPEAL.
2.) THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARAING
THE CERTIFICATE OF SALE ON EXECUTION OF REAL PROPERTY AS NULL
AND VOID AND SUBSEQUENTLY THE WRIT OF POSSESSION BECAUSE THE
SAME IS A PUBLIC DOCUMENT WHICH ENJOYS THE PRESUMPTION OF
REGULARITY AND IT CANNOT BE OVERCOME BY A MERE STRANGE
FEELING THAT SOMETHING IS AMISS ON ITS SURFACE SIMPLY BECAUSE
THE TYPEWRITTEN WORDS ON THE FRONT PAGE AND AT THE DORSAL
PORTION THEREOF IS DIFFERENT OR THAT IT IS UNLIKELY FOR THE SHERIFF
TO USE THE DORSAL PORTION OF THE FIRST PAGE BECAUSE THE SECOND
PAGE IS MERELY HALF FILLED AND THE NOTATION ON THE DORSAL
PORTION COULD STILL BE MADE AT THE SECOND PAGE.
On the first ground, petitioner contends that respondents were not
without remedy before the trial court. He points out that respondents
could have filed a motion for reconsideration of the Order dated June 4,
1999, but they did not do so. Respondents could also have filed an appeal
but they, likewise, did not do so. When the writ of possession was issued,
respondents could have filed a motion to quash the writ. Again they did
not. Respondents cannot now avail of the special civil action for certiorari
as a substitute for these remedies. They should suffer the consequences
for sleeping on their rights.
We disagree.
Concededly, those who seek to avail of the procedural remedies provided
by the rules must adhere to the requirements thereof, failing which the
right to do so is lost. It is, however, equally settled that the Rules of Court
seek to eliminate undue reliance on technical rules and to make litigation
as inexpensive as practicable and as convenient as can be done.[20] This is
in accordance with the primary purpose of the 1997 Rules of Civil
Procedure as provided in Rule 1, Section 6, which reads:
Section 6. Construction. These rules shall be liberally construed in order to
promote their objective of securing a just, speedy and inexpensive
determination of every action and proceeding.[21]
The rules of procedure are not to be applied in a very rigid, technical sense
and are used only to help secure substantial justice. If a technical and rigid
enforcement of the rules is made, their aim would be defeated.[22] They
should be liberally construed so that litigants can have ample opportunity
to prove their claims and thus prevent a denial of justice due to
technicalities.[23] Thus, in China Banking Corporation v. Members of the
Board of Trustees of Home Development Mutual Fund,[24] it was held:
while certiorari as a remedy may not be used as a substitute for an appeal,
especially for a lost appeal, this rule should not be strictly enforced if the
petition is genuinely meritorious.[25] It has been said that where the rigid
application of the rules would frustrate substantial justice, or bar the
vindication of a legitimate grievance, the courts are justified in exempting
a particular case from the operation of the rules.[26] (Emphasis ours)
Indeed, well-known is the rule that departures from procedure may be
forgiven where they do not appear to have impaired the substantial rights
of the parties.[27] Apropos in this regard is Cometa v. CA,[28] where we
said that
There is no question that petitioners were remiss in attending with
dispatch to the protection of their interests as regards the subject lots, and
for that reason the case in the lower court was dismissed on a technicality
and no definitive pronouncement on the inadequacy of the price paid for
the levied properties was ever made. In this regard, it bears stressing that
procedural rules are not to be belittled or dismissed simply because their
non-observance may have resulted in prejudice to a partys substantive
rights as in this case. Like all rules, they are required to be followed except
when only for the most persuasive of reasons they may be relaxed to
relieve a litigant of an injustice not commensurate with the degree of his
thoughtlessness in not complying with the procedure prescribed.[29]
(emphasis and italics supplied.)
In short, since rules of procedure are mere tools designed to facilitate the
attainment of justice, their strict and rigid application which would result
in technicalities that tend to frustrate rather than promote substantial
justice must always be avoided.[30] Technicality should not be allowed to
stand in the way of equitably and completely resolving the rights and
obligations of the parties.[31]
Eschewing, therefore, the procedural objections raised by petitioner, it
behooves us to address the issue of whether or not the questioned writ of
possession is in fact a nullity considering that it includes real property not
expressly mentioned in the Certificate of Sale of Real Property.
Petitioner, in sum, dwells on the general proposition that since the
certificate of sale is a public document, it enjoys the presumption of
regularity and all entries therein are presumed to be done in the
performance of regular functions.
The argument is not persuasive.
There are actually two (2) copies of the Certificate of Sale on Execution of
Real Properties issued on February 4, 1999 involved, namely: (a) copy
which is on file with the deputy sheriff; and (b) copy registered with the
Registry of Deeds. The object of scrutiny, however, is not the copy of the
Certificate of Sale on Execution of Real Properties issued by the deputy
sheriff on February 4, 1999,[32] but the copy thereof subsequently
registered by petitioner with the Registry of Deeds on April 23, 1999,[33]
which included an entry on the dorsal portion of the first page thereof
describing a parcel of land covered by OCT No. T-40785 not found in the
Certificate of Sale of Real Properties on file with the sheriff.
True, public documents by themselves may be adequate to establish the
presumption of their validity. However, their probative weight must be
evaluated not in isolation but in conjunction with other evidence adduced
by the parties in the controversy, much more so in this case where the
contents of a copy thereof subsequently registered for documentation
purposes is being contested. No reason has been offered how and why the
questioned entry was subsequently intercalated in the copy of the
certificate of sale subsequently registered with the Registry of Deeds.
Absent any satisfactory explanation as to why said entry was belatedly
inserted, the surreptitiousness of its inclusion coupled with the furtive
manner of its intercalation casts serious doubt on the authenticity of
petitioners copy of the Certificate of Sale. Thus, it has been held that while
a public document like a notarized deed of sale is vested with the
presumption of regularity, this is not a guarantee of the validity of its
contents.[34]
It must be pointed out in this regard that the issuance of a Certificate of
Sale is an end result of judicial foreclosure where statutory requirements
are strictly adhered to; where even the slightest deviations therefrom will
invalidate the proceeding[35] and the sale.[36] Among these requirements
is an explicit enumeration and correct description of what properties are
to be sold stated in the notice. The stringence in the observance of these
requirements is such that an incorrect title number together with a correct
technical description of the property to be sold and vice versa is deemed a
substantial and fatal error which results in the invalidation of the sale.[37]
The certificate of sale is an accurate record of what properties were
actually sold to satisfy the debt. The strictness in the observance of
accuracy and correctness in the description of the properties renders the
enumeration in the certificate exclusive. Thus, subsequently including
properties which have not been explicitly mentioned therein for
registration purposes under suspicious circumstances smacks of fraud. The
explanation that the land on which the properties sold is necessarily
included and, hence, was belatedly typed on the dorsal portion of the copy
of the certificate subsequently registered is at best a lame excuse
unworthy of belief.
The appellate court correctly observed that there was a marked difference
in the appearance of the typewritten words appearing on the first page of
the copy of the Certificate of Sale registered with the Registry of
Deeds[38] and those appearing at the dorsal portion thereof.
Underscoring the irregularity of the intercalation is the clearly devious
attempt to let such an insertion pass unnoticed by typing the same at the
back of the first page instead of on the second page which was merely
half-filled and could accommodate the entry with room to spare.
The argument that the land on which the buildings levied upon in
execution is necessarily included is, likewise, tenuous. Article 415 of the
Civil Code provides:
ART. 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil.
xxxxxxxxx
(3) Everything attached to an immovable in a fixed manner, in such a way
that it cannot be separated therefrom without breaking them material or
deterioration of the object;
(4) Statues, reliefs, paintings or other objects for use or ornamentation,
placed in buildings or on lands by the owner of the immovable in such a
manner that it reveals the intention to attach them permanently to the
tenements;
(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;
(6) Animal houses, pigeon houses, beehives, fish ponds or breeding places
of similar nature, in case their owner has placed them or preserves them
with the intention to have them permanently attached to the land, and
forming a permanent part of it; the animals in these places are also
included;
xxxxxxxxx
(9) Docks and structures which, though floating, are intended by their
nature and object to remain at a fixed place on a river, lake or coast;
x x x x x x x x x.
The foregoing provision of the Civil Code enumerates land and buildings
separately. This can only mean that a building is, by itself, considered
immovable.[39] Thus, it has been held that
. . . while it is true that a mortgage of land necessarily includes, in the
absence of stipulation of the improvements thereon, buildings, still a
building by itself may be mortgaged apart from the land on which it has
been built. Such mortgage would be still a real estate mortgage for the
building would still be considered immovable property even if dealt with
separately and apart from the land.[40] (emphasis and italics supplied)
In this case, considering that what was sold by virtue of the writ of
execution issued by the trial court was merely the storehouse and bodega
constructed on the parcel of land covered by Transfer Certificate of Title
No. T-40785, which by themselves are real properties of respondents
spouses, the same should be regarded as separate and distinct from the
conveyance of the lot on which they stand.
WHEREFORE, in view of all the foregoing, the petition is hereby DENIED for
lack of merit. The Decision dated May 13, 2002 of the Court of Appeals in
CA-G.R. SP No. 65891, which declared the writ of possession issued by the
Regional Trial Court of Balanga City, Branch 1, on July 18, 2001, null and
void, is AFFIRMED in toto.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-26278 August 4, 1927
LEON SIBAL , plaintiff-appellant,
vs.
EMILIANO J. VALDEZ ET AL., defendants.
EMILIANO J. VALDEZ, appellee.
J. E. Blanco for appellant.
Felix B. Bautista and Santos and Benitez for appellee.
JOHNSON, J.:
The action was commenced in the Court of First Instance of the Province
of Tarlac on the 14th day of December 1924. The facts are about as
conflicting as it is possible for facts to be, in the trial causes.
As a first cause of action the plaintiff alleged that the defendant Vitaliano
Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of
execution issued by the Court of First Instance of Pampanga, attached and
sold to the defendant Emiliano J. Valdez the sugar cane planted by the
plaintiff and his tenants on seven parcels of land described in the
complaint in the third paragraph of the first cause of action; that within
one year from the date of the attachment and sale the plaintiff offered to
redeem said sugar cane and tendered to the defendant Valdez the amount
sufficient to cover the price paid by the latter, the interest thereon and
any assessments or taxes which he may have paid thereon after the
purchase, and the interest corresponding thereto and that Valdez refused
to accept the money and to return the sugar cane to the plaintiff.
As a second cause of action, the plaintiff alleged that the defendant
Emiliano J. Valdez was attempting to harvest the palay planted in four of
the seven parcels mentioned in the first cause of action; that he had
harvested and taken possession of the palay in one of said seven parcels
and in another parcel described in the second cause of action, amounting
to 300 cavans; and that all of said palay belonged to the plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against the
defendant Emiliano J. Valdez his attorneys and agents, restraining them (1)
from distributing him in the possession of the parcels of land described in
the complaint; (2) from taking possession of, or harvesting the sugar cane
in question; and (3) from taking possession, or harvesting the palay in said
parcels of land. Plaintiff also prayed that a judgment be rendered in his
favor and against the defendants ordering them to consent to the
redemption of the sugar cane in question, and that the defendant Valdez
be condemned to pay to the plaintiff the sum of P1,056 the value of palay
harvested by him in the two parcels above-mentioned ,with interest and
costs.
On December 27, 1924, the court, after hearing both parties and upon
approval of the bond for P6,000 filed by the plaintiff, issued the writ of
preliminary injunction prayed for in the complaint.
The defendant Emiliano J. Valdez, in his amended answer, denied
generally and specifically each and every allegation of the complaint and
step up the following defenses:
(a) That the sugar cane in question had the nature of personal property
and was not, therefore, subject to redemption;
(b) That he was the owner of parcels 1, 2 and 7 described in the first cause
of action of the complaint;
(c) That he was the owner of the palay in parcels 1, 2 and 7; and
(d) That he never attempted to harvest the palay in parcels 4 and 5.
The defendant Emiliano J. Valdez by way of counterclaim, alleged that by
reason of the preliminary injunction he was unable to gather the sugar
cane, sugar-cane shoots (puntas de cana dulce) palay in said parcels of
land, representing a loss to him of P8,375.20 and that, in addition thereto,
he suffered damages amounting to P3,458.56. He prayed, for a judgment
(1) absolving him from all liability under the complaint; (2) declaring him to
be the absolute owner of the sugar cane in question and of the palay in
parcels 1, 2 and 7; and (3) ordering the plaintiff to pay to him the sum of
P11,833.76, representing the value of the sugar cane and palay in
question, including damages.
Upon the issues thus presented by the pleadings the cause was brought on
for trial. After hearing the evidence, and on April 28, 1926, the Honorable
Cayetano Lukban, judge, rendered a judgment against the plaintiff and in
favor of the defendants
(1) Holding that the sugar cane in question was personal property and, as
such, was not subject to redemption;
(2) Absolving the defendants from all liability under the complaint; and
(3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan
Sangalang and Marcos Sibal to jointly and severally pay to the defendant
Emiliano J. Valdez the sum of P9,439.08 as follows:
(a) P6,757.40, the value of the sugar cane;
(b) 1,435.68, the value of the sugar-cane shoots;
(c) 646.00, the value of palay harvested by plaintiff;
(d) 600.00, the value of 150 cavans of palay which the defendant was not
able to raise by reason of the injunction, at P4 cavan. 9,439.08 From that
judgment the plaintiff appealed and in his assignments of error contends
that the lower court erred: (1) In holding that the sugar cane in question
was personal property and, therefore, not subject to redemption;
(2) In holding that parcels 1 and 2 of the complaint belonged to Valdez, as
well as parcels 7 and 8, and that the palay therein was planted by Valdez;
(3) In holding that Valdez, by reason of the preliminary injunction failed to
realized P6,757.40 from the sugar cane and P1,435.68 from sugar-cane
shoots (puntas de cana dulce);
(4) In holding that, for failure of plaintiff to gather the sugar cane on time,
the defendant was unable to raise palay on the land, which would have
netted him the sum of P600; and.
(5) In condemning the plaintiff and his sureties to pay to the defendant the
sum of P9,439.08.
It appears from the record:
(1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by
virtue of writ of execution in civil case No. 20203 of the Court of First
Instance of Manila (Macondray & Co., Inc. vs. Leon Sibal),levied an
attachment on eight parcels of land belonging to said Leon Sibal, situated
in the Province of Tarlac, designated in the second of attachment as
parcels 1, 2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A).
(2) That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels
of land, at the auction held by the sheriff of the Province of Tarlac, for the
sum to P4,273.93, having paid for the said parcels separately as follows
(Exhibit C, and 2-A):
Parcel
1 ..................................................................... P1.00
2 ..................................................................... 2,000.00
3 ..................................................................... 120.93
4 ..................................................................... 1,000.00
5 ..................................................................... 1.00
6 ..................................................................... 1.00
7 with the house thereon .......................... 150.00
8 .....................................................................
1,000.00
==========
4,273.93
(3) That within one year from the sale of said parcel of land, and on the
24th day of September, 1923, the judgment debtor, Leon Sibal, paid
P2,000 to Macondray & Co., Inc., for the account of the redemption price
of said parcels of land, without specifying the particular parcels to which
said amount was to applied. The redemption price said eight parcels was
reduced, by virtue of said transaction, to P2,579.97 including interest
(Exhibit C and 2).
The record further shows:
(1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy
sheriff of the Province of Tarlac, by virtue of a writ of execution in civil
case No. 1301 of the Province of Pampanga (Emiliano J. Valdez vs. Leon
Sibal 1. the same parties in the present case), attached the personal
property of said Leon Sibal located in Tarlac, among which was included
the sugar cane now in question in the seven parcels of land described in
the complaint (Exhibit A).
(2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction
said personal properties of Leon Sibal, including the sugar cane in question
to Emilio J. Valdez, who paid therefor the sum of P1,550, of which P600
was for the sugar cane (Exhibit A).
(3) That on April 29,1924, said deputy sheriff, by virtue of said writ of
execution, also attached the real property of said Leon Sibal in Tarlac,
including all of his rights, interest and participation therein, which real
property consisted of eleven parcels of land and a house and camarin
situated in one of said parcels (Exhibit A).
(4) That on June 25, 1924, eight of said eleven parcels, including the house
and the camarin, were bought by Emilio J. Valdez at the auction held by
the sheriff for the sum of P12,200. Said eight parcels were designated in
the certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11. The house and
camarin were situated on parcel 7 (Exhibit A).
(5) That the remaining three parcels, indicated in the certificate of the
sheriff as parcels 2, 12, and 13, were released from the attachment by
virtue of claims presented by Agustin Cuyugan and Domiciano Tizon
(Exhibit A).
(6) That on the same date, June 25, 1924, Macondray & Co. sold and
conveyed to Emilio J. Valdez for P2,579.97 all of its rights and interest in
the eight parcels of land acquired by it at public auction held by the deputy
sheriff of Tarlac in connection with civil case No. 20203 of the Court of
First Instance of Manila, as stated above. Said amount represented the
unpaid balance of the redemption price of said eight parcels, after
payment by Leon Sibal of P2,000 on September 24, 1923, fro the account
of the redemption price, as stated above. (Exhibit C and 2).
The foregoing statement of facts shows:
(1) The Emilio J. Valdez bought the sugar cane in question, located in the
seven parcels of land described in the first cause of action of the complaint
at public auction on May 9 and 10, 1924, for P600.
(2) That on July 30, 1923, Macondray & Co. became the owner of eight
parcels of land situated in the Province of Tarlac belonging to Leon Sibal
and that on September 24, 1923, Leon Sibal paid to Macondray & Co.
P2,000 for the account of the redemption price of said parcels.
(3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray & Co.
all of its rights and interest in the said eight parcels of land.
(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights
and interest which Leon Sibal had or might have had on said eight parcels
by virtue of the P2,000 paid by the latter to Macondray.
(5) That Emilio J. Valdez became the absolute owner of said eight parcels
of land.
The first question raised by the appeal is, whether the sugar cane in
question is personal or real property. It is contended that sugar cane
comes under the classification of real property as "ungathered products"
in paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of article
334 enumerates as real property the following: Trees, plants, and
ungathered products, while they are annexed to the land or form an
integral part of any immovable property." That article, however, has
received in recent years an interpretation by the Tribunal Supremo de
Espaa, which holds that, under certain conditions, growing crops may be
considered as personal property. (Decision of March 18, 1904, vol. 97, Civil
Jurisprudence of Spain.)
Manresa, the eminent commentator of the Spanish Civil Code, in
discussing section 334 of the Civil Code, in view of the recent decisions of
the supreme Court of Spain, admits that growing crops are sometimes
considered and treated as personal property. He says:
No creemos, sin embargo, que esto excluya la excepcionque muchos
autores hacen tocante a la venta de toda cosecha o de parte de ella
cuando aun no esta cogida (cosa frecuente con la uvay y la naranja), y a la
de lenas, considerando ambas como muebles. El Tribunal Supremo, en
sentencia de 18 de marzo de 1904, al entender sobre un contrato de
arrendamiento de un predio rustico, resuelve que su terminacion por
desahucio no extingue los derechos del arrendario, para recolectar o
percibir los frutos correspondientes al ao agricola, dentro del que
nacieron aquellos derechos, cuando el arrendor ha percibido a su vez el
importe de la renta integra correspondiente, aun cuando lo haya sido por
precepto legal durante el curso del juicio, fundandose para ello, no solo en
que de otra suerte se daria al desahucio un alcance que no tiene, sino en
que, y esto es lo interesante a nuestro proposito, la consideracion de
inmuebles que el articulo 334 del Codigo Civil atribuge a los frutos
pendientes, no les priva del caracter de productos pertenecientes, como
tales, a quienes a ellos tenga derecho, Ilegado el momento de su
recoleccion.
xxx xxx xxx
Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria,
publicada en 16 de diciembre de 1909, con las reformas introducidas por
la de 21 de abril anterior, la hipoteca, salvo pacto expreso que disponga lo
contrario, y cualquiera que sea la naturaleza y forma de la obligacion que
garantice, no comprende los frutos cualquiera que sea la situacion en que
se encuentre. (3 Manresa, 5. edicion, pags. 22, 23.)
From the foregoing it appears (1) that, under Spanish authorities, pending
fruits and ungathered products may be sold and transferred as personal
property; (2) that the Supreme Court of Spain, in a case of ejectment of a
lessee of an agricultural land, held that the lessee was entitled to gather
the products corresponding to the agricultural year, because said fruits did
not go with the land but belonged separately to the lessee; and (3) that
under the Spanish Mortgage Law of 1909, as amended, the mortgage of a
piece of land does not include the fruits and products existing thereon,
unless the contract expressly provides otherwise.
An examination of the decisions of the Supreme Court of Louisiana may
give us some light on the question which we are discussing. Article 465 of
the Civil Code of Louisiana, which corresponds to paragraph 2 of article
334 of our Civil Code, provides: "Standing crops and the fruits of trees not
gathered, and trees before they are cut down, are likewise immovable,
and are considered as part of the land to which they are attached."
The Supreme Court of Louisiana having occasion to interpret that
provision, held that in some cases "standing crops" may be considered and
dealt with as personal property. In the case of Lumber Co. vs. Sheriff and
Tax Collector (106 La., 418) the Supreme Court said: "True, by article 465
of the Civil Code it is provided that 'standing crops and the fruits of trees
not gathered and trees before they are cut down . . . are considered as
part of the land to which they are attached, but the immovability provided
for is only one in abstracto and without reference to rights on or to the
crop acquired by others than the owners of the property to which the crop
is attached. . . . The existence of a right on the growing crop is a
mobilization by anticipation, a gathering as it were in advance, rendering
the crop movable quoad the right acquired therein. Our jurisprudence
recognizes the possible mobilization of the growing crop." (Citizens' Bank
vs. Wiltz, 31 La. Ann., 244; Porche vs. Bodin, 28 La., Ann., 761; Sandel vs.
Douglass, 27 La. Ann., 629; Lewis vs. Klotz, 39 La. Ann., 267.)
"It is true," as the Supreme Court of Louisiana said in the case of Porche vs.
Bodin (28 La. An., 761) that "article 465 of the Revised Code says that
standing crops are considered as immovable and as part of the land to
which they are attached, and article 466 declares that the fruits of an
immovable gathered or produced while it is under seizure are considered
as making part thereof, and incurred to the benefit of the person making
the seizure. But the evident meaning of these articles, is where the crops
belong to the owner of the plantation they form part of the immovable,
and where it is seized, the fruits gathered or produced inure to the benefit
of the seizing creditor.
A crop raised on leased premises in no sense forms part of the immovable.
It belongs to the lessee, and may be sold by him, whether it be gathered or
not, and it may be sold by his judgment creditors. If it necessarily forms
part of the leased premises the result would be that it could not be sold
under execution separate and apart from the land. If a lessee obtain
supplies to make his crop, the factor's lien would not attach to the crop as
a separate thing belonging to his debtor, but the land belonging to the
lessor would be affected with the recorded privilege. The law cannot be
construed so as to result in such absurd consequences.
In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:
If the crop quoad the pledge thereof under the act of 1874 was an
immovable, it would be destructive of the very objects of the act, it would
render the pledge of the crop objects of the act, it would render the
pledge of the crop impossible, for if the crop was an inseparable part of
the realty possession of the latter would be necessary to that of the
former; but such is not the case. True, by article 465 C. C. it is provided
that "standing crops and the fruits of trees not gathered and trees before
they are cut down are likewise immovable and are considered as part of
the land to which they are attached;" but the immovability provided for is
only one in abstracto and without reference to rights on or to the crop
acquired by other than the owners of the property to which the crop was
attached. The immovability of a growing crop is in the order of things
temporary, for the crop passes from the state of a growing to that of a
gathered one, from an immovable to a movable. The existence of a right
on the growing crop is a mobilization by anticipation, a gathering as it
were in advance, rendering the crop movable quoad the right acquired
thereon. The provision of our Code is identical with the Napoleon Code
520, and we may therefore obtain light by an examination of the
jurisprudence of France.
The rule above announced, not only by the Tribunal Supremo de Espaa
but by the Supreme Court of Louisiana, is followed in practically every
state of the Union.
From an examination of the reports and codes of the State of California
and other states we find that the settle doctrine followed in said states in
connection with the attachment of property and execution of judgment is,
that growing crops raised by yearly labor and cultivation are considered
personal property. (6 Corpuz Juris, p. 197; 17 Corpus Juris, p. 379; 23
Corpus Juris, p. 329: Raventas vs. Green, 57 Cal., 254; Norris vs. Watson,
55 Am. Dec., 161; Whipple vs. Foot, 3 Am. Dec., 442; 1 Benjamin on Sales,
sec. 126; McKenzie vs. Lampley, 31 Ala., 526; Crine vs. Tifts and Co., 65
Ga., 644; Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45 Mich., 174;
Freeman on Execution, vol. 1, p. 438; Drake on Attachment, sec. 249;
Mechem on Sales, sec. 200 and 763.)
Mr. Mechem says that a valid sale may be made of a thing, which though
not yet actually in existence, is reasonably certain to come into existence
as the natural increment or usual incident of something already in
existence, and then belonging to the vendor, and then title will vest in the
buyer the moment the thing comes into existence. (Emerson vs. European
Railway Co., 67 Me., 387; Cutting vs. Packers Exchange, 21 Am. St. Rep.,
63.) Things of this nature are said to have a potential existence. A man
may sell property of which he is potentially and not actually possessed. He
may make a valid sale of the wine that a vineyard is expected to produce;
or the gain a field may grow in a given time; or the milk a cow may yield
during the coming year; or the wool that shall thereafter grow upon
sheep; or what may be taken at the next cast of a fisherman's net; or fruits
to grow; or young animals not yet in existence; or the good will of a trade
and the like. The thing sold, however, must be specific and identified. They
must be also owned at the time by the vendor. (Hull vs. Hull, 48 Conn., 250
[40 Am. Rep., 165].)
It is contended on the part of the appellee that paragraph 2 of article 334
of the Civil Code has been modified by section 450 of the Code of Civil
Procedure as well as by Act No. 1508, the Chattel Mortgage Law. Said
section 450 enumerates the property of a judgment debtor which may be
subjected to execution. The pertinent portion of said section reads as
follows: "All goods, chattels, moneys, and other property, both real and
personal, * * * shall be liable to execution. Said section 450 and most of
the other sections of the Code of Civil Procedure relating to the execution
of judgment were taken from the Code of Civil Procedure of California. The
Supreme Court of California, under section 688 of the Code of Civil
Procedure of that state (Pomeroy, p. 424) has held, without variation, that
growing crops were personal property and subject to execution.
Act No. 1508, the Chattel Mortgage Law, fully recognized that growing
crops are personal property. Section 2 of said Act provides: "All personal
property shall be subject to mortgage, agreeably to the provisions of this
Act, and a mortgage executed in pursuance thereof shall be termed a
chattel mortgage." Section 7 in part provides: "If growing crops be
mortgaged the mortgage may contain an agreement stipulating that the
mortgagor binds himself properly to tend, care for and protect the crop
while growing.
It is clear from the foregoing provisions that Act No. 1508 was enacted on
the assumption that "growing crops" are personal property. This
consideration tends to support the conclusion hereinbefore stated, that
paragraph 2 of article 334 of the Civil Code has been modified by section
450 of Act No. 190 and by Act No. 1508 in the sense that "ungathered
products" as mentioned in said article of the Civil Code have the nature of
personal property. In other words, the phrase "personal property" should
be understood to include "ungathered products."
At common law, and generally in the United States, all annual crops which
are raised by yearly manurance and labor, and essentially owe their annual
existence to cultivation by man, . may be levied on as personal property."
(23 C. J., p. 329.) On this question Freeman, in his treatise on the Law of
Executions, says: "Crops, whether growing or standing in the field ready to
be harvested, are, when produced by annual cultivation, no part of the
realty. They are, therefore, liable to voluntary transfer as chattels. It is
equally well settled that they may be seized and sold under execution.
(Freeman on Executions, vol. p. 438.)
We may, therefore, conclude that paragraph 2 of article 334 of the Civil
Code has been modified by section 450 of the Code of Civil Procedure and
by Act No. 1508, in the sense that, for the purpose of attachment and
execution, and for the purposes of the Chattel Mortgage Law, "ungathered
products" have the nature of personal property. The lower court,
therefore, committed no error in holding that the sugar cane in question
was personal property and, as such, was not subject to redemption.
All the other assignments of error made by the appellant, as above stated,
relate to questions of fact only. Before entering upon a discussion of said
assignments of error, we deem it opportune to take special notice of the
failure of the plaintiff to appear at the trial during the presentation of
evidence by the defendant. His absence from the trial and his failure to
cross-examine the defendant have lent considerable weight to the
evidence then presented for the defense.
Coming not to the ownership of parcels 1 and 2 described in the first cause
of action of the complaint, the plaintiff made a futile attempt to show that
said two parcels belonged to Agustin Cuyugan and were the identical
parcel 2 which was excluded from the attachment and sale of real
property of Sibal to Valdez on June 25, 1924, as stated above. A
comparison of the description of parcel 2 in the certificate of sale by the
sheriff (Exhibit A) and the description of parcels 1 and 2 of the complaint
will readily show that they are not the same.
The description of the parcels in the complaint is as follows:
1. La caa dulce sembrada por los inquilinos del ejecutado Leon Sibal 1.
en una parcela de terreno de la pertenencia del citado ejecutado, situada
en Libutad, Culubasa, Bamban, Tarlac, de unas dos hectareas poco mas o
menos de superficie.
2. La caa dulce sembrada por el inquilino del ejecutado Leon Sibal 1.,
Ilamado Alejandro Policarpio, en una parcela de terreno de la pertenencia
del ejecutado, situada en Dalayap, Culubasa, Bamban, Tarlac de unas dos
hectareas de superficie poco mas o menos." The description of parcel 2
given in the certificate of sale (Exhibit A) is as follows:
2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090
metros cuadrados de superficie, linda al N. con Canuto Sibal, Esteban
Lazatin and Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mau and
others; al S. con Alejandro Dayrit, Isidro Santos and Melecio Mau; y al O.
con Alejandro Dayrit and Paulino Vergara. Tax No. 2854, vador amillarado
P4,200 pesos.
On the other hand the evidence for the defendant purported to show that
parcels 1 and 2 of the complaint were included among the parcels bought
by Valdez from Macondray on June 25, 1924, and corresponded to parcel
4 in the deed of sale (Exhibit B and 2), and were also included among the
parcels bought by Valdez at the auction of the real property of Leon Sibal
on June 25, 1924, and corresponded to parcel 3 in the certificate of sale
made by the sheriff (Exhibit A). The description of parcel 4 (Exhibit 2) and
parcel 3 (Exhibit A) is as follows:
June 25, 1924, Macondray & Co. sold all of the land which they had
purchased at public auction on the 30th day of July, 1923, to Valdez.
As to the loss of the defendant in sugar cane by reason of the injunction,
the evidence shows that the sugar cane in question covered an area of 22
hectares and 60 ares (Exhibits 8, 8-b and 8-c); that said area would have
yielded an average crop of 1039 picos and 60 cates; that one-half of the
quantity, or 519 picos and 80 cates would have corresponded to the
defendant, as owner; that during the season the sugar was selling at P13 a
pico (Exhibit 5 and 5-A). Therefore, the defendant, as owner, would have
netted P 6,757.40 from the sugar cane in question. The evidence also
shows that the defendant could have taken from the sugar cane 1,017,000
sugar-cane shoots (puntas de cana) and not 1,170,000 as computed by the
lower court. During the season the shoots were selling at P1.20 a thousand
(Exhibits 6 and 7). The defendant therefore would have netted P1,220.40
from sugar-cane shoots and not P1,435.68 as allowed by the lower court.
As to the palay harvested by the plaintiff in parcels 1 and 2 of the
complaint, amounting to 190 cavans, one-half of said quantity should
belong to the plaintiff, as stated above, and the other half to the
defendant. The court erred in awarding the whole crop to the defendant.
The plaintiff should therefore pay the defendant for 95 cavans only, at
P3.40 a cavan, or P323 instead of P646 as allowed by the lower court.

Parcels No. 4. Terreno palayero, ubicado en el barrio de
Culubasa,Bamban, Tarlac, I. F. de 145,000 metros cuadrados de superficie,
lindante al Norte con Road of the barrio of Culubasa that goes to
Concepcion; al Este con Juan Dizon; al Sur con Lucio Mao y Canuto Sibal y
al Oeste con Esteban Lazatin, su valor amillarado asciende a la suma de
P2,990. Tax No. 2856.
The evidence also shows that the defendant was prevented by the acts of
the plaintiff from cultivating about 10 hectares of the land involved in the
litigation. He expected to have raised about 600 cavans of palay, 300
cavans of which would have corresponded to him as owner. The lower
court has wisely reduced his share to 150 cavans only. At P4 a cavan, the
palay would have netted him P600.

As will be noticed, there is hardly any relation between parcels 1 and 2 of In view of the foregoing, the judgment appealed from is hereby modified.
the complaint and parcel 4 (Exhibit 2 and B) and parcel 3 (Exhibit A). But, The plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos
inasmuch as the plaintiff did not care to appear at the trial when the Sibal are hereby ordered to pay to the defendant jointly and severally the
defendant offered his evidence, we are inclined to give more weight to the sum of P8,900.80, instead of P9,439.08 allowed by the lower court, as
evidence adduced by him that to the evidence adduced by the plaintiff, follows:
with respect to the ownership of parcels 1 and 2 of the compliant. We,
therefore, conclude that parcels 1 and 2 of the complaint belong to the P6,757.40 for the sugar cane;
defendant, having acquired the same from Macondray & Co. on June 25, 1,220.40 for the sugar cane shoots;
1924, and from the plaintiff Leon Sibal on the same date. 323.00 for the palay harvested by plaintiff in parcels 1 and 2;
600.00 for the palay which defendant could have raised.
It appears, however, that the plaintiff planted the palay in said parcels and 8,900.80
harvested therefrom 190 cavans. There being no evidence of bad faith on ============
his part, he is therefore entitled to one-half of the crop, or 95 cavans. He In all other respects, the judgment appealed from is hereby affirmed, with
should therefore be condemned to pay to the defendant for 95 cavans costs. So ordered
only, at P3.40 a cavan, or the sum of P323, and not for the total of 190
cavans as held by the lower court. EN BANC

As to the ownership of parcel 7 of the complaint, the evidence shows that

said parcel corresponds to parcel 1 of the deed of sale of Macondray & Co, LUIS MARCOS P. LAUREL, G.R. No. 155076
to Valdez (Exhibit B and 2), and to parcel 4 in the certificate of sale to Petitioner,
Valdez of real property belonging to Sibal, executed by the sheriff as above Present:
stated (Exhibit A). Valdez is therefore the absolute owner of said parcel, Puno, C.J.,
having acquired the interest of both Macondray and Sibal in said parcel. Quisumbing,
Ynares-Santiago,
With reference to the parcel of land in Pacalcal, Tarlac, described in Carpio,
paragraph 3 of the second cause of action, it appears from the testimony - versus - Austria-Martinez,
of the plaintiff himself that said parcel corresponds to parcel 8 of the deed Corona,
of sale of Macondray to Valdez (Exhibit B and 2) and to parcel 10 in the Carpio Morales,
deed of sale executed by the sheriff in favor of Valdez (Exhibit A). Valdez is Azcuna,
therefore the absolute owner of said parcel, having acquired the interest Tinga,
of both Macondray and Sibal therein. Chico-Nazario,
Velasco, Jr.,
In this connection the following facts are worthy of mention: Nachura,
Leonardo-De Castro, and
Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land Brion, JJ.
were attached under said execution. Said parcels of land were sold to HON. ZEUS C. ABROGAR,
Macondray & Co. on the 30th day of July, 1923. Rice paid P4,273.93. On Presiding Judge of the Regional
September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 on the Trial Court, Makati City, Branch 150,
redemption of said parcels of land. (See Exhibits B and C ). PEOPLE OF THE PHILIPPINES Promulgated:
& PHILIPPINE LONG DISTANCE
Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal TELEPHONE COMPANY,
was attached, including the sugar cane in question. (Exhibit A) The said Respondents. January 13, 2009
personal property so attached, sold at public auction May 9 and 10, 1924.
April 29, 1924, the real property was attached under the execution in x ---------------------------------------------------------------------------------------- x
favor of Valdez (Exhibit A). June 25, 1924, said real property was sold and
purchased by Valdez (Exhibit A). RESOLUTION

YNARES-SANTIAGO, J.:
On February 27, 2006, this Courts First Division rendered judgment in this
case as follows:
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed
Orders of the Regional Trial Court and the Decision of the Court of Appeals
are REVERSED and SET ASIDE. The Regional Trial Court is directed to issue
an order granting the motion of the petitioner to quash the Amended
Information.
SO ORDERED.[1]
By way of brief background, petitioner is one of the accused in Criminal
Case No. 99-2425, filed with the Regional Trial Court of Makati City, Branch
150. The Amended Information charged the accused with theft under
Article 308 of the Revised Penal Code, committed as follows:
On or about September 10-19, 1999, or prior thereto in Makati City, and
within the jurisdiction of this Honorable Court, the accused, conspiring and
confederating together and all of them mutually helping and aiding one
another, with intent to gain and without the knowledge and consent of
the Philippine Long Distance Telephone (PLDT), did then and there
willfully, unlawfully and feloniously take, steal and use the international
long distance calls belonging to PLDT by conducting International Simple
Resale (ISR), which is a method of routing and completing international
long distance calls using lines, cables, antenae, and/or air wave frequency
which connect directly to the local or domestic exchange facilities of the
country where the call is destined, effectively stealing this business from
PLDT while using its facilities in the estimated amount of P20,370,651.92
to the damage and prejudice of PLDT, in the said amount.
CONTRARY TO LAW.[2]
Petitioner filed a Motion to Quash (with Motion to Defer Arraignment), on
the ground that the factual allegations in the Amended Information do not
constitute the felony of theft. The trial court denied the Motion to Quash
the Amended Information, as well petitioners subsequent Motion for
Reconsideration.
Petitioners special civil action for certiorari was dismissed by the Court of
Appeals. Thus, petitioner filed the instant petition for review with this
Court.
In the above-quoted Decision, this Court held that the 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.
Respondent Philippine Long Distance Telephone Company (PLDT) filed a
Motion for Reconsideration with Motion to Refer the Case to the Supreme
Court En Banc. It maintains that the Amended Information charging
petitioner with theft is valid and sufficient; that it states the names of all
the accused who were specifically charged with the crime of theft of PLDTs
international calls and business of providing telecommunication or
telephone service on or about September 10 to 19, 1999 in Makati City by
conducting ISR or International Simple Resale; that it identifies the
international calls and business of providing telecommunication or
telephone service of PLDT as the personal properties which were
unlawfully taken by the accused; and that it satisfies the test of sufficiency
as it enabled a person of common understanding to know the charge
against him and the court to render judgment properly.
PLDT further insists that the Revised Penal Code should be interpreted in
the context of the Civil Codes definition of real and personal property. The
enumeration of real properties in Article 415 of the Civil Code is exclusive
such that all those not included therein are personal properties. Since
Article 308 of the Revised Penal Code used the words personal property
without qualification, it follows that all personal properties as understood
in the context of the Civil Code, may be the subject of theft under Article
308 of the Revised Penal Code. PLDT alleges that the international calls
and business of providing telecommunication or telephone service are
personal properties capable of appropriation and can be objects of theft.
PLDT also argues that taking in relation to theft under the Revised Penal
Code does not require asportation, the sole requisite being that the object
should be capable of appropriation. The element of taking referred to in
Article 308 of the Revised Penal Code means the act of depriving another
of the possession and dominion of a movable coupled with the intention,
at the time of the taking, of withholding it with the character of
permanency. There must be intent to appropriate, which means to deprive
the lawful owner of the thing. Thus, the term personal properties under
Article 308 of the Revised Penal Code is not limited to only personal
properties which are susceptible of being severed from a mass or larger
quantity and of being transported from place to place.
PLDT likewise alleges that as early as the 1930s, international telephone
calls were in existence; hence, there is no basis for this Courts finding that
the Legislature could not have contemplated the theft of international
telephone calls and the unlawful transmission and routing of electronic
voice signals or impulses emanating from such calls by unlawfully
tampering with the telephone device as within the coverage of the Revised
Penal Code.
According to respondent, the international phone calls which are electric
currents or sets of electric impulses transmitted through a medium, and
carry a pattern representing the human voice to a receiver, are personal
properties which may be subject of theft. Article 416(3) of the Civil Code
deems forces of nature (which includes electricity) which are brought
under the control by science, are personal property.
In his Comment to PLDTs motion for reconsideration, petitioner Laurel
claims that a telephone call is a conversation on the phone or a
communication carried out using the telephone. It is not synonymous to
electric current or impulses. Hence, it may not be considered as personal
property susceptible of appropriation. Petitioner claims that the analogy
between generated electricity and telephone calls is misplaced. PLDT does
not produce or generate telephone calls. It only provides the facilities or
services for the transmission and switching of the calls. He also insists that
business is not personal property. It is not the business that is protected
but the right to carry on a business. This right is what is considered as
property. Since the services of PLDT cannot be considered as property, the
same may not be subject of theft.
The Office of the Solicitor General (OSG) agrees with respondent PLDT that
international phone calls and the business or service of providing
international phone calls are subsumed in the enumeration and definition
of personal property under the Civil Code hence, may be proper subjects
of theft. It noted that the cases of United States v. Genato,[3] United
States v. Carlos[4] and United States v. Tambunting,[5] which recognized
intangible properties like gas and electricity as personal properties, are
deemed incorporated in our penal laws. Moreover, the theft provision in
the Revised Penal Code was deliberately couched in broad terms precisely
to be all-encompassing and embracing even such scenario that could not
have been easily anticipated.
According to the OSG, prosecution under Republic Act (RA) No. 8484 or
the Access Device Regulations Act of 1998 and RA 8792 or the Electronic
Commerce Act of 2000 does not preclude prosecution under the Revised
Penal Code for the crime of theft. The latter embraces unauthorized
appropriation or use of PLDTs international calls, service and business, for
personal profit or gain, to the prejudice of PLDT as owner thereof. On the
other hand, the special laws punish the surreptitious and advanced
technical means employed to illegally obtain the subject service and
business. Even assuming that the correct indictment should have been
under RA 8484, the quashal of the information would still not be proper.
The charge of theft as alleged in the Information should be taken in
relation to RA 8484 because it is the elements, and not the designation of
the crime, that control.
Considering the gravity and complexity of the novel questions of law
involved in this case, the Special First Division resolved to refer the same
to the Banc.
We resolve to grant the Motion for Reconsideration but remand the case
to the trial court for proper clarification of the Amended Information.
Article 308 of the Revised Penal Code provides:
Art. 308. Who are liable for theft. Theft is committed by any person who,
with intent to gain but without violence against, or intimidation of persons
nor force upon things, shall take personal property of another without the
latters consent.
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.
Prior to the passage of the Revised Penal Code on December 8, 1930, the
definition of the term personal property in the penal code provision on
theft had been established in Philippine jurisprudence. This Court, in
United States v. Genato, United States v. Carlos, and United States v.
Tambunting, consistently ruled that any personal property, tangible or
intangible, corporeal or incorporeal, capable of appropriation can be the
object of theft.
Moreover, since the passage of the Revised Penal Code on December 8,
1930, the term personal property has had a generally accepted definition
in civil law. 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). Thus, the term personal property in
the Revised Penal Code should be interpreted in the context of the Civil
Code provisions in accordance with the rule on statutory construction that
where words have been long used in a technical sense and have been
judicially construed to have a certain meaning, and have been adopted by
the legislature as having a certain meaning prior to a particular statute, in
which they are used, the words used in such statute should be construed
according to the sense in which they have been previously used.[6] In fact,
this Court used the Civil Code definition of personal property in
interpreting the theft provision of the penal code in United States v.
Carlos.
Cognizant of the definition given by jurisprudence and the Civil Code of
Spain to the term personal property at the time the old Penal Code was
being revised, still the legislature did not limit or qualify the definition of
personal property in the Revised Penal Code. Neither did it provide a
restrictive definition or an exclusive enumeration of personal property in
the Revised Penal Code, thereby showing its intent to retain for the term
an extensive and unqualified interpretation. Consequently, any property
which is not included in the enumeration of real properties under the Civil
Code and capable of appropriation can be the subject of theft under the
Revised Penal Code.
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.[7] Jurisprudence
is settled that to take under the theft provision of the penal code does not
require asportation or carrying away.[8]
To appropriate means to deprive the lawful owner of the thing.[9] 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, as held in
Natividad v. Court of Appeals,[10] use of a device to fraudulently obtain
gas, as held in United States v. Tambunting, and the use of a jumper to
divert electricity, as held in the cases of United States v. Genato, United
States v. Carlos, and United States v. Menagas.[11]
As illustrated in the above cases, appropriation of forces of nature which
are brought under control by science such as electrical energy can be
achieved by tampering with any apparatus used for generating or
measuring such forces of nature, wrongfully redirecting such forces of
nature from such apparatus, or using any device to fraudulently obtain
such forces of nature. In the instant case, petitioner was charged with
engaging in International Simple Resale (ISR) or the unauthorized routing
and completing of international long distance calls using lines, cables,
antennae, and/or air wave frequency and connecting these calls directly to
the local or domestic exchange facilities of the country where destined.
As early as 1910, the Court declared in Genato that ownership over
electricity (which an international long distance call consists of), as well as
telephone service, is protected by the provisions on theft of the Penal
Code. The pertinent provision of the Revised Ordinance of the City of
Manila, which was involved in the said case, reads as follows:
Injury to electric apparatus; Tapping current; Evidence. No person shall
destroy, mutilate, deface, or otherwise injure or tamper with any wire,
meter, or other apparatus installed or used for generating, containing,
conducting, or measuring electricity, telegraph or telephone service, nor
tap or otherwise wrongfully deflect or take any electric current from such
wire, meter, or other apparatus.
No person shall, for any purpose whatsoever, use or enjoy the benefits of
any device by means of which he may fraudulently obtain any current of
electricity or any telegraph or telephone service; and the existence in any
building premises of any such device shall, in the absence of satisfactory
explanation, be deemed sufficient evidence of such use by the persons
benefiting thereby.
It was further ruled that even without the above ordinance the acts of
subtraction punished therein are covered by the provisions on theft of the
Penal Code then in force, thus:
Even without them (ordinance), the right of the ownership of electric
current is secured by articles 517 and 518 of the Penal Code; the
application of these articles in cases of subtraction of gas, a fluid used for
lighting, and in some respects resembling electricity, is confirmed by the
rule laid down in the decisions of the supreme court of Spain of January
20, 1887, and April 1, 1897, construing and enforcing the provisions of
articles 530 and 531 of the Penal Code of that country, articles 517 and
518 of the code in force in these islands.
The acts of subtraction include: (a) tampering with any wire, meter, or
other apparatus installed or used for generating, containing, conducting,
or measuring electricity, telegraph or telephone service; (b) tapping or
otherwise wrongfully deflecting or taking any electric current from such
wire, meter, or other apparatus; and (c) using or enjoying the benefits of
any device by means of which one may fraudulently obtain any current of
electricity or any telegraph or telephone service.
In the instant case, the act of conducting ISR operations by illegally
connecting various equipment or apparatus to private respondent PLDTs
telephone system, through which petitioner is able to resell or re-route
international long distance calls using respondent PLDTs 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. Business may be appropriated under
Section 2 of Act No. 3952 (Bulk Sales Law), hence, could be object of theft:
Section 2. Any sale, transfer, mortgage, or assignment of a stock of goods,
wares, merchandise, provisions, or materials otherwise than in the
ordinary course of trade and the regular prosecution of the business of the
vendor, mortgagor, transferor, or assignor, or any sale, transfer, mortgage,
or assignment of all, or substantially all, of the business or trade
theretofore conducted by the vendor, mortgagor, transferor or assignor,
or all, or substantially all, of the fixtures and equipment used in and about
the business of the vendor, mortgagor, transferor, or assignor, shall be
deemed to be a sale and transfer in bulk, in contemplation of the Act. x x
x.
In Strochecker v. Ramirez,[12] this Court stated:
With regard to the nature of the property thus mortgaged which is one-
half interest in the business above described, such interest is a personal
property capable of appropriation and not included in the enumeration of
real properties in article 335 of the Civil Code, and may be the subject of
mortgage.
Interest in business was not specifically enumerated as personal property
in the Civil Code in force at the time the above decision was rendered. Yet,
interest in business was declared to be personal property since it is
capable of appropriation and not included in the enumeration of real
properties. 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.[13]
As can be clearly gleaned from the above disquisitions, petitioners acts
constitute theft of respondent PLDTs business and service, committed by
means of the unlawful use of the latters facilities. In this regard, the
Amended Information inaccurately describes the offense by making it
appear that what petitioner took were the international long distance
telephone calls, rather than respondent PLDTs business.
A perusal of the records of this case readily reveals that petitioner and
respondent PLDT extensively discussed the issue of ownership of
telephone calls. The prosecution has taken the position that said
telephone calls belong to respondent PLDT. This is evident from its
Comment where it defined the issue of this case as whether or not the
unauthorized use or appropriation of PLDT international telephone calls,
service and facilities, for the purpose of generating personal profit or gain
that should have otherwise belonged to PLDT, constitutes theft.[14]
In discussing the issue of ownership, petitioner and respondent PLDT gave
their respective explanations on how a telephone call is generated.[15] For
its part, respondent PLDT explains the process of generating a telephone
call as follows:
38. The role of telecommunication companies is not limited to merely
providing the medium (i.e. the electric current) through which the human
voice/voice signal of the caller is transmitted. Before the human
voice/voice signal can be so transmitted, a telecommunication company,
using its facilities, must first break down or decode the human voice/voice
signal into electronic impulses and subject the same to further
augmentation and enhancements. Only after such process of conversion
will the resulting electronic impulses be transmitted by a
telecommunication company, again, through the use of its facilities. Upon
reaching the destination of the call, the telecommunication company will
again break down or decode the electronic impulses back to human
voice/voice signal before the called party receives the same. In other
words, a telecommunication company both converts/reconverts the
human voice/voice signal and provides the medium for transmitting the
same.
39. Moreover, in the case of an international telephone call, once the
electronic impulses originating from a foreign telecommunication
company country (i.e. Japan) reaches the Philippines through a local
telecommunication company (i.e. private respondent PLDT), it is the latter
which decodes, augments and enhances the electronic impulses back to
the human voice/voice signal and provides the medium (i.e. electric
current) to enable the called party to receive the call. Thus, it is not true
that the foreign telecommunication company provides (1) the electric
current which transmits the human voice/voice signal of the caller and (2)
the electric current for the called party to receive said human voice/voice
signal.
40. Thus, contrary to petitioner Laurels assertion, once the electronic
impulses or electric current originating from a foreign telecommunication
company (i.e. Japan) reaches private respondent PLDTs network, it is
private respondent PLDT which decodes, augments and enhances the
electronic impulses back to the human voice/voice signal and provides the
medium (i.e. electric current) to enable the called party to receive the call.
Without private respondent PLDTs network, the human voice/voice signal
of the calling party will never reach the called party.[16]
In the assailed Decision, it was conceded that in making the international
phone calls, the human voice is converted into electrical impulses or
electric current which are transmitted to the party called. A telephone call,
therefore, is electrical energy. It was also held in the assailed Decision that
intangible property such as electrical energy is capable of appropriation
because it may be taken and carried away. Electricity is personal property
under Article 416 (3) of the Civil Code, which enumerates forces of nature
which are brought under control by science.[17]
Indeed, while it may be conceded that international long distance calls,
the matter alleged to be stolen in the instant case, take the form of
electrical energy, it cannot be said that such international long distance
calls were personal properties belonging to PLDT since the latter could not
have acquired ownership over such calls. PLDT merely encodes, augments,
enhances, decodes and transmits said calls using its complex
communications infrastructure and facilities. PLDT not being the owner of
said telephone calls, then it could not validly claim that such telephone
calls were taken without its consent. It is the use of these communications
facilities without the consent of PLDT that constitutes the crime of theft,
which is the unlawful taking of the telephone services and business.
Therefore, the business of providing telecommunication and the
telephone service are personal property under Article 308 of the Revised
Penal Code, and the act of engaging in ISR is an act of subtraction
penalized under said article. However, the Amended Information describes
the thing taken as, international long distance calls, and only later
mentions stealing the business from PLDT as the manner by which the gain
was derived by the accused. In order to correct this inaccuracy of
description, this case must be remanded to the trial court and the
prosecution directed to amend the Amended Information, to clearly state
that the property subject of the theft are the services and business of
respondent PLDT. Parenthetically, this amendment is not necessitated by a
mistake in charging the proper offense, which would have called for the
dismissal of the information under Rule 110, Section 14 and Rule 119,
Section 19 of the Revised Rules on Criminal Procedure. To be sure, the
crime is properly designated as one of theft. The purpose of the
amendment is simply to ensure that the accused is fully and sufficiently
apprised of the nature and cause of the charge against him, and thus
guaranteed of his rights under the Constitution.
ACCORDINGLY, the motion for reconsideration is GRANTED. The assailed
Decision dated February 27, 2006 is RECONSIDERED and SET ASIDE. The
Decision of the Court of Appeals in CA-G.R. SP No. 68841 affirming the
Order issued by Judge Zeus C. Abrogar of the Regional Trial Court of
Makati City, Branch 150, which denied the Motion to Quash (With Motion
to Defer Arraignment) in Criminal Case No. 99-2425 for theft, is AFFIRMED.
The case is remanded to the trial court and the Public Prosecutor of
Makati City is hereby DIRECTED to amend the Amended Information to
show that the property subject of the theft were services and business of
the private offended party.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 6295 September 1, 1911
THE UNITED STATES, plaintiff-appellee,
vs.
IGNACIO CARLOS, defendant-appellant.
A. D. Gibbs for appellant.
Acting Attorney-General Harvey for appellee.
PER CURIAM:
The information filed in this case is as follows:
The undersigned accuses Ignacio Carlos of the crime of theft, committed
as follows:
That on, during, and between the 13th day of February, 1909, and the 3d
day of March, 1910, in the city of Manila, Philippine Islands, the said
Ignacio Carlos, with intent of gain and without violence or intimidation
against the person or force against the thing, did then and there, willfully,
unlawfully, and feloniously, take, steal , and carry away two thousand two
hundred and seventy-three (2,273) kilowatts of electric current, of the
value of nine hundred and nine (909) pesos and twenty (20) cents
Philippine currency, the property of the Manila Electric Railroad and Light
Company, a corporation doing business in the Philippine Islands, without
the consent of the owner thereof; to the damage and prejudice of the said
Manila Electric Railroad and Light Company in the said sum of nine
hundred and nine (909) pesos and twenty (20) cents Philippine currency,
equal to and equivalent of 4,546 pesetas Philippine currency. All contrary
to law.
(Sgd.) L. M. SOUTWORTH,
Prosecuting Attorney.
Subscribed and sworn to before me this 4th day of March, 1910, in the city
of Manila, Philippine Islands, by L. M. Southworth, prosecuting attorney
for the city of Manila.
(Sgd.) CHARLES S. LOBINGIER,
Judge, First Instance.
A preliminary investigation has heretofore been conducted in this case,
under my direction, having examined the witness under oath, in
accordance with the provisions of section 39 of Act No. 183 of the
Philippine Commission, as amended by section 2 of Act No. 612 of the
Philippine Commission.
(Sgd) L. M. SOUTHWORTH,
Prosecuting Attorney.
Subscribed and sworn to before me this 4th day of March, 1910, in the city
of Manila, Philippine Islands, by L. M. Southworth, prosecuting attorney
for the city of Manila.
(Sgd.) CHARLES LOBINGIER,
Judge, First Instance.
A warrant for the arrest of the defendant was issued by the Honorable J. C.
Jenkins on the 4th of March and placed in the hands of the sheriff. The
sheriff's return shows that the defendant gave bond for his appearance.
On the 14th of the same month counsel for the defendant demurrer to the
complaint on the following grounds:
1 That the court has no jurisdiction over the person of the
accused nor of the offense charged because the accused has not been
accorded a preliminary investigation or examination as required by law
and no court, magistrate, or other competent authority has determined
from a sworn complaint or evidence adduced that there is probable cause
to believe that a crime has been committed, or that this defendant has
committed any crime.
2 That the facts charged do not constitute a public offense.
The demurrer was overruled on the same day and the defendant having
refused to plead, a plea of not guilty was entered by direction of the court
for him and the trial proceeded.
After due consideration of all the proofs presented and the arguments of
counsel the trial court found the defendant guilty of the crime charged
and sentenced him to one year eight months and twenty-one days'
presidio correccional, to indemnify the offended party, The Manila Electric
Railroad and Light Company, in the sum of P865.26, to the corresponding
subsidiary imprisonment in case of insolvency and to the payment of the
costs. From this judgment the defendant appealed and makes the
following assignments of error:
I.
The court erred in overruling the objection of the accused to the
jurisdiction of the court, because he was not given a preliminary
investigation as required by law, and in overruling his demurrer for the
same reason.
II.
The court erred in declaring the accused to be guilty, in view of the
evidence submitted.
III.
The court erred in declaring that electrical energy may be stolen.
IV.
The court erred in not declaring that the plaintiff consented to the taking
of the current.
V.
The court erred in finding the accused guilty of more than one offense.
VI.
The court erred in condemning the accused to pay P865.26 to the electric
company as damages.
Exactly the same question as that raised in the first assignment of error,
was after a through examination and due consideration, decided adversely
to appellant's contention in the case of U. S. vs. Grant and Kennedy (18
Phil. Rep., 122). No sufficient reason is presented why we should not
follow the doctrine enunciated in that case.
The question raised in the second assignment of error is purely one fact.
Upon this point the trial court said:
For considerably more than a year previous to the filing of this complaint
the accused had been a consumer of electricity furnished by the Manila
Electric Railroad and Light Company for a building containing the residence
of the accused and three other residences, and which was equipped,
according to the defendant's testimony, with thirty electric lights. On
March 15, 1909, the representatives of the company, believing that more
light was being used than their meter showed, installed an additional
meter (Exhibit A) on a pole outside of defendant's house, and both it and
the meter (Exhibit B) which had been previously installed in the house
were read on said date. Exhibit A read 218 kilowatt hours; Exhibit B, 745
kilowatt hours. On March 3, 1910 each was read again, Exhibit A showing
2,718 kilowatt hours and Exhibit B, 968. It is undisputed that the current
which supplied the house passed through both meters and the city
electrician testifies that each meter was tested on the date of the last
reading and was "in good condition." The result of this registration
therefore is that while the outsider meter (Exhibit A) showed a
consumption in defendant's building of 2,500 kilowatt hours of electricity,
this inside meter (Exhibit B) showed but 223 kilowatt hours. In other
words the actual consumption, according to the outside meter, was more
than ten times as great as that registered by the one inside. Obviously this
difference could not be due to normal causes, for while the electrician
called by the defense (Lanusa) testifies to the possibility of a difference
between two such meters, he places the extreme limit of such difference
between them 5 per cent. Here, as we have seen, the difference is more
than 900 per cent. Besides, according to the defendant's electrician, the
outside meter should normally run faster, while according to the test
made in this case the inside meter (Exhibit B) ran the faster. The city
electrician also testifies that the electric current could have been deflected
from the inside meter by placing thereon a device known as a "jumper"
connecting the two outside wires, and there is other testimony that there
were marks on the insulation of the meter Exhibit B which showed the use
of such a device. There is a further evidence that the consumption of 223
kilowatt hours, registered by the inside meter would not be a reasonable
amount for the number of lights installed in defendant's building during
the period in question, and the accused fails to explain why he should
have had thirty lights installed if he needed but four or five.
On the strength of this showing a search warrant was issued for the
examination of defendant's premises and was duly served by a police
officer (Hartpence). He was accompanied at the time by three employees
of the Manila Electric Railroad and Light Company, and he found there the
accused, his wife and son, and perhaps one or two others. There is a sharp
conflict between the several spectators on some points but on one there is
no dispute. All agree that the "jumper" (Exhibit C) was found in a drawer
of a small cabinet in the room of defendant's house where the meter was
installed and not more than 20 feet therefrom. In the absence of a
satisfactory explanation this constituted possession on defendant's part,
and such possession, under the Code of Civil Procedure, section 334 (10),
raises the presumption that the accused was the owner of a device whose
only use was to deflect the current from the meter.
Is there any other "satisfactory explanation" of the "jumper's" presence?
The only one sought to be offered is the statement by the son of the
accused, a boy of twelve years, that he saw the "jumper" placed there by
the witness Porter, an employee of the Light Company. The boy is the only
witness who so testifies and Porter himself squarely denies it. We can not
agree with counsel for the defense that the boy's interest in the outcome
of this case is less than that of the witness for the prosecution. It seems to
us that his natural desire to shield his father would far outweight any
interest such an employee like Porter would have and which, at most,
would be merely pecuniary.
There is, however, one witness whom so far as appears, has no interest in
the matter whatsoever. This is officer Hartpence, who executed the search
warrant. He testifies that after inspecting other articles and places in the
building as he and the other spectators, including the accused, approached
the cabinet in which the "jumper" was found, the officer's attention was
called to the defendant's appearance and the former noticed that the
latter was becoming nervous. Where the only two witnesses who are
supposed to know anything of the matter thus contradict each other this
item of testimony by the officer is of more than ordinary significance; for
if, as the accused claims, the "jumper" was placed in the cabinet for the
first time by Porter there would be no occasion for any change of
demeanor on the part of the accused. We do not think that the officer's
declination to wait until defendant should secure a notary public shows
bias. The presence of such an official was neither required nor authorized
by law and the very efficacy of a search depends upon its swiftness.
We must also agree with the prosecuting attorney that the attending
circumstances do not strengthen the story told by the boy; that the latter
would have been likely to call out at the time he saw the "jumper" being
placed in the drawer, or at least directed his father's attention to it
immediately instead of waiting, as he says, until the latter was called by
the officer. Finally, to accept the boy's story we must believe that this
company or its representatives deliberately conspired not merely to lure
the defendant into the commission of a crime but to fasten upon him a
crime which he did not commit and thus convict an innocent man by
perjured evidence. This is a much more serious charge than that contained
in the complaint and should be supported by very strong corroborating
circumstances which we do not find here. We are, accordingly, unable to
consider as satisfactory defendant's explanation of the "jumper's"
presence.
The only alternative is the conclusion that the "jumper" was placed there
by the accused or by some one acting for him and that it was the
instrument by which the current was deflected from the matter Exhibit B
and the Light Company deprived of its lawful compensation.
After a careful examination of the entire record we are satisfied beyond
peradventure of a doubt that the proofs presented fully support the facts
as set forth in the foregoing finding.
Counsel for the appellant insists that the only corporeal property can be
the subject of the crime of larceny, and in the support of this proposition
cites several authorities for the purpose of showing that the only subjects
of larceny are tangible, movable, chattels, something which could be taken
in possession and carried away, and which had some, although trifling,
intrinsic value, and also to show that electricity is an unknown force and
can not be a subject of larceny.
In the U. S. vs. Genato (15 Phi. Rep., 170) the defendant, the owner of the
store situated at No. 154 Escolta, Manila, was using a contrivance known
as a "jumper" on the electric meter installed by the Manila Electric
Railroad and the Light Company. As a result of the use of this "jumper" the
meter, instead of making one revolution in every four seconds, registered
one in seventy-seven seconds, thereby reducing the current approximately
95 per cent. Genato was charged in the municipal court with a violation of
a certain ordinance of the city of Manila, and was sentenced to pay a fine
of P200. He appealed to the Court of First Instance, was again tried and
sentenced to pay the same fine. An appeal was taken from the judgment
of the Court of First Instance to the Supreme Court on the ground that the
ordinance in question was null and void. It is true that the only question
directly presented was of the validity of the city ordinance. The court, after
holding that said ordinance was valid, said:
Even without them (ordinances), the right of ownership of electric current
is secured by articles 517 and 518 of the Penal Code; the application of
these articles in case of subtraction of gas, a fluid used for lighting, and in
some respects resembling electricity, is confirmed by the rule laid down in
the decisions of the supreme court of Spain January 20, 1887, and April 1,
1897, construing and enforcing the provisions of articles 530 and 531 of
the penal code of that country, articles identical with articles 517 and 518
of the code in force in these Islands.
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.
And article 518 fixes the penalty for larceny in proportion to the value of
the personal property stolen.
It is true that electricity is no longer, as formerly, regarded by electricians
as a fluid, but its manifestation and effects, like those of gas, may be seen
and felt. The true test of what is a proper subject of larceny seems to be
not whether the subject is corporeal, but whether it is capable of
appropriation by another than the owner.
It is well-settled that illuminating gas may be the subject of larceny, even
in the absence of a statute so providing. (Decisions of supreme court of
Spain, January 20, 1887, and April 1, 1897, supra; also (England) Queen vs.
Firth, L. R. 1 C. C., 172, 11 Cox C. C., 234; Queen vs. White, 3 C. & K., 363, 6
Cox C. C., 213; Woods vs. People, 222 III., 293, 7 L. R. A., 520;
Commonwealth vs. Shaw, 4 Allen (Mass), 308; State vs. Wellman, 34
Minn., 221, N. W. Rep., 385, and 25 Cyc., p. 12, note 10.)
In the case of Commonwealth vs. Shaw, supra, the court, speaking through
Chief Justice Bigelow, said:
There is nothing in the nature of gas used for illuminating purposes which
renders it incapable of being feloniously taken and carried away. It is a
valuable article of merchandise, bought and sold like other personal
property, susceptible of being severed from a mass or larger quantity, and
of being transported from place to place. In the present case it appears
that it was the property of the Boston Gas Light Company; that it was in
their possession by being confined in conduits and tubes which belonged
to them, and that the defendant severed a portion of that which was in
the pipes of the company by taking it into her house and there consuming
it. All this being proved to have been done by her secretly and with intent
to deprive the company of their property and to appropriate it to her own
use, clearly constitutes the crime of larceny.
Electricity, the same as gas, is a valuable article of merchandise, bought
and sold like other personal property and is capable of appropriation by
another. So no error was committed by the trial court in holding that
electricity is a subject of larceny.
It is urged in support of the fourth assignment of error that if it be true
that the appellant did appropriate to his own use the electricity as charged
he can not be held guilty of larceny for any part of the electricity thus
appropriated, after the first month, for the reason that the complaining
party, the Manila Electric Road and Light Company, knew of this
misappropriation and consented thereto.
The outside meter was installed on March 15, 1909, and read 218 kilowatt
hours. On the same day the inside meter was read and showed 745
kilowatt hours. Both meters were again read on March 3, 1910, and the
outside one showed 2,718 kilowatt hours while the one on the inside only
showed 968, the difference in consumption during this time being 2,277
kilowatt hours. The taking of this current continued over a period of one
year, less twelve days. Assuming that the company read both meters at
the end of each month; that it knew the defendant was misappropriating
the current to that extent; and that t continued to furnish the current,
thereby giving the defendant an opportunity to continue the
misppropriation, still, we think, that the defendant is criminally
responsible for the taking of the whole amount, 2,277 kilowatt hours. The
company had a contract with the defendant to furnish him with current
for lighting purposes. It could not stop the misappropriation without
cutting off the current entirely. It could not reduce the current so as to just
furnish sufficient for the lighting of two, three, or five lights, as claimed by
the defendant that he used during the most of this time, but the current
must always be sufficiently strong to furnish current for the thirty lights, at
any time the defendant desired to use them.
There is no pretense that the accused was solicited by the company or any
one else to commit the acts charged. At most there was a mere passive
submission on the part of the company that the current should be taken
and no indication that it wished it to be taken, and no knowledge by the
defendant that the company wished him to take the current, and no
mutual understanding between the company and the defendant, and no
measures of inducement of any kind were employed by the company for
the purpose of leading the defendant into temptation, and no preconcert
whatever between him and company. The original design to
misappropriate this current was formed by the defendant absolutely
independent of any acts on the part of the company or its agents. It is
true, no doubt, as a general proposition, that larceny is not committed
when the property is taken with the consent of its owner. It may be
difficult in some instances to determine whether certain acts constitute, in
law, such "consent." But under the facts in the case at bar it is not difficult
to reach a conclusion that the acts performed by the plaintiff company did
not constitute a consent on its part the defendant take its property. We
have been unable to find a well considered case holding contrary opinion
under similar facts, but, there are numerous cases holding that such acts
do not constitute such consent as would relieve the taker of criminal
responsibility. The fourth assignment of error is, therefore, not well
founded.
It is also contended that since the "jumper" was not used continuously,
the defendant committed not a single offense but a series of offenses. It is,
no doubt, true that the defendant did not allow the "jumper" to remain in
place continuously for any number of days as the company inspected
monthly the inside meter. So the "jumper" was put on and taken off at
least monthly, if not daily, in order to avoid detection, and while the
"jumper" was off the defendant was not misappropriating the current. The
complaint alleged that the defendant did on, during, and between the
13th day of February, 1909, and the 3d of March, 1910. willfully,
unlawfully, and feloniously take, steal, and carry away 2,277 kilowatts of
electric current of the value of P909. No demurrer was presented against
this complaint on the ground that more than one crime was charged. The
Government had no opportunity to amend or correct this error, if error at
all. In the case of U. S. vs. Macaspac (12 Phil. Rep., 26), the defendant
received from one Joquina Punu the sum of P31.50, with the request to
deliver it to Marcelina Dy-Oco. The defendant called upon Marcelina, but
instead of delivering the said amount she asked Marcelina for P30 in the
name of Joaquina who had in no way authorized her to do so. Marcelina
gave her P30, believing that Joaquina had sent for it. Counsel for the
defendant insisted that the complaint charged his client with two different
crimes of estafa in violation of section 11 of General Orders, No. 58. In
disposing of this question this court said:
The said defect constitutes one of the dilatory pleas indicated by section
21, and the accused ought to have raised the point before the trial began.
Had this been done, the complaint might have been amended in time,
because it is merely a defect of form easily remedied. . . . Inasmuch as in
the first instance the accused did not make the corresponding dilatory
plea to the irregularity of the complaint, it must be understood that has
waived such objection, and is not now entitled to raise for the first time
any question in reference thereto when submitting to this court her
assignment of errors. Apart from the fact that the defense does not
pretend that any of the essential rights of the accused have been injured,
the allegation of the defect above alluded to, which in any case would only
affect form of the complaint, can not justify a reversal of the judgment
appealed from, according to the provisions of section 10 of General
Orders, No. 58.
In the case at bar it is not pointed out wherein any of the essential rights
of the defendant have been prejudiced by reason of the fact that the
complaint covered the entire period. If twelve distinct and separate
complaints had been filed against the defendant, one for each month, the
sum total of the penalties imposed might have been very much greater
than that imposed by the court in this case. The covering of the entire
period by one charge has been beneficial, if anything, and not prejudicial
to the rights of the defendant. The prosecuting attorney elected to cover
the entire period with one charge and the accused having been convicted
for this offense, he can not again be prosecuted for the stealing of the
current at any time within that period. Then, again, we are of the opinion
that the charge was properly laid. The electricity was stolen from the same
person, in the same manner, and in the same place. It was substantially
one continuous act, although the "jumper" might have been removed and
replaced daily or monthly. The defendant was moved by one impulse to
appropriate to his own use the current, and the means adopted by him for
the taking of the current were in the execution of a general fraudulent
plan.
A person stole gas for the use of a manufactory by means of pipe, which
drew off the gas from the main without allowing it to pass through the
meter. The gas from this pipe was burnt every day, and turned off at night.
The pipe was never closed at this junction with the main, and
consequently always remained full of gas. It was held, that if the pipe
always remained full, there was, in fact, a continuous taking of the gas and
not a series of separate talkings. It was held also that even if the pipe had
not been kept full, the taking would have been continuous, as it was
substantially all one transaction. (Regina vs. Firth, L. R., 1 C. C., 172; 11 Cox
C. C., 234. Cited on p. 758 of Wharton's Criminal Law, vol. 1, 10th ed.)
The value of the electricity taken by the defendant was found by the trial
court to be P865.26. This finding is fully in accordance with the evidence
presented. So no error was committed in sentencing the defendant to
indemnify the company in this amount, or to suffer the corresponding
subsidiary imprisonment in case of insolvency.
The judgment being strictly in accordance with the law and the merits of
the case, same is hereby affirmed, with costs against the appellant.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15334 January 31, 1964
BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER OF
QUEZON CITY, petitioners,
vs.
MANILA ELECTRIC COMPANY, respondent.
Assistant City Attorney Jaime R. Agloro for petitioners.
Ross, Selph and Carrascoso for respondent.
PAREDES, J.:
From the stipulation of facts and evidence adduced during the hearing, the
following appear:
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 said franchise on March 1903, the terms and conditions of
which were embodied in Ordinance No. 44 approved on March 24, 1903.
Respondent Manila Electric Co. (Meralco for short), 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. A
photograph of one of these steel towers is attached to the petition for
review, marked Annex A. Three steel towers were inspected by the lower
court and parties and the following were the descriptions given there of by
said court:
The first steel tower is located in South Tatalon, Espaa Extension, Quezon
City. The findings were as follows: the ground around one of the four posts
was excavated to a depth of about eight (8) feet, with an opening of about
one (1) meter in diameter, decreased to about a quarter of a meter as it
we deeper until it reached the bottom of the post; at the bottom of the
post were two parallel steel bars attached to the leg means of bolts; the
tower proper was attached to the leg three bolts; with two cross metals to
prevent mobility; there was no concrete foundation but there was adobe
stone underneath; as the bottom of the excavation was covered with
water about three inches high, it could not be determined with certainty
to whether said adobe stone was placed purposely or not, as the place
abounds with this kind of stone; and the tower carried five high voltage
wires without cover or any insulating materials.
The second tower inspected was located in Kamuning Road, K-F, Quezon
City, on land owned by the petitioner approximate more than one
kilometer from the first tower. As in the first tower, the ground around
one of the four legs was excavate from seven to eight (8) feet deep and
one and a half (1-) meters wide. There being very little water at the
bottom, it was seen that there was no concrete foundation, but there soft
adobe beneath. The leg was likewise provided with two parallel steel bars
bolted to a square metal frame also bolted to each corner. Like the first
one, the second tower is made up of metal rods joined together by means
of bolts, so that by unscrewing the bolts, the tower could be dismantled
and reassembled.
The third tower examined is located along Kamias Road, Quezon City. As in
the first two towers given above, the ground around the two legs of the
third tower was excavated to a depth about two or three inches beyond
the outside level of the steel bar foundation. It was found that there was
no concrete foundation. Like the two previous ones, the bottom
arrangement of the legs thereof were found to be resting on soft adobe,
which, probably due to high humidity, looks like mud or clay. It was also
found that the square metal frame supporting the legs were not attached
to any material or foundation.
On November 15, 1955, petitioner City Assessor of Quezon City declared
the aforesaid steel towers for real property tax under Tax declaration Nos.
31992 and 15549. After denying respondent's petition to cancel these
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 said steel towers for the
years 1952 to 1956. Respondent paid the amount under protest, and filed
a petition for review in the Court of Tax Appeals (CTA for short) which
rendered a decision on December 29, 1958, ordering the cancellation of
the said tax declarations and the petitioner City Treasurer of Quezon City
to refund to the respondent the sum of P11,651.86. The motion for
reconsideration having been denied, on April 22, 1959, the instant petition
for review was filed.
In upholding the cause of respondents, the CTA held that: (1) the steel
towers come within the term "poles" which are declared exempt from
taxes under part II paragraph 9 of respondent's franchise; (2) the steel
towers are personal properties and are not subject to real property tax;
and (3) the City Treasurer of Quezon City is held responsible for the refund
of the amount paid. These are assigned as errors by the petitioner in the
brief.
The tax exemption privilege of the petitioner is quoted hereunder:
PAR 9. The grantee shall be liable to pay the same taxes upon its real
estate, buildings, plant (not including poles, wires, transformers, and
insulators), machinery and personal property as other persons are or may
be hereafter required by law to pay ... Said percentage shall be due and
payable at the time stated in paragraph nineteen of Part One hereof, ...
and shall be in lieu of all taxes and assessments of whatsoever nature and
by whatsoever authority upon the privileges, earnings, income, franchise,
and poles, wires, transformers, and insulators of the grantee from which
taxes and assessments the grantee is hereby expressly exempted. (Par. 9,
Part Two, Act No. 484 Respondent's Franchise; emphasis supplied.)
The word "pole" means "a long, comparatively slender usually cylindrical
piece of wood or timber, as typically the stem of a small tree stripped of its
branches; also by extension, a similar typically cylindrical piece or object of
metal or the like". The term also refers to "an upright standard to the top
of which something is affixed or by which something is supported; as a
dovecote set on a pole; telegraph poles; a tent pole; sometimes,
specifically a vessel's master (Webster's New International Dictionary 2nd
Ed., p. 1907.) Along the streets, in the City of Manila, may be seen
cylindrical metal poles, cubical concrete poles, and poles of the PLDT Co.
which are made of two steel bars joined together by an interlacing metal
rod. They are called "poles" notwithstanding the fact that they are no
made of wood. It must be noted from paragraph 9, above quoted, that the
concept of the "poles" for which exemption is granted, is not determined
by their place or location, nor by the character of the electric current it
carries, nor the material or form of which it is made, but the use to which
they are dedicated. In accordance with the definitions, pole is not
restricted to a long cylindrical piece of wood or metal, but includes
"upright standards to the top of which something is affixed or by which
something is supported. As heretofore described, respondent's steel
supports consists of a framework of four steel bars or strips which are
bound by steel cross-arms atop of which are cross-arms supporting five
high voltage transmission wires (See Annex A) and their sole function is to
support or carry such wires.
The conclusion of the CTA that the steel supports in question are
embraced in the term "poles" is not a novelty. Several courts of last resort
in the United States have called these steel supports "steel towers", and
they denominated these supports or towers, as electric poles. In their
decisions the words "towers" and "poles" were used interchangeably, and
it is well understood in that jurisdiction that a transmission tower or pole
means the same thing.
In a proceeding to condemn land for the use of electric power wires, in
which the law provided that wires shall be constructed upon suitable
poles, this term was construed to mean either wood or metal poles and in
view of the land being subject to overflow, and the necessary carrying of
numerous wires and the distance between poles, the statute was
interpreted to include towers or poles. (Stemmons and Dallas Light Co.
(Tex) 212 S.W. 222, 224; 32-A Words and Phrases, p. 365.)
The term "poles" was also used to denominate the steel supports or
towers used by an association used to convey its electric power furnished
to subscribers and members, constructed for the purpose of fastening high
voltage and dangerous electric wires alongside public highways. The steel
supports or towers were made of iron or other metals consisting of two
pieces running from the ground up some thirty feet high, being wider at
the bottom than at the top, the said two metal pieces being connected
with criss-cross iron running from the bottom to the top, constructed like
ladders and loaded with high voltage electricity. In form and structure,
they are like the steel towers in question. (Salt River Valley Users' Ass'n v.
Compton, 8 P. 2nd, 249-250.)
The term "poles" was used to denote the steel towers of an electric
company engaged in the generation of hydro-electric power generated
from its plant to the Tower of Oxford and City of Waterbury. These steel
towers are about 15 feet square at the base and extended to a height of
about 35 feet to a point, and are embedded in the cement foundations
sunk in the earth, the top of which extends above the surface of the soil in
the tower of Oxford, and to the towers are attached insulators, arms, and
other equipment capable of carrying wires for the transmission of electric
power (Connecticut Light and Power Co. v. Oxford, 101 Conn. 383, 126 Atl.
p. 1).
In a case, the defendant admitted that the structure on which a certain
person met his death was built for the purpose of supporting a
transmission wire used for carrying high-tension electric power, but
claimed that the steel towers on which it is carried were so large that their
wire took their structure out of the definition of a pole line. It was held
that in defining the word pole, one should not be governed by the wire or
material of the support used, but was considering the danger from any
elevated wire carrying electric current, and that regardless of the size or
material wire of its individual members, any continuous series of
structures intended and used solely or primarily for the purpose of
supporting wires carrying electric currents is a pole line (Inspiration
Consolidation Cooper Co. v. Bryan 252 P. 1016).
It is evident, therefore, that the word "poles", as used in Act No. 484 and
incorporated in the petitioner's franchise, should not be given a restrictive
and narrow interpretation, as to defeat the very object for which the
franchise was granted. The poles as contemplated thereon, should be
understood and taken as a part of the electric power system of the
respondent Meralco, for the conveyance of electric current from the
source thereof to its consumers. If the respondent would be required to
employ "wooden poles", or "rounded poles" as it used to do fifty years
back, then one should admit that the Philippines is one century behind the
age of space. It should also be conceded by now that steel towers, like the
ones in question, for obvious reasons, can better effectuate the purpose
for which the respondent's franchise was granted.
Granting for the purpose of argument that the steel supports or towers in
question are not embraced within the term poles, the logical question
posited is whether they constitute real properties, so that they can be
subject to a real property tax. The tax law does not provide for a definition
of real property; but Article 415 of the Civil Code does, by stating 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
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 construction 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 can not 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 these 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. These steel towers or supports do not
also fall under paragraph 5, for they are not machineries, receptacles,
instruments or implements, and even if they were, they are not intended
for industry or works on the land. Petitioner is not engaged in an industry
or works in the land in which the steel supports or towers are constructed.
It is finally contended that the CTA erred in ordering the City Treasurer of
Quezon City to refund the sum of P11,651.86, despite the fact that Quezon
City is not a party to the case. It is argued that as the City Treasurer is not
the real party in interest, but Quezon City, which was not a party to the
suit, notwithstanding its capacity to sue and be sued, he should not be
ordered to effect the refund. This question has not been raised in the
court below, and, therefore, it cannot be properly raised for the first time
on appeal. The herein petitioner is indulging in legal technicalities and
niceties which do not help him any; for factually, it was he (City Treasurer)
whom had insisted that respondent herein pay the real estate taxes, which
respondent paid under protest. Having acted in his official capacity as City
Treasurer of Quezon City, he would surely know what to do, under the
circumstances.
IN VIEW HEREOF, the decision appealed from is hereby affirmed, with
costs against the petitioners.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18456 November 30, 1963
CONRADO P. NAVARRO, plaintiff-appellee,
vs.
RUFINO G. PINEDA, RAMONA REYES, ET AL., defendants-appellants.
Deogracias Taedo, Jr. for plaintiff-appellee.
Renato A. Santos for defendants-appellants.
PAREDES, J.:
On December 14, 1959, defendants Rufino G. Pineda and his mother Juana
Gonzales (married to Gregorio Pineda), borrowed from plaintiff Conrado P.
Navarro, the sum of P2,500.00, payable 6 months after said date or on
June 14, 1959. To secure the indebtedness, Rufino executed a document
captioned "DEED OF REAL ESTATE and CHATTEL MORTGAGES", whereby
Juana Gonzales, by way of Real Estate Mortgage hypothecated a parcel of
land, belonging to her, registered with the Register of Deeds of Tarlac,
under Transfer Certificate of Title No. 25776, and Rufino G. Pineda, by way
of Chattel Mortgage, mortgaged his two-story residential house, having a
floor area of 912 square meters, erected on a lot belonging to Atty.
Vicente Castro, located at Bo. San Roque, Tarlac, Tarlac; and one motor
truck, registered in his name, under Motor Vehicle Registration Certificate
No. A-171806. Both mortgages were contained in one instrument, which
was registered in both the Office of the Register of Deeds and the Motor
Vehicles Office of Tarlac.
When the mortgage debt became due and payable, the defendants, after
demands made on them, failed to pay. They, however, asked and were
granted extension up to June 30, 1960, within which to pay. Came June 30,
defendants again failed to pay and, for the second time, asked for another
extension, which was given, up to July 30, 1960. In the second extension,
defendant Pineda in a document entitled "Promise", categorically stated
that in the remote event he should fail to make good the obligation on
such date (July 30, 1960), the defendant would no longer ask for further
extension and there would be no need for any formal demand, and
plaintiff could proceed to take whatever action he might desire to enforce
his rights, under the said mortgage contract. In spite of said promise,
defendants, failed and refused to pay the obligation.
On August 10, 1960, plaintiff filed a complaint for foreclosure of the
mortgage and for damages, which consisted of liquidated damages in the
sum of P500.00 and 12% per annum interest on the principal, effective on
the date of maturity, until fully paid.
Defendants, answering the complaint, among others, stated
Defendants admit that the loan is overdue but deny that portion of
paragraph 4 of the First Cause of Action which states that the defendants
unreasonably failed and refuse to pay their obligation to the plaintiff the
truth being the defendants are hard up these days and pleaded to the
plaintiff to grant them more time within which to pay their obligation and
the plaintiff refused;
WHEREFORE, in view of the foregoing it is most respectfully prayed that
this Honorable Court render judgment granting the defendants until
January 31, 1961, within which to pay their obligation to the plaintiff.
On September 30, 1960, plaintiff presented a Motion for summary
Judgment, claiming that the Answer failed to tender any genuine and
material issue. The motion was set for hearing, but the record is not clear
what ruling the lower court made on the said motion. On November 11,
1960, however, the parties submitted a Stipulation of Facts, wherein the
defendants admitted the indebtedness, the authenticity and due
execution of the Real Estate and Chattel Mortgages; that the indebtedness
has been due and unpaid since June 14, 1960; that a liability of 12% per
annum as interest was agreed, upon failure to pay the principal when due
and P500.00 as liquidated damages; that the instrument had been
registered in the Registry of Property and Motor Vehicles Office, both of
the province of Tarlac; that the only issue in the case is whether or not the
residential house, subject of the mortgage therein, can be considered a
Chattel and the propriety of the attorney's fees.
On February 24, 1961, the lower court held
... WHEREFORE, this Court renders decision in this Case:
(a) Dismissing the complaint with regard to defendant Gregorio
Pineda;
(b) Ordering defendants Juana Gonzales and the spouses Rufino
Pineda and Ramon Reyes, to pay jointly and severally and within ninety
(90) days from the receipt of the copy of this decision to the plaintiff
Conrado P. Navarro the principal sum of P2,550.00 with 12% compounded
interest per annum from June 14, 1960, until said principal sum and
interests are fully paid, plus P500.00 as liquidated damages and the costs
of this suit, with the warning that in default of said payment of the
properties mentioned in the deed of real estate mortgage and chattel
mortgage (Annex "A" to the complaint) be sold to realize said mortgage
debt, interests, liquidated damages and costs, in accordance with the
pertinent provisions of Act 3135, as amended by Act 4118, and Art. 14 of
the Chattel Mortgage Law, Act 1508; and
(c) Ordering the defendants Rufino Pineda and Ramona Reyes, to
deliver immediately to the Provincial Sheriff of Tarlac the personal
properties mentioned in said Annex "A", immediately after the lapse of the
ninety (90) days above-mentioned, in default of such payment.
The above judgment was directly appealed to this Court, the defendants
therein assigning only a single error, allegedly committed by the lower
court, to wit
In holding that the deed of real estate and chattel mortgages appended to
the complaint is valid, notwithstanding the fact that the house of the
defendant Rufino G. Pineda was made the subject of the chattel mortgage,
for the reason that it is erected on a land that belongs to a third person.
Appellants contend that article 415 of the New Civil Code, in classifying a
house as immovable property, makes no distinction whether the owner of
the land is or not the owner of the building; the fact that the land belongs in the present case, it was one of the parties to the contract of mortgages
to another is immaterial, it is enough that the house adheres to the land; who assailed its validity.
that in case of immovables by incorporation, such as houses, trees, plants,
etc; the Code does not require that the attachment or incorporation be CONFORMABLY WITH ALL THE FOREGOING, the decision appealed from,
made by the owner of the land, the only criterion being the union or should be, as it is hereby affirmed, with costs against appellants.
incorporation with the soil. In other words, it is claimed that "a building is Republic of the Philippines
an immovable property, irrespective of whether or not said structure and SUPREME COURT
the land on which it is adhered to, belong to the same owner" (Lopez v. Manila
Orosa, G.R. Nos. L-10817-8, Feb. 28, 1958). (See also the case of Leung Yee
v. Strong Machinery Co., 37 Phil. 644). Appellants argue that since only FIRST DIVISION
movables can be the subject of a chattel mortgage (sec. 1, Act No. 3952)
then the mortgage in question which is the basis of the present action, G.R. No. 120098 October 2, 2001
cannot give rise to an action for foreclosure, because it is nullity. (Citing
Associated Ins. Co., et al. v. Isabel Iya v. Adriano Valino, et al., L-10838, RUBY L. TSAI, petitioner,
May 30, 1958.) vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS, INC. and MAMERTO R
The trial court did not predicate its decision declaring the deed of chattel VILLALUZ, respondents.
mortgage valid solely on the ground that the house mortgaged was
erected on the land which belonged to a third person, but also and x---------------------------------------------------------x
principally on the doctrine of estoppel, in that "the parties have so
expressly agreed" in the mortgage to consider the house as chattel "for its [G.R. No. 120109. October 2, 2001.]
smallness and mixed materials of sawali and wood". In construing arts.
334 and 335 of the Spanish Civil Code (corresponding to arts. 415 and 416, PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
N.C.C.), for purposes of the application of the Chattel Mortgage Law, it vs.
was held that under certain conditions, "a property may have a character HON. COURT OF APPEALS, EVER TEXTILE MILLS and MAMERTO R VILLALUZ,
different from that imputed to it in said articles. It is undeniable that the respondents.
parties to a contract may by agreement, treat as personal property that
which by nature would be real property" (Standard Oil Co. of N.Y. v. QUISUMBING, J.:
Jaranillo, 44 Phil. 632-633)."There can not be any question that a building
of mixed materials may be the subject of a chattel mortgage, in which These consolidated cases assail the decision1 of the Court of Appeals in
case, it is considered as between the parties as personal property. ... The CA-G.R. CV No. 32986, affirming the decision2 of the Regional Trial Court
matter depends on the circumstances and the intention of the parties". of Manila, Branch 7, in Civil Case No. 89-48265. Also assailed is respondent
"Personal property may retain its character as such where it is so agreed court's resolution denying petitioners' motion for reconsideration.
by the parties interested even though annexed to the realty ...". (42 Am.
Jur. 209-210, cited in Manarang, et al. v. Ofilada, et al., G.R. No. L-8133, On November 26, 1975, respondent Ever Textile Mills, Inc. (EVERTEX)
May 18, 1956; 52 O.G. No. 8, p. 3954.) The view that parties to a deed of obtained a three million peso (P3,000,000.00) loan from petitioner
chattel mortgagee may agree to consider a house as personal property for Philippine Bank of Communications (PBCom). As security for the loan,
the purposes of said contract, "is good only insofar as the contracting EVERTEX executed in favor of PBCom, a deed of Real and Chattel Mortgage
parties are concerned. It is based partly, upon the principles of estoppel over the lot under TCT No. 372097, where its factory stands, and the
..." (Evangelista v. Alto Surety, No. L-11139, Apr. 23, 1958). In a case, a chattels located therein as enumerated in a schedule attached to the
mortgage house built on a rented land, was held to be a personal mortgage contract. The pertinent portions of the Real and Chattel
property, not only because the deed of mortgage considered it as such, Mortgage are quoted below:
but also because it did not form part of the land (Evangelista v. Abad
[CA];36 O.G. 2913), for it is now well settled that an object placed on land MORTGAGE
by one who has only a temporary right to the same, such as a lessee or
usufructuary, does not become immobilized by attachment (Valdez v. (REAL AND CHATTEL)
Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co., Inc. v. Castillo,
et al., 61 Phil. 709). Hence, if a house belonging to a person stands on a xxx xxx xxx
rented land belonging to another person, it may be mortgaged as a
personal property is so stipulated in the document of mortgage. The MORTGAGOR(S) hereby transfer(s) and convey(s), by way of First
(Evangelista v. Abad, supra.) It should be noted, however, that the Mortgage, to the MORTGAGEE, . . . certain parcel(s) of land, together with
principle is predicated on statements by the owner declaring his house to all the buildings and improvements now existing or which may hereafter
be a chattel, a conduct that may conceivably estop him from subsequently exist thereon, situated in . . .
claiming otherwise (Ladera, et al.. v. C. N. Hodges, et al., [CA]; 48 O.G.
5374). The doctrine, therefore, gathered from these cases is that although "Annex A"
in some instances, a house of mixed materials has been considered as a
chattel between them, has been recognized, it has been a constant (Real and Chattel Mortgage executed by Ever Textile Mills in favor of
criterion nevertheless that, with respect to third persons, who are not PBCommunications continued)
parties to the contract, and specially in execution proceedings, the house
is considered as an immovable property (Art. 1431, New Civil Code). LIST OF MACHINERIES & EQUIPMENT

In the case at bar, the house in question was treated as personal or A. Forty Eight (48) units of Vayrow Knitting Machines-Tompkins
movable property, by the parties to the contract themselves. In the deed made in Hongkong:
of chattel mortgage, appellant Rufino G. Pineda conveyed by way of
"Chattel Mortgage" "my personal properties", a residential house and a Serial Numbers Size of Machines
truck. The mortgagor himself grouped the house with the truck, which is,
inherently a movable property. The house which was not even declared xxx xxx xxx
for taxation purposes was small and made of light construction materials:
G.I. sheets roofing, sawali and wooden walls and wooden posts; built on B. Sixteen (16) sets of Vayrow Knitting Machines made in Taiwan.
land belonging to another.
xxx xxx xxx
The cases cited by appellants are not applicable to the present case. The
Iya cases (L-10837-38, supra), refer to a building or a house of strong C. Two (2) Circular Knitting Machines made in West Germany.
materials, permanently adhered to the land, belonging to the owner of the
house himself. In the case of Lopez v. Orosa, (L-10817-18), the subject xxx xxx xxx
building was a theatre, built of materials worth more than P62,000,
attached permanently to the soil. In these cases and in the Leung Yee case, D. Four (4) Winding Machines.
supra, third persons assailed the validity of the deed of chattel mortgages;
xxx xxx xxx
SCHEDULE "A"
I. TCT # 372097 - RIZAL
xxx xxx xxx
II. Any and all buildings and improvements now existing or
hereafter to exist on the above-mentioned lot.
III. MACHINERIES & EQUIPMENT situated, located and/or installed
on the above-mentioned lot located at . . .
(a) Forty eight sets (48) Vayrow Knitting Machines . . .
(b) Sixteen sets (16) Vayrow Knitting Machines . . .
(c) Two (2) Circular Knitting Machines . . .
(d) Two (2) Winding Machines . . .
(e) Two (2) Winding Machines . . .
IV. Any and all replacements, substitutions, additions, increases
and accretions to above properties.
xxx xxx xxx3
On April 23, 1979, PBCom granted a second loan of P3,356,000.00 to
EVERTEX. The loan was secured by a Chattel Mortgage over personal
properties enumerated in a list attached thereto. These listed properties
were similar to those listed in Annex A of the first mortgage deed.
After April 23, 1979, the date of the execution of the second mortgage
mentioned above, EVERTEX purchased various machines and equipments.
On November 19, 1982, due to business reverses, EVERTEX filed
insolvency proceedings docketed as SP Proc. No. LP-3091-P before the
defunct Court of First Instance of Pasay City, Branch XXVIII. The CFI issued
an order on November 24, 1982 declaring the corporation insolvent. All its
assets were taken into the custody of the Insolvency Court, including the
collateral, real and personal, securing the two mortgages as
abovementioned.
In the meantime, upon EVERTEX's failure to meet its obligation to PBCom,
the latter commenced extrajudicial foreclosure proceedings against
EVERTEX under Act 3135, otherwise known as "An Act to Regulate the Sale
of Property under Special Powers Inserted in or Annexed to Real Estate
Mortgages" and Act 1506 or "The Chattel Mortgage Law". A Notice of
Sheriff's Sale was issued on December 1, 1982.
On December 15, 1982, the first public auction was held where petitioner
PBCom emerged as the highest bidder and a Certificate of Sale was issued
in its favor on the same date. On December 23, 1982, another public
auction was held and again, PBCom was the highest bidder. The sheriff
issued a Certificate of Sale on the same day.
On March 7, 1984, PBCom consolidated its ownership over the lot and all
the properties in it. In November 1986, it leased the entire factory
premises to petitioner Ruby L. Tsai for P50,000.00 a month. On May 3,
1988, PBCom sold the factory, lock, stock and barrel to Tsai for
P9,000,000.00, including the contested machineries.
On March 16, 1989, EVERTEX filed a complaint for annulment of sale,
reconveyance, and damages with the Regional Trial Court against PBCom,
alleging inter alia that the extrajudicial foreclosure of subject mortgage
was in violation of the Insolvency Law. EVERTEX claimed that no rights
having been transmitted to PBCom over the assets of insolvent EVERTEX,
therefore Tsai acquired no rights over such assets sold to her, and should
reconvey the assets.
Further, EVERTEX averred that PBCom, without any legal or factual basis,
appropriated the contested properties, which were not included in the
Real and Chattel Mortgage of November 26, 1975 nor in the Chattel
Mortgage of April 23, 1979, and neither were those properties included in
the Notice of Sheriff's Sale dated December 1, 1982 and Certificate of Sale
. . . dated December 15, 1982.
The disputed properties, which were valued at P4,000,000.00, are: 14
Interlock Circular Knitting Machines, 1 Jet Drying Equipment, 1 Dryer
Equipment, 1 Raisin Equipment and 1 Heatset Equipment.
The RTC found that the lease and sale of said personal properties were
irregular and illegal because they were not duly foreclosed nor sold at the
December 15, 1982 auction sale since these were not included in the
schedules attached to the mortgage contracts. The trial court decreed:
WHEREFORE, judgment is hereby rendered in favor of plaintiff corporation
and against the defendants:
1. Ordering the annulment of the sale executed by defendant
Philippine Bank of Communications in favor of defendant Ruby L. Tsai on
May 3, 1988 insofar as it affects the personal properties listed in par. 9 of
the complaint, and their return to the plaintiff corporation through its
assignee, plaintiff Mamerto R. Villaluz, for disposition by the Insolvency
Court, to be done within ten (10) days from finality of this decision;
2. Ordering the defendants to pay jointly and severally the
plaintiff corporation the sum of P5,200,000.00 as compensation for the
use and possession of the properties in question from November 1986 to
February 1991 and P100,000.00 every month thereafter, with interest
thereon at the legal rate per annum until full payment;
3. Ordering the defendants to pay jointly and severally the
plaintiff corporation the sum of P50,000.00 as and for attorney's fees and
expenses of litigation;
4. Ordering the defendants to pay jointly and severally the
plaintiff corporation the sum of P200,000.00 by way of exemplary
damages;
5. Ordering the dismissal of the counterclaim of the defendants;
and
6. Ordering the defendants to proportionately pay the costs of
suit.
SO ORDERED.4
Dissatisfied, both PBCom and Tsai appealed to the Court of Appeals, which
issued its decision dated August 31, 1994, the dispositive portion of which
reads:
WHEREFORE, except for the deletion therefrom of the award; for
exemplary damages, and reduction of the actual damages, from
P100,000.00 to P20,000.00 per month, from November 1986 until subject
personal properties are restored to appellees, the judgment appealed
from is hereby AFFIRMED, in all other respects. No pronouncement as to
costs.5
Motion for reconsideration of the above decision having been denied in
the resolution of April 28, 1995, PBCom and Tsai filed their separate
petitions for review with this Court.
In G.R No. 120098, petitioner Tsai ascribed the following errors to the
respondent court:
I
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
EFFECT MAKING A CONTRACT FOR THE PARTIES BY TREATING THE 1981
ACQUIRED MACHINERIES AS CHATTELS INSTEAD OF REAL PROPERTIES
WITHIN THEIR EARLIER 1975 DEED OF REAL AND CHATTEL MORTGAGE OR
1979 DEED OF CHATTEL MORTGAGE.
II
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
HOLDING THAT THE DISPUTED 1981 MACHINERIES ARE NOT REAL
PROPERTIES DEEMED PART OF THE MORTGAGE DESPITE THE CLEAR
IMPORT OF THE EVIDENCE AND APPLICABLE RULINGS OF THE SUPREME
COURT.
III
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
DEEMING PETITIONER A PURCHASER IN BAD FAITH.
IV
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
ASSESSING PETITIONER ACTUAL DAMAGES, ATTORNEY'S FEES AND
EXPENSES OF LITIGATION FOR WANT OF VALID FACTUAL AND LEGAL
BASIS.
V
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
HOLDING AGAINST PETITIONER'S ARGUMENTS ON PRESCRIPTION AND
LACHES.6
In G.R. No. 120098, PBCom raised the following issues:
I.
DID THE COURT OF APPEALS VALIDLY DECREE THE MACHINERIES LISTED
UNDER PARAGRAPH 9 OF THE COMPLAINT BELOW AS PERSONAL
PROPERTY OUTSIDE OF THE 1975 DEED OF REAL ESTATE MORTGAGE AND
EXCLUDED THEM FROM THE REAL PROPERTY EXTRAJUDICIALLY
FORECLOSED BY PBCOM DESPITE THE PROVISION IN THE 1975 DEED THAT
ALL AFTER-ACQUIRED PROPERTIES DURING THE LIFETIME OF THE
MORTGAGE SHALL FORM PART THEREOF, AND DESPITE THE UNDISPUTED
FACT THAT SAID MACHINERIES ARE BIG AND HEAVY, BOLTED OR
CEMENTED ON THE REAL PROPERTY MORTGAGED BY EVER TEXTILE MILLS
TO PBCOM, AND WERE ASSESSED FOR REAL ESTATE TAX PURPOSES?
II
CAN PBCOM, WHO TOOK POSSESSION OF THE MACHINERIES IN QUESTION
IN GOOD FAITH, EXTENDED CREDIT FACILITIES TO EVER TEXTILE MILLS
WHICH AS OF 1982 TOTALLED P9,547,095.28, WHO HAD SPENT FOR
MAINTENANCE AND SECURITY ON THE DISPUTED MACHINERIES AND HAD
TO PAY ALL THE BACK TAXES OF EVER TEXTILE MILLS BE LEGALLY
COMPELLED TO RETURN TO EVER THE SAID MACHINERIES OR IN LIEU
THEREOF BE ASSESSED DAMAGES. IS THAT SITUATION TANTAMOUNT TO A
CASE OF UNJUST ENRICHMENT?7
The principal issue, in our view, is whether or not the inclusion of the
questioned properties in the foreclosed properties is proper. The
secondary issue is whether or not the sale of these properties to petitioner
Ruby Tsai is valid.
For her part, Tsai avers that the Court of Appeals in effect made a contract
for the parties by treating the 1981 acquired units of machinery as chattels
instead of real properties within their earlier 1975 deed of Real and
Chattel Mortgage or 1979 deed of Chattel Mortgage.8 Additionally, Tsai
argues that respondent court erred in holding that the disputed 1981
machineries are not real properties.9 Finally, she contends that the Court
of Appeals erred in holding against petitioner's arguments on prescription
and laches10 and in assessing petitioner actual damages, attorney's fees
and expenses of litigation, for want of valid factual and legal basis.11
Essentially, PBCom contends that respondent court erred in affirming the
lower court's judgment decreeing that the pieces of machinery in dispute
were not duly foreclosed and could not be legally leased nor sold to Ruby
Tsai. It further argued that the Court of Appeals' pronouncement that the
pieces of machinery in question were personal properties have no factual
and legal basis. Finally, it asserts that the Court of Appeals erred in
assessing damages and attorney's fees against PBCom.
In opposition, private respondents argue that the controverted units of
machinery are not "real properties" but chattels, and, therefore, they
were not part of the foreclosed real properties, rendering the lease and
the subsequent sale thereof to Tsai a nullity.12
Considering the assigned errors and the arguments of the parties, we find
the petitions devoid of merit and ought to be denied.
Well settled is the rule that the jurisdiction of the Supreme Court in a
petition for review on certiorari under Rule 45 of the Revised Rules of
Court is limited to reviewing only errors of law, not of fact, unless the
factual findings complained of are devoid of support by the evidence on
record or the assailed judgment is based on misapprehension of facts.13
This rule is applied more stringently when the findings of fact of the RTC is
affirmed by the Court of Appeals.14
The following are the facts as found by the RTC and affirmed by the Court
of Appeals that are decisive of the issues: (1) the "controverted
machineries" are not covered by, or included in, either of the two
mortgages, the Real Estate and Chattel Mortgage, and the pure Chattel
Mortgage; (2) the said machineries were not included in the list of
properties appended to the Notice of Sale, and neither were they included
in the Sheriff's Notice of Sale of the foreclosed properties.15
Petitioners contend that the nature of the disputed machineries, i.e., that
they were heavy, bolted or cemented on the real property mortgaged by
EVERTEX to PBCom, make them ipso facto immovable under Article 415
(3) and (5) of the New Civil Code. This assertion, however, does not settle
the issue. Mere nuts and bolts do not foreclose the controversy. We have
to look at the parties' intent.
While it is true that the controverted properties appear to be immobile, a
perusal of the contract of Real and Chattel Mortgage executed by the
parties herein gives us a contrary indication. In the case at bar, both the
trial and the appellate courts reached the same finding that the true
intention of PBCOM and the owner, EVERTEX, is to treat machinery and
equipment as chattels. The pertinent portion of respondent appellate
court's ruling is quoted below:
As stressed upon by appellees, appellant bank treated the machineries as
chattels; never as real properties. Indeed, the 1975 mortgage contract,
which was actually real and chattel mortgage, militates against appellants'
posture. It should be noted that the printed form used by appellant bank
was mainly for real estate mortgages. But reflective of the true intention
of appellant PBCOM and appellee EVERTEX was the typing in capital
letters, immediately following the printed caption of mortgage, of the
phrase "real and chattel." So also, the "machineries and equipment" in the
printed form of the bank had to be inserted in the blank space of the
printed contract and connected with the word "building" by typewritten
slash marks. Now, then, if the machineries in question were contemplated
to be included in the real estate mortgage, there would have been no
necessity to ink a chattel mortgage specifically mentioning as part III of
Schedule A a listing of the machineries covered thereby. It would have
sufficed to list them as immovables in the Deed of Real Estate Mortgage of
the land and building involved.
As regards the 1979 contract, the intention of the parties is clear and
beyond question. It refers solely to chattels. The inventory list of the
mortgaged properties is an itemization of sixty-three (63) individually
described machineries while the schedule listed only machines and
2,996,880.50 worth of finished cotton fabrics and natural cotton fabrics.16
In the absence of any showing that this conclusion is baseless, erroneous
or uncorroborated by the evidence on record, we find no compelling
reason to depart therefrom.
Too, assuming arguendo that the properties in question are immovable by
nature, nothing detracts the parties from treating it as chattels to secure
an obligation under the principle of estoppel. As far back as Navarro v.
Pineda, 9 SCRA 631 (1963), an immovable may be considered a personal
property if there is a stipulation as when it is used as security in the
payment of an obligation where a chattel mortgage is executed over it, as
in the case at bar.
In the instant case, the parties herein: (1) executed a contract styled as
"Real Estate Mortgage and Chattel Mortgage," instead of just "Real Estate
Mortgage" if indeed their intention is to treat all properties included
therein as immovable, and (2) attached to the said contract a separate
"LIST OF MACHINERIES & EQUIPMENT". These facts, taken together,
evince the conclusion that the parties' intention is to treat these units of
machinery as chattels. A fortiori, the contested after-acquired properties,
which are of the same description as the units enumerated under the title
"LIST OF MACHINERIES & EQUIPMENT," must also be treated as chattels.
Accordingly, we find no reversible error in the respondent appellate
court's ruling that inasmuch as the subject mortgages were intended by
the parties to involve chattels, insofar as equipment and machinery were
concerned, the Chattel Mortgage Law applies, which provides in Section 7
thereof that: "a chattel mortgage shall be deemed to cover only the
property described therein and not like or substituted property thereafter
acquired by the mortgagor and placed in the same depository as the
property originally mortgaged, anything in the mortgage to the contrary
notwithstanding."
And, since the disputed machineries were acquired in 1981 and could not
have been involved in the 1975 or 1979 chattel mortgages, it was
consequently an error on the part of the Sheriff to include subject
machineries with the properties enumerated in said chattel mortgages.
As the auction sale of the subject properties to PBCom is void, no valid
title passed in its favor. Consequently, the sale thereof to Tsai is also a
nullity under the elementary principle of nemo dat quod non habet, one
cannot give what one does not have.17
Petitioner Tsai also argued that assuming that PBCom's title over the
contested properties is a nullity, she is nevertheless a purchaser in good
faith and for value who now has a better right than EVERTEX.
To the contrary, however, are the factual findings and conclusions of the
trial court that she is not a purchaser in good faith. Well-settled is the rule
that the person who asserts the status of a purchaser in good faith and for
value has the burden of proving such assertion.18 Petitioner Tsai failed to
discharge this burden persuasively.
Moreover, a purchaser in good faith and for value is one who buys the
property of another without notice that some other person has a right to
or interest in such property and pays a full and fair price for the same, at
the time of purchase, or before he has notice of the claims or interest of
some other person in the property.19 Records reveal, however, that when
Tsai purchased the controverted properties, she knew of respondent's
claim thereon. As borne out by the records, she received the letter of
respondent's counsel, apprising her of respondent's claim, dated February
27, 1987.20 She replied thereto on March 9, 1987.21 Despite her
knowledge of respondent's claim, she proceeded to buy the contested
units of machinery on May 3, 1988. Thus, the RTC did not err in finding
that she was not a purchaser in good faith.
Petitioner Tsai's defense of indefeasibility of Torrens Title of the lot where
the disputed properties are located is equally unavailing. This defense
refers to sale of lands and not to sale of properties situated therein.
Likewise, the mere fact that the lot where the factory and the disputed
properties stand is in PBCom's name does not automatically make PBCom
the owner of everything found therein, especially in view of EVERTEX's
letter to Tsai enunciating its claim.
Finally, petitioners' defense of prescription and laches is less than
convincing. We find no cogent reason to disturb the consistent findings of
both courts below that the case for the reconveyance of the disputed
properties was filed within the reglementary period. Here, in our view, the
doctrine of laches does not apply. Note that upon petitioners' adamant
refusal to heed EVERTEX's claim, respondent company immediately filed
an action to recover possession and ownership of the disputed properties.
There is no evidence showing any failure or neglect on its part, for an
unreasonable and unexplained length of time, to do that which, by
exercising due diligence, could or should have been done earlier. The
doctrine of stale demands would apply only where by reason of the lapse
of time, it would be inequitable to allow a party to enforce his legal rights.
Moreover, except for very strong reasons, this Court is not disposed to
apply the doctrine of laches to prejudice or defeat the rights of an
owner.22
As to the award of damages, the contested damages are the actual
compensation, representing rentals for the contested units of machinery,
the exemplary damages, and attorney's fees.
As regards said actual compensation, the RTC awarded P100,000.00
corresponding to the unpaid rentals of the contested properties based on
the testimony of John Chua, who testified that the P100,000.00 was based
on the accepted practice in banking and finance, business and investments
that the rental price must take into account the cost of money used to buy
them. The Court of Appeals did not give full credence to Chua's projection
and reduced the award to P20,000.00.
Basic is the rule that to recover actual damages, the amount of loss must
not only be capable of proof but must actually be proven with reasonable
degree of certainty, premised upon competent proof or best evidence
obtainable of the actual amount thereof.23 However, the allegations of
respondent company as to the amount of unrealized rentals due them as
actual damages remain mere assertions unsupported by documents and
other competent evidence. In determining actual damages, the court
cannot rely on mere assertions, speculations, conjectures or guesswork
but must depend on competent proof and on the best evidence
obtainable regarding the actual amount of loss.24 However, we are not
prepared to disregard the following dispositions of the respondent
appellate court:
. . . In the award of actual damages under scrutiny, there is nothing on
record warranting the said award of P5,200,000.00, representing monthly
rental income of P100,000.00 from November 1986 to February 1991, and
the additional award of P100,000.00 per month thereafter.
As pointed out by appellants, the testimonial evidence, consisting of the
testimonies of Jonh (sic) Chua and Mamerto Villaluz, is shy of what is
necessary to substantiate the actual damages allegedly sustained by
appellees, by way of unrealized rental income of subject machineries and
equipments.
The testimony of John Cua (sic) is nothing but an opinion or projection
based on what is claimed to be a practice in business and industry. But
such a testimony cannot serve as the sole basis for assessing the actual
damages complained of. What is more, there is no showing that had
appellant Tsai not taken possession of the machineries and equipments in
question, somebody was willing and ready to rent the same for
P100,000.00 a month.
xxx xxx xxx
Then, too, even assuming arguendo that the said machineries and
equipments could have generated a rental income of P30,000.00 a month,
as projected by witness Mamerto Villaluz, the same would have been a
gross income. Therefrom should be deducted or removed, expenses for
maintenance and repairs . . . Therefore, in the determination of the actual
damages or unrealized rental income sued upon, there is a good basis to
calculate that at least four months in a year, the machineries in dispute
would have been idle due to absence of a lessee or while being repaired.
In the light of the foregoing rationalization and computation, We believe
that a net unrealized rental income of P20,000.00 a month, since
November 1986, is more realistic and fair.25
As to exemplary damages, the RTC awarded P200,000.00 to EVERTEX
which the Court of Appeals deleted. But according to the CA, there was no
clear showing that petitioners acted malevolently, wantonly and
oppressively. The evidence, however, shows otherwise.It is a requisite to
award exemplary damages that the wrongful act must be accompanied by
bad faith,26 and the guilty acted in a wanton, fraudulent, oppressive,
reckless or malevolent manner.27 As previously stressed, petitioner Tsai's
act of purchasing the controverted properties despite her knowledge of
EVERTEX's claim was oppressive and subjected the already insolvent
respondent to gross disadvantage. Petitioner PBCom also received the
same letters of Atty. Villaluz, responding thereto on March 24, 1987.28
Thus, PBCom's act of taking all the properties found in the factory of the
financially handicapped respondent, including those properties not
covered by or included in the mortgages, is equally oppressive and tainted
with bad faith. Thus, we are in agreement with the RTC that an award of
exemplary damages is proper.
The amount of P200,000.00 for exemplary damages is, however,
excessive. Article 2216 of the Civil Code provides that no proof of
pecuniary loss is necessary for the adjudication of exemplary damages,
their assessment being left to the discretion of the court in accordance
with the circumstances of each case.29 While the imposition of exemplary
damages is justified in this case, equity calls for its reduction. In Inhelder
Corporation v. Court of Appeals, G.R. No. L-52358, 122 SCRA 576, 585,
(May 30, 1983), we laid down the rule that judicial discretion granted to
the courts in the assessment of damages must always be exercised with
balanced restraint and measured objectivity. Thus, here the award of
exemplary damages by way of example for the public good should be
reduced to P100,000.00.
By the same token, attorney's fees and other expenses of litigation may be
recovered when exemplary damages are awarded.30 In our view, RTC's
award of P50,000.00 as attorney's fees and expenses of litigation is
reasonable, given the circumstances in these cases.
WHEREFORE, the petitions are DENIED. The assailed decision and
resolution of the Court of Appeals in CA-G.R. CV No. 32986 are AFFIRMED
WITH MODIFICATIONS. Petitioners Philippine Bank of Communications
and Ruby L. Tsai are hereby ordered to pay jointly and severally Ever
Textile Mills, Inc. the following: (1) P20,000.00 per month, as
compensation for the use and possession of the properties in question
from November 198631 until subject personal properties are restored to
respondent corporation; (2) P100,000.00 by way of exemplary damages,
and (3) P50,000.00 as attorney's fees and litigation expenses. Costs against
petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Baguio City
EN BANC
G.R. No. 182894 April 22, 2014
FE FLORO VALINO, Petitioner,
vs.
ROSARIO D. ADRIANO, FLORANTE D. ADRIANO, RUBEN D. ADRIANO,
MARIA TERESA ADRIANO ONGOCO, VICTORIA ADRIANO BAYONA, and
LEAH ANTONETTE D. ADRIANO, Respondents.
DECISION
MENDOZA, J.:
Challenged in this petition is the October 2, 2006 Decision1 and the May 9,
2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 61613,
which reversed the October 1, 1998 Decision3 of the Regional Trial Court,
Branch 77, Quezon City (RTC) which ruled that petitioner Fe Floro Valino
(Valino) was entitled to the remains of the decedent.
The Facts:
Atty. Adriano Adriano (Atty. Adriano), a partner in the Pelaez Adriano and
Gregorio Law Office, married respondent Rosario Adriano (Rosario) on
November 15, 1955. The couple had two (2) sons, Florante and Ruben
Adriano; three (3) daughters, Rosario, Victoria and Maria Teresa; and one
(1) adopted daughter, Leah Antonette.
The marriage of Atty. Adriano and Rosario, however, turned sour and they
were eventually separated-in-fact. Years later, Atty. Adriano courted
Valino, one of his clients, until they decided to live together as husband
and wife. Despite such arrangement, he continued to provide financial
support to Rosario and their children (respondents).
In 1992, Atty. Adriano died of acute emphysema. At that time, Rosario was
in the United States spending Christmas with her children. As none of the
family members was around, Valino took it upon herself to shoulder the
funeral and burial expenses for Atty. Adriano. When Rosario learned about
the death of her husband, she immediately called Valino and requested
that she delay the interment for a few days but her request was not
heeded. The remains of Atty. Adriano were then interred at the
mausoleum of the family of Valino at the Manila Memorial Park.
Respondents were not able to attend the interment.
Claiming that they were deprived of the chance to view the remains of
Atty. Adriano before he was buried and that his burial at the Manila
Memorial Park was contrary to his wishes, respondents commenced suit
against Valino praying that they be indemnified for actual, moral and
exemplary damages and attorneys fees and that the remains of Atty.
Adriano be exhumed and transferred to the family plot at the Holy Cross
Memorial Cemetery in Novaliches, Quezon City.
In her defense, Valino countered that Rosario and Atty. Adriano had been
separated for more than twenty (20) years before he courted her. Valino
claimed that throughout the time they were together, he had introduced
her to his friends and associates as his wife. Although they were living
together, Valino admitted that he never forgot his obligation to support
the respondents. She contended that, unlike Rosario, she took good care
of Atty. Adriano and paid for all his medical expenses when he got
seriously ill. She also claimed that despite knowing that Atty. Adriano was
in a coma and dying, Rosario still left for the United States. According to
Valino, it was Atty. Adrianos last wish that his remains be interred in the
Valino family mausoleum at the Manila Memorial Park.
Valino further claimed that she had suffered damages as result of the suit
brought by respondents. Thus, she prayed that she be awarded moral and
exemplary damages and attorneys fees.
Decision of the RTC
The RTC dismissed the complaint of respondents for lack of merit as well
as the counterclaim of Valino after it found them to have not been
sufficiently proven.
The RTC opined that because Valino lived with Atty. Adriano for a very
long time, she knew very well that it was his wish to be buried at the
Manila Memorial Park. Taking into consideration the fact that Rosario left
for the United States at the time that he was fighting his illness, the trial
court concluded that Rosario did not show love and care for him.
Considering also that it was Valino who performed all the duties and
responsibilities of a wife, the RTC wrote that it could be reasonably
presumed that he wished to be buried in the Valino family mausoleum.4
In disposing of the case, the RTC noted that the exhumation and the
transfer of the body of Atty. Adriano to the Adriano family plot at the Holy
Cross Memorial Cemetery in Novaliches, Quezon City, would not serve any
useful purpose and so he should be spared and respected.5 Decision of
the CA
On appeal, the CA reversed and set aside the RTC decision and directed
Valino to have the remains of Atty. Adriano exhumed at the expense of
respondents. It likewise directed respondents, at their expense, to
transfer, transport and inter the remains of the decedent in the family plot
at the Holy Cross Memorial Park in Novaliches, Quezon City.
In reaching said determination, the CA explained that Rosario, being the
legal wife, was entitled to the custody of the remains of her deceased
husband. Citing Article 305 of the New Civil Code in relation to Article 199
of the Family Code, it was the considered view of the appellate court that
the law gave the surviving spouse not only the duty but also the right to
make arrangements for the funeral of her husband. For the CA, Rosario
was still entitled to such right on the ground of her subsisting marriage
with Atty. Adriano at the time of the latters death, notwithstanding their
30-year separation in fact.
Like the RTC, however, the CA did not award damages in favor of
respondents due to the good intentions shown by Valino in giving the
deceased a decent burial when the wife and the family were in the United
States. All other claims for damages were similarly dismissed.
The Sole Issue
The lone legal issue in this petition is who between Rosario and Valino is
entitled to the remains of Atty. Adriano.
The Courts Ruling
Article 305 of the Civil Code, in relation to what is now Article 1996 of the
Family Code, specifies the persons who have the right and duty to make
funeral arrangements for the deceased. Thus:
Art. 305. The duty and the right to make arrangements for the funeral of a
relative shall be in accordance with the order established for support,
under Article 294. In case of descendants of the same degree, or of
brothers and sisters, the oldest shall be preferred. In case of ascendants,
the paternal shall have a better right. [Emphases supplied]
Art. 199. Whenever two or more persons are obliged to give support, the
liability shall devolve upon the following persons in the order herein
provided:
(1) The spouse;
(2) The descendants in the nearest degree;
(3) The ascendants in the nearest degree; and
(4) The brothers and sisters. (294a)
[Emphasis supplied]
Further, Article 308 of the Civil Code provides:

Art. 308. No human remains shall be retained, interred, disposed of or
exhumed without the consent of the persons mentioned in Articles 294
and 305. [Emphases supplied]
In this connection, Section 1103 of the Revised Administrative Code
provides:
Section 1103. Persons charged with the duty of burial. The immediate
duty of burying the body of a deceased person, regardless of the ultimate
liability for the expense thereof, shall devolve upon the persons herein
below specified:
(a) If the deceased was a married man or woman, the duty of the burial
shall devolve upon the surviving spouse if he or she possesses sufficient
means to pay the necessary expenses;
x x x x. [Emphases supplied]
From the aforecited provisions, it is undeniable that the law simply
confines the right and duty to make funeral arrangements to the members
of the family to the exclusion of ones common law partner. In Tomas
Eugenio, Sr. v. Velez,7 a petition for habeas corpus was filed by the
brothers and sisters of the late Vitaliana Vargas against her lover, Tomas
Eugenio, Sr., alleging that the latter forcibly took her and confined her in
his residence. It appearing that she already died of heart failure due to
toxemia of pregnancy, Tomas Eugenio, Sr. sought the dismissal of the
petition for lack of jurisdiction and claimed the right to bury the deceased,
as the common-law husband.
In its decision, the Court resolved that the trial court continued to have
jurisdiction over the case notwithstanding the death of Vitaliana Vargas.
As to the claim of Tomas Eugenio, Sr. that he should be considered a
"spouse" having the right and duty to make funeral arrangements for his
common-law wife, the Court ruled:
x x x Indeed, Philippine Law does not recognize common law marriages. A
man and woman not legally married who cohabit for many years as
husband and wife, who represent themselves to the public as husband and
wife, and who are reputed to be husband and wife in the community
where they live may be considered legally married in common law
jurisdictions but not in the Philippines.
While it is true that our laws do not just brush aside the fact that such
relationships are present in our society, and that they produce a
community of properties and interests which is governed by law, authority
exists in case law to the effect that such form of co-ownership requires
that the man and woman living together must not in any way be
incapacitated to contract marriage. In any case, herein petitioner has a
subsisting marriage with another woman, a legal impediment which
disqualified him from even legally marrying Vitaliana. In Santero vs. CFI of
Cavite, the Court, thru Mr. Justice Paras, interpreting Art. 188 of the Civil
Code (Support of Surviving Spouse and Children During Liquidation of
Inventoried Property) stated: "Be it noted, however, that with respect to
'spouse,' the same must be the legitimate 'spouse' (not common-law
spouses)."
There is a view that under Article 332 of the Revised Penal Code, the term
"spouse" embraces common law relation for purposes of exemption from
criminal liability in cases of theft, swindling and malicious mischief
committed or caused mutually by spouses. The Penal Code article, it is
said, makes no distinction between a couple whose cohabitation is
sanctioned by a sacrament or legal tie and another who are husband and
wife de facto. But this view cannot even apply to the facts of the case at
bar. We hold that the provisions of the Civil Code, unless expressly
providing to the contrary as in Article 144, when referring to a "spouse"
contemplate a lawfully wedded spouse. Petitioner vis-a-vis Vitaliana was
not a lawfully-wedded spouse to her; in fact, he was not legally
capacitated to marry her in her lifetime.8 [Emphases supplied]
As applied to this case, it is clear that the law gives the right and duty to
make funeral arrangements to Rosario, she being the surviving legal wife
of Atty. Adriano. The fact that she was living separately from her husband
and was in the United States when he died has no controlling significance.
To say that Rosario had, in effect, waived or renounced, expressly or
impliedly, her right and duty to make arrangements for the funeral of her
deceased husband is baseless. The right and duty to make funeral
arrangements, like any other right, will not be considered as having been
waived or renounced, except upon clear and satisfactory proof of conduct
indicative of a free and voluntary intent to that end.9 While there was
disaffection between Atty. Adriano and Rosario and their children when he
was still alive, the Court also recognizes that human compassion, more
often than not, opens the door to mercy and forgiveness once a family
member joins his Creator. Notably, it is an undisputed fact that the
respondents wasted no time in making frantic pleas to Valino for the delay
of the interment for a few days so they could attend the service and view
the remains of the deceased. As soon as they came to know about Atty.
Adrianos death in the morning of December 19, 1992 (December 20, 1992
in the Philippines), the respondents immediately contacted Valino and the
Arlington Memorial Chapel to express their request, but to no avail.
Valino insists that the expressed wishes of the deceased should
nevertheless prevail pursuant to Article 307 of the Civil Code. Valinos own
testimony that it was Atty. Adrianos wish to be buried in their family plot
is being relied upon heavily. It should be noted, however, that other than
Valinos claim that Atty. Adriano wished to be buried at the Manila
Memorial Park, no other evidence was presented to corroborate such
claim. Considering that Rosario equally claims that Atty. Adriano wished to
be buried in the Adriano family plot in Novaliches, it becomes apparent
that the supposed burial wish of Atty. Adriano was unclear and undefinite.
Considering this ambiguity as to the true wishes of the deceased, it is the
law that supplies the presumption as to his intent. No presumption can be
said to have been created in Valinos favor, solely on account of a long-
time relationship with Atty. Adriano.
Moreover, it cannot be surmised that just because Rosario was
unavailable to bury her husband when she died, she had already
renounced her right to do so. Verily, in the same vein that the right and
duty to make funeral arrangements will not be considered as having been
waived or renounced, the right to deprive a legitimate spouse of her legal
right to bury the remains of her deceased husband should not be readily
presumed to have been exercised, except upon clear and satisfactory
proof of conduct indicative of a free and voluntary intent of the deceased
to that end. Should there be any doubt as to the true intent of the
deceased, the law favors the legitimate family. Here, Rosarios keenness to
exercise the rights and obligations accorded to the legal wife was even
bolstered by the fact that she was joined by the children in this case.
Even assuming, ex gratia argumenti, that Atty. Adriano truly wished to be
buried in the Valino family plot at the Manila Memorial Park, the result
remains the same. Article 307 of the Civil Code provides:
Art. 307. The funeral shall be in accordance with the expressed wishes of
the deceased. In the absence of such expression, his religious beliefs or
affiliation shall determine the funeral rites. In case of doubt, the form of
the funeral shall be decided upon by the person obliged to make
arrangements for the same, after consulting the other members of the
family.
From its terms, it is apparent that Article 307 simply seeks to prescribe the
"form of the funeral rites" that should govern in the burial of the
deceased. As thoroughly explained earlier, the right and duty to make
funeral arrangements reside in the persons specified in Article 305 in
relation to Article 199 of the Family Code. Even if Article 307 were to be
interpreted to include the place of burial among those on which the
wishes of the deceased shall be followed, Dr. Arturo M. Tolentino (Dr.
Tolentino), an eminent authority on civil law, commented that it is
generally recognized that any inferences as to the wishes of the deceased
should be established by some form of testamentary disposition.10 As
Article 307 itself provides, the wishes of the deceased must be expressly
provided. It cannot be inferred lightly, such as from the circumstance that
Atty. Adriano spent his last remaining days with Valino. It bears stressing
once more that other than Valinos claim that Atty. Adriano wished to be
buried at the Valino family plot, no other evidence was presented to
corroborate it.
At any rate, it should be remembered that the wishes of the decedent
with respect to his funeral are not absolute. As Dr. Tolentino further
wrote:
The dispositions or wishes of the deceased in relation to his funeral, must
not be contrary to law. They must not violate the legal and reglamentary
provisions concerning funerals and the disposition of the remains,
whether as regards the time and manner of disposition, or the place of
burial, or the ceremony to be observed.11 [Emphases supplied]
In this case, the wishes of the deceased with respect to his funeral are
limited by Article 305 of the Civil Code in relation to Article 199 of the
Family Code, and subject the same to those charged with the right and
duty to make the proper arrangements to bury the remains of their loved-
one. As aptly explained by the appellate court in its disquisition:
The testimony of defendant-appellee Fe Floro Valino that it was the oral
wish of Atty. Adriano Adriano that he be interred at the Floro familys
mausoleum at the Manila Memorial Park, must bend to the provisions of
the law. Even assuming arguendo that it was the express wish of the
deceased to be interred at the Manila Memorial Park, still, the law grants
the duty and the right to decide what to do with the remains to the wife,
in this case, plaintiff-appellant Rosario D. Adriano, as the surviving spouse,
and not to defendant-appellee Fe Floro Valino, who is not even in the list
of those legally preferred, despite the fact that her intentions may have
been very commendable. The law does not even consider the emotional
fact that husband and wife had, in this case at bench, been separated-in-
fact and had been living apart for more than 30 years.12
As for Valinos contention that there is no point in exhuming and
transferring the remains of Atty. Adriano, it should be said that the burial
of his remains in a place other than the Adriano family plot in Novaliches
runs counter to the wishes of his family. It does not only violate their right
provided by law, but it also disrespects the family because the remains of
the patriarch are buried in the family plot of his live-in partner.
It is generally recognized that the corpse of an individual is outside the
commerce of man. However, the law recognizes that a certain right of
possession over the corpse exists, for the purpose of a decent burial, and
for the exclusion of the intrusion by third persons who have no legitimate
interest in it. This quasi-property right, arising out of the duty of those
obligated by law to bury their dead, also authorizes them to take
possession of the dead body for purposes of burial to have it remain in its
final resting place, or to even transfer it to a proper place where the
memory of the dead may receive the respect of the living. This is a family
right. There can be no doubt that persons having this right may recover
the corpse from third persons.13
All this notwithstanding, the Court finds laudable the acts of Valino in
taking care of Atty. Adriano during his final moments and giving him a
proper burial. For her sacrifices, it would indeed be unkind to assess actual
or moral damages against her. As aptly explained by the CA:
The trial court found that there was good faith on the part of defendant-
appellee Fe Floro Valino, who, having lived with Atty. Adriano after he was
separated in fact from his wife, lovingly and caringly took care of the well-
being of Atty. Adriano Adriano while he was alive and even took care of his
remains when he had died.
On the issue of damages, plaintiffs-appellants are not entitled to actual
damages. Defendant-appellee Fe Floro Valino had all the good intentions
in giving the remains of Atty. Adriano a decent burial when the wife and
family were all in the United States and could not attend to his burial.
Actual damages are those awarded in satisfaction of, or in recompense for,
loss or injury sustained. To be recoverable, they must not only be capable
of proof but must actually be proven with a reasonable degree of
certainty. In this case at bench, there was no iota of evidence presented to
justify award of actual damages.
Plaintiffs-appellants are not also entitled to moral and exemplary
damages.1wphi1 Moral damages may be recovered only if the plaintiff is
able to satisfactorily prove the existence of the factual basis for the
damages and its causal connection with the acts complained of because
moral damages although incapable of pecuniary estimation are designed
not to impose a penalty but to compensate for injury sustained and actual
damages suffered. No injury was caused to plaintiffs-appellants, nor was
any intended by anyone in this case. Exemplary damages, on the other
hand, may only be awarded if claimant is able to establish his right to
moral, temperate, liquidated or compensatory damages. Unfortunately,
neither of the requirements to sustain an award for either of these
damages would appear to have been adequately established by plaintiffs-
appellants.
As regards the award of attorney's fees, it is an accepted doctrine that the
award thereof as an item of damages is the exception rather than the rule,
and counsel's fees are not to be awarded every time a party wins a suit.
The power of the court to award attorney's fees under Article 2208 of the
New Civil Code demands factual, legal and equitable justification, without
which the award is a conclusion without a premise, its basis being
improperly left to speculation and conjecture. In this case, we have
searched but found nothing in plaintiffs-appellants' suit that justifies the
award of attorney's fees.14
Finally, it should be said that controversies as to who should make
arrangements for the funeral of a deceased have often aggravated the
bereavement of the family and disturbed the proper solemnity which
should prevail at every funeral. It is for the purpose of preventing such
controversies that the Code Commission saw it best to include the
provisions on "Funerals."15
WHEREFORE, the petition is DENIED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Baguio City
FIRST DIVISION
G.R. No. 187495 April 21, 2014
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
vs.
EDGAR JUMAWAN, Accused-Appellant.
DECISION
"Among the duties assumed by the husband are his duties to love, cherish
and protect his wife, to give her a home, to provide her with the comforts
and the necessities of life within his means, to treat her kindly and not
cruelly or inhumanely. He is bound to honor her x x x; it is his duty not only
to maintain and support her, but also to protect her from oppression and
wrong."1
REYES, J.:
Husbands do not have property rights over their wives' bodies. Sexual
intercourse, albeit within the realm of marriage, if not consensual, is rape.
This is the clear State policy expressly legislated in Section 266-A of the
Revised Penal Code (RPC), as amended by Republic Act (R.A.) No. 8353 or
the Anti-Rape Law of 1997.
The Case
This is an automatic review2 of the Decision3 dated July 9, 2008 of the
Court of Appeals (CA) in CA-G.R. CR-HC No. 00353, which affirmed the
Judgment4 dated April 1, 2002 of the Regional Trial Court (RTC) of Cagayan
de Oro City, Branch 19, in Criminal Case Nos. 99-668 and 99-669 convicting
him to suffer the penalty of reclusion perpetua for each count.
The Facts
Accused-appellant and his wife, KKK,5 were married on October 18, 1975.
They Ii ved together since then and raised their four (4) children6 as they
put up several businesses over the years.
On February 19, 1999, KKK executed a Complaint-Affidavit,7 alleging that
her husband, the accused-appellant, raped her at 3 :00 a.m. of December
3, 1998 at their residence in Phase 2, Villa Ernesto, Gusa, Cagayan de Oro
City, and that on December 12, 1998, the accused-appellant boxed her
shoulder for refusing to have sex with him.
On June 11, 1999, the Office of the City Prosecutor of Cagayan de Oro City
issued a Joint Resolution,8 finding probable cause for grave threats, less
serious physical injuries and rape and recommending that the appropriate
criminal information be filed against the accused-appellant.
On July 16, 1999, two Informations for rape were filed before the RTC
respectively docketed as Criminal Case No. 99-6689 and Criminal Case No.
99-669.10 The Information in Criminal Case No. 99-668 charged the
accused-appellant as follows:
That on or about 10:30 in the evening more or less, of October 9, 1998, at
Gusa, Cagayan de Oro City, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused by means of force upon
person did then and there wilfully, unlawfully and feloniously have carnal
knowledge with the private complainant, her [sic] wife, against the
latter[']s will.
Contrary to and in Violation of R.A. 8353, the Anti-Rape Law of 1997.
Meanwhile the Information in Criminal Case No. 99-669 reads:
That on or about 10:30 in the evening more or less, of October 10, 1998,
at Gusa, Cagayan de Oro City, Philippines, and within the jurisdiction of
this Honorable Court, the above-named accused by means of force upon
person did then and there wilfully, unlawfully and feloniously have carnal
knowledge with the private complainant, her [sic] wife, against the latter's
will.
Contrary to and in Violation of R.A. 8353, the Anti-Rape Law of 1997.
The accused-appellant was arrested upon a warrant issued on July 21,
1999.11 On August 18, 1999, the accused-appellant filed a Motion for
Reinvestigation,12 which was denied by the trial court in an Order13 dated
August 19, 1999. On even date, the accused-appellant was arraigned and
he entered a plea of not guilty to both charges.14
On January 10, 2000, the prosecution filed a Motion to Admit Amended
Information15 averring that the name of the private complainant was
omitted in the original informations for rape. The motion also stated that
KKK, thru a Supplemental Affidavit dated November 15, 1999,16 attested
that the true dates of commission of the crime are October 16, 1998 and
October 1 7, 1998 thereby modifying the dates stated in her previous
complaint-affidavit. The motion was granted on January 18, 2000.17
Accordingly, the criminal informations were amended as follows:
Criminal Case No. 99-668:
That on or about October 16, 1998 at Gusa, Cagayan de Oro City,
Philippines, and within the jurisdiction of this Honorable Court, the above-
named accused by means of force upon person did then and there wilfully,
unlawfully and feloniously have carnal knowledge with the private
complainant, his wife, [KKK], against the latter's will.
Contrary to and in violation of R.A. 8353, the Anti-Rape Law of 1997.18
Criminal Case No. 99-669:
That on or about October 17, 1998 at Gusa, Cagayan de Oro City,
Philippines, and within the jurisdiction of this Honorable Court, the above-
named accused by means of force upon person did then and there wilfully,
unlawfully and feloniously have carnal knowledge with the private
complainant, his wife, [KKK], against the latter's will.
Contrary to and in violation of R.A. 8353, the Anti-Rape Law of 1997.19
The accused-appellant was thereafter re-arraigned. He maintained his not
guilty plea to both indictments and a joint trial of the two cases forthwith
ensued.
Version of the prosecution
The prosecution's theory was anchored on the testimonies of KKK, and her
daughters MMM and 000, which, together with pertinent physical
evidence, depicted the following events:
KKK met the accused-appellant at the farm of her parents where his father
was one of the laborers. They got married after a year of courtship.20
When their first child, MMM, was born, KKK and the accused-appellant put
up a sari-sari store.21 Later on, they engaged in several other businesses -
trucking, rice mill and hardware. KKK managed the businesses except for
the rice mill, which, ideally, was under the accused-appellant's supervision
with the help of a trusted employee. In reality, however, he merely
assisted in the rice mill business by occasionally driving one of the trucks
to haul goods.22
Accused-appellant's keenness to make the businesses flourish was not as
fervent as KKK's dedication. Even the daughters observed the
disproportionate labors of their parents.23 He would drive the trucks
sometimes but KKK was the one who actively managed the businesses.24
She wanted to provide a comfortable life for their children; he, on the
other hand, did not acquiesce with that objective.25
In 1994, KKK and the accused-appellant bought a lot and built a house in
Villa Ernesto, Gusa, Cagayan de Oro City.26 Three of the children
transferred residence therein while KKK, the accused-appellant and one of
their sons stayed in Dangcagan, Bukidnon. She shuttled between the two
places regularly and sometimes he accompanied her.27 In 1998, KKK
stayed in Gusa, Cagayan De Oro City most of the days of the week.28 On
Wednesdays, she went to Dangcagan, Bukidnon to procure supplies for
the family store and then returned to Cagayan de Oro City on the same
day.29
Conjugal intimacy did not really cause marital problems between KKK and
the accused-appellant. It was, in fact, both frequent and fulfilling. He
treated her well and she, of course, responded with equal degree of
enthusiasm.30 However, in 1997, he started to be brutal in bed. He would
immediately remove her panties and, sans any foreplay, insert her penis in
her vagina. His abridged method of lovemaking was physically painful for
her so she would resist his sexual ambush but he would threaten her into
submission.31
In 1998, KKK and the accused-appellant started quarrelling usually upon
his complaint that she failed to attend to him. She was preoccupied with
financial problems in their businesses and a bank loan. He wanted KKK to
stay at home because "a woman must stay in the house and only good in
bed (sic) x x x." She disobeyed his wishes and focused on her goal of
providing a good future for the children.32
Four days before the subject rape incidents or on October 12, 1998, KKK
and the accused-appellant slept together in Cebu City where the
graduation rites of their eldest daughter were held. By October 14, 1998,
the three of them were already back in Cagayan de Oro City.33
On October 16, 1998, the accused-appellant, his wife KKK and their
children went about their nightly routine. The family store in their
residence was closed at about 9:00 p.m. before supper was taken.
Afterwards, KKK and the children went to the girls' bedroom at the
mezzanine of the house to pray the rosary while the accused-appellant
watched television in the living room.34 OOO and MMM then prepared
their beds. Soon after, the accused-appellant fetched KKK and bid her to
come with him to their conjugal bedroom in the third floor of the house.
KKK complied.35
Once in the bedroom, KKK changed into a daster and fixed the
matrimonial bed but she did not lie thereon with the accused-appellant
and instead, rested separately in a cot near the bed. Her reclusive
behavior prompted him to ask angrily: "[W]hy are you lying on the
c{o]t[?]", and to instantaneously order: "You transfer here [to] our bed."36
KKK insisted to stay on the cot and explained that she had headache and
abdominal pain due to her forthcoming menstruation. Her reasons did not
appease him and he got angrier. He rose from the bed, lifted the cot and
threw it against the wall causing KKK to fall on the floor. Terrified, KKK
stood up from where she fell, took her pillow and transferred to the
bed.37
The accused-appellant then lay beside KKK and not before long, expressed
his desire to copulate with her by tapping his fingers on her lap. She
politely declined by warding off his hand and reiterating that she was not
feeling well.38
The accused-appellant again asserted his sexual yearning and when KKK
tried to resist by holding on to her panties, he pulled them down so
forcefully they tore on the sides.39 KKK stayed defiant by refusing to bend
her legs.40
The accused-appellant then raised KKK's daster,41 stretched her legs apart
and rested his own legs on them. She tried to wrestle him away but he
held her hands and succeeded in penetrating her. As he was carrying out
his carnal desires, KKK continued to protest by desperately shouting:
"[D]on 't do that to me because I'm not feeling well."42
With a concrete wall on one side and a mere wooden partition on the
other enclosing the spouses' bedroom,43 KKK's pleas were audible in the
children's bedroom where MMM lay awake.
Upon hearing her mother crying and hysterically shouting: "Eddie, don't do
that to me, have pity on me,"44 MMM woke up 000 who prodded her to
go to their parents' room.45 MMM hurriedly climbed upstairs, vigorously
knocked on the door of her parents' bedroom and inquired: "Pa, why is it
that Mama is crying?"46 The accused-appellant then quickly put on his
briefs and shirt, partly opened the door and said: "[D]on 't interfere
because this is a family trouble," before closing it again.47 Since she heard
her mother continue to cry, MMM ignored his father's admonition,
knocked at the bedroom door again, and then kicked it.48 A furious
accused-appellant opened the door wider and rebuked MMM once more:
"Don't interfere us. Go downstairs because this is family trouble!" Upon
seeing KKK crouching and crying on top of the bed, MMM boldly entered
the room, approached her mother and asked: "Ma, why are you crying?"
before asking her father: "Pa, what happened to Mama why is it that her
underwear is torn[?]"49
When MMM received no definite answers to her questions, she helped
her mother get up in order to bring her to the girls' bedroom. KKK then
picked up her tom underwear and covered herself with a blanket.50
However, their breakout from the room was not easy. To prevent KKK
from leaving, the accused-appellant blocked the doorway by extending his
arm towards the knob. He commanded KKK to "[S]tay here, you sleep in
our room," when the trembling KKK pleaded: "Eddie, allow me to go out."
He then held KKK's hands but she pulled them back. Determined to get
away, MMM leaned against door and embraced her mother tightly as they
pushed their way out.51
In their bedroom, the girls gave their mother some water and queried her
as to what happened.52 KKK relayed: "[Y]our father is an animal, a beast;
he forced me to have sex with him when I'm not feeling well." The girls
then locked the door and let her rest."53
The accused-appellant's aggression recurred the following night. After
closing the family store on October 17, 1998, KKK and the children took
their supper. The accused-appellant did not join them since, according to
him, he already ate dinner elsewhere. After resting for a short while, KKK
and the children proceeded to the girls' bedroom and prayed the rosary.
KKK decided to spend the night in the room's small bed and the girls were
already fixing the beddings when the accused-appellant entered.
"Why are you sleeping in the room of our children", he asked KKK, who
responded that she preferred to sleep with the children.54 He then
scoffed: "Its alright if you will not go with me, anyway, there are women
that could be paid [P] 1,000.00." She dismissed his comment by turning
her head away after retorting: "So be it." After that, he left the room.55
He returned 15 minutes later56 and when KKK still refused to go with him,
he became infuriated. He lifted her from the bed and attempted to carry
her out of the room as he exclaimed: "Why will you sleep here[?] Lets go
to our bedroom." When she defied him, he grabbed her short pants
causing them to tear apart.57 At this point, MMM interfered, "Pa, don't do
that to Mama because we are in front of you."58
The presence of his children apparently did not pacify the accused-
appellant who yelled, "[E]ven in front of you, I can have sex of your
mother [sic J because I'm the head of the family." He then ordered his
daughters to leave the room. Frightened, the girls obliged and went to the
staircase where they subsequently heard the pleas of their helpless
mother resonate with the creaking bed.59
The episodes in the bedroom were no less disturbing. The accused-
appellant forcibly pulled KKK's short pants and panties. He paid no heed as
she begged, "[D]on 't do that to me, my body is still aching and also my
abdomen and I cannot do what you wanted me to do [sic]. I cannot
withstand sex."60
After removing his own short pants and briefs, he flexed her legs, held her
hands, mounted her and forced himself inside her. Once gratified, the
accused-appellant put on his short pants and briefs, stood up, and went
out of the room laughing as he conceitedly uttered: "[I]t s nice, that is
what you deserve because you are [a] flirt or fond of sex." He then
retreated to the masters' bedroom.61
Sensing that the commotion in their bedroom has ceased, MMM and OOO
scurried upstairs but found the door locked. MMM pulled out a jalousie
window, inserted her arm, reached for the doorknob inside and
disengaged its lock. Upon entering the room, MMM and OOO found their
mother crouched on the bed with her hair disheveled. The girls asked:
"Ma, what happened to you, why are you crying?" KKK replied: "[Y}our
father is a beast and animal, he again forced me to have sex with him even
if I don't feel well. "62
Version of the defense
The defense spun a different tale. The accused-appellant's father owned a
land adjacent to that of KKK's father. He came to know KKK because she
brought food for her father's laborers. When they got married on October
18, 1975, he was a high school graduate while she was an elementary
graduate.
Their humble educational background did not deter them from pursuing a
comfortable life. Through their joint hard work and efforts, the couple
gradually acquired personal properties and established their own
businesses that included a rice mill managed by the accused-appellant. He
also drove their trucks that hauled coffee, copra, or com.63
The accused-appellant denied raping his wife on October 16 and 17, 1998.
He claimed that on those dates he was in Dangcagan, Bukidnon, peeling
com. On October 7, his truck met an accident somewhere in Angeles
Ranch, Maluko, Manolo Fortich, Bukidnon. He left the truck by the
roadside because he had to attend MMM's graduation in Cebu on October
12 with KKK. When they returned to Bukidnon on October 14, he asked
KKK and MMM to proceed to Cagayan de Oro City and just leave him
behind so he can take care of the truck and buy some com.64
Ryle Equia (Equia), the spouses' driver from January 1996 until June 1999
corroborated the above claims. According to him, on October 16, 1998,
the accused-appellant was within the vicinity of the rice mill's loading area
in Dangcagan, Bukidnon, cleaning a pick-up truck. On October 17, 1998, he
and the accused-appellant were in Dangcagan, Bukidnon, loading sacks of
com into the truck. They finished loading at 3 :00 p.m. The accused-
appellant then instructed Equia to proceed to Maluko, Manolo Fortich,
Bukidnon while the former attended a fiesta in New Cebu, Kianggat,
Dangcagan, Bukidnon. At around 4:00 p.m., Equia, together with a helper
and a mechanic, left for Maluko in order to tow the stalled truck left there
by the accused-appellant in October 7 and thereafter, bring it to Cagayan
de Oro City together with the separate truck loaded with com.
They arrived in Maluko at 7:00 p.m. and it took them three hours to turn
the truck around and hoist it to the towing bar of the other truck. At
around 10:00 p.m., the accused-appellant arrived in Maluko. The four of
them then proceeded to Cagayan de Oro City where they arrived at 3 :00
a.m. of October 18, 1998. The accused-appellant went to Gusa while the
other three men brought the damaged truck to Cugman.65
The accused-appellant asserted that KKK merely fabricated the rape
charges as her revenge because he took over the control and management
of their businesses as well as the possession of their pick-up truck in
January 1999. The accused-appellant was provoked to do so when she
failed to account for their bank deposits and business earnings. The entries
in their bank account showed the balance of P3,190,539.83 on October 31,
1996 but after only a month or on November 30, 1996, the amount
dwindled to a measly P9,894.88.66 Her failure to immediately report to
the police also belies her rape allegations.67
KKK wanted to cover-up her extra-marital affairs, which the accused-
appellant gradually detected from her odd behavior. While in Cebu on
October 12, 1998 for MMM's graduation rites, the accused-appellant and
KKK had sexual intercourse. He was surprised when his wife asked him to
get a napkin to wipe her after having sex. He tagged her request as "high-
tech," because they did not do the same when they had sex in the past.
KKK had also become increasingly indifferent to him. When he arrives
home, it was an employee, not her, who opened the door and welcomed
him. She prettied herself and would no longer ask for his permission
whenever she went out.68
Bebs,69 KKK's cousin and a cashier in their Bukidnon store, gave the
accused-appellant several love letters purportedly addressed to Bebs but
were actually intended for KKK.70
KKK had more than ten paramours some of whom the accused-appellant
came to know as: Arsenio, Jong-Jong, Joy or Joey, somebody from the
military or the Philippine National Police, another one is a government
employee, a certain Fernandez and three other priests.71 Several persons
told him about the paramours of his wife but he never confronted her or
them about it because he trusted her.72
What further confirmed his suspicions was the statement made by OOO
on November 2, 1998. At that time, OOO was listening loudly to a cassette
player. Since he wanted to watch a television program, he asked OOO to
tum down the volume of the cassette player. She got annoyed, unplugged
the player, spinned around and hit the accused-appellant's head with the
socket. His head bled. An altercation between the accused-appellant and
KKK thereafter followed because the latter took OOO's side. During the
argument, OOO blurted out that KKK was better off without the accused-
appellant because she had somebody young, handsome, and a
businessman unlike the accused-appellant who smelled bad, and was old,
and ugly.73
KKK also wanted their property divided between them with three-fourths
thereof going to her and one-fourth to the accused-appellant. However,
the separation did not push through because the accused-appellant's
parents intervened.74 Thereafter, KKK pursued legal separation from the
accused-appellant by initiating Barangay Case No. 00588-99 before the
Office of Lupong Tagapamayapa of Gusa, Cagayan de Oro City and
thereafter obtaining a Certificate to File Action dated February 18, 1999.75
Ruling of the RTC
In its Judgment76 dated April 1, 2002, the RTC sustained the version
proffered by the prosecution by giving greater weight and credence to the
spontaneous and straightforward testimonies of the prosecution's
witnesses. The trial court also upheld as sincere and genuine the two
daughters' testimonies, as it is not natural in our culture for daughters to
testify against their own father for a crime such as rape if the same was
not truly committed.
The trial court rejected the version of the defense and found unbelievable
the accused-appellant's accusations of extra-marital affairs and money
squandering against KKK. The trial court shelved the accused-appellant's
alibi for being premised on inconsistent testimonies and the contradicting
declarations of the other defense witness, Equia, as to the accused-
appellant's actual whereabouts on October 16, 1998. Accordingly, the RTC
ruling disposed as follows:
WHEREFORE, the Court hereby finds accused Edgar Jumawan "GUILTY"
beyond reasonable doubt of the two (2) separate charges of rape and
hereby sentences him to suffer the penalty of reclusion perpetua for each,
to pay complainant [P]50,000.00 in each case as moral damages,
indemnify complainant the sum of (P]75,000.00 in each case, [P]50,000.00
as exemplary damages and to pay the costs.
SO ORDERED.77
Ruling of the CA
In its Decision78 dated July 9, 2008, the CA affirmed in toto the RTC ruling.
The CA held that Section 14, Rule 110 of the Rules of Criminal Procedure,
sanctioned the amendment of the original informations. Further, the
accused-appellant was not prejudiced by the amendment because he was
re-arraigned with respect to the amended informations.
The CA found that the prosecution, through the straightforward testimony
of the victim herself and the corroborative declarations of MMM and
OOO, was able to establish, beyond reasonable doubt, all the elements of
rape under R.A. No. 8353. The accused-appellant had carnal knowledge of
KKK by using force and intimidation.
The CA also ruled that KKK's failure to submit herself to medical
examination did not negate the commission of the crime because a
medical certificate is not necessary to prove rape.
The CA rejected the accused-appellant's argument that since he and KKK
are husband and wife with mutual obligations of and right to sexual
intercourse, there must be convincing physical evidence or manifestations
of the alleged force and intimidation used upon KKK such as bruises. The
CA explained that physical showing of external injures is not indispensable
to prosecute and convict a person for rape; what is necessary is that the
victim was forced to have sexual intercourse with the accused.
In addition, the CA noted that the fact that KKK and the accused-appellant
are spouses only reinforces the truthfulness of KKK's accusations because
no wife in her right mind would accuse her husband of having raped her if
it were not true.
The delay in the filing of the rape complaint was sufficiently explained by
KKK when she stated that she only found out that a wife may charge his
husband with rape when the fiscal investigating her separate complaint for
grave threats and physical injuries told her about it.
Finally, the CA dismissed the accused-appellant's alibi for lack of
convincing evidence that it was physically impossible for him to be at his
residence in Cagayan de Oro City at the time of the commission of the
crimes, considering that Dangcagan, Bukidnon, the place where he
allegedly was, is only about four or five hours away. Accordingly, the
decretal portion of the decision read:
WHEREFORE, in the light of the foregoing, the appealed Judgment is
hereby AFFIRMED.
SO ORDERED.79
Hence, the present review. In the Court Resolution80 dated July 6, 2009,
the Court notified the parties that, if they so desire, they may file their
respective supplemental briefs. In a Manifestation and Motion81 dated
September 4, 2009, the appellee, through the Office of the Solicitor
General, expressed that it intends to adopt its Brief before the CA. On April
16, 2012, the accused-appellant, through counsel, filed his Supplemental
Brief, arguing that he was not in Cagayan de Oro City when the alleged
rape incidents took place, and the presence of force, threat or intimidation
is negated by: (a) KKK's voluntary act of going with him to the conjugal
bedroom on October 16, 1998; (b) KKK's failure to put up resistance or
seek help from police authorities; and ( c) the absence of a medical
certificate and of blood traces in KKK's panties.82
Our Ruling
I. Rape and marriage: the historical connection
The evolution of rape laws is actually traced to two ancient English
practices of 'bride capture' whereby a man conquered a woman through
rape and 'stealing an heiress' whereby a man abducted a woman and
married her.83
The rape laws then were intended not to redress the violation of the
woman's chastity but rather to punish the act of obtaining the heiress'
property by forcible marriage84 or to protect a man's valuable interest in
his wife's chastity or her daughter's virginity.85
If a man raped an unmarried virgin, he was guilty of stealing her father's
property and if a man raped his wife, he was merely using his property.86
Women were subjugated in laws and society as objects or goods and such
treatment was justified under three ideologies.
Under the chattel theory prevalent during the 6th century, a woman was
the property of her father until she marries to become the property of her
husband.87 If a man abducted an unmarried woman, he had to pay the
owner, and later buy her from the owner; buying and marrying a wife
were synonymous.88
From the 11th century to the 16th century, a woman lost her identity
upon marriage and the law denied her political power and status under
the feudal doctrine of coverture.89
A husband had the right to chastise his wife and beat her if she
misbehaved, allowing him to bring order within the family.90
This was supplanted by the marital unity theory, which espoused a similar
concept. Upon marrying, the woman becomes one with her husband. She
had no right to make a contract, sue another, own personal property or
write a will.91
II. The marital exemption rule
In the 17th century, Sir Matthew Hale (Hale), a Chief Justice in England,
conceived the irrevocable implied consent theory that would later on
emerge as the marital exemption rule in rape. He stated that:
[T]he husband cannot be guilty of a rape committed by himself upon his
lawful wife, for by their mutual matrimonial consent and contract the wife
hath given up herself in this kind unto her husband, which she cannot
retract.92
The rule was observed in common law countries such as the United States
of America (USA) and England. It gives legal immunity to a man who
forcibly sexually assaults his wife, an act which would be rape if committed
against a woman not his wife.93 In those jurisdictions, rape is traditionally
defined as "the forcible penetration of the body of a woman who is not
the wife of the perpetrator."94
The first case in the USA that applied the marital exemption rule was
Commonwealth v. Fogerty95 promulgated in 1857. The Supreme Judicial
Court of Massachusetts pronounced that it would always be a defense in
rape to show marriage to the victim. Several other courts adhered to a
similar rationale with all of them citing Hale's theory as basis.96
The rule was formally codified in the Penal Code of New York in 1909. A
husband was endowed with absolute immunity from prosecution for the
rape of his wife.97 The privilege was personal and pertained to him alone.
He had the marital right to rape his wife but he will be liable when he aids
or abets another person in raping her.98
In the 1970s, the rule was challenged by women's movements in the USA
demanding for its abolition for being violative of married women's right to
be equally protected under rape laws.99
In 1978, the rule was qualified by the Legislature in New York by
proscribing the application of the rule in cases where the husband and
wife are living apart pursuant to a court order "which by its terms or in its
effects requires such living apart," or a decree, judgment or written
agreement of separation.100
In 1983, the marital exemption rule was abandoned in New York when the
Court of Appeals of New York declared the same unconstitutional in
People v. Liberta101 for lack of rational basis in distinguishing between
marital rape and non-marital rape. The decision, which also renounced
Hale's irrevocable implied consent theory, ratiocinated as follows:
We find that there is no rational basis for distinguishing between marital
rape and nonmarital rape. The various rationales which have been
asserted in defense of the exemption are either based upon archaic
notions about the consent and property rights incident to marriage or are
simply unable to withstand even the slightest scrutiny. We therefore
declare the marital exemption for rape in the New York statute to be
unconstitutional.
Lord Hale's notion of an irrevocable implied consent by a married woman
to sexual intercourse has been cited most frequently in support of the
marital exemption. x x x Any argument based on a supposed consent,
however, is untenable. Rape is not simply a sexual act to which one party
does not consent. Rather, it is a degrading, violent act which violates the
bodily integrity of the victim and frequently causes severe, long-lasting
physical and psychic harm x x x. To ever imply consent to such an act is
irrational and absurd. Other than in the context of rape statutes, marriage
has never been viewed as giving a husband the right to coerced
intercourse on demand x x x. Certainly, then, a marriage license should not
be viewed as a license for a husband to forcibly rape his wife with
impunity. A married woman has the same right to control her own body as
does an unmarried woman x x x. If a husband feels "aggrieved" by his
wife's refusal to engage in sexual intercourse, he should seek relief in the
courts governing domestic relations, not in "violent or forceful self-help x x
x."
The other traditional justifications for the marital exemption were the
common-law doctrines that a woman was the property of her husband
and that the legal existence of the woman was "incorporated and
consolidated into that of the husband x x x." Both these doctrines, of
course, have long been rejected in this State. Indeed, "[nowhere] in the
common-law world - [or] in any modem society - is a woman regarded as
chattel or demeaned by denial of a separate legal identity and the dignity
associated with recognition as a whole human being x x x."102 (Citations
omitted)
By 1993, marital rape was a crime in all 50 states, with 17 of them, as well
as the District of Columbia, outlawing the act without exemptions.
Meanwhile, the 33 other states granted some exemptions to a husband
from prosecution such as when the wife is mentally or physically impaired,
unconscious, asleep, or legally unable to consent.103
III. Marital Rape in the Philippines
Interestingly, no documented case on marital rape has ever reached this
Court until now. It appears, however, that the old provisions of rape under
Article 335 of the RPC adhered to Hale's irrevocable implied consent
theory, albeit in a limited form. According to Chief Justice Ramon C.
Aquino,104 a husband may not be guilty of rape under Article 335 of Act
No. 3815 but, in case there is legal separation, the husband should be held
guilty of rape if he forces his wife to submit to sexual intercourse.105
In 1981, the Philippines joined 180 countries in ratifying the United
Nations Convention on the Elimination of all Forms of Discrimination
Against Women (UN-CEDAW).106 Hailed as the first international
women's bill of rights, the CEDAW is the first major instrument that
contains a ban on all forms of discrimination against women. The
Philippines assumed the role of promoting gender equality and women's
empowerment as a vital element in addressing global concerns.107 The
country also committed, among others, to condemn discrimination against
women in all its forms, and agreed to pursue, by all appropriate means
and without delay, a policy of eliminating discrimination against women
and, to this end, undertook:
(a) To embody the principle of the equality of men and women in their
national constitutions or other appropriate legislation if not yet
incorporated therein and to ensure, through law and other appropriate
means, the practical realization of this principle;
(b) To adopt appropriate legislative and other measures, including
sanctions where appropriate, prohibiting all discrimination against
women;
xxxx
(f) To take all appropriate measures, including legislation, to modify or
abolish existing laws, regulations, customs and practices which constitute
discrimination against women;
(g) To repeal all national penal provisions which constitute discrimination
against women.108
In compliance with the foregoing international commitments, the
Philippines enshrined the principle of gender equality in the 1987
Constitution specifically in Sections 11 and 14 of Article II thereof, thus:
Sec. 11. The State values the dignity of every human person and
guarantees full respect for human rights.
xxxx
Sec. 14. The State recognizes the role of women in nation-building, and
shall ensure the fundamental equality before the law of women and men.
The Philippines also acceded to adopt and implement the generally
accepted principles of international law such as the CEDA W and its allied
issuances, viz:
Article II, Section 2. The Philippines renounces war as an instrument of
national policy, and adopts the generally accepted principles of
international law as part of the law of the land and adheres to the policy of
peace, equality, justice, freedom, cooperation, and amity with all nations.
(Emphasis ours)
The Legislature then pursued the enactment of laws to propagate gender
equality. In 1997, R.A. No. 8353 eradicated the stereotype concept of rape
in Article 335 of the RPC.109 The law reclassified rape as a crime against
person and removed it from the ambit of crimes against chastity. More
particular to the present case, and perhaps the law's most progressive
proviso is the 2nd paragraph of Section 2 thereof recognizing the reality of
marital rape and criminalizing its perpetration, viz:
Article 266-C. Effect of Pardon. - The subsequent valid marriage between
the offended party shall extinguish the criminal action or the penalty
imposed.
In case it is the legal husband who is the offender, the subsequent
forgiveness by the wife as the offended party shall extinguish the criminal
action or the penalty: Provided, That the crime shall not be extinguished
or the penalty shall not be abated if the marriage is void ab initio.
Read together with Section 1 of the law, which unqualifiedly uses the term
"man" in defining rape, it is unmistakable that R.A. No. 8353 penalizes the
crime without regard to the rapist's legal relationship with his victim, thus:
Article 266-A. Rape: When And How Committed. - Rape is committed:
1) By a man who shall have carnal knowledge of a woman under any of the
following circumstances:
a) Through force, threat, or intimidation;
b) When the offended party is deprived of reason or otherwise
unconscious;
c) By means of fraudulent machination or grave abuse of authority; and
d) When the offended party is under twelve (12) years of age or is
demented, even though none of the circumstances mentioned above be
present.
The explicit intent to outlaw marital rape is deducible from the records of
the deliberations of the 10th Congress on the law's progenitor's, House Bill
No. 6265 and Senate Bill No. 650. In spite of qualms on tagging the crime
as 'marital rape' due to conservative Filipino impressions on marriage, the
consensus of our lawmakers was clearly to include and penalize marital
rape under the general definition of 'rape,' viz:
MR. DAMASING: Madam Speaker, Your Honor, one more point
of clarification in the House version on Anti-Rape Bill, House Bill No. 6265,
we never agreed to marital rape. But under Article 266-C, it says here: "In
case it is the legal husband who is the offender... " Does this presuppose
that there is now marital rape? x x x.
MR. LARA: x x x [I]n this jurisdiction, well, I only have a limited, very limited
17 years of private practice in the legal profession, Madam Speaker, and I
believe that I can put at stake my license as a lawyer in this jurisdiction
there is no law that prohibits a husband from being sued by the wife for
rape. Even jurisprudence, we don't have any jurisprudence that prohibits a
wife from suing a husband. That is why even if we don't provide in this bill
expanding the definition of crime that is now being presented for
approval, Madam Speaker, even if we don't provide here for marital rape,
even if we don't provide for sexual rape, there is the right of the wife to go
against the husband. The wife can sue the husband for marital rape and
she cannot be prevented from doing so because in this jurisdiction there is
no law that prohibits her from doing so. This is why we had to put second
paragraph of 266-C because it is the belief of many of us. x x x, that if it is
true that in this jurisdiction there is marital rape even if we don't provide it
here, then we must provide for something that will unify and keep the
cohesion of the family together that is why we have the second paragraph.
MR. DAMASING: Madam Speaker, Your Honor, under the House version
specifically House Bill No. 6265 our provision on a husband forcing the
wife is not marital rape, it is marital sexual assault.
MR. LARA: That is correct, Madam Speaker.
MR. DAMASING: But here it is marital rape because there is no crime of
sexual assault. So, Your Honor, direct to the point, under Article 266-C, is it
our understanding that in the second paragraph, quote: "In case it is the
legal husband who is the offender, this refers to marital rape filed against
the husband? Is that correct?
MR. LARA: No, Madam Speaker, not entirely, no. The answer is no.
MR. DAMASING: So if the husband is guilty of sexual assault, what do you
call- it?
MR. LARA: Sexual assault, Madam Speaker.
MR. DAMASING: There is no crime of sexual assault, Your Honor, we have
already stated that. Because under 1 and 2 it is all denominated as rape,
there is no crime of sexual assault. That is why I am sorry that our House
version which provided for sexual assault was not carried by the Senate
version because all sexual crimes under this bicameral conference
committee report are all now denominated as rape whether the penalty is
from reclusion perpetua to death or whether the penalty is only prision
mayor. So there is marital rape, Your Honor, is that correct?
xxxx
MR. DAMASING: Madam Speaker, Your Honor, I am in favor of this. I am in
favor of punishing the husband who forces the wife even to 30 years
imprisonment. But please do not call it marital rape, call it marital sexual
assault because of the sanctity of marriage. x x x.110 (Emphasis ours)
HON. APOSTOL: In our version, we did not mention marital rape but
marital rape is not excluded.
HON. ROCO: Yeah. No. But I think there is also no specific mention.
HON. APOSTOL: No. No. No. Silent lang 'yung marital rape.
xxxx
HON. ROCO: xx x [I]f we can retain the effect of pardon, then this marital
rape can be implicitly contained in the second paragraph. x x x So marital
rape actually was in the House version x x x. But it was not another
definition of rape. You will notice, it only says, that because you are the
lawful husband does not mean that you cannot commit rape.
Theoretically, I mean, you can beat up your wife until she's blue. And if the
wife complains she was raped, I guess that, I mean, you just cannot raise
the defense x x x[:] I am the husband. But where in the marriage contract
does it say that I can beat you up? That's all it means. That is why if we
stop referring to it as marital rape, acceptance is easy. Because parang ang
marital rape, married na nga kami. I cannot have sex. No, what it is saying
is you're [the] husband but you cannot beat me up. x x x. That's why to me
it's not alarming. It was just a way of saying you're [the] husband, you
cannot say when I am charged with rape x x x.
PRESIDING OFFICER SHAHAN!: All right, so how do you propose it if we put
it in[?]
HON. ROCO: x x x [A]ll we are saying [is] that if you are the lawful husband
does not mean you can have carnal knowledge by force[,] threat or
intimidation or by depriving your wife reason, a grave abuse of authority, I
don't know how that cannot apply. Di ba yung, or putting an instrument
into the, yun ang sinasabi ko lang, it is not meant to have another
classification of rape. It is all the same definition x x x.
xxxx
HON.ROCO: What is 266-F? x x x. Now if we can retain 266-F x x x, we can
say that this rule is implicit already in the first proviso. It implies na there is
an instance when a husband can be charged [with] rape x x x.
HON. ROXAS: Otherwise, silent na.
HON. ROCO: Otherwise, we are silent na. So parang i-delete natin ito. But
it is understood that this rule of evidence is now transport[ed], put into
266-F, the effect of pardon.
PRESIDING OFFICER APOSTOL: We will retain this effect of pardon. We will
remove marital rape.
HON. ROCO: No, yun ang, oo we will remove this one on page 3 but we
will retain the one on page 8, the effect of pardon. x x x [I]t is inferred but
we leave it because after all it is just a rule of evidence. But I think we
should understand that a husband cannot beat at his wife to have sex. Di
ha? I think that should be made clear. x x x.
xxxx
HON. ROCO: x x x [W]e are not defining a crime of marital rape. All we are
saying is that if you're [the] legal husband, Jesus Christ, don't beat up to
have sex. I almost want, you are my wife, why do you have to beat me up.
So, ganoon. So, if we both justify it that way in the Report as inferred in
proviso, I mean, we can face up, I hope, to the women and they would
understand that it is half achieved.
HON. ZAMORA: I think, Raul, as long as we understand that we are not
defining or creating a new crime but instead, we are just defining a rule of
evidence. x x x.
HON. ROCO: Then, in which case we may just want to clarify as a rule of
evidence the fact that he is husband is not, does not negate.111
CHAIRMAN LARA: x x x We all agree on the substance of the point in
discussion. The only disagreement now is where to place it. Let us clear
this matter. There are two suggestions now on marital rape. One is that it
is rape if it is done with force or intimidation or any of the circumstances
that would define rape x x x immaterial. The fact that the husband and
wife are separated does not come into the picture. So even if they are
living under one roof x x x for as long as the attendant circumstances of
the traditional rape is present, then that is rape.112
PRESIDING OFFICER ANGARA-CASTILLO: Mr. Chairman, x x x [t]his
provision on marital rape, it does not actually change the meaning of rape.
It merely erases the doubt in anybody's mind, whether or not rape can
indeed be committed by the husband against the wife. So the bill really
says, you having been married to one another is not a legal impediment.
So I don't really think there is any need to change the concept of rape as
defined presently under the revised penal code. This do[es] not actually
add anything to the definition of rape. It merely says, it is merely
clarificatory. That if indeed the wife has evidence to show that she was
really brow beaten, or whatever or forced or intimidated into having
sexual intercourse against her will, then the crime of rape has been
committed against her by the husband, notwithstanding the fact that they
have been legally married. It does not change anything at all, Mr.
Chairman.
PRESIDING OFFICER APOSTOL: Yes, I think, there is no change on this x x
x.113
The paradigm shift on marital rape in the Philippine jurisdiction is further
affirmed by R.A. No. 9262,114 which regards rape within marriage as a
form of sexual violence that may be committed by a man against his wife
within or outside the family abode, viz:
Violence against women and their children refers to any act or a series of
acts committed by any person against a woman who is his wife, former
wife, or against a woman with whom the person has or had a sexual or
dating relationship, or with whom he has a common child, or against her
child whether legitimate or illegitimate, within or without the family
abode, which result in or is likely to result in. physical, sexual,
psychological harm or suffering, or economic abuse including threats of
such acts, battery, assault, coercion, harassment or arbitrary deprivation
of liberty. It includes, but is not limited to, the following acts:
A. "Physical Violence" refers to acts that include bodily or physical harm;
B. "Sexual violence" refers to an act which is sexual in nature, committed
against a woman or her child. It includes, but is not limited to:
a) rape, sexual harassment, acts of lasciviousness, treating a woman or her
child as a sex object, making demeaning and sexually suggestive remarks,
physically attacking the sexual parts of the victim's body, forcing her/him
to watch obscene publications and indecent shows or forcing the woman
or her child to do indecent acts and/or make films thereof, forcing the wife
and mistress/lover to live in the conjugal home or sleep together in the
same room with the abuser;
b) acts causing or attempting to cause the victim to engage in any sexual
activity by force, threat of force, physical or other harm or threat of
physical or other harm or coercion;
c) Prostituting the woman or child.
Statistical figures confirm the above characterization. Emotional and other
forms of non-personal violence are the most common type of spousal
violence accounting for 23% incidence among ever-married women. One
in seven ever-married women experienced physical violence by their
husbands while eight percent (8%) experienced sexual violence.115
IV. Refutation of the accused-appellant's arguments
The crux of the accused-appellant's plea for acquittal mirrors the
irrevocable implied consent theory. In his appeal brief before the CA, he
posits that the two incidents of sexual intercourse, which gave rise to the
criminal charges for rape, were theoretically consensual, obligatory even,
because he and the victim, KKK, were a legally married and cohabiting
couple. He argues that consent to copulation is presumed between
cohabiting husband and wife unless the contrary is proved.
The accused-appellant further claims that this case should be viewed and
treated differently from ordinary rape cases and that the standards for
determining the presence of consent or lack thereof must be adjusted on
the ground that sexual community is a mutual right and obligation
between husband and wife.116
The contentions failed to muster legal and rational merit.
The ancient customs and ideologies from which the irrevocable implied
consent theory evolved have already been superseded by modem global
principles on the equality of rights between men and women and respect
for human dignity established in various international conventions, such as
the CEDAW. The Philippines, as State Party to the CEDAW, recognized that
a change in the traditional role of men as well as the role of women in
society and in the family is needed to achieve full equality between them.
Accordingly, the country vowed to take all appropriate measures to
modify the social and cultural patterns of conduct of men and women,
with a view to achieving the elimination of prejudices, customs and all
other practices which are based on the idea of the inferiority or the
superiority of either of the sexes or on stereotyped roles for men and
women.117 One of such measures is R.A. No 8353 insofar as it eradicated
the archaic notion that marital rape cannot exist because a husband has
absolute proprietary rights over his wife's body and thus her consent to
every act of sexual intimacy with him is always obligatory or at least,
presumed.
Another important international instrument on gender equality is the UN
Declaration on the Elimination of Violence Against Women, which was
Promulgated118 by the UN General Assembly subsequent to the CEDA W.
The Declaration, in enumerating the forms of gender-based violence that
constitute acts of discrimination against women, identified 'marital rape'
as a species of sexual violence, viz:
Article 1
For the purposes of this Declaration, the term "violence against women"
means any act of gender-based violence that results in, or is likely to result
in, physical, sexual or psychological harm or suffering to women, including
threats of such acts, coercion or arbitrary deprivation of liberty, whether
occurring in public or in private life.
Article 2
Violence against women shall be understood to encompass, but not be
limited to, the following:
(a) Physical, sexual and psychological violence occurring in the family,
including battering, sexual abuse of female children in the household,
dowry-related violence, marital rape, female genital mutilation and other
traditional practices harmful to women, non-spousal violence and violence
related to exploitation;119 (Emphasis ours)
Clearly, it is now acknowledged that rape, as a form of sexual violence,
exists within marriage. A man who penetrates her wife without her
consent or against her will commits sexual violence upon her, and the
Philippines, as a State Party to the CEDA W and its accompanying
Declaration, defines and penalizes the act as rape under R.A. No. 8353.
A woman is no longer the chattel-antiquated practices labeled her to be. A
husband who has sexual intercourse with his wife is not merely using a
property, he is fulfilling a marital consortium with a fellow human being
with dignity equal120 to that he accords himself. He cannot be permitted
to violate this dignity by coercing her to engage in a sexual act without her
full and free consent. Surely, the Philippines cannot renege on its
international commitments and accommodate conservative yet irrational
notions on marital activities121 that have lost their relevance in a
progressive society.
It is true that the Family Code,122 obligates the spouses to love one
another but this rule sanctions affection and sexual intimacy, as
expressions of love, that are both spontaneous and mutual123 and not the
kind which is unilaterally exacted by force or coercion.
Further, the delicate and reverent nature of sexual intimacy between a
husband and wife excludes cruelty and coercion. Sexual intimacy brings
spouses wholeness and oneness. It is a gift and a participation in the
mystery of creation. It is a deep sense of spiritual communion. It is a
function which enlivens the hope of procreation and ensures the
continuation of family relations. It is an expressive interest in each other's
feelings at a time it is needed by the other and it can go a long way in
deepening marital relationship.124 When it is egoistically utilized to
despoil marital union in order to advance a felonious urge for coitus by
force, violence or intimidation, the Court will step in to protect its lofty
purpose, vindicate justice and protect our laws and State policies. Besides,
a husband who feels aggrieved by his indifferent or uninterested wife's
absolute refusal to engage in sexual intimacy may legally seek the court's
intervention to declare her psychologically incapacitated to fulfill an
essential marital obligation.125 But he cannot and should not demand
sexual intimacy from her coercively or violently.
Moreover, to treat marital rape cases differently from non-marital rape
cases in terms of the elements that constitute the crime and in the rules
for their proof, infringes on the equal protection clause. The Constitutional
right to equal protection of the laws126 ordains that similar subjects
should not be treated differently, so as to give undue favor to some and
unjustly discriminate against others; no person or class of persons shall be
denied the same protection of laws, which is enjoyed, by other persons or
other classes in like circumstances.127
As above discussed, the definition of rape in Section 1 of R.A. No. 8353
pertains to: (a) rape, as traditionally known; (b) sexual assault; and (c)
marital rape or that where the victim is the perpetrator's own spouse. The
single definition for all three forms of the crime shows that the law does
not distinguish between rape committed in wedlock and those committed
without a marriage. Hence, the law affords protection to women raped by
their husband and those raped by any other man alike.
The posture advanced by the accused-appellant arbitrarily discriminates
against married rape victims over unmarried rape victims because it
withholds from married women raped by their husbands the penal redress
equally granted by law to all rape victims.
Further, the Court adheres to and hereby adopts the rationale in Liberta in
rejecting the argument akin to those raised by herein accused-appellant. A
marriage license should not be viewed as a license for a husband to
forcibly rape his wife with impunity. A married woman has the same right
to control her own body, as does an unmarried woman.128 She can give
or withhold her consent to a sexual intercourse with her husband and he
cannot unlawfully wrestle such consent from her in case she refuses.
Lastly, the human rights of women include their right to have control over
and decide freely and responsibly on matters related to their sexuality,
including sexual and reproductive health, free of coercion, discrimination
and violence.129 Women do not divest themselves of such right by
contracting marriage for the simple reason that human rights are
inalienable.130
In fine, since the law does not separately categorize marital rape and non-
marital rape nor provide for different definition or elements for either, the
Court, tasked to interpret and apply what the law dictates, cannot trudge
the forbidden sphere of judicial legislation and unlawfully divert from what
the law sets forth. Neither can the Court frame distinct or stricter
evidentiary rules for marital rape cases as it would inequitably burden its
victims and unreasonably and irrationally classify them differently from
the victims of non-marital rape.
Indeed, there exists no legal or rational reason for the Court to apply the
law and the evidentiary rules on rape any differently if the aggressor is the
woman's own legal husband. The elements and quantum of proof that
support a moral certainty of guilt in rape cases should apply uniformly
regardless of the legal relationship between the accused and his accuser.
Thus, the Court meticulously reviewed the present case in accordance
with the established legal principles and evidentiary policies in the
prosecution and resolution of rape cases and found that no reversible
error can be imputed to the conviction meted the accused-appellant.
The evidence for the prosecution was
based on credible witnesses who gave
equally credible testimonies
In rape cases, the conviction of the accused rests heavily on the credibility
of the victim. Hence, the strict mandate that all courts must examine
thoroughly the testimony of the offended party. While the accused in a
rape case may be convicted solely on the testimony of the complaining
witness, courts are, nonetheless, duty-bound to establish that their
reliance on the victim's testimony is justified. Courts must ensure that the
testimony is credible, convincing, and otherwise consistent with human
nature. If the testimony of the complainant meets the test of credibility,
the accused may be convicted on the basis thereof.131
It is settled that the evaluation by the trial court of the credibility of
witnesses and their testimonies are entitled to the highest respect. This is
in view of its inimitable opportunity to directly observe the witnesses and
their deportment, conduct and attitude, especially during cross-
examination. Thus, unless it is shown that its evaluation was tainted with
arbitrariness or certain facts of substance and value have been plainly
overlooked, misunderstood, or misapplied, the same will not be disturbed
on appeal.132
After approximating the perspective of the trial court thru a meticulous
scrutiny of the entire records of the trial proceedings and the transcript of
each witnesses' testimony, the Court found no justification to disturb its
findings.
Rather, the Court observed that KKK and her testimony were both credible
and spontaneous. Hailed to the witness stand on six separate occasions,
KKK never wavered neither did her statements vacillate between
uncertainty and certitude. She remained consistent, categorical,
straightforward, and candid during the rigorous cross-examination and on
rebuttal examination, she was able to convincingly explain and debunk the
allegations of the defense.
She vividly recounted how the accused-appellant forced her to have sex
with him despite her refusal on October 16, 1998. He initially ordered her
to sleep beside him in their conjugal bed by violently throwing the cot
where she was resting. In order not to aggravate his temper, KKK obeyed.
On the bed, he insinuated for them to have sex. When she rejected his
advances due to abdominal pain and headache, his request for intimacy
transformed into a stubborn demand. Unyielding, KKK held her panties but
the accused-appellant forcibly pulled them down. The tug caused the
small clothing to tear apart. She reiterated that she was not feeling well
and begged him to stop. But no amount of resistance or begging subdued
him. He flexed her two legs apart, gripped her hands, mounted her, rested
his own legs on hers and inserted his penis into her vagina. She continued
pleading but he never desisted.133
Her accurate recollection of the second rape incident on October 1 7, 1998
is likewise unmistakable. After the appalling episode in the conjugal
bedroom the previous night, KKK decided to sleep in the children's
bedroom. While her daughters were fixing the beddings, the accused-
appellant barged into the room and berated her for refusing to go with
him to their conjugal bedroom. When KKK insisted to stay in the children's
bedroom, the accused-appellant got angry and pulled her up. MMM's
attempt to pacify the accused-appellant further enraged him. He
reminded them that as the head of the family he could do whatever he
wants with his wife. To demonstrate his role as patriarch, he ordered the
children to go out of the room and thereafter proceeded to force KKK into
sexual intercourse. He forcibly pulled down her short pants and panties as
KKK begged "Dont do that to me, my body is still aching and also my
abdomen and I cannot do what you wanted me to do. I cannot withstand
sex."134 But her pleas fell on deaf ears. The accused-appellant removed
his shorts and briefs, spread KKK's legs apart, held her hands, mounted her
and inserted his penis into her vagina. After gratifying himself, he got
dressed, left the room as he chuckled: "Its nice, that is what you deserve
because you are [a] flirt or fond of sex."135
Entrenched is the rule that in the prosecution of rape cases, the essential
element that must be proved is the absence of the victim's consent to the
sexual congress.136
Under the law, consent is absent when: (a) it was wrestled from the victim
by force, threat or intimidation, fraudulent machinations or grave abuse of
authority; or (b) the victim is incapable of giving free and voluntary
consent because he/she is deprived of reason or otherwise unconscious or
that the offended party is under 12 years of age or is demented.
Contrary to the accused-appellant's asseverations, KKK's consent was
wrestled from her through force and intimidation both of which were
established beyond moral certainty by the prosecution through the
pertinent testimony of KKK, viz:
On the October 16, 1998 rape incident:
(Direct Examination)
ATTY. LARGO:
Q So, while you were already lying on the bed together with your husband,
do you remember what happened?
A He lie down beside me and asked me to have sex with him.
Q How did he manifest that he wanted to have sex with you?
A He put his hand on my lap and asked me to have sex with him but I
warded off his hand.
Q Can you demonstrate to this Court how did he use his hand?
A Yes. "witness demonstrating on how the accused used his finger by
touching or knocking her lap which means that he wanted to have sex."
Q So, what did you do after that?
A I warded off his hand and refused because I was not feeling well. (at this
juncture the witness is sobbing)
Q So, what did your husband do when you refused him to have sex with
you?
A He insisted and he pulled my pantie forcibly, that is why my pantie [sic]
was tom.
Q Why, what did you do when he started to pull your pantie [sic]?
A I resisted and tried to hold my pantie [sic] but I failed, because he is so
strong.
xx xx
Q So, when your pantie [sic] was tom by your husband, what else did he
do?
A He flexed my two legs and rested his two legs on my legs.
Q So after that what else did he do?
A He succeeded in having sex with me because he held my two hands no
matter how I wrestled but I failed because he is stronger than me.
COURT: Make it of record that the witness is sobbing while she is giving
her testimony.
ATTY. LARGO: (To the witness cont'ng.)
Q So, what did you do when your husband already stretched your two legs
and rode on you and held your two hands?
A I told him, "don't do that because I'm not feeling well and my whole
body is aching."
Q How did you say that to your husband?
A I told him, "don't do that to me because I'm not feeling well."
Q Did you say that in the manner you are saying now?
xxxx
A I shouted when I uttered that words.
xxxx
Q Was your husband able to consummate his desire?
xxxx
A Yes, sir, because I cannot do anything.137
(Cross-Examination)
ATTY. AMARGA;
Q Every time you have sex with your husband it was your husband
normally remove your panty?
A Yes, Sir.
Q It was not unusual for your husband then to remove your panty because
according to you he normally do that if he have sex with you?
A Yes, Sir.
Q And finally according to you your husband have sex with you?
A Yes, Sir because he forcibly used me in spite of holding my panty
because I don't want to have sex with him at that time.
Q You did not spread your legs at that time when he removed your panty?
A Yes, Sir.
Q Meaning, your position of your legs was normal during that time?
A I tried to resist by not flexing my legs.
xxxx
Q At that time when your husband allegedly removed your panty he also
remove your nightgown?
A No, Sir.
Q And he did pull out your duster [sic] towards your face?
A He raised my duster [sic] up.
Q In other words your face was covered when he raised your duster [sic]?
A No, only on the breast level.138
On the October 17, 1998 rape incident:
(Direct Examination)
ATTY. LARGO
Q So, after your children went out of the room, what transpired?
A He successfully having sex with me because he pulled my short pant and
pantie forcible.
Q So, what did you say when he forcibly pulled your short and pantie?
A I told him, "don't do that to me, my body is still aching and also my
abdomen and I cannot do what you wanted me to do. I cannot withstand
sex."
Q So, what happened to your short when he forcibly pulled it down?
A It was tom.
Q And after your short and pantie was pulled down by your husband, what
did he do?
A He also removed his short and brief and flexed my two legs and
mounted on me and succeeded in having sex with me.139
The accused-appellant forced his wife when he knowingly overpowered
her by gripping her hands, flexing her legs and then resting his own legs
thereon in order to facilitate the consummation of his much-desired non-
consensual sexual intercourse.
Records also show that the accused-appellant employed sufficient
intimidation upon KKK. His actuations prior to the actual moment of the
felonious coitus revealed that he imposed his distorted sense of moral
authority on his wife. He furiously demanded for her to lay with him on
the bed and thereafter coerced her to indulge his sexual craving.
The fury the accused-appellant exhibited when KKK refused to sleep with
him on their bed, when she insisted to sleep in the children's bedroom and
the fact that he exercises dominance over her as husband all cowed KKK
into submission.
The fact that KKK voluntarily went with the accused-appellant to their
conjugal bedroom on October 16, 1998 cannot be stretched to mean that
she consented to the forced sexual intercourse that ensued. The accused-
appellant was KKK's husband and hence it was customary for her to sleep
in the conjugal bedroom. No consent can be deduced from such act of KKK
because at that juncture there were no indications that sexual intercourse
was about to take place. The issue of consent was still irrelevant since the
act for which the same is legally required did not exist yet or at least
unclear to the person from whom the consent was desired. The significant
point when consent must be given is at that time when it is clear to the
victim that her aggressor is soliciting sexual congress. In this case, that
point is when the accused-appellant tapped his fingers on her lap, a
gesture KKK comprehended to be an invitation for a sexual intercourse,
which she refused.
Resistance, medical certificate and blood traces.
We cannot give credence to the accused-appellant's argument that KKK
should have hit him to convey that she was resisting his sexual onslaught.
Resistance is not an element of rape and the law does not impose upon
the victim the burden to prove resistance140 much more requires her to
raise a specific kind thereof.
At any rate, KKK put up persistent, audible and intelligible resistance for
the accused-appellant to recognize that she seriously did not assent to a
sexual congress. She held on to her panties to prevent him from
undressing her, she refused to bend her legs and she repeatedly shouted
and begged for him to stop.
Moreover, as an element of rape, force or intimidation need not be
irresistible; it may be just enough to bring about the desired result. What
is necessary is that the force or intimidation be sufficient to consummate
the purpose that the accused had in mind141 or is of such a degree as to
impel the defenseless and hapless victim to bow into submission.142
Contrary to the accused-appellant's allusions, the absence of blood traces
in KKK's panties or the lack of a medical certificate do not negate rape. It is
not the presence or absence of blood on the victim's underwear that
determines the fact of rape143 inasmuch as a medical certificate is
dispensable evidence that is not necessary to prove rape.144 These details
do not pertain to the elements that produce the gravamen of the offense
that is -sexual intercourse with a woman against her will or without her
consent.145
The accused-appellant harps on the acquittal ruling in People v. Godoy,146
the evidentiary circumstances of which are, however, disparate from
those in the present case. In Godoy, the testimony of the complainant was
inherently weak, inconsistent, and was controverted by the prosecution's
medico-legal expert witness who stated that force was not applied based
on the position of her hymenal laceration. This led the Court to conclude
that the absence of any sign of physical violence on the victim's body is an
indication of consent.147 Here, however, KKK's testimony is, as discussed
earlier, credible, spontaneous and forthright.
The corroborative testimonies of
MMM and OOO are worthy of credence.
The accused-appellant's assertion that MMM and OOO's testimonies
lacked probative value as they did not witness the actual rape is bereft of
merit. It must be stressed that rape is essentially committed in relative
isolation, thus, it is usually only the victim who can testify with regard to
the fact of the forced sexual intercourse.148 Hence, the probative value of
MMM and OOO's testimonies rest not on whether they actually witnessed
the rape but on whether their declarations were in harmony with KKK's
narration of the circumstances, preceding, subsequent to and concurrent
with, the rape incidents.
MMM and OOO's testimonies substantiated significant points in KKK's
narration. MMM heard KKK shouting and crying: "Eddie, dont do that to
me, have pity on me"149 on the night of October 16, 1998 shortly after
KKK and the accused-appellant went to their conjugal bedroom. When
MMM went upstairs to check on her mother, the accused-appellant
admonished her for meddling. Frustrated to aid her mother who
persistently cried, MMM kicked the door so hard the accused-appellant
was prompted to open it and rebuke MMM once more. OOO heard all
these commotion from the room downstairs.
MMM then saw her mother crouched on the bed, crying, with her hair
disheveled while her tom panty lay on the floor. After a brief struggle with
the accused-appellant, MMM and KKK were finally able to escape and
retreat to the children's bedroom where KKK narrated to her daughters:
"[Y]our father is an animal, a beast; he forced me to have sex with him
when I'm not feeling well. "
KKK gave a similar narration to MMM and OOO the following night after
the accused-appellant barged inside the children's bedroom. The couple
had an argument and when MMM tried to interfere, the accused-
appellant ordered her and OOO to get out after bragging that he can have
sex with his wife even in front of the children because he is the head of
the family. The girls then stayed by the staircase where they afterwards
heard their mother helplessly crying and shouting for the accused-
appellant to stop.
Indeed, the testimonies of KKK, MMM and OOO coherently depicted that
the accused-appellant, through the use of force and intimidation, had non-
consensual and forced carnal knowledge of his wife, KKK on the nights of
October 16 and 17, 1998.
KKK's helpless screams and pleas from inside the bedroom coupled with
her verbal and physical resistance were clear manifestations of coercion.
Her appearance when MMM saw her on the bed after the accused
appellant opened the door on October 16, 1998, her conduct towards the
accused-appellant on her way out of the room, and her categorical outcry
to her children after the two bedroom episodes - all generate the
conclusion that the sexual acts that occurred were against her will.
Failure to immediately report to the
police authorities, if satisfactorily
explained, is not fatal to the
credibility of a witness.
The testimonies of KKK and her daughters cannot be discredited merely
because they failed to report the rape incidents to the police authorities or
that KKK belatedly filed the rape charges. Delay or vacillation by the
victims in reporting sexual assaults does not necessarily impair their
credibility if such delay is satisfactorily explained.150
At that time, KKK and her daughters were not aware that a husband
forcing his wife to submit to sexual intercourse is considered rape. In fact,
KKK only found out that she could sue his husband for rape when
Prosecutor Benjamin Tabique, Jr. (Prosecutor Tabique) told her about it
when she filed the separate charges for grave threats and physical injuries
against the accused-appellant.151
It must be noted that the incidents occurred a year into the effectivity of
R.A. No. 8353 abolishing marital exemption in rape cases hence it is
understandable that it was not yet known to a layman as opposed to legal
professionals like Prosecutor Tabique. In addition, fear of reprisal thru
social humiliation which is the common factor that deter rape victims from
reporting the crime to the authorities is more cumbersome in marital rape
cases. This is in view of the popular yet outdated belief that it is the wife's
absolute obligation to submit to her husband's carnal desires. A husband
raping his own wife is often dismissed as a peculiar occurrence or
trivialized as simple domestic trouble.
Unfamiliarity with or lack of knowledge of the law criminalizing marital
rape, the stigma and public scrutiny that could have befallen KKK and her
family had the intervention of police authorities or even the neighbors
been sought, are acceptable explanations for the failure or delay in
reporting the subject rape incidents.
The victim -S testimony on the
witness stand rendered
unnecessary the presentation of her
complaint-affidavit as evidence.
The failure of the prosecution to present KKK's complaint-affidavit for rape
is not fatal in view of the credible, candid and positive testimony of KKK on
the witness stand. Testimonial evidence carries more weight than the
affidavit since it underwent the rudiments of a direct, cross, re-direct and
re-cross examinations. Affidavits or statements taken ex parte are
generally considered incomplete and inaccurate. Thus, by nature, they are
inferior to testimony given in court.152
Ill motive imputed to the victim
The ill motive, which the accused-appellant imputed to KKK, does not
inspire belief as it is riddled with loopholes generated by incongruent and
flimsy evidence. The prosecution was able to establish that the P3 Million
deposit in the spouses' bank account was the proceeds of their loan from
the Bank of Philippine Islands (BPI). Exhibit J, which is a BPI ML instruction
sheet dated October 31, 1996 in the amount of P3,149,840.63 is the same
amount the accused-appellant claimed to have entrusted to her wife.
Although the accused-appellant denied being aware of such loan, he
admitted that approximately P3 Million was spent for the construction of
their house. These pieces of evidence effectively belie the accused
appellant's allegation that KKK could not account for the money deposited
in the bank.153
Anent, KKK's alleged extra-marital affairs, the accused-appellant failed to
explain how Bebs could be his wife KKK when the letter-sender greeted
Bebs a "happy birthday" on October 28 while KKK's birthday is June 23.
The accused-appellant also did not present Bebs herself, being a more
competent witness to the existence of the alleged love letters for KKK. He
likewise failed, despite promise to do so, to present the original copies of
such love letters neither did he substantiate KKK's supposed extra-marital
affairs by presenting witnesses who could corroborate his claims. Further,
the Court finds it unbelievable that an able man would not have the
temerity to confront his wife who has fooled around with 10 men - some
of whom he has even met. The accused-appellant's erratic statements on
the witness stand are inconsistent with the theory of extra-marital
romance making it reasonable to infer that he merely made up those
malicious stories as a desperate ploy to extricate himself out of this legal
quandary.
At best, the basis of the alleged illicit affairs of KKK were the accused-
appellant's unfounded suspicions that hold no evidentiary weight in law
and thus incompetent to destroy KKK's credibility and that of her
testimony. In sum, the defense failed to present sufficiently convincing
evidence that KKK is a mere vindictive wife who is harassing the accused-
appellant with fabricated rape charges.
Alibi
It must be stressed that in raising the irrevocable implied consent theory
as defense, the accused-appellant has essentially admitted the facts of
sexual intercourse embodied in the two criminal informations for rape.
This admission is inconsistent with the defense of alibi and any discussion
thereon will thus be irrelevant.
At any rate, the courts a quo correctly rejected his alibi.
Alibi is one of the weakest defenses not only because it is inherently frail
and unreliable, but also because it is easy to fabricate and difficult to
check or rebut. It cannot prevail over the positive identification of the
accused by eyewitnesses who had no improper motive to testify
falsely.154
For the defense of alibi to prosper, the accused must prove not only that
he was at some other place at the time of the commission of the crime,
but also that it was physically impossible for him to be at the locus delicti
or within its immediate vicinity. Physical impossibility refers not only to
the geographical distance between the place where the accused was and
the place where the crime was committed when the crime transpired, but
more importantly, the facility of access between the two places.155
Even granting in arguendo that the accused-appellant had indeed
attended a fiesta in Dangcagan, Bukidnon or was hauling com with Equia
on the dates of commission of the crime, the same will not easily
exonerate him. The accused-appellant failed to adduce clear and
convincing evidence that it was physically impossible for him to be at his
residence in Cagayan de Oro City at the time of the commission of the
crime. Dangcagan, Bukidnon can be traversed by about four or five hours
from Cagayan de Oro City, and even less by private vehicle which was
available to the accused appellant at any time.156 Thus, it was not
physically impossible for him to be at the situs criminis at the dates and
times when the two rape incidents were committed.
Between the accused-appellant's alibi and denial, and the positive
identification and credible testimony of the victim, and her two daughters,
the Court must give weight to the latter, especially in the absence of ill
motive on their part to falsely testify against the accused-appellant.
Conclusion
All told, the presumption of innocence endowed an accused-appellant was
sufficiently overcome by KKK's clear, straightforward, credible, and
truthful declaration that on two separate occasions, he succeeded in
having sexual intercourse with her, without her consent and against her
will. Evidence of overwhelming force and intimidation to consummate
rape is extant from KKK's narration as believably corroborated by the
testimonies of MMM and OOO and the physical evidence of KKK's tom
panties and short pants. Based thereon, the reason and conscience of the
Court is morally certain that the accused-appellant is guilty of raping his
wife on the nights of October 16 and 17, 1998.
Penalties
The Court affirms the penalty of reclusion perpetua, for each count of
rape, meted upon the accused-appellant for being in accord with Article
266-A in relation to 266-B of the RPC. Further, he shall not be eligible for
parole pursuant to Section 3 of R.A. No. 9346, which states that "persons
convicted of offenses punished with reclusion perpetua, or whose
sentences will be reduced to reclusion perpetua, by reason of this Act,
shall not be eligible for parole under Act No. 4180, otherwise known as the
Indeterminate Sentence Law, as amended."157
The Court sustains the moral damages awarded in the amount of
P50,000.00. Moral damages are granted to rape victims without need of
proof other than the fact of rape under the assumption that the victim
suffered moral injuries from the experience she underwent.158
The award of civil indemnity is proper; it is mandatory upon the finding
that rape took place.1wphi1 Considering that the crime committed is
simple rape, there being no qualifying circumstances attendant in its
commission, the appropriate amount is P50,000.00159 and not
P75,000.00 as awarded by the RTC.
To serve as an example for public good and in order to deter a similar form
of domestic violence, an award of P30,000.00 as exemplary damages is
imperative.160
The damages awarded shall earn legal interest at the rate of six percent
(6%) per annum to be reckoned from the date of finality of this judgment
until fully paid.161
A Final Note
Rape is a crime that evokes global condemnation because it is an
abhorrence to a woman's value and dignity as a human being. It respects
no time, place, age, physical condition or social status. It can happen
anywhere and it can happen to anyone. Even, as shown in the present
case, to a wife, inside her time-honored fortress, the family home,
committed against her by her husband who vowed to be her refuge from
cruelty. The herein pronouncement is an affirmation to wives that our
rape laws provide the atonement they seek from their sexually coercive
husbands.
Husbands are once again reminded that marriage is not a license to
forcibly rape their wives. A husband does not own his wife's body by
reason of marriage. By marrying, she does not divest herself of the human
right to an exclusive autonomy over her own body and thus, she can
lawfully opt to give or withhold her consent to marital coitus. A husband
aggrieved by his wife's unremitting refusal to engage in sexual intercourse
cannot resort to felonious force or coercion to make her yield. He can seek
succor before the Family Courts that can determine whether her refusal
constitutes psychological incapacity justifying an annulment of the
marriage.
Sexual intimacy is an integral part of marriage because it is the spiritual
and biological communion that achieves the marital purpose of
procreation. It entails mutual love and self-giving and as such it
contemplates only mutual sexual cooperation and never sexual coercion
or imposition.
The Court is aware that despite the noble intentions of the herein
pronouncement, menacing personalities may use this as a tool to harass
innocent husbands. In this regard, let it be stressed that safeguards in the
criminal justice system are in place to spot and scrutinize fabricated or
false marital rape complaints and any person who institutes untrue and
malicious charges will be made answerable under the pertinent provisions
of the RPC and/or other laws.
WHEREFORE, all the foregoing considered, the Decision dated July 9, 2008
of the Court of Appeals in CA-G.R. CR-HC No. 00353 is hereby AFFIRMED
with MODIFICATIONS. Accused-appellant Edgar Jumawan is found GUILTY
beyond reasonable doubt of two (2) counts of RAPE and is sentenced to
suffer the penalty of reclusion perpetua for each count, without eligibility
for parole. He is further ordered to pay the victim, KKK, the amounts of
PS0,000.00 as civil indemnity, P50,000.00 as moral damages, and
P30,000.00 as exemplary damages, for each count of rape. The award of
damages shall earn legal interest at the rate of six percent (6%) per annum
from the finality of this judgment until fully paid.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 18520 September 26, 1922
INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER, appellee,
vs.
ILDEFONSO RAMIREZ, creditor and appellant.
WILLIAM EDMONDS, assignee.
Lim & Lim for appellant.
Ross & Lawrence and Antonio T. Carrascoso, jr., for the Fidelity & Surety
Co.
ROMUALDEZ, J.:
The question at issue in this appeal is, which of the two mortgages here in
question must be given preference? Is it the one in favor of the Fidelity &
Surety Co., or that in favor of Ildefonso Ramirez. The first was declared by
the trial court to be entitled to preference.
In the lower court there were three mortgagees each of whom claimed
preference. They were the two above mentioned and Concepcion Ayala.
The latter's claim was rejected by the trial court, and from that ruling she
did not appeal.
There is no question as to the priority in time of the mortgage in favor of
the Fidelity & Surety Co. which was executed on March 10, 1919, and
registered in due time in the registry of property, that in favor of the
appellant being dated September 22, 1919, and registered also in the
registry.
The appellant claims preference on these grounds: (a) That the first
mortgage above-mentioned is not valid because the property which is the
subject-matter thereof is not capable of being mortgaged, and the
description of said property is not sufficient; and (b) that the amount due
the appellant is a purchase price, citing article 1922 of the Civil Code in
support thereof, and that his mortgage is but a modification of the
security given by the debtor on February 15, 1919, that is, prior to the
mortgage executed in favor of the Fidelity & Surety Co.
As to the first ground, the thing that was mortgaged to this corporation is
described in the document as follows:
. . . his half interest in the drug business known as Antigua Botica Ramirez
(owned by Srta. Dolores del Rosario and the mortgagor herein referred to
as the partnership), located at Calle Real Nos. 123 and 125, District of
Intramuros, Manila, Philippine Islands.
With regard to the nature of the property thus mortgaged, which is one-
half interest in the business above described, such interest is a personal
property capable of appropriation and not included in the enumeration of
real properties in article 335 of the Civil Code, and may be the subject of
mortgage. All personal property may be mortgaged. (Sec. 2, Act No. 1508.)
The description contained in the document is sufficient. The law (sec. 7,
Act No. 1508) requires only a description of the following nature:
The description of the mortgaged property shall be such as to enable the
parties to the mortgage, or any other person, after reasonable inquiry and
investigation, to identify the same.
Turning to the second error assigned, numbers 1, 2, and 3 of article 1922
of the Civil Code invoked by the appellant are not applicable. Neither he,
as debtor, nor the debtor himself, is in possession of the property
mortgaged, which is, and since the registration of the mortgage has been,
legally in possession of the Fidelity & Surety Co. (Sec. 4, Act No. 1508;
Meyers vs. Thein, 15 Phil., 303.)
In no way can the mortgage executed in favor of the appellant on
September 22, 1919, be given effect as of February 15, 1919, the date of
the sale of the drug store in question. On the 15th of February of that
year, there was a stipulation about a persons security, but not a mortgage
upon any property, and much less upon the property in question.
Moreover, the appellant cannot deny the preferential character of the
mortgage in favor of the Fidelity & Surety Co. because in the very
document executed in his favor it was stated that his mortgage was a
second mortgage, subordinate to the one made in favor of the Fidelity &
Surety Co.
The judgment appealed from is affirmed with costs against the appellant.
So ordered
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-9865 December 24, 1915
VERGO D. TUFEXIS, plaintiff-appellant,
vs.
FRANCISCO OLAGUERA and THE MUNICIPAL COUNCIL OF GUINOBATAN,
represented by its president, Agapito Paulate, defendants-appellees.
Rafael de la Sierra for appellant.
Attorney-General Avancea for appellee Municipal Council of Guinobatan.
No appearance for the other appellee.
TORRES, J.:
Counsel for plaintiff, in his written petition of May 13, 1913, prayed the
Court of First Instance of Albay to declare that his client was entitled to
the possession and use of the land referred to in the complaint in
conformity with the terms of the Government concession (Exhibit A), of
which he claimed to be the sole and lawful owner; that the defendants be
ordered to remove from the said land all the stores, sheds, billiard tables,
and other obstructions thereon, so that plaintiff might reconstruct the
public market building on the said land in accordance with the provisions
of the said concession, and that they be ordered to pay jointly and
severally to the plaintiff, as damages, the sum of P250 per month from
March 1, 1912, until the date on which the land be vacated, and to pay the
legal costs and expenses of the suit.
After the complaint had been answered by counsel for the defendant
Francisco Olaguera, who prayed that his client be absolved therefrom,
with the costs against the plaintiff, the provincial fiscal, in the name and
representation of the municipality of Guinobatan, demurred on the
ground that plaintiff lacked the personality to institute the action and
further alleged that the complaint did not set forth sufficient facts to
constitute a cause of action.1awphil.net
By an order of August 25, 1913, the court sustained the demurrer filed by
the defendant municipality of Guinobatan, allowed plaintiff ten days in
which to amend his complaint, and notified him that unless he did so
within that period the action would be dismissed.
Counsel for plaintiff, by a writing of the 27th of the said month, set forth:
That he objected to the above ruling as he believed it erroneous and
contrary to law; that he did not desire to amend his complaint, wherefore,
in accordance with the provisions of section 101 of the Code of Civil
Procedure, the court should render such judgment in the case as the law
might warrant, and his exception to the said ruling should be entered on
the record. By an order of September 1, 1913, the court, overruling the
motion made by the defendant Olaguera, dismissed the complaint filed by
the plaintiff, Vergo D. Tufexis, against the municipal council of Guinobatan
on the ground that plaintiff had not amended his complaint. Plaintiff's
counsel, when notified of this ruling, excepted thereto and moved for a
rehearing and a new trial. This motion was overruled, whereupon the
plaintiff excepted and filed the proper bill of exceptions.
In the complaint filed by counsel for Vergo D. Tufexis, it was alleged that
on September 30, 1911, plaintiff acquired at a public sale held in execution
of a judgment rendered against Ricardo Pardo y Pujol, a piece of property
situated in the municipality of Guinobatan, consisting of a frame building
of strong materials with a galvanized-iron roof, erected on a parcel of land
belonging to that municipality and intended for a public market; that
plaintiff also acquired at the sale all the right, interest, title, and
participation in the said property that appertained or might appertain to
Pardo y Pujol; that the said building was constructed by virtue of a
concession granted by the former Spanish government to Ricardo Pardo y
Cabaas, father of the judgment debtor, who, by a public instrument of
July 31, 1912, renounced his right to redeem the said property and
conveyed it to plaintiff, together with all his rights therein, the instrument
of grant, Exhibit A, being attached to the complaint as a part thereof; that
on January 2, 1912, the said building was totally destroyed by an
accidental fire; that subsequent to the date just mentioned and for several
months thereafter the municipal council of Guinobatan carried on
negotiations with plaintiff for the purchase of his rights in the said
concession; that these negotiations could not be brought to a conclusion
because the municipal council had acted therein deceitfully, fraudulently,
and in bad faith and for the sole purpose of beguiling, deceiving, and
prejudicing plaintiff in order to prevent him from exercising his right to
reconstruct the burned market building and utilize it in accordance with
the terms of the said concession; that the defendant municipal council,
without plaintiff's consent and in connivance with the other defendant,
Francisco Olaguera, had authorized the latter unlawfully to take
possession of all the land from March 1, 1912, in violation of plaintiff's
rights; that the said Olaguera occupied the same with booths or stores for
the sale of groceries and other merchandise, for billiard tables, and other
analogous uses and derived unlawful gain from the revenues and rents
produced by the said buildings; that plaintiff was entitled to the
possession of the said land in accordance with the concession, which was
in full force and effect and belonged to plaintiff; that plaintiff proposed to
construct another public market building on the same land, but that the
defendants had prevented him from using the land and reconstructing
thereon the said public market building, and refused to recognize
plaintiff's right and to vacate the land that had been occupied by the
burned edifice.
The provincial fiscal alleged as a ground for the demurrer that in no part of
the instrument of concession did it appear that the privilege granted to
Ricardo Pardo y Cabaas had likewise been granted to his successors or
assignees, and that therefore such rights and actions as might have
appertained to the assignee, Pardo y Cabaas, could not be conveyed to
nor could they be acquired by any other person; that it was alleged in the
complaint that the building was completely destroyed by fire on January 2,
1912, and that if plaintiff's right to the possession of the land was
conditioned by the existence thereon of the said market building, such
right had terminated by the disappearance of the building, inasmuch as
plaintiff's right of action for the possession of the land was a corollary of
the existence or nonexistence of the market building, and upon the
disappearance of the latter the eland had reverted to the control of its
owner; that pursuant to the terms of the said concession, the land
belonging to the municipality was granted for the purpose of constructing
thereon a market, and as this market had disappeared plaintiff would
need a new concession, if it could be obtained, in order to be entitled to
the possession of the land and to construct a new building; that by
plaintiff's acquiring the right, title and interest of Ricardo Pardo y Pujol in
the land he could not be understood to have also acquired such right and
interest in the building intended for a public market, for the purchase of
the building refers only to the edifice itself and it never could be
understood that plaintiff acquired any right in the concession, which was
never sold to him, as the complaint contains no allegation whatever that
he purchased or acquired such right; that a personal privilege like the said
concession is only temporary and is extinguished at the death of the
grantee, unless otherwise provided in the grant; and that, from the lack of
an allegation in the complaint that plaintiff legally purchased or acquired
the right in the said concession, it was evident that the complaint did not
allege sufficient facts to constitute a cause of action and was fatally
defective.
The question presented in the case at bar consists of whether a building of
strong materials, erected by the said debtor's father, Ricardo Pardo y
Cabaas, on land belonging to the municipality of Guinobatan and
intended for a public market, by virtue of a concession granted on August
4, 1884, under the conditions therein imposed upon the grantee, could be
attached and sold for the payment of a certain debt owed by Ricardo
Pardo y Pujol to a third person who had obtained a final judgment.
In deciding this question it is indispensable to determine what rights were
acquired by Pardo y Pujol's father by virtue of the said concession granted
to him by the Spanish Government, in the building erected by him on a
parcel of land belonging to the municipality of Guinobatan. The concession
referred to contains, among other provisions, the following:itc-a1f
ARTICLE 1. There is hereby granted to Mr. Ricardo Pardo y Cabaas the
parcel of land in the pueblo of Guinobatan, a prolongation of another
parcel belonging to him, situated between the store and house of the
Chinaman Valentin Garcia and that of Mr. Roco, following the line of Calle
Real or Calzada de Albay and that of Calle del Carmen, up to and as far as
the square that is to be laid out in the said pueblo.
ART. 2. On the said land the petitioner shall construct a public market
building, with a galvanized-iron roof, in accordance with the plan
submitted to this office on the 13th of last May and which was approved
by his Excellency the Governor-General in conformity with the changes
recommended by the advisory board of the consulting board of public
works; and these changes are those hereinafter specified.
ART. 3. The said Mr. Pardo is granted the right to enjoy the revenue
derived from the floor space of the market for the period of forty years,
since the revenue from such floor space appertains to the grantee of the
said service. By floor space is meant the right to shelter or retail
merchandise in the market belonging to the grantee.
ART. 4. On the expiration of the said period both the land
aforementioned and the building thereon constructed shall be the
property of the Government and the building shall be delivered to it in
good condition.
ART. 5. It shall be obligatory for every vendor to sell his goods in the
said market, which shall be the only one in the said pueblo.
ART. 7. The said authority shall put Mr. Pardo in possession of the land
affected by this concession, and the proper proceedings in connection
therewith shall be had in the presence of the chief engineer of public
works of the said district and the headmen of the pueblo.
ART. 8. Mr. Pardo shall inform this office of the date of the
commencement of the work of construction, and the work shall be
inspected by the public works officials residing in Albay; the building when
completed shall be examined and accepted by the chief engineer of the
district of Nueva Caceres or by the deputy to whom the latter may
delegate this duty: all with the knowledge of the office of the inspector of
public works.
The land on which the building was erected and which is referred to in the
foregoing articles, contained in the franchise granted by the Government
of the former sovereignty, belongs to the municipality of Guinobatan.
Although the building was constructed at the expense and with the money
of the grantee, Ricardo Pardo y Cabaas, it is, nevertheless, the property
of the state or of the said municipality, and was temporarily transferred to
the grantee, Pardo y Cabaas, in order that he might enjoy the usufruct of
its floor space for forty years, but on the termination of this period the
said right of usufruct was to cease and the building was to belong finally
and absolutely to the state or the municipality in representation thereof.
For these reasons, then, there is no question that the building and the land
on which it was erected, since they did not belong to the grantee, Pardo y
Cabaas, nor do they belong to his son and heir, Ricardo Pardo y Pujol,
could not be attached or sold for the payment of a debt contracted by the
latter.

The concession granted by the former Spanish Government is personal
and transferable only by inheritance, and in no manner could it be
conveyed as a special personal privilege to another and a third person
unless were an hereditary successor of the grantee, Pardo y Cabaas,
without knowledge and consent of the administrative authorities under
whose control the special right of usufruct in the floor space of the said
market building was enjoyed and exercised.
Even though it is unquestionable that the creditor has a right to collect the
money due him, out of his debtor's property, yet when among such
property is included the right of usufruct in a public-service building and
this right is closely related to a service of a public character, the right that
lies in behalf of the creditor for the collection of a debt from the person
who enjoys the said special privilege of right of usufruct in the floor space
of a building intended for a public market is not absolute and may be
exercised only through the action of a court of justice with respect to the
profits or revenues obtained under the special right of usufruct granted to
the debtor.
Ricardo Pardo y Pujol, as the successor and heir of the grantee, Pardo y
Cabaas, is bound to pay his debts and his property can be attached on
petition of his creditors. However, his personal privilege of usufruct in the
floor space of the public market building of Guinobatan cannot be
attached like any ordinary right, because that would mean that a person
who has contracted with the state or with the Governmental authorities to
furnish a service of a public character would be substituted, for another
person who took no part in the contract, and that the regular course of a
public service would be disturbed by the more or less legal action of the
creditors of a grantee, to the prejudice of the state and the public
interests.
It is indeed true that the building, which for many years served as a public
market in the pueblo of Guinobatan, was erected out of the private funds
of the grantee, Pardo y Cabaas, and at first sight it seems natural that the
latter, who paid the cost of the construction of the building, should be its
owner. However, judging from the agreement between him and the
Government authorities, he was granted the right to usufruct in the floor
space of the said building in order that, during the period of forty years, he
might reimburse himself for and collect the value of the building
constructed by him; and it must be believed that Pardo y Cabaas, before
executing the contract with the Government for the purpose of obtaining
the right of usufruct granted to him and before accepting the contract,
thought over its conditions deliberately and maturely and felt sure that he
would profit thereby, that is, that he would reimburse himself for the
value of the building he erected, and obtain interest on the investment
and other advantages by enjoying the usufruct for the space of forty long
years, as in fact even after his death this right continued to be enjoyed by
his son, Ricardo Pardo y Pujol. Therefore, the said privilege conferred on
the grantee by the Spanish Government on August 4, 1884, was neither
onerous nor prejudicial to him or his heir, but on the contrary was
beneficial to them.
So, if neither the land nor the building in question belongs to Pardo y
Pujol, it is evident that they could not be attached or sold at public auction
to satisfy his debt and, consequently, the attachment and sale of the said
Government property executed on petition of the creditor of the said
Pardo y Pujol are notoriously illegal, null and void, and the acquisition of
the property by plaintiff confers upon him no right whatever based on the
said concession.
In the decision in the case of Lopez vs. Alvarez (9 Phil. Rep., 28) the
principle was asserted that:
In attachments of all kinds it is an essential condition that the thing which
is attached shall be the property of the debtor, and from no provision of
the Mortgage Law can any conclusion be drawn which shall be contrary to
this principle.
This same principle was set up in the decision of the case of Alvaran vs.
Marquez (11 Phil. Rep., 263).
It having been demonstrated by the foregoing reasons that the building
constructed on land of the municipality of Guinobatan for a public market
could not be attached and sold as the result of a debt contracted by
Ricardo Pardo y Pujol in favor of a third person, we shall now proceed to
examine whether an attachment would lie of the special right, granted by
the former Spanish Government to the said debtor's father, of usufruct in
the floor space of the said market and right to collect the revenues
therefrom for the period of forty years, counted from the date of the
granting of the said right.
Without the consent of the proper administrative official, a grantee, or
one charged with conducting a public service such as a market of the
municipality of Guinobatan, cannot be permitted to be substituted by any
other person, though this latter be a creditor of the usufructuary grantee.
Hence, we hold that the attachment of the right of usufruct in the said
building and of collecting the revenue obtained from the floor space of the
said public market of Guinobatan, was illegal, because, were this right
susceptible of attachment, a third person, as a creditor or a purchaser,
might exercise such right, notwithstanding his personal status, instead of
the grantee contractor. This theory does not bar the creditor from
collecting the money owed him by the grantee, inasmuch as he has the
right to petition the courts to allow him through proper legal proceedings
to collect his money out of the revenues produced by the usufruct
conferred by the Government on the grantee of the said service.
The concession obtained by Ricardo Pardo y Pujol's father on August 4,
1884, is a true sovereignty and the grantee, Pardo y Cabaas, and
therefore the stipulations made by and between the contracting parties,
the obligation to which that contract may have given rise, and the
consequences that may have been entailed by the contract, all come
within the scope of the civil law which guarantees the rights of the
contracting parties.
Although in our opinion the said concession is somewhat of the nature of a
franchise, yet we do not think that the provisions of sections 56 to 61 of
Act No. 1459 are applicable to the case at bar, for these sections refer to a
franchise granted to a corporation, while the concession given by the
former Spanish Government was granted to a private party and not to a
corporation or judicial entity. Therefore, though under the said Act a
franchise is subject to attachment, the Act contains no express provision
whatever which authorizes the attachment and sale of a right or franchise
especially granted to a private party under the conditions in which the
concession in question was granted. The substitution of a third person
instead of the one who obtained such an administrative concession must
be explicitly authorized by the proper official of the administrative branch
of the Government in order that the substitute may exercise the right so
granted.
In the case of Ricardo y Pujol, the grantee of the usufruct on the floor
space in the said market building in Guinobatan, his creditor, in order to
obtain the payment of his credit, could have applied to the courts for an
attachment of the revenues or proceeds collected by his said debtor by
virtue of the said concession; but it was in no wise proper to attach and
sell the right granted by the public administration to operate and enjoy
the usufruct of the floor space of the said public market.
Although there is no similarity between the management of a public
market and that of a railroad company, yet for the reason that the
operation of the one as well as the other is of public interest, when a
creditor of such a company sues to collect a debt it would be improper to
attach the stationary equipment and rolling stock of the railroad only
the gross receipts of the business over and above the amount required for
its operation could be touched. This same legal principle holds in the case
where the grantee of a market is a debtor and his property is attached on
petition of his creditor. The receipts of the market may be attached, but
not the right to operate and conduct the service, which is of a public
character.
In fact, article 1448 of the Ley de Enjuiciamiento Civil, cited in this
decision, not as a law now in force, but for the purpose of setting out a
principle of law, prohibits the levy of attachments on railroads opened to
public service, and on the stations, stores, shops, lands, works and
buildings necessary for their operation, or on the locomotives, rails and
other material intended for the operation of the line. When execution is
levied on such railroad companies, the proceedings are governed by the
provisions of the Law of November 12, 1869, extended by a royal order of
August 3, 1886, to the overseas provinces. This law prescribes among
other things that attachments may be levied and executed only on the
gross receipts remaining after the necessary operating expenses have
been deducted.
In harmony with this legal provision, the supreme court of the State of
Nebraska, in which State there is no law whatever that authorizes the
attachment and sale of a bridge belonging to a corporation, in the case of
the Overton Bridge co. vs. Means (33 Neb., 857) laid down the principle
that such a bridge and the rights of the corporation therein could not be
sold to satisfy a judgment against the corporation for the reason that:

The property of corporations which are closed as public agencies, such as

railroad and bridge companies, which is essential to the exercise of their
corporate franchise, and the discharge of the duties they have assumed
toward the general public, cannot, without statutory authority, be sold to
satisfy a common law judgment.

It cites decisions of several states, and also, in the decision referred to,
cited Morawetz on Private Corporations, section 1125, and held that after
attachment of the property not necessary to enable the corporation to
perform its duties to the public, the only remedy remaining to a judgment
creditor was to obtain the appointment of a receiver and a sequestration
of the company's earnings.

The supreme court of Alabama, in deciding a similar case (Gardner vs.

Mobile & Northwestern R.R. Co., 102 Ala., 635, 645), affirmed the same
principle and said:

The only remedy of a judgment creditor is to obtain the appointment of a

receiver and the sequestration of its income or earnings.

It is to be noted that section 56 of Act No. 1459, which permits the sale
under execution of a corporation's franchise, is in no wise applicable to the
case at bar, for the reason that, since this Act was promulgated on March
1, 1906, it could not and cannot affect the laws, decrees, and orders of the
Spanish government in conformity with which the administrative
concession, Exhibit A, was granted to Pardo y Cabaas.

The operation of a railroad is of public interest, and concerns both the

public and the state, even though the superintendent and management
thereof be conducted by a private company. Therefore, the property of a
railroad, either its rolling stock or permanent equipment, is not subject to
attachment and sale, and the rights of the creditors of the operating
company may be exercised for the collection of their credit only of the
gross receipts after the operation of the railroad is insured from its own
income.

This decision is based on the provisions of the aforecited law and the
premise that the usufruct of the floor space of the public market of
Guinobatan, granted to Ricardo Pardo y Pujol's father was not subject to
attachment on account of its being of a public character, but still the
latter's creditor could have applied for a writ of execution and laid an
attachment on the proceeds obtained from the operation of the market,
which proceeds or income could have been collected by a receiver and
intervenor.

This, however, was not done, but on the creditor's petition the public
market building, which was not his debtor's property, together with all the
right, interest, title and participation which the latter had or might have
had therein, was attached and sold; and as plaintiff was unable to acquire
any right or title in such property illegally sold and illegally acquired by him
at public auction or in the usufruct of the floor space of the building, it is
unquestionable that he lacks the personality to claim possession of the
land that belongs to the municipality or the enjoyment and exercise of the
right conferred by the aforesaid administrative concession, which was and
is inalienable on account of its being a personal right. For the same reason,
plaintiff has no right to reconstruct the burned building on the land where
it formerly stood.

The only right to which the creditor was entitled was to petition for the
attachment of the income and proceeds obtained from the use of the floor
space of the market; but he did not avail himself of this right, nor were the
receipts therefrom attached, nor were they adjudicated either to the
creditor or to the plaintiff Tufexis. Therefore, the order of dismissal
appealed is in accordance with law and the merits of the case, and likewise FIRST DIVISION
the errors assigned thereto have been duly refuted by the reasons set
forth herein.
ZENAIDA RAMOS-BALALIO, G.R. No. 168464
For the foregoing considerations, we hereby affirm the said order of Petitioner,
dismissal, with the costs against the appellant. So ordered. Present:
Panganiban, C.J. (Chairman),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
ROLANDO RAMOS,
EUSEBIO I. RAMOS and Promulgated:
EVANGELISTO GARCIA,
Respondents. January 23, 2006
x ---------------------------------------------------------------------------------------- x
DECISION
YNARES-SANTIAGO, J.:
This petition assails the Decision[1] of the Court of Appeals dated February
16, 2005 in CA-G.R. CV No. 58644 reversing the Decision[2] of the Regional
Trial Court (RTC) of Roxas, Isabela, Branch 23, dated July 17, 1996, in Civil
Case No. Br. 23-357 which ruled that herein petitioner Zenaida Ramos-
Balalio had a superior right to possess Lot No. 204, Pls-15, situated at
Muoz, Roxas, Isabela, as well as its Resolution[3] dated June 14, 2005
denying the motion for reconsideration.
As culled from the records, petitioner Zenaida and her brother Alexander
(now deceased) are the children of spouses Susana Bueno and Abundio
Ramos. The spouses started occupying Lot No. 204 in 1938. Abundio died
in 1944. Susana met her second husband, respondent Eusebio Ramos in
1946, with whom she had five children, one of whom is respondent
Rolando.
In the interim, prior to 1958, Susana discovered that Felimon Domingo
applied for a sales patent over the subject parcel of land which she
opposed. The Bureau of Lands resolved the dispute, thus:
In the light of the foregoing facts, it is clear that Felimon B. Domingo has
not entered, possessed or cultivated the land in question and therefore he
has not acquired any preference right thereto. Upon the other hand
contestant Susana Bueno Vda. de Ramos and her children have sufficiently
established their right of preference over the land except the one hectare
Cemetery site, on the basis of their continuous occupation and cultivation
and their valuable improvements introduced thereon.
Wherefore, it is ordered that the Sales Application No. 21992 of Felimon B.
Domingo be as hereby it is rejected, forfeiting in favor of the Government
whatever amount have been paid on account thereof. The land in question
shall be subdivided so as to exclude therefrom the one hectare portion in
the northwestern part of the land, which shall be reserved as barrio
cemetery site, while the remaining area is hereby allocated to SUSANA
BUENO VDA DE RAMOS who shall file an appropriate application therefore
within sixty (60) days after the survey thereof at her own expense, it not
appearing that this Office has received the homestead (new) application
allegedly filed by her for the same land.
SO ORDERED.[4]
It was alleged that as Susana accompanied her husband Eusebio, a soldier,
wherever he was assigned, Susanas father, George Bueno, and daughter,
petitioner Zenaida continued the cultivation and possession of the subject
land. Sometime later, Susana sold the land to petitioner who, in turn,
partitioned it among herself, her brother, Alexander, and respondent
Rolando and his siblings. The partition was not registered but Deeds of
Sale were executed in favor of Rolando and Alexander.
Petitioner thereafter mortgaged her share; however, it came to her
knowledge that respondents Rolando and Eusebio had usurped her share
and deprived the mortgagees of possession over the land. After settling
the mortgage, petitioner filed a case for recovery of inheritance,
possession and damages with a petition for preliminary mandatory
injunction.
The trial court had the land surveyed. Subdividing the land into Lots 204-A
to 204-H[5] based on the actual possessor or occupant, the survey plan
revealed the following:
1. Plaintiff Zenaida Ramos Balalio has no possession, occupation, and
cultivation whatsoever of lot 204, Pls-15;
2. Rolando Ramos is in possession and cultivation of lot 204-F, lot 204-G
and lot 204-C, with a total area of 43,957 sq. m., more or less;
3. Eusebio Ramos is occupying and cultivating lot 204-A with an area of
4,994 sq. m., more or less;
4. Lot 204-B consisting of 17,685 sq. m., more or less, is possessed and
cultivated by Evangelisto Garcia, another intervenor. His occupation is very
much less than the two (2) hectares sold to him by Alexander Ramos. It is
short by 2,311 sq. m., more or less;
5. The total area of the land in question, after deducting one (1) hectare
occupied by the cemetery is 73,150 sq. m., more or less.[6]
On July 17, 1996, the trial court rendered its decision holding that
petitioner was deprived of her right to cultivation and possession of her
share of Lot No. 204 and thus ruled:
AS A CONSEQUENCE OF ALL THE FOREGOING, judgment is hereby
rendered in favor of plaintiff, Zenaida Ramos and against Rolando Ramos,
defendant, and Eusebio Ramos, intervenor.
1. Ordering Eusebio Ramos to vacate lot 204-A and surrender it to
Evangelisto Garcia because he is not entitled to any portion of the lot in
question, it being the conjugal property of the first marriage of Susana
Bueno to Abundio Ramos;
2. Evangelisto Garcia is adjudicated the first two (2) hectares from the
North and East of the cemetery, as he validly bought the area from
Alexander Ramos. He is presently occupying only 17,689 sq. m., more or
less. His possession now is increased to two (2) hectares which includes
the area being possessed by Eusebio Ramos;
3. The remaining portion of the share of Alexander Ramos is 4,410 sq. m.,
more or less. This is adjudicated in favor of his heirs. This portion now
corresponds to the area immediately South of the area of Evangelisto
Garcia, the partition being from East to West;
4. The middle portion consisting of 24,410 sq. m., more or less, and
immediately South of the cemetery, and also South of the portion
adjudicated to the heirs of Alexander is now given to Zenaida Ramos
Balalio as her valid share of lot 204, the partition being also East to West;
5. South of the share of Zenaida consisting also of 24,410 sq. m., more or
less, is the valid share of Rolando Ramos and his full blooded brother and
sisters namely Robin, Corazon, Myrna and Mila, all surnamed Ramos;
6. Rolando Ramos and Eusebio Ramos are ordered jointly and severally to
pay Zenaida Ramos:
a. Ten Thousand (P10,000.00) Pesos as attorneys fees;
b. One thousand Five Hundred (P1,500.00) Pesos as appearance fees of
her lawyer;
c. Ten Thousand (P10,000.00) Pesos as incidental expenses relative to the
case;
d. One Hundred Thousand Eight Hundred (P100,800.00) Pesos as the
reasonable owners share of the produce of the land of Zenaida Ramos
from 1975 to the present, with an interest of 6% per annum until fully
paid;
7. The Clerk of Court and the Sheriff are ordered to repair to the land in
question and partition said land in accordance with the tenor of this
decision;
8. And to pay the cost.
SO ORDERED.[7]
On appeal, the Court of Appeals found that neither Zenaida nor Alexander
complied with the homestead application requirements in order to acquire
superior vested right. As a consequence, it reversed the decision of the
trial court, to wit:
As a consequence of the foregoing, the Court rules in favor of appellants
as to the fourth error and finds that the contract supposedly dividing that
property among Zenaida, Rolando Ramos and Alexander Ramos cannot be
enforced because neither of the parties therein can claim any vested right
over the subject parcel land which is still part of the public domain.
Also, prescinding from the above ruling, the intervention of Eusebio
Ramos and Evangelisto Garcia should likewise be dismissed. As to Eusebio,
since Susana never filed an application for homestead, her right never
ripened to ownership which she could have transmitted to her heirs. As to
Evangelisto Garcia who supposedly purchased that share of Alexander (an
heir of Susana), since the vendor never inherited anything from Susana
there was nothing which he (Evangelisto) could have bought. In fine,
neither of the intervenors could claim any right which they can enforce in
court.
WHEREFORE, the Decision of the Regional Trial Court of Roxas, Isabela,
Branch 23, in Civil Case No. Br. 23-357 is REVERSED and the Complaint
filed by plaintiff-appellee as well as the respective Answer in Intervention
of Eusebio Ramos and Evangelisto Garcia are all hereby ordered
DISMISSED.
SO ORDERED.[8]
Hence, this petition on the following assigned errors:
7.1. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
REVERSING THE TRIAL COURTS DECISION AND DISMISSING THE
PETITIONERS COMPLAINT.
7.2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONER IS NOT IN PRIOR POSSESSION OF THE SAID LAND, AND
DECLARING THAT SHE HAS NO RIGHT WHATSOEVER TO THE DISPUTED
LAND.
7.3. THE HONORABLE COURT OF APPEALS ERRED IN IGNORING THE ISSUE
OF ACCION PUBLICIANA IN THE CASE AT BAR AND CONFINED ITSELF TO
THE CLAIM OF RECOVERY OF INHERITANCE.[9]
The petition is partly meritorious.
Under the Regalian doctrine, all lands of the public domain belong to the
State and those lands not appearing to be clearly within private ownership
are presumed to belong to the State.[10] Lands of the public domain are
classified into agricultural, forest or timber, mineral lands, and national
parks. Alienable lands of the public domain shall be limited to agricultural
lands.[11]
Commonwealth Act No. 141 (1936), or the Public Land Act, as amended by
Presidential Decree No. 1073 (1977), remains to be the general law
governing the classification and disposition of alienable lands of the public
domain. It enumerates the different modes of acquisition of these lands
and prescribes the terms and conditions to enable private persons to
perfect their title to them. It is, therefore, the applicable law to the case
before us.
A homestead patent, such as the subject of the instant case, is one of the
modes to acquire title to public lands suitable for agricultural purposes.
Under the Public Land Act, a homestead patent is one issued to any citizen
of this country, over the age of 18 years or the head of a family, and who is
not the owner of more than 24[12] hectares of land in the country.[13] To
be qualified, the applicant must show that he has resided continuously for
at least one year in the municipality where the land is situated and must
have cultivated at least one-fifth of the land applied for.[14]
In the case at bar, petitioner Zenaida asserts her right to a parcel of
agricultural land that her parents Susana and Abundio had possessed since
1938. She claims that, for some time, the cultivation of this land was left to
her and her grandfather and that, following the death of her father
Abundio, the land was allegedly sold to her by her mother Susana.
Zenaidas argument is flawed because it assumes that her parents had
perfected their title over the land and that they could validly convey the
same to third persons, whether by sale or by inheritance. However, a
careful examination of the records shows that petitioner has not
satisfactorily established that a valid application for homestead patent was
filed by her parents. The decision of the Bureau of Lands in 1958 only
addressed Zenaidas familys right of preference over the land, in view of
their possession and cultivation of the land. Nonetheless, the Bureau of
Lands ordered the filing of an appropriate application for its registration
which indicates that as of that time, there was as yet no valid application
filed.[15]
The purported sale, therefore, between petitioner and her mother cannot
be given effect, nor can it be a source of right for Zenaida, because Susana
did not have the authority to sell what did not belong to her. The
invalidation of the sale consequently nullifies the partition of the property
among Zenaida, Alexander, and Rolando and his siblings because Zenaida
could not have disposed of the land which she did not own.
For the same reason, neither Eusebio nor Rolando can claim any right
whatsoever as heirs of Susana. Their claim evidently relies on the provision
of the Public Land Act which states:
Section 105. If at any time the applicant or grantee shall die before the
issuance of the patent or the final grant of the land, or during the life of
the lease, or while the applicant or grantee still has obligations pending
towards the Government, in accordance with this Act, he shall be
succeeded in his rights and obligations with respect to the land applied for
or granted or leased under this Act by his heirs in law, who shall be
entitled to have issued to them the patent or final concession if they show
that they have complied with the requirements therefor, and who shall be
subrogated in all his rights and obligations for the purposes of this Act.
(Emphasis added)
The reliance is misplaced because the cited provision speaks of an
applicant, grantee, or lessee. Susana was not one of these. In her lifetime,
despite her possession and cultivation of the land, she failed to apply for a
homestead patent and to acquire any vested right that Eusebio or Rolando
can inherit. As such, the land remains part of the public domain.
Furthermore, Eusebio and Rolando cannot invoke their prior possession
and occupation of the land because the same cannot be considered as
adverse, open, public, peaceful and to the exclusion of all.
Hence, the subject land remains to be part of the public domain and
rightfully belongs to the State. As held by the Court of Appeals, none of
the parties obtained a defensible title to the property which can be upheld
by the Court. Nonetheless, the possession of the land is different from the
issue of its ownership. Petitioner argues that her petition may be treated
as an accion publiciana and not merely an action for recovery of
inheritance.
An accion publiciana is an action for the recovery of the right to possess
and is a plenary action in an ordinary civil proceeding to determine the
better right of possession of realty independently of title.[16] In this case,
the issue is whether Zenaida, as an applicant for public land, may be
considered as having any right to the land occupied, which may entitle her
to sue in courts for the return of the possession thereof.
We find that Zenaida has proven prior possession of the portion of land
she claims as her share, which possession antedates the filing of the
homestead application. She produced evidence showing that she has filed
a verified application for the registration of the land with the Bureau of
Lands on August 10, 1971,[17] which is still pending. The documents
remain uncontested and the application has not been assailed by any of
the parties to the case. She alleged that during the lifetime of her mother,
she and her maternal grandfather cultivated and occupied the land.
Moreover, Zenaida presented tax declarations both in her name and that
of her predecessor-in-interest (mother Susana Bueno) covering the
property. Time and again, we have held that although tax declarations or
realty tax payments of property are not conclusive evidence of ownership,
nevertheless, they are good indicia of possession in the concept of owner
for no one in his right mind would be paying taxes for a property that is
not in his actual or at least constructive possession.[18] They constitute at
least proof that the holder has a claim of title over the property. The
voluntary declaration of a piece of property for taxation purposes
manifests not only ones sincere and honest desire to obtain title to the
property and announces his adverse claim against the State and all other
interested parties, but also the intention to contribute needed revenues to
the Government.[19]
All told, petitioner Zenaidas uncontested and verified application for a
homestead patent coupled with her open and notorious occupation of the
land convinces us of her preferential right to possess the land claimed,
which entitles her to be protected by the law in such possession.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of the
Court of Appeals dated February 16, 2005 is MODIFIED, insofar as to grant
petitioner Zenaida Ramos-Balalio preferential possession of the portion of
Lot 204, Pls-15, situated in Muoz, Roxas, Isabela, as delineated in the
Decision of the Regional Trial Court of Roxas, Isabela, Branch 23, dated July
17, 1996.
SO ORDERED.

THIRD DIVISION
[G.R. No. 136438. November 11, 2004]
TEOFILO C. VILLARICO, petitioner, vs. VIVENCIO SARMIENTO, SPOUSES
BESSIE SARMIENTO-DEL MUNDO & BETH DEL MUNDO, ANDOKS LITSON
CORPORATION and MARITES CARINDERIA, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari of the Decision[1] of the
Court of Appeals dated December 7, 1998 in CA-G.R. CV No. 54883,
affirming in toto the Decision[2] of the Regional Trial Court (RTC) of
Paraaque City, Branch 259, dated November 14, 1996, in Civil Case No. 95-
044.
The facts of this case, as gleaned from the findings of the Court of Appeals,
are:
Teofilo C. Villarico, petitioner, is the owner of a lot in La Huerta, Paraaque
City, Metro Manila with an area of sixty-six (66) square meters and
covered by Transfer Certificate of Title (T.C.T.) No. 95453 issued by the
Registry of Deeds, same city.
Petitioners lot is separated from the Ninoy Aquino Avenue (highway) by a
strip of land belonging to the government. As this highway was elevated
by four (4) meters and therefore higher than the adjoining areas, the
Department of Public Works and Highways (DPWH) constructed stairways
at several portions of this strip of public land to enable the people to have
access to the highway.
Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and
her husband Beth Del Mundo, respondents herein, had a building
constructed on a portion of said government land. In November that same
year, a part thereof was occupied by Andoks Litson Corporation and
Marites Carinderia, also impleaded as respondents.
In 1993, by means of a Deed of Exchange of Real Property, petitioner
acquired a 74.30 square meter portion of the same area owned by the
government. The property was registered in his name as T.C.T. No. 74430
in the Registry of Deeds of Paraaque City.
In 1995, petitioner filed with the RTC, Branch 259, Paraaque City, a
complaint for accion publiciana against respondents, docketed as Civil
Case No. 95-044. He alleged inter alia that respondents structures on the
government land closed his right of way to the Ninoy Aquino Avenue; and
encroached on a portion of his lot covered by T.C.T. No. 74430.
Respondents, in their answer, specifically denied petitioners allegations,
claiming that they have been issued licenses and permits by Paraaque City
to construct their buildings on the area; and that petitioner has no right
over the subject property as it belongs to the government.
After trial, the RTC rendered its Decision, the dispositive portion of which
reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Declaring the defendants to have a better right of possession over
the subject land except the portion thereof covered by Transfer Certificate
of Title No. 74430 of the Register of Deeds of Paraaque;
2. Ordering the defendants to vacate the portion of the subject
premises described in Transfer Certificate of Title No. 74430 and gives its
possession to plaintiff; and
3. Dismissing the claim for damages of the plaintiff against the
defendants, and likewise dismissing the claim for attorneys fees of the
latter against the former.
Without pronouncement as to costs.
SO ORDERED.[3]
The trial court found that petitioner has never been in possession of any
portion of the public land in question. On the contrary, the defendants are
the ones who have been in actual possession of the area. According to the
trial court, petitioner was not deprived of his right of way as he could use
the Kapitan Tinoy Street as passageway to the highway.
On appeal by petitioner, the Court of Appeals issued its Decision affirming
the trial courts Decision in toto, thus:
WHEREFORE, the judgment hereby appealed from is hereby AFFIRMED in
toto, with costs against the plaintiff-appellant.
SO ORDERED.[4]
In this petition, petitioner ascribes to the Court of Appeals the following
assignments of error:
I
THE FINDINGS OF FACT OF THE HON. COURT OF APPEALS CONTAINED A
CONCLUSION WITHOUT CITATION OF SPECIFIC EVIDENCE ON WHICH THE
SAME WAS BASED.
II
THE HON. COURT OF APPEALS ERRED IN CONSIDERING THAT THE ONLY
ISSUE IN THIS CASE IS WHETHER OR NOT THE PLAINTIFF-APPELLANT HAS
ACQUIRED A RIGHT OF WAY OVER THE LAND OF THE GOVERNMENT
WHICH IS BETWEEN HIS PROPERTY AND THE NINOY AQUINO AVENUE.
III
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT ACCION
PUBLICIANA IS NOT THE PROPER REMEDY IN THE CASE AT BAR.
IV
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT THE
EXISTENCE OF THE PLAINTIFF-APPELLANTS RIGHT OF WAY DOES NOT
CARRY POSSESSION OVER THE SAME.
V
THE HON. COURT OF APPEALS ERRED IN NOT RESOLVING THE ISSUE OF
WHO HAS THE BETTER RIGHT OF POSSESSION OVER THE SUBJECT LAND
BETWEEN THE PLAINTIFF-APPELLANT AND THE DEFENDANT-APPELLEES.[5]
In their comment, respondents maintain that the Court of Appeals did not
err in ruling that petitioners action for accion publiciana is not the proper
remedy in asserting his right of way on a lot owned by the government.
Here, petitioner claims that respondents, by constructing their buildings
on the lot in question, have deprived him of his right of way and his right
of possession over a considerable portion of the same lot, which portion is
covered by his T.C.T. No. 74430 he acquired by means of exchange of real
property.
It is not disputed that the lot on which petitioners alleged right of way
exists belongs to the state or property of public dominion. Property of
public dominion is defined by Article 420 of the Civil Code as follows:
ART. 420. The following things are property of public dominion:
(1) Those intended for public use such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores, roadsteads, and
other of similar character.
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.
Public use is use that is not confined to privileged individuals, but is open
to the indefinite public.[6] Records show that the lot on which the
stairways were built is for the use of the people as passageway to the
highway. Consequently, it is a property of public dominion.
Property of public dominion is outside the commerce of man and hence it:
(1) cannot be alienated or leased or otherwise be the subject matter of
contracts; (2) cannot be acquired by prescription against the State; (3) is
not subject to attachment and execution; and (4) cannot be burdened by
any voluntary easement.[7]
Considering that the lot on which the stairways were constructed is a
property of public dominion, it can not be burdened by a voluntary
easement of right of way in favor of herein petitioner. In fact, its use by
the public is by mere tolerance of the government through the DPWH.
Petitioner cannot appropriate it for himself. Verily, he can not claim any
right of possession over it. This is clear from Article 530 of the Civil Code
which provides:
ART. 530. Only things and rights which are susceptible of being
appropriated may be the object of possession.
Accordingly, both the trial court and the Court of Appeals erred in ruling
that respondents have better right of possession over the subject lot.
However, the trial court and the Court of Appeals found that defendants
buildings were constructed on the portion of the same lot now covered by
T.C.T. No. 74430 in petitioners name. Being its owner, he is entitled to its
possession.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of
Appeals dated December 7, 1998 in CA-G.R. CV No. 54883 is AFFIRMED
with MODIFICATION in the sense that neither petitioner nor respondents
have a right of possession over the disputed lot where the stairways were
built as it is a property of public dominion. Costs against petitioner.
SO ORDERED.
FIRST DIVISION
FRISCO F. DOMALSIN,
Petitioner,
- versus -
SPOUSES JUANITO VALENCIANO and AMALIA VALENCIANO,
Respondents.
G.R. No. 158687
Present:
PANGANIBAN, C.J.
Chairman,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR.[1] and
CHICO-NAZARIO, JJ.
Promulgated:
January 25, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
Before Us is a petition for review which seeks to set aside the decision[2]
of the Court of Appeals in CA-G.R. SP No. 69415 dated 20 August 2002
which reversed and set aside the decision[3] of Branch 63 of the Regional
Trial Court (RTC) of La Trinidad, Benguet, in Civil Case No. 01-CV-1582(150)
dated 23 January 2002, which affirmed the decision[4] of the Municipal
Circuit Trial Court (MCTC) of Tuba-Sablan, Tuba, Benguet, in Civil Case No.
150 dated 20 November 2000, declaring petitioner Frisco F. Domalsin the
actual possessor of the lot in dispute and ordering, inter alia, respondent
spouses Juanito and Amalia Valenciano to vacate and deliver the physical
possession thereof to the former, and its Resolution[5] dated 20 May 2003
denying petitioners motion for reconsideration.
The respective allegations of the parties as contained in the complaint and
answer are substantially summarized by the Court of Appeals as follows:
The property subject of this action for forcible entry is a parcel of land
located at sitio Riverside, Camp 3, Tuba, Benguet. Respondent Frisco B.
Domalsin claims to be the lawful owner and possessor of said parcel of
land since 1979 up to the present. He declared it for taxation purposes in
1983 as (per) Tax Declaration No. 9540 issued on September 12, 1983 by
the Municipal Assessor of Tuba Benguet. He allegedly introduced
improvements consisting of levelling, excavation, riprapping of the earth
and a private road to the river, fruitbearing trees and other agricultural
plants of economic value. He was in continuous, adverse possession and in
the concept of an owner for the past nineteen (19) years.
On August 1, 1998, petitioners Spouses Juanito Valenciano and Amalia
Valenciano (Sps. Valenciano, for brevity) allegedly entered the premises to
construct a building made of cement and strong materials, without the
authority and consent of respondent, by means of force and strategy, and
without a building permit from the Department of Public Works and
Highways (DPWH, for brevity). Respondent protested and demanded that
petitioners Sps. Valenciano halt construction of said building, but the latter
refused to do so. Hence, he filed the instant case.
Petitioners Sps. Valenciano, on the other hand, claimed that the ongoing
construction was with the consent and conformity of the DPWH and in
fact the improvements found in the property were introduced by the
residents thereof, including its first residents, William and Gloria Banuca,
and not by respondent. The premises on which petitioners Sps. Valenciano
are constructing their house were leveled after the earthquake in 1990 by
the Banuca spouses. Petitioners Sps. Valenciano are just starting the
construction because the permission was only given now by Gloria
Banuca.[6]
On 18 August 1998, petitioner filed before the MCTC of Tuba, Benguet, a
complaint for Forcible Entry with Prayer for Preliminary Mandatory
Injunction with Application for Issuance of a Temporary Restraining Order
plus Damages.[7] The complaint was amended on 27 August 1998.[8] Per
Order dated 19 August 1998, a Temporary Restraining Order (TRO) was
issued ordering respondents to desist and cease and refrain from
continuing the construction of a house on the land in question.[9]
On 27 August 1998, respondent spouses Juanito and Amalia Valenciano
filed their Answer with Opposition to the Prayer for Issuance of Writ of
Preliminary Injunction.[10] On 07 September 1998, they filed an Answer to
the Amended Complaint[11] to which petitioner filed a Reply.[12]
On 15 September 1998, the MCTC issued another TRO.[13]
The pre-trial order dated 6 November 1998 contained, among other
things, petitioners admission that he was temporarily not operating any
business in the area, and respondents admission regarding the issuance of
Tax Declarations on the property in dispute in petitioners name.[14]
Trial ensued. Petitioner presented Mariano Suyam and Tonsing Binay-an,
two of his former truck drivers from 1981 to 1985 in his business of
hauling sand, gravel and other aggregates at Riverside, Camp 3, Tuba,
Benguet.
Mariano Suyam testified that sometime in 1981, petitioner caused the
construction of a private road leading to the Bued River from Kennon
Road. He added that petitioner constructed two houses, the first was
located along the road-right-of-way of Kennon Road where respondents
are now constructing their house, while the second was located below the
private road around 40 to 60 meters down from Kennon Road. He
explained that the first house was used for sleeping quarters and resting
center for laborers, while petitioner used the second one as his quarters.
He said William Banuca was hired as foreman in 1983 and that the latter
and his family stayed in the second house.
Tonsing Binay-an corroborated the testimony of Suyam as regards the two
houses constructed by petitioner and added that petitioner was the
manager of Salamander Enterprises and had a concession permit from the
Bureau of Mines to haul gravel and sand.
Petitioner testified that he is a lawyer-businessman formerly engaged in
trucking business, hauling sand and gravel, and operated under the name
Salamander Enterprises.[15] He narrated that while he was passing
Kennon Road, he discovered that a portion of the Bued River, Camp 3,
Tuba Benguet, can be a potential source of supplies for his business.
Though the area was steep and deep, he scouted a place where he can
construct a road from Kennon Road to the Bued River. In the course of
cleaning the area, his workers noticed that the place had been tilled. A
certain Castillo Binay-an appeared informing him that he was the occupant
of the site of the proposed private road. After agreeing on the
consideration, the former executed a Deed of Waiver and Quitclaim[16]
over the land in his favor.
Thereafter, the Office of the Highway District Engineer of Baguio, Ministry
of Public Highways (now Department of Public Works and Highways
[DPWH]) issued a permit in favor of petitioner to extract construction
materials at Camp 3, Tuba, Benguet,[17] which was followed by the
issuance on 1 October 1981 of Commercial Permit No. 147 by the Office of
the Mines Regional Officer, Mineral Region No. 1, Bureau of Mines and
Geo-Sciences (Bureau of Mines).[18] The Commercial Permit, which was
renewable every year, was last renewed in 1987.[19]
Based on the Deed of Waiver and Quitclaim executed by Castillo Binay-an,
petitioner was able to apply for, and was issued, a tax declaration over the
land covering one hectare. Tax Declaration No. 9540[20] dated 12
September 1983 was issued to petitioner describing the land bounded on
the North by Bued River, on the South by Kennon Road, on the East by
Kennon Road, and on the West by a Creek. With the revision of the fair
market value and assessed value of lands, Tax Declaration No. 94-004-
00327 dated 12 November 1994 was issued to him.[21] From 1983 up to
1998, petitioner has been regularly paying real property taxes over the
land.
Petitioner disclosed that in 1983, William Banuca applied for, and was
accepted, as foreman.[22] Due to the nature of his job, Banuca was
permitted to stay in the second house beside the private road.[23] Banuca
now lives permanently in said house after petitioner gave it to him.
Petitioner revealed that the houses his former laborers constructed were
awarded to them as a kind gesture to them. As to the land he occupied
along the Kennon Road where the first house was erected, he claims that
same still belongs to him. This house, which his laborers and drivers used
as a resting area, was cannibalized and leveled, and the land over which it
once stood was taken possession by respondents who are now building
their house thereon.
Gloria Banuca testified for respondents. She disclosed that it was she who
invited respondents to come and reside at Riverside, Camp 3, Tuba,
Benguet. She said she knew petitioner to be engaged in the sand and
gravel business in Tuba, Benguet, from 1981 to 1985, and that the latter
stopped in 1985 and never returned to haul sand and gravel at the Bued
River. She claimed she never saw petitioner introduce any improvements
on the land he claimed he bought from Castillo Binay-an, and that it was
she and the other residents who introduced the existing improvements.
She narrated that in 1983, she planted fruit-bearing trees in the area
where respondents were constructing their house which is located along
the Kennon Roads road-right-of-way, fronting petitioners property. After
the earthquake of 1990, the private road constructed by petitioner
became impassable and it was she who hired the equipment used to clear
the same. She even leveled the area where respondents were building
their home. Based on the ocular inspection, she said this area is within the
15-meter radius from the center of the road. This area, she claims, was
sold to her by the Spouses Jularbal. However, the agreement between
them shows that what was sold to her were the improvements near her
house which was 40 meters down from Kennon Road and the
improvements along Kennon Road.[24]
Agustin Domingo next testified for respondents. He testified that in 1986,
upon the invitation of Gloria Banuca, he transferred his residence to sitio
Riverside because of its proximity to his place of work. He stayed there for
good and even buried his father near his house. He said that in 1990, the
private road constructed by petitioner was covered by boulders, soil and
rocks, and it was Mrs. Banuca who initiated the clearing of the road.
Finally, he declared that since 1986, he never saw petitioner introduce any
improvement in the area.
Respondent Juanito Valenciano revealed that he is the cousin of Gloria
Banuca. He narrated that in 1984, he went to Riverside to see the latter
whose husband, William Banuca, was working as foreman of petitioner. At
that time, the lot under litigation was still a hill. It was Gloria Banuca who
leveled the hill and told him to construct his house there. Finding the place
to be an ideal place to build his house, he paid the Banucas P10,000.00 for
the improvements.
He explained that before he started building his house, he sought the
permission of the Benguet District Engineer, DPWH, which the latter
granted. In August 1998, he received a notice[25] to stop and desist from
continuing the construction of a permanent one-storey house made of
hollow blocks and cement since the condition was only to utilize light
materials. Thereafter, a letter dated 22 January 1999 was sent to him
informing him that the temporary permit issued to him for the
improvement/utilization of a portion of the national road along Kennon
Road had been revoked for non-submission of the waiver as required by
the Office of the District Engineer and his non-compliance with the
condition that no permanent structures are to be constructed within the
road-right-of-way. He, however, denied receiving said letter.
Juan de Vera, a retired DPWH foreman, testified last for the respondents.
He claimed he witnessed the execution of the document[26] regarding the
sale by Adriano Jularbal to Gloria Banuca of improvements found near the
house of the latter in the amount of P1,000.00.
The MCTC found that what is being contested is the possession of a
portion of the road-right-of way of Kennon Road which is located in front
of a parcel of land that petitioner bought by way of Deed of Waiver and
Quitclaim from Castillo Binay-an. It held that petitioner had prior material
possession over the subject land. It ruled that the destruction of his house
built thereon by the earthquake in 1990, and later cannibalized without
being reconstructed was not tantamount to abandonment of the site by
the petitioner because it was destroyed by a fortuitous event which was
beyond his control. It explained that his possession over the land must be
recognized by respondents who came later after the earthquake. It
brushed aside respondents allegation that the land in dispute was
abandoned by the latter after he stopped operating his sand and gravel
business in 1985 and never returned anymore, and when the house
erected on it was destroyed during the 1990 earthquake, it was no longer
reconstructed and was subsequently leveled or demolished by Gloria
Banuca. However, it pronounced that respondents action to occupy the
land was done in good faith considering that their occupation of the land
was with the assurance of the seller (Gloria Banuca) and that they were
armed with the permit issued by the DPWH for him to construct his house
thereon.
On 20 November 2000, the MCTC came out with its decision, the decretal
portion of which reads:
WHEREFORE PREMISES CONSIDERED, decision is hereby rendered in favor
of plaintiff, FRISCO DOMALSIN, and against defendants, JUANITO
VALENCIANO and AMALIA VALENCIANO, with the following:
1. Order to declare the injunction permanent.
2. Order the plaintiff as the actual possessor of the lot in question.
3. Order the defendant(s) to vacate and deliver the physical possession
voluntarily of the disputed land to plaintiff within 60 days from receipt of
this decision.
4. Order defendant(s) to remove his structure within from receipt of
this decision.
5. Order the defendant(s) to (sic) plaintiff the amount of P10,000.00, as
litigation expenses.
6. Order defendant(s) to pay the cost of suit[27]
Respondents appealed the decision to the RTC.[28] In affirming the
decision in toto the RTC ratiocinated:
It may be well to consider that even after plaintiffs business ceased
operation, he religiously paid the taxes due thereon.
Appellants theory that the plaintiff-appellee abandoned the property does
not sit well and finds no support in the record. Notice that since 1985 up
to mid-1990, the Banucas never laid claim over the property taking into
consideration that they were already residents of the place. This only goes
to show that they acknowledged and respected the prior possession of the
plaintiff-appellee. Besides, what right has Gloria to cause the leveling of
the property destroying the natural contour thereof, to presume that
plaintiff-appellee abandoned it and to invite and allow other persons to
settle thereat? Absolutely none. Knowing fully well that the plaintiff-
appellee has prior possession of the property, Glorias actions are
unjustified, to say the least. Her consummated act of leveling the property
without the knowledge of the plaintiff-appellee is viewed as a test to
determine whether or not the latter is still interested in the property.
From then on until 1998 (but before the construction), the Banucas still
recognize the plaintiffs possession. But as Gloria claims to have heard no
word from the plaintiff, she unilaterally declared that the place is now
abandoned as she invited and allowed the defendants to live and
construct their house thereat.
Contrary to the assertion of the appellants, there was no abandonment
simply because plaintiff-appellee continuously paid the corresponding
taxes due thereon and that he promptly objected to the construction of
the defendants-appellants house. These are clear manifestations of his
intention not to abandon the property. Sad to say though that here is a
former employer. By passing off such property to be hers is so unkind,
unfair and against social order. It is very clear that the Banucas knew of
the prior possession of the plaintiff way back then so that they themselves
never personally build construction over the property. If they honestly
believe that they now own the land, why will they still have to invite other
people who are not their relatives to settle thereat? Why the preference
of strangers over relatives? The Court does not believe that they did not
receive any compensation for having allowed strangers, the defendants
included, to settle on the land.
From all the foregoing, Gloria is clearly in bad faith. And her being in bad
faith must be corrected and if warranted, must be meted appropriate
penalty. If the Banucas are in bad faith, then the appellants cannot have
better rights either. The Banucas transferred nothing to them. Defendants-
appellants cannot even be considered as builders in good faith. It must be
noted that they were prohibited by the plaintiff from going further but
they ignored it. They shall lose what was built (Art. 449, Civil Code). Again,
if the Banucas believe that they have an action or a right to deprive the
plaintiffs possession, why did they not invoke judicial interference as
required under Art. 536 of the same code? Nonetheless, notwithstanding
the fact of leveling without the knowledge of the plaintiff-appellee, the
same did not affect his possession (Art. 537, Civil Code).[29]
Via a petition for review, respondents appealed to the Court of Appeals.
The Court of Appeals made a sudden turn-around and reversed the
decision under review. Its decision dated 20 August 2002 reads in part:
[T]here is a need to clarify a few things. What is undisputed are the
identity and nature of the property subject of the action for forcible entry.
The subject of the action concerns a portion of the road-right-of-way along
Kennon Road just above the private road constructed by respondent. The
problem, however, is that petitioners Sps. Valenciano started constructing
a house on the same spot where a house belonging to respondent once
stood. Both parties are now asserting that they are entitled to the
possession of said lot. But the decision of the lower court seems to imply
that respondents right to possess the subject property stems from his
acquisition of the one-hectare property below it. That is not the case.
We must emphasize that the subject of the deed of quitclaim and waiver
of rights of Castillo Binay-an was not the road-right-of-way but the sloping
terrain below it. This was the property acquired by the respondent to have
access to the sand and gravel on the Bued River. It did not include the
road-right-of-way. As regards Gloria Banucass claims, the evidence show
that her agreement with Jularbal involved only the improvements near her
residence down the private road and not the road-right-of-way. Since the
subject property is a road-right-of-way, it forms part of the public
dominion. It is not susceptible to private acquisition or ownership.
Prolonged occupation thereof, improvements introduced thereat or
payment of the realty taxes thereon will never ripen into ownership of
said parcel of land. Thus, what We have are two parties, neither of which
can be owners, only possessors of the subject property. Beyond these two,
only the government has a better right to the subject property which right
it may exercise at any time. This bears emphasizing because if either party
has possessory rights to the subject property, it is not predicated on
ownership but only on their actual possession of the subject property.
xxxx
There is no doubt that respondent had prior physical possession of the
subject property. He entered and acquired possession of the subject
property when he built his house thereon. The house was destroyed
during the 1990 earthquake and respondent did not rebuild it. The mound
on which it stood was later leveled by Gloria Banuca and in 1998
petitioners Sps. Valenciano began construction thereat. Petitioners Sps.
Valenciano claim there was abandonment, but the lower court ruled that
respondent did not abandon the subject property as he continued to pay
the realty taxes thereon and objected to petitioners Sps. Valencianos
construction. We believe, and so hold, that at this point in time, it is
immaterial whether or not there was abandonment by respondent. The
fact remains that Gloria Banuca took possession of the subject property
soon after the earthquake. She leveled the mound and the ruins of
respondents house, yet respondent remained silent. Respondent objected
only after petitioners Sps. Valenciano started construction of the house on
the subject property. Respondent cannot now interpose an action for
forcible entry against petitioners Sps. Valenciano, which he should have
filed against Gloria Banuca, petitioners Sps. Valencianos predecessor-in-
interest. But more than a year had passed and his right to do so lapsed.
Thus, respondents prior possession is material only as against Gloria
Banuca and only within a period of one year from the time she wrested
possession of the property from respondent.
We view with distate Gloria Banucas ingratitude toward her husbands
former employer. Her actions smack of the proverbial hand being offered
in aid but the person to whom it is offered would rather have the whole
arm instead. This is an instance where it is the employees who commit
injustice against their employer. Nonetheless, petitioners Sps. Valenciano
should not suffer because of Gloria Banucas ingratitude for the former
came across the property in good faith.
But respondent is also reminded that he only has himself to blame. His
failure to assert his right for an unreasonable and unexplained length of
time allowed Gloria Banuca to wrest possession from him. Especially in
this case where they do not and cannot own the subject property, actual
possession becomes particularly important.[30]
The case was disposed as follows:
WHEREFORE, in view of the foregoing, the petition is GRANTED and the
decision of the Municipal Circuit Trial Court of tuba-Sablan dated
November 20, 2000 as affirmed by the Regional Trial Court on January 23,
2002 is hereby REVERSED and SET ASIDE.[31]
The Motion for Reconsideration filed by petitioner was denied in a
resolution[32] dated 20 May 2003.
Petitioner is now before us seeking redress. He assigns the following as the
errors committed by the Court of Appeals:
I.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PRIVATE
RESPONDENT (NOW PETITIONER) FRISCO DOMALSIN ABANDONED THE
PROPERTY SUBJECT OF THE LITIGATION.
II.
THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING
ASIDE THE DECISION OF THE REGIONAL TRIAL COURT OF LA TRINIDAD,
BENGUET, BRANCH 63 WHICH AFFIRMED THE DECISION OF THE
MUNICIPAL CIRCUIT TRIAL COURT OF TUBA-SABLAN.
At the outset, it must be made clear that the property subject of this case
is a portion of the road-right-of way of Kennon Road which is located in
front of a parcel of land that petitioner bought by way of Deed of Waiver
and Quitclaim from Castillo Binay-an.[33] The admission[34] of petitioner
in his Amended Complaint that respondents started constructing a
building within the Kennon Road road-right-of-way belies his claim that
the lot in question is his.
In light of this exposition, it is clear that neither the petitioner nor the
respondents can own nor possess the subject property the same being
part of the public dominion. Property of public dominion is defined by
Article 420 of the Civil Code as follows:
ART. 420. The following things are property of public dominion:
(1) Those intended for public use such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores, roadsteads, and
other of similar character.
(2) Those which belong to the State, without being for public use, and
are intended for some public service or for the development of the
national wealth.
Properties of public dominion are owned by the general public.[35] Public
use is use that is not confined to privileged individuals, but is open to the
indefinite public.[36] As the land in controversy is a portion of Kennon
Road which is for the use of the people, there can be no dispute that same
is part of public dominion. This being the case, the parties cannot
appropriate the land for themselves. Thus, they cannot claim any right of
possession over it. This is clear from Article 530 of the Civil Code which
provides:
ART. 530. Only things and rights which are susceptible of being
appropriated may be the object of possession.
Notwithstanding the foregoing, it is proper to discuss the position of the
Court of Appeals for comprehensive understanding of the facts and the
law involved.
Petitioner maintains that the Court of Appeals erred when it ruled that he
abandoned the land being disputed contrary to the rulings of the MCTC
and RTC. The MCTC found there was no abandonment of the land because
the house erected thereon was destroyed by a fortuitous event
(earthquake), while the RTC ruled there was no abandonment because
petitioner paid taxes due on the land and that he promptly objected to the
construction of respondents house which are clear manifestations of his
intention not to abandon the property.
A reading of the decision of the Court of Appeals shows that it did not
reverse the two lower courts on the issue of abandonment. It merely
declared that such issue is not material in the resolution of the case at bar.
It faulted petitioner for not asserting his right for a long time allowing
Gloria Banuca to wrest the possession of the land in question from
petitioner by leveling the house he built thereon and pronounced that
actual possession becomes important in a case where parties do not and
cannot own the land in question.
From the foregoing it appears that the Court of Appeals did not give
weight or importance to the fact that petitioner had prior physical
possession over the subject land. It anchored its decision on the fact that
the parties do not and cannot own the land and that respondents now
have actual possession over it.
Ejectment proceedings are summary proceedings intended to provide an
expeditious means of protecting actual possession or right to possession
of property. Title is not involved. The sole issue to be resolved is the
question as to who is entitled to the physical or material possession of the
premises or possession de facto.[37]
The Court of Appeals erred when it preferred the present and actual
possession of respondents vis--vis the prior possession of petitioner on the
ground that the parties do not and cannot own the lot in question.
Regardless of the actual condition of the title to the property, the party in
peaceable, quiet possession shall not be thrown out by a strong hand,
violence or terror. Neither is the unlawful withholding of property allowed.
Courts will always uphold respect for prior possession. 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 prior possession in time, he has the security that entitles him
to remain on the property until a person with a better right lawfully ejects
him.[38]
The fact that the parties do not and cannot own the property under
litigation does not mean that the issue to be resolved is no longer priority
of possession. The determining factor for one to be entitled to possession
will be prior physical possession and not actual physical possession. Since
title is never in issue in a forcible entry case, the Court of Appeals should
have based its decision on who had prior physical possession. The main
thing to be proven in an action for forcible entry is prior possession and
that same was lost through force, intimidation, threat, strategy and
stealth, so that it behooves the court to restore possession regardless of
title or ownership.[39]
Inasmuch as prior physical possession must be respected, the Court of
Appeals should have ruled squarely on the issue of abandonment because
it gave precedence to the actual present possession of respondents. If,
indeed, there was abandonment of the land under consideration by
petitioner, only then should respondents be given the possession of the
same since abandonment is one way by which a possessor may lose his
possession.[40]
Abandonment of a thing is the voluntary renunciation of all rights which a
person may have in a thing, with the intent to lose such thing.[41] A thing
is considered abandoned and possession thereof lost if the spes
recuperandi (the hope of recovery) is gone and the animus revertendi (the
intention of returning) is finally given up.[42]
In the case before us, we find that petitioner never abandoned the subject
land. His opposition to the construction of respondents house upon
learning of the same and the subsequent filing of the instant case are clear
indicia of non-abandonment; otherwise, he could have just allowed the
latter to continue with the construction. Moreover, the fact that the house
petitioner built was destroyed by the earthquake in 1990, was never
rebuilt nor repaired and that same was leveled to the ground by Gloria
Banuca do not signify abandonment. Although his house was damaged by
the earthquake, Gloria Banuca, the person who supposedly demolished
said house, had no right to do the same. Her act of removing the house
and depriving petitioner of possession of the land was an act of forcible
entry. The entry of respondents in 1998 was likewise an act of forcible
entry.
The next question is: Was the action filed the correct one and was it timely
filed?
Well-settled is the rule that what determines the nature of the action as
well as the court which has jurisdiction over the case are the allegations in
the complaint.[43] In actions for forcible entry, the law tells us that two
allegations are mandatory for the municipal court to acquire jurisdiction:
First, the plaintiff must allege prior physical possession of the property.
Second, he must also allege that he was deprived of his possession by any
of the means provided for in Section 1, Rule 70 of the Rules of Court.[44]
To effect the ejectment of an occupant or deforciant on the land, the
complaint should embody such a statement of facts as to bring the party
clearly within the class of cases for which the statutes provide a remedy,
as these proceedings are summary in nature. The complaint must show
enough on its face to give the court jurisdiction without resort to parol
evidence.[45]
A look at the Amended Complaint filed by petitioner clearly shows a case
for forcible entry. Petitioner alleged therein that he has been in possession
of the subject land for the last nineteen years and that respondents, in the
first week of August 1998, without his permission and consent, entered
the land by means of force, strategy and stealth and started the
construction of a building thereon; and upon being informed thereof, he
requested them to stop their construction but respondents refused to
vacate the land forcing him to file the instant case to recover possession
thereof.
The Court of Appeals pronounced that petitioner cannot interpose an
action for forcible entry against respondents and that the same should
have been filed against Gloria Banuca. It added that the right to file against
the latter had already lapsed because more than a year had passed by
from the time she wrestled possession of the property from the petitioner.
We find such pronouncement to be flawed. An action of forcible entry and
detainer may be maintained only against one in possession at the
commencement of the action, and not against one who does not in fact
hold the land.[46] Under Section 1,[47] Rule 70 of the Rules of Court, the
action may be filed against persons unlawfully withholding or depriving
possession or any person claiming under them. Considering that
respondents are the ones in present actual possession and are depriving
petitioner of the possession of the land in question, it is proper that they
be the ones to be named defendants in the case. The fact that Gloria
Banuca was supposedly the one who first committed forcible entry when
she allegedly demolished the house of petitioner does not make her the
proper party to be sued because she is no longer in possession or control
of the land in controversy.
As regards the timeliness of the filing of the case for forcible entry, we find
that same was filed within the one-year prescriptive period. We have ruled
that where forcible entry was made clandestinely, the one-year
prescriptive period should be counted from the time the person deprived
of possession demanded that the deforciant desist from such
dispossession when the former learned thereof.[48] As alleged by
petitioner in the Amended Complaint, he was deprived of his possession
over the land by force, strategy and stealth. Considering that one of the
means employed was stealth because the intrusion was done by
respondents without his knowledge and consent, the one-year period
should be counted from the time he made the demand to respondents to
vacate the land upon learning of such dispossession. The record shows
that upon being informed that respondents were constructing a building in
the subject land sometime in the first week of August 1998, petitioner
immediately protested and advised the former to stop; but to no avail. The
one-year period within which to file the forcible entry case had not yet
expired when the ejectment suit was filed on 18 August 1998 with the
MCTC.
Despite the foregoing findings, this Court finds that the MCTC and the RTC,
as well as the Court of Appeals, to be in error when they respectively
declared that petitioner and respondents to be entitled to the possession
of the land in dispute. The parties should not be permitted to take
possession of the land, much more, claim ownership thereof as said lot is
part of the public dominion.
WHEREFORE, the foregoing considered, the instant petition is hereby
PARTIALLY GRANTED. Nonetheless, there being a finding that the subject
property is a part of the public dominion, of which neither party is entitled
to own nor possess, the decisions of the Court of Appeals dated 20 August
2002, the Regional Trial Court of La Trinidad, Benguet, dated 23 January
2002, and the Municipal Circuit Trial Court of Tuba-Sablan, Tuba, Benguet,
dated 20 November 2000 are SET ASIDE. Respondents Juanito and Amalia
Valenciano are ordered to remove their structure on the subject land
within sixty (60) days from receipt of this decision, and to vacate and
deliver the physical possession thereof to the Office of the District
Engineer, Benguet Engineering District, Department of Public Works and
Highways.
SO ORDERED.
SECOND DIVISION
[G.R. No. 123586. August 12, 2004]
SPOUSES BEDER MORANDARTE and MARINA FEBRERA, petitioners, vs.
COURT OF APPEALS, REPUBLIC OF THE PHILIPPINES, and SPOUSES
VIRGINIO B. LACAYA and NENITA LACAYA, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules
of Court which seeks the reversal of the Decision,[1] dated August 23,
1995, of the Court of Appeals (CA for brevity) in CA-G.R. CV No. 36258,
affirming the Decision, dated November 5, 1991, rendered by the Regional
Trial Court (Branch 7), Dipolog City, Zamboanga del Norte (RTC for brevity)
in Civil Case No. 3890, declaring Free Patent No. (IX-8) 785[2] and Original
Certificate of Title No. P-21972, in the name of petitioner Beder
Morandarte (Morandarte for brevity), and all its derivative titles, null and
void ab initio.
The factual antecedents are as follows:
Morandarte filed an application for free patent, dated December 5, 1972,
before the Bureau of Lands, Dipolog City District Land Office (BOL for
brevity), covering a parcel of land located at Sta. Filomena, Dipolog City
with an area of 4.5499 hectares and described as a portion of Lot 1038 of
Dipolog Cadastre No. 85.[3]
On July 27, 1976, the District Land Officer of the BOL approved the free
patent application of Morandarte and directed the issuance of a free
patent in his favor.[4] Accordingly, Free Patent No. (IX-8) 785 for Lot No. 7,
Csd-09-05-00078-D was issued in the name of Morandarte. On September
20, 1976, the Register of Deeds of Zamboanga del Norte issued the
corresponding Original Certificate of Title No. (P-21972) 5954.[5]
Subsequently, Morandarte caused a subdivision survey of the lot, dividing
the same into Lot No. 6781-A, with an area of 13,939 square meters, and
Lot No. 6781-B, with an area of 32,819 square meters. As a result of the
subdivision survey, Transfer Certificates of Title Nos. T-1835 and T-1836
covering Lots 6781-A and 6781-B, respectively, were issued in favor of
Morandarte on May 12, 1980 by the Registry of Deeds of Dipolog City.[6]
On May 22, 1981, Morandarte and his wife, Marina Febrera, executed a
real estate mortgage over Lot 6781-B, subject of TCT No. 1836, in favor of
the Development Bank of the Philippines, Dipolog City branch (DBP for
brevity), in consideration of a loan in the amount of P52,160.00.[7]
More than ten years after the issuance of the OCT in Morandartes name,
or on March 19, 1987, respondent Republic of the Philippines (Republic for
brevity), represented by the Director of Lands, filed before the RTC a
Complaint for Annulment of Title and Reversion against the Morandarte
spouses, the Register of Deeds of Zamboanga del Norte, the Register of
Deeds of Dipolog City, and DBP, docketed as Civil Case No. 3890.[8]
The Republic alleged that the BOL found that the subject land includes a
portion of the Miputak River which cannot be validly awarded as it is
outside the commerce of man and beyond the authority of the BOL to
dispose of. It claimed that the Morandarte spouses deliberately and
intentionally concealed such fact in the application to ensure approval
thereof. Considering that the Morandarte spouses are guilty of fraud and
misrepresentation in the procurement of their title, the Republic stressed
that their title is void.[9]
The Register of Deeds of Dipolog City filed a Motion to Dismiss, dated April
7, 1987, praying for the dismissal of the complaint as against her since the
complaint failed to state a claim against her.[10]
In their Answer dated April 13, 1987, the Morandarte spouses denied the
allegations of the complaint and claimed that they were able to secure the
title in accordance and in compliance with the requirements of the law.
They alleged that the land is a portion of inherited property from Antonio
L. Morandarte whose ownership thereof is covered by Tax Declaration No.
2296.
As regards the Miputak River, they argued that the river changed its
course brought about by the fact that a portion of the Miputak River was
leased by the Bureau of Fisheries (BOF for brevity) to a certain Aguido
Realiza whose rights were subsequently transferred to Virginio Lacaya.
They alleged that they indicated in their survey plan the actual location of
the Miputak River in relation to the property but the BOL returned the
survey with the directive that the existence of the river should not be
indicated as the original survey did not show its existence, to which they
complied with by submitting a new survey plan which did not indicate the
existence of the river.
In the alternative, they alleged that inclusion of the Miputak River should
not render the title void; only the portion of the property covered by the
Miputak River should be nullified but their title to the remaining portion
should be maintained.[11]
For its part, DBP filed its Answer dated April 13, 1987 praying for the
dismissal of the complaint as against it since it had nothing to do with the
issuance of the title to the spouses.[12] DBP interposed a cross-claim
against the spouses for the payment of their outstanding obligations.[13]
The Morandarte spouses filed an Answer to the Crossclaim dated April 29,
1987.[14]
No answer was filed by the Register of Deeds of Zamboanga del Norte.
On March 4, 1988, upon prior leave of court, herein respondent spouses
Virginio B. Lacaya and Nenita Lacaya filed their Complaint-In-Intervention
which alleged that they are holders of a fishpond lease agreement
covering a fishpond area of about 5.0335 hectares, 1.2681 hectares of
which have been included in the title issued to the Morandarte spouses.
Considering that the land of the Morandarte spouses encroaches on the
area leased to them, the Lacaya spouses submit that the formers title
thereto is void.[15]
In their Answer to the complaint-in-intervention, dated March 19, 1988,
the Morandarte spouses denied the allegations of the Lacaya spouses.[16]
They maintained that the portion of the fishpond originally belonged to
Antonio L. Morandarte, their predecessor-in-interest, and the Lacaya
spouses have never been in possession thereof but are actually squatters
therein.
On the other hand, the Republic, in its Answer to the complaint-in-
intervention, dated March 21, 1988, adopted the allegations of the
complaint-in-intervention to further support its claim that the title of the
Morandarte spouses is void.[17] The Lacaya spouses filed their Reply and
Answer on March 30, 1988, denying the arguments of the Morandarte
spouses and reiterating the allegations in their complaint-in-
intervention.[18]
Following trial on the merits, on November 5, 1992, the RTC rendered a
Decision[19] in favor of the Republic and the Lacaya spouses. The RTC
declared that while fraud in the procurement of the title was not
established by the State, Morandartes title is, nonetheless, void because it
includes a portion of the Miputak River which is outside the commerce of
man and beyond the authority of the BOL to dispose of. In addition, the
RTC sustained the fishpond rights of the Lacaya spouses over a portion
included in Morandartes title based on a Deed of Transfer of Fishpond
Rights from Felipe B. Lacaya and a Fishpond Lease Agreement with the
BOF.
The dispositive portion of the decision of the trial court reads:
WHEREFORE, judgment is hereby rendered:
1. Declaring null and void ab initio Free Patent No. (IX-5) (sic) 785 and
Original Certificate of Title No. P-21972 in the name of Beder Morandarte,
as well as all derivative titles issued thereafter;
2. Ordering defendants spouses Beder Morandarte and Marina Febrera to
surrender their owners duplicate copies of Transfer Certificate of Title Nos.
T-1835 and T-1836, which were the derivative titles of Original Certificate
of Title No. P-21972;
3. Directing the Register of Deeds of Zamboanga del Norte to cancel
Original Certificate of Title No. P-21972 in the name of Beder Morandarte,
and the Register of Deeds of Dipolog City to cancel Transfer Certificate of
Title Nos. T-1835 and T-1836 in the name of the same defendant;
4. Ordering the reversion of the land in question to the state, free from
liens and encumbrances;
5. Enjoining defendants spouses Beder Morandarte and Marina Febrera
from exercising any act of ownership or possession of the subject
property;
6. Dismissing the Cross-Claim of defendant Development Bank of the
Philippines against Cross Defendants Spouses Beder Morandarte and
Marina Febrera, for being premature, but ordering the latter cross
defendants to give a substitute security in favor of DBP as indicated in this
decision;
7. Declaring valid and enforceable the Lease Agreement for a period of
twenty five years over the fishpond area of Intervenors;
8. Denying Intervenors prayer for damages against defendants-spouses
Morandarte; and
9. Dismissing, for lack of merit, the counterclaim and prayer for damages
of defendants spouses Morandarte against the Intervenors.
No costs against defendant-spouses Morandarte.
IT IS SO ORDERED.[20]
Dissatisfied, the Morandarte spouses appealed to the CA.[21] In a Decision
dated August 23, 1995, the CA affirmed the decision of the RTC,[22]
ratiocinating, as follows:
The present controversial Miputak River used to occupy the area adjacent
to the northern and western boundaries of Lot No. 6781 Cad-85 (Exh. J).
As time passed, it changed its course and occupies (sic) Lot No. 6781 Cad-
85 (identical to Lot 7, Exh. H). This will explain Beder Morandartes
argument that when he applied for the Sales Patent Lot 7 (identical to Lot
6781), the original technical description did not show the Miputak River.
But it is inescapable though, that while originally, Lot 6781 is not occupied
by the river, at the time that the Sales Application was filed by Beder
Morandarte, the Miputak River was actually occupying said Lot 6781 or Lot
7 covered by his Sales Application and the titles sought to be annulled in
this case.
Rivers and their natural beds are undoubtedly properties of public
dominion (Art. 502 par. 1, Civil Code of the Philippines). Whether
navigable or not, rivers belong to the public and cannot be acquired by
prescription (Com vs. Meneses, 38 O.G. 2839, Paras, Civil Code, p. 328,
Vol. II, 12th Edition). In fact, a stream located within private land is still
property of public dominion, even if the Torrens Title of the land does not
show the existence of said stream (Talion vs. Sec. of Public Works and
Highways, L-24281, May 16, 1967; Paras, supra).
Correspondingly, Art. 462 of the same Civil Code provides:
Art. 462. Whenever a river, changing its course by natural causes, opens a
new bed through a private estate, this bed shall become of public
dominion.
The rule is the same that even if the new bed is on private property. The
bed becomes property of public dominion. Just as the old bed had been of
public dominion before the abandonment, the new riverbed shall likewise
be of public dominion (Hilario vs. City of Manila, L-19570, April 27,
1967).[23]
On October 10, 1995, the Morandarte spouses filed a motion for
reconsideration.[24] In its Resolution dated January 19, 1996, the CA
found no justifiable cause or reason to modify or reverse its decision.[25]
Hence, the instant petition for review anchored on the following assigned
errors:
A.
RESPONDENT COURT COMMITTED A GRAVE ERROR OF LAW IN APPLYING
ARTICLE 462 OF THE CIVIL CODE TO THIS CASE WHEN THE CHANGE IN
COURSE OF THE OLD MIPUTAK RIVER WAS NOT DUE TO NATURAL CAUSES
BUT WAS ACCIDENTAL.
B.
ASSUMING ARGUENDO THAT THE CHANGE OF COURSE OF THE OLD
MIPUTAK RIVER WAS DUE TO NATURAL CAUSE ONLY A PORTION OF THE
SUBJECT PROPERTY OF PETITIONERS WAS AFFECTED THEREBY SO THAT
THE TITLE OF PETITIONERS TO THE REMAINING PORTION IS VALID AND
CANNOT BE NULLIFIED AS IT REMAINED PRIVATE PROPERTY.
C.
RESPONDENT COURT GRAVELY ERRED IN ORDERING THE REVERSION OF
LOT 7, CSD-09-05-00078-D TO THE PUBLIC DOMAIN.
D.
RESPONDENT COURT GRAVELY ERRED IN NOT DECLARING AS NULL AND
VOID THE LEASE AGREEMENT EXECUTED IN FAVOR OF INTERVENORS.
E.

RESPONDENT COURT GRAVELY ERRED IN NOT DISMISSING THE
COMPLAINT CONSIDERING THAT NO FRAUD OR MISREPRESENTATION
WAS EMPLOYED BY THE SPOUSES MORANDARTE IN OBTAINING THE
TITLE.[26]
The Morandarte spouses emphatically argue that the CA failed to take into
consideration the true state of the present Miputak River in relation to Lot
7. They contend that the Miputak River changed its course due to the
closure of the river bed through the construction of dikes by the Lacaya
spouses, forcing the river to be diverted into Lot 6781-B. Thus, they submit
that the applicable provision is Article 77 of the Law of Waters, which
provides that [l]ands accidentally inundated by the waters of lakes, or by
creeks, rivers and other streams shall continue to be the property of their
respective owners.
Furthermore, they staunchly claim that the Miputak River does not
actually correspond to Lot 7. The Miputak River occupies only 12,162
square meters of Lot 7 which has an area of 45,499 square meters. Also,
they insist that the lower courts made capital, albeit erroneously, of their
agreement to a reversion. The reversion agreed to refers only to the
12,162 square meters portion covered by the Miputak River, which should
be voided, while the portion unaffected by the Miputak River is valid and
their title thereto should be maintained and respected.
Moreover, they vigorously contend that the CA erred in sustaining the
validity of fishpond rights of the Lacaya spouses. They aver that the Lacaya
spouses violated the terms of the lease agreement by constructing dikes
for the fishponds which caused the Miputak River to traverse the property
of the Morandarte spouses.
Prefatorily, it must be stated that in petitions for review on certiorari, only
questions of law may be raised by the parties and passed upon by this
Court.[27] Factual findings of the trial court, when adopted and confirmed
by the CA, are binding and conclusive upon the Supreme Court and
generally will not be reviewed on appeal.[28] Inquiry upon the veracity of
the CAs factual findings and conclusion is not the function of the Supreme
Court for the Court is not a trier of facts.[29]
While this Court has recognized several exceptions to this rule, to wit: (1)
when the findings are grounded entirely on speculation, surmises, or
conjectures; (2) when the inference made is manifestly mistaken, absurd,
or impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of
facts are conflicting; (6) when in making its findings, the CA went beyond
the issues of the case, or its findings are contrary to the admissions of both
the appellant and the appellee; (7) when the findings are contrary to the
trial court; (8) when the findings are conclusions without citation of
specific evidence on which they are based; (9) when the facts set forth in
the petition as well as in the petitioners main and reply briefs are not
disputed by the respondent; (10) when the findings of fact are premised
on the supposed absence of evidence and contradicted by the evidence on
record; and (11) when the CA manifestly overlooked certain relevant facts
not disputed by the parties, which, if properly considered, would justify a
different conclusion,[30] none of these exceptions find application here.
A complaint for reversion involves a serious controversy, involving a
question of fraud and misrepresentation committed against the
government and it seeks the return of the disputed portion of the public
domain. It seeks to cancel the original certificate of registration, and nullify
the original certificate of title, including the transfer certificate of title of
the successors-in-interest because the same were all procured through
fraud and misrepresentation.[31]
The State, as the party alleging that fraud and misrepresentation attended
the application for free patent, bears the burden of proof. The
circumstances evidencing fraud and misrepresentation are as varied as the
people who perpetrate it in each case. It assumes different shapes and
forms and may be committed in as many different ways.[32] Therefore,
fraud and misrepresentation are never presumed but must be proved by
clear and convincing evidence;[33] mere preponderance of evidence not
even being adequate.[34]
In this case, the State failed to prove that fraud and misrepresentation
attended the application for free patent. The RTC, in fact, recognized that
no fraud attended the application for free patent[35] but declared
reversion based on the judicial admission of the Morandarte spouses that
reversion is warranted due to the inalienability of the Miputak River.
Ordinarily, a judicial admission requires no proof and a party is precluded
from denying it except when it is shown that such admission was made
through palpable mistake or that no such admission was made.[36] In this
case, the exception finds application since the records lay bare that such
admission was made through mistake and not in the context it was
considered. As reflected in the Order dated May 25, 1998,[37] the
Morandarte spouses essentially agreed only to a reconveyance of the
portion covering the Miputak River. Undoubtedly, such acquiescence to
return the portion covering the Miputak River is not, and cannot be
considered, an admission that fraud and misrepresentation attended the
application for free patent. This fact, standing alone, does not prove fraud
and misrepresentation.
Besides, it is undisputed that the original survey plan submitted by
Morandarte to the BOL reflected the true state of the Miputak River in Lot
1038 but the BOL did not approve the plan because a 1916 survey did not
so indicate the existence of a river traversing Lot 1038 such that
Morandarte was directed to submit an amended plan deleting the
existence of the Miputak River. This mothered the subsequent error of the
BOL of approving the amended plan as CAS-09-05-000078-D.
This error could have been discovered through a thorough ocular
inspection of the property claimed under the free patent application.
However, Aurelio F. Bureros, Hearing Officer I of the BOL, surprisingly
failed to notice the existence of the river traversing Lot 1038 in the field
investigation he conducted on January 10, 1976.[38]
Neither did Bureros note the 13,339 square meter portion already covered
by an existing fishpond lease agreement granted by the BOF in favor of
Felipe B. Lacaya, the predecessor-in-interest of the Lacaya spouses.[39]
The records reveal that as early as 1948, 4.6784 hectares[40] of the public
land have been leased for fishpond purposes. Aguido S. Realiza was the
initial grantee of a fishpond lease agreement.[41] Amor A. Realiza, Aguidos
son, acquired his fishpond permit on May 29, 1953.[42] Amor A. Realiza
transferred his fishpond rights to Felipe B. Lacaya on May 14, 1956.[43] By
1960, the public land leased for fishpond purposes had increased to
5.0335 hectares.[44] Felipe B. Lacaya transferred his fishpond rights to
Virgilio B. Lacaya on October 25, 1977.[45] Thus, the fishpond rights have
been in existence since 1948, prior to the 1972 free patent application of
Morandarte.
Regardless of the foregoing, Aurelio F. Bureros, concluded that
Morandarte is a qualified applicant and recommended that a free patent
be granted to him. This error culminated in the erroneous grant of a free
patent on July 27, 1976 covering the Miputak River and land subject of the
fishpond rights of Felipe B. Lacaya.[46]
Be that as it may, the mistake or error of the officials or agents of the BOL
in this regard cannot be invoked against the government with regard to
property of the public domain. It has been said that the State cannot be
estopped by the omission, mistake or error of its officials or agents.[47]
It is well-recognized that if a person obtains a title under the Public Land
Act which includes, by oversight, lands which cannot be registered under
the Torrens system, or when the Director of Lands did not have
jurisdiction over the same because it is a public domain, the grantee does
not, by virtue of the said certificate of title alone, become the owner of
the land or property illegally included.[48] Otherwise stated, property of
the public domain is incapable of registration and its inclusion in a title
nullifies that title.[49]
The present controversy involves a portion of the public domain that was
merely erroneously included in the free patent. A different rule would
apply where fraud is convincingly shown. The absence of clear evidence of
fraud will not invalidate the entire title of the Morandarte spouses.
Accordingly, the 12,162-square meter portion traversed by the Miputak
River and the 13,339-square meter portion covered by the fishpond lease
agreement of the Lacaya spouses which were erroneously included in Free
Patent No. (IX-8) 785 and Original Certificate of Title No. P-21972 should
be reconveyed back to the State.
The Morandarte spouses cannot seek refuge in their claim that Antonio A.
Morandarte, their predecessor-in-interest, was already the owner of that
portion of Lot 1038 when the fishpond application of Aguido S. Realiza was
approved in 1948 because Lot 1038 was still part of the public domain
then. It was only in 1972, through Forestry Administrative Order No. 4-
1257, which was approved August 14, 1972, when Lot 1038 was declared CITY ASSESSOR OF PARAAQUE,
alienable or disposable property of the State.[50] and CITY TREASURER OF Promulgated:
PARAAQUE,
It is a settled rule that unless a public land is shown to have been Respondents. July 20, 2006
reclassified as alienable or actually alienated by the State to a private
person, that piece of land remains part of the public domain. Hence, x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
Antonio A. Morandartes occupation thereof, however long, cannot ripen
into private ownership.[51] D E C I S I ON

The Morandarte spouses also unsuccessfully harp on the inapplicability of CARPIO, J.:
Article 462 of the Civil Code by claiming that the change of course of the
Miputak River was due to a man-made cause and not by natural means. The Antecedents
They offered no iota of evidence to substantiate this claim, other than the
bare testimony of Beder Morandarte. Neither is there proof that the Petitioner Manila International Airport Authority (MIAA) operates the
movement of the river was caused by accident or calamity, such as a Ninoy Aquino International Airport (NAIA) Complex in Paraaque City under
typhoon, and not by the natural movements thereof. General statements, Executive Order No. 903, otherwise known as the Revised Charter of the
which are mere conclusions of law and not proofs, are unavailing and Manila International Airport Authority (MIAA Charter). Executive Order
cannot suffice. No. 903 was issued on 21 July 1983 by then President Ferdinand E.
Marcos. Subsequently, Executive Order Nos. 909[1] and 298[2] amended
Besides, at the time of the filing of the application for free patent in 1972, the MIAA Charter.
a portion of the Miputak River was already in its present course, traversing
Lot 1038, particularly Lot 7 of the amended plan submitted by As operator of the international airport, MIAA administers the land,
Morandarte. improvements and equipment within the NAIA Complex. The MIAA
Charter transferred to MIAA approximately 600 hectares of land,[3]
We need not delve on the question of whether the Lacaya spouses including the runways and buildings (Airport Lands and Buildings) then
violated the terms of the fishpond lease agreement. It is not material in under the Bureau of Air Transportation.[4] The MIAA Charter further
this case in the sense that it was not made an issue by the parties. Neither provides that no portion of the land transferred to MIAA shall be disposed
is there evidence to corroborate the bare allegation of petitioners that the of through sale or any other mode unless specifically approved by the
Lacaya spouses constructed dikes for the fishponds which caused the President of the Philippines.[5]
Miputak River to traverse Lot 7. What is significant here is the established
fact that there was an existing fishpond lease agreement between Felipe On 21 March 1997, the Office of the Government Corporate Counsel
Lacaya and the Bureau of Fisheries at the time of Morandartes application (OGCC) issued Opinion No. 061. The OGCC opined that the Local
for free patent; in effect, proving that the area covering the fishpond Government Code of 1991 withdrew the exemption from real estate tax
belongs to the Government and petitioners have no rights thereto. granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA
negotiated with respondent City of Paraaque to pay the real estate tax
In closing, we cannot but decry the carelessness of the BOL in having imposed by the City. MIAA then paid some of the real estate tax already
issued the Free Patent in Morandartes favor which covered the Miputak due.
River and the fishpond rights of Felipe B. Lacaya. Surely, a more diligent
search into their records and thorough ocular inspection of Lot 7 would On 28 June 2001, MIAA received Final Notices of Real Estate Tax
have revealed the presence of the Miputak River traversing therein and an Delinquency from the City of Paraaque for the taxable years 1992 to 2001.
existing fishpond right thereon. Had more vigilance been exercised by the MIAAs real estate tax delinquency is broken down as follows:
BOL, the government agency entrusted specifically with the task of
administering and disposing of public lands, the present litigation could
have been averted.
TAX DECLARATION
WHEREFORE, the petition is partly GRANTED. The assailed Decision of the TAXABLE YEAR
Court of Appeals, dated August 23, 1995, in CA G.R. No. 36258 is TAX DUE
REVERSED insofar only as it affirmed the nullity of Free Patent No. (IX-8) PENALTY
785 and Original Certificate of Title No. P-21972, in the name of petitioner TOTAL
Beder Morandarte. In its stead, petitioners Spouses Beder Morandarte and E-016-01370
Marina Febrera are directed to reconvey to the respondent Republic of 1992-2001
the Philippines within thirty (30) days from the finality of this Decision the 19,558,160.00
12,162-square meter portion traversed by the Miputak River and the 11,201,083.20
13,339-square meter portion covered by the fishpond lease agreement of 30,789,243.20
the Lacaya spouses. No pronouncement as to costs. E-016-01374
1992-2001
SO ORDERED. 111,689,424.90
EN BANC 68,149,479.59
179,838,904.49
MANILA INTERNATIONAL G.R. No. 155650 E-016-01375
AIRPORT AUTHORITY, 1992-2001
Petitioner, Present: 20,276,058.00
12,371,832.00
PANGANIBAN, C.J., 32,647,890.00
PUNO, E-016-01376
QUISUMBING, 1992-2001
YNARES-SANTIAGO, 58,144,028.00
SANDOVAL-GUTIERREZ, 35,477,712.00
- versus - CARPIO, 93,621,740.00
AUSTRIA-MARTINEZ, E-016-01377
CORONA, 1992-2001
CARPIO MORALES, 18,134,614.65
CALLEJO, SR., 11,065,188.59
AZCUNA, 29,199,803.24
COURT OF APPEALS, CITY OF TINGA, E-016-01378
PARAAQUE, CITY MAYOR OF CHICO-NAZARIO, 1992-2001
PARAAQUE, SANGGUNIANG GARCIA, and 111,107,950.40
PANGLUNGSOD NG PARAAQUE, VELASCO, JR., JJ. 67,794,681.59
178,902,631.99
E-016-01379 On 7 February 2003, this Court issued a temporary restraining order (TRO)
1992-2001 effective immediately. The Court ordered respondents to cease and desist
4,322,340.00 from selling at public auction the Airport Lands and Buildings.
2,637,360.00 Respondents received the TRO on the same day that the Court issued it.
6,959,700.00 However, respondents received the TRO only at 1:25 p.m. or three hours
E-016-01380 after the conclusion of the public auction.
1992-2001 On 10 February 2003, this Court issued a Resolution confirming nunc pro
7,776,436.00 tunc the TRO.
4,744,944.00
12,521,380.00 On 29 March 2005, the Court heard the parties in oral arguments. In
*E-016-013-85 compliance with the directive issued during the hearing, MIAA,
1998-2001 respondent City of Paraaque, and the Solicitor General subsequently
6,444,810.00 submitted their respective Memoranda.
2,900,164.50 MIAA admits that the MIAA Charter has placed the title to the Airport
9,344,974.50 Lands and Buildings in the name of MIAA. However, MIAA points out that
*E-016-01387 it cannot claim ownership over these properties since the real owner of
1998-2001 the Airport Lands and Buildings is the Republic of the Philippines. The
34,876,800.00 MIAA Charter mandates MIAA to devote the Airport Lands and Buildings
5,694,560.00 for the benefit of the general public. Since the Airport Lands and Buildings
50,571,360.00 are devoted to public use and public service, the ownership of these
*E-016-01396 properties remains with the State. The Airport Lands and Buildings are
1998-2001 thus inalienable and are not subject to real estate tax by local
75,240.00 governments.
33,858.00
109,098.00 MIAA also points out that Section 21 of the MIAA Charter specifically
GRAND TOTAL 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
P392,435,861.95 Government Code because the Airport Lands and Buildings are owned by
P232,070,863.47 the Republic. To justify the exemption, MIAA invokes the principle that the
P 624,506,725.42 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
1992-1997 RPT was paid on Dec. 24, 1997 as per O.R.#9476102 for public advantage, since in such a case the tax debtor is also the tax
P4,207,028.75 creditor.
#9476101 for P28,676,480.00
#9476103 for P49,115.00[6] 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
On 17 July 2001, the City of Paraaque, through its City Treasurer, issued Code. Respondents also argue that a basic rule of statutory construction is
notices of levy and warrants of levy on the Airport Lands and Buildings. that the express mention of one person, thing, or act excludes all others.
The Mayor of the City of Paraaque threatened to sell at public auction the An international airport is not among the exceptions mentioned in Section
Airport Lands and Buildings should MIAA fail to pay the real estate tax 193 of the Local Government Code. Thus, respondents assert that MIAA
delinquency. MIAA thus sought a clarification of OGCC Opinion No. 061. cannot claim that the Airport Lands and Buildings are exempt from real
On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC estate tax.
Opinion No. 061. The OGCC pointed out that Section 206 of the Local
Government Code requires persons exempt from real estate tax to show Respondents also cite the ruling of this Court in Mactan International
proof of exemption. The OGCC opined that Section 21 of the MIAA Charter Airport v. Marcos[8] where we held that the Local Government Code has
is the proof that MIAA is exempt from real estate tax. withdrawn the exemption from real estate tax granted to international
airports. Respondents further argue that since MIAA has already paid
On 1 October 2001, MIAA filed with the Court of Appeals an original some of the real estate tax assessments, it is now estopped from claiming
petition for prohibition and injunction, with prayer for preliminary that the Airport Lands and Buildings are exempt from real estate tax.
injunction or temporary restraining order. The petition sought to restrain
the City of Paraaque from imposing real estate tax on, levying against, and
auctioning for public sale the Airport Lands and Buildings. The petition was The Issue
docketed as CA-G.R. SP No. 66878. This petition raises the threshold issue of whether the Airport Lands and
On 5 October 2001, the Court of Appeals dismissed the petition because Buildings of MIAA are exempt from real estate tax under existing laws. If
MIAA filed it beyond the 60-day reglementary period. The Court of so exempt, then the real estate tax assessments issued by the City of
Appeals also denied on 27 September 2002 MIAAs motion for Paraaque, and all proceedings taken pursuant to such assessments, are
reconsideration and supplemental motion for reconsideration. Hence, void. In such event, the other issues raised in this petition become moot.
MIAA filed on 5 December 2002 the present petition for review.[7]
The Courts Ruling
Meanwhile, in January 2003, the City of Paraaque posted notices of
auction sale at the Barangay Halls of Barangays Vitalez, Sto. Nio, and We rule that MIAAs Airport Lands and Buildings are exempt from real
Tambo, Paraaque City; in the public market of Barangay La Huerta; and in estate tax imposed by local governments.
the main lobby of the Paraaque City Hall. The City of Paraaque published
the notices in the 3 and 10 January 2003 issues of the Philippine Daily
Inquirer, a newspaper of general circulation in the Philippines. The notices
announced the public auction sale of the Airport Lands and Buildings to First, MIAA is not a government-owned or controlled corporation but an
the highest bidder on 7 February 2003, 10:00 a.m., at the Legislative instrumentality of the National Government and thus exempt from local
Session Hall Building of Paraaque City. taxation. Second, the real properties of MIAA are owned by the Republic
of the Philippines and thus exempt from real estate tax.
A day before the public auction, or on 6 February 2003, at 5:10 p.m., MIAA
filed before this Court an Urgent Ex-Parte and Reiteratory Motion for the 1. MIAA is Not a Government-Owned or Controlled Corporation
Issuance of a Temporary Restraining Order. The motion sought to restrain
respondents the City of Paraaque, City Mayor of Paraaque, Sangguniang Respondents argue that MIAA, being a government-owned or controlled
Panglungsod ng Paraaque, City Treasurer of Paraaque, and the City corporation, is not exempt from real estate tax. Respondents claim that
Assessor of Paraaque (respondents) from auctioning the Airport Lands and the deletion of the phrase any government-owned or controlled so
Buildings. 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:
SEC. 2. General Terms Defined. x x x x
(13) Government-owned or controlled corporation refers to any agency
organized as a stock or non-stock corporation, vested with functions
relating to public needs whether governmental or proprietary in nature,
and owned by the Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of stock corporations, to
the extent of at least fifty-one (51) percent of its capital stock: x x x.
(Emphasis supplied)
A government-owned or controlled corporation must be organized as a
stock or non-stock corporation. MIAA is not organized as a stock or non-
stock corporation. MIAA is not a stock corporation because it has no
capital stock divided into shares. MIAA has no stockholders or voting
shares. Section 10 of the MIAA Charter[9] provides:
SECTION 10. Capital. The capital of the Authority to be contributed by the
National Government shall be increased from Two and One-half Billion
(P2,500,000,000.00) Pesos to Ten Billion (P10,000,000,000.00) Pesos to
consist of:
(a) The value of fixed assets including airport facilities, runways and
equipment and such other properties, movable and immovable[,] which
may be contributed by the National Government or transferred by it from
any of its agencies, the valuation of which shall be determined jointly with
the Department of Budget and Management and the Commission on Audit
on the date of such contribution or transfer after making due allowances
for depreciation and other deductions taking into account the loans and
other liabilities of the Authority at the time of the takeover of the assets
and other properties;
(b) That the amount of P605 million as of December 31, 1986 representing
about seventy percentum (70%) of the unremitted share of the National
Government from 1983 to 1986 to be remitted to the National Treasury as
provided for in Section 11 of E. O. No. 903 as amended, shall be converted
into the equity of the National Government in the Authority. Thereafter,
the Government contribution to the capital of the Authority shall be
provided in the General Appropriations Act.
Clearly, under its Charter, MIAA does not have capital stock that is divided
into shares.
Section 3 of the Corporation Code[10] defines a stock corporation as one
whose capital stock is divided into shares and x x x authorized to distribute
to the holders of such shares dividends x x x. MIAA has capital but it is not
divided into shares of stock. MIAA has no stockholders or voting shares.
Hence, MIAA is not a stock corporation.
MIAA is also not a non-stock corporation because it has no members.
Section 87 of the Corporation Code defines a non-stock corporation as one
where no part of its income is distributable as dividends to its members,
trustees or officers. A non-stock corporation must have members. Even if
we assume that the Government is considered as the sole member of
MIAA, this will not make MIAA a non-stock corporation. Non-stock
corporations cannot distribute any part of their income to their members.
Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual
gross operating income to the National Treasury.[11] This prevents MIAA
from qualifying as a non-stock corporation.
Section 88 of the Corporation Code provides that non-stock corporations
are organized for charitable, religious, educational, professional, cultural,
recreational, fraternal, literary, scientific, social, civil service, or similar
purposes, like trade, industry, agriculture and like chambers. MIAA is not
organized for any of these purposes. MIAA, a public utility, is organized to
operate an international and domestic airport for public use.
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not
qualify as a government-owned or controlled corporation. 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. x x x x
(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. x x x (Emphasis supplied)
When the law vests in a government instrumentality corporate powers,
the instrumentality does not become a corporation. Unless the
government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not only
governmental but also corporate powers. Thus, MIAA exercises the
governmental powers of eminent domain,[12] police authority[13] and the
levying of fees and charges.[14] At the same time, MIAA exercises all the
powers of a corporation under the Corporation Law, insofar as these
powers are not inconsistent with the provisions of this Executive
Order.[15]
Likewise, when the law makes a government instrumentality operationally
autonomous, the instrumentality remains part of the National
Government machinery although not integrated with the department
framework. The MIAA Charter expressly states that transforming MIAA
into a separate and autonomous body[16] will make its operation more
financially viable.[17]
Many government instrumentalities are vested with corporate powers but
they do not become stock or non-stock corporations, which is a necessary
condition before an agency or instrumentality is deemed a government-
owned or controlled corporation. Examples are the Mactan International
Airport Authority, the Philippine Ports Authority, the University of the
Philippines and Bangko Sentral ng Pilipinas. All these government
instrumentalities exercise corporate powers but they are not organized as
stock or non-stock corporations as required by Section 2(13) of the
Introductory Provisions of the Administrative Code. These government
instrumentalities are sometimes loosely called government corporate
entities. However, they are not government-owned or controlled
corporations in the strict sense as understood under the Administrative
Code, which is the governing law defining the legal relationship and status
of government entities.
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:
xxxx
(o) Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities and local government units. (Emphasis and
underscoring supplied)
Section 133(o) recognizes the basic principle that local governments
cannot tax the national government, which historically merely delegated
to local governments the power to tax. While the 1987 Constitution now
includes taxation as one of the powers of local governments, local
governments may only exercise such power subject to such guidelines and
limitations as the Congress may provide.[18]
When local governments invoke the power to tax on national government
instrumentalities, such power is construed strictly against local
governments. The rule is that a tax is never presumed and there must be
clear language in the law imposing the tax. Any doubt whether a person,
article or activity is taxable is resolved against taxation. This rule applies
with greater force when local governments seek to tax national
government instrumentalities.
Another rule is that a tax exemption is strictly construed against the
taxpayer claiming the exemption. However, when Congress grants an
exemption to a national government instrumentality from local taxation,
such exemption is construed liberally in favor of the national government
instrumentality. As this Court declared in Maceda v. Macaraig, Jr.:
The reason for the rule does not apply in the case of exemptions running
to the benefit of the government itself or its agencies. In such case the
practical effect of an exemption is merely to reduce the amount of money
that has to be handled by government in the course of its operations. For
these reasons, provisions granting exemptions to government agencies
may be construed liberally, in favor of non tax-liability of such
agencies.[19]
There is, moreover, no point in national and local governments taxing each
other, unless a sound and compelling policy requires such transfer of
public funds from one government pocket to another.
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)
This doctrine emanates from the supremacy of the National Government
over local governments.
Justice Holmes, speaking for the Supreme Court, made reference to the
entire absence of power on the part of the States to touch, in that way
(taxation) at least, the instrumentalities of the United States (Johnson v.
Maryland, 254 US 51) and it can be agreed that no state or political
subdivision can regulate a federal instrumentality in such a way as to
prevent it from consummating its federal responsibilities, or even to
seriously burden it in the accomplishment of them. (Antieau, Modern
Constitutional Law, Vol. 2, p. 140, emphasis supplied)
Otherwise, mere creatures of the State can defeat National policies thru
extermination of what local authorities may perceive to be undesirable
activities or enterprise using the power to tax as a tool for regulation (U.S.
v. Sanchez, 340 US 42).
The power to tax which was called by Justice Marshall as the power to
destroy (Mc Culloch v. Maryland, supra) cannot be allowed to defeat an
instrumentality or creation of the very entity which has the inherent
power to wield it. [20]
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;
(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. (Emphasis supplied)
ARTICLE 421. All other property of the State, which is not of the character
stated in the preceding article, is patrimonial property.
ARTICLE 422. 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.
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 charging of fees to the public does not determine the character of the
property whether it is of public dominion or not. Article 420 of the Civil
Code defines property of public dominion as one intended for public use.
Even if the government collects toll fees, the road is still intended for
public use if anyone can use the road under the same terms and
conditions as the rest of the public. The charging of fees, the limitation on
the kind of vehicles that can use the road, the speed restrictions and other
conditions for the use of the road do not affect the public character of the
road.
The terminal fees MIAA charges to passengers, as well as the landing fees
MIAA charges to airlines, constitute the bulk of the income that maintains
the operations of MIAA. The collection of such fees does not change the
character of MIAA as an airport for public use. Such fees are often termed
users tax. This means taxing those among the public who actually use a
public facility instead of taxing all the public including those who never use
the particular public facility. A users tax is more equitable a principle of
taxation mandated in the 1987 Constitution.[21]
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 ruled repeatedly that properties of public dominion are outside
the commerce of man. As early as 1915, this Court already ruled in
Municipality of Cavite v. Rojas that properties devoted to public use are
outside the commerce of man, thus:
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 plaintiff municipality 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. (Emphasis supplied) [23]
Again in Espiritu v. Municipal Council, the Court declared that properties of
public dominion are outside the commerce of man:
xxx Town plazas are properties of public dominion, to be devoted to public
use and to be made available to the public in general. They are outside the
commerce of man and cannot be disposed of or even leased by the
municipality to private parties. While in case of war or during an
emergency, town plazas may be occupied temporarily by private
individuals, as was done and as was tolerated by the Municipality of
Pozorrubio, when the emergency has ceased, said temporary occupation
or use must also cease, and the town officials should see to it that the
town plazas should ever be kept open to the public and free from
encumbrances or illegal private constructions.[24] (Emphasis supplied)
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. Sections 83 and 88 of the Public Land Law or Commonwealth
Act No. 141, which remains to this day the existing general law governing
the classification and disposition of lands of the public domain other than
timber and mineral lands,[27] provide:
SECTION 83. Upon the recommendation of the Secretary of Agriculture
and Natural Resources, the President may designate by proclamation any
tract or tracts of land of the public domain as reservations for the use of
the Republic of the Philippines or of any of its branches, or of the
inhabitants thereof, in accordance with regulations prescribed for this
purposes, or for quasi-public uses or purposes when the public interest
requires it, including reservations for highways, rights of way for railroads,
hydraulic power sites, irrigation systems, communal pastures or lequas
communales, public parks, public quarries, public fishponds, working mens
village and other improvements for the public benefit.
SECTION 88. The tract or tracts of land reserved under the provisions of
Section eighty-three shall be non-alienable and shall not be subject to
occupation, entry, sale, lease, or other disposition until again declared
alienable under the provisions of this Act or by proclamation of the
President. (Emphasis and underscoring supplied)
Thus, unless the President issues a proclamation withdrawing the Airport
Lands and Buildings from public use, these properties remain properties of
public dominion and are inalienable. Since the Airport Lands and Buildings
are inalienable in their present status as properties of public dominion,
they are not subject to levy on execution or foreclosure sale. As long as
the Airport Lands and Buildings are reserved for public use, their
ownership remains with the State or the Republic of the Philippines.
The authority of the President to reserve lands of the public domain for
public use, and to withdraw such public use, is reiterated in Section 14,
Chapter 4, Title I, Book III of the Administrative Code of 1987, which
states:
SEC. 14. Power to Reserve Lands of the Public and Private Domain of the
Government. (1) The President shall have the power to reserve for
settlement or public use, and for specific public purposes, any of the lands
of the public domain, the use of which is not otherwise directed by law.
The reserved land shall thereafter remain subject to the specific public
purpose indicated until otherwise provided by law or proclamation;
x x x x. (Emphasis supplied)
There is no question, therefore, that unless the Airport Lands and
Buildings are withdrawn by law or presidential proclamation from public
use, they are properties of public dominion, owned by the Republic and
outside the commerce of man.
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 MIAAs 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]
d. Transfer to MIAA was Meant to Implement a Reorganization
The MIAA Charter, which is a law, transferred to MIAA the title to the
Airport Lands and Buildings from the Bureau of Air Transportation of the
Department of Transportation and Communications. The MIAA Charter
provides:
SECTION 3. Creation of the Manila International Airport Authority. x x x x
The land where the Airport is presently located as well as the surrounding
land area of approximately six hundred hectares, are hereby transferred,
conveyed and assigned to the ownership and administration of the
Authority, subject to existing rights, if any. The Bureau of Lands and other
appropriate government agencies shall undertake an actual survey of the
area transferred within one year from the promulgation of this Executive
Order and the corresponding title to be issued in the name of the
Authority. Any portion thereof shall not be disposed through sale or
through any other mode unless specifically approved by the President of
the Philippines. (Emphasis supplied)
SECTION 22. Transfer of Existing Facilities and Intangible Assets. All
existing public airport facilities, runways, lands, buildings and other
property, movable or immovable, belonging to the Airport, and all assets,
powers, rights, interests and privileges belonging to the Bureau of Air
Transportation relating to airport works or air operations, including all
equipment which are necessary for the operation of crash fire and rescue
facilities, are hereby transferred to the Authority. (Emphasis supplied)
SECTION 25. Abolition of the Manila International Airport as a Division in
the Bureau of Air Transportation and Transitory Provisions. The Manila
International Airport including the Manila Domestic Airport as a division
under the Bureau of Air Transportation is hereby abolished.
x x x x.
The MIAA Charter transferred the Airport Lands and Buildings to MIAA
without the Republic receiving cash, promissory notes or even stock since
MIAA is not a stock corporation.
The whereas clauses of the MIAA Charter explain the rationale for the
transfer of the Airport Lands and Buildings to MIAA, thus:
WHEREAS, the Manila International Airport as the principal airport of the
Philippines for both international and domestic air traffic, is required to
provide standards of airport accommodation and service comparable with
the best airports in the world;
WHEREAS, domestic and other terminals, general aviation and other
facilities, have to be upgraded to meet the current and future air traffic
and other demands of aviation in Metro Manila;
WHEREAS, a management and organization study has indicated that the
objectives of providing high standards of accommodation and service
within the context of a financially viable operation, will best be achieved
by a separate and autonomous body; and
WHEREAS, under Presidential Decree No. 1416, as amended by
Presidential Decree No. 1772, the President of the Philippines is given
continuing authority to reorganize the National Government, which
authority includes the creation of new entities, agencies and
instrumentalities of the Government[.] (Emphasis supplied)
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 MIAAs 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 x x x dispose of a thing. Since MIAA cannot dispose of the
Airport Lands and Buildings, MIAA does not own the Airport Lands and
Buildings.
At any time, the President can transfer back to the Republic title to the
Airport Lands and Buildings without the Republic paying MIAA any
consideration. Under Section 3 of the MIAA Charter, the President is the
only one who can authorize the sale or disposition of the Airport Lands
and Buildings. This only confirms that the Airport Lands and Buildings
belong to the Republic.
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;
x x x. (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 x x x. The real properties owned by the Republic are
titled either in the name of the Republic itself or in the name of agencies
or instrumentalities of the National Government. The Administrative Code
allows real property owned by the Republic to be titled in the name of
agencies or instrumentalities of the national government. Such real
properties remain owned by the Republic and continue to be exempt from
real estate tax.
The Republic may grant the beneficial use of its real property to an agency
or instrumentality of the national government. This happens when title of
the real property is transferred to an agency or instrumentality even as the
Republic remains the owner of the real property. Such arrangement does
not result in the loss of the tax exemption. Section 234(a) of the Local
Government Code states that real property owned by the Republic loses
its tax exemption only if the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person. MIAA, as a government
instrumentality, is not a taxable person under Section 133(o) of the Local
Government Code. Thus, even if we assume that the Republic has granted
to MIAA the beneficial use of the Airport Lands and Buildings, such fact
does not make these real properties subject to real estate tax.
However, portions of the Airport Lands and Buildings that MIAA leases to
private entities are not exempt from real estate tax. For example, the land
area occupied by hangars that MIAA leases to private corporations is
subject to real estate tax. In such a case, MIAA has granted the beneficial
use of such land area for a consideration to a taxable person and therefore
such land area is subject to real estate tax. In Lung Center of the
Philippines v. Quezon City, the Court ruled:
Accordingly, we hold that the portions of the land leased to private
entities as well as those parts of the hospital leased to private individuals
are not exempt from such taxes. On the other hand, the portions of the
land occupied by the hospital and portions of the hospital used for its
patients, whether paying or non-paying, are exempt from real property
taxes.[29]
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)
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 posits that the determinative test whether MIAA is exempt
from local taxation is its status whether MIAA is a juridical person or not.
The minority also insists that Sections 193 and 234 may be examined in
isolation from Section 133(o) to ascertain MIAAs claim of exemption.
The argument of the minority is fatally flawed. Section 193 of the Local
Government Code expressly withdrew the tax exemption of all juridical
persons [u]nless otherwise provided in this Code. Now, Section 133(o) of
the Local Government Code expressly provides otherwise, specifically
prohibiting local governments from imposing any kind of tax on national
government instrumentalities. Section 133(o) states:
SEC. 133. Common Limitations on the Taxing Powers of Local Government
Units. Unless otherwise provided herein, the exercise of the taxing powers
of provinces, cities, municipalities, and barangays shall not extend to the
levy of the following:
xxxx
(o) Taxes, fees or charges of any kinds on the National Government, its
agencies and instrumentalities, and local government units. (Emphasis and
underscoring supplied)
By express mandate of the Local Government Code, local governments
cannot impose any kind of tax on national government instrumentalities
like the MIAA. Local governments are devoid of power to tax the national
government, its agencies and instrumentalities. The taxing powers of local
governments do not extend to the national government, its agencies and
instrumentalities, [u]nless otherwise provided in this Code as stated in the
saving clause of Section 133. The saving clause refers to Section 234(a) on
the exception to the exemption from real estate tax of real property
owned by the Republic.
The minority, however, theorizes that unless exempted in Section 193
itself, all juridical persons are subject to tax by local governments. The
minority insists that the juridical persons exempt from local taxation are
limited to the three classes of entities specifically enumerated as exempt
in Section 193. Thus, the minority states:
x x x Under Section 193, the exemption is limited to (a) local water
districts; (b) cooperatives duly registered under Republic Act No. 6938;
and (c) non-stock and non-profit hospitals and educational institutions. It
would be belaboring the obvious why the MIAA does not fall within any of
the exempt entities under Section 193. (Emphasis supplied)
The minoritys theory directly contradicts and completely negates Section
133(o) of the Local Government Code. This theory will result in gross
absurdities. It will make the national government, which itself is a juridical
person, subject to tax by local governments since the national government
is not included in the enumeration of exempt entities in Section 193.
Under this theory, local governments can impose any kind of local tax, and
not only real estate tax, on the national government.
Under the minoritys theory, many national government instrumentalities
with juridical personalities will also be subject to any kind of local tax, and
not only real estate tax. Some of the national government
instrumentalities vested by law with juridical personalities are: Bangko
Sentral ng Pilipinas,[30] Philippine Rice Research Institute,[31] Laguna Lake
Development Authority,[32] Fisheries Development Authority,[33] Bases
Conversion Development Authority,[34] Philippine Ports Authority,[35]
Cagayan de Oro Port Authority,[36] San Fernando Port Authority,[37] Cebu
Port Authority,[38] and Philippine National Railways.[39]
The minoritys 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.
Section 133 of the Local Government Code starts with the saving clause
[u]nless otherwise provided in this Code. This means that unless the Local
Government Code grants an express authorization, local governments
have no power to tax the national government, its agencies and
instrumentalities. Clearly, the rule is local governments have no power to
tax the national government, its agencies and instrumentalities. As an
exception to this rule, local governments may tax the national
government, its agencies and instrumentalities only if the Local
Government Code expressly so provides.
The saving clause in Section 133 refers to the exception to the exemption
in Section 234(a) of the Code, which makes the national government
subject to real estate tax when it gives the beneficial use of its real
properties to a taxable entity. Section 234(a) of the Local Government
Code provides:
SEC. 234. Exemptions from Real Property Tax The following are exempted
from payment of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof has been
granted, for consideration or otherwise, to a taxable person.
x x x. (Emphasis supplied)
Under Section 234(a), real property owned by the Republic is exempt from
real estate tax. The exception to this exemption is when the government
gives the beneficial use of the real property to a taxable entity.
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.
The minority also argues that since Section 133 precedes Section 193 and
234 of the Local Government Code, the later provisions prevail over
Section 133. Thus, the minority asserts:
x x x Moreover, sequentially Section 133 antecedes Section 193 and 234.
Following an accepted rule of construction, in case of conflict the
subsequent provisions should prevail. Therefore, MIAA, as a juridical
person, is subject to real property taxes, the general exemptions attaching
to instrumentalities under Section 133(o) of the Local Government Code
being qualified by Sections 193 and 234 of the same law. (Emphasis
supplied)
The minority assumes that there is an irreconcilable conflict between
Section 133 on one hand, and Sections 193 and 234 on the other. No one
has urged that there is such a conflict, much less has any one presented a
persuasive argument that there is such a conflict. The minoritys
assumption of an irreconcilable conflict in the statutory provisions is an
egregious error for two reasons.
First, there is no conflict whatsoever between Sections 133 and 193
because Section 193 expressly admits its subordination to other provisions
of the Code when Section 193 states [u]nless otherwise provided in this
Code. By its own words, Section 193 admits the superiority of other
provisions of the Local Government Code that limit the exercise of the
taxing power in Section 193. When a provision of law grants a power but
withholds such power on certain matters, there is no conflict between the
grant of power and the withholding of power. The grantee of the power
simply cannot exercise the power on matters withheld from its power.
Second, Section 133 is entitled Common Limitations on the Taxing Powers
of Local Government Units. Section 133 limits the grant to local
governments of the power to tax, and not merely the exercise of a
delegated power to tax. Section 133 states that the taxing powers of local
governments shall not extend to the levy of any kind of tax on the national
government, its agencies and instrumentalities. There is no clearer
limitation on the taxing power than this.
Since Section 133 prescribes the common limitations on the taxing powers
of local governments, Section 133 logically prevails over Section 193 which
grants local governments such taxing powers. By their very meaning and
purpose, the common limitations on the taxing power prevail over the
grant or exercise of the taxing power. If the taxing power of local
governments in Section 193 prevails over the limitations on such taxing
power in Section 133, then local governments can impose any kind of tax
on the national government, its agencies and instrumentalities a gross
absurdity.
Local governments have no power to tax the national government, its
agencies and instrumentalities, except as otherwise provided in the Local
Government Code pursuant to the saving clause in Section 133 stating
[u]nless otherwise provided in this Code. This exception which is an
exception to the exemption of the Republic from real estate tax imposed
by local governments refers to Section 234(a) of the Code. The exception
to the exemption in Section 234(a) subjects real property owned by the
Republic, whether titled in the name of the national government, its
agencies or instrumentalities, to real estate tax if the beneficial use of such
property is given to a taxable entity.
The minority also claims that the definition in the Administrative Code of
the phrase government-owned or controlled corporation is not
controlling. The minority points out that Section 2 of the Introductory
Provisions of the Administrative Code admits that its definitions are not
controlling when it provides:
SEC. 2. General Terms Defined. Unless the specific words of the text, or the
context as a whole, or a particular statute, shall require a different
meaning:
xxxx
The minority then concludes that reliance on the Administrative Code
definition is flawed.
The minoritys argument is a non sequitur. True, Section 2 of the
Administrative Code recognizes that a statute may require a different
meaning than that defined in the Administrative Code. However, this does
not automatically mean that the definition in the Administrative Code
does not apply to the Local Government Code. Section 2 of the
Administrative Code clearly states that unless the specific words x x x of a
particular statute shall require a different meaning, the definition in
Section 2 of the Administrative Code shall apply. Thus, unless there is
specific language in the Local Government Code defining the phrase
government-owned or controlled corporation differently from the
definition in the Administrative Code, the definition in the Administrative
Code prevails.
The minority does not point to any provision in the Local Government
Code defining the phrase government-owned or controlled corporation
differently from the definition in the Administrative Code. Indeed, there is
none. The Local Government Code is silent on the definition of the phrase
government-owned or controlled corporation. The Administrative Code,
however, expressly defines the phrase government-owned or controlled
corporation. The inescapable conclusion is that the Administrative Code
definition of the phrase government-owned or controlled corporation
applies to the Local Government Code.
The third whereas clause of the Administrative Code states that the Code
incorporates in a unified document the major structural, functional and
procedural principles and rules of governance. Thus, the Administrative
Code is the governing law defining the status and relationship of
government departments, bureaus, offices, agencies and
instrumentalities. Unless a statute expressly provides for a different status
and relationship for a specific government unit or entity, the provisions of
the Administrative Code prevail.
The minority also contends that the phrase government-owned or
controlled corporation should apply only to corporations organized under
the Corporation Code, the general incorporation law, and not to
corporations created by special charters. The minority sees no reason why
government corporations with special charters should have a capital stock.
Thus, the minority declares:
I submit that the definition of government-owned or controlled
corporations under the Administrative Code refer to those corporations
owned by the government or its instrumentalities which are created not
by legislative enactment, but formed and organized under the Corporation
Code through registration with the Securities and Exchange Commission.
In short, these are GOCCs without original charters.
xxxx
It might as well be worth pointing out that there is no point in requiring a
capital structure for GOCCs whose full ownership is limited by its charter
to the State or Republic. Such GOCCs are not empowered to declare
dividends or alienate their capital shares.
The contention of the minority is seriously flawed. It is not in accord with
the Constitution and existing legislations. It will also result in gross
absurdities.
First, the Administrative Code definition of the phrase government-owned
or controlled corporation does not distinguish between one incorporated
under the Corporation Code or under a special charter. Where the law
does not distinguish, courts should not distinguish.
Second, Congress has created through special charters several
government-owned corporations organized as stock corporations. Prime
examples are the Land Bank of the Philippines and the Development Bank
of the Philippines. The special charter[40] of the Land Bank of the
Philippines provides:
SECTION 81. Capital. The authorized capital stock of the Bank shall be nine
billion pesos, divided into seven hundred and eighty million common
shares with a par value of ten pesos each, which shall be fully subscribed
by the Government, and one hundred and twenty million preferred shares
with a par value of ten pesos each, which shall be issued in accordance
with the provisions of Sections seventy-seven and eighty-three of this
Code. (Emphasis supplied)
Likewise, the special charter[41] of the Development Bank of the
Philippines provides:
SECTION 7. Authorized Capital Stock Par value. The capital stock of the
Bank shall be Five Billion Pesos to be divided into Fifty Million common
shares with par value of P100 per share. These shares are available for
subscription by the National Government. Upon the effectivity of this
Charter, the National Government shall subscribe to Twenty-Five Million
common shares of stock worth Two Billion Five Hundred Million which
shall be deemed paid for by the Government with the net asset values of
the Bank remaining after the transfer of assets and liabilities as provided in
Section 30 hereof. (Emphasis supplied)
Other government-owned corporations organized as stock corporations
under their special charters are the Philippine Crop Insurance
Corporation,[42] Philippine International Trading Corporation,[43] and the
Philippine National Bank[44] before it was reorganized as a stock
corporation under the Corporation Code. All these government-owned
corporations organized under special charters as stock corporations are
subject to real estate tax on real properties owned by them. To rule that
they are not government-owned or controlled corporations because they
are not registered with the Securities and Exchange Commission would
remove them from the reach of Section 234 of the Local Government
Code, thus exempting them from real estate tax.
Third, the government-owned or controlled corporations created through
special charters are those that meet the two conditions prescribed in
Section 16, Article XII of the Constitution. The first condition is that the
government-owned or controlled corporation must be established for the
common good. The second condition is that the government-owned or
controlled corporation must meet the test of economic viability. Section
16, Article XII of the 1987 Constitution provides:
SEC. 16. The Congress shall not, except by general law, provide for the
formation, organization, or regulation of private corporations.
Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good and
subject to the test of economic viability. (Emphasis and underscoring
supplied)
The Constitution expressly authorizes the legislature to create
government-owned or controlled corporations through special charters
only if these entities are required to meet the twin conditions of common
good and economic viability. In other words, Congress has no power to
create government-owned or controlled corporations with special charters
unless they are made to comply with the two conditions of common good
and economic viability. The test of economic viability applies only to
government-owned or controlled corporations that perform economic or
commercial activities and need to compete in the market place. Being
essentially economic vehicles of the State for the common good meaning
for economic development purposes these government-owned or
controlled corporations with special charters are usually organized as
stock corporations just like ordinary private corporations.
In contrast, government instrumentalities vested with corporate powers
and performing governmental or public functions need not meet the test
of economic viability. These instrumentalities perform essential public
services for the common good, services that every modern State must
provide its citizens. These instrumentalities need not be economically
viable since the government may even subsidize their entire operations.
These instrumentalities are not the government-owned or controlled
corporations referred to in Section 16, Article XII of the 1987 Constitution.
Thus, the Constitution imposes no limitation when the legislature creates
government instrumentalities vested with corporate powers but
performing essential governmental or public functions. Congress has
plenary authority to create government instrumentalities vested with
corporate powers provided these instrumentalities perform essential
government functions or public services. However, when the legislature
creates through special charters corporations that perform economic or
commercial activities, such entities known as government-owned or
controlled corporations must meet the test of economic viability because
they compete in the market place.
This is the situation of the Land Bank of the Philippines and the
Development Bank of the Philippines and similar government-owned or
controlled corporations, which derive their income to meet operating
expenses solely from commercial transactions in competition with the
private sector. The intent of the Constitution is to prevent the creation of
government-owned or controlled corporations that cannot survive on
their own in the market place and thus merely drain the public coffers.
Commissioner Blas F. Ople, proponent of the test of economic viability,
explained to the Constitutional Commission the purpose of this test, as
follows:
MR. OPLE: Madam President, the reason for this concern is really that
when the government creates a corporation, there is a sense in which this
corporation becomes exempt from the test of economic performance. We
know what happened in the past. If a government corporation loses, then
it makes its claim upon the taxpayers money through new equity infusions
from the government and what is always invoked is the common good.
That is the reason why this year, out of a budget of P115 billion for the
entire government, about P28 billion of this will go into equity infusions to
support a few government financial institutions. And this is all taxpayers
money which could have been relocated to agrarian reform, to social
services like health and education, to augment the salaries of grossly
underpaid public employees. And yet this is all going down the drain.
Therefore, when we insert the phrase ECONOMIC VIABILITY together with
the common good, this becomes a restraint on future enthusiasts for state
capitalism to excuse themselves from the responsibility of meeting the
market test so that they become viable. And so, Madam President, I
reiterate, for the committees consideration and I am glad that I am joined
in this proposal by Commissioner Foz, the insertion of the standard of
ECONOMIC VIABILITY OR THE ECONOMIC TEST, together with the common
good.[45]
Father Joaquin G. Bernas, a leading member of the Constitutional
Commission, explains in his textbook The 1987 Constitution of the
Republic of the Philippines: A Commentary:
The second sentence was added by the 1986 Constitutional Commission.
The significant addition, however, is the phrase in the interest of the
common good and subject to the test of economic viability. The addition
includes the ideas that they must show capacity to function efficiently in
business and that they should not go into activities which the private
sector can do better. Moreover, economic viability is more than financial
viability but also includes capability to make profit and generate benefits
not quantifiable in financial terms.[46] (Emphasis supplied)
Clearly, the test of economic viability does not apply to government
entities vested with corporate powers and performing essential public
services. The State is obligated to render essential public services
regardless of the economic viability of providing such service. The non-
economic viability of rendering such essential public service does not
excuse the State from withholding such essential services from the public.
However, government-owned or controlled corporations with special
charters, organized essentially for economic or commercial objectives,
must meet the test of economic viability. These are the government-
owned or controlled corporations that are usually organized under their
special charters as stock corporations, like the Land Bank of the Philippines
and the Development Bank of the Philippines. These are the government-
owned or controlled corporations, along with government-owned or
controlled corporations organized under the Corporation Code, that fall
under the definition of government-owned or controlled corporations in
Section 2(10) of the Administrative Code.
The MIAA need not meet the test of economic viability because the
legislature did not create MIAA to compete in the market place. MIAA
does not compete in the market place because there is no competing
international airport operated by the private sector. MIAA performs an
essential public service as the primary domestic and international airport
of the Philippines. The operation of an international airport requires the
presence of personnel from the following government agencies:
1. The Bureau of Immigration and Deportation, to document the arrival
and departure of passengers, screening out those without visas or travel
documents, or those with hold departure orders;
2. The Bureau of Customs, to collect import duties or enforce the ban on
prohibited importations;
3. The quarantine office of the Department of Health, to enforce health
measures against the spread of infectious diseases into the country;
4. The Department of Agriculture, to enforce measures against the
spread of plant and animal diseases into the country;
5. The Aviation Security Command of the Philippine National Police, to
prevent the entry of terrorists and the escape of criminals, as well as to
secure the airport premises from terrorist attack or seizure;
6. The Air Traffic Office of the Department of Transportation and
Communications, to authorize aircraft to enter or leave Philippine
airspace, as well as to land on, or take off from, the airport; and
7. The MIAA, to provide the proper premises such as runway and
buildings for the government personnel, passengers, and airlines, and to
manage the airport operations.
All these agencies of government perform government functions essential
to the operation of an international airport.
MIAA performs an essential public service that every modern State must
provide its citizens. MIAA derives its revenues principally from the
mandatory fees and charges MIAA imposes on passengers and airlines.
The terminal fees that MIAA charges every passenger are regulatory or
administrative fees[47] and not income from commercial transactions.
MIAA falls under the definition of a government instrumentality under
Section 2(10) of the Introductory Provisions of the Administrative Code,
which provides:
SEC. 2. General Terms Defined. x x x x
(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. x x x (Emphasis supplied)
The fact alone that MIAA is endowed with corporate powers does not
make MIAA a government-owned or controlled corporation. Without a
change in its capital structure, MIAA remains a government
instrumentality under Section 2(10) of the Introductory Provisions of the
Administrative Code. More importantly, as long as MIAA renders essential
public services, it need not comply with the test of economic viability.
Thus, MIAA is outside the scope of the phrase government-owned or
controlled corporations under Section 16, Article XII of the 1987
Constitution.
The minority belittles the use in the Local Government Code of the phrase
government-owned or controlled corporation as merely clarificatory or
illustrative. This is fatal. The 1987 Constitution prescribes explicit
conditions for the creation of government-owned or controlled
corporations. The Administrative Code defines what constitutes a
government-owned or controlled corporation. To belittle this phrase as
clarificatory or illustrative is grave error.
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, 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. (Emphasis supplied)
The term ports x x x 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 x x x constructed by the State, which includes
public airports and seaports, as properties of public dominion and owned
by the Republic. As properties of public dominion owned by the Republic,
there is no doubt whatsoever that the Airport Lands and Buildings are
expressly exempt from real estate tax under Section 234(a) of the Local
Government Code. This Court has also repeatedly ruled that properties of
public dominion are not subject to execution or foreclosure sale.
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.
No costs.
SO ORDERED
FIRST DIVISION
G.R. No. 181756, June 15, 2015
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), Petitioner,
v. CITY OF LAPU-LAPU AND ELENA T. PACALDO, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a clear opportunity for this Court to clarify the effects of our two
previous decisions, issued a decade apart, on the power of local
government units to collect real property taxes from airport authorities
located within their area, and the nature or the juridical personality of said
airport authorities.
Before us is a Petition for Review on Certiorari under Rule 45 of the 1997
Rules of Civil Procedure seeking to reverse and set aside the October 8,
2007 Decision1 of the Court of Appeals (Cebu City) in CA-G.R. SP No. 01360
and the February 12, 2008 Resolution2 denying petitioners motion for
reconsideration.
THE FACTS
Petitioner Mactan-Cebu International Airport Authority (MCIAA) was
created by Congress on July 31, 1990 under Republic Act No. 69583 to
undertake the economical, efficient and effective control, management
and supervision of the Mactan International Airport in the Province of
Cebu and the Lahug Airport in Cebu City x x x and such other airports as
may be established in the Province of Cebu. It is represented in this case
by the Office of the Solicitor General.
Respondent City of Lapu-Lapu is a local government unit and political
subdivision, created and existing under its own charter with capacity to
sue and be sued. Respondent Elena T. Pacaldo was impleaded in her
capacity as the City Treasurer of respondent City.
Upon its creation, petitioner enjoyed exemption from realty taxes under
the following provision of Republic Act No.
6958:chanRoblesvirtualLawlibrary
Section 14. Tax Exemptions. The Authority shall be exempt from realty
taxes imposed by the National Government or any of its political
subdivisions, agencies and instrumentalities: Provided, That no tax
exemption herein granted shall extend to any subsidiary which may be
organized by the Authority.chanroblesvirtuallawlibrary
On September 11, 1996, however, this Court rendered a decision in
Mactan-Cebu International Airport Authority v. Marcos4 (the 1996 MCIAA
case) declaring that upon the effectivity of Republic Act No. 7160 (The
Local Government Code of 1991), petitioner was no longer exempt from
real estate taxes. The Court held:chanRoblesvirtualLawlibrary
Since the last paragraph of Section 234 unequivocally withdrew, upon the
effectivity of the LGC, exemptions from payment of real property taxes
granted to natural or juridical persons, including government-owned or
controlled corporations, except as provided in the said section, and the
petitioner is, undoubtedly, a government-owned corporation, it
necessarily follows that its exemption from such tax granted it in Section
14 of its Charter, R.A. No. 6958, has been withdrawn. x x
x.chanroblesvirtuallawlibrary
On January 7, 1997, respondent City issued to petitioner a Statement of
Real Estate Tax assessing the lots comprising the Mactan International
Airport in the amount of P162,058,959.52. Petitioner complained that
there were discrepancies in said Statement of Real Estate Tax as
follows:chanRoblesvirtualLawlibrary
(a) [T]he statement included lots and buildings not found in the inventory
of petitioners real properties;
(b) [S]ome of the lots were covered by two separate tax declarations
which resulted in double assessment;
(c) [There were] double entries pertaining to the same lots; and
(d) [T]he statement included lots utilized exclusively for governmental
purposes.5
Respondent City amended its billing and sent a new Statement of Real
Estate Tax to petitioner in the amount of P151,376,134.66. Petitioner
averred that this amount covered real estate taxes on the lots utilized
solely and exclusively for public or governmental purposes such as the
airfield, runway and taxiway, and the lots on which they are
situated.6chanrobleslaw
Petitioner paid respondent City the amount of four million pesos
(P4,000,000.00) monthly, which was later increased to six million pesos
(P6,000,000.00) monthly. As of December 2003, petitioner had paid
respondent City a total of P275,728,313.36.7chanrobleslaw
Upon request of petitioners General Manager, the Secretary of the
Department of Justice (DOJ) issued Opinion No. 50, Series of 1998,8 and
we quote the pertinent portions of said Opinion
below:chanRoblesvirtualLawlibrary
You further state that among the real properties deemed transferred to
MCIAA are the airfield, runway, taxiway and the lots on which the runway
and taxiway are situated, the tax declarations of which were transferred in
the name of the MCIAA. In 1997, the City of Lapu-Lapu imposed real estate
taxes on these properties invoking the provisions of the Local Government
Code.
It is your view that these properties are not subject to real property tax
because they are exclusively used for airport purposes. You said that the
runway and taxiway are not only used by the commercial airlines but also
by the Philippine Air Force and other government agencies. As such and in
conjunction with the above interpretation of Section 15 of R.A. No. 6958,
you believe that these properties are considered owned by the Republic of
the Philippines. Hence, this request for opinion.
The query is resolved in the affirmative. The properties used for airport
purposes (i.e. airfield, runway, taxiway and the lots on which the runway
and taxiway are situated) are owned by the Republic of the Philippines.
xxxx
Under the Law on Public Corporations, the legislature has complete
control over the property which a municipal corporation has acquired in
its public or governmental capacity and which is devoted to public or
governmental use. The municipality in dealing with said property is subject
to such restrictions and limitations as the legislature may impose. On the
other hand, property which a municipal corporation acquired in its private
or proprietary capacity, is held by it in the same character as a private
individual. Hence, the legislature in dealing with such property, is subject
to the constitutional restrictions concerning property (Martin, Public
Corporations [1997], p. 30; see also Province of Zamboanga del [Norte] v.
City of Zamboanga [131 Phil. 446]). The same may be said of properties
transferred to the MCIAA and used for airport purposes, such as those
involved herein. Since such properties are of public dominion, they are
deemed held by the MCIAA in trust for the Government and can be
alienated only as may be provided by law.
Based on the foregoing, it is our considered opinion that the properties
used for airport purposes, such as the airfield, runway and taxiway and the
lots on which the runway and taxiway are located, are owned by the State
or by the Republic of the Philippines and are merely held in trust by the
MCIAA, notwithstanding that certificates of titles thereto may have been
issued in the name of the MCIAA. (Emphases added.)
Based on the above DOJ Opinion, the Department of Finance issued a 2nd
Indorsement to the City Treasurer of Lapu-Lapu dated August 3, 1998,9
which reads:chanRoblesvirtualLawlibrary
The distinction as to which among the MCIAA properties are still
considered owned by the State or by the Republic of the Philippines,
such as the resolution in the above-cited DOJ Opinion No. 50, for purposes
of real property tax exemption is hereby deemed tenable considering that
the subject airfield, runway, taxiway and the lots on which the runway
and taxiway are situated appears to be the subject of real property tax
assessment and collection of the city government of Lapu-Lapu, hence, the
same are definitely located within the jurisdiction of Lapu-Lapu City.
Moreover, then Undersecretary Antonio P. Belicena of the Department of
Finance, in his 1st Indorsement dated May 18, 1998, advanced that this
Department (DOF) interposes no objection to the request of Mactan Cebu
International Airport Authority for exemption from payment of real
property tax on the property used for airport purposes mentioned above.
The City Assessor, therefore, is hereby instructed to transfer the
assessment of the subject airfield, runway, taxiway and the lots on which
the runway and taxiway are situated, from the Taxable Roll to the
Exempt Roll of real properties.
The City Treasurer thereat should be informed on the action taken for his
immediate appropriate action. (Emphases added.)
Respondent City Treasurer Elena T. Pacaldo sent petitioner a Statement of
Real Property Tax Balances up to the year 2002 reflecting the amount of
P246,395,477.20. Petitioner claimed that the statement again included the
lots utilized solely and exclusively for public purpose such as the airfield,
runway, and taxiway and the lots on which these are built. Respondent
Pacaldo then issued Notices of Levy on 18 sets of real properties of
petitioner.10chanrobleslaw
Petitioner filed a petition for prohibition11 with the Regional Trial Court
(RTC) of Lapu-Lapu City with prayer for the issuance of a temporary
restraining order (TRO) and/or a writ of preliminary injunction, docketed
as SCA No. 6056-L. Branch 53 of RTC Lapu-Lapu City then issued a 72-hour
TRO. The petition for prohibition sought to enjoin respondent City from
issuing a warrant of levy against petitioners properties and from selling
them at public auction for delinquency in realty tax obligations. The
petition likewise prayed for a declaration that the airport terminal
building, the airfield, runway, taxiway and the lots on which they are
situated are exempted from real estate taxes after due hearing. Petitioner
based its claim of exemption on DOJ Opinion No. 50.
The RTC issued an Order denying the motion for extension of the TRO.
Thus, on December 10, 2003, respondent City auctioned 27 of petitioners
properties. As there was no interested bidder who participated in the
auction sale, respondent City forfeited and purchased said properties. The
corresponding Certificates of Sale of Delinquent Property were issued to
respondent City.12chanrobleslaw
Petitioner claimed before the RTC that it had discovered that respondent
City did not pass any ordinance authorizing the collection of real property
tax, a tax for the special education fund (SEF), and a penalty interest for its
nonpayment. Petitioner argued that without the corresponding tax
ordinances, respondent City could not impose and collect real property
tax, an additional tax for the SEF, and penalty interest from
petitioner.13chanrobleslaw
The RTC issued an Order14 on December 28, 2004 granting petitioners
application for a writ of preliminary injunction. The pertinent portions of
the Order are quoted below:chanRoblesvirtualLawlibrary
The supervening legal issue has rendered it imperative that the matter of
the consolidation of the ownership of the auctioned properties be placed
on hold. Furthermore, it is the view of the Court that great prejudice and
damage will be suffered by petitioner if it were to lose its dominion over
these properties now when the most important legal issue has still to be
resolved by the Court. Besides, the respondents and the intervenor have
not sufficiently shown cause why petitioners application should not be
granted.
WHEREFORE, the foregoing considered, petitioners application for a writ
of preliminary injunction is granted. Consequently, upon the approval of a
bond in the amount of one million pesos (P1,000,000.00), let a writ of
preliminary injunction issue enjoining the respondents, the intervenor,
their agents or persons acting in [their] behalf, to desist from consolidating
and exercising ownership over the properties of the
petitioner.chanroblesvirtuallawlibrary
However, upon motion of respondents, the RTC lifted the writ of
preliminary injunction in an Order15 dated December 5, 2005. The RTC
reasoned as follows:chanRoblesvirtualLawlibrary
The respondent City, in the course of the hearing of its motion, presented
to this Court a certified copy of its Ordinance No. 44 (Omnibus Tax
Ordinance of the City of Lapu-Lapu), Section 25 whereof authorized the
collection of a rate of one and one-half (1 ) [per centum] from owners,
executors or administrators of any real estate lying within the jurisdiction
of the City of Lapu-Lapu, based on the assessed value as shown in the
latest revision.
Though this ordinance was enacted prior to the effectivity of Republic Act
No. 7160 (Local Government Code of 1991), to the mind of the Court this
ordinance is still a valid and effective ordinance in view of Sec. 529 of RA
7160 x x x [and the] Implementing Rules and Regulations of RA 7160 x x x.
xxxx
The tax collected under Ordinance No. 44 is within the rates prescribed by
RA 7160, though the 25% penalty collected is higher than the 2% interest
allowed under Sec. 255 of the said law which
provides:chanRoblesvirtualLawlibrary
In case of failure to pay the basic real property tax or any other tax levied
under this Title upon the expiration of the periods as provided in Section
250, or when due, as the case may be, shall subject the taxpayer to the
payment of interest at the rate of two percent (2%) per month on the
unpaid amount or a fraction thereof, until the delinquent tax shall have
been fully paid: Provided, however, That in no case shall the total interest
on the unpaid tax or portion thereof exceed thirty-six (36)
months.chanroblesvirtuallawlibrary
This difference does not however detract from the essential enforceability
and effectivity of Ordinance No. 44 pursuant to Section 529 of RA 7160
and Article 278 of the Implementing Rules and Regulations. The outcome
of this disparity is simply that respondent City can only collect an interest
of 2% per month on the unpaid tax. Consequently, respondent City [has]
to recompute the petitioners tax liability.
It is also the Courts perception that respondent City can still collect the
additional 1% tax on real property without an ordinance to this effect. It
may be recalled that Republic Act No. 5447 has created the Special
Education Fund which is constituted from the proceeds of the additional
tax on real property imposed by the law. Respondent City has collected
this tax as mandated by this law without any ordinance for the purpose, as
there is no need for it. Even when RA 5447 was amended by PD 464 (Real
Property Tax Code), respondent City had continued to collect the tax, as it
used to.
It is true that RA 7160 has repealed RA 5447, but what has been repealed
are only Section 3, a(3) and b(2) which concern the allocation of the
additional tax, considering that under RA 7160, the proceeds of the
additional 1% tax on real property accrue exclusively to the Special
Education Fund. Nevertheless, RA 5447 has not been totally repealed;
there is only a partial repeal.
It may be observed that there is no requirement in RA 7160 that an
ordinance be enacted to enable the collection of the additional 1% tax.
This is so since RA 5447 is still in force and effect, and the declared policy
of the government in enacting the law, which is to contribute to the
financial support of the goals of education as provided in the Constitution,
necessitates the continued and uninterrupted collection of the tax.
Considering that this is a tax of far-reaching importance, to require the
passage of an ordinance in order that the tax may be collected would be to
place the collection of the tax at the option of the local legislature. This
would run counter to the declared policy of the government when the SEF
was created and the tax imposed.
As regards the allegation of respondents that this Court has no jurisdiction
to entertain the instant petition, the Court deems it proper, at this stage of
the proceedings, not to treat this issue, as it involves facts which are yet to
be established.
x x x [T]he Courts issuance of a writ of preliminary injunction may appear
to be a futile gesture in the light of Section 263 of RA 7160. x x x.
xxxx
It would seem from the foregoing provisions, that once the taxpayer fails
to redeem within the one-year period, ownership fully vests on the local
government unit concerned. Thus, when in the present case petitioner
failed to redeem the parcels of land acquired by respondent City, the
ownership thereof became fully vested on respondent City without the
latter having to perform any other acts to perfect its ownership. Corollary
thereto, ownership on the part of respondent City has become a fait
accompli.
WHEREFORE, in the light of the foregoing considerations, respondents
motion for reconsideration is granted, and the order of this Court dated
December 28, 2004 is hereby reconsidered. Consequently, the writ of
preliminary injunction issued by this Court is hereby
lifted.chanroblesvirtuallawlibrary
Aggrieved, petitioner filed a petition for certiorari16 with the Court of
Appeals (Cebu City), with urgent prayer for the issuance of a TRO and/or
writ of preliminary injunction, docketed as CA-G.R. SP No. 01360. The
Court of Appeals (Cebu City) issued a TRO17 on January 5, 2006 and
shortly thereafter, issued a writ of preliminary injunction18 on February
17, 2006.
RULING OF THE COURT OF APPEALS
The Court of Appeals (Cebu City) promulgated the questioned Decision on
October 8, 2007, holding that petitioner is a government-owned or
controlled corporation and its properties are subject to realty tax. The
dispositive portion of the questioned Decision
reads:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing, judgment is hereby rendered by us
as follows:
We DECLARE the airport terminal building, the airfield, runway, taxiway
and the lots on which they are situated NOT EXEMPT from the real estate
tax imposed by the respondent City of Lapu-Lapu;
We DECLARE the imposition and collection of the real estate tax, the
additional levy for the Special Education Fund and the penalty interest as
VALID and LEGAL. However, pursuant to Section 255 of the Local
Government Code, respondent city can only collect an interest of 2% per
month on the unpaid tax which total interest shall, in no case, exceed
thirty-six (36) months;
We DECLARE the sale in public auction of the aforesaid properties and the
eventual forfeiture and purchase of the subject property by the
respondent City of Lapu-Lapu as NULL and VOID. However, petitioner
MCIAAs property is encumbered only by a limited lien possessed by the
respondent City of Lapu-Lapu in accord with Section 257 of the Local
Government Code.19
Petitioner filed a Motion for Partial Reconsideration20 of the questioned
Decision covering only the portion of said decision declaring that
petitioner is a GOCC and, therefore, not exempt from the realty tax and
special education fund imposed by respondent City. Petitioner cited
Manila International Airport Authority v. Court of Appeals21 (the 2006
MIAA case) involving the City of Paraaque and the Manila International
Airport Authority. Petitioner claimed that it had been described by this
Court as a government instrumentality, and that it followed as a logical
consequence that petitioner is exempt from the taxing powers of
respondent City of Lapu-Lapu.22 Petitioner alleged that the 1996 MCIAA
case had been overturned by the Court in the 2006 MIAA case. Petitioner
thus prayed that it be declared exempt from paying the realty tax, special
education fund, and interest being collected by respondent City.
On February 12, 2008, the Court of Appeals denied petitioners motion for
partial reconsideration in the questioned Resolution.
The Court of Appeals followed and applied the precedent established in
the 1996 MCIAA case and refused to apply the 2006 MIAA case. The Court
of Appeals wrote in the questioned Decision: We find that our position is
in line with the coherent and cohesive interpretation of the relevant
provisions of the Local Government Code on local taxation enunciated in
the [1996 MCIAA] case which to our mind is more elegant and rational and
provides intellectual clarity than the one provided by the Supreme Court in
the [2006] MIAA case.23chanrobleslaw
In the questioned Decision, the Court of Appeals held that petitioners
airport terminal building, airfield, runway, taxiway, and the lots on which
they are situated are not exempt from real estate tax reasoning as
follows:chanRoblesvirtualLawlibrary
Under the Local Government Code (LGC for brevity), enacted pursuant to
the constitutional mandate of local autonomy, all natural and juridical
persons, including government-owned or controlled corporations (GOCCs),
instrumentalities and agencies, are no longer exempt from local taxes
even if previously granted an exemption. The only exemptions from local
taxes are those specifically provided under the Code itself, or those
enacted through subsequent legislation.
Thus, the LGC, enacted pursuant to Section 3, Article X of the Constitution,
provides for the exercise by local government units of their power to tax,
the scope thereof or its limitations, and the exemptions from local
taxation.
Section 133 of the LGC prescribes the common limitations on the taxing
powers of local government units. x x x.
xxxx
The above-stated provision, however, qualified the exemption of the
National Government, its agencies and instrumentalities from local
taxation with the phrase unless otherwise provided herein.
Section 232 of the LGC provides for the power of the local government
units (LGUs for brevity) to levy real property tax. x x x.
xxxx
Section 234 of the LGC provides for the exemptions from payment of real
property taxes and withdraws previous exemptions granted to natural and
juridical persons, including government-owned and controlled
corporations, except as provided therein. x x x.
xxxx
Section 193 of the LGC is the general provision on withdrawal of tax
exemption privileges. x x x.24 (Citations omitted.)
The Court of Appeals went on to state that contrary to the ruling of the
Supreme Court in the 2006 MIAA case, it finds and rules
that:chanRoblesvirtualLawlibrary
a) Section 133 of the LGC is not an absolute prohibition on the power of
the LGUs to tax the National Government, its agencies and
instrumentalities as the same is qualified by Sections 193, 232 and 234
which otherwise provided; and
b) Petitioner MCIAA is a GOCC.25 (Emphasis ours.)
The Court of Appeals ratiocinated in the following
manner:chanRoblesvirtualLawlibrary
Pursuant to the explicit provision of Section 193 of the LGC, exemptions
previously enjoyed by persons, whether natural or juridical, like the
petitioner MCIAA, are deemed withdrawn upon the effectivity of the
Code. Further, the last paragraph of Section 234 of the Code also
unequivocally withdrew, upon the Codes effectivity, exemptions from
payment of real property taxes previously granted to natural or juridical
persons, including government-owned or controlled corporations, except
as provided in the said section. Petitioner MCIAA, undoubtedly a juridical
person, it follows that its exemption from such tax granted under Section
14 of R.A. 6958 has been withdrawn.
xxxx
From the [1996 MCIAA] ruling, it is acknowledged that, under Section 133
of the LGC, instrumentalities were generally exempt from all forms of local
government taxation, unless otherwise provided in the Code. On the other
hand, Section 232 otherwise provided insofar as it allowed local
government units to levy an ad valorem real property tax, irrespective of
who owned the property. At the same time, the imposition of real
property taxes under Section 232 is, in turn, qualified by the phrase not
hereinafter specifically exempted. The exemptions from real property
taxes are enumerated in Section 234 of the Code which specifically states
that only real properties owned by the Republic of the Philippines or any
of its political subdivisions are exempted from the payment of the tax.
Clearly, instrumentalities or GOCCs do not fall within the exceptions under
Section 234 of the LGC.
Thus, as ruled in the [1996 MCIAA] case, the prohibition on taxing the
national government, its agencies and instrumentalities under Section 133
is qualified by Sections 232 and 234, and accordingly, the only relevant
exemption now applicable to these bodies is what is now provided under
Section 234(a) of the Code. It may be noted that the express withdrawal of
previously granted exemptions to persons from the payment of real
property tax by the LGC does not even make any distinction as to whether
the exempt person is a governmental entity or not. As Sections 193 and
234 of the Code both state, the withdrawal applies to all persons,
including GOCCs, thus encompassing the two classes of persons
recognized under our laws, natural persons and juridical persons.
xxxx
The question of whether or not petitioner MCIAA is an instrumentality or a
GOCC has already been lengthily but soundly, cogently and lucidly
answered in the [1996 MCIAA] case x x x.
xxxx
Based on the foregoing, the claim of the majority of the Supreme Court in
the [2006 MIAA] case that MIAA (and also petitioner MCIAA) is not a
government-owned or controlled corporation but an instrumentality
based on Section 2(10) of the Administrative Code of 1987 appears to be
unsound. In the [2006 MIAA] case, the majority justifies MIAAs purported
exemption on Section 133(o) of the Local Government Code which places
agencies and instrumentalities: as generally exempt from the taxation
powers of the LGUs. It further went on to hold that By express mandate
of the Local Government Code, local governments cannot impose any kind
of tax on national government instrumentalities like the MIAA. x x x.26
(Citations omitted.)
The Court of Appeals further cited Justice Tingas dissent in the 2006 MIAA
case as well as provisions from petitioner MCIAAs charter to show that
petitioner is a GOCC.27 The Court of Appeals
wrote:chanRoblesvirtualLawlibrary
These cited provisions establish the fitness of the petitioner MCIAA to be
the subject of legal relations. Under its charter, it has the power to
acquire, possess and incur obligations. It also has the power to contract in
its own name and to acquire title to movable or immovable property.
More importantly, it may likewise exercise powers of a corporation under
the Corporation Code. Moreover, based on its own allegation, it even
recognized itself as a GOCC when it alleged in its petition for prohibition
filed before the lower court that it is a body corporate organized and
existing under Republic Act No. 6958 x x x.
We also find to be not meritorious the assertion of petitioner MCIAA that
the respondent city can no longer challenge the tax-exempt character of
the properties since it is estopped from doing so when respondent City of
Lapu-Lapu, through its former mayor, Ernest H. Weigel, Jr., had long ago
conceded that petitioners properties are exempt from real property tax.
It is not denied by the respondent city that it considered, through its
former mayor, Ernest H. Weigel, Jr., petitioners subject properties,
specifically the runway and taxiway, as exempt from taxes. However, as
astutely pointed out by the respondent city it can never be in estoppel,
particularly in matters involving taxes. It is a well-known rule that
erroneous application and enforcement of the law by public officers do
not preclude subsequent correct application of the statute, and that the
Government is never estopped by mistake or error on the part of its
agents.28 (Citations omitted.)
The Court of Appeals established the
following:chanRoblesvirtualLawlibrary
a) [R]espondent City was able to prove and establish that it has a valid and
existing ordinance for the imposition of realty tax against petitioner
MCIAA;
b) [T]he imposition and collection of additional levy of 1% Special
Education Fund (SEF) is authorized by law, Republic Act No. 5447; and
c) [T]he collection of penalty interest for delinquent taxes is not only
authorized by law but is likewise [sanctioned] by respondent Citys
ordinance.29
The Court of Appeals likewise held that respondent City has a valid and
existing local tax ordinance, Ordinance No. 44, or the Omnibus Tax
Ordinance of Lapu-Lapu City, which provided for the imposition of real
property tax. The relevant provision reads:chanRoblesvirtualLawlibrary
Chapter 5 Tax on Real Property Ownership
Section 25. RATE OF TAX. - A rate of one and one-half (1 ) percentum
shall be collected from owners, executors or administrators of any real
estate lying within the territorial jurisdiction of the City of Lapu-Lapu,
based on the assessed value as shown in the latest revision.30
The Court of Appeals found that even if Ordinance No. 44 was enacted
prior to the effectivity of the LGC, it remained in force and effect, citing
Section 529 of the LGC and Article 278 of the LGCs Implementing Rules
and Regulations.31chanrobleslaw
As regards the Special Education Fund, the Court of Appeals held that
respondent City can still collect the additional 1% tax on real property
even without an ordinance to this effect, as this is authorized by Republic
Act No. 5447, as amended by Presidential Decree No. 464 (the Real
Property Tax Code), which does not require an enabling tax ordinance. The
Court of Appeals affirmed the RTCs ruling that Republic Act No. 5447 was
still in force and effect notwithstanding the passing of the LGC, as the
latter only partially repealed the former law. What Section 534 of the LGC
repealed was Section 3 a(3) and b(2) of Republic Act No. 5447, and not the
entire law that created the Special Education Fund.32 The repealed
provisions referred to allocation of taxes on Virginia type cigarettes and
duties on imported leaf tobacco and the percentage remittances to the
taxing authority concerned. The Court of Appeals, citing The Commission
on Audit of the Province of Cebu v. Province of Cebu,33 held that [t]he
failure to add a specific repealing clause particularly mentioning the
statute to be repealed indicates that the intent was not to repeal any
existing law on the matter, unless an irreconcilable inconsistency and
repugnancy exists in the terms of the new and the old laws.34 The Court
of Appeals quoted the RTCs discussion on this issue, which we reproduce
below:chanRoblesvirtualLawlibrary
It may be observed that there is no requirement in RA 7160 that an
ordinance be enacted to enable the collection of the additional 1% tax.
This is so since R.A. 5447 is still in force and effect, and the declared policy
of the government in enacting the law, which is to contribute to the
financial support of the goals of education as provided in the Constitution,
necessitates the continued and uninterrupted collection of the tax.
Considering that this is a tax of far-reaching importance, to require the
passage of an ordinance in order that the tax may be collected would be to
place the collection of the tax at the option of the local legislature. This
would run counter to the declared policy of the government when the SEF
was created and the tax imposed.35
Regarding the penalty interest, the Court of Appeals found that Section 30
of Ordinance No. 44 of respondent City provided for a penalty surcharge
of 25% of the tax due for a given year. Said provision
reads:chanRoblesvirtualLawlibrary
Section 30. PENALTY FOR FAILURE TO PAY TAX. Failure to pay the tax
provided for under this Chapter within the time fixed in Section 27, shall
subject the taxpayer to a surcharge of twenty-five percent (25%), without
interest.36
The Court of Appeals however declared that after the effectivity of the
Local Government Code, the respondent City could only collect penalty
surcharge up to the extent of 72%, covering a period of three years or 36
months, for the entire delinquent property.37 This was lower than the
25% per annum surcharge imposed by Ordinance No. 44.38 The Court of
Appeals affirmed the findings of the RTC in the decision quoted
below:chanRoblesvirtualLawlibrary
The tax collected under Ordinance No. 44 is within the rates prescribed by
RA 7160, though the 25% penalty collected is higher than the 2% allowed
under Sec. 255 of the said law which provides:ChanRoblesVirtualawlibrary
xxxx
This difference does not however detract from the essential enforceability
and effectivity of Ordinance No. 44 pursuant to Section 529 of RA No.
7160 and Article 278 of the Implementing Rules and Regulations. The
outcome of this disparity is simply that respondent City can only collect an
interest of 2% per month on the unpaid tax. Consequently, respondent
city will have to [recompute] the petitioners tax liability.39
It is worthy to note that the Court of Appeals nevertheless held that even
if it is clear that respondent City has the power to impose real property
taxes over petitioner, it is also evident and categorical that, under
Republic Act No. 6958, the properties of petitioner MCIAA may not be
conveyed or transferred to any person or entity except to the national
government.40 The relevant provisions of the said law are quoted
below:chanRoblesvirtualLawlibrary
Section 4. Functions, Powers and Duties. The Authority shall have the
following functions, powers and duties:ChanRoblesVirtualawlibrary
xxxx
(e) To acquire, purchase, own, administer, lease, mortgage, sell or
otherwise dispose of any land, building, airport facility, or property of
whatever kind and nature, whether movable or immovable, or any interest
therein: Provided, That any asset located in the Mactan International
Airport important to national security shall not be subject to alienation or
mortgage by the Authority nor to transfer to any entity other than the
National Government[.]
Section 13. Borrowing Power. The Authority may, in accordance with
Section 21, Article XII of the Constitution and other existing laws, rules and
regulations on local or foreign borrowing, raise funds, either from local or
international sources, by way of loans, credit or securities, and other
borrowing instruments with the power to create pledges, mortgages and
other voluntary liens or encumbrances on any of its assets or properties,
subject to the prior approval of the President of the Philippines.
All loans contracted by the Authority under this section, together with all
interests and other sums payable in respect thereof, shall constitute a
charge upon all the revenues and assets of the Authority and shall rank
equally with one another, but shall have priority over any other claim or
charge on the revenue and assets of the Authority: Provided, That this
provision shall not be construed as a prohibition or restriction on the
power of the Authority to create pledges, mortgages and other voluntary
liens or encumbrances on any asset or property of the Authority.
The payment of the loans or other indebtedness of the Authority may be
guaranteed by the National Government subject to the approval of the
President of the Philippines.chanroblesvirtuallawlibrary
The Court of Appeals concluded that it is clear that petitioner MCIAA is
denied by its charter the absolute right to dispose of its property to any
person or entity except to the national government and it is not
empowered to obtain loans or encumber its property without the
approval of the President.41 The questioned Decision contained the
following conclusion:chanRoblesvirtualLawlibrary
With the advent of RA 7160, the Local Government Code, the power to tax
is no longer vested exclusively on Congress. LGUs, through its local
legislative bodies, are now given direct authority to levy taxes, fees and
other charges pursuant to Article X, Section 5 of the 1987 Constitution.
And one of the most significant provisions of the LGC is the removal of the
blanket inclusion of instrumentalities and agencies of the national
government from the coverage of local taxation. The express withdrawal
by the Code of previously granted exemptions from realty taxes applied to
instrumentalities and government-owned or controlled corporations
(GOCCs) such as the petitioner Mactan-Cebu International Airport
Authority. Thus, petitioner MCIAA became a taxable person in view of the
withdrawal of the realty tax exemption that it previously enjoyed under
Section 14 of RA No. 6958 of its charter. As expressed and categorically
held in the Mactan case, the removal and withdrawal of tax exemptions
previously enjoyed by persons, natural or juridical, are consistent with the
State policy to ensure autonomy to local governments and the objective of
the Local Government Code that they enjoy genuine and meaningful local
autonomy to enable them to attain their fullest development as self-
reliant communities and make them effective partners in the attainment
of national goals.
However, in the case at bench, petitioner MCIAAs charter expressly bars
the alienation or mortgage of its property to any person or entity except
to the national government. Therefore, while petitioner MCIAA is a taxable
person for purposes of real property taxation, respondent City of Lapu-
Lapu is prohibited from seizing, selling and owning these properties by and
through a public auction in order to satisfy petitioner MCIAAs tax
liability.42 (Citations omitted.)
In the questioned Resolution that affirmed its questioned Decision, the
Court of Appeals denied petitioners motion for reconsideration based on
the following grounds:chanRoblesvirtualLawlibrary
First, the MCIAA case remains the controlling law on the matter as the
same is the established precedent; not the MIAA case but the MCIAA case
since the former, as keenly pointed out by the respondent City of Lapu-
Lapu, has not yet attained finality as there is still yet a pending motion for
reconsideration filed with the Supreme Court in the aforesaid case.
Second, and more importantly, the ruling of the Supreme Court in the
MIAA case cannot be similarly invoked in the case at bench. The said case
cannot be considered as the law of the case. The law of the case
doctrine has been defined as that principle under which determinations of
questions of law will generally be held to govern a case throughout all its
subsequent stages where such determination has already been made on a
prior appeal to a court of last resort. It is merely a rule of procedure and
does not go to the power of the court, and will not be adhered to where
its application will result in an unjust decision. It relates entirely to
questions of law, and is confined in its operation to subsequent
proceedings in the same case. According to said doctrine, whatever has
been irrevocably established constitutes the law of the case only as to the
same parties in the same case and not to different parties in an entirely
different case. Besides, pending resolution of the aforesaid motion for
reconsideration in the MIAA case, the latter case has not irrevocably
established anything.
Thus, after a thorough and judicious review of the allegations in
petitioners motion for reconsideration, this Court resolves to deny the
same as the matters raised therein had already been exhaustively
discussed in the decision sought to be reconsidered, and that no new
matters were raised which would warrant the modification, much less
reversal, thereof.43 (Emphasis added, citations omitted.)
PETITIONERS THEORY
Petitioner is before us now claiming that this Court, in the 2006 MIAA
case, had expressly declared that petitioner, while vested with corporate
powers, is not considered a government-owned or controlled corporation,
but is a government instrumentality like the Manila International Airport
Authority (MIAA), Philippine Ports Authority (PPA), University of the
Philippines, and Bangko Sentral ng Pilipinas (BSP). Petitioner alleges that as
a government instrumentality, all its airport lands and buildings are
exempt from real estate taxes imposed by respondent
City.44chanrobleslaw
Petitioner alleges that Republic Act No. 6958 placed a limitation on
petitioners administration of its assets and properties as it provides
under Section 4(e) that any asset in the international airport important to
national security cannot be alienated or mortgaged by petitioner or
transferred to any entity other than the National
Government.45chanrobleslaw
Thus, petitioner claims that the Court of Appeals (Cebu City) gravely erred
in disregarding the following:chanRoblesvirtualLawlibrary
I those enumerated in its charter, specifically Section 3 of Republic Act No.
PETITIONER IS A GOVERNMENT INSTRUMENTALITY AS EXPRESSLY
DECLARED BY THE HONORABLE COURT IN THE MIAA CASE. AS SUCH, IT IS
EXEMPT FROM PAYING REAL ESTATE TAXES IMPOSED BY RESPONDENT
CITY OF LAPU-LAPU.
II
THE PROPERTIES OF PETITIONER CONSISTING OF THE AIRPORT TERMINAL
BUILDING, AIRFIELD, RUNWAY, TAXIWAY, INCLUDING THE LOTS ON
WHICH THEY ARE SITUATED, ARE EXEMPT FROM REAL PROPERTY TAXES.
III
RESPONDENT CITY OF LAPU-LAPU CANNOT IMPOSE REAL PROPERTY TAX
WITHOUT ANY APPROPRIATE ORDINANCE.
IV
RESPONDENT CITY OF LAPU-LAPU CANNOT IMPOSE AN ADDITIONAL 1%
TAX FOR THE SPECIAL EDUCATION FUND IN THE ABSENCE OF ANY
CORRESPONDING ORDINANCE.
V (a)
RESPONDENT CITY OF LAPU-LAPU CANNOT IMPOSE ANY INTEREST SANS
ANY ORDINANCE MANDATING ITS IMPOSITION.46
Petitioner claims the following similarities with MIAA:
MCIAA belongs to the same class and performs identical functions as
MIAA;
MCIAA is a public utility like MIAA;
MIAA was organized to operate the international and domestic airport in
Paranaque City for public use, while MCIAA was organized to operate the
international and domestic airport in Mactan for public use.
Both are attached agencies of the Department of Transportation and
Communications.47
Petitioner compares its charter (Republic Act No. 6958) with that of MIAA
(Executive Order No. 903).
Section 3 of Executive Order No. 903 provides:chanRoblesvirtualLawlibrary
Sec. 3. Creation of the Manila International Airport Authority. There is
hereby established a body corporate to be known as the Manila
International Airport Authority which shall be attached to the Ministry of
Transportation and Communications. The principal office of the Authority
shall be located at the New Manila International Airport. The Authority
may establish such offices, branches, agencies or subsidiaries as it may
deem proper and necessary; x x x.chanroblesvirtuallawlibrary
Section 2 of Republic Act No. 6958 reads:chanRoblesvirtualLawlibrary
Section 2. Creation of the Mactan-Cebu International Airport Authority.
There is hereby established a body corporate to be known as the Mactan-
Cebu International Airport Authority which shall be attached to the
Department of Transportation and Communications. The principal office of
the Authority shall be located at the Mactan International Airport,
Province of Cebu.
The Authority may have such branches, agencies or subsidiaries as it may
deem proper and necessary.chanroblesvirtuallawlibrary
As to MIAAs purposes and objectives, Section 4 of Executive Order No.
903 reads:chanRoblesvirtualLawlibrary
Sec. 4. Purposes and Objectives. The Authority shall have the following
purposes and objectives:ChanRoblesVirtualawlibrary
(a) To help encourage and promote international and domestic air traffic
in the Philippines as a means of making the Philippines a center of
international trade and tourism and accelerating the development of the
means of transportation and communications in the country;
(b) To formulate and adopt for application in the Airport internationally
acceptable standards of airport accommodation and service; and
(c) To upgrade and provide safe, efficient, and reliable airport facilities for
international and domestic air travel.chanroblesvirtuallawlibrary
Petitioner claims that the above purposes and objectives are analogous to
6958, which reads:chanRoblesvirtualLawlibrary
Section 3. Primary Purposes and Objectives. The Authority shall
principally undertake the economical, efficient and effective control,
management and supervision of the Mactan International Airport in the
Province of Cebu and the Lahug Airport in Cebu City, hereinafter
collectively referred to as the airports, and such other airports as may be
established in the Province of Cebu. In addition, it shall have the following
objectives:ChanRoblesVirtualawlibrary
(a) To encourage, promote and develop international and domestic air
traffic in the central Visayas and Mindanao regions as a means of making
the regions centers of international trade and tourism, and accelerating
the development of the means of transportation and communications in
the country; and
(b) To upgrade the services and facilities of the airports and to formulate
internationally acceptable standards of airport accommodation and
service.chanroblesvirtuallawlibrary
The powers, functions and duties of MIAA under Section 5 of Executive
Order No. 903 are:ChanRoblesVirtualawlibrary
Sec. 5. Functions, Powers and Duties. The Authority shall have the
following functions, powers and duties:chanRoblesvirtualLawlibrary
To formulate, in coordination with the Bureau of Air Transportation and
other appropriate government agencies, a comprehensive and integrated
policy and program for the Airport and to implement, review and update
such policy and program periodically;
(b)
To control, supervise, construct, maintain, operate and provide such
facilities or services as shall be necessary for the efficient functioning of
the Airport;
(c)
To promulgate rules and regulations governing the planning,
development, maintenance, operation and improvement of the Airport,
and to control and/or supervise as may be necessary the construction of
any structure or the rendition of any services within the Airport;
(d)
To sue and be sued in its corporate name;
(e)
To adopt and use a corporate seal;
(f)
To succeed by its corporate name;
(g)
To adopt its by-laws, and to amend or repeal the same from time to time;
(h)
To execute or enter into contracts of any kind or nature;
(i)
To acquire, purchase, own, administer, lease, mortgage, sell or otherwise
dispose of any land, building, airport facility, or property of whatever kind
and nature, whether movable or immovable, or any interest therein;
(j)
To exercise the power of eminent domain in the pursuit of its purposes
and objectives;
(k)
To levy, and collect dues, charges, fees or assessments for the use of the
Airport premises, works, appliances, facilities or concessions or for any
service provided by the Authority, subject to the approval of the Minister
of Transportation and Communications in consultation with the Minister
of Finance, and subject further to the provisions of Batas Pambansa Blg.
325 where applicable;
(l)
To invest its idle funds, as it may deem proper, in government securities
and other evidences of indebtedness of the government;
(m)
To provide services, whether on its own or otherwise, within the Airport
and the approaches thereof, which shall include but shall not be limited to,
the following:
(1)
Aircraft movement and allocation of parking areas of aircraft on the
ground;
(2)
Loading or unloading of aircrafts;
(3)
Passenger handling and other services directed towards the care,
convenience and security of passengers, visitors and other airport users;
and
(4)
Sorting, weighing, measuring, warehousing or handling of baggage and
goods.
(n)
To perform such other acts and transact such other business, directly or
indirectly necessary, incidental or conducive to the attainment of the
purposes and objectives of the Authority, including the adoption of
necessary measures to remedy congestion in the Airport; and
(o)
To exercise all the powers of a corporation under the Corporation Law,
insofar as these powers are not inconsistent with the provisions of this
Executive Order.
Petitioner claims that MCIAA has related functions, powers and duties
under Section 4 of Republic Act No. 6958, as shown in the provision
quoted below:chanRoblesvirtualLawlibrary
Section 4. Functions, Powers and Duties. The Authority shall have the
following functions, powers and duties:ChanRoblesVirtualawlibrary
(a) To formulate a comprehensive and integrated development policy and
program for the airports and to implement, review and update such policy
and program periodically;
(b) To control, supervise, construct, maintain, operate and provide such
facilities or services as shall be necessary for the efficient functioning of
the airports;
(c) To promulgate rules and regulations governing the planning,
development, maintenance, operation and improvement of the airports,
and to control and supervise the construction of any structure or the
rendition of any service within the airports;
(d) To exercise all the powers of a corporation under the Corporation Code
of the Philippines, insofar as those powers are not inconsistent with the
provisions of this Act;
(e) To acquire, purchase, own, administer, lease, mortgage, sell or
otherwise dispose of any land, building, airport facility, or property of
whatever kind and nature, whether movable or immovable, or any interest
therein: Provided, That any asset located in the Mactan International
Airport important to national security shall not be subject to alienation or
mortgage by the Authority nor to transfer to any entity other than the
National Government;
(f) To exercise the power of eminent domain in the pursuit of its purposes
and objectives;
(g) To levy and collect dues, charges, fees or assessments for the use of
airport premises, works, appliances, facilities or concessions, or for any
service provided by the Authority;
(h) To retain and appropriate dues, fees and charges collected by the
Authority relative to the use of airport premises for such measures as may
be necessary to make the Authority more effective and efficient in the
discharge of its assigned tasks;
(i) To invest its idle funds, as it may deem proper, in government securities
and other evidences of indebtedness; and
(j) To provide services, whether on its own or otherwise, within the
airports and the approaches thereof as may be necessary or in connection
with the maintenance and operation of the airports and their
facilities.chanroblesvirtuallawlibrary
Petitioner claims that like MIAA, it has police authority within its premises,
as shown in their respective charters quoted
below:chanRoblesvirtualLawlibrary
EO 903, Sec. 6. Police Authority. The Authority shall have the power to
exercise such police authority as may be necessary within its premises to
carry out its functions and attain its purposes and objectives, without
prejudice to the exercise of functions within the same premises by the
Ministry of National Defense through the Aviation Security Command
(AVSECOM) as provided in LOI 961: Provided, That the Authority may
request the assistance of law enforcement agencies, including request for
deputization as may be required. x x x.
R.A. No. 6958, Section 5. Police Authority. The Authority shall have the
power to exercise such police authority as may be necessary within its
premises or areas of operation to carry out its functions and attain its
purposes and objectives: Provided, That the Authority may request the
assistance of law enforcement agencies, including request for deputization
as may be required. x x x.chanroblesvirtuallawlibrary
Petitioner pointed out other similarities in the two charters, such
as:ChanRoblesVirtualawlibrary
1. Both MCIAA and MIAA are covered by the Civil Service Law, rules and
regulations (Section 15, Executive Order No. 903; Section 12, Republic Act
No. 6958);
2. Both charters contain a proviso on tax exemptions (Section 21,
Executive Order No. 903; Section 14, Republic Act No. 6958);
3. Both MCIAA and MIAA are required to submit to the President an
annual report generally dealing with their activities and operations
(Section 14, Executive Order No. 903; Section 11, Republic Act No. 6958);
and
4. Both have borrowing power subject to the approval of the President
(Section 16, Executive Order No. 903; Section 13, Republic Act No.
6958).48chanrobleslaw
Petitioner suggests that it is because of its similarity with MIAA that this
Court, in the 2006 MIAA case, placed it in the same class as MIAA and
considered it as a government instrumentality.
Petitioner submits that since it is also a government instrumentality like
MIAA, the following conclusion arrived by the Court in the 2006 MIAA case
is also applicable to petitioner:chanRoblesvirtualLawlibrary
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 x x x constructed by the State, which includes
public airports and seaports, as properties of public dominion and owned
by the Republic. As properties of public dominion owned by the Republic,
there is no doubt whatsoever that the Airport Lands and Buildings are
expressly exempt from real estate tax under Section 234(a) of the Local
Government Code. This Court has also repeatedly ruled that properties of
public dominion are not subject to execution or foreclosure sale.49
(Emphases added.)
Petitioner insists that its properties consisting of the airport terminal
building, airfield, runway, taxiway and the lots on which they are situated
are not subject to real property tax because they are actually, solely and
exclusively used for public purposes.50 They are indispensable to the
operation of the Mactan International Airport and by their very nature,
these properties are exempt from tax. Said properties belong to the State
and are merely held by petitioner in trust. As earlier mentioned, petitioner
claims that these properties are important to national security and cannot
be alienated, mortgaged, or transferred to any entity except the National
Government.
Petitioner prays that judgment be rendered:chanRoblesvirtualLawlibrary
a)
Declaring petitioner exempt from paying real property taxes as it is a
government instrumentality;
b)
Declaring respondent City of Lapu-Lapu as bereft of any authority to levy
and collect the basic real property tax, the additional tax for the SEF and
the penalty interest for its failure to pass the corresponding tax
ordinances; and
c)
Declaring, in the alternative, the airport lands and buildings of petitioner
as exempt from real property taxes as they are used solely and exclusively
for public purpose.51
In its Consolidated Reply filed through the OSG, petitioner claims that the
2006 MIAA ruling has overturned the 1996 MCIAA ruling. Petitioner cites
Justice Dante O. Tingas dissent in the MIAA ruling, as
follows:chanRoblesvirtualLawlibrary
[The] ineluctable conclusion is that the majority rejects the rationale and
ruling in Mactan. The majority provides for a wildly different
interpretation of Section 133, 193 and 234 of the Local Government Code
than that employed by the Court in Mactan. Moreover, the parties in
Mactan and in this case are similarly situated, as can be obviously
deducted from the fact that both petitioners are airport authorities
operating under similarly worded charters. And the fact that the majority
cites doctrines contrapuntal to the Local Government Code as in Basco
and Maceda evinces an intent to go against the Courts jurisprudential
trend adopting the philosophy of expanded local government rule under
the Local Government Code.
x x x The majority is obviously inconsistent with Mactan and there is no
way these two rulings can stand together. Following basic principles in
statutory construction, Mactan will be deemed as giving way to this new
ruling.
xxxx
There is no way the majority can be justified unless Mactan is overturned.
The MCIAA and the MIAA are similarly situated. They are both, as will be
demonstrated, GOCCs, commonly engaged in the business of operating an
airport. They are the owners of airport properties they respectively
maintain and hold title over these properties in their name. These entities
are both owned by the State, and denied by their respective charters the
absolute right to dispose of their properties without prior approval
elsewhere. Both of them are not empowered to obtain loans or encumber
their properties without prior approval the prior approval of the
President.52 (Citations omitted.)
Petitioner likewise claims that the enactment of Ordinance No. 070-2007
is an admission on respondent Citys part that it must have a tax measure
to be able to impose a tax or special assessment. Petitioner avers that
assuming that it is a non-exempt entity or that its airport lands and
buildings are not exempt, it was only upon the effectivity of Ordinance No.
070-2007 on January 1, 2008 that respondent City could properly impose
the basic real property tax, the additional tax for the SEF, and the interest
in case of nonpayment.53chanrobleslaw
Petitioner filed its Memorandum54 on June 17, 2009.
RESPONDENTS THEORY
In their Comment,55 respondents point out that petitioner partially
moved for a reconsideration of the questioned Decision only as to the
issue of whether petitioner is a GOCC or not. Thus, respondents declare
that the other portions of the questioned decision had already attained
finality and ought not to be placed in issue in this petition for certiorari.
Thus, respondents discussed the other issues raised by petitioner with
reservation as to this objection.
Respondents summarized the issues and the grounds relied upon as
follows:chanRoblesvirtualLawlibrary
STATEMENT OF THE ISSUES
WHETHER OR NOT PETITIONER IS A GOVERNMENT INSTRUMENTALITY
EXEMPT FROM PAYING REAL PROPERTY TAXES
WHETHER OR NOT RESPONDENT CITY CAN [IMPOSE] REALTY TAX, SPECIAL
EDUCATION FUND AND PENALTY INTEREST
WHETHER OR NOT THE AIRPORT TERMINAL BUILDING, AIRFIELD,
RUNWAY, TAXIWAY INCLUDING THE LOTS ON WHICH THEY ARE SITUATED
ARE EXEMPT FROM REALTY TAXES
GROUNDS RELIED UPON
PETITIONER IS A GOCC HENCE NOT EXEMPT FROM REALTY TAXES
TERMINAL BUILDING, RUNWAY, TAXIWAY ARE NOT EXEMPT FROM REALTY
TAXES
ESTOPPEL DOES NOT LIE AGAINST GOVERNMENT
CITY CAN COLLECT REALTY TAX AND INTEREST
CITY CAN COLLECT SEF
MCIAA HAS NOT SHOWN ANY IRREPARABLE INJURY WARRANTING
INJUNCTIVE RELIEF
MCIAA HAS NOT COMPLIED WITH PROVISION OF THE LGC56
Respondents claim that the mere mention of MCIAA in the MIAA v.
[Court of Appeals] case does not make it the controlling case on the
matter.57 Respondents further claim that the 1996 MCIAA case where
this Court held that petitioner is a GOCC is the controlling jurisprudence.
Respondents point out that petitioner and MIAA are two very different
entities. Respondents argue that petitioner is a GOCC contrary to its
assertions, based on its Charter and on DOJ Opinion No. 50.
Respondents contend that if petitioner is not a GOCC but an
instrumentality of the government, still the following statement in the
1996 MCIAA case applies:chanRoblesvirtualLawlibrary
Besides, nothing can prevent Congress from decreeing that even
instrumentalities or agencies of the Government performing
governmental functions may be subject to tax. Where it is done precisely
to fulfill a constitutional mandate and national policy, no one can doubt its
wisdom.58
Respondents argue that MCIAA properties such as the terminal building,
taxiway and runway are not exempt from real property taxation. As
discussed in the 1996 MCIAA case, Section 234 of the LGC omitted GOCCs
such as MCIAA from entities enjoying tax exemptions. Said decision also
provides that the transfer of ownership of the land to petitioner was
absolute and petitioner cannot evade payment of taxes.59chanrobleslaw
Even if the following issues were not raised by petitioner in its motion for
reconsideration of the questioned Decision, and thus the ruling pertaining
to these issues in the questioned decision had become final, respondents
still discussed its side over its objections as to the propriety of bringing
these up before this Court.
1. Estoppel does not lie against the government.
2. Respondent City can collect realty taxes and interest.
Based on the Local Government Code (Sections 232, 233, 255) and its IRR
(Sections 241, 247).
The City of Lapu-Lapu passed in 1980 Ordinance No. 44, or the Omnibus
Tax Ordinance, wherein the imposition of real property tax was made. This
Ordinance was in force and effect by virtue of Article 278 of the IRR of
Republic Act No. 7160.60chanrobleslaw
Ordinance No. 070-2007, known as the Revised Lapu-Lapu City Revenue
Code, imposed real property taxes, special education fund and further
provided for the payment of interest and surcharges. Thus, the issue is
pass and is moot and academic.
3. Respondent City can collect Special Education Fund.
The LGC does not require the enactment of an ordinance for the collection
of the SEF.
Congress did not entirely repeal the SEF law, hence, its levy, imposition
and collection need not be covered by ordinance. Besides, the City has
enacted the Revenue Code containing provisions for the levy and
collection of the SEF.61
Furthermore, respondents aver that:ChanRoblesVirtualawlibrary
1. Collection of taxes is beyond the ambit of injunction.
Respondents contend that the petition only questions the denial of the
writ of preliminary injunction by the RTC and the Court of Appeals.
Petitioner failed to show irreparable injury.
Comparing the alleged damage that may be caused petitioner and the
direct affront and challenge against the power to tax, which is an attribute
of sovereignty, it is but appropriate that injunctive relief should be denied.
2. Petitioner did not comply with LGC provisions on payment under
protest.
Petitioner should have protested the tax imposition as provided in Article
285 of the IRR of Republic Act No. 7160. Section 252 of Republic Act No.
716062 requires that the taxpayers protest can only be entertained if the
tax is first paid under protest.63
Respondents submitted their Memorandum64 on June 30, 2009, wherein
they allege that the 1996 MCIAA case is still good law, as shown by the
following cases wherein it was quoted:
National Power Corporation v. Local Board of Assessment Appeals of
Batangas [545 Phil. 92 (2007)];
Mactan-Cebu International Airport Authority v. Urgello [549 Phil. 302
(2007)];
Quezon City v. ABS-CBN Broadcasting Corporation [588 Phil. 785 (2008)];
and
The City of Iloilo v. Smart Communications, Inc. [599 Phil. 492 (2009)].
Respondents assert that the constant reference to the 1996 MCIAA case
could hardly mean that the doctrine has breathed its last and that the
1996 MCIAA case stands as precedent and is controlling on petitioner
MCIAA.65chanrobleslaw
Respondents allege that the issue for consideration is whether it is proper
for petitioner to raise the issue of whether it is not liable to pay real
property taxes, special education fund (SEF), interests and/or
surcharges.66 Respondents argue that the Court of Appeals was correct in
declaring petitioner liable for realty taxes, etc., on the terminal building,
taxiway, and runway. Respondent City relies on the following
grounds:chanRoblesvirtualLawlibrary
The case of MCIAA v. Marcos, et al., is controlling on petitioner MCIAA;
MCIAA is a corporation;
Section 133 in relation to Sections 232 and 234 of the Local Government
Code of 1991 authorizes the collection of real property taxes (etc.) from
MCIAA;
Terminal Building, Runway & Taxiway are not of the Public Dominion and
are not exempt from realty taxes, special education fund and interest;
Respondent City can collect realty tax, interest/surcharge, and Special
Education Fund from MCIAA; [and]
Estoppel does not lie against the government.67
THIS COURTS RULING
The petition has merit. The petitioner is an instrumentality of the
government; thus, its properties actually, solely and exclusively used for
public purposes, consisting of the airport terminal building, airfield,
runway, taxiway and the lots on which they are situated, are not subject to
real property tax and respondent City is not justified in collecting taxes
from petitioner over said properties.
DISCUSSION
The Court of Appeals (Cebu City) erred in declaring that the 1996 MCIAA
case still controls and that petitioner is a GOCC. The 2006 MIAA case
governs.
The Court of Appeals reliance on the 1996 MCIAA case is misplaced and
its staunch refusal to apply the 2006 MIAA case is patently erroneous. The
Court of Appeals, finding for respondents, refused to apply the ruling in
the 2006 MIAA case on the premise that the same had not yet reached
finality, and that as far as MCIAA is concerned, the 1996 MCIAA case is still
good law.68chanrobleslaw
While it is true, as respondents allege, that the 1996 MCIAA case was cited
in a long line of cases,69 still, in 2006, the Court en banc decided a case
that in effect reversed the 1996 Mactan ruling. The 2006 MIAA case had,
since the promulgation of the questioned Decision and Resolution,
reached finality and had in fact been either affirmed or cited in numerous
cases by the Court.70 The decision became final and executory on
November 3, 2006.71 Furthermore, the 2006 MIAA case was decided by
the Court en banc while the 1996 MCIAA case was decided by a Division.
Hence, the 1996 MCIAA case should be read in light of the subsequent and
unequivocal ruling in the 2006 MIAA case.
To recall, in the 2006 MIAA case, we held that MIAAs airport lands and
buildings are exempt from real estate tax imposed by local governments;
that it is not a GOCC but an instrumentality of the national government,
with its real properties being owned by the Republic of the Philippines,
and these are exempt from real estate tax. Specifically referring to
petitioner, we stated as follows:chanRoblesvirtualLawlibrary
Many government instrumentalities are vested with corporate powers but
they do not become stock or non-stock corporations, which is a necessary
condition before an agency or instrumentality is deemed a government-
owned or controlled corporation. Examples are the Mactan International
Airport Authority, the Philippine Ports Authority, the University of the
Philippines and Bangko Sentral ng Pilipinas. All these government
instrumentalities exercise corporate powers but they are not organized as
stock or non-stock corporations as required by Section 2(13) of the
Introductory Provisions of the Administrative Code. These government
instrumentalities are sometimes loosely called government corporate
entities. However, they are not government-owned or controlled
corporations in the strict sense as understood under the Administrative
Code, which is the governing law defining the legal relationship and status
of government entities.72 (Emphases ours.)
In the 2006 MIAA case, the issue before the Court was whether the
Airport Lands and Buildings of MIAA are exempt from real estate tax under
existing laws.73 We quote the extensive discussion of the Court that led
to its finding that MIAAs lands and buildings were exempt from real
estate tax imposed by local governments:chanRoblesvirtualLawlibrary
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
xxxx
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:chanRoblesvirtualLawlibrary
SEC. 2. General Terms Defined. - x x x
(13) Government-owned or controlled corporation refers to any agency
organized as a stock or non-stock corporation, vested with functions
relating to public needs whether governmental or proprietary in nature,
and owned by the Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of stock corporations, to
the extent of at least fifty-one (51) percent of its capital stock: x x
x.chanroblesvirtuallawlibrary
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. x x x
xxxx
Clearly, under its Charter, MIAA does not have capital stock that is divided
into shares.
Section 3 of the Corporation Code defines a stock corporation as one
whose capital stock is divided into shares and x x x authorized to
distribute to the holders of such shares dividends x x x. MIAA has capital
but it is not divided into shares of stock. MIAA has no stockholders or
voting shares. Hence, MIAA is not a stock corporation.
MIAA is also not a non-stock corporation because it has no members.
Section 87 of the Corporation Code defines a non-stock corporation as
one where no part of its income is distributable as dividends to its
members, trustees or officers. A non-stock corporation must have
members. Even if we assume that the Government is considered as the
sole member of MIAA, this will not make MIAA a non-stock corporation.
Non-stock corporations cannot distribute any part of their income to their
members. Section 11 of the MIAA Charter mandates MIAA to remit 20% of
its annual gross operating income to the National Treasury. This prevents
MIAA from qualifying as a non-stock corporation.
Section 88 of the Corporation Code provides that non-stock corporations
are organized for charitable, religious, educational, professional, cultural,
recreational, fraternal, literary, scientific, social, civil service, or similar
purposes, like trade, industry, agriculture and like chambers. MIAA is not
organized for any of these purposes. MIAA, a public utility, is organized to
operate an international and domestic airport for public use.
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not
qualify as a government-owned or controlled corporation. 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:chanRoblesvirtualLawlibrary
SEC. 2. General Terms Defined. - x x x
(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. x x x.chanroblesvirtuallawlibrary
When the law vests in a government instrumentality corporate powers,
the instrumentality does not become a corporation. Unless the
government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not only
governmental but also corporate powers. Thus, MIAA exercises the
governmental powers of eminent domain, police authority and the levying
of fees and charges. At the same time, MIAA exercises all the powers of a
corporation under the Corporation Law, insofar as these powers are not
inconsistent with the provisions of this Executive Order.
Likewise, when the law makes a government instrumentality operationally
autonomous, the instrumentality remains part of the National
Government machinery although not integrated with the department
framework. The MIAA Charter expressly states that transforming MIAA
into a separate and autonomous body will make its operation more
financially viable.
Many government instrumentalities are vested with corporate powers but
they do not become stock or non-stock corporations, which is a necessary
condition before an agency or instrumentality is deemed a government-
owned or controlled corporation. Examples are the Mactan International
Airport Authority, the Philippine Ports Authority, the University of the
Philippines and Bangko Sentral ng Pilipinas. All these government
instrumentalities exercise corporate powers but they are not organized as
stock or non-stock corporations as required by Section 2(13) of the
Introductory Provisions of the Administrative Code. These government
instrumentalities are sometimes loosely called government corporate
entities. However, they are not government-owned or controlled
corporations in the strict sense as understood under the Administrative
Code, which is the governing law defining the legal relationship and status
of government entities.74 (Emphases ours, citations omitted.)
The Court in the 2006 MIAA case went on to discuss the limitation on the
taxing power of the local governments as against the national government
or its instrumentality:chanRoblesvirtualLawlibrary
A government instrumentality like MIAA falls under Section 133(o) of the
Local Government Code, which states:chanRoblesvirtualLawlibrary
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:ChanRoblesVirtualawlibrary
xxxx
(o) Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities and local government units. x x
x.chanroblesvirtuallawlibrary
Section 133(o) recognizes the basic principle that local governments
cannot tax the national government, which historically merely delegated
to local governments the power to tax. While the 1987 Constitution now
includes taxation as one of the powers of local governments, local
governments may only exercise such power subject to such guidelines
and limitations as the Congress may provide.
When local governments invoke the power to tax on national government
instrumentalities, such power is construed strictly against local
governments. The rule is that a tax is never presumed and there must be
clear language in the law imposing the tax. Any doubt whether a person,
article or activity is taxable is resolved against taxation. This rule applies
with greater force when local governments seek to tax national
government instrumentalities.
Another rule is that a tax exemption is strictly construed against the
taxpayer claiming the exemption. However, when Congress grants an
exemption to a national government instrumentality from local taxation,
such exemption is construed liberally in favor of the national government
instrumentality. x x x.
xxxx
There is, moreover, no point in national and local governments taxing each
other, unless a sound and compelling policy requires such transfer of
public funds from one government pocket to another.
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. x x x.75 (Emphases ours, citations omitted.)
The Court emphasized that the airport lands and buildings of MIAA are
owned by the Republic and belong to the public domain. The Court
said:chanRoblesvirtualLawlibrary
The Airport Lands and Buildings of MIAA are property of public dominion
and therefore owned by the State or the Republic of the Philippines. x x x.
xxxx
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. x x x.
xxxx
The terminal fees MIAA charges to passengers, as well as the landing fees
MIAA charges to airlines, constitute the bulk of the income that maintains
the operations of MIAA. The collection of such fees does not change the
character of MIAA as an airport for public use. Such fees are often termed
users tax. This means taxing those among the public who actually use a
public facility instead of taxing all the public including those who never use
the particular public facility. A users tax is more equitable - a principle of
taxation mandated in the 1987 Constitution.
The Airport Lands and Buildings of MIAA x x x 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.76 (Emphases supplied, citations omitted.)
The Court also held in the 2006 MIAA case that airport lands and buildings
are outside the commerce of man.
As properties of public dominion, the Airport Lands and Buildings are
outside the commerce of man. The Court has ruled repeatedly that
properties of public dominion are outside the commerce of man. As early
as 1915, this Court already ruled in Municipality of Cavite v. Rojas that
properties devoted to public use are outside the commerce of man,
thus:ChanRoblesVirtualawlibrary
xxxx
The Civil Code, Article 1271, prescribes that everything which is not
outside the commerce of man may be the object of a contract, x x x.
xxxx
The Court has also ruled that property of public dominion, being outside
the commerce of man, cannot be the subject of an auction sale.
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 the Airport Lands and Buildings, the President
must first withdraw from public use the Airport Lands and Buildings. x x x.
xxxx
Thus, unless the President issues a proclamation withdrawing the Airport
Lands and Buildings from public use, these properties remain properties of
public dominion and are inalienable. Since the Airport Lands and Buildings
are inalienable in their present status as properties of public dominion,
they are not subject to levy on execution or foreclosure sale. As long as
the Airport Lands and Buildings are reserved for public use, their
ownership remains with the State or the Republic of the Philippines.
The authority of the President to reserve lands of the public domain for
public use, and to withdraw such public use, is reiterated in Section 14,
Chapter 4, Title I, Book III of the Administrative Code of 1987, which
states:chanRoblesvirtualLawlibrary
SEC. 14. Power to Reserve Lands of the Public and Private Domain of the
Government. - (1) The President shall have the power to reserve for
settlement or public use, and for specific public purposes, any of the lands
of the public domain, the use of which is not otherwise directed by law.
The reserved land shall thereafter remain subject to the specific public
purpose indicated until otherwise provided by law or proclamation;
xxxx
There is no question, therefore, that unless the Airport Lands and
Buildings are withdrawn by law or presidential proclamation from public
use, they are properties of public dominion, owned by the Republic and
outside the commerce of man.77
Thus, the Court held that MIAA is merely holding title to the Airport Lands
and Buildings in trust for the Republic. [Under] Section 48, Chapter 12,
Book I of the Administrative Code [which] allows instrumentalities like
MIAA to hold title to real properties owned by the
Republic.78chanrobleslaw
The Court in the 2006 MIAA case cited Section 234(a) of the Local
Government Code and held that said provision exempts from real estate
tax any [r]eal property owned by the Republic of the Philippines.79 The
Court emphasized, however, that portions of the Airport Lands and
Buildings that MIAA leases to private entities are not exempt from real
estate tax. The Court further held:chanRoblesvirtualLawlibrary
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 x x x. The real properties owned by the Republic are
titled either in the name of the Republic itself or in the name of agencies
or instrumentalities of the National Government. The Administrative Code
allows real property owned by the Republic to be titled in the name of
agencies or instrumentalities of the national government. Such real
properties remain owned by the Republic and continue to be exempt from
real estate tax.
The Republic may grant the beneficial use of its real property to an agency
or instrumentality of the national government. This happens when title of
the real property is transferred to an agency or instrumentality even as the
Republic remains the owner of the real property. Such arrangement does
not result in the loss of the tax exemption. Section 234(a) of the Local
Government Code states that real property owned by the Republic loses
its tax exemption only if the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person. MIAA, as a government
instrumentality, is not a taxable person under Section 133(o) of the Local
Government Code. Thus, even if we assume that the Republic has granted
to MIAA the beneficial use of the Airport Lands and Buildings, such fact
does not make these real properties subject to real estate tax.
However, portions of the Airport Lands and Buildings that MIAA leases to
private entities are not exempt from real estate tax. For example, the land
area occupied by hangars that MIAA leases to private corporations is
subject to real estate tax. In such a case, MIAA has granted the beneficial
use of such land area for a consideration to a taxable person and therefore
such land area is subject to real estate tax. x x x.80
Significantly, the Court reiterated the above ruling and applied the same
reasoning in Manila International Airport Authority v. City of Pasay,81
thus:chanRoblesvirtualLawlibrary
The only difference between the 2006 MIAA case and this case is that the
2006 MIAA case involved airport lands and buildings located in Paraaque
City while this case involved airport lands and buildings located in Pasay
City. The 2006 MIAA case and this case raised the same threshold issue:
whether the local government can impose real property tax on the airport
lands, consisting mostly of the runways, as well as the airport buildings, of
MIAA. x x x.
xxxx
The definition of instrumentality under Section 2(10) of the Introductory
Provisions of the Administrative Code of 1987 uses the phrase includes x
x x government-owned or controlled corporations which means that a
government instrumentality may or may not be a government-owned
or controlled corporation. Obviously, the term government
instrumentality is broader than the term government-owned or
controlled corporation. x x x.
xxxx
The fact that two terms have separate definitions means that while a
government instrumentality may include a government-owned or
controlled corporation, there may be a government instrumentality
that will not qualify as a government-owned or controlled corporation.
A close scrutiny of the definition of government-owned or controlled
corporation in Section 2(13) will show that MIAA would not fall under
such definition. MIAA is a government instrumentality that does not
qualify as a government-owned or controlled corporation. x x x.
xxxx
Thus, MIAA is not a government-owned or controlled corporation but a
government instrumentality which is exempt from any kind of tax from the
local governments. Indeed, the exercise of the taxing power of local
government units is subject to the limitations enumerated in Section 133
of the Local Government Code. Under Section 133(o) of the Local
Government Code, local government units have no power to tax
instrumentalities of the national government like the MIAA. Hence, MIAA
is not liable to pay real property tax for the NAIA Pasay properties.
Furthermore, the airport lands and buildings of MIAA are properties of
public dominion intended for public use, and as such are exempt from real
property tax under Section 234(a) of the Local Government Code.
However, under the same provision, if MIAA leases its real property to a
taxable person, the specific property leased becomes subject to real
property tax. In this case, only those portions of the NAIA Pasay properties
which are leased to taxable persons like private parties are subject to real
property tax by the City of Pasay. (Emphases added, citations omitted.)
The Court not only mentioned petitioner MCIAA as similarly situated as
MIAA. It also mentioned several other government instrumentalities,
among which was the Philippine Fisheries Development Authority. Thus,
applying the 2006 MIAA ruling, the Court, in Philippine Fisheries
Development Authority v. Court of Appeals,82
held:chanRoblesvirtualLawlibrary
On the basis of the parameters set in the MIAA case, the Authority should
be classified as an instrumentality of the national government. As such, it
is generally exempt from payment of real property tax, except those
portions which have been leased to private entities.
In the MIAA case, petitioner Philippine Fisheries Development Authority
was cited as among the instrumentalities of the national government. x x
x.
xxxx
Indeed, the Authority is not a GOCC but an instrumentality of the
government. The Authority has a capital stock but it is not divided into
shares of stocks. Also, it has no stockholders or voting shares. Hence, it is
not a stock corporation. Neither [is it] a non-stock corporation because it
has no members.
The Authority is actually a national government instrumentality which is
defined as an agency of the national government, not integrated within
the department framework, vested with special functions or jurisdiction by
law, endowed with some if not all corporate powers, administering special
funds, and enjoying operational autonomy, usually through a charter.
When the law vests in a government instrumentality corporate powers,
the instrumentality does not become a corporation. Unless the
government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not only
governmental but also corporate powers.
Thus, the Authority which is tasked with the special public function to
carry out the governments policy to promote the development of the
countrys fishing industry and improve the efficiency in handling,
preserving, marketing, and distribution of fish and other aquatic
products, exercises the governmental powers of eminent domain, and
the power to levy fees and charges. At the same time, the Authority
exercises the general corporate powers conferred by laws upon private
and government-owned or controlled corporations.
xxxx
In light of the foregoing, the Authority should be classified as an
instrumentality of the national government which is liable to pay taxes
only with respect to the portions of the property, the beneficial use of
which were vested in private entities. When local governments invoke the
power to tax on national government instrumentalities, such power is
construed strictly against local governments. The rule is that a tax is never
presumed and there must be clear language in the law imposing the tax.
Any doubt whether a person, article or activity is taxable is resolved
against taxation. This rule applies with greater force when local
governments seek to tax national government instrumentalities.
Thus, the real property tax assessments issued by the City of Iloilo should
be upheld only with respect to the portions leased to private persons. In
case the Authority fails to pay the real property taxes due thereon, said
portions cannot be sold at public auction to satisfy the tax delinquency. x x
x.
xxxx
In sum, the Court finds that the Authority is an instrumentality of the
national government, hence, it is liable to pay real property taxes assessed
by the City of Iloilo on the IFPC only with respect to those portions which
are leased to private entities. Notwithstanding said tax delinquency on the
leased portions of the IFPC, the latter or any part thereof, being a property
of public domain, cannot be sold at public auction. This means that the
City of Iloilo has to satisfy the tax delinquency through means other than
the sale at public auction of the IFPC. (Citations omitted.)
Another government instrumentality specifically mentioned in the 2006
MIAA case was the Philippine Ports Authority (PPA). Hence, in Curata v.
Philippine Ports Authority,83 the Court held that the PPA is similarly
situated as MIAA, and ruled in this wise:chanRoblesvirtualLawlibrary
This Courts disquisition in Manila International Airport Authority v. Court
of Appeals ruling that MIAA is not a government-owned and/or
controlled corporation (GOCC), but an instrumentality of the National
Government and thus exempt from local taxation, and that its real
properties are owned by the Republic of the Philippines is instructive. x
x x. These findings are squarely applicable to PPA, as it is similarly situated
as MIAA. First, PPA is likewise not a GOCC for not having shares of stocks
or members. Second, the docks, piers and buildings it administers are
likewise owned by the Republic and, thus, outside the commerce of man.
Third, PPA is a mere trustee of these properties. Hence, like MIAA, PPA is
clearly a government instrumentality, an agency of the government vested
with corporate powers to perform efficiently its governmental functions.
Therefore, an undeniable conclusion is that the funds of PPA partake of
government funds, and such may not be garnished absent an allocation by
its Board or by statutory grant. If the PPA funds cannot be garnished and
its properties, being government properties, cannot be levied via a writ of
execution pursuant to a final judgment, then the trial court likewise
cannot grant discretionary execution pending appeal, as it would run afoul
of the established jurisprudence that government properties are exempt
from execution. What cannot be done directly cannot be done indirectly.
(Citations omitted.)
In Government Service Insurance System v. City Treasurer and City
Assessor of the City of Manila84 the Court found that the GSIS was also a
government instrumentality and not a GOCC, applying the 2006 MIAA case
even though the GSIS was not among those specifically mentioned by the
Court as similarly situated as MIAA. The Court
said:chanRoblesvirtualLawlibrary
GSIS an instrumentality of the National Government
Apart from the foregoing consideration, the Courts fairly recent ruling in
Manila International Airport Authority v. Court of Appeals, a case likewise
involving real estate tax assessments by a Metro Manila city on the real
properties administered by MIAA, argues for the non-tax liability of GSIS
for real estate taxes. x x x.
xxxx
While perhaps not of governing sway in all fours inasmuch as what were
involved in Manila International Airport Authority, e.g., airfields and
runways, are properties of the public dominion and, hence, outside the
commerce of man, the rationale underpinning the disposition in that case
is squarely applicable to GSIS, both MIAA and GSIS being similarly situated.
First, while created under CA 186 as a non-stock corporation, a status that
has remained unchanged even when it operated under PD 1146 and RA
8291, GSIS is not, in the context of the aforequoted Sec. 193 of the LGC, a
GOCC following the teaching of Manila International Airport Authority, for,
like MIAA, GSISs capital is not divided into unit shares. Also, GSIS has no
members to speak of. And by members, the reference is to those who,
under Sec. 87 of the Corporation Code, make up the non-stock
corporation, and not to the compulsory members of the system who are
government employees. Its management is entrusted to a Board of
Trustees whose members are appointed by the President.
Second, the subject properties under GSISs name are likewise owned by
the Republic. The GSIS is but a mere trustee of the subject properties
which have either been ceded to it by the Government or acquired for the
enhancement of the system. This particular property arrangement is
clearly shown by the fact that the disposal or conveyance of said subject
properties are either done by or through the authority of the President of
the Philippines. x x x. (Emphasis added, citations omitted.)
All the more do we find that petitioner MCIAA, with its many similarities to
the MIAA, should be classified as a government instrumentality, as its
properties are being used for public purposes, and should be exempt from
real estate taxes. This is not to derogate in any way the delegated
authority of local government units to collect realty taxes, but to uphold
the fundamental doctrines of uniformity in taxation and equal protection
of the laws, by applying all the jurisprudence that have exempted from
said taxes similar authorities, agencies, and instrumentalities, whether
covered by the 2006 MIAA ruling or not.
To reiterate, petitioner MCIAA is vested with corporate powers but it is
not a stock or non-stock corporation, which is a necessary condition
before an agency or instrumentality is deemed a government-owned or
controlled corporation. Like MIAA, petitioner MCIAA has capital under its
charter but it is not divided into shares of stock. It also has no stockholders
or voting shares. Republic Act No. 6958
provides:chanRoblesvirtualLawlibrary
Section 9. Capital. The [Mactan-Cebu International Airport] Authority
shall have an authorized capital stock equal to and consisting
of:ChanRoblesVirtualawlibrary
(a) The value of fixed assets (including airport facilities, runways and
equipment) and such other properties, movable and immovable, currently
administered by or belonging to the airports as valued on the date of the
effectivity of this Act;
(b) The value of such real estate owned and/or administered by the
airports; and
(c) Government contribution in such amount as may be deemed an
appropriate initial balance. Such initial amount, as approved by the
President of the Philippines, which shall be more or less equivalent to six
(6) months working capital requirement of the Authority, is hereby
authorized to be appropriated in the General Appropriations Act of the
year following its enactment into law.chanroblesvirtuallawlibrary
Thereafter, the government contribution to the capital of the Authority
shall be provided for in the General Appropriations Act.
Like in MIAA, the airport lands and buildings of MCIAA 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, and are outside the commerce of man. This, unless
petitioner leases its real property to a taxable person, the specific property
leased becomes subject to real property tax; in which case, only those
portions of petitioners properties which are leased to taxable persons like
private parties are subject to real property tax by the City of Lapu-Lapu.
We hereby adopt and apply to petitioner MCIAA the findings and
conclusions of the Court in the 2006 MIAA case, and we
quote:chanRoblesvirtualLawlibrary
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. x x x.
xxxx
The term ports x x x 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 x x x constructed by the State, which includes
public airports and seaports, as properties of public dominion and owned
by the Republic. As properties of public dominion owned by the Republic,
there is no doubt whatsoever that the Airport Lands and Buildings are
expressly exempt from real estate tax under Section 234(a) of the Local
Government Code. This Court has also repeatedly ruled that properties of
public dominion are not subject to execution or foreclosure sale.85
(Emphases added.)
WHEREFORE, we hereby GRANT the petition. We REVERSE and SET ASIDE
the Decision dated October 8, 2007 and the Resolution dated February 12,
2008 of the Court of Appeals (Cebu City) in CA-G.R. SP No. 01360.
Accordingly, we DECLARE:
Petitioners properties that are actually, solely and exclusively used for
public purpose, consisting of the airport terminal building, airfield,
runway, taxiway and the lots on which they are situated, EXEMPT from
real property tax imposed by the City of Lapu-Lapu.
VOID all the real property tax assessments, including the additional tax for
the special education fund and the penalty interest, as well as the final
notices of real property tax delinquencies, issued by the City of Lapu-Lapu
on petitioners properties, except the assessment covering the portions
that petitioner has leased to private parties.
NULL and VOID the sale in public auction of 27 of petitioners properties
and the eventual forfeiture and purchase of the said properties by
respondent City of Lapu-Lapu. We likewise declare VOID the
corresponding Certificates of Sale of Delinquent Property issued to
respondent City of Lapu-Lapu.
SO ORDERED
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 92013 July 25, 1990
SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL
MANGLAPUS, as Secretary of Foreign Affairs, and CATALINO MACARAIG,
as Executive Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST
CHAIRMAN RAMON T. GARCIA, AMBASSADOR RAMON DEL ROSARIO, et
al., as members of the PRINCIPAL AND BIDDING COMMITTEES ON THE
UTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT
PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.
GUTIERREZ, JR., J.:
These are two petitions for prohibition seeking to enjoin respondents,
their representatives and agents from proceeding with the bidding for the
sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome Minato-
ku Tokyo, Japan scheduled on February 21, 1990. We granted the prayer
for a temporary restraining order effective February 20, 1990. One of the
petitioners (in G.R. No. 92047) likewise prayes for a writ of mandamus to
compel the respondents to fully disclose to the public the basis of their
decision to push through with the sale of the Roppongi property inspire of
strong public opposition and to explain the proceedings which effectively
prevent the participation of Filipino citizens and entities in the bidding
process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard
by the Court on March 13, 1990. After G.R. No. 92047, Ojeda v. Secretary
Macaraig, et al. was filed, the respondents were required to file a
comment by the Court's resolution dated February 22, 1990. The two
petitions were consolidated on March 27, 1990 when the memoranda of
the parties in the Laurel case were deliberated upon.
The Court could not act on these cases immediately because the
respondents filed a motion for an extension of thirty (30) days to file
comment in G.R. No. 92047, followed by a second motion for an extension
of another thirty (30) days which we granted on May 8, 1990, a third
motion for extension of time granted on May 24, 1990 and a fourth
motion for extension of time which we granted on June 5, 1990 but calling
the attention of the respondents to the length of time the petitions have
been pending. After the comment was filed, the petitioner in G.R. No.
92047 asked for thirty (30) days to file a reply. We noted his motion and
resolved to decide the two (2) cases.
I after postponements, has not yet materialized. The last scheduled bidding
The subject property in this case is one of the four (4) properties in Japan
acquired by the Philippine government under the Reparations Agreement
entered into with Japan on May 9, 1956, the other lots being:
(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-
ku, Tokyo which has an area of approximately 2,489.96 square meters, and
is at present the site of the Philippine Embassy Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with
an area of around 764.72 square meters and categorized as a commercial
lot now being used as a warehouse and parking lot for the consulate staff;
and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho,
Shinohara, Nada-ku, Kobe, a residential lot which is now vacant.
The properties and the capital goods and services procured from the
Japanese government for national development projects are part of the
indemnification to the Filipino people for their losses in life and property
and their suffering during World War II.
The Reparations Agreement provides that reparations valued at $550
million would be payable in twenty (20) years in accordance with annual
schedules of procurements to be fixed by the Philippine and Japanese
governments (Article 2, Reparations Agreement). Rep. Act No. 1789, the
Reparations Law, prescribes the national policy on procurement and
utilization of reparations and development loans. The procurements are
divided into those for use by the government sector and those for private
parties in projects as the then National Economic Council shall determine.
Those intended for the private sector shall be made available by sale to
Filipino citizens or to one hundred (100%) percent Filipino-owned entities
in national development projects.
The Roppongi property was acquired from the Japanese government
under the Second Year Schedule and listed under the heading
"Government Sector", through Reparations Contract No. 300 dated June
27, 1958. The Roppongi property consists of the land and building "for the
Chancery of the Philippine Embassy" (Annex M-D to Memorandum for
Petitioner, p. 503). As intended, it became the site of the Philippine
Embassy until the latter was transferred to Nampeidai on July 22, 1976
when the Roppongi building needed major repairs. Due to the failure of
our government to provide necessary funds, the Roppongi property has
remained undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former
Philippine Ambassador to Japan, Carlos J. Valdez, to make the property the
subject of a lease agreement with a Japanese firm - Kajima Corporation
which shall construct two (2) buildings in Roppongi and one (1) building in
Nampeidai and renovate the present Philippine Chancery in Nampeidai.
The consideration of the construction would be the lease to the foreign
corporation of one (1) of the buildings to be constructed in Roppongi and
the two (2) buildings in Nampeidai. The other building in Roppongi shall
then be used as the Philippine Embassy Chancery. At the end of the lease
period, all the three leased buildings shall be occupied and used by the
Philippine government. No change of ownership or title shall occur. (See
Annex "B" to Reply to Comment) The Philippine government retains the
title all throughout the lease period and thereafter. However, the
government has not acted favorably on this proposal which is pending
approval and ratification between the parties. Instead, on August 11,
1986, President Aquino created a committee to study the
disposition/utilization of Philippine government properties in Tokyo and
Kobe, Japan through Administrative Order No. 3, followed by
Administrative Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296 entitling
non-Filipino citizens or entities to avail of separations' capital goods and
services in the event of sale, lease or disposition. The four properties in
Japan including the Roppongi were specifically mentioned in the first
"Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the
government has been pushing, with great vigor, its decision to sell the
reparations properties starting with the Roppongi lot. The property has
twice been set for bidding at a minimum floor price of $225 million. The
first bidding was a failure since only one bidder qualified. The second one,
on February 21, 1990 was restrained by his Court. Later, the rules on
bidding were changed such that the $225 million floor price became
merely a suggested floor price.
The Court finds that each of the herein petitions raises distinct issues. The
petitioner in G.R. No. 92013 objects to the alienation of the Roppongi
property to anyone while the petitioner in G.R. No. 92047 adds as a
principal objection the alleged unjustified bias of the Philippine
government in favor of selling the property to non-Filipino citizens and
entities. These petitions have been consolidated and are resolved at the
same time for the objective is the same - to stop the sale of the Roppongi
property.
The petitioner in G.R. No. 92013 raises the following issues:
(1) Can the Roppongi property and others of its kind be alienated
by the Philippine Government?; and
(2) Does the Chief Executive, her officers and agents, have the
authority and jurisdiction, to sell the Roppongi property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the
authority of the government to alienate the Roppongi property assails the
constitutionality of Executive Order No. 296 in making the property
available for sale to non-Filipino citizens and entities. He also questions
the bidding procedures of the Committee on the Utilization or Disposition
of Philippine Government Properties in Japan for being discriminatory
against Filipino citizens and Filipino-owned entities by denying them the
right to be informed about the bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property
and the related lots were acquired as part of the reparations from the
Japanese government for diplomatic and consular use by the Philippine
government. Vice-President Laurel states that the Roppongi property is
classified as one of public dominion, and not of private ownership under
Article 420 of the Civil Code (See infra).
The petitioner submits that the Roppongi property comes under "property
intended for public service" in paragraph 2 of the above provision. He
states that being one of public dominion, no ownership by any one can
attach to it, not even by the State. The Roppongi and related properties
were acquired for "sites for chancery, diplomatic, and consular quarters,
buildings and other improvements" (Second Year Reparations Schedule).
The petitioner states that they continue to be intended for a necessary
service. They are held by the State in anticipation of an opportune use.
(Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the
commerce of man, or to put it in more simple terms, it cannot be
alienated nor be the subject matter of contracts (Citing Municipality of
Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi
property at the moment, the petitioner avers that the same remains
property of public dominion so long as the government has not used it for
other purposes nor adopted any measure constituting a removal of its
original purpose or use.
The respondents, for their part, refute the petitioner's contention by
saying that the subject property is not governed by our Civil Code but by
the laws of Japan where the property is located. They rely upon the rule of
lex situs which is used in determining the applicable law regarding the
acquisition, transfer and devolution of the title to a property. They also
invoke Opinion No. 21, Series of 1988, dated January 27, 1988 of the
Secretary of Justice which used the lex situs in explaining the
inapplicability of Philippine law regarding a property situated in Japan.
The respondents add that even assuming for the sake of argument that
the Civil Code is applicable, the Roppongi property has ceased to become
property of public dominion. It has become patrimonial property because
it has not been used for public service or for diplomatic purposes for over
thirteen (13) years now (Citing Article 422, Civil Code) and because the
intention by the Executive Department and the Congress to convert it to
private use has been manifested by overt acts, such as, among others: (1)
the transfer of the Philippine Embassy to Nampeidai (2) the issuance of
administrative orders for the possibility of alienating the four government
properties in Japan; (3) the issuance of Executive Order No. 296; (4) the
enactment by the Congress of Rep. Act No. 6657 [the Comprehensive
Agrarian Reform Law] on June 10, 1988 which contains a provision stating
that funds may be taken from the sale of Philippine properties in foreign
countries; (5) the holding of the public bidding of the Roppongi property
but which failed; (6) the deferment by the Senate in Resolution No. 55 of
the bidding to a future date; thus an acknowledgment by the Senate of the
government's intention to remove the Roppongi property from the public
service purpose; and (7) the resolution of this Court dismissing the petition
in Ojeda v. Bidding Committee, et al., G.R. No. 87478 which sought to
enjoin the second bidding of the Roppongi property scheduled on March
30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on
the constitutionality of Executive Order No. 296. He had earlier filed a
petition in G.R. No. 87478 which the Court dismissed on August 1, 1989.
He now avers that the executive order contravenes the constitutional
mandate to conserve and develop the national patrimony stated in the
Preamble of the 1987 Constitution. It also allegedly violates:
(1) The reservation of the ownership and acquisition of alienable
lands of the public domain to Filipino citizens. (Sections 2 and 3, Article XII,
Constitution; Sections 22 and 23 of Commonwealth Act 141).itc-asl
(2) The preference for Filipino citizens in the grant of rights,
privileges and concessions covering the national economy and patrimony
(Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against unfair
competition and trade practices;
(4) The guarantee of the right of the people to information on all
matters of public concern (Section 7, Article III, Constitution);
(5) The prohibition against the sale to non-Filipino citizens or
entities not wholly owned by Filipino citizens of capital goods received by
the Philippines under the Reparations Act (Sections 2 and 12 of Rep. Act
No. 1789); and
(6) The declaration of the state policy of full public disclosure of all
transactions involving public interest (Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the execution of an
unconstitutional executive order is a misapplication of public funds He
states that since the details of the bidding for the Roppongi property were
never publicly disclosed until February 15, 1990 (or a few days before the
scheduled bidding), the bidding guidelines are available only in Tokyo, and
the accomplishment of requirements and the selection of qualified bidders
should be done in Tokyo, interested Filipino citizens or entities owned by
them did not have the chance to comply with Purchase Offer
Requirements on the Roppongi. Worse, the Roppongi shall be sold for a
minimum price of $225 million from which price capital gains tax under
Japanese law of about 50 to 70% of the floor price would still be deducted.
IV
The petitioners and respondents in both cases do not dispute the fact that
the Roppongi site and the three related properties were through
reparations agreements, that these were assigned to the government
sector and that the Roppongi property itself was specifically designated
under the Reparations Agreement to house the Philippine Embassy.
The nature of the Roppongi lot as property for public service is expressly
spelled out. It is dictated by the terms of the Reparations Agreement and
the corresponding contract of procurement which bind both the Philippine
government and the Japanese government.
There can be no doubt that it is of public dominion unless it is convincingly
shown that the property has become patrimonial. This, the respondents
have failed to do.
As property of public dominion, the Roppongi lot is outside the commerce
of man. It cannot be alienated. Its ownership is a special collective
ownership for general use and enjoyment, an application to the
satisfaction of collective needs, and resides in the social group. The
purpose is not to serve the State as a juridical person, but the citizens; it is
intended for the common and public welfare and cannot be the object of
appropration. (Taken from 3 Manresa, 66-69; cited in Tolentino,
Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p.
26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of private ownership.
ART. 420. The following things are property of public dominion
(1) Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks shores
roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use,
and are intended for some public service or for the development of the
national wealth.
ART. 421. All other property of the State, which is not of the character
stated in the preceding article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article
420 of the Civil Code as property belonging to the State and intended for
some public service.
Has the intention of the government regarding the use of the property
been changed because the lot has been Idle for some years? Has it
become patrimonial?
The fact that the Roppongi site has not been used for a long time for
actual Embassy service does not automatically convert it to patrimonial
property. Any such conversion happens only if the property is withdrawn
from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481
[1975]). A property continues to be part of the public domain, not
available for private appropriation or ownership until there is a formal
declaration on the part of the government to withdraw it from being such
(Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public
officials insinuating a change of intention. We emphasize, however, that
an abandonment of the intention to use the Roppongi property for public
service and to make it patrimonial property under Article 422 of the Civil
Code must be 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. Lazaro,
166 SCRA 368 [1988]). Abandonment must be a certain and positive act
based on correct legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not
relinquishment of the Roppongi property's original purpose. Even the
failure by the government to repair the building in Roppongi is not
abandonment since as earlier stated, there simply was a shortage of
government funds. The recent Administrative Orders authorizing a study
of the status and conditions of government properties in Japan were
merely directives for investigation but did not in any way signify a clear
intention to dispose of the properties.
Executive Order No. 296, though its title declares an "authority to sell",
does not have a provision in its text expressly authorizing the sale of the
four properties procured from Japan for the government sector. The
executive order does not declare that the properties lost their public
character. It merely intends to make the properties available to foreigners
and not to Filipinos alone in case of a sale, lease or other disposition. It
merely eliminates the restriction under Rep. Act No. 1789 that reparations
goods may be sold only to Filipino citizens and one hundred (100%)
percent Filipino-owned entities. The text of Executive Order No. 296
provides:
Section 1. The provisions of Republic Act No. 1789, as amended, and of
other laws to the contrary notwithstanding, the above-mentioned
properties can be made available for sale, lease or any other manner of
disposition to non-Filipino citizens or to entities owned by non-Filipino
citizens.
Executive Order No. 296 is based on the wrong premise or assumption
that the Roppongi and the three other properties were earlier converted
into alienable real properties. As earlier stated, Rep. Act No. 1789
differentiates the procurements for the government sector and the private
sector (Sections 2 and 12, Rep. Act No. 1789). Only the private sector
properties can be sold to end-users who must be Filipinos or entities
owned by Filipinos. It is this nationality provision which was amended by
Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one
of the sources of funds for its implementation, the proceeds of the
disposition of the properties of the Government in foreign countries, did
not withdraw the Roppongi property from being classified as one of public
dominion when it mentions Philippine properties abroad. Section 63 (c)
refers to properties which are alienable and not to those reserved for
public use or service. Rep Act No. 6657, therefore, does not authorize the
Executive Department to sell the Roppongi property. It merely enumerates
possible sources of future funding to augment (as and when needed) the
Agrarian Reform Fund created under Executive Order No. 299. Obviously
any property outside of the commerce of man cannot be tapped as a
source of funds.
The respondents try to get around the public dominion character of the
Roppongi property by insisting that Japanese law and not our Civil Code
should apply.
It is exceedingly strange why our top government officials, of all people,
should be the ones to insist that in the sale of extremely valuable
government property, Japanese law and not Philippine law should prevail.
The Japanese law - its coverage and effects, when enacted, and exceptions
to its provision is not presented to the Court It is simply asserted that
the lex loci rei sitae or Japanese law should apply without stating what
that law provides. It is a ed on faith that Japanese law would allow the
sale.
We see no reason why a conflict of law rule should apply when no conflict
of law situation exists. A conflict of law situation arises only when: (1)
There is a dispute over the title or ownership of an immovable, such that
the capacity to take and transfer immovables, the formalities of
conveyance, the essential validity and effect of the transfer, or the
interpretation and effect of a conveyance, are to be determined (See
Salonga, Private International Law, 1981 ed., pp. 377-383); and (2) A
foreign law on land ownership and its conveyance is asserted to conflict
with a domestic law on the same matters. Hence, the need to determine
which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is
no question that the property belongs to the Philippines. The issue is the
authority of the respondent officials to validly dispose of property
belonging to the State. And the validity of the procedures adopted to
effect its sale. This is governed by Philippine Law. The rule of lex situs does
not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the
relevance of the lex situs rule is misplaced. The opinion does not tackle the
alienability of the real properties procured through reparations nor the
existence in what body of the authority to sell them. In discussing who are
capable of acquiring the lots, the Secretary merely explains that it is the
foreign law which should determine who can acquire the properties so
that the constitutional limitation on acquisition of lands of the public
domain to Filipino citizens and entities wholly owned by Filipinos is
inapplicable. We see no point in belaboring whether or not this opinion is
correct. Why should we discuss who can acquire the Roppongi lot when
there is no showing that it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the
recommendation by the investigating committee to sell the Roppongi
property was premature or, at the very least, conditioned on a valid
change in the public character of the Roppongi property. Moreover, the
approval does not have the force and effect of law since the President
already lost her legislative powers. The Congress had already convened for
more than a year.
Assuming for the sake of argument, however, that the Roppongi property
is no longer of public dominion, there is another obstacle to its sale by the
respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f ) Conveyances and contracts to which the
Government is a party. In cases in which the Government of the
Republic of the Philippines is a party to any deed or other instrument
conveying the title to real estate or to any other property the value of
which is in excess of one hundred thousand pesos, the respective
Department Secretary shall prepare the necessary papers which, together
with the proper recommendations, shall be submitted to the Congress of
the Philippines for approval by the same. Such deed, instrument, or
contract shall be executed and signed by the President of the Philippines
on behalf of the Government of the Philippines unless the Government of
the Philippines unless the authority therefor be expressly vested by law in
another officer. (Emphasis supplied)
The requirement has been retained in Section 48, Book I of the
Administrative Code of 1987 (Executive Order No. 292).
SEC. 48. Official Authorized to Convey Real Property. Whenever real
property of the Government is authorized by law to be conveyed, the deed
of conveyance shall be executed in behalf of the government by the
following:
(1) For property belonging to and titled in the name of the
Republic of the Philippines, by the President, unless the authority therefor
is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but
titled in the name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)
It is not for the President to convey valuable real property of the
government on his or her own sole will. Any such conveyance must be
authorized and approved by a law enacted by the Congress. It requires
executive and legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the
deferment of the sale of the Roppongi property does not withdraw the
property from public domain much less authorize its sale. It is a mere
resolution; it is not a formal declaration abandoning the public character
of the Roppongi property. In fact, the Senate Committee on Foreign
Relations is conducting hearings on Senate Resolution No. 734 which
raises serious policy considerations and calls for a fact-finding investigation
of the circumstances behind the decision to sell the Philippine government
properties in Japan.
The resolution of this Court in Ojeda v. Bidding Committee, et al., supra,
did not pass upon the constitutionality of Executive Order No. 296.
Contrary to respondents' assertion, we did not uphold the authority of the
President to sell the Roppongi property. The Court stated that the
constitutionality of the executive order was not the real issue and that
resolving the constitutional question was "neither necessary nor finally
determinative of the case." The Court noted that "[W]hat petitioner
ultimately questions is the use of the proceeds of the disposition of the
Roppongi property." In emphasizing that "the decision of the Executive to
dispose of the Roppongi property to finance the CARP ... cannot be
questioned" in view of Section 63 (c) of Rep. Act No. 6657, the Court did
not acknowledge the fact that the property became alienable nor did it
indicate that the President was authorized to dispose of the Roppongi
property. The resolution should be read to mean that in case the Roppongi
property is re-classified to be patrimonial and alienable by authority of
law, the proceeds of a sale may be used for national economic
development projects including the CARP.
Moreover, the sale in 1989 did not materialize. The petitions before us
question the proposed 1990 sale of the Roppongi property. We are
resolving the issues raised in these petitions, not the issues raised in 1989.
Having declared a need for a law or formal declaration to withdraw the
Roppongi property from public domain to make it alienable and a need for
legislative authority to allow the sale of the property, we see no
compelling reason to tackle the constitutional issues raised by petitioner
Ojeda.
The Court does not ordinarily pass upon constitutional questions unless
these questions are properly raised in appropriate cases and their
resolution is necessary for the determination of the case (People v. Vera,
65 Phil. 56 [1937]). The Court will not pass upon a constitutional question
although properly presented by the record if the case can be disposed of
on some other ground such as the application of a statute or general law
(Siler v. Louisville and Nashville R. Co., 213 U.S. 175, [1909], Railroad
Commission v. Pullman Co., 312 U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the Roppongi property should
not be sold:
The Roppongi property is not just like any piece of property. It was given
to the Filipino people in reparation for the lives and blood of Filipinos who
died and suffered during the Japanese military occupation, for the
suffering of widows and orphans who lost their loved ones and kindred,
for the homes and other properties lost by countless Filipinos during the
war. The Tokyo properties are a monument to the bravery and sacrifice of
the Filipino people in the face of an invader; like the monuments of Rizal,
Quezon, and other Filipino heroes, we do not expect economic or financial
benefits from them. But who would think of selling these monuments?
Filipino honor and national dignity dictate that we keep our properties in
Japan as memorials to the countless Filipinos who died and suffered. Even
if we should become paupers we should not think of selling them. For it
would be as if we sold the lives and blood and tears of our countrymen.
(Rollo- G.R. No. 92013, p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is one ceded by the Japanese
government in atonement for its past belligerence for the valiant sacrifice
of life and limb and for deaths, physical dislocation and economic
devastation the whole Filipino people endured in World War II.
It is for what it stands for, and for what it could never bring back to life,
that its significance today remains undimmed, inspire of the lapse of 45
years since the war ended, inspire of the passage of 32 years since the
property passed on to the Philippine government.
Roppongi is a reminder that cannot should not be dissipated ...
(Rollo-92047, p. 9)
It is indeed true that the Roppongi property is valuable not so much
because of the inflated prices fetched by real property in Tokyo but more
so because of its symbolic value to all Filipinos veterans and civilians
alike. Whether or not the Roppongi and related properties will eventually
be sold is a policy determination where both the President and Congress
must concur. Considering the properties' importance and value, the laws
on conversion and disposition of property of public dominion must be
faithfully followed.
WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A
writ of prohibition is issued enjoining the respondents from proceeding
with the sale of the Roppongi property in Tokyo, Japan. The February 20,
1990 Temporary Restraining Order is made PERMANENT.
SO ORDERED.
SECOND DIVISION
G.R. No. 177168, August 03, 2015
NAVY OFFICERS' VILLAGE ASSOCIATION, INC. (NOVAI), Petitioner, v.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
BRION, J.:
We resolve the present petition for review on certiorari1 assailing the
December 28, 2006 decision2 and March 28, 2007 resolution3 of the Court
of Appeals (CA) in CA-G.R. CV No. 85179.
The CA reversed and set aside the August 20, 2004 decision4 of the
Regional Trial Court (RTC) Branch 67, Pasig City, that dismissed the
complaint filed by the Republic of the Philippines (respondent or the
Republic) for the cancellation of Transfer Certificate of Title (TCT) No. T-
15387 issued in the name of Navy Officers' Village Association, Inc. or
NOVAI (petitioner).
The Factual Antecedents
TCT No. T-15387,5 issued in NOVAI's name, covers a 475,009 square-meter
parcel of land (the property)6 situated inside the former Fort Andres
Bonifacio Military Reservation (FBMR) in Taguig, Metro Manila.
The property previously formed part of a larger 15,812,684 square-meter
parcel of land situated at the former Fort William McKinley, Rizal, which
was covered by TCT No. 61524 issued in the name of the Republic of the
Philippines.
On July 12, 1957, then President Carlos P. Garcia issued Proclamation No.
4237 "reserving for military purposes certain parcels of the public domain
situated in the municipalities of Pasig, Taguig, Paraaque, province of
Rizal, and Pasay City," which included the 15,812,684 square-meter parcel
of land covered by TCT No. 61524.
On September 29, 1965, then Pres. Diosdado Macapagal issued
Proclamation No. 4618 which excluded from Fort McKinley "a certain
portion of land embraced therein, situated in the municipalities of Taguig
and Paraaque, Province of Rizal, and Pasay City," with an area of
2,455,310 square meters, and declared the excluded area as "AFP Officers'
Village" to be disposed of under the provisions of Republic Act Nos. 2749
and 730.10cralawrednad
Barely a month after, or on October 25, 1965, Pres. Macapagal issued
Proclamation No. 47811 "reserving for the veterans rehabilitation,
medicare and training center site purposes" an area of 537,520 square
meters of the land previously declared as AFP Officers' Village under
Proclamation No. 461, and placed the reserved area under the
administration of the Veterans Federation of the Philippines (VFP).
The property is within the 537,520 square-meter parcel of land reserved in
VFP's favor.
On November 15, 1991, the property was the subject of a Deed of
Sale12between the Republic of the Philippines, through former Land
Management Bureau (LMB) Director Abelardo G. Palad, Jr., (Dir. Palad) and
petitioner NOVAI. The deed of sale was subsequently registered and from
which TCT No. T-15387 was issued in NOVAI's name.
The Republic's Complaint for Cancellation of Title
In its complaint13 filed with the RTC on December 23, 1993, the Republic
sought to cancel NOVAFs title based on the following grounds: (a) the land
covered by NOVAFs title is part of a military reservation; (b) the deed of
sale conveying the property to NOVAI, which became the basis for the
issuance of TCT No. 15387, is fictitious; (c) the LMB has no records of any
application made by NOVAI for the purchase of the property, and of the
NOVAFs alleged payment of P14,250,270.00 for the property; and (d) the
presidential proclamation, i.e., Proclamation No. 2487, claimed to have
been issued by then President Corazon C. Aquino in 1991 that authorized
the transfer and titling of the property to NOVAI, is fictitious.
NOVAI's Answer to the Complaint
In its answer (which was later amended) to the Republic's complaint,
NOVAI counter-argued that the property was no longer part of the public
dominion, as the land had long been segregated from the military
reservation pursuant to Proclamation No. 461.
NOVAI claimed that, contrary to the Republic's contention that there were
no records of the sale, it had actually filed a letter-application for a sales
patent over the property with the LMB which prepared, verified and
approved the property's plan and technical description; and that the LMB
delivered to it a copy of the deed of sale, signed and executed by Dir.
Palad, after it had paid a portion of the P14,250,270.00 purchase price,
corresponding taxes, and other charges, with the balance to be paid in
installments.
Also, NOVAI contended that, since any alleged irregularities that may have
attended the sale pertained only to formalities, the proper remedy for the
Republic was to file an action for reformation of instrument, not for
cancellation of title. In any event, it added that the Republic's cause of
action had prescribed because its title to the property had already become
indefeasible.
The RTC's decision
The RTC narrowed down the issues to: (a) the character of the property in
question, i.e., whether the property in question was part of the FBMR, and
hence, inalienable; and (b) the validity of the deed of sale conveying the
property to NOVAI, i.e., whether the title over the property was acquired
by NOVAI through fraud. The RTC resolved both issues in NOVAI's favor.
In its decision, the RTC ruled that: (a) the property is alienable and
disposable in character, as the land falls within the area segregated from
the FBMR pursuant to Proclamation No. 461; (b) the subject deed of sale
should be presumed valid on its face, as it was executed with all the
formalities of a notarial certification; (c) notwithstanding the claims of
forgery, the signature of Dir. Palad on the deed of sale appeared genuine
and authentic; and (d) NOVAI's title to the property had attained
indefeasibility since the Republic's action for cancellation of title was filed
close to two (2) years from the issuance of the title.
The CA's decision
The CA reversed and set aside the RTC's decision. It ruled that the property
is inalienable land of the public domain; thus, it cannot be disposed of or
be the subject of a sale. It pointed out that, since NOVAI failed to
discharge its burden of proving the existence of Proclamation No. 2487 -
the positive governmental act that would have removed the property from
the public domain the property remained reserved for veterans
rehabilitation purposes under Proclamation No. 478, the latest executive
issuance affecting the property.
Since the property is inalienable, the CA held that the incontestability and
indefeasibility generally accorded to a Torrens title cannot apply because
the property, as in this case, is unregistrable land; that a title issued by
reason or on account of any sale, alienation, or transfer of an inalienable
property is void and a patent nullity; and that, consequently, the
Republic's action for the cancellation of NOVAI's title cannot be barred by
prescription.
Also, the CA held that there can be no presumption of regularity in the
execution of the subject deed of sale given the questionable
circumstances that surrounded the alleged sale of the property to
NOVAI,14e.g., NOVAI's failure to go through the regular process in the
Department of Environment and Natural Resources (DENR) or the LMB
Offices in the filing of an application for sales patent and in the conduct of
survey and investigation; the execution of the deed of sale without
payment of the full purchase price as required by policy; and the
appearances of forgery and falsification of Dir. Palad's signature on the
deed of sale and on the receipts issued to NOVAI for its installment
payments on the property, among others.
Lastly, the CA held that the Court's observations and ruling in Republic of
the Philippines v. Southside Homeowners Association, Inc (Southside)15 is
applicable to the present case. In Southside, the Republic similarly sought
the cancellation of title - TCT No. 15084 - issued in favor of Southside
Homeowners Association, Inc. (SHAI) over a 39.99 hectare area of land
situated in what was known as the Joint U.S. Military Assistance Group
(JUSMAG) housing area in Fort Bonifacio. The Court cancelled the
certificate of title issued to SHAI, as the latter failed to prove that the
JUSMAG area had been withdrawn from the military reservation and had
been declared open for disposition. The Court therein ruled that, since the
JUSMAG area was still part of the FBMR, its alleged sale to SHAI is
necessarily void and of no effect.
NOVAI sought reconsideration of the CA's decision, which the CA denied in
its March 28, 2007 resolution;16 hence, this petition.
The Petition
NOVAI alleges that the CA erred in declaring that: (a) the property is
inalienable land of the public domain, (b) the deed of sale and
Proclamation No. 2487 were void and nonexistent, respectively, (c) the
Republic's action for cancellation of title was not barred by prescription,
and (d) the ruling in Southside was applicable to the present case.
In support of its petition, NOVAI raises the following
arguments:ChanRoblesvirtualLawlibrary
(a)
The property is no longer part of the public domain because, by virtue of
Proclamation No. 461, s. of 1965, the property was excluded from the
FBMR and made available for disposition to qualified persons, subject to
the provisions of R.A. Nos. 274 and 720 in relation to the Public Land Act;
(b)
The deed of sale was, in all respects, valid and enforceable, as it was
shown to have been officially executed by an authorized public officer
under the provisions of the Public Land Act, and celebrated with all the
formalities of a notarial certification;
(c)
Proclamation No. 2487 is to be presumed valid until proven otherwise;
that the Republic carried the burden of proving that Proclamation No.
2487 was a forgery, and that it failed to discharge this burden;
(d)
The CA should not have considered as evidence the testimony of Senator
Franklin Drilon on the nonexistence of Proclamation No. 2487 because
such testimony was given by Senator Drilon in another case17 and was not
formally offered in evidence by the Republic during the trial of the present
case before the RTC;
(e)
The action for cancellation of title filed by the Republic is already barred
by prescription because it was filed only on December 23, 1993, or close to
two (2) years from the issuance of NOVAI's title on January 9, 1992; and
(f)
The case of Southside is not a cognate or companion case to the present
case because the two cases involve completely dissimilar factual and
doctrinal bases; thus, the Court's observations and ruling in Southside
should not be applied to the present case.
The Republic's Comment to the Petition
Procedurally, the Republic assails the propriety of the issues raised by
NOVAI, such as "whether Proclamation No. 2487 and the signature of LMB
Director Palad on the assailed deed of sale are forged or fictitious," and
"whether the Republic had presented adequate evidence to establish the
spuriousness of the subject proclamation," which are factual in nature and
not allowed in a Rule 45 petition.
On the petition's substance, the Republic counters
that:ChanRoblesvirtualLawlibrary
(a)
The property is inalienable public land incapable of private appropriation
because, while the property formed part of the area segregated from the
FBMR under Proclamation No. 461, it was subsequently reserved for a
specific public use or purpose under Proclamation No. 478;
(b)
Proclamation No. 2487, which purportedly revoked Proclamation No. 478,
does not legally exist and thus cannot be presumed valid and
constitutional unless proven otherwise; the presumption of validity and
constitutionality of a law applies only where there is no dispute as to the
authenticity and due execution of the law in issue;
(c)
The deed of sale executed by NOVAI and by Dir. Palad was undeniably
forged, as Dir. Palad categorically denied having signed the deed of sale,
and a handwriting expert from the National Bureau of Investigation (NBI)
confirmed that Dir. Palad's signature was indeed a forgery;18
(d)
NOVAI, a private corporation, is disqualified from purchasing the property
because R.A. Nos. 274 and 730, and the Public Land Act only allow the sale
of alienable and disposable public lands to natural persons, not juridical
persons; and
(e)
The Court's decision in Southside applies to the present case because of
the strong factual and evidentiary relationship between the two cases.
BCDA's Comment-in-Intervention
On December 28, 2007, and while the case was pending before this Court,
the Bases Conversion Development Authority (BCDA) filed a motion for
leave to file comment-in-intervention and to admit the attached
comment-in-intervention.19cralawrednad
In a resolution dated February 18, 2008,20 the Court allowed the BCDA's
intervention.
As the Republic has done, the BCDA contends that NOVAI is disqualified
from acquiring the property given the constitutional and statutory
provisions that prohibit the acquisition of lands of the public domain by a
corporation or association; that any sale of land in violation of the
Constitution or of the provisions of R.A. Nos. 274 and 730, and the Public
Land Act are null and void; and that any title which may have been issued
by mistake or error on the part of a public official can be cancelled at any
time by the State.
The BCDA further contends that NOVAI miserably failed to comply with
the legal requirements for the release of the property from the military
reservation. More specifically, (1) the Director of Lands did not cause the
property's subdivision, including the determination of the number of
prospective applicants and the area of each subdivision lot which should
not exceed one thousand (1,000) square meters for residential purposes;
(2) the purchase price for the property was not fixed by the Director of
Lands as approved by the DENR Secretary; (3) NOVAI did not pay the
purchase price or a portion of it to the LMB; and (4) the Deed of Sale was
not signed by the President of the Republic of the Philippines or by the
Executive Secretary, but was signed only by the LMB Director.
Also, the BCDA observed that NOVAI was incorporated only on December
11, 1991, while the deed of sale was purportedly executed on November
15, 1991, which shows that NOVAI did not yet legally exist at the time of
the property's purported sale.
OUR RULING
We resolve to DENY NOVAI's petition for review on certiorari as we find no
reversible error committed by the CA in issuing its December 28, 2006
decision and March 28, 2007 resolution.
I. Procedural Objections
A. In the filing of the present petition before this Court
Under Section 1, Rule 45 of the Rules of Court, a party desiring to appeal
from a judgment or final order of the CA shall raise only questions of law
which must be distinctly set forth.
A question of law exists when the doubt or controversy concerns the
correct application of law or jurisprudence on a certain state of facts.21
The issue does not call for an examination of the probative value of the
evidence presented, the truth or falsehood of the facts being admitted.22
In contrast, a question of fact exists when a doubt or difference arises as
to the truth or falsehood of facts or when the query invites the calibration
of the whole evidence considering mainly the credibility of the witnesses;
the existence and relevancy of specific surrounding circumstances, as well
as their relation to each other and to the whole; and the probability of the
situation.23cralawrednad
The rule that only questions of law may be the subject of a Rule 45
Petition before this Court, however, has exceptions.24 Among these
exceptions is when there is conflict between the factual findings of the
RTC and that of the CA.
In this case, the CA totally reversed the RTC on the nature and character of
the land, in question, and on the,validity of the deed of sale between the
parties. Due to the conflicting findings of the RTC and the CA on these
issues, we are allowed to reexamine the facts and the parties' evidence in
order to finally resolve the present controversy.
B. On BCD A's Intervention
In its reply25cralawred to the BCDA's comment-in-intervention, NOVAI
primarily objects to the BCDA's intervention because it was made too late.
Intervention is a proceeding in a suit or action by which a third person is
permitted by the court to make himself a party, either joining the plaintiff
or defendant, or demanding something adverse to both of them.26 Its
purpose is to enable such third party to protect or preserve a right or
interest which may be affected by the proceeding,27 such interest being
actual, material, direct and immediate, not simply contingent and
expectant.28cralawrednad
As a general rule, intervention cannot be made at the appeal stage.
Section 2, Rule 19 of the Rules of Court, governing interventions, provides
that "the motion to intervene may be filed at any time before rendition of
judgment by the trial court." This rule notwithstanding, intervention may
be allowed after judgment where it is necessary to protect some interest
which cannot otherwise be protected, and may be allowed for the purpose
of preserving the intervenor's right to appeal.29 "The rule on intervention,
like all other rules of procedure, is intended to make the powers of the
Court fully and completely available for justice x x x and aimed to facilitate
a comprehensive adjudication of rival claims overriding technicalities on
the timeliness of the filing thereof."30cralawrednad
Thus, in exceptional cases, the Court may allow intervention although the
trial court has already rendered judgment. In fact, the Court had allowed
intervention in one case even when the petition for review was already
submitted for decision before it.31cralawrednad
In the present case, the BCDA is indisputably the agency specifically
created under R.A. No. 722732 to own, hold and/or administer military
reservations including, among others, those located inside the FBMR. If we
are to affirm the CA's decision, the BCDA stands to benefit as a favorable
ruling will enable it to pursue its mandate under R.A. No. 7227. On the
other hand, if we reverse the CA's decision, it stands to suffer as the
contrary ruling will greatly affect the BCDA's performance of its legal
mandate as it will lose the property without the opportunity to defend its
right in court.
Indeed, the BCDA has such substantial and material interest both in the
outcome of the case and in the disputed property that a final adjudication
cannot be made in its absence without affecting such interest. Clearly, the
BCDA's intervention is necessary; hence, we allow the BCDA's intervention
although made beyond the period prescribed under Section 2, Rule 19 of
the Rules of Court.
II. Substantive Issues
A. The property is non-disposable land of the public domain reserved for
public or quasi-public use or purpose
We agree with the CA that the property remains a part of the public
domain that could not have been validly disposed of in NOVAI's favor.
NOVAI failed to discharge its burden of proving that the property was
withdrawn from the intended public or quasi-public use or purpose.
While the parties disagree on the character and nature of the property at
the time of the questioned sale, they agree, however, that the property
formed part of the FBMR - a military reservation belonging to the public
domain. We note that the FBMR has been the subject of several
presidential proclamations and statues issued subsequent to Proclamation
No. 423, which either removed or reserved for specific public or quasi-
public use or purpose certain of its portions.
On the one hand, NOVAI argues that Proclamation No. 461 had already
transferred the property from the State's "public domain" to its "private
domain." On the other hand, the respondents argue that Proclamation No.
478, in relation with RA 7227 and EO No. 40, had reverted the property to
the inalienable property of the "public domain."
The classification and disposition of lands of the public domain are
governed by Commonwealth Act (C.A.) No. 141 or the Public Land Act, the
country's primary law on the matter.
Under Section 6 of C.A. No. 141, the President of the Republic of the
Philippines, upon the recommendation of the Secretary of Agriculture and
Natural Resources, may, from time to time, classify lands of the public
domain into alienable or disposable, timber and mineral lands, and
transfer these lands from one class to another for purposes of their
administration and disposition.
Under Section 7 of C.A. No. 141, the President may, from time to time,
upon recommendation of the Secretary of Agriculture and Natural
Resources and for purposes of the administration and disposition of
alienable and disposable public lands, declare what lands are open to
disposition or concession under the Acts' provisions.33cralawrednad
Section 8 of C.A. No. 141 sets out the public lands open to disposition or
concession and the requirement that they have been officially delimited
and classified, and when practicable, surveyed. Section 8 excludes (by
implication) from disposition or concession, public lands which have been
reserved for public or quasi-public uses; appropriated by the Government;
or in any manner have become private property, or those on which a
private right authorized and recognized by the Act or any other valid law
may be claimed. Further, Section 8 authorizes the President to suspend
the concession or disposition of lands previously declared open to
disposition, until again declared open to disposition by his proclamation or
by act of Congress.
Lands of the public domain classified as alienable and disposable are
further classified, under Section 9 of C.A. No. 141, according to their use or
purpose into: (1) agricultural; (2) residential, commercial, industrial, or for
similar productive purposes; (3) educational, charitable, or other similar
purposes; and (4) reservations for townsites and for public and quasi-
public uses. Section 9 also authorizes the President to make the
classifications and, at any time, transfer lands from one class to another.
Section 83 of C.A. No. 141 defines public domain lands classified as
reservations for public and quasi-public uses as "any tract or tracts of land
of the public domain" which the President, by proclamation and upon
recommendation of the Secretary of Agriculture and Natural Resources,
may designate "as reservations for the use of the Republic of the
Philippines or any of its branches, or of the inhabitants thereof or "for
quasi-public uses or purposes when the public interest requires it."34
Under Section 88 of the same Act, these "reserved tract or tracts of lands
shall be non-alienable and shall not be subject to occupation, entry, sale,
lease or other disposition until again declared alienable under the
provisions of [CA No. 141] or by proclamation of the
President."35cralawrednad
As these provisions operate, the President may classify lands of the public
domain as alienable and disposable, mineral or timber land, and transfer
such lands from one class to another at any time.
Within the class of alienable and disposable lands of the public domain,
the President may further classify public domain lands, according to the
use or purpose to which they are destined, as agricultural: residential,
commercial, industrial, etc.; educational, charitable, etc.; and reservations
for townsites and for public and quasi-public uses; and, he may transfer
such lands from one class to the other at any time.
Thus, the President may, for example, transfer a certain parcel of land
from its classification as agricultural (under Section 9 [a]), to residential,
commercial, industrial, or for similar purposes (under Section 9 [b]) and
declare it available for disposition under any of the modes of disposition of
alienable and disposable public lands available under C.A. No. 141, as
amended.
The modes of disposition of alienable and disposable lands available under
C.A. No. 141 include: (1) by homestead settlement (Chapter IV), by sale
(Chapter V), by lease (Chapter VI) and by confirmation of imperfect or
incomplete titles (Chapters VII and VIII) for agricultural lands under Title II
of C.A. No. 141 as amended; (2) by sale or by lease for residential,
commercial, or industrial lands under Title III of C.A. No. 141, as amended;
(3) by donation, sale, lease, exchange or any other form for educational
and charitable lands under Title IV of C.A. No. 141, as amended; and (4) by
sale by public auction for townsite reservations under Chapter XI, Title V of
C.A. No. 141, as amended.
Once these parcels of lands are actually acquired by private persons,
either by sale, grant, or other modes of disposition, they are removed
from the mass of land of the public domain and become, by operation of
law, their private property.
With particular regard, however, to parcels of land classified as
reservations for public and quasi-public uses (under Section 9 [d]), when
the President transfers them to the class of .alienable and disposable
public domain lands destined for residential, commercial, industrial, or for
similar purposes (under Section 9 [b]), or some other class under Section
9, these reserved public domain lands become available for disposition
under any of the available modes of disposition under C.A. No. 141, as
provided above. Once these re-classified lands (to residential purposes
from reservation for public and quasi-public uses) are actually acquired by
private persons, they become private property.
In the meantime, however, and until the parcels of land are actually
granted to, acquired, or purchased by private persons, they remain lands
of the public domain which the President, under Section 9 of C.A. No. 141,
may classify again as reservations for public and quasi-public uses. The
President may also, under Section 8 of C.A. No. 141, suspend their
concession or disposition.
If these parcels of land are re-classified as reservations before they are
actually acquired by private persons, or if the President suspends their
concession or disposition, they shall not be subject to occupation, entry,
sale, lease, or other disposition until again declared open for disposition by
proclamation of the President pursuant to Section 88 in relation with
Section 8 of C.A. No. 141.
Thus, in a limited sense, parcels of land classified as reservations for public
or quasi-public uses under Section 9 (d) of C.A. No. 141 are still non-
alienable and non-disposable, even though they are, by the general
classification under Section 6, alienable and disposable lands of the public
domain. By specific declaration under Section 88, in relation with Section
8, these lands classified as reservations are non-alienable and non-
disposable.
In short, parcels of land classified as reservations for public or quasi-public
uses: (1) are non-alienable and non-disposable in view of Section 88 (in
relation with Section 8) of CA No. 141 specifically declaring them as non-
alienable and not subject to disposition; and (2) they remain public
domain lands until they are actually disposed of in favor of private
persons.
Complementing and reinforcing this interpretation - that lands designated
as reservations for public and quasi-public uses are non-alienable and non-
disposable and retain their character as land of the public domain is the
Civil Code with its provisions on Property that deal with lands in general.
We find these provisions significant to our discussion and interpretation as
lands are property, whether they are public lands or private
lands.36cralawrednad
In this regard, Article 419 of the Civil Code classifies property as either of
public dominion or of private ownership. Article 42037 defines property of
the public dominion as those which are intended for public use or, while
not intended for public use, belong to the State and are intended for some
public service. Article 421, on the other hand, defines patrimonial property
as all other property of the State which is not of the character stated in
Article 420. While Article 422 states that public dominion property which
is no longer intended for public use or service shall form part of the State's
patrimonial property.
Thus, from the perspective of the general Civil Code provisions on
Property, lands which are intended for public use or public service such as
reservations for public or quasi-public uses are property of the public
dominion and remain to be so as long as they remain reserved.
As property of the public dominion, public lands reserved for public or
quasi-public uses are outside the commerce of man.38 They cannot be
subject to sale, disposition or encumbrance; any sale, disposition or
encumbrance of such property of the public dominion is void for being
contrary to law and public policy.39cralawrednad
To be subject to sale, occupation or other disposition, lands of the public
domain designated as reservations must first be withdrawn, by act of
Congress or by proclamation of the President, from the public or quasi-
public use for which it has been reserved or otherwise positively declared
to have been converted to patrimonial property, pursuant to Sections 8
and 88 of C.A. No. 141 and Article 422 of the Civil Code.40 Without such
express declaration or positive governmental act, the reserved public
domain lands remain to be public dominion property of the
State.41cralawrednad
To summarize our discussion:ChanRoblesvirtualLawlibrary
(1) Lands of the public domain classified as reservations for public or
quasi-public uses are non-alienable and shall not be subject to disposition,
although they are, by the general classification under Section 6 of C.A. No.
141, alienable and disposable lands of the public domain, until declared
open for disposition by proclamation of the President; and
(2) Lands of the public domain classified as reservations are property of
the public dominion; they remain to be property of the public dominion
until withdrawn from the public or quasi-public use for which they have
been reserved, by act of Congress or by proclamation of the President, or
otherwise positively declared to have been converted to patrimonial
property.
Based on these principles, we now examine the various issuances affecting
the property in order to determine the property's character and nature,
i.e., whether the property remains public domain property of the State or
has become its private property.
For easier reference, we reiterate the various presidential proclamations
and statutes affecting the property:cralawlawlibrary
(1)
Proclamation No. 423, series of 1957 - established the FBMR, a military
reservation; the property falls within the FBMR;
(2)
Proclamation No. 461, series of (September) 1965 - segregated, from the
FBMR, a portion of Parcel 3, plan Psd-2031, which includes the property,
for disposition in favor of the AFPOVAI;
(3)
Proclamation No. 478, series of (October) 1965 reserved the property in
favor of the Veterans Rehabilitation and Medical Training Center (VRMTC);
and
(4)
RA No. 7227 (1992), as implemented by EO No. 40, series of 1992 - subject
to certain specified exemptions, transferred the military camps within
Metro Manila, among others, to the BCDA.
1. Proclamation No. 461 was not the legal basis for the property's sale in
favor of NOVAI
We agree with the respondents that while Proclamation No. 461, issued in
September 1965, removed from the FBMR a certain parcel of land that
includes the property, Proclamation No. 478, issued in October 1965, in
turn segregated the property from the area made available for disposition
under Proclamation No. 461, and reserved it for the use of the VRMTC.
We find it clear that Proclamation No. 478 was issued after, not before,
Proclamation No. 461. Hence, while Proclamation No. 461 withdrew a
certain area or parcel of land from the FBMR and made the covered area
available for disposition in favor of the AFPOVAI, Proclamation No. 478
subsequently withdrew the property from the total disposable portion and
reserved it for the use of the VRMTC. With the issuance of Proclamation
No. 478, the property was transferred back to that class of public domain
land reserved for public or quasi-public use or purpose which, consistent
with Article 420 of the Civil Code, is property of the public dominion, not
patrimonial property of the State.
Even under the parties' deed of sale, Proclamation No. 2487, not
Proclamation No. 461, was used as the authority for the transfer and sale
of the property to NOVAI. The subject deed of sale pertinently
reads:cralawlawlibrary
"This DEED OF SALE, made and executed in Manila, Philippines, by the
Director of Lands, Pursuant to Batas Pambansa Blg. 878 and in
representation of the Republic of the Philippines, hereinafter referred to
as the Vendor, in favor of THE NAVY OFFICERS VILLAGE ASSOCIATION
(NOVA) and residing in Fort Bonifacio, Metro Manila, referred to as the
Vendee, WITNESSETH:ChanRoblesvirtualLawlibrary
xxxx
WHEREAS, pursuant to Presidential proclamation No. 478 as amended by
proclamation No. 2487 in relation to the provision of Act No. 3038 and
similar Acts supplemented thereto, the Vendee applied for the purchase of
a portion of the above-described Property which portion is identical to Lot
3, Swo-000183 and more particularly described on page two hereof;
xxxx
WHEREAS, the Vendee has complied with all other conditions required by
Act No. 3038 in relation to Commonwealth Act No. 141, as amended, and
the rules and regulation promulgated thereunder.
x x x x. (Emphasis supplied)
Clearly, the legal basis of the property's sale could not have been
Proclamation No. 461.
2. Proclamation No. 2487 which purportedly revoked Proclamation No.
478 does not legally exist; hence, it did not withdraw the property from
the reservation or from the public dominion
Neither can Proclamation No. 2487 serve as legal basis for the property's
sale in NOVAI's favor. Proclamation No. 2487 purportedly revoked
Proclamation No. 478 and declared the property open for disposition in
favor of NOVAI.
The Republic and the BCD A (now respondents) argue that Proclamation
No. 2487 does not legally exist; it could not have served to release the
property from the mass of the non-alienable property of the State.
Hence, even if NOVAI relies on Proclamation No. 2487 - on which it did not
as it relied on Proclamation No. 4.61 - the sale and NOVAI's title are still
void. NOVAI, on the other hand, claims in defense that Proclamation No.
2487 is presumed valid and constitutional, and the burden of proving
otherwise rests on the respondents.
In insisting on the presumptive validity of law, NOVAI obviously failed to
grasp and appreciate the thrust of the respondents' arguments, including
the impact of the evidence which they presented to support the question
they raised regarding the authenticity of Proclamation No. 2487.
Rather than the validity or constitutionality of Proclamation No. 2487,
what the respondents assailed was its legal existence, not whether it was
constitutional or not. Put differently, they claimed that Proclamation No.
2487 was never issued by former Pres. Aquino; hence, the presumptive
validity and constitutionality of laws cannot apply.
Accordingly, after the respondents presented their evidence, it was
NOVAI's turn to present its own evidence sufficient to rebut that of the
respondents. On this point, we find the Republic's evidence sufficiently
convincing to show that Proclamation No. 2487 does not legally exist.
These pieces of evidence include:ChanRoblesvirtualLawlibrary
First, the October 26, 1993 letter of the Solicitor General to the Office of
the President inquiring about the existence of Proclamation No.
2487.42cralawrednad
Second, the November 12, 1993 letter-reply of the Office of the President
informing the Solicitor General that Proclamation No. 2487 "is not among
the alleged documents on file with [its] Office."43cralawrednad
Third, the testimony of the Assistant Director of the Records Office in
Malacaang confirming that indeed, after verifying their records or of the
different implementing agencies, "[t]here is no existing document(s) in
[their] possession regarding that alleged Proclamation No. 2487;"44 and
Fourth and last, the October 11, 1993 Memorandum of then Department
of Justice Secretary Frahklin M. Drilon (DOJ Secretary Drilon) to the NBI to
investigate, among others, the circumstances surrounding the issuance of
Proclamation No. 2487.45 Notably, this October 11, 1993 Memorandum of
DOJ Secretary Drilon stated that: "Proclamation No. 2487 is null and void x
x x. [It] does not exist in the official records of the Office of the President x
x x [and] could riot have been issued by the former President since the last
Proclamation issued during her term was proclamation No. 932 dated 19
June 1992."46cralawrednad
In this regard, we quote with approval the CA's observations in its
December 28, 2006 decision:cralawlawlibrary
Cast against this backdrop, it stands to reason enough that the defendant-
appellee NOVAI was inevitably duty bound to prove and establish the very
existence, as well as the genuineness or authenticity, of this Presidential
Proclamation No. 2487. For certain inexplicable reasons, however, the
defendant-appellee did not do so, but opted to build up and erect its case
upon Presidential Proclamation No. 461.
To be sure, the existence of Presidential Proclamation No. 2487 could be
easily proved, and established, by its publication in the Official Gazette.
But the defendant-appellee could not, as it did not, submit or present any
copy or issue of the Official Gazette mentioning or referring to this
Presidential Proclamation No. 2487, this even in the face of the
Government's determined and unrelenting claim that it does not exist at
all.47 (Emphasis supplied)
A final point, we did not fail to notice the all too obvious and significant
difference between the proclamation number of Proclamation No. 2487
and the numbers of the proclamations actually issued by then President
Corazon C. Aquino on or about that time.
We take judicial notice that on September 25, 1991 - the very day when
Proclamation No. 2487 was supposedly issued - former Pres. Aquino
issued Proclamation No. 80048 and Proclamation No. 801.49 Previously,
on September 20, 1991, Pres. Aquino issued Proclamation No. 799;50 and
thereafter, on September 27, 1991, she issued Proclamation No.
802.51cralawrednad
Other proclamations issued around or close to September 25, 1991,
included the following:cralawlawlibrary
1. Proclamation No. 750 issued on July 1, 1991;52cralawrednad
2. Proclamation No. 760 issued on July 18, 1991;53cralawrednad
3. Proclamation No. 770 issued on August 12, 1991;54cralawrednad
4. Proclamation No. 780 issued on August 26, 1991;55cralawrednad
5. Proclamation No. 790 issued on September 3, 1991;56cralawrednad
6. Proclamation No. 792 issued on September 5, 1991;57cralawrednad
7. Proclamation No. 797 issued on September 11, 1991;58cralawrednad
8. Proclamation No. 798 issued on September 12, 1991;59cralawrednad
9. Proclamation No. 804 issued on September 30, 1991;60cralawrednad
10. Proclamation No. 805 issued on September 30, 1991;61cralawrednad
11. Proclamation No. 806 issued on October 2, 1991;62cralawrednad
12. Proclamation No. 810 issued on October 7, 1991;63cralawrednad
13. Proclamation No. 820 issued on October 25, 1991;64cralawrednad
14. Proclamation No. 834 issued on November 13, 1991;65 and
15. Proclamation No. 840 issued on November 26, 1991.66
This list shows that the proclamations issued by former Pres. Aquino
followed a series or sequential pattern with each succeeding issuance
bearing a proclamation number one count higher than the proclamation
number of the preceding Presidential Proclamation. It also shows that on
or about the time Proclamation No. 2487 was purportedly issued, the
proclamation numbers of the proclamations issued by President Aquino
did not go beyond the hundreds series.
It is highly implausible that Proclamation No. 2487 was issued on
September 25, 1991, or on any day close to September 25, 1991, when the
proclamations issued for the same period were sequentially numbered
and bore three-digit proclamation numbers.
As Proclamation No. 2487 does not legally exist and therefore could not
have validly revoked Proclamation No. 478, we find, as the CA also
correctly did, that Proclamation No. 478 stands as the most recent
manifestation of the State's intention to reserve the property anew for
some public or quasi-public use or purpose. Thus, consistent with Sections
88, in relation with Section 8, of C.A. No. 141 and Article 420 of the Civil
Code, as discussed above, the property which was classified again as
reservation for public or quasi-public use or purpose is non-alienable and
not subject to disposition; it also remains property of the public dominion;
hence, non-alienable and non-disposable land of the public domain.
As a consequence, when R.A. No. 7227 took effect in 1992, the property
subject of this case, which does not fall among the areas specifically
designated as exempt from the law's operation67 was, by legal fiat,
transferred to the BCDA's authority.
B. As the property remains a reserved public domain land, its sale and the
title issued pursuant to the sale are void
As the property remains a reserved public domain land, it is outside the
commerce of man. Property which are intended for public or quasi- public
use or for some public purpose are public dominion property of the
State68 and are outside the commerce of man. NOVAI, therefore, could
not have validly purchased the property in 1991.
We reiterate and emphasize that property which has been reserved for
public or quasi-public use or purpose are non-alienable and shall not be
subject to sale or other disposition until again declared alienable by law or
by proclamation of the President.69 Any sale or disposition of property of
the public dominion is void for being contrary to law and public
policy.70cralawrednad
Since the sale of the property, in this case, is void, the title issued to
NOVAI is similarly void ab initio. It is a well-settled doctrine that
registration under the Torrens System does not, by itself, vest title as it is
not a mode of acquiring ownership;71 that registration under the Torrens
System merely confirms the registrant's already existing
title.72cralawrednad
Accordingly, the indefeasibility of a Torrens title does not apply in this case
and does not attach to NOVAI's title. The principle of indefeasibility does
not apply when the sale of the property and the title based thereon are
null and void. Hence, the Republic's action to declare the nullity of NOVAI's
void title has not prescribed.
NOVAI insists that the deed of sale carries the presumption of regularity in
the performance of official duties as it bears all the earmarks of a valid
deed of sale and is duly notarized.
While we agree that duly notarized deeds of sale carry the legal
presumption of regularity in the performance of official duties,73 the
presumption of regularity in the performance of official duties, like all
other disputable legal presumptions, applies only in the absence of clear
and convincing evidence establishing the contrary.74cralawrednad
When, as in this case, the evidence on record shows not only that the
property was reserved for public use or purpose, and thus, non-disposable
- a fact that on its own defeats all the evidence which the petitioner may
have had to support the validity of the sale - but also shows that the sale
and the circumstances leading to it are void in form and in substance, the
disputable presumption of regularity in the performance of official duties
certainly cannot apply.
C. Even assuming that Proclamation No. 2487 legally exists, the sale of the
property to NOVAI is illegal.
1. Dir. Palad did not have the authority to sell and convey the property.
The subject deed of sale points to Proclamation No. 2487, purportedly
amending Proclamation No. 478, in relation with Act No. 3038,75 as legal
basis for authorizing the sale.
Section 176 of Act No. 3038 authorizes the sale or lease only: (i) of land of
the private domain, not land of the public domain; and (ii) by the Secretary
of Agriculture and Natural Resources, not by the LMB Director. Section 277
of the said Act, in fact, specifically exempts from its coverage "land
necessary for the public service." As the sale was executed by the LMB
Director covering the property that was reserved for the use of the
VRMTC, it, therefore, clearly violated the provisions of Act No. 3038.
2. The area subject of the sale far exceeded the area that the Director of
Lands is authorized to convey.
Batas Pambansa (B.P.) Blg. 87878 which, per the Deed of Sale, purportedly
authorized the Director of Lands, representing the Republic, to sell the
property in favor of NOVAI, limits the authority of the Director of Lands to
sign patents or certificates covering lands to ten (10) hectares.
In this case, the subject deed of sale covers a total area of 475,009 square
meters or 47.5009 hectares. Obviously, the area covered by the deed of
sale and which NOVAI purportedly purchased, far exceeds the area that
the Director of Lands is authorized to convey under B.P. Blg. 878.
3. The evidence on record and the highly suspect circumstances
surrounding the sale fully supports the conclusion that the property's sale
to NOVAI is fictitious, thus, void.
We note the following irregularities that attended the sale of the property
to NOVAI:
The absence, on file with the LMB, of any request for approval of any
survey plan or of an approved survey plan in NOVAI's name covering the
property.79 The approved survey plan relating to Lot 3, SWO-13-000183
subject of NOVAI's TCT No. 15387 pertains to the AFPOVAI under
Proclamation No. 461;80cralawrednad
The technical description, which the DENR prepared for the property as
covered by TCT No. T-15387, was issued upon NOVAI's request only for
purposes of reference, not for registration of title, and was based on the
approved survey plan of the AFPOVAI;81cralawrednad
There is no record of any public land application filed by NOVAI with the
LMB or with the DENR Office for the purchase of the property or of any
parcel of land in Metro Manila;82cralawrednad
LMB Dir. Palad categorically denied signing and executing the deed of
sale;83cralawrednad
The findings of the NBI handwriting; expert, detailed in the Questioned
Documents Report No. 815-1093 dated October 29, 1993,84 revealed that
the, signature of LMB Director Palad as it appeared on the Deed of Sale
and his standard/sample signature as they appeared on the submitted
comparison documents "were not written by one and the same
person,"85 and concluded that "[t]he questioned signature of 'ABELARDG
G. PALAD, JR.' xxx is a TRACED FORGERY by carbon process;"86 and
Lastly, the LMB Cashier's Office did not receive the amount of
P14,250,270.00 allegedly paid by NOVAI as consideration for the property.
The receipts87 - O.R. No. 8282851 dated November 28, 1991, for
P160,000.00 and O.R. No. 317024 dated December 23, 1992, for
P200,000.00 - which NOVAI presented as evidence of its alleged payment
bore official receipt numbers which were not among the series of official
receipts issued by the National Printing Office to the LMB, and in fact,
were not among the series used by the LMB on the pertinent dates.88
In sum, we find - based on the facts, the law, and jurisprudence - that the
property, at the time of the sale, was a reserved public domain land. Its
sale, therefore, and the corresponding title issued in favor of petitioner
NOVAI, is void.
WHEREFORE, we hereby DENY the present petition for review on
certiorari. No reversible error attended the decision dated December 28,
2006, and the resolution dated March 28, 2007, of the Court of Appeals in
CA-G.R. CV No. 85179.
SO ORDERED
SECOND DIVISION
G.R. No. 184203, November 26, 2014
CITY OF LAPU-LAPU, Petitioner, v. PHILIPPINE ECONOMIC ZONE
AUTHORITY, Respondent.
G.R. NO. 187583
PROVINCE OF BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA,
JR., AND EMERLINDA S. TALENTO, IN HER CAPACITY AS PROVINCIAL
TREASURER OF BATAAN, Petitioners, v. PHILIPPINE ECONOMIC ZONE
AUTHORITY, Respondent.
DECISION
LEONEN, J.:
The Philippine Economic Zone Authority is exempt from payment of real
property taxes.
These are consolidated1 petitions for review on certiorari the City of Lapu-
Lapu and the Province of Bataan separately filed against the Philippine
Economic Zone Authority (PEZA).
In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of
Appeals decision2 dated January 11, 2008 and resolution3 dated August
6, 2008, dismissing the Citys appeal for being the wrong mode of appeal.
The City appealed the Regional Trial Court, Branch 111, Pasay Citys
decision finding the PEZA exempt from payment of real property taxes.
In G.R. No. 187583, the Province of Bataan (the Province) assails the Court
of Appeals decision4 dated August 27, 2008 and resolution5 dated April
16, 2009, granting the PEZAs petition for certiorari. The Court of Appeals
ruled that the Regional Trial Court, Branch 115, Pasay City gravely abused
its discretion in finding the PEZA liable for real property taxes to the
Province of Bataan.
Facts common to the consolidated petitions
In the exercise of his legislative powers,6 President Ferdinand E. Marcos
issued Presidential Decree No. 66 in 1972, declaring as government policy
the establishment of export processing zones in strategic locations in the
Philippines. Presidential Decree No. 66 aimed to encourage and promote
foreign commerce as a means of making the Philippines a center of
international trade, of strengthening our export trade and foreign
exchange position, of hastening industrialization, of reducing domestic
unemployment, and of accelerating the development of the
country.7chanRoblesvirtualLawlibrary
To carry out this policy, the Export Processing Zone Authority (EPZA) was
created to operate, administer, and manage the export processing zones
established in the Port of Mariveles, Bataan8 and such other export
processing zones that may be created by virtue of the
decree.9chanRoblesvirtualLawlibrary
The decree declared the EPZA non-profit in character10 with all its
revenues devoted to its development, improvement, and maintenance.11
To maintain this non-profit character, the EPZA was declared exempt from
all taxes that may be due to the Republic of the Philippines, its provinces,
cities, municipalities, and other government agencies and
instrumentalities.12 Specifically, Section 21 of Presidential Decree No. 66
declared the EPZA exempt from payment of real property
taxes:chanroblesvirtuallawlibrary
Section 21. Non-profit Character of the Authority; Exemption from Taxes.
The Authority shall be non-profit and shall devote and use all its returns
from its capital investment, as well as excess revenues from its operations,
for the development, improvement and maintenance and other related
expenditures of the Authority to pay its indebtedness and obligations and
in furtherance and effective implementation of the policy enunciated in
Section 1 of this Decree. In consonance therewith, the Authority is hereby
declared exempt:ChanRoblesVirtualawlibrary
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds
of taxes and licenses to be paid to the National Government, its provinces,
cities, municipalities and other government agencies and
instrumentalities[.]
In 1979, President Marcos issued Proclamation No. 1811, establishing the
Mactan Export Processing Zone. Certain parcels of land of the public
domain located in the City of Lapu-Lapu in Mactan, Cebu were reserved to
serve as site of the Mactan Export Processing Zone.
In 1995, the PEZA was created by virtue of Republic Act No. 7916 or the
Special Economic Zone Act of 199513 to operate, administer, manage,
and develop economic zones in the country.14 The PEZA was granted the
power to register, regulate, and supervise the enterprises located in the
economic zones.15 By virtue of the law, the export processing zone in
Mariveles, Bataan became the Bataan Economic Zone16 and the Mactan
Export Processing Zone the Mactan Economic
Zone.17chanRoblesvirtualLawlibrary
As for the EPZA, the law required it to evolve into the PEZA in accordance
with the guidelines and regulations set forth in an executive order issued
for [the] purpose.18chanRoblesvirtualLawlibrary
On October 30, 1995, President Fidel V. Ramos issued Executive Order No.
282, directing the PEZA to assume and exercise all of the EPZAs powers,
functions, and responsibilities as provided in Presidential Decree No. 66,
as amended, insofar as they are not inconsistent with the powers,
functions, and responsibilities of the PEZA, as mandated under [the Special
Economic Zone Act of 1995].19 All of EPZAs properties, equipment, and
assets, among others, were ordered transferred to the
PEZA.20chanRoblesvirtualLawlibrary
Facts of G.R. No. 184203
In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through the
Office of the Treasurer, demanded from the PEZA ?32,912,350.08 in real
property taxes for the period from 1992 to 1998 on the PEZAs properties
located in the Mactan Economic Zone.
The City reiterated its demand in the letter22 dated May 21, 1998. It cited
Sections 193 and 234 of the Local Government Code of 1991 that
withdrew the real property tax exemptions previously granted to or
presently enjoyed by all persons. The City pointed out that no provision in
the Special Economic Zone Act of 1995 specifically exempted the PEZA
from payment of real property taxes, unlike Section 21 of Presidential
Decree No. 66 that explicitly provided for EPZAs exemption. Since no
legal provision explicitly exempted the PEZA from payment of real
property taxes, the City argued that it can tax the PEZA.
The City made subsequent demands23 on the PEZA. In its last reminder24
dated May 13, 2002, the City assessed the PEZA ?86,843,503.48 as real
property taxes for the period from 1992 to 2002.
On September 11, 2002, the PEZA filed a petition for declaratory relief25
with the Regional Trial Court of Pasay City, praying that the trial court
declare it exempt from payment of real property taxes. The case was
raffled to Branch 111.
The City answered26 the petition, maintaining that the PEZA is liable for
real property taxes. To support its argument, the City cited a legal opinion
dated September 6, 1999 issued by the Department of Justice,27 which
stated that the PEZA is not exempt from payment of real property taxes.
The Department of Justice based its opinion on Sections 193 and 234 of
the Local Government Code that withdrew the tax exemptions, including
real property tax exemptions, previously granted to all persons.
A reply28 was filed by the PEZA to which the City filed a
rejoinder.29chanRoblesvirtualLawlibrary
Pursuant to Rule 63, Section 3 of Rules of Court,30 the Office of the
Solicitor General filed a comment31 on the PEZAs petition for declaratory
relief. It agreed that the PEZA is exempt from payment of real property
taxes, citing Sections 24 and 51 of the Special Economic Zone Act of 1995.
The trial court agreed with the Solicitor General. Section 24 of the Special
Economic Zone Act of 1995 provides:chanroblesvirtuallawlibrary
SEC. 24. Exemption from National and Local Taxes. Except for real
property taxes on land owned by developers, no taxes, local and national,
shall be imposed on business establishments operating within the
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by
all business enterprises within the ECOZONE shall be paid and remitted as
follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business
establishments to the treasurers office of the municipality or city where
the enterprise is located.
Section 51 of the law, on the other hand,
provides:chanroblesvirtuallawlibrary
SEC. 51. Ipso-Facto Clause. All privileges, benefits, advantages or
exemptions granted to special economic zones under Republic Act No.
7227, shall ipso-facto be accorded to special economic zones already
created or to be created under this Act. The free port status shall not be
vested upon new special economic zones.
Based on Section 51, the trial court held that all privileges, benefits,
advantages, or exemptions granted to special economic zones created
under the Bases Conversion and Development Act of 1992 apply to special
economic zones created under the Special Economic Zone Act of 1995.
Since these benefits include exemption from payment of national or local
taxes, these benefits apply to special economic zones owned by the PEZA.
According to the trial court, the PEZA remained tax-exempt regardless of
Section 24 of the Special Economic Zone Act of 1995. It ruled that Section
24, which taxes real property owned by developers of economic zones,
only applies to private developers of economic zones, not to public
developers like the PEZA. The PEZA, therefore, is not liable for real
property taxes on the land it owns.
Characterizing the PEZA as an agency of the National Government, the trial
court ruled that the City had no authority to tax the PEZA under Sections
133(o) and 234(a) of the Local Government Code of 1991.
In the resolution32 dated June 14, 2006, the trial court granted the PEZAs
petition for declaratory relief and declared it exempt from payment of real
property taxes.
The City filed a motion for reconsideration,33 which the trial court denied
in its resolution34 dated September 26, 2006.
The City then appealed35 to the Court of Appeals.
The Court of Appeals noted the following issues the City raised in its
appellants brief: (1) whether the trial court had jurisdiction over the
PEZAs petition for declaratory relief; (2) whether the PEZA is a
government agency performing governmental functions; and (3) whether
the PEZA is exempt from payment of real property taxes.
The issues presented by the City, according to the Court of Appeals, are
pure questions of law which should have been raised in a petition for
review on certiorari directly filed before this court. Since the City availed
itself of the wrong mode of appeal, the Court of Appeals dismissed the
Citys appeal in the decision36 dated January 11, 2008.
The City filed a motion for extension of time to file a motion for
reconsideration,37 which the Court of Appeals denied in the resolution38
dated April 11, 2008.
Despite the denial of its motion for extension, the City filed a motion for
reconsideration.39 In the resolution40 dated August 6, 2008, the Court of
Appeals denied that motion.
In its petition for review on certiorari with this court,41 the City argues
that the Court of Appeals hid under the skirts of technical rules42 in
resolving its appeal. The City maintains that its appeal involved mixed
questions of fact and law. According to the City, whether the PEZA
performed governmental functions cannot completely be addressed by
law but [by] the factual and actual activities [the PEZA is] carrying
out.43chanRoblesvirtualLawlibrary
Even assuming that the petition involves pure questions of law, the City
contends that the subject matter of the case is of extreme importance
with [far-reaching] consequence that [its magnitude] would surely shape
and determine the course of our nations future.44 The Court of Appeals,
the City argues, should have resolved the case on the merits.
The City insists that the trial court had no jurisdiction to hear the PEZAs
petition for declaratory relief. According to the City, the case involves real
property located in the City of Lapu-Lapu. The petition for declaratory
relief should have been filed before the Regional Trial Court of the City of
Lapu-Lapu.45chanRoblesvirtualLawlibrary
Moreover, the Province of Bataan, the City of Baguio, and the Province of
Cavite allegedly demanded real property taxes from the PEZA. The City
argues that the PEZA should have likewise impleaded these local
government units as respondents in its petition for declaratory relief. For
its failure to do so, the PEZA violated Rule 63, Section 2 of the Rules of
Court, and the trial court should have dismissed the
petition.46chanRoblesvirtualLawlibrary
This court ordered the PEZA to comment on the Citys petition for review
on certiorari.47chanRoblesvirtualLawlibrary
At the outset of its comment, the PEZA argues that the Court of Appeals
decision dated January 11, 2008 had become final and executory. After
the Court of Appeals had denied the Citys appeal, the City filed a motion
for extension of time to file a motion for reconsideration. Arguing that the
time to file a motion for reconsideration is not extendible, the PEZA filed
its motion for reconsideration out of time. The City has no more right to
appeal to this court.48chanRoblesvirtualLawlibrary
The PEZA maintains that the City availed itself of the wrong mode of
appeal before the Court of Appeals. Since the City raised pure questions
of law in its appeal, the PEZA argues that the proper remedy is a petition
for review on certiorari with this court, not an ordinary appeal before the
appellate court. The Court of Appeals, therefore, correctly dismissed
outright the Citys appeal under Rule 50, Section 2 of the Rules of
Court.49chanRoblesvirtualLawlibrary
On the merits, the PEZA argues that it is an agency and instrumentality of
the National Government. It is therefore exempt from payment of real
property taxes under Sections 133(o) and 234(a) of the Local Government
Code.50 It adds that the tax privileges under Sections 24 and 51 of the
Special Economic Zone Act of 1995 applied to
it.51chanRoblesvirtualLawlibrary
Considering that the site of the Mactan Economic Zone is a reserved land
under Proclamation No. 1811, the PEZA claims that the properties sought
to be taxed are lands of public dominion exempt from real property
taxes.52chanRoblesvirtualLawlibrary
As to the jurisdiction issue, the PEZA counters that the Regional Trial Court
of Pasay had jurisdiction to hear its petition for declaratory relief under
Rule 63, Section 1 of the Rules of Court.53 It also argued that it need not
implead the Province of Bataan, the City of Baguio, and the Province of
Cavite as respondents considering that their demands came after the PEZA
had already filed the petition in court.54chanRoblesvirtualLawlibrary
Facts of G.R. No. 187583
After the City of Lapu-Lapu had demanded payment of real property taxes
from the PEZA, the Province of Bataan followed suit. In its letter55 dated
May 29, 2003, the Province, through the Office of the Provincial Treasurer,
informed the PEZA that it would be sending a real property tax billing to
the PEZA. Arguing that the PEZA is a developer of economic zones, the
Province claimed that the PEZA is liable for real property taxes under
Section 24 of the Special Economic Zone Act of 1995.
In its reply letter56 dated June 18, 2003, the PEZA requested the Province
to suspend the service of the real property tax billing. It cited its petition
for declaratory relief against the City of Lapu-Lapu pending before the
Regional Trial Court, Branch 111, Pasay City as basis.
The Province argued that serving a real property tax billing on the PEZA
would not in any way affect [its] petition for declaratory relief before [the
Regional Trial Court] of Pasay City.57 Thus, in its letter58 dated June 27,
2003, the Province notified the PEZA of its real property tax liabilities for
June 1, 1995 to December 31, 2002 totalling ?110,549,032.55.
After having been served a tax billing, the PEZA again requested the
Province to suspend collecting its alleged real property tax liabilities until
the Regional Trial Court of Pasay City resolves its petition for declaratory
relief.59chanRoblesvirtualLawlibrary
The Province ignored the PEZAs request. On January 20, 2004, the
Province served on the PEZA a statement of unpaid real property tax for
the period from June 1995 to December
2004.60chanRoblesvirtualLawlibrary
The PEZA again requested the Province to suspend collecting its alleged
real property taxes.61 The Province denied the request in its letter62
dated January 29, 2004, then served on the PEZA a warrant of levy63
covering the PEZAs real properties located in Mariveles, Bataan.
The PEZAs subsequent requests64 for suspension of collection were all
denied by the Province.65 The Province then served on the PEZA a notice
of delinquency in the payment of real property taxes66 and a notice of
sale of real property for unpaid real property tax.67 The Province finally
sent the PEZA a notice of public auction of the latters properties in
Mariveles, Bataan.68chanRoblesvirtualLawlibrary
On June 14, 2004, the PEZA filed a petition for injunction69 with prayer for
issuance of a temporary restraining order and/or writ of preliminary
injunction before the Regional Trial Court of Pasay City, arguing that it is
exempt from payment of real property taxes. It added that the notice of
sale issued by the Province was void because it was not published in a
newspaper of general circulation as required by Section 260 of the Local
Government Code.70chanRoblesvirtualLawlibrary
The case was raffled to Branch 115.
In its order71 dated June 18, 2004, the trial court issued a temporary
restraining order against the Province. After the PEZA had filed a
P100,000.00 bond,72 the trial court issued a writ of preliminary
injunction,73 enjoining the Province from selling the PEZAs real properties
at public auction.
On March 3, 2006, the PEZA and Province both manifested that each
would file a memorandum after which the case would be deemed
submitted for decision. The parties then filed their respective
memoranda.74chanRoblesvirtualLawlibrary
In the order75 dated January 31, 2007, the trial court denied the PEZAs
petition for injunction. The trial court ruled that the PEZA is not exempt
from payment of real property taxes. According to the trial court, Sections
193 and 234 of the Local Government Code had withdrawn the real
property tax exemptions previously granted to all persons, whether
natural or juridical.76 As to the tax exemptions under Section 51 of the
Special Economic Zone Act of 1995, the trial court ruled that the provision
only applies to businesses operating within the economic zones, not to the
PEZA.77chanRoblesvirtualLawlibrary
The PEZA filed before the Court of Appeals a petition for certiorari78 with
prayer for issuance of a temporary restraining order.
The Court of Appeals issued a temporary restraining order, enjoining the
Province and its Provincial Treasurer from selling PEZA's properties at
public auction scheduled on October 17, 2007.79 It also ordered the
Province to comment on the PEZAs petition.
In its comment,80 the Province alleged that it received a copy of the
temporary restraining order only on October 18, 2007 when it had already
sold the PEZAs properties at public auction. Arguing that the act sought
to be enjoined was already fait accompli, the Province prayed for the
dismissal of the petition for certiorari.
The PEZA then filed a supplemental petition for certiorari, prohibition, and
mandamus81 against the Province, arguing that the Provincial Treasurer of
Bataan acted with grave abuse of discretion in issuing the notice of
delinquency and notice of sale. It maintained that it is exempt from
payment of real property taxes because it is a government instrumentality.
It added that its lands are property of public dominion which cannot be
sold at public auction.
The PEZA also filed a motion82 for issuance of an order affirming the
temporary restraining order and a writ of preliminary injunction to enjoin
the Province from consolidating title over the PEZAs properties.
In its resolution83 dated January 16, 2008, the Court of Appeals admitted
the supplemental petition for certiorari, prohibition, and mandamus. It
required the Province to comment on the supplemental petition and to
file a memorandum on the PEZAs prayer for issuance of temporary
restraining order.
The Province commented84 on the PEZAs supplemental petition, to which
the PEZA replied.85chanRoblesvirtualLawlibrary
The Province then filed a motion86 for leave to admit attached rejoinder
with motion to dismiss. In the rejoinder with motion to dismiss,87 the
Province argued for the first time that the Court of Appeals had no
jurisdiction over the subject matter of the action.
According to the Province, the PEZA erred in filing a petition for certiorari.
Arguing that the PEZA sought to reverse a Regional Trial Court decision in a
local tax case, the Province claimed that the court with appellate
jurisdiction over the action is the Court of Tax Appeals. The PEZA then
prayed that the Court of Appeals dismiss the petition for certiorari for lack
of jurisdiction over the subject matter of the action.
The Court of Appeals held that the issue before it was whether the trial
court judge gravely abused his discretion in dismissing the PEZAs petition
for prohibition. This issue, according to the Court of Appeals, is properly
addressed in a petition for certiorari over which it has jurisdiction to
resolve. It, therefore, maintained jurisdiction to resolve the PEZAs
petition for certiorari.88chanRoblesvirtualLawlibrary
Although it admitted that appeal, not certiorari, was the PEZAs proper
remedy to reverse the trial courts decision,89 the Court of Appeals
proceeded to decide the petition for certiorari in the broader interest of
justice.90chanRoblesvirtualLawlibrary
The Court of Appeals ruled that the trial court judge gravely abused his
discretion in dismissing the PEZAs petition for prohibition. It held that
Section 21 of Presidential Decree No. 66 and Section 51 of the Special
Economic Zone Act of 1995 granted the PEZA exemption from payment of
real property taxes.91 Based on the criteria set in Manila International
Airport Authority v. Court of Appeals,92 the Court of Appeals found that
the PEZA is an instrumentality of the national government. No taxes,
therefore, could be levied on it by local government
units.93chanRoblesvirtualLawlibrary
In the decision94 dated August 27, 2008, the Court of Appeals granted the
PEZAs petition for certiorari. It set aside the trial courts decision and
nullified all the Provinces proceedings with respect to the collection of
real property taxes from the PEZA.
The Province filed a motion for reconsideration,95 which the Court of
Appeals denied in the resolution96 dated April 16, 2009 for lack of merit.
In its petition for review on certiorari with this court,97 the Province of
Bataan insists that the Court of Appeals had no jurisdiction to take
cognizance of the PEZAs petition for certiorari. The Province maintains
that the Court of Tax Appeals had jurisdiction to hear the PEZAs petition
since it involved a local tax case decided by a Regional Trial
Court.98chanRoblesvirtualLawlibrary
The Province reiterates that the PEZA is not exempt from payment of real
property taxes. The Province points out that the EPZA, the PEZAs
predecessor, had to be categorically exempted from payment of real
property taxes. The EPZA, therefore, was not inherently exempt from
payment of real property taxes and so is the PEZA. Since Congress omitted
from the Special Economic Zone Act of 1995 a provision specifically
exempting the PEZA from payment of real property taxes, the Province
argues that the PEZA is a taxable entity. It cited the rule in statutory
construction that provisions omitted in revised statutes are deemed
repealed.99chanRoblesvirtualLawlibrary
With respect to Sections 24 and 51 of the Special Economic Zone Act of
1995 granting tax exemptions and benefits, the Province argues that these
provisions only apply to business establishments operating within special
economic zones,100 not to the PEZA.
This court ordered the PEZA to comment on the Provinces petition for
review on certiorari.101chanRoblesvirtualLawlibrary
In its comment,102 the PEZA argues that the Court of Appeals had
jurisdiction to hear its petition for certiorari since the issue was whether
the trial court committed grave abuse of discretion in denying its petition
for injunction. The PEZA maintains that it is exempt from payment of real
property taxes under Section 21 of Presidential Decree No. 66 and Section
51 of the Special Economic Zone Act of 1995.
The Province filed its reply,103 reiterating its arguments in its petition for
review on certiorari.
On the PEZAs motion,104 this court consolidated the petitions filed by the
City of Lapu-Lapu and the Province of
Bataan.105chanRoblesvirtualLawlibrary
The issues for our resolution are the following:
I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapus
appeal for raising pure questions of law;
II. Whether the Regional Trial Court, Branch 111, Pasay City had
jurisdiction to hear, try, and decide the City of Lapu-Lapus petition for
declaratory relief;
III. Whether the petition for injunction filed before the Regional Trial
Court, Branch 115, Pasay City, is a local tax case appealable to the Court of
Tax Appeals; and
IV. Whether the PEZA is exempt from payment of real property taxes.
We deny the consolidated petitions.
I.
The Court of Appeals did not err in
dismissing the City of Lapu-Lapus
appeal for raising pure questions of law
Under the Rules of Court, there are three modes of appeal from Regional
Trial Court decisions. The first mode is through an ordinary appeal before
the Court of Appeals where the decision assailed was rendered in the
exercise of the Regional Trial Courts original jurisdiction. Ordinary
appeals are governed by Rule 41, Sections 3 to 13 of the Rules of Court. In
ordinary appeals, questions of fact or mixed questions of fact and law may
be raised.106chanRoblesvirtualLawlibrary
The second mode is through a petition for review before the Court of
Appeals where the decision assailed was rendered by the Regional Trial
Court in the exercise of its appellate jurisdiction. Rule 42 of the Rules of
Court governs petitions for review before the Court of Appeals. In
petitions for review under Rule 42, questions of fact, of law, or mixed
questions of fact and law may be raised.107chanRoblesvirtualLawlibrary
The third mode is through an appeal by certiorari before this court under
Rule 45 where only questions of law shall be
raised.108chanRoblesvirtualLawlibrary
A question of fact exists when there is doubt as to the truth or falsity of
the alleged facts.109 On the other hand, there is a question of law if the
appeal raises doubt as to the applicable law on a certain set of
facts.110chanRoblesvirtualLawlibrary
Under Rule 50, Section 2, an improper appeal before the Court of Appeals
is dismissed outright and shall not be referred to the proper
court:chanroblesvirtuallawlibrary
SEC. 2. Dismissal of improper appeal to the Court of Appeals. An appeal
under Rule 41 taken from the Regional Trial Court to the Court of Appeals
raising only questions of law shall be dismissed, issues purely of law not
being reviewable by said court. Similarly, an appeal by notice of appeal
instead of by petition for review from the appellate judgment of a
Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be
transferred to the appropriate court but shall be dismissed outright.
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of Court,
which provided that improper appeals to the Court of Appeals shall not be
dismissed but shall be certified to the proper court for
resolution:chanroblesvirtuallawlibrary
Sec. 3. Where appealed case erroneously, brought. Where the appealed
case has been erroneously brought to the Court of Appeals, it shall not
dismiss the appeal, but shall certify the case to the proper court, with a
specific and clear statement of the grounds therefor.
With respect to appeals by certiorari directly filed before this court but
which raise questions of fact, paragraph 4(b) of Circular No. 2-90 dated
March 9, 1990 states that this court retains the option, in the exercise of
its sound discretion and considering the attendant circumstances, either
itself to take cognizance of and decide such issues or to refer them to the
Court of Appeals for determination.
In Indoyon, Jr. v. Court of Appeals,111 we said that this court cannot
tolerate ignorance of the law on appeals.112 It is not this courts task to
determine for litigants their proper remedies under the
Rules.113chanRoblesvirtualLawlibrary
We agree that the City availed itself of the wrong mode of appeal before
the Court of Appeals. The City raised pure questions of law in its appeal.
The issue of whether the Regional Trial Court of Pasay had jurisdiction
over the PEZAs petition for declaratory relief is a question of law,
jurisdiction being a matter of law.114 The issue of whether the PEZA is a
government instrumentality exempt from payment of real property taxes
is likewise a question of law since this question is resolved by examining
the provisions of the PEZAs charter as well as other laws relating to the
PEZA.115chanRoblesvirtualLawlibrary
The Court of Appeals, therefore, did not err in dismissing the Citys appeal
pursuant to Rule 50, Section 2 of the Rules of Court.
Nevertheless, considering the important questions involved in this case,
we take cognizance of the Citys petition for review on certiorari in the
interest of justice.
In Municipality of Pateros v. The Honorable Court of Appeals,116 the
Municipality of Pateros filed an appeal under Rule 42 before the Court of
Appeals, which the Court of Appeals denied outright for raising pure
questions of law. This court agreed that the Municipality of Pateros
committed a procedural infraction117 and should have directly filed a
petition for review on certiorari before this court. Nevertheless, in the
interest of justice and in order to write finis to [the] controversy,118 this
court opt[ed] to relax the rules119 and proceeded to decide the case.
This court said:chanroblesvirtuallawlibrary
While it is true that rules of procedure are intended to promote rather
than frustrate the ends of justice, and while the swift unclogging of the
dockets of the courts is a laudable objective, it nevertheless must not be
met at the expense of substantial justice.
The Court has allowed some meritorious cases to proceed despite
inherent procedural defects and lapses. This is in keeping with the
principle that rules of procedure are mere tools designed to facilitate the
attainment of justice, and that strict and rigid application of rules which
should result in technicalities that tend to frustrate rather than promote
substantial justice must always be avoided. It is a far better and more
prudent cause of action for the court to excuse a technical lapse and
afford the parties a review of the case to attain the ends of justice, rather
than dispose of the case on technicality and cause grave injustice to the
parties, giving a false impression of speedy disposal of cases while actually
resulting in more delay, if not a miscarriage of justice.120
Similar to Municipality of Pateros, we opt to relax the rules in this case.
The PEZA operates or otherwise administers special economic zones all
over the country. Resolving the substantive issue of whether the PEZA is
taxable for real property taxes will clarify the taxing powers of all local
government units where special economic zones are operated. This case,
therefore, should be decided on the merits.
II.
The Regional Trial Court of Pasay had
no jurisdiction to hear, try, and decide
the PEZAs petition for declaratory relief
against the City of Lapu-Lapu
Rule 63 of the Rules of Court governs actions for declaratory relief. Section
1 of Rule 63 provides:chanroblesvirtuallawlibrary
SECTION 1. Who may file petition. Any person interested under a deed,
will, contract or other written instrument, or whose rights are affected by
a statute, executive order or regulation, ordinance, or any other
governmental regulation may, before breach or violation, thereof, bring an
action in the appropriate Regional Trial Court to determine any question of
construction or validity arising, and for a declaration of his rights or duties,
thereunder.
An action for reformation of an instrument, to quiet title to real property
or remove clouds therefrom, or to consolidate ownership under Article
1607 of the Civil Code, may be brought under this Rule.
The court with jurisdiction over petitions for declaratory relief is the
Regional Trial Court, the subject matter of litigation in an action for
declaratory relief being incapable of pecuniary estimation.121 Section 19
of the Judiciary Reorganization Act of 1980
provides:chanroblesvirtuallawlibrary
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise
exclusive original jurisdiction:
(1) In all civil actions in which the subject of litigation is incapable of
pecuniary estimation[.]
Consistent with the law, the Rules state that a petition for declaratory
relief is filed in the appropriate Regional Trial Court.122
A special civil action for declaratory relief is filed for a judicial
determination of any question of construction or validity arising from, and
for a declaration of rights and duties, under any of the following subject
matters: a deed, will, contract or other written instrument, statute,
executive order or regulation, ordinance, or any other governmental
regulation.123 However, a declaratory judgment may issue only if there
has been no breach of the documents in question.124 If the contract or
statute subject matter of the action has already been breached, the
appropriate ordinary civil action must be filed.125 If adequate relief is
available through another form of action or proceeding, the other action
must be preferred over an action for declaratory
relief.126chanRoblesvirtualLawlibrary
In Ollada v. Central Bank of the Philippines,127 the Central Bank issued CB-
IED Form No. 5 requiring certified public accountants to submit an
accreditation under oath before they were allowed to certify financial
statements submitted to the bank. Among those financial statements the
Central Bank disallowed were those certified by accountant Felipe B.
Ollada. 128chanRoblesvirtualLawlibrary
Claiming that the requirement restrained the legitimate pursuit of ones
trade,129 Ollada filed a petition for declaratory relief against the Central
Bank.
This court ordered the dismissal of Olladas petition without prejudice to
[his] seeking relief in another appropriate action.130 According to this
court, Olladas right had already been violated when the Central Bank
refused to accept the financial statements he prepared. Since there was
already a breach, a petition for declaratory relief was not proper. Ollada
must pursue the appropriate ordinary civil action or proceeding.131
This court explained:chanroblesvirtuallawlibrary
Petitioner commenced this action as, and clearly intended it to be one for
Declaratory Relief under the provisions of Rule 66 of the Rules of Court.
On the question of when a special civil action of this nature would prosper,
we have already held that the complaint for declaratory relief will not
prosper if filed after a contract, statute or right has been breached or
violated. In the present case such is precisely the situation arising from the
facts alleged in the petition for declaratory relief. As vigorously claimed by
petitioner himself, respondent had already invaded or violated his right
and caused him injury all these giving him a complete cause of action
enforceable in an appropriate ordinary civil action or proceeding. The
dismissal of the action was, therefore, proper in the light of our ruling in
De Borja vs. Villadolid, 47 O.G. (5) p. 2315, and Samson vs. Andal, G.R. No.
L-3439, July 31, 1951, where we held that an action for declaratory relief
should be filed before there has been a breach of a contract, statutes or
right, and that it is sufficient to bar such action, that there had been a
breach which would constitute actionable violation. The rule is that an
action for Declaratory Relief is proper only if adequate relief is not
available through the means of other existing forms of action or
proceeding (1 C.J.S. 1027-1028). 132
It is also required that the parties to the action for declaratory relief be
those whose rights or interests are affected by the contract or statute in
question.133 There must be an actual justiciable controversy or the
ripening seeds of one134 between the parties. The issue between the
parties must be ripe for judicial determination.135 An action for
declaratory relief based on theoretical or hypothetical questions cannot be
filed for our courts are not advisory courts.136chanRoblesvirtualLawlibrary
In Republic v. Roque,137 this court dismissed respondents petition for
declaratory relief for lack of justiciable controversy. According to this
court, [the respondents] fear of prospective prosecution [under the
Human Security Act] was solely based on remarks of certain government
officials which were addressed to the general
public.138chanRoblesvirtualLawlibrary
In Velarde v. Social Justice Society,139 this court refused to resolve the
issue of whether or not [a religious leaders endorsement] of a candidate
for elective office or in urging or requiring the members of his flock to vote
for a specific candidate is violative [of the separation clause].140
According to the court, there was no justiciable controversy and ordered
the dismissal of the Social Justice Societys petition for declaratory relief.
This court explained:chanroblesvirtuallawlibrary
Indeed, SJS merely speculated or anticipated without factual moorings
that, as religious leaders, the petitioner and his co-respondents below had
endorsed or threatened to endorse a candidate or candidates for elective
offices; and that such actual or threatened endorsement "will enable
[them] to elect men to public office who [would] in turn be forever
beholden to their leaders, enabling them to control the government"[;]
and "pos[ing] a clear and present danger of serious erosion of the peoples
faith in the electoral process[;] and reinforc[ing] their belief that religious
leaders determine the ultimate result of elections," which would then be
violative of the separation clause.
Such premise is highly speculative and merely theoretical, to say the least.
Clearly, it does not suffice to constitute a justiciable controversy. The
Petition does not even allege any indication or manifest intent on the part
of any of the respondents below to champion an electoral candidate, or to
urge their so-called flock to vote for, or not to vote for, a particular
candidate. It is a time-honored rule that sheer speculation does not give
rise to an actionable right.
Obviously, there is no factual allegation that SJS rights are being subjected
to any threatened, imminent and inevitable violation that should be
prevented by the declaratory relief sought. The judicial power and duty of
the courts to settle actual controversies involving rights that are legally
demandable and enforceable cannot be exercised when there is no actual
or threatened violation of a legal right.
All that the 5-page SJS Petition prayed for was "that the question raised in
paragraph 9 hereof be resolved." In other words, it merely sought an
opinion of the trial court on whether the speculated acts of religious
leaders endorsing elective candidates for political offices violated the
constitutional principle on the separation of church and state. SJS did not
ask for a declaration of its rights and duties; neither did it pray for the
stoppage of any threatened violation of its declared rights. Courts,
however, are proscribed from rendering an advisory opinion.141
In sum, a petition for declaratory relief must satisfy six
requisites:chanroblesvirtuallawlibrary
[F]irst, the subject matter of the controversy must be a deed, will, contract
or other written instrument, statute, executive order or regulation, or
ordinance; second, the terms of said documents and the validity thereof
are doubtful and require judicial construction; third, there must have been
no breach of the documents in question; fourth, there must be an actual
justiciable controversy or the "ripening seeds" of one between persons
whose interests are adverse; fifth, the issue must be ripe for judicial
determination; and sixth, adequate relief is not available through other
means or other forms of action or proceeding.142 (Emphases omitted)
We rule that the PEZA erred in availing itself of a petition for declaratory
relief against the City. The City had already issued demand letters and real
property tax assessment against the PEZA, in violation of the PEZAs
alleged tax-exempt status under its charter. The Special Economic Zone
Act of 1995, the subject matter of PEZAs petition for declaratory relief,
had already been breached. The trial court, therefore, had no jurisdiction
over the petition for declaratory relief.
There are several aspects of jurisdiction.143 Jurisdiction over the subject
matter is the power to hear and determine cases of the general class to
which the proceedings in question belong.144 It is conferred by law,
which may either be the Constitution or a statute.145 Jurisdiction over
the subject matter means the nature of the cause of action and the relief
sought.146 Thus, the cause of action and character of the relief sought as
alleged in the complaint are examined to determine whether a court had
jurisdiction over the subject matter.147 Any decision rendered by a court
without jurisdiction over the subject matter of the action is
void.148chanRoblesvirtualLawlibrary
Another aspect of jurisdiction is jurisdiction over the person. It is the
power of [a] court to render a personal judgment or to subject the parties
in a particular action to the judgment and other rulings rendered in the
action.149 A court automatically acquires jurisdiction over the person of
the plaintiff upon the filing of the initiatory pleading.150 With respect to
the defendant, voluntary appearance in court or a valid service of
summons vests the court with jurisdiction over the defendants
person.151 Jurisdiction over the person of the defendant is indispensable
in actions in personam or those actions based on a partys personal
liability.152 The proceedings in an action in personam are void if the court
had no jurisdiction over the person of the
defendant.153chanRoblesvirtualLawlibrary
Jurisdiction over the res or the thing under litigation is acquired either by
the seizure of the property under legal process, whereby it is brought into
actual custody of the law; or as a result of the institution of legal
proceedings, in which the power of the court is recognized and made
effective.154 Jurisdiction over the res is necessary in actions in rem or
those actions directed against the thing or property or status of a person
and seek judgments with respect thereto as against the whole world.155
The proceedings in an action in rem are void if the court had no
jurisdiction over the thing under litigation.156chanRoblesvirtualLawlibrary
In the present case, the Regional Trial Court had no jurisdiction over the
subject matter of the action, specifically, over the remedy sought. As this
court explained in Malana v. Tappa:157chanRoblesvirtualLawlibrary
. . . an action for declaratory relief presupposes that there has been no
actual breach of the instruments involved or of rights arising thereunder.
Since the purpose of an action for declaratory relief is to secure an
authoritative statement of the rights and obligations of the parties under a
statute, deed, or contract for their guidance in the enforcement thereof,
or compliance therewith, and not to settle issues arising from an alleged
breach thereof, it may be entertained only before the breach or violation
of the statute, deed, or contract to which it refers. A petition for
declaratory relief gives a practical remedy for ending controversies that
have not reached the state where another relief is immediately available;
and supplies the need for a form of action that will set controversies at
rest before they lead to a repudiation of obligations, an invasion of rights,
and a commission of wrongs.
Where the law or contract has already been contravened prior to the filing
of an action for declaratory relief, the courts can no longer assume
jurisdiction over the action. In other words, a court has no more
jurisdiction over an action for declaratory relief if its subject has already
been infringed or transgressed before the institution of the action.158
(Emphasis supplied)
The trial court should have dismissed the PEZAs petition for declaratory
relief for lack of jurisdiction.
Once an assessment has already been issued by the assessor, the proper
remedy of a taxpayer depends on whether the assessment was erroneous
or illegal.
An erroneous assessment presupposes that the taxpayer is subject to the
tax but is disputing the correctness of the amount assessed.159 With an
erroneous assessment, the taxpayer claims that the local assessor erred in
determining any of the items for computing the real property tax, i.e., the
value of the real property or the portion thereof subject to tax and the
proper assessment levels. In case of an erroneous assessment, the
taxpayer must exhaust the administrative remedies provided under the
Local Government Code before resorting to judicial action.
The taxpayer must first pay the real property tax under protest. Section
252 of the Local Government Code provides:chanroblesvirtuallawlibrary
SECTION 252. Payment Under Protest. -(a) No protest shall be entertained
unless the taxpayer first pays the tax. There shall be annotated on the tax
receipts the words "paid under protest". The protest in writing must be
filed within thirty (30) days from payment of the tax to the provincial, city
treasurer or municipal treasurer, in the case of a municipality within
Metropolitan Manila Area, who shall decide the protest within sixty (60)
days from receipt.
(b) The tax or a portion thereof paid under protest, shall be held in trust by
the treasurer concerned.
(c) In the event that the protest is finally decided in favor of the taxpayer,
the amount or portion of the tax protested shall be refunded to the
protestant, or applied as tax credit against his existing or future tax
liability.
(d) In the event that the protest is denied or upon the lapse of the sixty
day period prescribed in subparagraph (a), the taxpayer may avail of the
remedies as provided for in Chapter 3, Title II, Book II of this Code.
Should the taxpayer find the action on the protest unsatisfactory, the
taxpayer may appeal with the Local Board of Assessment Appeals within
60 days from receipt of the decision on the
protest:chanroblesvirtuallawlibrary
SECTION 226. Local Board of Assessment Appeals. - Any owner or person
having legal interest in the property who is not satisfied with the action of
the provincial, city or municipal assessor in the assessment of his property
may, within sixty (60) days from the date of receipt of the written notice of
assessment, appeal to the Board of Assessment Appeals of the provincial
or city by filing a petition under oath in the form prescribed for the
purpose, together with copies of the tax declarations and such affidavits or
documents submitted in support of the appeal.
Payment under protest and appeal to the Local Board of Assessment
Appeals are successive administrative remedies to a taxpayer who
questions the correctness of an assessment.160 The Local Board
Assessment Appeals shall not entertain an appeal without the action of
the local assessor161 on the protest.
If the taxpayer is still unsatisfied after appealing with the Local Board of
Assessment Appeals, the taxpayer may appeal with the Central Board of
Assessment Appeals within 30 days from receipt of the Local Boards
decision:chanroblesvirtuallawlibrary
SECTION 229. Action by the Local Board of Assessment Appeals. - (a) The
Board shall decide the appeal within one hundred twenty (120) days from
the date of receipt of such appeal. The Board, after hearing, shall render
its decision based on substantial evidence or such relevant evidence on
record as a reasonable mind might accept as adequate to support the
conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have the
power to summon witnesses, administer oaths, conduct ocular inspection,
take depositions, and issue subpoena and subpoena duces tecum. The
proceedings of the Board shall be conducted solely for the purpose of
ascertaining the facts without necessarily adhering to technical rules
applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or
the person having legal interest therein and the provincial or city assessor
with a copy of the decision of the Board. In case the provincial or city
assessor concurs in the revision or the assessment, it shall be his duty to
notify the owner of the property or the person having legal interest
therein of such fact using the form prescribed for the purpose. The owner
of the property or the person having legal interest therein or the assessor
who is not satisfied with the decision of the Board, may, within thirty (30)
days after receipt of the decision of said Board, appeal to the Central
Board of Assessment Appeals, as herein provided. The decision of the
Central Board shall be final and executory. (Emphasis supplied)
On the other hand, an assessment is illegal if it was made without
authority under the law.162 In case of an illegal assessment, the taxpayer
may directly resort to judicial action without paying under protest the
assessed tax and filing an appeal with the Local and Central Board of
Assessment Appeals.
In Ty v. Trampe,163 the Municipal Assessor of Pasig sent Alejandro B. Ty a
notice of assessment with respect to Tys real properties in Pasig. Without
resorting to the administrative remedies under the Local Government
Code, Ty filed before the Regional Trial Court a petition, praying that the
trial court nullify the notice of assessment. In assessing the real property
taxes due, the Municipal Assessor used a schedule of market values solely
prepared by him. This, Ty argued, was void for being contrary to the Local
Government Code requiring that the schedule of market values be jointly
prepared by the provincial, city, and municipal assessors of the
municipalities within the Metropolitan Manila Area.
This court ruled that the assessment was illegal for having been issued
without authority of the Municipal Assessor. Reconciling provisions of the
Real Property Tax Code and the Local Government Code, this court held
that the schedule of market values must be jointly prepared by the
provincial, city, and municipal assessors of the municipalities within the
Metropolitan Manila Area.
As to the issue of exhaustion of administrative remedies, this court held
that Ty did not err in directly resorting to judicial action. According to this
court, payment under protest is required only where there is a question
as to the reasonableness of the amount assessed.164 As to appeals
before the Local and Central Board of Assessment Appeals, they are
fruitful only where questions of fact are
involved.165chanRoblesvirtualLawlibrary
Ty raised the issue of the legality of the notice of assessment, an issue that
did not go into the reasonableness of the amount assessed. Neither did
the issue involve a question of fact. Ty raised a question of law and,
therefore, need not resort to the administrative remedies provided under
the Local Government Code.
In the present case, the PEZA did not avail itself of any of the remedies
against a notice of assessment. A petition for declaratory relief is not the
proper remedy once a notice of assessment was already issued.
Instead of a petition for declaratory relief, the PEZA should have directly
resorted to a judicial action. The PEZA should have filed a complaint for
injunction, the appropriate ordinary civil action166 to enjoin the City
from enforcing its demand and collecting the assessed taxes from the
PEZA. After all, a declaratory judgment as to the PEZAs tax-exempt status
is useless unless the City is enjoined from enforcing its demand.
Injunction is a judicial writ, process or proceeding whereby a party is
ordered to do or refrain from doing a certain act.167 It may be the main
action or merely a provisional remedy for and as incident in the main
action.168 The essential requisites of a writ of injunction are: (1) there
must be a right in esse or the existence of a right to be protected; and (2)
the act against which the injunction is directed to constitute a violation of
such right.169chanRoblesvirtualLawlibrary
We note, however, that the City confused the concepts of jurisdiction and
venue in contending that the Regional Trial Court of Pasay had no
jurisdiction because the real properties involved in this case are located in
the City of Lapu-Lapu.
On the one hand, jurisdiction is the power to hear and determine cases of
the general class to which the proceedings in question belong.170
Jurisdiction is a matter of substantive law.171 Thus, an action may be filed
only with the court or tribunal where the Constitution or a statute says it
can be brought.172 Objections to jurisdiction cannot be waived and may
be brought at any stage of the proceedings, even on appeal.173 When a
case is filed with a court which has no jurisdiction over the action, the
court shall motu proprio dismiss the case.174chanRoblesvirtualLawlibrary
On the other hand, venue is the place of trial or geographical location in
which an action or proceeding should be brought.175 In civil cases,
venue is a matter of procedural law.176 A partys objections to venue
must be brought at the earliest opportunity either in a motion to dismiss
or in the answer; otherwise the objection shall be deemed waived.177
When the venue of a civil action is improperly laid, the court cannot motu
proprio dismiss the case.178chanRoblesvirtualLawlibrary
The venue of an action depends on whether the action is a real or personal
action. Should the action affect title to or possession of real property, or
interest therein, it is a real action. The action should be filed in the proper
court which has jurisdiction over the area wherein the real property
involved, or a portion thereof, is situated.179 If the action is a personal
action, the action shall be filed with the proper court where the plaintiff or
any of the principal plaintiffs resides, or where the defendant or any of the
principal defendants resides, or in the case of a non-resident defendant
where he may be found, at the election of the
plaintiff.180chanRoblesvirtualLawlibrary
The City was objecting to the venue of the action, not to the jurisdiction of
the Regional Trial Court of Pasay. In essence, the City was contending that
the PEZAs petition is a real action as it affects title to or possession of real
property, and, therefore, the PEZA should have filed the petition with the
Regional Trial Court of Lapu-Lapu City where the real properties are
located.
However, whatever objections the City has against the venue of the PEZAs
action for declaratory relief are already deemed waived. Objections to
venue must be raised at the earliest possible opportunity.181 The City did
not file a motion to dismiss the petition on the ground that the venue was
improperly laid. Neither did the City raise this objection in its answer.
In any event, the law sought to be judicially interpreted in this case had
already been breached. The Regional Trial Court of Pasay, therefore, had
no jurisdiction over the PEZAs petition for declaratory relief against the
City.
III.

The Court of Appeals had no jurisdiction
over the PEZAs petition for certiorari
against the Province of Bataan
Appeal is the remedy to obtain a reversal or modification of a judgment
on the merits.182 A judgment on the merits is one which determines
the rights and liabilities of the parties based on the disclosed facts,
irrespective of the formal, technical or dilatory objections.183 It is not
even necessary that the case proceeded to trial.184 So long as the
judgment is general185 and the parties had a full legal opportunity to
be heard on their respective claims and contentions, 186 the judgment is
on the merits.
On the other hand, certiorari is a special civil action filed to annul or
modify a proceeding of a tribunal, board, or officer exercising judicial or
quasi-judicial functions.187 Certiorari, which in Latin means to be more
fully informed,188 was originally a remedy in the common law. This
court discussed the history of the remedy of certiorari in Spouses Delos
Santos v. Metropolitan Bank and Trust
Company:189chanRoblesvirtualLawlibrary
In the common law, from which the remedy of certiorari evolved, the writ
of certiorari was issued out of Chancery, or the Kings Bench, commanding
agents or officers of the inferior courts to return the record of a cause
pending before them, so as to give the party more sure and speedy justice,
for the writ would enable the superior court to determine from an
inspection of the record whether the inferior courts judgment was
rendered without authority. The errors were of such a nature that, if
allowed to stand, they would result in a substantial injury to the petitioner
to whom no other remedy was available. If the inferior court acted
without authority, the record was then revised and corrected in matters of
law. The writ of certiorari was limited to cases in which the inferior court
was said to be exceeding its jurisdiction or was not proceeding according
to essential requirements of law and would lie only to review judicial or
quasi-judicial acts.190
In our jurisdiction, the term certiorari is used in two ways. An appeal
before this court raising pure questions of law is commenced by filing a
petition for review on certiorari under Rule 45 of the Rules of Court. An
appeal by certiorari, which continues the proceedings commenced before
the lower courts,191 is filed to reverse or modify judgments or final
orders.192 Under the Rules, an appeal by certiorari must be filed within
15 days from notice of the judgment or final order, or of the denial of the
appellants motion for new trial or
reconsideration.193chanRoblesvirtualLawlibrary
A petition for certiorari under Rule 65, on the other hand, is an
independent and original action filed to set aside proceedings conducted
without or in excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction.194 Under the Rules, a petition
for certiorari may only be filed if there is no appeal or any plain, speedy, or
adequate remedy in the ordinary course of law.195 The petition must be
filed within 60 days from notice of the judgment, order, or
resolution.196chanRoblesvirtualLawlibrary
Because of the longer period to file a petition for certiorari, some litigants
attempt to file petitions for certiorari as substitutes for lost appeals by
certiorari. However, Rule 65 is clear that a petition for certiorari will not
prosper if appeal is available. Appeal is the proper remedy even if the
error, or one of the errors, raised is grave abuse of discretion on the part
of the court rendering judgment.197 If appeal is available, a petition for
certiorari cannot be filed.
In this case, the trial courts decision dated January 31, 2007 is a judgment
on the merits. Based on the facts disclosed by the parties, the trial court
declared the PEZA liable to the Province of Bataan for real property taxes.
The PEZAs proper remedy against the trial courts decision, therefore, is
appeal.
Since the PEZA filed a petition for certiorari against the trial courts
decision, it availed itself of the wrong remedy. As the Province of Bataan
contended, the trial courts decision dated January 31, 2007 is only an
error of judgment appealable to the higher level court and may not be
corrected by filing a petition for certiorari.198 That the trial court judge
allegedly committed grave abuse of discretion does not make the petition
for certiorari the correct remedy. The PEZA should have raised this ground
in an appeal filed within 15 days from notice of the assailed resolution.
This court, in the liberal spirit pervading the Rules of Court and in the
interest of substantial justice,199 has treated petitions for certiorari as an
appeal: (1) if the petition for certiorari was filed within the reglementary
period within which to file a petition for review on certiorari; (2) when
errors of judgment are averred; and (3) when there is sufficient reason to
justify the relaxation of the rules.200 Considering that the nature of an
action is determined by the allegations of the complaint or the petition
and the character of the relief sought,201 a petition which actually avers
errors of judgment rather than errors than that of jurisdiction202 may be
considered a petition for review.
However, suspending the application of the Rules has its disadvantages.
Relaxing procedural rules may reduce the effective enforcement of
substantive rights,203 leading to arbitrariness, caprice, despotism, or
whimsicality in the settlement of disputes.204 Therefore, for this court
to suspend the application of the Rules, the accomplishment of substantial
justice must outweigh the importance of predictability of court
procedures.
The PEZAs petition for certiorari may be treated as an appeal. First, the
petition for certiorari was filed within the 15-day reglementary period for
filing an appeal. The PEZA filed its petition for certiorari before the Court
of Appeals on October 15, 2007,205 which was 12 days from October 3,
2007206 when the PEZA had notice of the trial courts order denying the
motion for reconsideration.
Second, the petition for certiorari raised errors of judgment. The PEZA
argued that the trial court erred in ruling that it is not exempt from
payment of real property taxes given Section 21 of Presidential Decree No.
66 and Sections 11 and 51 of the Special Economic Zone Act of
1995.207chanRoblesvirtualLawlibrary
Third, there is sufficient reason to relax the rules given the importance of
the substantive issue presented in this case.
However, the PEZAs petition for certiorari was filed before the wrong
court. The PEZA should have filed its petition before the Court of Tax
Appeals.
The Court of Tax Appeals has the exclusive appellate jurisdiction over local
tax cases decided by Regional Trial Courts. Section 7, paragraph (a)(3) of
Republic Act No. 1125, as amended by Republic Act No. 9282,
provides:chanroblesvirtuallawlibrary
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax
cases originally decided or resolved by them in the exercise of their
original or appellate jurisdiction[.]
The local tax cases referred to in Section 7, paragraph (a)(3) of Republic
Act No. 1125, as amended, include cases involving real property taxes.
Real property taxation is governed by Book II of the Local Government
Code on Local Taxation and Fiscal Matters. Real property taxes are
collected by the Local Treasurer,208 not by the Bureau of Internal
Revenue in charge of collecting national internal revenue taxes, fees, and
charges.209chanRoblesvirtualLawlibrary
Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by
Republic Act No. 9282, separately provides for the exclusive appellate
jurisdiction of the Court of Tax Appeals over decisions of the Central Board
of Assessment Appeals involving the assessment or collection of real
property taxes:chanroblesvirtuallawlibrary
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
5. Decisions of the Central Board of Assessment Appeals in the exercise of
its appellate jurisdiction over cases involving the assessment and taxation
of real property originally decided by the provincial or city board of
assessment appeals[.]
This separate provision, nevertheless, does not bar the Court of Tax
Appeals from taking cognizance of trial court decisions involving the
collection of real property tax cases. Sections 256210 and 266211 of the
Local Government Code expressly allow local government units to file in
any court of competent jurisdiction civil actions to collect basic real
property taxes. Should the trial court rule against them, local government
units cannot be barred from appealing before the Court of Tax Appeals
the highly specialized body specifically created for the purpose of
reviewing tax cases.212chanRoblesvirtualLawlibrary
We have also ruled that the Court of Tax Appeals, not the Court of
Appeals, has the exclusive original jurisdiction over petitions for certiorari
assailing interlocutory orders issued by Regional Trial Courts in a local tax
case. We explained in The City of Manila v. Hon. Grecia-Cuerdo213 that
while the Court of Tax Appeals has no express grant of power to issue
writs of certiorari under Republic Act No. 1125,214 as amended, the tax
courts judicial power as defined in the Constitution215 includes the
power to determine whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the
[Regional Trial Court] in issuing an interlocutory order of jurisdiction in
cases falling within the exclusive appellate jurisdiction of the tax
court.216 We further elaborated:chanroblesvirtuallawlibrary
Indeed, in order for any appellate court to effectively exercise its appellate
jurisdiction, it must have the authority to issue, among others, a writ of
certiorari. In transferring exclusive jurisdiction over appealed tax cases to
the CTA, it can reasonably be assumed that the law intended to transfer
also such power as is deemed necessary, if not indispensable, in aid of
such appellate jurisdiction. There is no perceivable reason why the
transfer should only be considered as partial, not total.
....
If this Court were to sustain petitioners' contention that jurisdiction over
their certiorari petition lies with the CA, this Court would be confirming
the exercise by two judicial bodies, the CA and the CTA, of jurisdiction over
basically the same subject matter precisely the split-jurisdiction situation
which is anathema to the orderly administration of justice. The Court
cannot accept that such was the legislative motive, especially considering
that the law expressly confers on the CTA, the tribunal with the specialized
competence over tax and tariff matters, the role of judicial review over
local tax cases without mention of any other court that may exercise such
power. Thus, the Court agrees with the ruling of the CA that since
appellate jurisdiction over private respondents' complaint for tax refund is
vested in the CTA, it follows that a petition for certiorari seeking
nullification of an interlocutory order issued in the said case should,
likewise, be filed with the same court. To rule otherwise would lead to an
absurd situation where one court decides an appeal in the main case while
another court rules on an incident in the very same case.
Stated differently, it would be somewhat incongruent with the
pronounced judicial abhorrence to split jurisdiction to conclude that the
intention of the law is to divide the authority over a local tax case filed
with the RTC by giving to the CA or this Court jurisdiction to issue a writ of
certiorari against interlocutory orders of the RTC but giving to the CTA the
jurisdiction over the appeal from the decision of the trial court in the same
case. It is more in consonance with logic and legal soundness to conclude
that the grant of appellate jurisdiction to the CTA over tax cases filed in
and decided by the RTC carries with it the power to issue a writ of
certiorari when necessary in aid of such appellate jurisdiction. The
supervisory power or jurisdiction of the CTA to issue a writ of certiorari in
aid of its appellate jurisdiction should co-exist with, and be a complement
to, its appellate jurisdiction to review, by appeal, the final orders and
decisions of the RTC, in order to have complete supervision over the acts
of the latter.217 (Citations omitted)
In this case, the petition for injunction filed before the Regional Trial Court
of Pasay was a local tax case originally decided by the trial court in its
original jurisdiction. Since the PEZA assailed a judgment, not an
interlocutory order, of the Regional Trial Court, the PEZAs proper remedy
was an appeal to the Court of Tax Appeals.
Considering that the appellate jurisdiction of the Court of Tax Appeals is to
the exclusion of all other courts, the Court of Appeals had no jurisdiction
to take cognizance of the PEZAs petition. The Court of Appeals acted
without jurisdiction in rendering the decision in CA-G.R. SP No. 100984. Its
decision in CA-G.R. SP No. 100984 is void.218chanRoblesvirtualLawlibrary
The filing of appeal in the wrong court does not toll the period to appeal.
Consequently, the decision of the Regional Trial Court, Branch 115, Pasay
City, became final and executory after the lapse of the 15th day from the
PEZAs receipt of the trial courts decision.219 The denial of the petition
for injunction became final and executory.
IV.
The remedy of a taxpayer depends on the
stage in which the local government unit is
enforcing its authority to impose real
property taxes
The proper remedy of a taxpayer depends on the stage in which the local
government unit is enforcing its authority to collect real property taxes.
For the guidance of the members of the bench and the bar, we reiterate
the taxpayers remedies against the erroneous or illegal assessment of real
property taxes.
Exhaustion of administrative remedies under the Local Government Code
is necessary in cases of erroneous assessments where the correctness of
the amount assessed is assailed. The taxpayer must first pay the tax then
file a protest with the Local Treasurer within 30 days from date of
payment of tax.220 If protest is denied or upon the lapse of the 60-day
period to decide the protest, the taxpayer may appeal to the Local Board
of Assessment Appeals within 60 days from the denial of the protest or the
lapse of the 60-day period to decide the protest.221 The Local Board of
Assessment Appeals has 120 days to decide the
appeal.222chanRoblesvirtualLawlibrary
If the taxpayer is unsatisfied with the Local Boards decision, the taxpayer
may appeal before the Central Board of Assessment Appeals within 30
days from receipt of the Local Boards
decision.223chanRoblesvirtualLawlibrary
The decision of the Central Board of Assessment Appeals is appealable
before the Court of Tax Appeals En Banc.224 The appeal before the Court
of Tax Appeals shall be filed following the procedure under Rule 43 of the
Rules of Court.225chanRoblesvirtualLawlibrary
The Court of Tax Appeals decision may then be appealed before this court
through a petition for review on certiorari under Rule 45 of the Rules of
Court raising pure questions of law.226chanRoblesvirtualLawlibrary
In case of an illegal assessment where the assessment was issued without
authority, exhaustion of administrative remedies is not necessary and the
taxpayer may directly resort to judicial action.227 The taxpayer shall file a
complaint for injunction before the Regional Trial Court228 to enjoin the
local government unit from collecting real property taxes.
The party unsatisfied with the decision of the Regional Trial Court shall file
an appeal, not a petition for certiorari, before the Court of Tax Appeals,
the complaint being a local tax case decided by the Regional Trial
Court.229 The appeal shall be filed within fifteen (15) days from notice of
the trial courts decision.
The Court of Tax Appeals decision may then be appealed before this court
through a petition for review on certiorari under Rule 45 of the Rules of
Court raising pure questions of law.230chanRoblesvirtualLawlibrary
In case the local government unit has issued a notice of delinquency, the
taxpayer may file a complaint for injunction to enjoin the impending sale
of the real property at public auction. In case the local government unit
has already sold the property at public auction, the taxpayer must first
deposit with the court the amount for which the real property was sold,
together with interest of 2% per month from the date of sale to the time
of the institution of action. The taxpayer may then file a complaint to
assail the validity of the public auction.231 The decisions of the Regional
Trial Court in these cases shall be appealable before the Court of Tax
Appeals,232 and the latters decisions appealable before this court
through a petition for review on certiorari under Rule 45 of the Rules of
Court.233chanRoblesvirtualLawlibrary
V.
The PEZA is exempt from payment
of real property taxes
The jurisdictional errors in this case render these consolidated petitions
moot. We do not review void decisions rendered without jurisdiction.
However, the PEZA alleged that several local government units, including
the City of Baguio and the Province of Cavite, have issued their respective
real property tax assessments against the PEZA. Other local government
units will likely follow suit, and either the PEZA or the local government
units taxing the PEZA may file their respective actions against each other.
In the interest of judicial economy234 and avoidance of conflicting
decisions involving the same issues,235 we resolve the substantive issue of
whether the PEZA is exempt from payment of real property taxes.
Real property taxes are annual taxes levied on real property such as lands,
buildings, machinery, and other improvements not otherwise specifically
exempted under the Local Government Code.236 Real property taxes are
ad valorem, with the amount charged based on a fixed proportion of the
value of the property.237 Under the law, provinces, cities, and
municipalities within the Metropolitan Manila Area have the power to levy
real property taxes within their respective
territories.238chanRoblesvirtualLawlibrary
The general rule is that real properties are subject to real property taxes.
This is true especially since the Local Government Code has withdrawn
exemptions from real property taxes of all persons, whether natural or
juridical:chanroblesvirtuallawlibrary
SEC. 234. Exemptions from Real Property Tax. The following are
exempted from payment of 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;
(b) Charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, nonprofit or religious cemeteries and all lands,
buildings, and improvements actually, directly, and exclusively used for
religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned or
controlled corporations engaged in the supply and distribution of water
and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided
under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemption from payment of real property
taxes previously granted to, or presently enjoyed by, all persons, whether
natural or juridical, including government-owned or -controlled
corporations are hereby withdrawn upon the effectivity of this Code.
(Emphasis supplied)
The person liable for real property taxes is the taxable person who had
actual or beneficial use and possession [of the real property for the
taxable period,] whether or not [the person owned the property for the
period he or she is being taxed].239chanRoblesvirtualLawlibrary
The exceptions to the rule are provided in the Local Government Code.
Under Section 133(o), local government units have no power to levy taxes
of any kind on the national government, its agencies and instrumentalities
and local government units:chanroblesvirtuallawlibrary
SEC. 133. Common Limitations on the Taxing Powers of Local Government
Units. Unless otherwise provided herein, the exercise of taxing powers of
provinces, cities, municipalities, and barangays shall not extend to the levy
of the following:
....
(o) Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities and local government units.
Specifically on real property taxes, Section 234 enumerates the persons
and real property exempt from real property
taxes:chanroblesvirtuallawlibrary
SEC. 234. Exemptions from Real Property Tax. The following are
exempted from payment of 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;
(b) Charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, nonprofit or religious cemeteries and all lands,
buildings, and improvements actually, directly, and exclusively used for
religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned or
controlled corporations engaged in the supply and distribution of water
and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided
under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemption from payment of real property
tax previously granted to, or presently enjoyed by, all persons, whether
natural or juridical, including all government-owned or -controlled
corporations are hereby withdrawn upon the effectivity of this Code.
(Emphasis supplied)
For persons granted tax exemptions or incentives before the effectivity of
the Local Government Code, Section 193 withdrew these tax exemption
privileges. These persons consist of both natural and juridical persons,
including government-owned or controlled
corporations:chanroblesvirtuallawlibrary
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. 6938, non stock and non profit
hospitals and educational institutions, are hereby withdrawn upon
effectivity of this Code.
As discussed, Section 234 withdrew all tax privileges with respect to real
property taxes.
Nevertheless, local government units may grant tax exemptions under
such terms and conditions as they may deem
necessary:chanroblesvirtuallawlibrary
SEC. 192. Authority to Grant Tax Exemption Privileges. Local government
units may, through ordinances duly approved, grant tax exemptions,
incentives or reliefs under such terms and conditions as they may deem
necessary.
In Mactan Cebu International Airport Authority v. Hon. Marcos,240 this
court classified the exemptions from real property taxes into ownership,
character, and usage exemptions.
Ownership exemptions are exemptions based on the ownership of the real
property. The exemptions of real property owned by the Republic of the
Philippines, provinces, cities, municipalities, barangays, and registered
cooperatives fall under this classification.241chanRoblesvirtualLawlibrary
Character exemptions are exemptions based on the character of the real
property. Thus, no real property taxes may be levied on charitable
institutions, houses and temples of prayer like churches, parsonages, or
convents appurtenant thereto, mosques, and non profit or religious
cemeteries.242chanRoblesvirtualLawlibrary
Usage exemptions are exemptions based on the use of the real property.
Thus, no real property taxes may be levied on real property such as: (1)
lands and buildings actually, directly, and exclusively used for religious,
charitable or educational purpose; (2) machineries and equipment
actually, directly and exclusively used by local water districts or by
government-owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric
power; and (3) machinery and equipment used for pollution control and
environmental protection.243chanRoblesvirtualLawlibrary
Persons may likewise be exempt from payment of real properties if their
charters, which were enacted or reenacted after the effectivity of the
Local Government Code, exempt them payment of real property
taxes.244chanRoblesvirtualLawlibrary
V. (A)
The PEZA is an instrumentality of the national government
An instrumentality is 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.245chanRoblesvirtualLawlibrary
Examples of instrumentalities of the national government are the Manila
International Airport Authority,246 the Philippine Fisheries Development
Authority,247 the Government Service Insurance System,248 and the
Philippine Reclamation Authority.249 These entities are not integrated
within the department framework but are nevertheless vested with
special functions to carry out a declared policy of the national
government.
Similarly, the PEZA is an instrumentality of the national government. It is
not integrated within the department framework but is an agency
attached to the Department of Trade and Industry.250 Book IV, Chapter 7,
Section 38(3)(a) of the Administrative Code of 1987 defines
attachment:chanroblesvirtuallawlibrary
SEC. 38. Definition of Administrative Relationship. Unless otherwise
expressly stated in the Code or in other laws defining the special
relationships of particular agencies, administrative relationships shall be
categorized and defined as follows:
....
(3) Attachment.(a) This refers to the lateral relationship between the
department or its equivalent and the attached agency or corporation for
purposes of policy and program coordination. The coordination may be
accomplished by having the department represented in the governing
board of the attached agency or corporation, either as chairman or as a
member, with or without voting rights, if this is permitted by the charter;
having the attached corporation or agency comply with a system of
periodic reporting which shall reflect the progress of the programs and
projects; and having the department or its equivalent provide general
policies through its representative in the board, which shall serve as the
framework for the internal policies of the attached corporation or
agency[.]
Attachment, which enjoys a larger measure of independence251
compared with other administrative relationships such as supervision and
control, is further explained in Beja, Sr. v. Court of
Appeals:252chanRoblesvirtualLawlibrary
An attached agency has a larger measure of independence from the
Department to which it is attached than one which is under departmental
supervision and control or administrative supervision. This is borne out by
the lateral relationship between the Department and the attached
agency. The attachment is merely for policy and program coordination.
With respect to administrative matters, the independence of an attached
agency from Departmental control and supervision is further reinforced by
the fact that even an agency under a Departments administrative
supervision is free from Departmental interference with respect to
appointments and other personnel actions in accordance with the
decentralization of personnel functions under the Administrative Code of
1987. Moreover, the Administrative Code explicitly provides that Chapter
8 of Book IV on supervision and control shall not apply to chartered
institutions attached to a Department.253
With the PEZA as an attached agency to the Department of Trade and
Industry, the 13-person PEZA Board is chaired by the Department
Secretary.254 Among the powers and functions of the PEZA is its ability to
coordinate with the Department of Trade and Industry for policy and
program formulation and implementation.255 In strategizing and
prioritizing the development of special economic zones, the PEZA
coordinates with the Department of Trade and
Industry.256chanRoblesvirtualLawlibrary
The PEZA also administers its own funds and operates autonomously, with
the PEZA Board formulating and approving the PEZAs annual budget.257
Appointments and other personnel actions in the PEZA are also free from
departmental interference, with the PEZA Board having the exclusive and
final authority to promote, transfer, assign and reassign officers of the
PEZA.258chanRoblesvirtualLawlibrary
As an instrumentality of the national government, the PEZA is vested with
special functions or jurisdiction by law. Congress created the PEZA to
operate, administer, manage and develop special economic zones in the
Philippines.259 Special economic zones are areas with highly developed
or which have the potential to be developed into agro-industrial, industrial
tourist/recreational, commercial, banking, investment and financial
centers.260 By operating, administering, managing, and developing
special economic zones which attract investments and promote use of
domestic labor, the PEZA carries out the following policy of the
Government:chanroblesvirtuallawlibrary
SECTION 2. Declaration of Policy. It is the declared policy of the
government to translate into practical realities the following State policies
and mandates in the 1987 Constitution, namely:
(a) The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments. (Sec. 20, Art. II)
(b) The State shall promote the preferential use of Filipino labor,
domestic materials and locally produced goods, and adopt measures that
help make them competitive. (Sec. 12, Art. XII)
In pursuance of these policies, the government shall actively encourage,
promote, induce and accelerate a sound and balanced industrial,
economic and social development of the country in order to provide jobs
to the people especially those in the rural areas, increase their
productivity and their individual and family income, and thereby improve
the level and quality of their living condition through the establishment,
among others, of special economic zones in suitable and strategic
locations in the country and through measures that shall effectively attract
legitimate and productive foreign investments.261
Being an instrumentality of the national government, the PEZA cannot be
taxed by local government units.
Although a body corporate vested with some corporate powers,262 the
PEZA is not a government-owned or controlled corporation taxable for real
property taxes.
Section 2(13) of the Introductory Provisions of the Administrative Code of
1987 defines the term government-owned or controlled
corporation:chanroblesvirtuallawlibrary
SEC. 2. General Terms Defined. Unless the specific words of the text, or
the context as a whole, or a particular statute, shall require a different
meaning:
....
(13) Government-owned or controlled corporation refers to any agency
organized as a stock or non-stock corporation, vested with functions
relating to public needs whether governmental or proprietary in nature,
and owned by the Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of stock corporations, to
the extent of at least fifty-one (51) per cent of its capital stock: Provided,
That government-owned or controlled corporations may be further
categorized by the Department of the Budget, the Civil Service
Commission, and the Commission on Audit for purposes of the exercise
and discharge of their respective powers, functions and responsibilities
with respect to such corporations.
Government entities are created by law, specifically, by the Constitution or
by statute. In the case of government-owned or controlled corporations,
they are incorporated by virtue of special charters263 to participate in the
market for special reasons which may be related to dysfunctions or
inefficiencies of the market structure. This is to adjust reality as against
the concept of full competition where all market players are price takers.
Thus, under the Constitution, government-owned or controlled
corporations are created in the interest of the common good and should
satisfy the test of economic viability.264 Article XII, Section 16 of the
Constitution provides:chanroblesvirtuallawlibrary
Section 16. The Congress shall not, except by general law, provide for the
formation, organization, or regulation of private corporations.
Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good and
subject to the test of economic viability.
Economic viability is the capacity to function efficiently in business.265
To be economically viable, the entity should not go into activities which
the private sector can do better.266chanRoblesvirtualLawlibrary
To be considered a government-owned or controlled corporation, the
entity must have been organized as a stock or non-stock
corporation.267chanRoblesvirtualLawlibrary
Government instrumentalities, on the other hand, are also created by law
but partake of sovereign functions. When a government entity performs
sovereign functions, it need not meet the test of economic viability. In
Manila International Airport Authority v. Court of Appeals,268 this court
explained:chanroblesvirtuallawlibrary
In contrast, government instrumentalities vested with corporate powers
and performing governmental or public functions need not meet the test
of economic viability. These instrumentalities perform essential public
services for the common good, services that every modern State must
provide its citizens. These instrumentalities need not be economically
viable since the government may even subsidize their entire operations.
These instrumentalities are not the "government-owned or controlled
corporations" referred to in Section 16, Article XII of the 1987
Constitution.
Thus, the Constitution imposes no limitation when the legislature creates
government instrumentalities vested with corporate powers but
performing essential governmental or public functions. Congress has
plenary authority to create government instrumentalities vested with
corporate powers provided these instrumentalities perform essential
government functions or public services. However, when the legislature
creates through special charters corporations that perform economic or
commercial activities, such entities known as "government-owned or
controlled corporations" must meet the test of economic viability
because they compete in the market place.
....
Commissioner Blas F. Ople, proponent of the test of economic viability,
explained to the Constitutional Commission the purpose of this test, as
follows:chanroblesvirtuallawlibrary
MR. OPLE: Madam President, the reason for this concern is really that
when the government creates a corporation, there is a sense in which this
corporation becomes exempt from the test of economic performance. We
know what happened in the past. If a government corporation loses, then
it makes its claim upon the taxpayers' money through new equity infusions
from the government and what is always invoked is the common good.
That is the reason why this year, out of a budget of P115 billion for the
entire government, about P28 billion of this will go into equity infusions to
support a few government financial institutions. And this is all taxpayers'
money which could have been relocated to agrarian reform, to social
services like health and education, to augment the salaries of grossly
underpaid public employees. And yet this is all going down the drain.
Therefore, when we insert the phrase "ECONOMIC VIABILITY" together
with the "common good," this becomes a restraint on future enthusiasts
for state capitalism to excuse themselves from the responsibility of
meeting the market test so that they become viable. And so, Madam
President, I reiterate, for the committee's consideration and I am glad that
I am joined in this proposal by Commissioner Foz, the insertion of the
standard of "ECONOMIC VIABILITY OR THE ECONOMIC TEST," together
with the common good.
....
Clearly, the test of economic viability does not apply to government
entities vested with corporate powers and performing essential public
services. The State is obligated to render essential public services
regardless of the economic viability of providing such service. The non-
economic viability of rendering such essential public service does not
excuse the State from withholding such essential services from the
public.269 (Emphases and citations omitted)
The law created the PEZAs charter. Under the Special Economic Zone Act
of 1995, the PEZA was established primarily to perform the governmental
function of operating, administering, managing, and developing special
economic zones to attract investments and provide opportunities for
preferential use of Filipino labor.
Under its charter, the PEZA was created a body corporate endowed with
some corporate powers. However, it was not organized as a stock270 or
non-stock271 corporation. Nothing in the PEZAs charter provides that the
PEZAs capital is divided into shares.272 The PEZA also has no members
who shall share in the PEZAs profits.
The PEZA does not compete with other economic zone authorities in the
country. The government may even subsidize the PEZAs operations.
Under Section 47 of the Special Economic Zone Act of 1995, any sum
necessary to augment [the PEZAs] capital outlay shall be included in the
General Appropriations Act to be treated as an equity of the national
government.273chanRoblesvirtualLawlibrary
The PEZA, therefore, need not be economically viable. It is not a
government-owned or controlled corporation liable for real property
taxes.
V. (B)
The PEZA assumed the non-profit character, including the tax exempt
status, of the EPZA
The PEZAs predecessor, the EPZA, was declared non-profit in character
with all its revenues devoted for its development, improvement, and
maintenance. Consistent with this non-profit character, the EPZA was
explicitly declared exempt from real property taxes under its charter.
Section 21 of Presidential Decree No. 66
provides:chanroblesvirtuallawlibrary
Section 21. Non-profit Character of the Authority; Exemption from Taxes.
The Authority shall be non-profit and shall devote and use all its returns
from its capital investment, as well as excess revenues from its operations,
for the development, improvement and maintenance and other related
expenditures of the Authority to pay its indebtedness and obligations and
in furtherance and effective implementation of the policy enunciated in
Section 1 of this Decree. In consonance therewith, the Authority is hereby
declared exempt:ChanRoblesVirtualawlibrary
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds
of taxes and licenses to be paid to the National Government, its provinces,
cities, municipalities and other government agencies and
instrumentalities[.]
The Special Economic Zone Act of 1995, on the other hand, does not
specifically exempt the PEZA from payment of real property taxes.
Nevertheless, we rule that the PEZA is exempt from real property taxes by
virtue of its charter. A provision in the Special Economic Zone Act of 1995
explicitly exempting the PEZA is unnecessary. The PEZA assumed the real
property exemption of the EPZA under Presidential Decree No. 66.
Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA
to evolve into the PEZA in accordance with the guidelines and regulations
set forth in an executive order issued for this purpose. President Ramos
then issued Executive Order No. 282 in 1995, ordering the PEZA to assume
the EPZAs powers, functions, and responsibilities under Presidential
Decree No. 66 not inconsistent with the Special Economic Zone Act of
1995:chanroblesvirtuallawlibrary
SECTION 1. Assumption of EPZAs Powers and Functions by PEZA. All the
powers, functions and responsibilities of EPZA as provided under its
Charter, Presidential Decree No. 66, as amended, insofar as they are not
inconsistent with the powers, functions and responsibilities of the PEZA, as
mandated under Republic Act No. 7916, shall hereafter be assumed and
exercised by the PEZA. Henceforth, the EPZA shall be referred to as the
PEZA.
The following sections of the Special Economic Zone Act of 1995 provide
for the PEZAs powers, functions, and
responsibilities:chanroblesvirtuallawlibrary
SEC. 5. Establishment of ECOZONES. To ensure the viability and
geographical dispersal of ECOZONES through a system of prioritization, the
following areas are initially identified as ECOZONES, subject to the criteria
specified in Section 6:
....
The metes and bounds of each ECOZONE are to be delineated and more
particularly described in a proclamation to be issued by the President of
the Philippines, upon the recommendation of the Philippine Economic
Zone Authority (PEZA), which shall be established under this Act, in
coordination with the municipal and / or city council, National Land Use
Coordinating Committee and / or the Regional Land Use Committee.
SEC. 6. Criteria for the Establishment of Other ECOZONES. In addition to
the ECOZONES identified in Section 5 of this Act, other areas may be
established as ECOZONES in a proclamation to be issued by the President
of the Philippines subject to the evaluation and recommendation of the
PEZA, based on a detailed feasibility and engineering study which must
conform to the following criteria:
(a) The proposed area must be identified as a regional growth center in
the Medium-Term Philippine Development Plan or by the Regional
Development Council;
(b) The existence of required infrastructure in the proposed ECOZONE,
such as roads, railways, telephones, ports, airports, etc., and the suitability
and capacity of the proposed site to absorb such improvements;
(c) The availability of water source and electric power supply for use of the
ECOZONE;
(d) The extent of vacant lands available for industrial and commercial
development and future expansion of the ECOZONE as well as of lands
adjacent to the ECOZONE available for development of residential areas
for the ECOZONE workers;
(e) The availability of skilled, semi-skilled and non-skilled trainable labor
force in and around the ECOZONE;
(f) The area must have a significant incremental advantage over the
existing economic zones and its potential profitability can be established;
(g) The area must be strategically located; and
(h) The area must be situated where controls can easily be established to
curtail smuggling activities.
Other areas which do not meet the foregoing criteria may be established
as ECOZONES: Provided, That the said area shall be developed only
through local government and/or private sector initiative under any of the
schemes allowed in Republic Act No. 6957 (the build-operate-transfer
law), and without any financial exposure on the part of the national
government: Provided, further, That the area can be easily secured to
curtail smuggling activities: Provided, finally, That after five (5) years the
area must have attained a substantial degree of development, the
indicators of which shall be formulated by the PEZA.
SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial,
Commercial / Trading, Tourist, Investment and Financial Community. -
Within the framework of the Constitution, the interest of national
sovereignty and territorial integrity of the Republic, ECOZONE shall be
developed, as much as possible, into a decentralized, self-reliant and self-
sustaining industrial, commercial/trading, agro-industrial, tourist, banking,
financial and investment center with minimum government intervention.
Each ECOZONE shall be provided with transportation,
telecommunications, and other facilities needed to generate linkage with
industries and employment opportunities for its own inhabitants and
those of nearby towns and cities.
The ECOZONE shall administer itself on economic, financial, industrial,
tourism development and such other matters within the exclusive
competence of the national government.
The ECOZONE may establish mutually beneficial economic relations with
other entities within the country, or, subject to the administrative
guidance of the Department of Foreign Affairs and/or the Department of
Trade and Industry, with foreign entities or enterprises.
Foreign citizens and companies owned by non-Filipinos in whatever
proportion may set up enterprises in the ECOZONE, either by themselves
or in joint venture with Filipinos in any sector of industry, international
trade and commerce within the ECOZONE. Their assets, profits and other
legitimate interests shall be protected: Provided, That the ECOZONE
through the PEZA may require a minimum investment for any ECOZONE
enterprises in freely convertible currencies: Provided, further, That the
new investment shall fall under the priorities, thrusts and limits provided
for in the Act.
SEC. 8. ECOZONE to be Operated and Managed as Separate Customs
Territory. The ECOZONE shall be managed and operated by the PEZA as
separate customs territory.
The PEZA is hereby vested with the authority to issue certificate of origin
for products manufactured or processed in each ECOZONE in accordance
with the prevailing rules or origin, and the pertinent regulations of the
Department of Trade and Industry and/or the Department of Finance.
SEC. 9. Defense and Security. The defense of the ECOZONE and the
security of its perimeter fence shall be the responsibility of the national
government in coordination with the PEZA. Military forces sent by the
national government for the purpose of defense shall not interfere in the
internal affairs of any of the ECOZONE and expenditure for these military
forces shall be borne by the national government. The PEZA may provide
and establish the ECOZONES internal security and firefighting forces.
SEC. 10. Immigration. Any investor within the ECOZONE whose initial
investment shall not be less than One Hundred Fifty Thousand Dollars
($150,000.00), his/her spouse and dependent children under twenty-one
(21) years of age shall be granted permanent resident status within the
ECOZONE. They shall have freedom of ingress and egress to and from the
ECOZONE without any need of special authorization from the Bureau of
Immigration.
The PEZA shall issue working visas renewable every two (2) years to
foreign executives and other aliens, processing highly-technical skills which
no Filipino within the ECOZONE possesses, as certified by the Department
of Labor and Employment. The names of aliens granted permanent
resident status and working visas by the PEZA shall be reported to the
Bureau of Immigration within thirty (30) days after issuance thereof.
SEC. 13. General Powers and Functions of the Authority. The PEZA shall
have the following powers and functions:
(a) To operate, administer, manage and develop the ECOZONE according
to the principles and provisions set forth in this Act;
(b) To register, regulate and supervise the enterprises in the ECOZONE in
an efficient and decentralized manner;
(c) To coordinate with local government units and exercise general
supervision over the development, plans, activities and operations of the
ECOZONES, industrial estates, export processing zones, free trade zones,
and the like;
(d) In coordination with local government units concerned and
appropriate agencies, to construct, acquire, own, lease, operate and
maintain on its own or through contract, franchise, license, bulk purchase
from the private sector and build-operate-transfer scheme or joint
venture, adequate facilities and infrastructure, such as light and power
systems, water supply and distribution systems, telecommunication and
transportation, buildings, structures, warehouses, roads, bridges, ports
and other facilities for the operation and development of the ECOZONE;
(e) To create, operate and/or contract to operate such agencies and
functional units or offices of the authority as it may deem necessary;
(f) To adopt, alter and use a corporate seal; make contracts, lease, own or
otherwise dispose of personal or real property; sue and be sued; and
otherwise carry out its duties and functions as provided for in this Act;
(g) To coordinate the formulation and preparation of the development
plans of the different entities mentioned above;
(h) To coordinate with the National Economic Development Authority
(NEDA), the Department of Trade and Industry (DTI), the Department of
Science and Technology (DOST), and the local government units and
appropriate government agencies for policy and program formulation and
implementation; and
(i) To monitor and evaluate the development and requirements of entities
in subsection (a) and recommend to the local government units or other
appropriate authorities the location, incentives, basic services, utilities and
infrastructure required or to be made available for said entities.
SEC. 17. Investigation and Inquiries. Upon a written formal complaint
made under oath, which on its face provides reasonable basis to believe
that some anomaly or irregularity might have been committed, the PEZA
or the administrator of the ECOZONE concerned, shall have the power to
inquire into the conduct of firms or employees of the ECOZONE and to
conduct investigations, and for that purpose may subpoena witnesses,
administer oaths, and compel the production of books, papers, and other
evidences: Provided, That to arrive at the truth, the investigator(s) may
grant immunity from prosecution to any person whose testimony or
whose possessions of documents or other evidence is necessary or
convenient to determine the truth in any investigation conducted by him
or under the authority of the PEZA or the administrator of the ECOZONE
concerned.
SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority
of development of each ECOZONE established pursuant to this Act shall be
formulated by the PEZA, in coordination with the Department of Trade
and Industry and the National Economic and Development Authority;
Provided, That such development strategy is consistent with the priorities
of the national government as outlined in the medium-term Philippine
development plan. It shall be the policy of the government and the PEZA
to encourage and provide Incentives and facilitate private sector
participation in the construction and operation of public utilities and
infrastructure in the ECOZONE, using any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law).
SEC. 22. Survey of Resources. The PEZA shall, in coordination with
appropriate authorities and neighboring cities and
municipalities, immediately conduct a survey of the physical, natural
assets and potentialities of the ECOZONE areas under its
jurisdiction.
SEC. 26. Domestic Sales. Goods manufactured by an ECOZONE enterprise
shall be made available for immediate retail sales in the domestic market,
subject to payment of corresponding taxes on the raw materials and other
regulations that may be adopted by the Board of the PEZA.
However, in order to protect the domestic industry, there shall be a
negative list of Industries that will be drawn up by the PEZA. Enterprises
engaged in the industries included in the negative list shall not be allowed
to sell their products locally. Said negative list shall be regularly updated
by the PEZA.
The PEZA, in coordination with the Department of Trade and Industry and
the Bureau of Customs, shall jointly issue the necessary implementing
rules and guidelines for the effective Implementation of this section.
SEC. 29. Eminent Domain. The areas comprising an ECOZONE may be
expanded or reduced when necessary. For this purpose, the government
shall have the power to acquire, either by purchase, negotiation or
condemnation proceedings, any private lands within or adjacent to the
ECOZONE for:
a. Consolidation of lands for zone development purposes;
b. Acquisition of right of way to the ECOZONE; and
c. The protection of watershed areas and natural assets valuable to the
prosperity of the ECOZONE.
If in the establishment of a publicly-owned ECOZONE, any person or group
of persons who has been occupying a parcel of land within the Zone has to
be evicted, the PEZA shall provide the person or group of persons
concerned with proper disturbance compensation: Provided, however,
That in the case of displaced agrarian reform beneficiaries, they shall be
entitled to the benefits under the Comprehensive Agrarian Reform Law,
including but not limited to Section 36 of Republic Act No. 3844, in
addition to a homelot in the relocation site and preferential employment
in the project being undertaken.
SEC. 32. Shipping and Shipping Register. Private shipping and related
business including private container terminals may operate freely in the
ECOZONE, subject only to such minimum reasonable regulations of local
application which the PEZA may prescribe.
The PEZA shall, in coordination with the Department of Transportation and
Communications, maintain a shipping register for each ECOZONE as a
business register of convenience for ocean-going vessels and issue related
certification.
Ships of all sizes, descriptions and nationalities shall enjoy access to the
ports of the ECOZONE, subject only to such reasonable requirement as
may be prescribed by the PEZA In coordination with the appropriate
agencies of the national government.
SEC. 33. Protection of Environment. - The PEZA, in coordination with the
appropriate agencies, shall take concrete and appropriate steps and enact
the proper measure for the protection of the local environment.
SEC. 34. Termination of Business. - Investors In the ECOZONE who desire
to terminate business or operations shall comply with such requirements
and procedures which the PEZA shall set, particularly those relating to the
clearing of debts. The assets of the closed enterprise can be transferred
and the funds con be remitted out of the ECOZONE subject to the rules,
guidelines and procedures prescribed jointly by the Bangko Sentral ng
Pilipinas, the Department of Finance and the PEZA.
SEC. 35. Registration of Business Enterprises. - Business enterprises within
a designated ECOZONE shall register with the PEZA to avail of all incentives
and benefits provided for in this Act.
SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop
center for the purpose of facilitating the registration of new enterprises in
the ECOZONE. Thus, all appropriate government agencies that are
Involved In registering, licensing or issuing permits to investors shall assign
their representatives to the ECOZONE to attend to Investors
requirements.
SEC. 39. Master Employment Contracts. - The PEZA, in coordination with
the Department of Tabor and Employment, shall prescribe a master
employment contract for all ECOZONE enterprise staff members and
workers, the terms of which provide salaries and benefits not less than
those provided under this Act, the Philippine Labor Code, as amended, and
other relevant issuances of the national government.
SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department
of Labor and Employment, shall promulgate appropriate measures and
programs leading to the expansion of the services of the ECOZONE to help
the local governments of nearby areas meet the needs of the migrant
workers.
SEC. 42. Incentive Scheme. - An additional deduction equivalent to one-
half (1/2) of the value of training expenses incurred in developing skilled
or unskilled labor or for managerial or other management development
programs incurred by enterprises in the ECOZONE can be deducted from
the national government's share of three percent (3%) as provided In
Section 24.
The PEZA, the Department of Labor and Employment, and the Department
of Finance shall jointly make a review of the incentive scheme provided In
this section every two (2) years or when circumstances so warrant.
SEC. 43. Relationship with the Regional Development Council. - The PEZA
shall determine the development goals for the ECOZONE within the
framework of national development plans, policies and goals, and the
administrator shall, upon approval by the PEZA Board, submit the
ECOZONE plans, programs and projects to the regional development
council for inclusion in and as inputs to the overall regional development
plan.
SEC. 44. Relationship with the Local Government Units. - Except as herein
provided, the local government units comprising the ECOZONE shall retain
their basic autonomy and identity. The cities shall be governed by their
respective charters and the municipalities shall operate and function In
accordance with Republic Act No. 7160, otherwise known as the Local
Government
Code of 1991.
SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates.
Privately-owned industrial estates shall retain their autonomy and
independence and shall be monitored by the PEZA for the implementation
of incentives.
SEC. 46. Transfer of Resources. - The relevant functions of the Board of
Investments over industrial estates and agri-export processing estates
shall be transferred to the PEZA. The resources of government-owned
Industrial estates and similar bodies except the Bases Conversion
Development Authority and those areas identified under Republic Act No.
7227, are hereby transferred to the PEZA as the holding agency. They are
hereby detached from their mother agencies and attached to the PEZA for
policy, program and operational supervision.
The Boards of the affected government-owned industrial estates shall be
phased out and only the management level and an appropriate number of
personnel shall be retained.
Government personnel whose services are not retained by the PEZA or any
government office within the ECOZONE shall be entitled to separation pay
and such retirement and other benefits they are entitled to under the laws
then in force at the time of their separation: Provided, That in no case
shall the separation pay be less than one and one-fourth (1 1/4) month of
every year of service.
The non-profit character of the EPZA under Presidential Decree No. 66 is
not inconsistent with any of the powers, functions, and responsibilities of
the PEZA. The EPZAs non-profit character, including the EPZAs
exemption from real property taxes, must be deemed assumed by the
PEZA.
In addition, the Local Government Code exempting instrumentalities of
the national government from real property taxes was already in force274
when the PEZAs charter was enacted in 1995. It would have been
redundant to provide for the PEZAs exemption in its charter considering
that the PEZA is already exempt by virtue of Section 133(o) of the Local
Government Code.
As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was
in force when the EPZAs charter was enacted. Unlike the Local
Government Code, Commonwealth Act No. 470 does not contain a
provision specifically exempting instrumentalities of the national
government from payment of real property taxes.275 It was necessary to
put an exempting provision in the EPZAs charter.
Contrary to the PEZAs claim, however, Section 24 of the Special Economic
Zone Act of 1995 is not a basis for the PEZAs exemption. Section 24 of the
Special Economic Zone Act of 1995 provides:chanroblesvirtuallawlibrary
Sec. 24. Exemption from National and Local Taxes. Except for real
property taxes on land owned by developers, no taxes, local and national,
shall be imposed on business establishments operating within the
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by
all business enterprises within the ECOZONE shall be paid and remitted as
follows:chanroblesvirtuallawlibrary
(a) Three percent (3%) to the National Government;
(b) Two percent (2%) which shall be directly remitted by the business
establishments to the treasurer's office of the municipality or city where
the enterprise is located. (Emphasis supplied)
Tax exemptions provided under Section 24 apply only to business
establishments operating within economic zones. Considering that the
PEZA is not a business establishment but an instrumentality performing
governmental functions, Section 24 is inapplicable to the PEZA.
Also, contrary to the PEZAs claim, developers of economic zones, whether
public or private developers, are liable for real property taxes on lands
they own. Section 24 does not distinguish between a public and private
developer. Thus, courts cannot distinguish.276 Unless the public
developer is exempt under the Local Government Code or under its
charter enacted after the Local Government Codes effectivity, the public
developer must pay real property taxes on their land.
At any rate, the PEZA cannot be taxed for real property taxes even if it acts
as a developer or operator of special economic zones. The PEZA is an
instrumentality of the national government exempt from payment of real
property taxes under Section 133(o) of the Local Government Code. As
this court said in Manila International Airport Authority, 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.277chanRoblesvirtualLawlibrary
V. (C)
Real properties under the PEZAs title are owned by the Republic of the
Philippines
Under Section 234(a) of the Local Government Code, real properties
owned by the Republic of the Philippines are exempt from real property
taxes:chanroblesvirtuallawlibrary
SEC. 234. Exemptions from Real Property Tax. The following are
exempted from payment of 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[.]
Properties owned by the state are either property of public dominion or
patrimonial property. Article 420 of the Civil Code of the Philippines
enumerates property of public dominion:chanroblesvirtuallawlibrary
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 belonging for public use, and
are intended for some public service or for the development of the
national wealth.
Properties of public dominion are outside the commerce of man. These
properties are exempt from levy, encumbrance or disposition through
public or private sale.278 As this court explained in Manila International
Airport Authority:chanroblesvirtuallawlibrary
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[.]279
On the other hand, all other properties of the state that are not intended
for public use or are not intended for some public service or for the
development of the national wealth are patrimonial properties. Article 421
of the Civil Code of the Philippines provides:chanroblesvirtuallawlibrary
Art. 421. All other property of the State, which is not of the character
stated in the preceding article, is patrimonial property.
Patrimonial properties are also properties of the state, but the state may
dispose of its patrimonial property similar to private persons disposing of
their property. Patrimonial properties are within the commerce of man
and are susceptible to prescription, unless otherwise
provided.280chanRoblesvirtualLawlibrary
In this case, the properties sought to be taxed are located in publicly
owned economic zones. These economic zones are property of public
dominion. The City seeks to tax properties located within the Mactan
Economic Zone,281 the site of which was reserved by President Marcos
under Proclamation No. 1811, Series of 1979. Reserved lands are lands of
the public domain set aside for settlement or public use, and for specific
public purposes by virtue of a presidential proclamation.282 Reserved
lands are inalienable and outside the commerce of man,283 and remain
property of the Republic until withdrawn from public use either by law or
presidential proclamation.284 Since no law or presidential proclamation
has been issued withdrawing the site of the Mactan Economic Zone from
public use, the property remains reserved land.
As for the Bataan Economic Zone, the law consistently characterized the
property as a port. Under Republic Act No. 5490, Congress declared
Mariveles, Bataan a principal port of entry285 to serve as site of a
foreign trade zone where foreign and domestic merchandise may be
brought in without being subject to customs and internal revenue laws
and regulations of the Philippines.286 Section 4 of Republic Act No. 5490
provided that the foreign trade zone in Mariveles, Bataan shall at all
times remain to be owned by the
Government:chanroblesvirtuallawlibrary
SEC. 4. Powers and Duties. The Foreign Trade Zone Authority shall have
the following powers and duties:
To fix and delimit the site of the Zone which at all times remain to be
owned by the Government, and which shall have a contiguous and
adequate area with well defined and policed boundaries, with adequate
enclosures to segregate the Zone from the customs territory for protection
of revenues, together with suitable provisions for ingress and egress of
persons, conveyance, vessels and merchandise sufficient for the purpose
of this Act[.] (Emphasis supplied)
The port in Mariveles, Bataan then became the Bataan Economic Zone
under the Special Economic Zone Act of 1995.287 Republic Act No. 9728
then converted the Bataan Economic Zone into the Freeport Area of
Bataan.288chanRoblesvirtualLawlibrary
A port of entry, where imported goods are unloaded then introduced in
the market for public consumption, is considered property for public use.
Thus, Article 420 of the Civil Code classifies a port as property of public
dominion. The Freeport Area of Bataan, where the government allows tax
and duty-free importation of goods,289 is considered property of public
dominion. The Freeport Area of Bataan is owned by the state and cannot
be taxed under Section 234(a) of the Local Government Code.
Properties of public dominion, even if titled in the name of an
instrumentality as in this case, remain owned by the Republic of the
Philippines. If property registered in the name of an instrumentality is
conveyed to another person, the property is considered conveyed on
behalf of the Republic of the Philippines. Book I, Chapter 12, Section 48 of
the Administrative Code of 1987 provides:chanroblesvirtuallawlibrary
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:
....
(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 Manila International Airport Authority, this court
explained:chanroblesvirtuallawlibrary
[The exemption under Section 234(a) of the Local Government Code]
should be read in relation with Section 133(o) of the same Code, which
prohibits local governments from imposing [t]axes, fess or charges of any
kind on the National Government, its agencies and instrumentalities x x x.
The real properties owned by the Republic are titled either in the name of
the Republic itself or in the name of agencies or instrumentalities of the
National Government. The Administrative Code allows real property
owned by the Republic to be titled in the name of agencies or
instrumentalities of the national government. Such real properties
remained owned by the Republic of the Philippines and continue to be
exempt from real estate tax.
The Republic may grant the beneficial use of its real property to an agency
or instrumentality of the national government. This happens when title of
the real property is transferred to an agency or instrumentality even as the
Republic remains the owner of the real property. Such arrangement does
not result in the loss of the tax exemption/ Section 234(a) of the Local
Government Code states that real property owned by the Republic loses
its tax exemption only if the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person. . . .290 (Emphasis in the
original; italics supplied)
Even the PEZAs lands and buildings whose beneficial use have been
granted to other persons may not be taxed with real property taxes. The
PEZA may only lease its lands and buildings to PEZA-registered economic
zone enterprises and entities.291 These PEZA-registered enterprises and
entities, which operate within economic zones, are not subject to real
property taxes. Under Section 24 of the Special Economic Zone Act of
1995, no taxes, whether local or national, shall be imposed on all business
establishments operating within the economic
zones:chanroblesvirtuallawlibrary
SEC. 24. Exemption from National and Local Taxes. Except for real
property on land owned by developers, no taxes, local and national, shall
be imposed on business establishments operating within the ECOZONE. In
lieu thereof, five percent (5%) of the gross income earned by all business
enterprises within the ECOZONE shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business
establishments to the treasurers office of the municipality or city where
the enterprise is located.292 (Emphasis supplied)
In lieu of revenues from real property taxes, the City of Lapu-Lapu collects
two-fifths of 5% final tax on gross income paid by all business
establishments operating within the Mactan Economic
Zone:chanroblesvirtuallawlibrary
SEC. 24. Exemption from National and Local Taxes. Except for real
property on land owned by developers, no taxes, local and national, shall
be imposed on business establishments operating within the ECOZONE. In
lieu thereof, five percent (5%) of the gross income earned by all business
enterprises within the ECOZONE shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business
establishments to the treasurers office of the municipality or city where
the enterprise is located.293 (Emphasis supplied)
For its part, the Province of Bataan collects a fifth of the 5% final tax on
gross income paid by all business establishments operating within the
Freeport Area of Bataan:chanroblesvirtuallawlibrary
Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income
Earned. - No taxes, local and national, shall be imposed on business
establishments operating within the FAB. In lieu thereof, said business
establishments shall pay a five percent (5%) final tax on their gross income
earned in the following percentages:
(a) One per centum (1%) to the National Government;
(b) One per centum (1%) to the Province of Bataan;
(c) One per centum (1%) to the treasurer's office of the Municipality of
Mariveles; and
(d) Two per centum (2%) to the Authority of the Freeport of Area of
Bataan.294 (Emphasis supplied)
Petitioners, therefore, are not deprived of revenues from the operations
of economic zones within their respective territorial jurisdictions. The
national government ensured that local government units comprising
economic zones shall retain their basic autonomy and
identity.295chanRoblesvirtualLawlibrary
All told, the PEZA is an instrumentality of the national government.
Furthermore, the lands owned by the PEZA are real properties owned by
the Republic of the Philippines. The City of Lapu-Lapu and the Province of
Bataan cannot collect real property taxes from the PEZA.chanrobleslaw
WHEREFORE, the consolidated petitions are DENIED.
SO ORDERED.cral
EN BANC
HEIRS OF MARIO MALABANAN, G.R. No. 179987
Petitioner,
Present:
PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
- versus - AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
LEONARDO DE CASTRO,
BRION,
REPUBLIC OF THE PHILIPPINES, PERALTA, and
Respondent. BERSAMIN, JJ.
Promulgated:
April 29, 2009
x--------------------------------------------------------------------------- x
DECISION
TINGA, J.:
One main reason why the informal sector has not become formal is that
from Indonesia to Brazil, 90 percent of the informal lands are not titled
and registered. This is a generalized phenomenon in the so-called Third
World. And it has many consequences.
xxx
The question is: How is it that so many governments, from Suharto's in
Indonesia to Fujimori's in Peru, have wanted to title these people and have
not been able to do so effectively? One reason is that none of the state
systems in Asia or Latin America can gather proof of informal titles. In
Peru, the informals have means of proving property ownership to each
other which are not the same means developed by the Spanish legal
system. The informals have their own papers, their own forms of
agreements, and their own systems of registration, all of which are very
clearly stated in the maps which they use for their own informal business
transactions.
If you take a walk through the countryside, from Indonesia to Peru, and
you walk by field after field--in each field a different dog is going to bark at
you. Even dogs know what private property is all about. The only one who
does not know it is the government. The issue is that there exists a
"common law" and an "informal law" which the Latin American formal
legal system does not know how to recognize.
- Hernando De Soto[1]
This decision inevitably affects all untitled lands currently in possession of
persons and entities other than the Philippine government. The petition,
while unremarkable as to the facts, was accepted by the Court en banc in
order to provide definitive clarity to the applicability and scope of original
registration proceedings under Sections 14(1) and 14(2) of the Property
Registration Decree. In doing so, the Court confronts not only the relevant
provisions of the Public Land Act and the Civil Code, but also the reality on
the ground. The countrywide phenomenon of untitled lands, as well as the
problem of informal settlement it has spawned, has unfortunately been
treated with benign neglect. Yet our current laws are hemmed in by their
own circumscriptions in addressing the phenomenon. Still, the duty on our
part is primarily to decide cases before us in accord with the Constitution
and the legal principles that have developed our public land law, though
our social obligations dissuade us from casting a blind eye on the endemic
problems.
I.
On 20 February 1998, Mario Malabanan filed an application for land
registration covering a parcel of land identified as Lot 9864-A, Cad-452-D,
Silang Cadastre,[2] situated in Barangay Tibig, Silang Cavite, and consisting
of 71,324 square meters. Malabanan claimed that he had purchased the
property from Eduardo Velazco,[3] 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.
The application was raffled to the Regional Trial Court of (RTC) Cavite-
Tagaytay City, Branch 18. The Office of the Solicitor General (OSG) duly
designated the Assistant Provincial Prosecutor of Cavite, Jose Velazco, Jr.,
to appear on behalf of the State.[4] Apart from presenting documentary
evidence, Malabanan himself and his witness, Aristedes Velazco, testified
at the hearing. 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.[5]
Assistant Provincial Prosecutor Jose Velazco, Jr. did not cross-examine
Aristedes Velazco. He further manifested that he also [knew] the property
and I affirm the truth of the testimony given by Mr. Velazco.[6] The
Republic of the Philippines likewise did not present any evidence to
controvert the application.
Among the evidence presented by Malabanan during trial was a
Certification dated 11 June 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.[7]
On 3 December 2002, the RTC rendered judgment in favor of Malabanan,
the dispositive portion of which reads:
WHEREFORE, this Court hereby approves this application for registration
and thus places under the operation of Act 141, Act 496 and/or P.D. 1529,
otherwise known as Property Registration Law, the lands described in Plan
Csd-04-0173123-D, Lot 9864-A and containing an area of Seventy One
Thousand Three Hundred Twenty Four (71,324) Square Meters, as
supported by its technical description now forming part of the record of
this case, in addition to other proofs adduced in the name of MARIO
MALABANAN, who is of legal age, Filipino, widower, and with residence at
Munting Ilog, Silang, Cavite.
Once this Decision becomes final and executory, the corresponding decree
of registration shall forthwith issue.
SO ORDERED.
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 rendered a Decision[8]
reversing the RTC and dismissing the application of Malabanan. The
appellate court held that under Section 14(1) of the Property Registration
Decree any period of possession prior to the classification of the lots as
alienable and disposable was inconsequential and should be excluded
from the computation of the period of possession. Thus, the appellate
court noted that since the CENRO-DENR certification had verified that the
property was declared alienable and disposable only on 15 March 1982,
the Velazcos possession prior to that date could not be factored in the
computation of the period of possession. This interpretation of the Court
of Appeals of Section 14(1) of the Property Registration Decree was based
on the Courts ruling in Republic v. Herbieto.[9]
Malabanan died while the case was pending with the Court of
Appeals;[10] hence, it was his heirs who appealed the decision of the
appellate court. Petitioners, before this Court, rely on our ruling in
Republic v. Naguit,[11] which was handed down just four months prior to
Herbieto. Petitioners suggest that the discussion in Herbieto cited by the
Court of Appeals is actually obiter dictum since the Metropolitan Trial
Court therein which had directed the registration of the property had no
jurisdiction in the first place since the requisite notice of hearing was
published only after the hearing had already begun. Naguit, petitioners
argue, remains the controlling doctrine, especially when the property in
question is agricultural land. Therefore, with respect to agricultural lands,
any possession prior to the declaration of the alienable property as
disposable may be counted in reckoning the period of possession to
perfect title under the Public Land Act and the Property Registration
Decree.
The petition was referred to the Court en banc,[12] and on 11 November
2008, the case was heard on oral arguments. The Court formulated the
principal issues for the oral arguments, to wit:
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?
3. May a parcel of land established as agricultural in character either
because of its use or because its slope is below that of forest lands be
registrable under Section 14(2) of the Property Registration Decree in
relation to the provisions of the Civil Code on acquisitive prescription?
4. Are petitioners entitled to the registration of the subject land in their
names under Section 14(1) or Section 14(2) of the Property Registration
Decree or both?[13]
Based on these issues, the parties formulated their respective positions.
With respect to Section 14(1), petitioners reiterate that the analysis of the
Court in Naguit is the correct interpretation of the provision. The
seemingly contradictory pronouncement in Herbieto, it is submitted,
should be considered obiter dictum, since the land registration
proceedings therein was void ab initio due to lack of publication of the
notice of initial hearing. Petitioners further point out that in Republic v.
Bibonia,[14] promulgated in June of 2007, the Court applied Naguit and
adopted the same observation that the preferred interpretation by the
OSG of Section 14(1) was patently absurd. For its part, the OSG remains
insistent that for Section 14(1) to apply, the land should have been
classified as alienable and disposable as of 12 June 1945. Apart from
Herbieto, the OSG also cites the subsequent rulings in Buenaventura v.
Republic,[15] Fieldman Agricultural Trading v. Republic[16] and Republic v.
Imperial Credit Corporation,[17] as well as the earlier case of Director of
Lands v. Court of Appeals.[18]
With respect to Section 14(2), petitioners submit that open, continuous,
exclusive and notorious possession of an alienable land of the public
domain for more than 30 years ipso jure converts the land into private
property, thus placing it under the coverage of Section 14(2). According to
them, it would not matter whether the land sought to be registered was
previously classified as agricultural land of the public domain so long as, at
the time of the application, the property had already been converted into
private property through prescription. To bolster their argument,
petitioners cite extensively from our 2008 ruling in Republic v. T.A.N.
Properties.[19]
The arguments submitted by the OSG with respect to Section 14(2) are
more extensive. The OSG notes that under Article 1113 of the Civil Code,
the acquisitive prescription of properties of the State refers to patrimonial
property, while Section 14(2) speaks of private lands. It observes that the
Court has yet to decide a case that presented Section 14(2) as a ground for
application for registration, and that the 30-year possession period refers
to the period of possession under Section 48(b) of the Public Land Act, and
not the concept of prescription under the Civil Code. The OSG further
submits that, assuming that the 30-year prescriptive period can run
against public lands, said period should be reckoned from the time the
public land was declared alienable and disposable.
Both sides likewise offer special arguments with respect to the particular
factual circumstances surrounding the subject property and the ownership
thereof.
II.
First, we discuss Section 14(1) of the Property Registration Decree. For a
full understanding of the provision, reference has to be made to the Public
Land Act.
A.
Commonwealth Act No. 141, also known as the Public Land Act, has, since
its enactment, governed the classification and disposition of lands of the
public domain. The President is authorized, from time to time, to classify
the lands of the public domain into alienable and disposable, timber, or
mineral lands.[20] Alienable and disposable lands of the public domain are
further classified according to their uses into (a) agricultural; (b)
residential, commercial, industrial, or for similar productive purposes; (c)
educational, charitable, or other similar purposes; or (d) reservations for
town sites and for public and quasi-public uses.[21]
May a private person validly seek the registration in his/her name of
alienable and disposable lands of the public domain? Section 11 of the
Public Land Act acknowledges that public lands suitable for agricultural
purposes may be disposed of by confirmation of imperfect or incomplete
titles through judicial legalization.[22] Section 48(b) of the Public Land Act,
as amended by P.D. No. 1073, supplies the details and unmistakably grants
that right, subject to the requisites stated therein:
Sec. 48. The following described citizens of the Philippines, occupying
lands of the public domain or claiming to own any such land or an interest
therein, but whose titles have not been perfected or completed, may
apply to the Court of First Instance of the province where the land is
located for confirmation of their claims and the issuance of a certificate of
title therefor, under the Land Registration Act, to wit:
xxx
(b) 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, or earlier,
immediately preceding the filing of the application for confirmation of title
except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title under the
provisions of this chapter.
Section 48(b) of Com. Act No. 141 received its present wording in 1977
when the law was amended by P.D. No. 1073. Two significant
amendments were introduced by P.D. No. 1073. First, the term agricultural
lands was changed to alienable and disposable lands of the public domain.
The OSG submits that this amendment restricted the scope of the lands
that may be registered.[23] This is not actually the case. Under Section 9
of the Public Land Act, agricultural lands are a mere subset of lands of the
public domain alienable or open to disposition. Evidently, alienable and
disposable lands of the public domain are a larger class than only
agricultural lands.
Second, the length of the requisite possession was changed from
possession for thirty (30) years immediately preceding the filing of the
application to possession since June 12, 1945 or earlier. The Court in
Naguit explained:
When the Public Land Act was first promulgated in 1936, the period of
possession deemed necessary to vest the right to register their title to
agricultural lands of the public domain commenced from July 26, 1894.
However, this period was amended by R.A. No. 1942, which provided that
the bona fide claim of ownership must have been for at least thirty (30)
years. Then in 1977, Section 48(b) of the Public Land Act was again
amended, this time by P.D. No. 1073, which pegged the reckoning date at
June 12, 1945. xxx
It bears further observation that Section 48(b) of Com. Act No, 141 is
virtually the same as Section 14(1) of the Property Registration Decree.
Said Decree codified the various laws relative to the registration of
property, including lands of the public domain. It is Section 14(1) that
operationalizes the registration of such lands of the public domain. The
provision reads:
SECTION 14. Who may apply. The following persons may file in the proper
Court of First Instance an application for registration of title to land,
whether personally or through their duly authorized representatives:
(1) 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 ownership since June 12, 1945, or earlier.
Notwithstanding the passage of the Property Registration Decree and the
inclusion of Section 14(1) therein, the Public Land Act has remained in
effect. Both laws commonly refer to persons or their predecessors-in-
interest who 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 ownership since June 12, 1945, or
earlier. That circumstance may have led to the impression that one or the
other is a redundancy, or that Section 48(b) of the Public Land Act has
somehow been repealed or mooted. That is not the case.
The opening clauses of Section 48 of the Public Land Act and Section 14 of
the Property Registration Decree warrant comparison:
Sec. 48 [of the Public Land Act]. The following described citizens of the
Philippines, occupying lands of the public domain or claiming to own any
such land or an interest therein, but whose titles have not been perfected
or completed, may apply to the Court of First Instance of the province
where the land is located for confirmation of their claims and the issuance
of a certificate of title therefor, under the Land Registration Act, to wit:
xxx
Sec. 14 [of the Property Registration Decree]. Who may apply. The
following persons may file in the proper Court of First Instance an
application for registration of title to land, whether personally or through
their duly authorized representatives:
xxx
It is clear that Section 48 of the Public Land Act is more descriptive of the
nature of the right enjoyed by the possessor than Section 14 of the
Property Registration Decree, which seems to presume the pre-existence
of the right, rather than establishing the right itself for the first time. It is
proper to assert that it is the Public Land Act, as amended by P.D. No.
1073 effective 25 January 1977, that has primarily established the right of
a Filipino citizen who has 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 to perfect or complete his title by applying with the
proper court for the confirmation of his ownership claim and the issuance
of the corresponding certificate of title.
Section 48 can be viewed in conjunction with the afore-quoted Section 11
of the Public Land Act, which provides that public lands suitable for
agricultural purposes may be disposed of by confirmation of imperfect or
incomplete titles, and given the notion that both provisions declare that it
is indeed the Public Land Act that primarily establishes the substantive
ownership of the possessor who has been in possession of the property
since 12 June 1945. In turn, Section 14(a) of the Property Registration
Decree recognizes the substantive right granted under Section 48(b) of the
Public Land Act, as well provides the corresponding original registration
procedure for the judicial confirmation of an imperfect or incomplete title.
There is another limitation to the right granted under Section 48(b).
Section 47 of the Public Land Act limits the period within which one may
exercise the right to seek registration under Section 48. The provision has
been amended several times, most recently by Rep. Act No. 9176 in 2002.
It currently reads thus:
Section 47. The persons specified in the next following section are hereby
granted time, not to extend beyond December 31, 2020 within which to
avail of the benefits of this Chapter: Provided, That this period shall apply
only where the area applied for does not exceed twelve (12) hectares:
Provided, further, That the several periods of time designated by the
President in accordance with Section Forty-Five of this Act shall apply also
to the lands comprised in the provisions of this Chapter, but this Section
shall not be construed as prohibiting any said persons from acting under
this Chapter at any time prior to the period fixed by the President.[24]
Accordingly under the current state of the law, the substantive right
granted under Section 48(b) may be availed of only until 31 December
2020.
B.
Despite the clear text of Section 48(b) of the Public Land Act, as amended
and Section 14(a) of the Property Registration Decree, the OSG has
adopted the position that for one to acquire the right to seek registration
of an alienable and disposable land of the public domain, it is not enough
that the applicant and his/her predecessors-in-interest be in possession
under a bona fide claim of ownership since 12 June 1945; the alienable
and disposable character of the property must have been declared also as
of 12 June 1945. Following the OSGs approach, all lands certified as
alienable and disposable after 12 June 1945 cannot be registered either
under Section 14(1) of the Property Registration Decree or Section 48(b) of
the Public Land Act as amended. The absurdity of such an implication was
discussed in Naguit.
Petitioner suggests an interpretation that the alienable and disposable
character of the land should have already been established since June 12,
1945 or earlier. This is not borne out by the plain meaning of Section
14(1). Since June 12, 1945, as used in the provision, qualifies its
antecedent phrase under a bonafide claim of ownership. Generally
speaking, qualifying words restrict or modify only the words or phrases to
which they are immediately associated, and not those distantly or
remotely located.[25] Ad proximum antecedents fiat relation nisi
impediatur sentencia.
Besides, we are mindful of the absurdity that would result if we adopt
petitioners position. Absent a legislative amendment, the rule would be,
adopting the OSGs view, that all lands of the public domain which were
not declared alienable or disposable before June 12, 1945 would not be
susceptible to original registration, no matter the length of unchallenged
possession by the occupant. Such interpretation renders paragraph (1) of
Section 14 virtually inoperative and even precludes the government from
giving it effect even as it decides to reclassify public agricultural lands as
alienable and disposable. The unreasonableness of the situation would
even be aggravated considering that before June 12, 1945, the Philippines
was not yet even considered an independent state.
Accordingly, the Court in Naguit explained:
[T]he more reasonable interpretation of Section 14(1) is that it merely
requires the property sought to be registered as already alienable and
disposable at the time the application for registration of title is filed. If the
State, at the time the application is made, has not yet deemed it proper to
release the property for alienation or disposition, the presumption is that
the government is still reserving the right to utilize the property; hence,
the need to preserve its ownership in the State irrespective of the length
of adverse possession even if in good faith. However, if the property has
already been classified as alienable and disposable, as it is in this case,
then there is already an intention on the part of the State to abdicate its
exclusive prerogative over the property.
The Court declares that the correct interpretation of Section 14(1) is that
which was adopted in Naguit. The contrary pronouncement in Herbieto, as
pointed out in Naguit, absurdly limits the application of the provision to
the point of virtual inutility since it would only cover lands actually
declared alienable and disposable prior to 12 June 1945, even if the
current possessor is able to establish open, continuous, exclusive and
notorious possession under a bona fide claim of ownership long before
that date.
Moreover, the Naguit interpretation allows more possessors under a bona
fide claim of ownership to avail of judicial confirmation of their imperfect
titles than what would be feasible under Herbieto. This balancing fact is
significant, especially considering our forthcoming discussion on the scope
and reach of Section 14(2) of the Property Registration Decree.
Petitioners make the salient observation that the contradictory passages
from Herbieto are obiter dicta since the land registration proceedings
therein is void ab initio in the first place due to lack of the requisite
publication of the notice of initial hearing. There is no need to explicitly
overturn Herbieto, as it suffices that the Courts acknowledgment that the
particular line of argument used therein concerning Section 14(1) is indeed
obiter.
It may be noted that in the subsequent case of Buenaventura,[26] the
Court, citing Herbieto, again stated that [a]ny period of possession prior to
the date when the [s]ubject [property was] classified as alienable and
disposable is inconsequential and should be excluded from the
computation of the period of possession That statement, in the context of
Section 14(1), is certainly erroneous. Nonetheless, the passage as cited in
Buenaventura should again be considered as obiter. The application
therein was ultimately granted, citing Section 14(2). The evidence
submitted by petitioners therein did not establish any mode of possession
on their part prior to 1948, thereby precluding the application of Section
14(1). It is not even apparent from the decision whether petitioners
therein had claimed entitlement to original registration following Section
14(1), their position being that they had been in exclusive possession
under a bona fide claim of ownership for over fifty (50) years, but not
before 12 June 1945.
Thus, neither Herbieto nor its principal discipular ruling Buenaventura has
any precedental value with respect to Section 14(1). On the other hand,
the ratio of Naguit is embedded in Section 14(1), since it precisely involved
situation wherein the applicant had been in exclusive possession under a
bona fide claim of ownership prior to 12 June 1945. The Courts
interpretation of Section 14(1) therein was decisive to the resolution of
the case. Any doubt as to which between Naguit or Herbieto provides the
final word of the Court on Section 14(1) is now settled in favor of Naguit.
We noted in Naguit that it should be distinguished from Bracewell v. Court
of Appeals[27] since in the latter, the application for registration had been
filed before the land was declared alienable or disposable. The dissent
though pronounces Bracewell as the better rule between the two. Yet two
years after Bracewell, its ponente, the esteemed Justice Consuelo Ynares-
Santiago, penned the ruling in Republic v. Ceniza,[28] which involved a
claim of possession that extended back to 1927 over a public domain land
that was declared alienable and disposable only in 1980. Ceniza cited
Bracewell, quoted extensively from it, and following the mindset of the
dissent, the attempt at registration in Ceniza should have failed. Not so.
To prove that the land subject of an application for registration is
alienable, an applicant must establish the existence of a positive act of the
government such as a presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of Lands
investigators; and a legislative act or a statute.
In this case, private respondents presented a certification dated November
25, 1994, issued by Eduardo M. Inting, the Community Environment and
Natural Resources Officer in the Department of Environment and Natural
Resources Office in Cebu City, stating that the lots involved were "found to
be within the alienable and disposable (sic) Block-I, Land Classification
Project No. 32-A, per map 2962 4-I555 dated December 9, 1980." This is
sufficient evidence to show the real character of the land subject of
private respondents application. Further, the certification enjoys a
presumption of regularity in the absence of contradictory evidence, which
is true in this case. Worth noting also was the observation of the Court of
Appeals stating that:
[n]o opposition was filed by the Bureaus of Lands and Forestry to contest
the application of appellees on the ground that the property still forms
part of the public domain. Nor is there any showing that the lots in
question are forestal land....
Thus, while the Court of Appeals erred in ruling that mere possession of
public land for the period required by law would entitle its occupant to a
confirmation of imperfect title, it did not err in ruling in favor of private
respondents as far as the first requirement in Section 48(b) of the Public
Land Act is concerned, for they were able to overcome the burden of
proving the alienability of the land subject of their application.
As correctly found by the Court of Appeals, private respondents were able
to prove their open, continuous, exclusive and notorious possession of the
subject land even before the year 1927. As a rule, we are bound by the
factual findings of the Court of Appeals. Although there are exceptions,
petitioner did not show that this is one of them.[29]
Why did the Court in Ceniza, through the same eminent member who
authored Bracewell, sanction the registration under Section 48(b) of public
domain lands declared alienable or disposable thirty-five (35) years and
180 days after 12 June 1945? The telling difference is that in Ceniza, the
application for registration was filed nearly six (6) years after the land had
been declared alienable or disposable, while in Bracewell, the application
was filed nine (9) years before the land was declared alienable or
disposable. That crucial difference was also stressed in Naguit to
contradistinguish it from Bracewell, a difference which the dissent seeks to
belittle.
III.
We next ascertain the correct framework of analysis with respect to
Section 14(2). The provision reads:
SECTION 14. Who may apply. The following persons may file in the proper
Court of First Instance an application for registration of title to land,
whether personally or through their duly authorized representatives:
xxx
(2) Those who have acquired ownership over private lands by
prescription under the provisions of existing laws.
The Court in Naguit offered the following discussion concerning Section
14(2), which we did even then recognize, and still do, to be an obiter
dictum, but we nonetheless refer to it as material for further discussion,
thus:
Did the enactment of the Property Registration Decree and the
amendatory P.D. No. 1073 preclude the application for registration of
alienable lands of the public domain, possession over which commenced
only after June 12, 1945? It did not, considering Section 14(2) of the
Property Registration Decree, which governs and authorizes the
application of those who have acquired ownership of private lands by
prescription under the provisions of existing laws.
Prescription is one of the modes of acquiring ownership under the Civil
Code.[[30]] There is a consistent jurisprudential rule that properties
classified as alienable public land may be converted into private property
by reason of open, continuous and exclusive possession of at least thirty
(30) years.[[31]] With such conversion, such property may now fall within
the contemplation of private lands under Section 14(2), and thus
susceptible to registration by those who have acquired ownership through
prescription. Thus, even if possession of the alienable public land
commenced on a date later than June 12, 1945, and such possession being
been open, continuous and exclusive, then the possessor may have the
right to register the land by virtue of Section 14(2) of the Property
Registration Decree.
Naguit did not involve the application of Section 14(2), unlike in this case
where petitioners have based their registration bid primarily on that
provision, and where the evidence definitively establishes their claim of
possession only as far back as 1948. It is in this case that we can properly
appreciate the nuances of the provision.
A.
The obiter in Naguit cited the Civil Code provisions on prescription as the
possible basis for application for original registration under Section 14(2).
Specifically, it is Article 1113 which provides legal foundation for the
application. It reads:
All things which are within the commerce of men are susceptible of
prescription, unless otherwise provided. Property of the State or any of its
subdivisions not patrimonial in character shall not be the object of
prescription.
It is clear under the Civil Code that where lands of the public domain are
patrimonial in character, they are susceptible to acquisitive prescription.
On the other hand, among the public domain lands that are not
susceptible to acquisitive prescription are timber lands and mineral lands.
The Constitution itself proscribes private ownership of timber or mineral
lands.
There are in fact several provisions in the Civil Code concerning the
acquisition of real property through prescription. Ownership of real
property may be acquired by ordinary prescription of ten (10) years,[32] or
through extraordinary prescription of thirty (30) years.[33] Ordinary
acquisitive prescription requires possession in good faith,[34] as well as
just title.[35]
When Section 14(2) of the Property Registration Decree explicitly provides
that persons who have acquired ownership over private lands by
prescription under the provisions of existing laws, it unmistakably refers to
the Civil Code as a valid basis for the registration of lands. The Civil Code is
the only existing law that specifically allows the acquisition by prescription
of private lands, including patrimonial property belonging to the State.
Thus, the critical question that needs affirmation is whether Section 14(2)
does encompass original registration proceedings over patrimonial
property of the State, which a private person has acquired through
prescription.
The Naguit obiter had adverted to a frequently reiterated jurisprudence
holding that properties classified as alienable public land may be
converted into private property by reason of open, continuous and
exclusive possession of at least thirty (30) years.[36] Yet if we ascertain the
source of the thirty-year period, additional complexities relating to Section
14(2) and to how exactly it operates would emerge. For there are in fact
two distinct origins of the thirty (30)-year rule.
The first source is Rep. Act No. 1942, enacted in 1957, which amended
Section 48(b) of the Public Land Act by granting the right to seek original
registration of alienable public lands through possession in the concept of
an owner for at least thirty years.
The following-described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such lands or an interest therein,
but whose titles have not been perfected or completed, may apply to the
Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title
therefor, under the Land Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessors in interest
have been in open, continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain, under a bona fide
claim of acquisition of ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title, except
when prevented by war or force majeure. These shall be conclusively
presumed to have performed all the conditions essential to a Government
grant and shall be entitled to a certificate of title under the provisions of
this Chapter. (emphasis supplied)[37]
This provision was repealed in 1977 with the enactment of P.D. 1073,
which made the date 12 June 1945 the reckoning point for the first time.
Nonetheless, applications for registration filed prior to 1977 could have
invoked the 30-year rule introduced by Rep. Act No. 1942.
The second source is Section 14(2) of P.D. 1529 itself, at least by
implication, as it applies the rules on prescription under the Civil Code,
particularly Article 1113 in relation to Article 1137. Note that there are
two kinds of prescription under the Civil Codeordinary acquisitive
prescription and extraordinary acquisitive prescription, which, under
Article 1137, is completed through uninterrupted adverse possession for
thirty years, without need of title or of good faith.
Obviously, the first source of the thirty (30)-year period rule, Rep. Act No.
1942, became unavailable after 1977. At present, the only legal basis for
the thirty (30)-year period is the law on prescription under the Civil Code,
as mandated under Section 14(2). However, there is a material difference
between how the thirty (30)-year rule operated under Rep. Act No. 1942
and how it did under the Civil Code.
Section 48(b) of the Public Land Act, as amended by Rep. Act No. 1942, did
not refer to or call into application the Civil Code provisions on
prescription. It merely set forth a requisite thirty-year possession period
immediately preceding the application for confirmation of title, without
any qualification as to whether the property should be declared alienable
at the beginning of, and continue as such, throughout the entire thirty-(30)
years. There is neither statutory nor jurisprudential basis to assert Rep. Act
No. 1942 had mandated such a requirement,[38] similar to our earlier
finding with respect to the present language of Section 48(b), which now
sets 12 June 1945 as the point of reference.
Then, with the repeal of Rep. Act No. 1942, the thirty-year possession
period as basis for original registration became Section 14(2) of the
Property Registration Decree, which entitled those who have acquired
ownership over private lands by prescription under the provisions of
existing laws to apply for original registration. Again, the thirty-year period
is derived from the rule on extraordinary prescription under Article 1137
of the Civil Code. At the same time, Section 14(2) puts into operation the
entire regime of prescription under the Civil Code, a fact which does not
hold true with respect to Section 14(1).
B.
Unlike Section 14(1), Section 14(2) explicitly refers to the principles on
prescription under existing laws. Accordingly, we are impelled to apply the
civil law concept of prescription, as set forth in the Civil Code, in our
interpretation of Section 14(2). There is no similar demand on our part in
the case of Section 14(1).
The critical qualification under Article 1113 of the Civil Code is thus:
[p]roperty of the State or any of its subdivisions not patrimonial in
character shall not be the object of prescription. The identification what
consists of patrimonial property is provided by Articles 420 and 421, which
we quote in full:
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
It is clear that property of public dominion, which generally includes
property belonging to the State, cannot be the object of prescription or,
indeed, be subject of the commerce of man.[39] Lands of the public
domain, whether declared alienable and disposable or not, are property of
public dominion and thus insusceptible to acquisition by prescription.
Let us now explore the effects under the Civil Code of a declaration by the
President or any duly authorized government officer of alienability and
disposability of lands of the public domain. Would such lands so declared
alienable and disposable be converted, under the Civil Code, from
property of the public dominion into patrimonial property? After all, by
connotative definition, alienable and disposable lands may be the object
of the commerce of man; Article 1113 provides that all things within the
commerce of man are susceptible to prescription; and the same provision
further provides that patrimonial property of the State may be acquired by
prescription.
Nonetheless, Article 422 of the Civil Code states that [p]roperty of public
dominion, when no longer intended for public use or for public service,
shall form part of the patrimonial property of the State. It is this provision
that controls how public dominion property may be converted into
patrimonial property susceptible to acquisition by prescription. After all,
Article 420 (2) makes clear that those property 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 are public dominion property.
For as long as the property belongs to the State, although already
classified as alienable or disposable, it remains property of the public
dominion if when it is intended for some public service or for the
development of the national wealth.
Accordingly, there must be an express declaration by the State that the
public dominion property is no longer intended for public service or the
development of the national wealth or that the property has been
converted into patrimonial. Without such express declaration, the
property, even if classified as alienable or disposable, remains property of
the public dominion, pursuant to Article 420(2), and thus incapable of
acquisition by prescription. It is only when such alienable and disposable
lands are expressly declared by the State to be no longer intended for
public service or for the development of the national wealth that the
period of acquisitive prescription can begin to run. Such declaration shall
be in the form of a law duly enacted by Congress or a Presidential
Proclamation in cases where the President is duly authorized by law.
It is comprehensible with ease that this reading of Section 14(2) of the
Property Registration Decree limits its scope and reach and thus affects
the registrability even of lands already declared alienable and disposable
to the detriment of the bona fide possessors or occupants claiming title to
the lands. Yet this interpretation is in accord with the Regalian doctrine
and its concomitant assumption that all lands owned by the State,
although declared alienable or disposable, remain as such and ought to be
used only by the Government.
Recourse does not lie with this Court in the matter. The duty of the Court
is to apply the Constitution and the laws in accordance with their language
and intent. The remedy is to change the law, which is the province of the
legislative branch. Congress can very well be entreated to amend Section
14(2) of the Property Registration Decree and pertinent provisions of the
Civil Code to liberalize the requirements for judicial confirmation of
imperfect or incomplete titles.
The operation of the foregoing interpretation can be illustrated by an
actual example. Republic Act No. 7227, entitled An Act Accelerating The
Conversion Of Military Reservations Into Other Productive Uses, etc., is
more commonly known as the BCDA law. Section 2 of the law authorizes
the sale of certain military reservations and portions of military camps in
Metro Manila, including Fort Bonifacio and Villamor Air Base. For purposes
of effecting the sale of the military camps, the law mandates the President
to transfer such military lands to the Bases Conversion Development
Authority (BCDA)[40] which in turn is authorized to own, hold and/or
administer them.[41] The President is authorized to sell portions of the
military camps, in whole or in part.[42] Accordingly, the BCDA law itself
declares that the military lands subject thereof are alienable and
disposable pursuant to the provisions of existing laws and regulations
governing sales of government properties.[43]
From the moment the BCDA law was enacted the subject military lands
have become alienable and disposable. However, said lands did not
become patrimonial, as the BCDA law itself expressly makes the
reservation that these lands are to be sold in order to raise funds for the
conversion of the former American bases at Clark and Subic.[44] Such
purpose can be tied to either public service or the development of
national wealth under Article 420(2). Thus, at that time, the lands
remained property of the public dominion under Article 420(2),
notwithstanding their status as alienable and disposable. It is upon their
sale as authorized under the BCDA law to a private person or entity that
such lands become private property and cease to be property of the public
dominion.
C.
Should public domain lands become patrimonial because they are
declared as such in a duly enacted law or duly promulgated proclamation
that they are no longer intended for public service or for the development
of the national wealth, would the period of possession prior to the
conversion of such public dominion into patrimonial be reckoned in
counting the prescriptive period in favor of the possessors? We rule in the
negative.
The limitation imposed by Article 1113 dissuades us from ruling that the
period of possession before the public domain land becomes patrimonial
may be counted for the purpose of completing the prescriptive period.
Possession of public dominion property before it becomes patrimonial
cannot be the object of prescription according to the Civil Code. As the
application for registration under Section 14(2) falls wholly within the
framework of prescription under the Civil Code, there is no way that
possession during the time that the land was still classified as public
dominion property can be counted to meet the requisites of acquisitive
prescription and justify registration.
Are we being inconsistent in applying divergent rules for Section 14(1) and
Section 14(2)? There is no inconsistency. Section 14(1) mandates
registration on the basis of possession, while Section 14(2) entitles
registration on the basis of prescription. Registration under Section 14(1)
is extended under the aegis of the Property Registration Decree and the
Public Land Act while registration under Section 14(2) is made available
both by the Property Registration Decree and the Civil Code.
In the same manner, we can distinguish between the thirty-year period
under Section 48(b) of the Public Land Act, as amended by Rep. Act No.
1472, and the thirty-year period available through Section 14(2) of the
Property Registration Decree in relation to Article 1137 of the Civil Code.
The period under the former speaks of a thirty-year period of possession,
while the period under the latter concerns a thirty-year period of
extraordinary prescription. Registration under Section 48(b) of the Public
Land Act as amended by Rep. Act No. 1472 is based on thirty years of
possession alone without regard to the Civil Code, while the registration
under Section 14(2) of the Property Registration Decree is founded on
extraordinary prescription under the Civil Code.
It may be asked why the principles of prescription under the Civil Code
should not apply as well to Section 14(1). Notwithstanding the vaunted
status of the Civil Code, it ultimately is just one of numerous statutes,
neither superior nor inferior to other statutes such as the Property
Registration Decree. The legislative branch is not bound to adhere to the
framework set forth by the Civil Code when it enacts subsequent
legislation. Section 14(2) manifests a clear intent to interrelate the
registration allowed under that provision with the Civil Code, but no such
intent exists with respect to Section 14(1).
IV.
One of the keys to understanding the framework we set forth today is
seeing how our land registration procedures correlate with our law on
prescription, which, under the Civil Code, is one of the modes for acquiring
ownership over property.
The Civil Code makes it clear that patrimonial property of the State may be
acquired by private persons through prescription. This is brought about by
Article 1113, which states that [a]ll things which are within the commerce
of man are susceptible to prescription, and that [p]roperty of the State or
any of its subdivisions not patrimonial in character shall not be the object
of prescription.
There are two modes of prescription through which immovables may be
acquired under the Civil Code. The first is ordinary acquisitive prescription,
which, under Article 1117, requires possession in good faith and with just
title; and, under Article 1134, is completed through possession of ten (10)
years. There is nothing in the Civil Code that bars a person from acquiring
patrimonial property of the State through ordinary acquisitive
prescription, nor is there any apparent reason to impose such a rule. At
the same time, there are indispensable requisitesgood faith and just title.
The ascertainment of good faith involves the application of Articles 526,
527, and 528, as well as Article 1127 of the Civil Code,[45] provisions that
more or less speak for themselves.
On the other hand, the concept of just title requires some clarification.
Under Article 1129, there is just title for the purposes of prescription when
the adverse claimant came into possession of the property through one of
the modes recognized by law for the acquisition of ownership or other real
rights, but the grantor was not the owner or could not transmit any right.
Dr. Tolentino explains:
Just title is an act which has for its purpose the transmission of ownership,
and which would have actually transferred ownership if the grantor had
been the owner. This vice or defect is the one cured by prescription.
Examples: sale with delivery, exchange, donation, succession, and dacion
in payment.[46]
The OSG submits that the requirement of just title necessarily precludes
the applicability of ordinary acquisitive prescription to patrimonial
property. The major premise for the argument is that the State, as the
owner and grantor, could not transmit ownership to the possessor before
the completion of the required period of possession.[47] It is evident that
the OSG erred when it assumed that the grantor referred to in Article 1129
is the State. The grantor is the one from whom the person invoking
ordinary acquisitive prescription derived the title, whether by sale,
exchange, donation, succession or any other mode of the acquisition of
ownership or other real rights.
Earlier, we made it clear that, whether under ordinary prescription or
extraordinary prescription, the period of possession preceding the
classification of public dominion lands as patrimonial cannot be counted
for the purpose of computing prescription. But after the property has been
become patrimonial, the period of prescription begins to run in favor of
the possessor. Once the requisite period has been completed, two legal
events ensue: (1) the patrimonial property is ipso jure converted into
private land; and (2) the person in possession for the periods prescribed
under the Civil Code acquires ownership of the property by operation of
the Civil Code.
It is evident that once the possessor automatically becomes the owner of
the converted patrimonial property, the ideal next step is the registration
of the property under the Torrens system. It should be remembered that
registration of property is not a mode of acquisition of ownership, but
merely a mode of confirmation of ownership.[48]
Looking back at the registration regime prior to the adoption of the
Property Registration Decree in 1977, it is apparent that the registration
system then did not fully accommodate the acquisition of ownership of
patrimonial property under the Civil Code. What the system
accommodated was the confirmation of imperfect title brought about by
the completion of a period of possession ordained under the Public Land
Act (either 30 years following Rep. Act No. 1942, or since 12 June 1945
following P.D. No. 1073).
The Land Registration Act[49] was noticeably silent on the requisites for
alienable public lands acquired through ordinary prescription under the
Civil Code, though it arguably did not preclude such registration.[50] Still,
the gap was lamentable, considering that the Civil Code, by itself,
establishes ownership over the patrimonial property of persons who have
completed the prescriptive periods ordained therein. The gap was finally
closed with the adoption of the Property Registration Decree in 1977, with
Section 14(2) thereof expressly authorizing original registration in favor of
persons who have acquired ownership over private lands by prescription
under the provisions of existing laws, that is, the Civil Code as of now.
V.
We synthesize the doctrines laid down in this case, as follows:
(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.[51]
(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.
B.
We now apply the above-stated doctrines to the case at bar.
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 evidencethe 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.
VI.
A final word. The Court is comfortable with the correctness of the legal
doctrines established in this decision. Nonetheless, discomfiture over the
implications of todays ruling cannot be discounted. For, every untitled
property that is occupied in the country will be affected by this ruling. The
social implications cannot be dismissed lightly, and the Court would be
abdicating its social responsibility to the Filipino people if we simply levied
the law without comment.
The informal settlement of public lands, whether declared alienable or
not, is a phenomenon tied to long-standing habit and cultural
acquiescence, and is common among the so-called Third World countries.
This paradigm powerfully evokes the disconnect between a legal system
and the reality on the ground. The law so far has been unable to bridge
that gap. Alternative means of acquisition of these public domain lands,
such as through homestead or free patent, have
proven unattractive due to limitations imposed on the grantee in the
encumbrance or alienation of said properties.[52] Judicial confirmation of
imperfect title has emerged as the most viable, if not the most attractive
means to regularize the informal settlement of alienable or disposable
lands of the public domain, yet even that system, as revealed in this
decision, has considerable limits.
There are millions upon millions of Filipinos who have individually or
exclusively held residential lands on which they have lived and raised their
families. Many more have tilled and made productive idle lands of the
State with their hands. They have been regarded for generation by their
families and their communities as common law owners. There is much to
be said about the virtues of according them legitimate states. Yet such
virtues are not for the Court to translate into positive law, as the law itself
considered such lands as property of the public dominion. It could only be
up to Congress to set forth a new phase of land reform to sensibly
regularize and formalize the settlement of such lands which in legal theory
are lands of the public domain before the problem becomes insoluble. This
could be accomplished, to cite two examples, by liberalizing the standards
for judicial confirmation of imperfect title, or amending the Civil Code
itself to ease the requisites for the conversion of public dominion property
into patrimonial.
Ones sense of security over land rights infuses into every aspect of well-
being not only of that individual, but also to the persons family. Once that
sense of security is deprived, life and livelihood are put on stasis. It is for
the political branches to bring welcome closure to the long pestering
problem.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals
dated 23 February 2007 and Resolution dated 2 October 2007 are
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 188494 November 26, 2014
REMMAN ENTERPRISES, INC., Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
REYES, J.:
This resolves the petition for review on certiorari1 filed by Remman
Enterprises, Inc. (petitioner) under Rule 45 of the Rules of Court to assail
the Decision2 dated May 23, 2008 and Resolution3 dated June 22, 2009 of
the Court of Appeals (CA) in CA-G.R. CV No. 74418. The CA reversed the
Decision4 dated November 27, 2001 of the Regional Trial Court (RTC) of
Pasig City, Branch 155, in LR Case No. N-11379, which granted the
petitioner's application for land registration of three (3) parcels of land
situated in Taguig, Metro Manila (subject properties).
The petitioner, through its authorized representative Ronnie P. Inocencio
(Inocencio), filed with the RTC on June 4, 1998 an application for
registration of the subject properties situated in Barangay Napindan,
Taguig, Metro Manila, with an area of 27,477 square meters, 23,179 sq m
and 45,636 sq m, more particularly described as follows:
SWO-00-001771, being a conversion of Lot 3079, Mcadm-590-D,
containing an area of Twenty[-]Seven Thousand Four Hundred Seventy[-]
Seven (27,477) square meters, more or less; SWO-00-001768, being a
conversion of Lot 3071, Mcadm-590-D, containing an area of Twenty[-]
Three Thousand One Hundred Seventy[-]Nine (23,179) square meters,
more or less; and SWO-00-001773, being a conversion of Lot 3082,
Mcadm-590-D, containing an area of Forty[-]Five Thousand Six Hundred
Thirty[-]Six (45,636) square meters, more or less, all brought under the
operation of the Property Registration Decree (PD 1529) or
Commonwealth Act 141, as amended x x x.5
The State, through the Office of the Solicitor General, interposed its
opposition to the application.1avvphi1 During the initial hearing of the
case on May 4, 1999, the petitioner presented and marked documentary
evidence6 to prove its compliance with jurisdictional requirements.7
On October 25, 1999, the petitioner was allowed to present its evidence
before the Branch Clerk of Court of the RTC. Inocencio, the petitioners
sales manager, testified that the subject properties were purchased on
August 28, 1989 by the petitioner from sellers Magdalena Samonte, Jaime
Aldana and Virgilio Navarro. The properties were declared for taxation
purposes on August 9, 1989.After the sale, the petitioner occupied the
properties and planted thereon crops like rice, corn and vegetables.8
Witness Cenon Serquia (Serquia) supported the application for
registration by claiming that he had been the caretaker of the subject
properties since 1957, long before the lots were purchased by the
petitioner. Serquia alleged that no person other than the applicant and
its predecessors-in-interest had claimed ownership or rights over the
subject properties.9
On November 27, 2001, the RTC rendered its Decision10 granting the
petitioners application. The decretal portion of its decision reads:
WHEREFORE, in view of the foregoing, the Court finds the Applicant,
Remman Enterprises, Inc., represented in this matter by its representative,
Ronnie P. Inocencio, the absolute owner in fee simple of three (3) parcels
of land, all located at Barangay Napindan, Taguig, Metro Manila, more
particularly described as follows:
1.) SWO-00-001771, being a conversion of Lot 3079, Mcadm-590-D;
2.) SWO-00-001768, being a conversion of Lot 3071, Mcadm-590-D; and
3.) SWO-00-001773, being a conversion of Lot 3082, Mcadm-590-D
together with their corresponding technical descriptions.
Once the foregoing Decision has become final, let the corresponding
decree of registration issue. SO ORDERED.11
Dissatisfied, the State appealed to the CA by alleging substantive and
procedural defects in the petitioners application. It argued that the
identity of the subject properties was not sufficiently established. The
State further claimed that the character and length of possession required
by law in land registration cases were not satisfied by the petitioner.
Finding merit in the appeal, the CA reversed the RTC decision. The
dispositive portion of the CA Decision dated May 23, 2008 reads:
WHEREFORE, the DECISION DATED NOVEMBER 27, 2001is REVERSEDand
SET ASIDE and this case is DISMISSED.
SO ORDERED.12
The CA explained that the survey plans and technical descriptions
submitted by the petitioner failed to establish the true identity of the
subject properties. The application should have been accompanied by the
original tracing cloth plan duly approved by the Director of Lands.13 The
petitioner should have also submitted a certification from the proper
government office stating that the properties were already declared
alienable and disposable.14 The CA further cited a failure to establish that
the petitioner and its predecessors-in-interest possessed the subject
parcels of land under a bona fide claim of ownership since June 12, 1945
or earlier.15
Hence, this petition for review on certiorari filed by the petitioner to assail
the CAs dismissal of its application for land registration. The petitioner
argues that the identity of the subject properties was sufficiently
established through the submission of the original tracing cloth plans,
survey plans and technical descriptions. The alienable and disposable
character of the properties was also duly established via a certification
issued by the Community Environment and Natural Resources Office
(CENRO) of the Department of Environment and Natural Resources
(DENR). Further, it claims that it and its predecessors-in-interest possessed
the parcels of land in the nature and within the length of time required by
law.
The petition is dismissible.
On the matter of proof of the subject propertys identity, jurisprudence
provides that the presentation of the original tracing cloth plan may be
dispensed with, subject however to certain conditions. Contrary to the
petitioners claim, the original clothing plans that cover the subject
properties do not form part of the case records. The Court has
nonetheless held in Republic v. Espinosa:16
As ruled in Republic v. Guinto-Aldana, the identity of the land, its
boundaries and location can be established by other competent evidence
apart from the original tracing cloth such as a duly executed blueprint of
the survey plan and technical description:
"Yet if the reason for requiring an applicant to adduce in evidence the
original tracing cloth plan is merely to provide a convenient and necessary
means to afford certainty as to the exact identity of the property applied
for registration and to ensure that the same does not overlap with the
boundaries of the adjoining lots, there stands to be no reason why a
registration application must be denied for failure to present the original
tracing cloth plan, especially where it is accompanied by piecesof
evidencesuch as a duly executed blueprint of the survey plan and a duly
executed technical description of the propertywhich may likewise
substantially and with as much certainty prove the limits and extent of the
property sought to be registered."17 (Citations omitted)
Notwithstanding the foregoing, the CAs dismissal of the petitioners
application for original registration was proper considering the latters
failure to sufficiently establish that the subject properties were already
declared alienable and disposable by the government. Its reliance on a
Report,18 issued by the CENRO, DENR National Capital Region, West
Sector, was misplaced. The Court ruled in Republic v. Medida:19
In Republic v. T.A.N. Properties, Inc.,this Court explained that a Provincial
Environment and Natural Resources Office (PENRO) or CENRO
certification, by itself, fails toprove the alienable and disposable character
of a parcel of land. We ruled:
[I]t is not enough for the PENRO or CENRO to certify that a land is
alienable and disposable. The applicant for land registration must prove
that the DENR Secretary had approved the land classification and released
the land of the public domain as alienable and disposable, and that the
land subject of the application for registration falls within the approved
area per verification through survey by the PENRO or CENRO. In addition,
the applicant for land registration must present a copy of the original
classification approved by the DENR Secretary and certified as a true copy
by the legal custodian of the official records.These facts must be
established to prove that the land is alienable and disposable.
Respondents failed to do so because the certifications presented by
respondent do not, by themselves, prove that the land is alienable and
disposable. x x x.
xxxx
The present rule on the matter then requires that an application for
original registration be accompanied by: (1) CENRO or PENRO
Certification; and (2) a copy of the original classification approved by the
DENR Secretary and certified as a true copy by the legal custodian of the
official records. x x x.20 (Citations omitted and emphasis in the original)
The burden of proof in overcoming the presumption of State ownership of
the lands of the public domain is on the person applying for registration,
who must provethat the properties subject of the application are alienable
and disposable.21 Even the notations on the survey plans submitted by
the petitioner cannot be admitted asevidence of the subject properties
alienability and disposability. Such notations do not constitute
incontrovertible evidence to overcome the presumption that the subject
properties remain part of the inalienable public domain.22
Given the foregoing, the dismissal of the petitioner's application for
registration was proper. Under pertinent laws and jurisprudence, the
petitioner had to sufficiently establish that: first, the subject properties
form part of the disposable and alienable lands of the public domain;
second, the applicant and his predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession anq occupation of the
same; and third, the possession is under a bona fide claim of ownership
since June 12, 1945 or earlier.23
Without sufficient proof that the subject properties had been declared
alienable and disposable, the Court finqs no reason to look further into the
petitioner's claim that the CA erred in' finding that it failed to satisfy the
nature and length of possession that could qualify for land registration.
WHEREFORE, the petition if DENIED. The Decision dated May 23, 2008 and
Resolution dated Jun~ 22, 2009 of the Court of Appeals in CA-G.R. CV No.
74418 are AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 182913 November 20, 2013
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
ANTONIO, FELIZA, NEMESIO, ALBERTO, FELICIDAD, RICARDO, MILAGROS
AND CIPRIANO, ALL SURNAMED BACAS; EMILIANA CHABON, SATURNINO
ABDON, ESTELA, CHABON, LACSASA DEMON, PDERITA CHABON,
FORTUNATA EMBALSADO, MINDA J. CASTILLO, PABLO CASTILLO, ARTURO
P. LEGASPI, and JESSIE I. LEGASPI, Respondents.
DECISION
MENDOZA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court
seeks to review, reverse and set aside the November 12, 2007 Decision1
and the May 15, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R.
CV No. 64142, upholding the decision of the Regional Trial Court, Branch
17, Cagayan de Oro City (RTC) , which dismissed the consolidated cases of
Civil Case No. 3494, entitled Republic of the Philippines v. Antonio, et al.
and Civil Case No. 5918, entitled Republic of the Philippines v. Emiliana
Chabon , et al. Said civil cases were filed by the Republic of the Philippines
(Republic) for the cancellation and annulment of Original Certificate of
Title (OCT) No. 0-358 and OCT No. O-669, covering certain parcels of land
occupied and utilized as part of the Camp Evangelista Military Reservation,
Misamis Oriental, presently the home of the 4th Infantry Division of the
Philippine Army.
The Antecedents:
In 1938, Commonwealth President Manuel Luis Quezon (Pres. Quezon)
issued Presidential Proclamation No. 265, which took effect on March 31,
1938, reserving for the use of the Philippine Army three (3) parcels of the
public domain situated in the barrios of Bulua and Carmen, then
Municipality of Cagayan, Misamis Oriental. The parcels of land were
withdrawn from sale or settlement and reserved for military purposes,
"subject to private rights, if any there be."
Land Registration Case No. N-275
[Antonio, Feliza, Nemesio, Roberto, and Felicidad, all surnamed Bacas, and
the Heirs of Jesus Bacas, Applicants (The Bacases)]
The Bacases filed their Application for Registration3 on November 12,
1964 covering a parcel of land, together with all the improvements found
thereon, located in Patag, Cagayan de Oro City, more particularly
described and bounded as follows:
A parcel of land, Lot No. 4354 of the Cadastral Survey of Cagayan, L.R.C.
Record No. 1612, situated at Barrio Carmen, Municipality of Cagayan,
Province of Misamis Oriental. Bounded on the SE., along lines 1-2-3-4, by
Lot 4357; and alongline 4-5, by Lot 3862; on the S., along line 5-6, by Lot
3892; on the W. and NW., along lines 6-7-8, by Lot 4318; on the NE., along
line 8-9, by Lot 4319, along line 9-10, by Lot 4353 and long line 10-11, by
Lot 4359; and on the SE., along line 11-1, by Lot 4356, all of Cagayan
Cadastre; containing an area of THREE HUNDRED FIFTY FOUR THOUSAND
THREE HUNDRED SEVENTY SEVEN (354,377) square meters, more or less,
under Tax Declaration No. 35436 and assessed at P3,540.00.4
They alleged ownership in fee simple of the property and indicated in their
application the names and addresses of the adjoining owners, as well as a
statement that the Philippine Army (Fourth Military Area) recently
occupied a portion of the land by their mere tolerance.5
The Director of the Bureau of Lands, thru its Special Counsel, Benito S.
Urcia (Urcia) , registered its written Opposition6 against the application.
Later, Urcia, assisted by the District Land Officer of Cagayan de Oro City,
thru the Third Assistant Provincial Fiscal of Misamis Oriental, Pedro R.
Luspo (Luspo) , filed an Amended Opposition.7
On April 10, 1968, based on the evidence presented by the Bacases, the
Land Registration Court (LRC) rendered a decision8 holding that the
applicants had conclusively established their ownership in fee simple over
the subject land and that their possession, including that of their
predecessor-in-interest, had been open, adverse, peaceful, uninterrupted,
and in concept of owners for more than forty (40) years.
No appeal was interposed by the Republic from the decision of the LRC.
Thus, the decision became final and executory, resulting in the issuance of
a decree and the corresponding certificate of title over the subject
property.
Land Registration Case No. N-521 [Emiliana Chabon, Estela Chabon and
Pedrita Chabon, Applicants (The Chabons)]
The Chabons filed their Application for Registration9 on May 8, 1974
covering a parcel of land located in Carmen-District, Cagayan de Oro City,
known as Lot 4357, Cagayan Cadastre, bounded and described as:
A parcel of land (Lot 4357, Cagayan Cadastre, plan Ap-12445), situated in
the District of Carmen, City of Cagayan de Oro. Bounded on the NE. by
property of Potenciano Abrogan vs. Republic of the Philippines (Public
Land); on the SE. by properties of Geronimo Wabe and Teofilo Batifona or
Batipura; on the SW. by property of Teofilo Batifona or Batipura; and on
the NW. by property of Felipe Bacao or Bacas vs. Republic of the
Philippines (Public Land). Point "1" is N. 10 deg. 39W., 379.88 M. from
B.L.L.M. 14, Cagayan Cadastre. Area SIXTY NINE THOUSAND SIX HUNDRED
THIRTY TWO (69,632) SQUARE METERS, more or less.10
They alleged ownership in fee simple over the property and indicated
therein the names and addresses of the adjoining owners, but no mention
was made with respect to the occupation, if any, by the Philippine Army.
The Chabons likewise alleged that, to the best of their knowledge, no
mortgage or encumbrance of any kind affecting said land with the
exception of 18,957 square meters sold to Minda J. Castillo and 1,000
square meters sold and conveyed to Atty. Arturo R. Legaspi.11
On February 18, 1976, there being no opposition made, even from the
government, hearing on the application ensued. The LRC then rendered a
decision12 holding that Chabons evidence established their ownership in
fee simple over the subject property and that their possession, including
that of their predecessor-in-interest, had been actual, open, public,
peaceful, adverse, continuous, and in concept of owners for more than
thirty (30) years.
The decision then became final and executory. Thus, an order13 for the
issuance of a decree and the corresponding certificate of title was issued.
The present cases
As a consequence of the LRC decisions in both applications for registration,
the Republic filed a complaint for annulment of titles against the Bacases
and the Chabons before the RTC. More specifically, on September 7, 1970
or one (1) year and ten (10) months from the issuance of OCT No. 0-358, a
civil case for annulment, cancellation of original certificate of title,
reconveyance of lot or damages was filed by the Republic against the
Bacases, which was docketed as Civil Case No. 3494. On the other hand,
on April 21, 1978 or two (2) years and seven (7) months after issuance of
OCT No. 0-669, the Republic filed a civil case for annulment of title and
reversion against the Chabons, docketed as Civil Case No. 5918.
Civil Case No. 3494 against the Bacases
The Republic claimed in its petition for annulment before the RTC14 that
the certificate of title issued in favor of the Bacases was null and void
because they fraudulently omitted to name the military camp as the actual
occupant in their application for registration. Specifically, the Republic,
through the Fourth Military Area, was the actual occupant of Lot No. 4354
and also the owner and possessor of the adjoining Lots Nos. 431815 and
4357. Further, the Bacases failed to likewise state that Lot No. 4354 was
part of Camp Evangelista. These omissions constituted fraud which
vitiated the decree and certificate of title issued.
Also, the Republic averred that the subject land had long been reserved in
1938 for military purposes at the time it was applied for and, so, it was no
longer disposable and subject to registration.16
Civil Case No. 5918 against the Chabons
In this case, the Republic claimed that it was the absolute owner and
possessor of Lot No. 4357. The said lot, together with Lots 431817 and
4354, formed part of the military reservation known as Camp Evangelista
in Cagayan de Oro City, which was set aside and reserved under
Presidential Proclamation No. 265 issued by President Quezon on March
31, 1938.18
In its petition for annulment before the RTC,19 the Republic alleged that
OCT No. 0-669 issued in favor of the Chabons and all transfer certificates
of titles, if any, proceeding therefrom, were null and void for having been
vitiated by fraud and/or lack of jurisdiction.20 The Chabons concealed that
the fact that Lot 4357 was part of Camp Evangelista and that the Republic,
through the Armed Forces of the Philippines, was its actual occupant and
possessor.21 Further, Lot 4357 was a military reservation, established as
such as early as March 31, 1938 and, thus, could not be the subject of
registration or private appropriation.22 As a military reservation, it was
beyond the commerce of man and the registration court did not have any
jurisdiction to adjudicate the same as private property.23
Decision of the Regional Trial Court
As the facts and issues in both cases were substantially the same and
identical, and the pieces of evidence adduced were applicable to both, the
cases were consolidated and jointly tried. Thereafter, a joint decision
dismissing the two complaints of the Republic was rendered.
In dismissing the complaints, the RTC explained that the stated fact of
occupancy by Camp Evangelista over certain portions of the subject lands
in the applications for registration by the respondents was a substantial
compliance with the requirements of the law.24 It would have been
absurd to state Camp Evangelista as an adjoining owner when it was
alleged that it was an occupant of the land.25 Thus, the RTC ruled that the
respondents did not commit fraud in filing their applications for
registration.
Moreover, the RTC was of the view that the Republic was then given all
the opportunity to be heard as it filed its opposition to the applications,
appeared and participated in the proceedings. It was, thus, estopped from
contesting the proceedings.
The RTC further reasoned out that assuming arguendo that respondents
were guilty of fraud, the Republic lost its right to a relief for its failure to
file a petition for review on the ground of fraud within one (1) year after
the date of entry of the decree of registration.26 Consequently, it would
now be barred by prior judgment to contest the findings of the LRC.27
Finally, the RTC agreed with the respondents that the subject parcels of
land were exempted from the operation and effect of the Presidential
Proclamation No. 265 pursuant to a proviso therein that the same would
not apply to lands with existing "private rights." The presidential
proclamation did not, and should not, apply to the respondents because
they did not apply to acquire the parcels of land in question from the
government, but simply for confirmation and affirmation of their rights to
the properties so that the titles over them could be issued in their favor.28
What the proclamation prohibited was the sale or disposal of the parcels
of land involved to private persons as a means of acquiring ownership of
the same, through the modes provided by law for the acquisition of
disposable public lands.29
The Republic filed its Notice of Appeal before the RTC on July 5, 1991. On
the other hand, the Bacases and the Chabons filed an Ex-Parte Motion for
the Issuance of the Writ of Execution and Possession on July 16, 1991. An
amended motion was filed on July 31, 1991. The RTC then issued the
Order,30 dated February 24, 1992, disapproving the Republics appeal for
failure to perfect it as it failed to notify the Bacases and granting the writ
of execution.
Action of the Court of Appeals and the Court regarding the Republics
Appeal
The Republic filed a Notice of Appeal on April 1, 1992 from the February
24, 1992 of the RTC. The same was denied in the RTC Order,31 dated April
23, 1992. The Republic moved for its reconsideration but the RTC was still
denied it on July 8, 1992.32
Not satisfied, the Republic filed a petition before the CA, docketed as CA-
G.R. SP No. 28647, entitled Republic vs. Hon. Cesar M. Ybaez,33
questioning the February 24, 1992 Order of the RTC denying its appeal in
Civil Case No. 3494. The CA sustained the government and, accordingly,
annulled the said RTC order.
The respondents appealed to the Court, which later found no commission
of a reversible error on the part of the CA. Accordingly, the Court
dismissed the appeal as well as the subsequent motions for
reconsideration. An entry of judgment was then issued on February 16,
1995.34
Ruling of the Court of Appeals
The appeal allowed, the CA docketed the case as CA G.R. CV No. 64142.
On November 12, 2007, the CA affirmed the ruling of the RTC. It explained
that once a decree of registration was issued under the Torrens system
and the reglementary period had passed within which the decree may be
questioned, the title was perfected and could not be collaterally
questioned later on.35 Even assuming that an action for the nullification of
the original certificate of title may still be instituted, the review of a decree
of registration under Section 38 of Act No. 496 [Section 32 of Presidential
Decree (P.D.) No. 1529] would only prosper upon proof that the
registration was procured through actual fraud,36 which proceeded from
an intentional deception perpetrated through the misrepresentation or
the concealment of a material fact.37 The CA stressed that "[t]he fraud
must be actual and extrinsic, not merely constructive or intrinsic; the
evidence thereof must be clear, convincing and more than merely
preponderant, because the proceedings which are assailed as having been
fraudulent are judicial proceedings which by law, are presumed to have
been fair and regular."38
Citing the rule that "[t]he fraud is extrinsic if it is employed to deprive
parties of their day in court and, thus, prevent them from asserting their
right to the property registered in the name of the applicant,"39 the CA
found that there was none. The CA agreed with the RTC that there was
substantial compliance with the requirement of the law. The allegation of
the respondent that Camp Evangelista occupied portions of their property
negated the complaint that they committed misrepresentation or
concealment amounting to fraud.40
As regards the issue of exemption from the proclamation, the CA deemed
that a discussion was unnecessary because the LRC already resolved it. The
CA stressed that the proceeding was one in rem, thereby binding everyone
to the legal effects of the same and that a decree of registration that had
become final should be deemed conclusive not only on the questions
actually contested and determined, but also upon all matters that might
be litigated or decided in the land registration proceeding.41
Not in conformity, the Republic filed a motion for reconsideration which
was denied on May 15, 2008 for lack of merit.
Hence, this petition.
GROUNDS RELIED UPON
WARRANTING REVIEW OF THE
PETITION
1. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING
THAT THE LAND REGISTRATION COURT HAD JURISDICTION OVER THE
APPLICATION FOR REGISTRATION FILED BY RESPONDENTS DESPITE THE
LATTERS FAILURE TO COMPLY WITH THE MANDATORY REQUIREMENT OF
INDICATING ALL THE ADJOINING OWNERS OF THE PARCELS OF LAND
SUBJECT OF THE APPLICATION.
2. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING
THAT RESPONDENTS HAVE A REGISTRABLE RIGHT OVER THE SUBJECT
PARCELS OF LAND WHICH ARE WITHIN THE CAMP EVANGELISTA MILITARY
RESERVATION.
3. IN G.R. NO. 157306 ENTITLED "REPUBLIC OF THE PHILIPPINES VS.
ANATALIA ACTUB TIU ESTONILO, ET AL.," WHICH INVOLVES PRIVATE
INDIVIDUALS CLAIMING RIGHTS OVER PORTIONS OF THE CAMP
EVANGELISTA MILITARY RESERVATION, THIS HONORABLE COURT HELD
THAT THESE INDIVIDUALS COULD NOT HAVE VALIDLY OCCUPIED THEIR
CLAIMED LOTS BECAUSE THE SAME WERE CONSIDERED INALIENABLE
FROM THE TIME OF THEIR RESERVATION IN 1938. HERE, THE CERTIFICATES
OF TITLE BEING SUSTAINED BY THE COURT OF APPEALS WERE ISSUED
PURSUANT TO THE DECISIONS OF THE LAND REGISTRATION COURT IN
APPLICATIONS FOR REGISTRATION FILED IN 1964 AND 1974. VERILY, THE
COURT OF APPEALS, IN ISSUING THE HEREIN ASSAILED DECISION DATED
NOVEMBER 15, 2007 AND RESOLUTION DATED MAY 15, 2008, HAS
DECIDED THAT INSTANT CONTROVERSY IN A MANNER THAT IS CONTRARY
TO LAW AND JURISPRUDENCE.42
Position of the Republic
In advocacy of its position, the Republic principally argues that (1) the CA
erred in holding that the LRC acquired jurisdiction over the applications for
registration of the reserved public lands filed by the respondents; and (2)
the respondents do not have a registrable right over the subject parcels of
land which are within the Camp Evangelista Military Reservation.
With respect to the first argument, the Republic cites Section 15 of P.D.
No. 1529, which requires that applicants for land registration must
disclose the names of the occupants of the land and the names and
addresses of the owners of the adjoining properties. The respondents did
not comply with that requirement which was mandatory and
jurisdictional. Citing Pinza v. Aldovino,43 it asserts that the LRC had no
jurisdiction to take cognizance of the case. Moreover, such omission
constituted fraud or willful misrepresentation. The respondents cannot
invoke the indefeasibility of the titles issued since a "grant tainted with
fraud and secured through misrepresentation is null and void and of no
effect whatsoever."44
On the second argument, the Republic points out that Presidential
Proclamation No. 265 reserved for the use of the Philippine Army certain
parcels of land which included Lot No. 4354 and Lot No. 4357. Both lots
were, however, allowed to be registered. Lot No. 4354 was registered as
OCT No. 0-0358 and Lot No. 4357 as OCT No. O-669.
The Republic asserts that being part of the military reservation, these lots
are inalienable and cannot be the subject of private ownership. Being so,
the respondents do not have registrable rights over them. Their
possession of the land, however long, could not ripen into ownership, and
they have not shown proof that they were entitled to the land before the
proclamation or that the said lots were segregated and withdrawn as part
thereof.
Position of the Respondents
The Bacases
The Bacases anchor their opposition to the postures of the Republic on
three principal arguments:
First, there was no extrinsic fraud committed by the Bacases in their
failure to indicate Camp Evangelista as an adjoining lot owner as their
application for registration substantially complied with the legal
requirements. More importantly, the Republic was not prejudiced and
deprived of its day in court.
Second, the LRC had jurisdiction to adjudicate whether the Bacases had
"private rights" over Lot No. 4354 in accordance with, and therefore
exempt from the coverage of, Presidential Proclamation No. 265, as well
as to determine whether such private rights constituted registrable title
under the land registration law.
Third, the issue of the registrability of the title of the Bacases over Lot No.
4354 is res judicata and cannot now be subject to a re-litigation or
reopening in the annulment proceedings.45
Regarding the first ground, the Bacases stress that there was no extrinsic
fraud because their application substantially complied with the
requirements when they indicated that Camp Evangelista was an occupant
by mere tolerance of Lot No. 4354. Also, the Republic filed its opposition
to the respondents application and actively participated in the land
registration proceedings by presenting evidence, through the Director of
Lands, who was represented by the Solicitor General. The Republic,
therefore, was not deprived of its day in court or prevented from
presenting its case. Its insistence that the non-compliance with the
requirements of Section 15 of P.D. No. 1529 is an argument that is at once
both empty and dangerous.46
On jurisdiction, the Bacases assert that even in the case of Republic v.
Estonilo,47 it was recognized in Presidential Proclamation No. 265 that the
reservation was subject to private rights. In other words, the LRC had
authority to hear and adjudicate their application for registration of title
over Lot No. 4354 if they would be able to prove that their private rights
under the presidential proclamation constituted registrable title over the
said lot. They claim that there is completely no basis for the Republic to
argue that the LRC had no jurisdiction to hear and adjudicate their
application for registration of their title to Lot No. 4354 just because the
proclamation withdrew the subject land from sale and settlement and
reserved the same for military purposes. They cited the RTC statement
that "the parcels of land they applied for in those registration proceedings
and for which certificates of title were issued in their favor are precisely
exempted from the operation and effect of said presidential proclamation
when the very same proclamation in itself made a proviso that the same
will not apply to lands with existing private rights therein."48
The Bacases claim that the issue of registrability is no longer an issue as
what is only to be resolved is the question on whether there was extrinsic
or collateral fraud during the land registration proceedings. There would
be no end to litigation on the registrability of their title if questions of facts
or law, such as, whether or not Lot No. 4354 was alienable and disposable
land of the public domain prior to its withdrawal from sale and settlement
and reservation for military purposes under Presidential Proclamation No.
265; whether or not their predecessors-in-interest had prior possession of
the lot long before the issuance of the proclamation or the establishment
of Camp Evangelista in the late 1930s; whether or not such possession
was held in the concept of an owner to constitute recognizable "private
rights" under the presidential proclamation; and whether or not such
private rights constitute registrable title to the lot in accordance with the
land registration law, which had all been settled and duly adjudicated by
the LRC in favor of the Bacases, would be re-examined under this
annulment case.49
The issue of registrability of the Bacases title had long been settled by the
LRC and is
res judicata between the Republic and the respondents. The findings of
the LRC became final when the Republic did not appeal its decision within
the period to appeal or file a petition to reopen or review the decree of
registration within one year from entry thereof.50
To question the findings of the court regarding the registrability of then
title over the land would be an attempt to reopen issues already barred by
res judicata. As correctly held by the RTC, it is estopped and barred by
prior judgment to contest the findings of the LRC.51
The Chabons
In traversing the position of the Republic, the Chabons insist that the CA
was correct when it stated that there was substantial compliance52 with
the requirements of the P.D. No. 1529 because they expressly stated in
their application that Camp Evangelista was occupying a portion of it. It is
contrary to reason or common sense to state that Camp Evangelista is an
adjoining owner when it is occupying a portion thereof.
And as to the decision, it was a consequence of a proceeding in rem and,
therefore, the decree of registration is binding and conclusive against all
persons including the Republic who did not appeal the same. It is now
barred forever to question the validity of the title issued. Besides, res
judicata has set in because there is identity of parties, subject matter and
cause of action.53
The Chabons also assailed the proclamation because when it was issued,
they were already the private owners of the subject parcels of land and
entitled to protection under the Constitution. The taking of their property
in the guise of a presidential proclamation is not only oppressive and
arbitrary but downright confiscatory.54
The Issues
The ultimate issues to be resolved are: 1) whether or not the decisions of
the LRC over the subject lands can still be questioned; and 2) whether or
not the applications for registration of the subject parcels of land should
be allowed.
The Courts Ruling
The Republic can question even final and executory judgment when there
was fraud.
The governing rule in the application for registration of lands at that time
was Section 21 of Act 49655 which provided for the form and content of
an application for registration, and it reads:
Section 21. The application shall be in writing, signed and sworn to by
applicant, or by some person duly authorized in his behalf. x x x It shall
also state the name in full and the address of the applicant, and also the
names and addresses of all adjoining owners and occupants, if known;
and, if not known, it shall state what search has been made to find them. x
xx
The reason behind the law was explained in the case of Fewkes vs.
Vasquez,56 where it was written:
Under Section 21 of the Land Registration Act an application for
registration of land is required to contain, among others, a description of
the land subject of the proceeding, the name, status and address of the
applicant, as well as the names and addresses of all occupants of the land
and of all adjoining owners, if known, or if unknown, of the steps taken to
locate them. When the application is set by the court for initial hearing, it
is then that notice (of the hearing), addressed to all persons appearing to
have an interest in the lot being registered and the adjoining owners, and
indicating the location, boundaries and technical description of the land
being registered, shall be published in the Official Gazette for two
consecutive times. It is this publication of the notice of hearing that is
considered one of the essential bases of the jurisdiction of the court in
land registration cases, for the proceedings being in rem, it is only when
there is constructive seizure of the land, effected by the publication and
notice, that jurisdiction over the res is vested on the court. Furthermore, it
is such notice and publication of the hearing that would enable all persons
concerned, who may have any rights or interests in the property, to come
forward and show to the court why the application for registration thereof
is not to be granted.
Here, the Chabons did not make any mention of the ownership or
occupancy by the Philippine Army. They also did not indicate any efforts or
searches they had exerted in determining other occupants of the land.
Such omission constituted fraud and deprived the Republic of its day in
court. Not being notified, the Republic was not able to file its opposition to
the application and, naturally, it was not able to file an appeal either.
The Republic can also question a final and executory judgment when the
LRC had no jurisdiction over the land in question
With respect to the Bacases, although the lower courts might have been
correct in ruling that there was substantial compliance with the
requirements of law when they alleged that Camp Evangelista was an
occupant, the Republic is not precluded and estopped from questioning
the validity of the title.
The success of the annulment of title does not solely depend on the
existence of actual and extrinsic fraud, but also on the fact that a
judgment decreeing registration is null and void. In Collado v. Court of
Appeals and the Republic,57 the Court declared that any title to an
inalienable public land is void ab initio. Any procedural infirmities
attending the filing of the petition for annulment of judgment are
immaterial since the LRC never acquired jurisdiction over the property. All
proceedings of the LRC involving the property are null and void and,
hence, did not create any legal effect. A judgment by a court without
jurisdiction can never attain finality.58 In Collado, the Court made the
following citation:
The Land Registration Court has no jurisdiction over non-registrable
properties, such as public navigable rivers which are parts of the public
domain, and cannot validly adjudge the registration of title in favor of
private applicant. Hence, the judgment of the Court of First Instance of
Pampanga as regards the Lot No. 2 of certificate of Title No. 15856 in the
name of petitioners may be attacked at any time, either directly or
collaterally, by the State which is not bound by any prescriptive period
provided for by the Statute of Limitations.59

Prescription or estoppel cannot lie against the government
In denying the petition of the Republic, the CA reasoned out that 1) once a
decree of registration is issued under the Torrens system and the
reglementary period has passed within which the decree may be
questioned, the title is perfected and cannot be collaterally questioned
later on;60 2) there was no commission of extrinsic fraud because the
Bacases allegation of Camp Evangelistas occupancy of their property
negated the argument that they committed misrepresentation or
concealment amounting to fraud;61 and 3) the Republic did not appeal the
decision and because the proceeding was one in rem, it was bound to the
legal effects of the decision.
Granting that the persons representing the government was negligent, the
doctrine of estoppel cannot be taken against the Republic. It is a well-
settled rule that the Republic or its government is not estopped by
mistake or error on the part of its officials or agents. In Republic v. Court of
Appeals,62 it was written:
In any case, even granting that the said official was negligent, the doctrine
of estoppel cannot operate against the State . "It is a well-settled rule in
our jurisdiction that the Republic or its government is usually not estopped
by mistake or error on the part of its officials or agents (Manila Lodge No.
761 vs. CA, 73 SCRA 166, 186; Republic vs. Marcos, 52 SCRA 238, 244;
Luciano vs. Estrella, 34 SCRA 769).
Consequently, the State may still seek the cancellation of the title issued
to Perpetuo Alpuerto and his successors-interest pursuant to Section 101
of the Public Land Act. Such title has not become indefeasible, for
prescription cannot be invoked against the State (Republic vs. Animas,
supra).
The subject lands, being part of a military reservation, are inalienable and
cannot be the subjects of land registration proceedings
The application of the Bacases and the Chabons were filed on November
12, 1964 and May 8, 1974, respectively. Accordingly, the law governing the
applications was Commonwealth Act (C.A.) No. 141,63 as amended by RA
1942,64 particularly Sec. 48(b) which provided that:
Those who by themselves or through their predecessors in interest have
been in open, continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain, under a bona fide
claim of acquisition of ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be conclusively presumed
to have performed all the conditions essential to a Government grant and
shall be entitled to a certificate of title under the provisions of this
chapter.
As can be gleaned therefrom, the necessary requirements for the grant of
an application for land registration are the following:
1. The applicant must, by himself or through his predecessors-in-interest,
have been in possession and occupation of the subject land;
2. The possession and occupation must be open, continuous, exclusive and
notorious;
3. The possession and occupation must be under a bona fide claim of
ownership for at least thirty years immediately preceding the filing of the
application; and
4. The subject land must be an agricultural land of the public domain. As
earlier stated, in 1938, President Quezon issued Presidential Proclamation
No. 265, which took effect on March 31, 1938, reserving for the use of the
Philippine Army parcels of the public domain situated in the barrios of
Bulua and Carmen, then Municipality of Cagayan, Misamis Oriental. The
subject parcels of land were withdrawn from sale or settlement or
reserved for military purposes, "subject to private rights, if any there
be."65
Such power of the President to segregate lands was provided for in
Section 64(e) of the old Revised Administrative Code and C.A. No. 141 or
the Public Land Act. Later, the power of the President was restated in
Section 14, Chapter 4, Book III of the 1987 Administrative Code. When a
property is officially declared a military reservation, it becomes inalienable
and outside the commerce of man.66 It may not be the subject of a
contract or of a compromise agreement.67 A property continues to be
part of the public domain, not available for private appropriation or
ownership, until there is a formal declaration on the part of the
government to withdraw it from being such.68 In the case of Republic v.
Court of Appeals and De Jesus,69 it was even stated that
Lands covered by reservation are not subject to entry, and no lawful
settlement on them can be acquired.1wphi1 The claims 0f persons who
have settled on, occupied, and improved a parcel of public land which is
later included in a reservation are considered worthy of protection and are
usually respected, but where the President, as authorized by law, issues a
proclamation reserving certain lands and warning all persons to depart
therefrom, this terminates any rights previously acquired in such lands by
a person who was settled thereon in order to obtain a preferential right of
purchase. And patents for lands which have been previously granted,
reserved from sale, or appropriate, are void.
Regarding the subject lots, there was a reservation respecting "private
rights." In Republic v. Estonilo,70 where the Court earlier declared that Lot
No. 4318 was part of the Camp Evangelista Military Reservation and,
therefore, not registrable, it noted the proviso in Presidential
Proclamation No. 265 requiring the reservation to be subject to private
rights as meaning that persons claiming rights over the reserved land were
not precluded from proving their claims. Stated differently, the said
proviso did not preclude the LRC from determining whether or not the
respondents indeed had registrable rights over the property.
As there has been no showing that the subject parcels of land had been
segregated from the military reservation, the respondents had to prove
that the subject properties were alienable and disposable land of the
public domain prior to its withdrawal from sale and settlement and
reservation for military purposes under Presidential Proclamation No. 265.
The question is of primordial importance because it is determinative if the
land can in fact be subject to acquisitive prescription and, thus, registrable
under the Torrens system. Without first determining the nature and
character of the land, all the other requirements such as the length and
nature of possession and occupation over such land do not come into play.
The required length of possession does not operate when the land is part
of the public domain.
In this case, however, the respondents miserably failed to prove that,
before the proclamation, the subject lands were already private lands.
They merely relied on such "recognition" of possible private rights. In their
application, they alleged that at the time of their application,71 they had
been in open, continuous, exclusive, and notorious possession of the
subject parcels of land for at least thirty (30) years and became its owners
by prescription. There was, however, no allegation or showing that the
government had earlier declared it open for sale or settlement, or that it
was already pronounced as inalienable and disposable.
It is well-settled that land of the public domain is not ipso facto converted
into a patrimonial or private property by the mere possession and
occupation by an individual over a long period of time. In the case of Diaz
v. Republic,72 it was written:
But even assuming that the land in question was alienable land before it
was established as a military reservation, there was nevertheless still a
dearth of evidence with respect to its occupation by petitioner and her
predecessors-in-interest for more than 30 years. x x x.
x x x.
A mere casual cultivation of portions of the land by the claimant, and the
raising thereon of cattle, do not constitute possession under claim of
ownership. In that sense, possession is not exclusive and notorious as to
give rise to a presumptive grant from the State. While grazing livestock
over land is of course to be considered with other acts of dominion to
show possession, the mere occupancy of land by grazing livestock upon it,
without substantial enclosures, or other permanent improvements, is not
sufficient to support a claim of title thru acquisitive prescription. The
possession of public land, however long the period may have extended,
never confers title thereto upon the possessor because the statute of
limitations with regard to public land does not operate against the State
unless the occupant can prove possession and occupation of the same
under claim of ownership for the required number of years to constitute a
grant from the State. [Emphases supplied]

In the recent case of Heirs of Mario Malabanan vs. Republic of the
Philippines,73 the Court emphasized that fundamental is the rule that
lands of the public domain, unless declared otherwise by virtue of a
statute or law, are inalienable and can never be acquired by prescription.
No amount of time of possession or occupation can ripen into ownership
over lands of the public domain. All lands of the public domain presumably
belong to the State and are inalienable. Lands that are not clearly under
private ownership are also presumed to belong to the State and,
therefore, may not be alienated or disposed.74
Another recent case, Diaz v. Republic,75 also held that possession even for
more than 30 years cannot ripen into ownership.76 Possession is of no
moment if applicants fail to sufficiently and satisfactorily show that the
subject lands over which an application was applied for was indeed an
alienable and disposable agricultural land of the public domain. It would
not matter even if they declared it for tax purposes. In Republic v. Heirs of
Juan Fabio,77 the rule was reiterated. Thus:
Well-entrenched is the rule that unless a land is reclassified and declared
alienable and disposable, occupation in the concept of an owner, no
matter how long, cannot ripen into ownership and be registered as a title.
Consequently, respondents could not have occupied the Lot in the concept
of an owner in 1947 and subsequent years when respondents declared the
Lot for taxation purposes, or even earlier when respondents'
predecessors-in-interest possessed the Lot, because the Lot was
considered inalienable from the time of its declaration as a military
reservation in 1904. Therefore, respondents failed to prove, by clear and
convincing evidence, that the Lot is alienable and disposable.
Public lands not shown to have been classified as alienable and disposable
land remain part of the inalienable public domain. In view of the lack of
sufficient evidence showing that the Lot was already classified as alienable
and disposable, the Lot applied for by respondents is inalienable land of
the public domain, not subject to registration under Section 14(1) of PD
1529 and Section 48(b) of CA 141, as amended by PD 1073. Hence, there is
no need to discuss the other requisites dealing with respondents'
occupation and possession of the Lot in the concept of an owner.
While it is an acknowledged policy of the State to promote the distribution
of alienable public lands to spur economic growth and in line with the
ideal of social justice, the law imposes stringent safeguards upon the grant
of such resources lest they fall into the wrong hands to the prejudice of
the national patrimony. We must not, therefore, relax the stringent
safeguards relative to the registration of imperfect titles. [Emphases
Supplied]
In Estonilo,78 where the Court ruled that persons claiming the protection
of "private rights" in order to exclude their lands from military
reservations must show by clear and convincing evidence that the
properties in question had been acquired by a legal method of acquiring
public lands, the respondents therein failed to clearly prove that the lands
over which they lay a claim were alienable and disposable so that the
same belonged and continued to belong to the State and could not be
subject to the commerce of man or registration. Specifically, the Court
wrote:
Land that has not been acquired from the government, either by purchase
or by grant, belongs to the State as part of the public domain. For this
reason, imperfect titles to agricultural lands are subjected to rigorous
scrutiny before judicial confirmation is granted. In the same manner,
persons claiming the protection of "private rights" in order to exclude their
lands from military reservations must show by clear and convincing
evidence that the pieces of property in question have been acquired by a
legal method of acquiring public lands.
In granting respondents judicial confirmation of their imperfect title, the
trial and the appellate courts gave much weight to the tax declarations
presented by the former. However, while the tax declarations were issued
under the names of respondents predecessors-in-interest, the earliest
one presented was issued only in 1954.19 The Director, Lands
Management Bureau v. CA20 held thus:
"x x x. Tax receipts and tax declarations are not incontrovertible evidence
of ownership.1wphi1 They are mere indicia of [a] claim of ownership. In
Director of Lands vs. Santiago:
x x x [I]f it is true that the original owner and possessor, Generosa
Santiago, had been in possession since 1925, why were the subject lands
declared for taxation purposes for the first time only in 1968, and in the
names of Garcia and Obdin? For although tax receipts and declarations of
ownership for taxation purposes are not incontrovertible evidence of
ownership, they constitute at least proof that the holder had a claim of
title over the property."
In addition, the lower courts credited the alleged prior possession by
Calixto and Rosendo Bacas, from whom respondents predecessors had
purportedly bought the property. This alleged prior possession, though,
was totally devoid of any supporting evidence on record. Respondents
evidence hardly supported the conclusion that their predecessors-in-
interest had been in possession of the land since "time immemorial."
Moreover, as correctly observed by the Office of the Solicitor General, the
evidence on record merely established the transfer of the property from
Calixto Bacas to Nazaria Bombeo . The evidence did not show the nature
and the period of the alleged possession by Calixto and Rosendo Bacas. It
is important that applicants for judicial confirmation of imperfect titles
must present specific acts of ownership to substantiate their claims; they
cannot simply offer general statements that are mere conclusions of law
rather than factual evidence of possession.
It must be stressed that respondents, as applicants, have the burden of
proving that they have an imperfect title to Lot 4318. Even the absence of
opposition from the government does not relieve them of this burden.
Thus, it was erroneous for the trial and the appellate courts to hold that
the failure of the government to dislodge respondents, judicially or
extrajudicially, from the subject land since 1954 already amounted to a
title. [Emphases supplied]
The ruling reiterated the long standing rule in the case of Director Lands
Management Bureau v. Court of Appeals,79
x x x. The petitioner is not necessarily entitled to have the land registered
under the Torrens system simply because no one appears to oppose his
title and to oppose the registration of his land. He must show, even
though there is no opposition to the satisfaction of the court, that he is the
absolute owner, in fee simple. Courts are not justified in registering
property under the Torrens system, simply because there is no opposition
offered. Courts may, even in the absence of any opposition, deny the
registration of the land under the Torrens system, upon the ground that
the facts presented did not show that the petitioner is the owner, in fee
simple, of the land which he is attempting to have registered.
The Court is not unmindful of the principle of immutability of judgments
that nothing is more settled in law than that once a judgment attains
finality it thereby becomes immutable and unalterable.80 Such principle,
however, must yield to the basic rule that a decision which is null and void
for want of jurisdiction of the trial court is not a decision m contemplation
of law and can never become final and executory.81
Had the LRC given primary importance on the status of the land and not
merely relied on the testimonial evidence of the respondents without
other proof of the alienability of the land, the litigation would have already
been ended and finally settled in accordance with law and jurisprudence a
long time ago.
WHEREFORE, the petition is GRANTED. The November 12, 2007 Decision
and the May 15, 2008 Resolution of the Court of Appeals in CA G.R. CV
No. 64142 are hereby REVERSED and SET ASIDE. Judgment is rendered
declaring the proceedings in the Land Registration Court as NULL and VOID
for lack of jurisdiction. Accordingly, Original Certificate of Title Nos. 0-358
and 0-669 issued by the Registry of Deeds of Cagayan de Oro City are
CANCELLED. Lot No. 4354 and Lot No. 4357 are ordered reverted to the
public domain.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-61969 July 25, 1984
AGUSTINA DE LA CRUZ, ET AL., petitioners,
vs.
LUCIA DE LA CRUZ, IGLESIA NI KRISTO (Church of Christ) and HONORABLE
COURT OF APPEALS, respondents.
Prospero A. Crescini for petitioners.
Juan T. David for respondent Lucia de la Cruz.
San Juan, Africa, Gonzales & Agustin for respondent Iglesia Ni Kristo.
GUERRE RO, J.:
The land subject of the instant petition for review on certiorari is known as
Lot 671 of the Piedad Estate, GLRO Record No. 5975 with an area of
184,268 square meters more or less, situated in Barrio Culiat Quezon City,
adjacent to the main church of respondent Iglesia Ni Kristo. The Piedad
Estate consists of a vast tract of land originally registered on March 12,
1912 under Original Certificate of Title No. 614 of the Register of Deeds of
the Province of Rizal in the name of the Philippine Government.
The Piedad Estate was one of the so-called friar lands which were
purchased by the government of the Phil.ippines pursuant to the
provisions of the Friar Lands Act, Public Act No. 1120 which was enacted
on April 26, 1904. By way of historical background of the property in
litigation, We quote hereunder the Preamble to the Act as follows:
Whereas, pursuant to the provisions of sections sixty-three, sixty-four, and
sixty-five of an Act of the Congress of the United States, entitled "An Act
temporarily to provide for the administration of the affairs of civil
government in the Phil.ippine Islands, and for other purposes," approved
July first, nineteen hundred and two, the Government of the Phil.ippine
Islands, on the twenty-second day of December, nineteen hundred and
three, entered into contracts with the Phil.ippine Sugar Estates
Development Company, Limited, La Sociedad Agricola de Ultramar, the
British- Manila Estate Company, Ltd. and the Recoleto Order of the
Phil.ippine Islands, for the purchase of about one hundred and sixty-four
thousand one hundred and twenty-seven hectares of land, situated in the
Provinces of Laguna, Bulacan, Cavite, Bataan, Cebu, Rizal Isabela, and
Mindoro, for the aggregate sum of seven million two hundred and thirty-
nine thousand seven hundred and eighty-four dollars and sixty-six cents
money of the United States; and
Whereas in said contracts of purchase it was provided, among other
things, that the Government of the Phil.ippine Islands should have a
period of six months from the date of said contracts within which to
examine the titles to said lands and also within which to survey the same
in order to ascertain whether there is the quantity of land specified in said
contracts, and in the event there is not, that a proportionate reduction
shall be made in the amounts agreed to be paid therefor; and it was
further provided in said contracts that the said parties, so agreeing to sell
obligated themselves to convey good and indefeasible titles to said lands
by proper conveyances; and
Whereas by said section sixty-five of said Act of Congress the Government
of the Phil.ippine Islands is empowered to lease the said lands after their
acquisition for a period not ex three years, and to sell the same on such
terms and conditions as it may prescribe, subject to the stations and
conditions contained in said Act of Congress: Provided. That all deferred
payments and the. interest thereon shall be payable in the money
prescribed for the payment of principal and interest of the bonds
authorized to be issued and sold for the purpose of realizing the money
necessary to Pay for said lands by section sixty-four of said Act of
Congress, and that said deferred Payments shall bear interest at the rate
borne by said bonds: And provided further. That all moneys are Or
received from the sales or other disposition of said lands, or by reason
thereof, shall constitute a trust fund for the payment of principal and
interest of paid bonds, and also constitute a sinking fund for the payment
of said bonds at their maturity: And provided further. That actual settlers
and occupants at the time said lands are acquired by the Government shall
have the preference over all others to lease, purchase, or acquire their
holdings within such reasonable time as may be determined by said
Government; and
Whereas the said lands are not "Public lands" in the sense in which those
words are used in the Public Land Act, Numbered Nine hundred and
twenty-six, and cannot be acquired or leased under the provisions thereof,
and it is necessary to Provide proper agencies for carrying out the terms of
said contracts of Purchase and the requirements of said Act of Congress
with reference to the leasing and selling of said lands and the creation of a
sinking fund to secure the payment of the bonds so issued.
As specifically stated above, the said lands are not "public lands" in the
sense in which those words are used in the Public Land Act Numbered
Nine hundred and twenty- six and cannot be acquired or leased under the
provisions thereof. In the case of Jacinto vs. Director of Lands (1926) 49
Phil. 853, the Supreme Court held that the acused friar lands, to which the
government of the Phil.ippines holds title, are not public lands but private
or patrimonial property of the government.
Under Section 7 of PA 1120, upon the vesting of the titles to said lands in
the government of the Phil.ippine Islands by properties of conveyance, the
Chief of the Bureau of Public Lands was directed to ascertain the names
and residences of the actual bona fide settlers and occupants then in
posession of said lands or of any portion of them, together with the extent
of their several holdings and the character and value thereof. He was also
directed to ascertain from said occupants whether they desire to purchase
their holdings upon the terms prescribed in the succeeding Section:
Provided. That the failure on the part of the occupants to state their desire
to lease or purchase said lands shall not be understood to mean that they
do not desire to acquire them. In case of such failure it shall be the duty of
the Director of Lands, or his agents, to enjoin such occupants to state their
desire in writing within the period of eight days from the date of such
injunction, and their failure to do so shall be understood to mean that
such occupants do not desire either to lease or to purchase said lands. The
Director of Lands shall neither lease nor sell the said lands to any other
person until the foregoing requirements shall have been complied lease or
of sale hereafter explied with, and any contracts executed without them
shall be null and void.
In case any occupant in possession does not desire to purchase his
holding, but does desire to lease the same, then it n be the duty of the
Chief of the Bureau of Public Lands, after vesting of title, to see that such
occupant attorns in due form to the Government and enters into a lease
with the usual covenants and agrees to pay a reasonable rental for the use
and occupation of his holding. Such rental shall be fixed by the Chief of the
Bureau of Public Lands, but in no instance shall any lease be made for a
longer term than three years. (Sec. 8, PA 1120). In Zarraga vs. Sleeper,
(1913), 25 Phil.. 650, the Supreme Court held that although occupants and
lessees of portions of friar lands were authorized to continue in possession
for a reasonable time and then to lease or purchase the property
occupied, they were given no right, by this Act, to continue leasing the
land after expiration of such time and of existing leases.
It is pertinent and material in the resolution of the case at bar to state that
under Sec. 11 of PA 1120, should any person who is the actual and bona
fide settler upon an occupant of any portion of said lands at the time the
same is conveyed to the government of the Phil.ippines desire to purchase
the land so occupied by him, he shall be entitled to do so at the actual cost
thereof to the government, and shall be granted 15 years from the date of
the purchase in which to pay for the same in equal annual installments,
should he so desire, paying interest at the rate of 4% per annum on all
deferred payments. The actual value of the parcel of land held by which
settler and occupant is ascertained by the Chief of the Bureau of Public
Lands, taking into consideration the location and quality of each holding of
land, and any other circumstance giving it value. The basis of valuation is
such that the aggregate of the values of all the holdings included in each
particular tract shall be equal to the cost to the government of the entire
tract, including the cost of surveys, administration, and interest upon the
purchase money to the time of sale. When the cost thereof shall have
been thus ascertained, the Chief of the Bureau of Public Lands shall give
the said settler and occupant a certificate which shall set forth in detail
that the government has agreed to sell to such settler and occupant the
amount of land so held by him, at the price so fixed, and that upon the
payment of the final installment together with all accrued interest the
Government will convey to such settler and occupant the land so held by
him by proper instrument of conveyance, which shall be issued and
become effective in the manner provided in Sec. 122 of the Land
Registration Act.
Under Sec. 15 of PA 1120, the government reserves the title to each and
every parcel of land sold under the provisions of the Act until the full
payment of all installments of purchase money and interest by the
purchaser has been made, and any sale or encumbrance made by him
shall be invalid as against the government of the Phil.ippine Islands and
shall be in all respects subordinate to its prior claim. The rights of
possession and purchase acquired by certificates of sale signed by
purchasers of friar lands, pending final payment and the issuance of title
shall be considered as personal property for the purposes of serving as
security for mortgages, and shall be considered as such in judicial
proceedings relative to such security.
In the event of death of a holder of a certificate prior to the execution of a
deed by the government to any purchaser, the interest of the holder of
the certificate shag descend and deed shall issue to the persons who
under the laws of the Philippine Islands would have taken had the title
been perfected before the death of the holder of the certificate, upon
proof of compliance with all the requirements of the certificate. In case
the holder of the certificate shall have sold his interest in the land before
having complied with all the conditions thereof, the purchaser shall have
all the rights of the holder of the certificate, (Sec. 16, PA 1120).
As held in Lorenzo vs. Nicolas, No. L-4085, 30 July 1952, 91 Phil.. 686,
"from the provisions of sections 11, 12 and 16 of Act No. 1120, it is
apparent that the pervading legislative intent is to sell the friar lands
acquired by the Government to actual settlers and occupants of the same.
In case of death of a holder of a certificate, which is only an agreement to
sell, it is not the heirs but the widow who succeeds in the parcels of land
to be sold by the Government. Only do the heirs succeed in the rights of
the deceased holder of a certificate but no widow survives him." The
widow of a purchaser of Friar Estates land is entitled to have, patent
issued to her for the lands purchased upon proper showing she has
completed payment of the purchase price, the right to complete such a
purchase being analogous to the homestead laws. The widow's rights are
governed by the law in force at time of her husband's death, and are not
affected by her remarriage (Jocson vs. Soriano (1923), 45 Phil., 375).
Attempted legacies in violation of this section, which grants the widow of
the purchaser the ownership of lands purchased arid not transferred
during the purchaser's lifetime, were void. Arayata vs. Joya (1928), 51
Phil.. 654).
Later decisions of the Court have settled controversies involving the friar
lands from which We can resolve the conflicting rights and interests of the
parties in the present litigation, thus
One who acquires land under the Friar Lands Act (Act 1120), as well as his
successors in interest, may not claim successional rights to purchase by
reason of occupation from time immemorial, as this contravenes the
historical fact that friar lands were bought by the Government of the
Phil.ippine Islands. pursuant to an Act of Congress of the United States,
approved on 1 July 1902, not from individual persons but from certain
companies, a society and a religious order (12 PAL, 153-155).
Under the Friar Lands Act, only "actual settlers and occupants at the time
said lands are acquired by the Government" were given preference to
lease, purchase, or acquire their holdings, in disregard of the settlement
and occupation of persons before the government acquired the lands.
Where MB bought on installment a tract of Friar land on 1 July 1920, while
his wife AA was still living, to which a Sales Certificate stating the sale is
effective 1 July 1920, the date it was issued; and after AA died on 23
September 1923, MB continued paying for the lot on installments until
payment was completed I June 1931: it was held that MB acquired the
beneficial and equitable title to the land on 1 July 1920, before completion
of payment for the purchase price, the bare and naked title remaining in
the Government, the reservation of title in the Government, pursuant to
Section 15 of the Friar Lands Act (Act 1120), being merely for its
protection.
Comparing the first part of the original Section 16 (of the Friar Lands Act)
and its amendment, it is seen that while under the original provision the
interest of a deceased certificate holder passed to his widow (or widower),
it is not so under the amendment which provides that his interest shall
descend "to the persons who under the laws of the Phil.ippine Islands
would have taken had the title been perfected before the death of the
holder of the certificate, ..." and these persons are no other than his or her
heirs under the Civil Code of 1889.
Where MB executed 4 June 1931 a duly notarized deed of assignment of a
parcel of Friar land for P300.00 in favor of his son, AB and the deed of
conveyance by the Director of Lands was registered 28 September 1931
with the Cavite Register of Deeds, on which same date a Certificate of Title
was issued in the name of AB, who has been in possession of the lot since
1927 or 1928, whereas the action to set the assignment aside was filed
only in 1952, such action is barred by prescription, since the ten-year
period within which to have filed the same started to run from the date of
the issuance (on 28 September 1931) of the certificate of title.
(Balicudiong vs. Balicudiong, L-29603, June 7, 1971, 39 SCRA 386 per
Reyes, J.B.L., J.)
Under section 15 of Act 1120, otherwise known as the Friar Lands Act, title
to the land sold is reserved to the Government until the purchaser makes
full payment of all the required installments and the interests thereon.
This legal reservation refers 'to the bare, naked title. The equitable and
beneficial title really went to the purchaser the moment he paid the first
installment and was given a certificate of sale. The reservation of the title
in favor of the Government is made merely to protect the interest of the
Government so as to preclude or prevent the purchaser from encumbering
or disposing of the lot purchased before the payment in full of the
purchase price. Outside of this protection the Government retains no right
as owner. (Fabian vs. Fabian, L-20449, Jan. 29, 1968, 22 SCRA 231, Castro,
J.)
Now to the antecedent facts.
On August 14, 1975, petitioners filed Civil Case No. 20942, Court of First
Instance of Rizal, Quezon City Branch V, against respondents Lucia de la
Cruz and Iglesia Ni Kristo for recovery of ownership and possession of land
described in the complaint and praying for judgment in their favor as
plaintiffs below and against the defendants (respondents herein) "A.
Declaring the plaintiffs the legitimate owners pro indiviso of 122,845.32
square meters of land, part of Lot No. 671 of the Piedad Estate, Quezon
City, previously covered by TCT No. 168322 of the Registry of Deeds of
Quezon City; B. Ordering the defendant Lucia de la Cruz to convey to the
plaintiffs in the proportion fixed by the law of succession, 46,892 square
meters of land, a portion of the land covered by TCT No. 168322, still
remaining under her ownership; C. Ordering the defendant Iglesia ni Cristo
to convey to the plaintiffs in the same proportion a pro indiviso area of
75,953.32 square meters of land, now covered by TCT No. 209554 of the
Registry of Deeds of Quezon City; and further, damages in the amount of
P1,858,850.00, attorney's fees of P200,000.00 and pay moral, nominal and
exemplary damages in such sums as may be determined by the Honorable
Court."
The decision of the trial court clearly and succinctly summarizes the
complaint of petitioners as follows:
... that plaintiffs and defendants are the compulsory heirs of Policarpio de
la Cruz who left as his property a parcel of land situated in Quezon City,
known as Lot 671 of the Piedad Estate, L.R.C. Record No. 5975 and with an
area of 184,268 square meters, more or less; that plaintiffs, as
grandchildren and great grandchildren of Policarpio de la Cruz, own pro
indiviso two-thirds (2/3) of said property or, more specifically, 122,845.32
square meters thereof, one-third (1/3) going to the 10 children of Maximo
de la Cruz, share and share alike and one- third (11'3) going to the
surviving children and grandchildren of Filomeno de la Cruz, the children
participating per capita and the grandchildren participating per stripes that
silly the remaining one-third (1/3) of the property belongs to defendant
Lucia de la Cruz; that plaintiffs knew that their fathers had left certain
lands in co-ownership with their aunt who was administering the same;
that when their fathers died, plaintiffs similarly entrusted the care of the
properties due them Lucia de la Cruz; that Lucia de la Cruz had been giving
plaintiffs every now and then their shares of the produce and, from the
quantity thereof, they thought all along that the landholdings left by their
fathers did not amount to much; that upon information of someone close
to defendant Lucia dela Cruz, plaintiff was recently led to investigate their
inheritance from their fathers and they discovered that the property
subject of the complaint was registered in the name of defendant Lucia de
la Cruz in 1943 to the prejudice of their fathers; that in 1971, a
reconstituted title, TCT No. RT-38 of the Registry of Deeds of Quezon City,
was issued over the property in the name of Lucia de la Cruz alone upon p
on her instance: that upon discovery in December 1974, plaintiffs
immediately demanded from defendant Lucia de la Cruz their share but
the latter glibly talked them into waiting on the pretext that she would do
so later on ... that plaintiffs also came to learn that the ownership of the
property was the subject of a controversy in Civil Case No. Q-16125, Court
of First Instance of Rizal, Quezon City Branch XXXI, against the defendant
Lucia de la Cruz, Juana de los Reyes Basilisa T. Ramos and Maximino Agana
upon a complaint filed by Nieva Paz Eraa, et al , who held a title over
103,108 square meters of said land traceable to an invalidly reconstituted
title in the names of Dorotea and Eugenia de la Paz in whose names the
original certificate of title was issued in trust for Policarpio de la Cruz and
who already transferred the property to Lucia de la Cruz prior to the
reconstitution; that on March 21, 1975, plaintiffs, through their present
counsel, appeared in a hearing of that case and manifested their intention
to intervene; that before plaintiffs could intervene Civil Civil Case No. Q-
16125, the parties in said case presented a compromise agreement dated
July 17, 1975, whereby the parties admitted that the original owner of Lot
No. 671, Piedad Estate, was Policarpio de la Cruz; that accordingly
judgment was rendered approving the compromise agreement; that on
July 17, 1975, plaintiffs in Civil Case No. Q-16125 executed a deed of
assignment of rights over Lot 671-B with an area of 103,108 square meters
for P1250,000.00 in favor of defendant Lucia de la Cruz and the defendant
Igiesia ni Kristo; that also on July 17, 1975, defendant Lucia de la Cruz
executed a Deed of Absolute Sale of Segregated Portion of Registered
Land, referring to Lot No. 671-B, with an area of 103,108 square meters, in
favor of defendant Iglesia ni Kristo, for the total sum of P2,108,850.00;
that the only remaining area not disposed of by Lucia de la Cruz and still in
her name is a portion of her TCT No. 168322 with an area of 46,892 square
meters; that both documents have already been registered with the
Register of Deeds of Quezon City and, consequently, TCT No. 209554
dated July 19, 1975, had been issued in the name of defendant Igiesia ni
Kristo; that the sale to iglesa ni Kristo had been attended with fraud, bad
faith and deceit because Lucia de la Cruz well knew that she did not own
the entire property; that the two defendants connived with each other to
deprive plaintiffs of their just shares because the stated purchase price of
the sale is far below the current and fair market value of the property and
more so because Iglesia ni Kristo well knew of the pending Civil Case No.
Q-16125 because of the list pendens annotated in the corresponding title
and that on February 17, 1975, counsel for plaintiffs, then intended
intervenors in that case, had written the Branch Clerk of Court of Branch
XXXI of this Court wherein the case was pending inquiring about the status
thereof; that defendant Iglesia Ni Kristo should at the very least be
charged with constructive, if not actual, knowledge of the proceedings in
Civil Case No. Q-16125 and consequently, of the claim of the plaintiffs;
that the attendant haste in the purchase and sale immediately after the
submission of the compromise agreement and in the registration of the
sale shows the great desire of the defendants to jump the gun on the
intended intervention of the plaintiffs; that neither Maximo de la Cruz nor
Filomeno de la Cruz nor their children have inherited any piece of property
from Policarpio de la Cruz except the property in question; that 75,953.32
square meters should be reconveyed by defendant Iglesia ni Kristo to
plaintiffs; that plaintiffs engaged the services of their counsel for a fee of
P200,000.00; that plaintiffs suffered mental anguish, serious anxiety,
wounded feelings, moral shock and similar injury, entitling them to moral
damages; that because the rights of the plaintiffs had been invaded by
defendants, the former are entitled to nominal damages; and, that by way
of example or correction for the public good and to serve as a deterrent,
plaintiffs should also be awarded exemplary damages (RA pp. 246- 25 1;
Brief for Petitioners, pp. 6-9).
Respondent Lucia de la Cruz answered the complaint and quoting the
decision of the trial court again, her answer is synthesized as follows:
In her answer filed on April 13, 1976, defendant Lucia de la Cruz denied
the material allegations of the complaint and alleged, by way of
affirmative defenses, that the property in question was derived by
Dorotea de la Cruz from the Government (of the Phil.ippine Islands) whose
title thereto is Original Certificate of Title No. 614 and, in turn, she
acquired it from Dorotea de la Cruz and later from Nieva Paz Eraa, et al.,
and that it is not part of the estate of Policarpio de la Cruz; that plaintiffs'
claim does not appear in the title; that the title to the property (OCT 614)
was first issued in 1912 and it had become indefeasible after a year from
issuance; that plaintiffs' claim is already barred by laches and the statute
of limitations because since 1941 she had been asserting ownership over
the land to the exclusion of all others, including the plaintiffs. Claiming
that plaintiffs' action is malicious and frivolous, she set up a counterclaim
for actual and moral damages in an amount to be established and
attorney's fees in the amount of P50,000.00. (RA p. 251; Brief for
Petitioners, pp. 9-10).
For respondent Iglesia ni Kristo, the trial court likewise condensed its
answer in the following wise and manner:
Defendant Igiesia ni Kristo in its answer filed on March 26, 1976 likewise
denied the material allegations of the complaint except the fact of
rendition of judgment on compromise agreement in Civil Case No. Q-
16125, the execution of plaintiffs therein of a deed of assignment of rights
over Lot 671-B with an area of 103,108 sq.m. in favor of Lucia de la Cruz
and Iglesia ni Kristo, and the execution of a Deed of Absolute Sale of
Segregated Portion of Registered Land (Lot 671-B) by Lucia de la Cruz in
favor of Iglesia ni Kristo for the total sum of P2,108,850.00. By way of
affirmative defenses, it alleges that it examined TCT No. 168322 in the
name of Lucia de la Cruz and, after satisfying itself that it was free from
any Hen or encumbrances or claims of other persons, bought the land
covered thereby; that the price thereof was the result of an honest-to-
goodness negotiation, freely arrived at by the parties; that plaintiffs' claim
is barred by res judicata, laches or prescription and, that plaintiffs have no
legal capacity to sue the defendant corporation sole because there is no
privity of contract between them. Alleging that plaintiffs' allegation of
fraud and deceit and imputation of bad faith and connivance had exposed
the defendant corporation sole to public ridicule and contempt, it set up a
counterclaim of P1,000,000.00 representing damages to its good name
and reputation and P250,000.00 for attorney's fees. In support of its cross-
claim against defendant Lucia de la Cruz, the defendant Iglesia ni Kristo
further alleged that it paid Lucia de la Cruz the amount of P2,108,850.00
and incurred expenses for the registration of the deed of sale; that Lucia
de la Cruz agreed to answer for the eviction of defendant corporation sole
from the land bought by it; and, that Lucia de la Cruz had also already
executed a deed of sale of the remaining area covered by TCT 168322 in
compliance with an agreement that all the land covered thereby be sold to
it but the remaining portion would first be rid of squatters and occupants
before payment. It prays that cross-defendant Lucia de la Cruz be ordered
to pay whatever it may be ordered to pay plaintiffs in this case, and in the
event the sale is declared invalid, to reimburse it of all the expenses it
incurred by reason thereof. (RA pp. 252253; Brief for Petitioners, pp. 10-
11).
After trial, the defunct Court of First Instance, now Regional Trial Court,
rendered judgment on October 24, 1977 in favor of the petitioners,
annulling the title of the Iglesia ni Kristo which was found to be a
purchaser in bad faith and awarding to the petitioners their aliquot
inheritance shares in the estate of Policarpio de la Cruz equivalent to
about 12 hectares of land. (RA pp. 244-302). The findings of fact made by
the trial court state:
From the evidence, testimonial and documentary, the following facts
appear indubitably established:
The land in question is known as Lot No. 671 of the Piedad Estate, L.R.C.
Record No. 5975 and contains an area of 184,268 square meters, more or
less. Although the entire Piedad Estate which covered a wide tract of land
in Quezon City was titled in the name of the Government of the
Phil.ippines for as early as before 1920 under Original Certificate of Title
No. 614, portions thereof were actually under claim of ownership by
various persons who were in possession thereof Lot 671 was owned and
possessed by the late Policarpio de la Cruz. Upon his death in 1920, the
property passed to his three children Maximo and Filomeno, the fathers of
grandfathers of the plaintiffs, and Lucia, one of the defendants. Plaintiffs
Agustina de la Cruz and Cesaria de la Cruz, as do many of the plaintiffs,
were born in the land in question. Defendant Lucia de la Cruz was
widowed early and the brothers Maximo and Filomeno, feeling
compassion for their only sister, left the administration and management
of the only property left them by their father to her. Lucia gave to her
brothers during their lifetime parts of the produce of the land consisting of
rice and money forming part of the proceeds of other crops raised
therefrom. Upon the return of the American armed forces during the war
of liberation, the land in question was used as a depot by them and the De
la Cruzes, Maximo, Filomeno and Lucia including their children were asked
to vacate the area. Most of them transferred their small houses to the
property of the Kalaws. Maximo added on January 15, 1968 and Filomeno
died on March 14, 1971. Before their death, they called their respective
children together and informed them that they (the children) will inherit a
piece of land in Barrio Culiat Quezon City. Both told their children that
they inherited the property from their father Policarpio but that the same
was being administered and managed by their (the children's) aunt Lucia,
the defendant herein. Lucia continued to give the plaintiffs rice and money
as their share. However, due to the meagerness of the quantity of rice
which was a ganta or two and the amount of money which was only
P10.00 given them now and then by their aunt Lucia, plaintiffs never
realized the extent and value of the property left them as inheritance.
Practically all the plaintiffs were and still are wallowing in the quagmire of
poverty. Never having gone beyond the first or second grade, they are
almost illiterate and belong 'to the laboring class, Eleuterio de la Cruz, a
son of the late Filomeno de la Cruz, and a mere employee still resides in
Barrio Culiat of Quezon City. Now and then, he visits their aunt to ask
almost in a begging manner for a share in the fruits of the land left by the
father which come in trikles of a ganta or two of rice or a sum of P10.00.
During one of these visits, Eleuterio asked Lucia as to when they will
partition the land left by their father and Lucia answered "after a month's
time." He once asked their aunt about the area of the land they are going
to partition and she answered "18 hectares".
Cesaria de but Cruz who is now married to Marcelo Baluyot resides in
Abucay, Bataan where she works as a fish vendor. Just like her brothers
and sisters, she too was informed by their late father Filomeno that they
will inherit a piece of land which came from their grandfather Policarpio
de la Cruz. Their father also told her that the land was being administered
by their aunt Lucia and that the same should be left with her for
administration for the meantime as she Lucia was already a widow and
had many children. On the first anniversary of their father's death, her
brothers and sisters gathered at the house of their brother Eleuterio in
Barrio Culiat Quezon City, for prayers and a little "salo-salo". Their aunt
Lucia was also there. While in the kitchen cooking, her aunt Lucia went
near her. She then asked her aunt for the partition of the land left them by
their father. At this, her aunt Lucia got mad, and thrusting into her hand a
fifty-peso bill, said: 'There is your share. You have no more share in the
land. I will just feed your share to the dogs and pigs.
Agustina de la Cruz and Pablo de la Cruz, two of the children of the late
Maximo de la Cruz, reside in Balayan, Batangas. Agustina is a farmer, while
Pablo is a fisherman. Before their father's death on January 15, 1968,
Agustina like her cousins received now and then some shares from the
proceeds of the land which their father told them they inherited. It was
given by their aunt Lucia who was administering the property 3 After their
father's death, Lucia stopped giving Agustina her share because she (Lucia)
resented her accusation of them having poisoned her father, who three
weeks after Lucia and her son Regino had fetched him from Batangas, died
in Barangka, Marikina, Rizal in the house of Regino At the first anniversary
of their father's death celebrated in Balayan, Batangas, their aunt Lucia
was present. Lucia informed the brothers and sisters that each will receive
a share of P5,000.00 from the inheritance left by their father. When they
asked their aunt as to when they will get their share, defendant Lucia
answered that it will be as soon as everything is fixed and told them not to
be impatient. They waited but Lucia never called for them. One time,
Pablo went to the house of his cousin Pepe at Culiat Quezon City, where
their aunt Lucia also resides. However, the wife of his cousin Pepe
informed him that their aunt Lucia has no time to talk to him. Fe then
came to the conclusion that heir aunt Lucia does not anymore want to give
their share of P5,000.00 each, Pablo then consulted and sought the help
and advice of Sixto Calalo a sales supervisor residing in Manila but whose
area covers that of Balayan Batangas. That was in 1974. (RA pp. 254258;
Brief for Petitioners, pp. 12-15).
Respondents Lucia de la Cruz and Iglesia ni Kristo filed separate appeals
before the defunct Court of Appeals, now Intermediate Appellate Court,
docketed under C.A.-G.R. No. 63244-R.
On February 26, 1982, the Court of Appeals promulgated its decision
reversing the judgment of the trial court, including its findings of fact and
dismissed petitioner's complaint on the ground that legally speaking,
Policarpio de la Cruz never owned the property and therefore, the
testimonial evidence of the petitioners could not be believed and
sustained; that consequently, no co-ownership existed; that, even if there
was, no trust existed; that laches and prescription bar petitioners' claim of
ownership; and that the Igiesia ni Kristo was an innocent purchaser in
good faith.
According to the Court of Appeals, the undisputed facts are, and We
quote:
The undisputed facts indicate that the parcel of land in question is Lot No.
671 of the Piedad Estete GLRO Rec. No. 5975, with an area of 184,268
square meters, more or less, situated in Barrio Culiat Quezon City; that the
totality of the Piedad Estate consists of a vast tract of land, registered on
March 12, 1912, in the name of the Phil.ippine Government, under
Original Certificate of Title (OCT) No. 614 of the Register of Deeds of the
Province of Rizal; that when the Piedad Estate was subdivided (with lot no.
671) as one of the resulting parcels) whoever was in possession of a
particular lot was given priority and/or preference in the acquisition
thereof provided that the price and the cost of titling would be paid; that
upon such payment, the government would issue the corresponding
certificate of title; that Policarpio de la Cruz and his wife Luciana Rafael
were originally in possession of the land; that they had three children,
namely:
(1) Maximo dela Cruz married to Felisa Yabut
(2) Filomeno de la Cruz (married to Narcisa Santiago); and
(3) defendant-appellant Lucia de la Cruz (a widow);
that the plaintiffs-appellees herein are the descendants of the two sons
(Maximo and Filomeno) of Policarpio; that on April 25, 1940, Lot no. 671
was segregated from the totality of the Piedad Estate, covered by OCT No.
614 and a separate title was issued in the name of
"Eugenia de la Paz, soltera" and "Dorotea de la Cruz, viuda"
(this was Transfer Certificate of Title (TCT) No. 40355 of the Register of
Deeds for the Province of Rizal); that on November 29, 1941, a deed of
sale over Lot No. 671 was executed by Eugenia de la Paz and Dorotea de la
Cruz (the registered owners) in favor of defendant-appellant Lucia de la
Cruz; that said deed of sale was registered with the office of the Register
of Deeds on July 17, 1943 and the corresponding certificate of title was
issued to Lucia de la Cruz; that in 1971, Lucia de la Cruz obtained from the
land registration court a reconstituted title (TCT No. RT-59 over Lot No.
671), the transfer certificate of title previously issued to her in 1943 having
been lost; that subsequently, Lot No. 671 (this time, already covered by
TCT No. RT 58) was subdivided into three (3) lots, each of which was issued
a separate title, as follows:
(a) Lot No. 671-A containing an area of 30,000 square meters and
covered by TCT No. 168320;
(b) Lot No. 671-B, containing an area of 4,268 square meters and
covered by TCT No. 168321; and
(c) Lot No. 671-C, containing an area of 150,000 square meters and
covered by TCT No. 168322';
that meanwhile TCT No. 40355 (already previously issued to and in the
names of Eugenia de la Paz and Dorotea de la Cruz) continued to exist;
that when the title was transferred from the Rizal Registry to the Quezon
City Registry, from the latter Registry assigned to this TCT a new number,
RT-52; that this same lot (No. 671) was later subdivided into two lots, each
with a title:
(a) Lot No.671-A (TCT No. 16212)
(b) Lot No.671-B (TCT No. 16213)
both in the names of Eugenia de la Paz and Dorotea de la Cruz; that the
second lot (lot No. 671-B, with an area of 103,108 square meters) was sold
on December 17,1952 to one Narcisa Vda. de Leon (to whom TCT No. 2009
was later issued); that on May 6,1964, Narcisa Vda. de Leon transferred
the same lot 671-B to Nieves Paz Eraa (who was later issued in her own
name TCT No. 79971).
The undisputed facts further show that in 1971, Nieves Paz Eraa filed
before the Court of First Instance of Quezon City Civil Case No. Q-16125
for "quieting of title" against Lucia de la Cruz, et al., praying that TCT No.
RT-58, (the reconstituted title of Lucia de la Cruz), as well as all titles
derived therefrom, be declared null and void; that the case ended with the
parties submitting a compromise agreement, with Lucia de la Cruz, among
other things, paying plaintiff Eraa the amount of P250,000.00 to cover
the acquisitive cost of the 103,108 square meters of land included in the
certificate of title of defendant Lucia de la Cruz; that on July 17, 1975,
Lucia de la Cruz sold a portion of Lot No. 671-C (one of the three portions
to which the lot included in RT-58 had been subdivided, and which portion
was covered by TCT No. 168322), consisting of 103,108 square meters to
defendant-appellant Iglesia Ni Cristo, for the amount of P2,108,850.00;
that this sale was later registered in the Registry of Deeds of Quezon City,
with a new title, TCT No. 209554 being issued in the name of the Iglesia Ni
Cristo; that another deed of absolute sale was executed for the re g 84,356
square meters in favor also of the Iglesia and said sale was annotated on
TCT No. 168322. In view of said sales and the fact that registration of the
involved parcels is now in the name (separately) of Lucia de la Cruz and
the Iglesia Ni Cristo, the present action for reconveyance with damages
was instituted. (CA Decision, pp. 6-8).
In resolving the case, the Court of Appeals ruled that:
After a study of the case We have come to the conclusion that the facts
mentioned by the appellants Lucia de la Cruz and the Iglesia ni Cristo are
the true facts, accordingly, We adopt the same as Our own. We likewise
believe that there is substantial solidity in their legal conclusions.
The assigned errors deal with co-ownership, trust, prescription, laches,
and bad faith. We plan to discuss them successively.
Anent the alleged co- ownership of the lot among the heirs (or
descendants) of Policarpio de la Cruz, We say that definitely there was
none. Indeed it was impossible, factually and legally, for Policarpio to be
the owner for the entire Piedad Estate (of which lot no. 671 was then a
part) had been since March 12, 1912 registered in the name of the
Phil.ippine Government. How then could anyone hold legitimate title
adverse to that of the State? It is true that on certain occasions, Lucia
referred to the ownership of the lot by her parents, but it is evident (from
the State's ownership of the same) that Lucia must have meant
"possession" as contra distinguished from "co-ownership". Lucia cannot be
regarded in estoppel for estoppel can only apply to one with capacity
(such) as one who is given authority to make a pronouncement). One who
because of sheer ignorance does not know what she is talking about can
never be in estoppel, particularly when a legal conclusion is involved. And
while it is true that the two brothers lacked rudimentary education
(alluded to by the trial court in its attempt to excuse their ostensible
negligence in delaying their legal claims to the lot involved) it is also true
that Lucia likewise was sadly wanting insofar as education was concerned.
And precisely because there never was a co-ownership, there never also
was a trust, whether express or implied. How could the brothers entrust to
Lucia something they never owned (whether by themselves, or together
with Lucia)? The testimonies of certain of the appellees to the effect that
Lucia had from time to time doled out to them their shares in the produce
of the "co-ownership" and had in fact proprosed them their distributive
shares in the form of P5,000.00 each are rather difficult to believe. As has
already been said, there were no shares or produce to be distributed,
there being neither a co-ownership or a trust. The testimonies in open
court of plaintiffs Cesaria de la Cruz and Eleuterio de la Cruz that their
fathers had told them they were going to inherit property from
grandfather Policarpio are pure hearsay and consequently inadmissible in
evidence (see tsn, p. 11, Sept. 9, 1976; tsn, pp. 5-10, Aug. 28, 1976). Be it
noted that these witnesses never knew Policarpio, who had died way back
in 1920. Then again there is no evidence whatsoever on how Policarpio
ever acquired ownership over the land. No document of any kind was
presented, no testimony at an that Policarpio had ever purchased or
applied with the Government (the registered owner of the Piedad Estate)
for the purchase of Lot No. 671. Truth to ten, even mere tax declarations
or receipts of tax payments in the name of Policarpio were not presented.
How then can one sincerely and logically conclude that Lot No. 671 was
owned by Policarpio and inherited by his three children on his death in
1920 when in fact such Lot No. 671 had not even been segregated as yet
from the Piedad Estate?
Additionally We take note of the fact that plaintiff Florentino de la Cruz
admitted that he had once been the overseer of one Narcisa Vda. de Leon
over the very same parcel of land now in dispute. If indeed he, together
with his relatives, regarded the property as theirs, why did he allow
himself to become a mere overseer? Since his relatives (most of the
plaintiffs) resided nearby Culiat Quezon City), and knew that Florentino
was a mere overseer, it is significant that said relatives (plaintiffs) did not
question Narcisa Vda. de Leon's claim of ownership over a large portion of
the land subject matter of the instant suit. If they were positive of their
right to the parcel (as their inheritance from their grandfather Policarpio)
why did they not even press for an opportunity to occupy on the vast tract
island several square meter upon which they could erect their respective
houses? From all these it is evident that together with Lucia, they had
always believed that their grandfather's 'ownership' was actually a case of
mere possession'. It is evident their eyes opened wide only when they
heard of the negotiations leading to and the eventual sale of the lot by
Lucia to her co-appellant, the lglesia ni Cristo, the transaction involving as
it did millions of pesos. Again let it be observed that the did not concern
themselves with transactions involving other parts of the estate (such as
the sale of lot no. 611-A to Juana de los Reyes, Basilisa T. Ramos and
Maximo A. Argana)
Appellees' assertion that they had been receiving certain distributive
shares from Lucia defies belief. They have not shown who actually
tenanted the property or were responsible for the products thereof. They
have failed to point out the extent to the land under actual cultivation, the
value of the harvest, the sharing agreed upon, if any Their claim that from
time to time they had received a ganta or two of rice plus ten pesos
(P10.00) as their distributive co-owners' shares bogs the imagination.
Assuming that said amounts had actually been given them, it is easy to
believe they were mere doleouts from a better-situated relative to less
fortunate ones, perhaps a token of sympathy and assistance to needy kins
rather than an acknowledgment of their right to share in the property as
co-owners.
As already intimated, since there never was any co-ownership, there also
never existed a trust (whether express or implied) on the property.
Assuming without admitting that Lucia and her two brothers co-owned Lot
No. 671, what would be the effect of having the same registered in Lucia's
name alone on July 17, 1943 (See Entry no. 258, p. 7, Vol. 7 of the Primary
Entry Book of the Registry of Property)? We say that no express trust was
created, for an express trust concerning an immovable or any interest
therein cannot be proved by parol evidence. Nor did an implied resulting
trust arise (for there never was any intent to create a trust or to grant legal
title to Lucia, at most she was given mere administration). What could
have taken place was an implied constructive trust (one that is created by
law when property is acquired by mistake or fraud, the objective of the
law being to prevent unjust enrichment). It is now firmly entrenched in
Our jurisprudence that an implied constructive trust prescribes in ten (10)
years (Bacay et al. v. Court of Appeals, et al., L- 37504, Dec. 18, 1974, 61
SCRA 369; Ramos v. Ramos, No. L-198412, Dec. 3, 1972; Nacalaban v. CA,
80 SCRA 428) counted from the registration of the adverse title.
The registration of an instrument in the Office of the Register of Deeds
constitutes constructive notice to the whole world and therefore discovery
of the fraud is deemed to have taken place at the time of registration
(Carantes v. Court of Appeals, 76 SCRA 514)
xxx xxx xxx
The issuance of Transfer Certificate of Title No. 7501 in 1931 to Mariano
Duque commenced the effective assertion of adverse title for the purpose
of the statute oil limitations (Duque v. Domingo, No. L- 32762, 80 SCRA
695, 664).
That the registration in Lucia's name was clearly adverse to her brothers
and the latter's descendants is evident from Our discussion of Lucia's
CONTINUED NON-RECOGNITION of her relatives' shares in the lot qqqo in
the proceeds/produce thereof. Hence the trial court was in complete error
in saying there was a continuing and subsisting trust.
It is obvious from the foregoing that if at all an implied constructive trust
existed previously, prescription has long barred the appellees' recovery of
their alleged shares, This must have been why neither brother nor their
relatives caused the annotation of an adverse claim on Lucia's property.
And even assuming in gratia argumenti that prescription has not yet set in,
appellees are most certainly guilty of laches land laches can apply in the
two kinds of implied trusts, that is both the resulting trust and the
constructive trust) (Ramos v. Ramos, 61 SCRA 300). There is no denying
the fact that in the present case, the appellees delayed too long in the
assertion of their alleged rights. The property was registered in Lucia's
name on July 17, 1943 and it was only on March 21, 1975 when appellees
appeared in a hearing of Civil Case No. Q-16125, CFI, Quezon City Eraa et
al. v. dela Cruz, et al.) and manifested an intent to intervene therein, and it
was only on August 14, 1975 that they filed the instant case (more than 32
years later) asserting their claims over Lot 671. Their claim can thus hardly
evoke any judicial compassion. Vigilantibus it non dormientibus jure
subveniunt. If eternal vigilance is the price of liberty, one cannot sleep on
one's right for more than thirty 130) years and still expect it to be
preserved in its pristine purity.
Even if We were to hold Lucia still liable and that neither prescription or
laches would enable her to escape from the appellees' demands, the fact
is that the Iglesia ni Cristo is an innocent purchaser for value, and should
not therefore be prejudiced. Good faith is always presumed, and upon him
who alleges bad faith on the part of a possessor rests the burden of proof.
At the time the Iglesia purchased the property from Lucia, the same was
registered under the Torrens System in her name, with the title showing
no adverse claims, liens burdens or encumbrances. One who buys from
the registered owner
"is not bound to go behind the certificate and inquire into transactions the
existence of which is not there intimidated. ... he is only charged with the
notice of the burdens on the property which are noted on the face of the
register or on the certificate of title."
"If the rule were otherwise, the efficacy and conclusiveness of the
certificate of title which the Torrens System seeks to ensure would entirely
be futile and nugatory."
The assertion of the trial court that the Iglesia was a buyer in bad faith
because it had "constructive" if not actual knowledge of the claim of the
plaintiffs' is not borne by the facts because there is nothing in the records
of this case to indicate that the various claimants referred to by Judge
Herminio Mariano in his court testimony (as witness for the Iglesia) are the
very plaintiffs-appellees in this case. There were thirteen occupants of the
property titled in Eraa's name (five of whom were her overseers, the
other eight being squatters). Be it remembered that the witness was not
cross-examined on this matter, evidently because everybody knew that
when witness referred to "claimants" he was not referring to the plaintiffs-
appellees (See tsn, pp. 7-9, 18-19, 63, Feb. 16, 1977). The trial court
likewise faulted the Iglesia for having purchased the property at only
P25.00 per square meter when allegedly in 1975 the ongoing price in the
vicinity was P100.00. Again the latter price is not borne out by the facts.
Besides, the total area involved was so big that only very few could have
been in a position to buy even if they had been interested. The Iglesia
cannot also be blamed for registering the same the same day it was
effected. This is a normal prerogative given to every purchaser.
Finally, whether the Iglesia was in good faith or in bad faith is really of no
significance, for after all, the appellees as already extensively dismissed
are not entitled to any proprietary interest in the lot.
PREMISES CONSIDERED, the applied decision is hereby SET ASIDE and
REVERSED, and a new one is hereby rendered, dismissing the complaint,
with costs against the plaintiffs-appellees.
SO ORDERED.
Petitioners' motion for reconsideration having been filed March 27, 1982
and denied for lack of merit in the Court of Appeals' resolution of
September 7, 1982, petitioners now come to Us in the instant petition for
review, praying that the decision of the Court of Appeals as well as the
resolution denying reconsideration be reversed and set aside, and that a
new decision be promulgated, reinstating and affirming the judgment of
the Court of First Instance of Rizal, Quezon City.
The petition for review before Us sets forth the following assignments of
error:
I. The Court of Appeals grievously erred in not declaring that, on
their face, the reconstituted titles of both respondent Lucia de la Cruz and
her alleged predecessors-in-interest, Dorotea de la Cruz and Eugenia de la
Paz, are absolutely null and void and without legal force and effect.
II. The Court of Appeals grievously erred in holding that
respondent Iglesia ni Kristo was an innocent purchaser for value and in
good faith under the established circumstances, particularly in the face of
two different titles of two different owners over the same property; and in
not holding that, in any event, respondent Iglesia ni Kristo purchased
nothing.
III. The Court of Appeals grievously erred (A) in not recognizing the
legal ownership of Policarpio de la Cruz expressly recognized by the
government and judicially admitted by respondent Lucia de la Cruz binding
on her successor-in-interest, respondent Iglesia ni Kristo; and (B) in not
upholding the existence of a co- ownership between the petitioners and
respondent Lucia de la Cruz.
IV. The Court of Appeals grievously erred in holding that
petitioners' case is barred by both prescription and laches.
V. The Court of Appeals grievously erred in not affirming the
judgment of the Court of First Instance in toto, including its award for
moral and exemplary damages as well as attorney's fees.
The principal issue in controversy is the question of ownership of Lot 671,
admittedly an original part and parcel of the Piedad Estate. For its
resolution, the basic and fundamental precept to be followed, in Our view,
is the rule and doctrine laid down by the Supreme Court in Jacinto vs.
Director of Lands (1926), 49 Phil. 853 that the so-called friar lands, to
which the Government of the Phil.ippines holds title, are not public lands
but private or patrimonial property of the government. The Piedad Estate
was among the friar lands which the government of the Phil.ippines
purchased from the Phil.ippine Sugar Estates Development Company,
Limited, La Sociedad Agricola de Ultramar, the British- Manila Estate
Company, Limited, and the Recoleto Order Of the Phil.ippine Islands for
the sum of $7,239,784.66 on December 23, 1903, as indicated in the
Preamble to the Friar Lands Act, Public Act No. 1120 enacted on April 26,
1904, herein before quoted in this decision. These properties consisted of
about 164,127 hectares of land situated in the provinces of Laguna,
Bulacan, Cavite, Bataan, Cebu, Rizal, Isabela and Mindoro. These lands are
not public lands in the sense in which these words are used in the Public
Lands Act, numbered nine hundred and twenty six and cannot be acquired
or leased under the provisions thereof. (See last paragraph, Preamble to
PA 1120).
And prescinding from this ruling or doctrine in the Jacinto case, the
Supreme Court in the case of Balicudiong vs. Balicudiong, 39 SCRA 386,
held that one who acquires land under the Friar Lands Act (Act 1120) as
well as his successor- in-interest, may not claim successional rights to
purchase by reason of occupation from time immemorial; that under the
Friar Lands Act, only "actual settlers and occupants at the time said lands
are acquired by the government" were given preference to lease,
purchase, or acquire their holdings, in disregard of the settlement and
occupation of persons before the government acquired the lands.
The ruling of the appellate court that definitely there was no co-ownership
of Lot 671 among the heirs (or descendants) of Policarpio de la Cruz
because it was impossible, factually and legally, for Policarpio to be the
owner, for the entire Piedad Estate (of which Lot No. 671 was then a part)
had been since March 12, 1912, registered in the name of the Phil.ippine
Government, is correct, and We affirm the same, considering the
provisions of the Friar Lands Act and the doctrine laid down by this Court
that said Friar lands are the private and patrimonial property of the
Phil.ippine Government. And there being no evidence as to how Policarpio
acquired ownership over the land, no document of any kind presented,
and no testimony or proof whatsoever that Policarpio had ever purchased
or applied with the government for the purchase of Lot No. 671, We reject
petitioners' repeated pretensions that Policarpio de la Cruz was the owner
of Lot 671. He may have been an actual settler or occupant in the land at
the time said lands were acquired by the government and was given the
preference to lease, purchase or acquire his holding, which preference,
however, is in disregard of the settlement and occupation of persons
before the government acquired the land but absent any showing, proof
or evidence that he applied to purchase or acquire the holding, Policarpio
de la Cruz acquired no title, right or interest whatsoever which he could
have transmitted by succession to his children and heirs
The admission by respondent Lucia de la Cruz that she inherited the
property from her father, Policarpio de la Cruz; that Policarpio's
possession from time immemorial was in concept of owner; the allegation
of the parties that the government has expressly recognized the right of
Policarpio to the land in litigation and that even the trial and appellate
courts' decisions assume such express recognition by the government to
Policarpio's claim to the property all these are unavailing and of no
effect in the face of the precedent setting doctrine of this Court that the
land is private and patrimonial property of the government and the
specific provision of the Friar Lands Act that the actual and bonafide
settler should he desire to purchase the land occupied by him shall pay to
the government the actual cost thereof, granting to him 15 years from the
date of the purchase in which to pay the same in equal annual
installments, should he so desire, paying interest at the rate of 4% per
annum on an deferred payments. When the cost thereof shall have been
ascertained which included the cost of surveys, administration and
interest upon the purchase money, the Chief of the Bureau of Public Lands
then gives the said settler and occupant a certificate setting forth in detail
that the government has agreed to sell such settler and occupant the
amount of land so held by him, at the price so fixed, and that upon the
payment of the final installment together with all accrued interest, the
government will convey to such settler and occupant the land so held by
him by proper instrument of conveyance which is then issued and become
effective in the manner provided in Section 122 of the Land Registration
Act.
We have searched the entire records of this case and there is absolutely
no showing, proof or evidence whatsoever, documentary or testimonial,
that Policarpio de la Cruz purchased or attempted to purchase, in cash or Hour and Minute
by installment, Lot 671 of the Piedad Estate. Petitioners' submission that
"the donical rights of petitioners over 2/3 of the property, as marked out 10:15 A.M.
by intestate succession, are still preserved" (Brief of Petitioners, p. 67) is
without merit. It is repugnant and inconsistent with the Jacinto doctrine, 3.
and there is no factual basis of compliance with the requirements of
Section 11, PA 1120. Nature of Contract

More than that, the Government of the Philippines is not a party to this Sale
proceedings and it cannot be bound by any act, allegation, declaration, or
admission by either or both parties relating to the disposition and 4.
ownership of the private and patrimonial property of the government such
as the Friar land herein involved. Even the assumption of both courts, the Executed by
trial and appellate court, that the government has expressly recognized
Policarpio's claim to the property in question, is erroneous. Doroteo (sic)

Now, to the other issues:

1. Petitioners' contention on that a trust was created over the

land in their favor as beneficiaries when Lucia de la Cruz took over the
administration, possession and occupancy of the property, being the de la Cruz, et al
eldest daughter of Policarpio and has recognized the share of petitioners
by supposedly giving them P10.00 and a few gantas of rice produced from 5.
the land, is without merit. As the appellate court held, Policarpio never
had title to the land and legally speaking, he had no right to transmit to his In favor of Lucia
daughter Lucia, and his sons Maximo and Filomeno, much less to the
petitioners as the successors- ininterest of the deceased brothers Maximo Lucia de la Cruz
and Filomeno. We have affirmed the appellate court's ruling that
Policarpio had no title to the land, and the legal consequence thereof is 6.
that no trust relationship existed over the land in favor of the petitioners
as beneficiaries and the respondent Lucia de la Cruz as the supposed Date of Instrument
trustee. This is so because in the first place, the land is the private and
patrimonial property of the government and in the second place, it has not 11-29-41
been shown or established that the land had been sold by the government
to Policarpio de la Cruz. If he had the preference to purchase the land but 7.
he failed to exercise said preference or avail the benefits thereof, the
same must have been abandoned or had lapsed through inaction, neglect Relative to:
or omission up to the time of his death in 1920.

2. The mother title of Lot 671 is OCT No. 614 of the Register of
Deeds of the Province of Rizal registered on March 12, 1912 in the name
of the Phil.ippine Government. When Lot 671 was segregated, the original
title was partially cancelled and TCT 40355, T-201 was issued to Eugenia de Certificate of
la Paz and Dorotea de la Cruz by virtue of Entry No. 3241 which reads: ...

Vendido a Eugenia de la Paz y Dorotea de la Cruz el Lote No. 671 del

terreno en este certificado de titulo, mediante escritura ratificada al 27 de
Julio de 1931 en Manila, ante Vicente Garcia, Notario Publico; se cancels
parcialmente al presente certificado de titulo, en cuanto al lote Title No 40355
mencionado y se expide otro a nombre de las compradoras con el No.
40355, folio 5, Tomo T 201 del libro de transferencias; archivandose la 40355
escritura de que se ha hecho referencia en el Legajo T. No 40355.

TCT No. 40355, T-201 in the name of Eugenia Paz, soltera y Dorotea de la
Cruz, viuda" was cancelled by virtue of Entry No. 258, page 7, Vol. 7, Book
Primary Entry Book of the Registry of Deeds of Manila. Said entry reads as
follows: T-201

1. 8.

Number of Entry Papers presented by:

258

2.

Date of filing Name

Regino Cleofas

Month, day & year Address

July 17, 1943 Pasong Tamo,

Quezon City
9.
Contract Value
P2,500.00
(Exh. P)
10.
Remark
Caloocan
In due course of official business and duty, a new Transfer Certificate of
Title must have been issued to the new owner, Lucia de la Cruz. The entire
records do not disclose the number of the new Transfer Certificate of Title
(TCT) in the name of Lucia de la Cruz. When in 197 1, Lucia de la Cruz
petitioned for the reconstitution of her title in the Court of First Instance
of Manila, she alleged her title as No. NA The Court granted the petition
and the Register of Deeds of Manila issued to her TCT No. RT-58, thereby
cancelling TCT 40355, T-201.
Petitioners now claim that the reconstituted title TCT No. RT 58 is null and
void and without legal force and effect, petitioners' counsel having failed
after a "recent wide hunt" to locate the existence of TCT No. 40355; T-201
in the Registries of Deeds of Manila, Quezon City and Pasig and the
resulting "nil" investigation to locate Primary Entry No. 258.
But these are factual issues to which We may not properly address
Ourselves in the instant petition for certiorari. Moreover. the petition for
reconstitution was duly published and proper notices posted in
accordance with law, and after due hearing, was granted by the court in
the exercise of its authority and jurisdiction It must be assumed that
official duty was likewise duly and properly exercised in the premises.
Hence, We are reject petitioners' assignment of error that the Court of.
Appeals erred in not declaring that the reconstituted title of Lucia de la
Cruz is absolutely null and void.
3. With respect to the reconstituted title of Dorotea de la Cruz
which was granted by the Court of First Instance of Rizal on December 14,
1945 and TCT 5284 of the Register of Deeds of Quezon City was issued in
substitution and/or reconstitution of TCT 40355 of the Register of Deeds
of Rizal by virtue of the following inscription on TCT 40355, to wit:
Se expide otra copia para el duefto del presente certificado de titulo en
sustitucion del duplicado que se alega haberse quemado, en vud de una
orden del juzgado de Primera Instancia de Rizal dictada el 14 de
Decembre, 1945, en Expedients G.L.R.O. Rec. No. 5975, y en donde se
declare hulo y ninguna valor dicho duplicado quemado.
MAMERTO TINGKUNGKO
Register of Deeds Interino
it may be true that the order granting reconstitution was null and void by
reason of the failure to cause the necessary publication of the petition,
and, therefore, the reconstituted title was ineffective. More than that, it is
established that Dorotea de la Cruz and Eugenia de la Paz had previously
sold the land to Lucia de la Cruz executed on November 29, 1941 as
indicated in Entry No. 258 so that Dorotea de la Cruz was no longer the
owner at the time she petitioned for reconstitution. Nonetheless, it is not
disputed that Dorotea de la Cruz together with Eugenia de la Paz were the
registered owners of Lot 671 under TCT 40355, T-201 of the Register of
Deeds of Rizal, and they could legally transfer the same to Lucia de la Cruz
who thereafter sold in favor of respondent Iglesia ni Kristo.
4. Petitioners argue that "Now, therefore, with the undisputed
family tree and with the absence of any other property of Policarpio de la
Cruz aside from the property in litigation, the conclusion should be
ineluctable that co- ownership exist between the petitioners and
respondent de la Cruz" (Brief of Petitioners, p. 66). The argument is
supported by the allegation that "Policarpio owned no other property is a
fact established by a Lucia witness no less, one Restituto Gomez in the.
reconstitution case who was asked the question as to 'whether Mr.
Policarpio de la Cruz has any other property,' and his answer was: 'That
same property, Policarpio de la Cruz was actually staying on that land'"
(Brief of Petitioners, p. 67).
The argument lacks factual basis. Analyzing the answer of the witness, it is
self- evident that it is not responsive to the question. It is hazy, ambiguous,
and not categorical. The testimony does not prove that Policarpio de la
Cruz had no other property aside from Lot 671. And while petitioners bank
on the circumstance that the witness Gomez was a Lucia witness no less
and quotes testimony given in the reconstitution case, petitioners
conveniently ignore documentary exhibit presented by them showing that
Policarpio de la Cruz had owned 65 hectares of land. Petitioners presented
as their exhibit Exhibit "D- 2", the Counter-Affidavit of Lucia de la Cruz,
paragraph 1 of which reads:
l. It is not true as complainants state in their affidavit that when
our father, Policarpio Cruz, died sometime in the year 1920 that Lot No.
671 of the Piedad Estate was his only property, the truth is that during his
lifetime he owned approximately sixty five (65) hectares as shown in the
Official Gazette of 1911 when the Piedad Estate was published under
G.L.R.O. 5975, the boundary of the land of Policarpio Cruz to the South is
the Culiat Creek, and complainants are aware of this fact.
Indeed, the most telling and revealing piece of documentary evidence
among the voluminous records of this case is the copy of the Official
Gazette of 1911 when the registration of the Piedad Estate was published
as mentioned in paragraph 1 above. The copy of the Official Gazette of
1911 is marked Exhibit "N-1-A" Exhibit "3-Cruz" being pp. 152, 153 and 154
of the Gazette. Excerpts from this Exhibit show the following:
Court of Land Registration
(Registration of title G.L.R.O. No. 5976)
The Agent of the Compania Agricula de Ultramar and the Procurator of the
PP. Agustino Calsados these two c/o Convent of San Agustin, Calle Palacio
and Pelagia Teotimo, Cane Esculdo No. 65, District of Quiapo; Augusto
Tuazon, Agent of the Heirs of Jose Rivero Tuazon ... ... Policarpio Cruz,
Gregorio Sevilla, Juan Francisco, ...;
Whereas, an application has been presented to this Court by the
Government of the Phil.ippine Islands, through Director of lands, of
Manila, P.I. to register and confirm its title to the following describe land,
to wit:
A piece of land known as Piedad Estate situated to the Municipalities of
San Mateo and Caloocan, Province of Rizal P.I., more particularly bounded
and described as follows:
(The technical description of the land follows.)
The partial description is stated as follows:
Bounded on the N. by the Tala Estate separated by the Tuliajan River; NE
by the Tala and Payatan Estates separated by the Tuliajan and Lipjo Rivers;
N. by the Patayas Estate; S. by the Santa Mesa-Diliman Estate separated by
the Culiat River by properties of Hugo Lingat Tomas Mandaba Gregorio
Eugenia Mamerto Cruz, Jacinto Diaz, Policarpio Cruz, Gregorio Sevilla, and
Juan Francisco, and by the Marikina Estate and by the Maynito Estate...'
(The above notice is dated 10th day of January in the year 1910.)
Petitioners contend that the above notice of entry is an express
recognition by the government of the ownership of Policarpio de la Cruz.
Even the trial and appellate courts assume in their respective decisions
that the government has expressly recognized the ownership and title of
Policarpio de la Cruz. Petitioners' contention and the courts' assumption
are not correct.
Properly understood, the above notice in the Official Gazette clearly
indicate that the properties of the Piedad Estate which include Lot 671
subject of the application of the government and which eventually were
registered under OCT No. 604 in the name of the Government, were
outside, in fact separated from other lands occupied by Hugo Lingat Tomas
Mandaba Gregorio Eugenia Mamerto Cruz, Jacinto Diaz, Policarpio Cruz
and others. In other words, Policarpio Cruz was one of the adjoining
owners on the South separated by the Culiat River. It further indicates that
Policarpio de la Cruz had lands other than the property in litigation which
is Lot 671. In passing, We note from the notice that Mamerto Cruz was
also an adjoining owner.
The fact that Mamerto Cruz, one of the two sons of Policarpio de la Cruz
and brother of the respondent Lucia de la Cruz, appears as an adjoining
boundary owner to the Piedad Estate, gives support to the claim of Lucia
de la Cruz that their father, Policarpio, had other lands aside from the
property in litigation. And further credence is established in the testimony
of Leoncio Cruz, the son of Mamerto Cruz, who testified in the
reconstitution case that he (Leoncio) is the owner of property adjacent to
Lot 671, which he inherited from his father, Mamerto (Exhibit " H ", p. 32
thereof).
5. With respect to the alleged error of the Court of Appeals in
holding that respondent Iglesia ni Kristo was an innocent purchaser for
value and in good faith, We hold and rule that under the law and
jurisprudence and in view of the historical facts recited earlier, respondent
Iglesia ni Kristo cannot be faulted in taking care to protect its interests in
acquiring Lot 671, confronted as the Iglesia was by the conflicting titles of
Lucia de la Cruz and Dorotea de la Cruz over the same land. By procuring
and effecting the settlement of the case for Quieting of title filed by Nieves
Paz Eraa before the Court of First Instance of Quezon City, Civil Case No.
Q-16125 under i. compromise agreement and executing the Deed of
Absolute Sale of Segregated Portion of Registered land and the Deed of
Assignment made by the Eraas in favor of both Lucia de la Cruz and
Iglesia ni Kristo, respondent Iglesia did what a prudent, careful and
cautious vendee would do under the circumstances, considering the
purchase price paid and invested and the vast area of the property
acquired. For while indeed, two (2) titles crop up under different names
for the same land, the purchaser is not necessarily obliged to be so naive
and innocent and require the title holder to clear their rights first before
buying the property he is interested in acquiring.
True it is that a would be purchaser of property known to have two titles
would certainly have the duty to inquire about the validity of those two
titles against each other, which would necessarily involve examining their
validity per se against any other title. (Brief of Petitioners, p. 61). But the
better part of prudence, caution and wisdom would be to satisfy and
pacify both title-holders together with their assignees or transferees. This
is what respondent Iglesia did to clear and quiet its own acquisition of the
property under litigation. And assuming that there were adverse claimants
such as petitioners herein, respondent Iglesia was not duty- bound as
purchaser for value to respect their claims and interests for after all, the
same have been found and ruled to be false and frivolous.
There is justification in the appellate court's observation that petitioners
moved no finger when Lucia disposed smaller portions of the lot to Juana
de los Reyes, Basilisa T. Ramos and Maximo A. Argana and "their eyes
opened wide only when they heard of the negotiations leading to and the
eventual sale of the lot by Lucia to her co-appellant, the Iglesia ni Kristo,
the transaction involving as it did millions of pesos". It took them 32 years
to assert their claim to Lot 671 when they filed the case for reconveyance
on August 14, 1975, which is a clear case of inaction and neglect, thereby
converrting whatever interest petitioners had into a stale demand. (Mejia
vs. Gamponia 100 Phil.. 277; Miguel vs. Catalino, L-23072, 26 SCRA 234).
Otherwise, there is no meaning to the maxim Vigilantibus et non
dormientibusjura subveniunt (The laws serve the vigilant, not those who
sleep.)
With Our affirmance of the Court of Appeals' holding that no trust
(whether express or implied) existed on the property between Lucia de la
Cruz and petitioners, the legal provision that is inescapable and applicable
is Section 38 of the Land Registration Act whereby the registered title of
Lucia de la Cruz reconstituted as TCT No. RT-58 in 1971 became
indefeasible and incontrovertible one year from its issuance. As registered
owner, Lucia de la Cruz had the perfect and legal right to sell, assign, and
convey the property to respondent Iglesia ni Kristo who as purchaser for
value in good faith holds the same free from an encumbrances except
those noted in said certificate of title. (Section 39, Land Registration Act).
The Iglesia may then safely rely on the correctness of the certificate of title
issued therefor and the law will in no way oblige him to go behind the
certificate to determine the condition of the property. (Director of Lands
vs. Abache, et al. 73 Phil.. 606). Where there was nothing in the certificate
of title to indicate any cloud or vice in the ownership of the property, or
any encumbrance thereon, the purchaser is not required to explore
farther than what the Torrens title upon its face indicates in quest for any
hidden defect or inchoate right that may subsequently defeat his right
thereto. If the rule were otherwise, the efficacy and conclusiveness of the
certificate of title which the Torrens system seeks to insure would entirely
be futile and nugatory. (Reynes vs. Barrera, 68 Phil.. 656; De Lara and De
Guzman vs. Ayroso 50 O.G. No. 10, 4838, cited in Fule vs. De Legare, 7
SCRA 351).
Thus, the indefeasibility and imprescriptibility of a Torrens title is
preserved and maintained and the purposes of the Torrens System of land
registration achieved which is to insure stability by quieting titled lands
and put to a stop forever any question of the legality of the registration, in
the certificate, or which may arise subsequent thereto. And once the title
was registered, the owner might rest secure, without the necessity of
waiting in the portals of the court, or sitting in the "mirador de sucasa to
avoid the possibility of losing his land in the classic pronouncement of this
Court in Legarda vs. Saleeby, 31 Phil.. 590, reiterated in Salao vs. Salao, 70
SCRA 65, 84, and Director of Lands vs. Court of Appeals, 102 SCRA 370,
451.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the decision of the
respondent Court of Appeals (now Intermediate Appellate Court) in CA-
G.R. No. 63244-R is hereby AFFIRMED in toto. Costs against petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 83383 May 6, 1991
SOLID STATE MULTI-PRODUCTS CORPORATION, petitioner,
vs.
THE COURT OF APPEALS (Former Sixth Division) and THE INTESTATE
ESTATE OF ANTENOR S. VIRATA and the DEVELOPMENT BANK OF THE
PHILIPPINES, respondents.
Antonio M. Chavez for petitioner.
Rodolfo M. Dela Rosa for respondent Intestate Estate of Antenor S. Virata.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals which affirmed the decision of the trial court dismissing the
complaint filed by petitioner for quieting of title and declaring Antenor
Virata as the true and lawful owner of the disputed property.
The antecedent facts are as follows:
On September 28, 1982, petitioner, a domestic corporation, filed an action
for quieting of title against the respondent estate of Virata alleging that it
is the registered owner of a parcel of land located at Imus, Cavite, with an
area of 48,182 sq. meters, covered by Certificate of Title No. T-80889 of
the Register of Deeds of Cavite, which was issued on February 24, 1976;
that Virata, during his lifetime thru the use of fraud, caused the issuance
of Certificate of Title No. T-11520 RT 1660 on September 1, 1959 thru an
administrative reconstitution of a nonexistent original title covering the
same parcel of land; that by reason of the said reconstitution and
subsequent issuance of TCT No. T-11520 RT 1660, there now exists a cloud
on the title of petitioner.
As gathered by the respondent appellate court and trial court, the
evidence for the petitioner consists of the following:
Pursuant to the provisions of Act No. 32, as amended, Julian Pearanda
submitted with the Bureau of Lands, thru its District Land Office at
Rosario, Cavite an application dated November 22, 1968, in a verified
Indorsement dated November 25, 1968, to purchase a friar land which was
subscribed and sworn to before Manuel Cupino, Acting District Land
Officer (Exh. "D"). The application covers Lot No. 7449 of the Imus Friar
Lands Estate, situated at Barrio Molino, Bacoor, Cavite, containing an area
of 4 hectares, 81 ares and 82 centares. Said application was accompanied
by a "SALAYSAY" (Exhibit "A") signed and sworn to by one Mabini Legaspi
before said District Land Officer Cupino, purporting to transfer to, and to
waive in favor of, Julian Pearanda, all the rights of executor to Lot No.
7449.

Following the routine in cases of this nature, District Land Officer Cupino
referred to Land Investigator Alberto Buhain for investigation and in a
verified Indorsement dated November 25, 1968, said investigator made a
Report (Exh. "B") on the result of his investigation, to District Land Officer
Cupino, District Land Office No. III-8 Bureau of Lands, Rosario, Cavite,
certifying that applicant Julian Pearanda is the actual occupant of Lot No.
7449, has introduced improvements consisting of upland rice and other
seasonal crops; that Pearanda's occupation of the land is derived through
a voluntary assignment of right of the former occupant, Mabini Legaspi,
and that the same is free from claims and conflicts and that the said
applicant has established his rights over the subject land, in view of which,
said investigator recommended that said lot be awarded to applicant
Julian Pearanda according to law.
Thereafter, the Report having been submitted to Cupino, the latter
directed investigator Buhain to prepare an Information Sheet (Exh. "G" up
to "G-3") and Cupino made the Appraisal Report (Exh. "E-2"). The above
requirements having been accomplished, District Land Officer Cupino
forwarded Pearanda's application to the Director of Lands, thru the Chief,
Land Management Division, recommending disposition of Lot No. 7449 be
made in accordance with the findings of his office, to Julian Pearanda,
pursuant to the provisions of C.A. of No. 32, as amended.
By second Indorsement dated December 16, 1968, Higinio P. Sunico, Chief,
Land Management Division, acting for and in behalf of the Director of
Lands, forwarded to the Secretary of Agriculture and Natural Resources,
the application of Julian Pearanda, recommending that Lot No. 7449 be
sold to said applicant without public auction for a sum of P1,198.00 (Exh.
"I") and by a 3rd Indorsement dated December 16, 1969, the application
of Julian Pearanda was returned by the Secretary of Agriculture and
Natural Resources, to the Director of Lands, Manila, approving that sale
without auction, to Julian Pearanda, of lot No. 7449. Pursuant to this
approval, the Director of Lands authorized the District Land Officer,
Rosario, Cavite, to sell without auction to Julian Pearanda, and directing
that the sales contract should be executed soonest (Exh- "I"). The Director
of Lands and Julian Pearanda executed, therefore, Sales Contract No. V-
447 (Exh. "K"), on February 28, 1969, for a consideration of P1,198.00, to
be paid in ten (10) monthly installments, the first installment of P290.00
having been paid upon execution of the sales contract and the payment of
the P1,198.00 was fully paid on August 6, 1969 (Exh. "O").
The contract price of the land having been paid by Pearanda,
Undersecretary of Agriculture and Natural Resources Isoceles Pascual, on
August 13, 1969, issued the final deed of conveyance of lot No. 7449 (Exh.
"8") in favor of Julian Pearanda and the said deed of conveyance contains
the physical and technical description of the lot in question (See Exh. "S-
l").
xxx xxx xxx
On the basis of said Deed of Conveyance No. 10431, the Register of Deeds
of Cavite issued on November 14, 1969 in favor of Julian Pearanda TCT
No. T-39631 (Exh. "Z-6") which on its face shows it to have come from a
direct transfer from OCT no. 1002, and on February 17, 1976, the plaintiff,
by way of a Deed of Absolute Sale (Exh. "Z") bought said Lot No. 7449 as a
consequence of which, TCT No. T-39631 was cancelled and new TCT No. T-
80889 was issued on February 24, 1976 to the plaintiff, Solid State Multi
Products Corporation.
Plaintiff Solid State Multi-Products Corporation enrolled Lot No. 7449 with
the issuance of Tax Declaration No. 20893 which was superseded by Tax
Declaration No. 10973 and continued to religiously pay the realty taxes as
covered by receipts of tax payments (Exh. for 1977 and Exh. "7-19" for
1984) and the subject property is in its actual possession since its
acquisition from Pearanda up to the present. (pp. 109-112, Rollo
(Emphasis Ours)
On the other hand, respondent Virata denied the allegations in the
complaint and presented evidence to prove his claim over the land. The
appellate court and trial court made the following findings:
. . . on March 20, 1943, the Director of Lands, Mr. Jose F. Dans, gave
authority to sell at public auction Lot No. 7449 of the Imus Estate,
containing an area of 4.8182 hectares at the price of not less than its
appraised value of P290.00 (Exh. X-33). Accordingly on April 20, 1943, the
Bureau of Friar Lands Agent Severo Rivera issued a Notice fixing the public
auction of Lot No. 7449, among others, on May 5, 1943 at 10:00 a.m. (Exh.
1). On said date, Mabini Legaspi (appellee Virata's predecessor-in-interest)
submitted a winning bid of P290.00 and paid P29.00 (10% of the purchase
price) and even issued Bureau of Lands Official Receipt No. 77735 dated
May 5, 1943 (Exh. 7). The subsequent installments were paid on January
14, 1944, April 24, 1944, August 17, 1944, and September 20, 1944 in the
amounts of P29.00, P29.00, 87.00 and P116.00, respectively. The
payments were evidenced by Official Receipts Nos. 78396, 783392,
784704 and 78466 (Exhs. 7-A, 7-B, 7-C and V)
On December 12, 1944, the Bureau of Lands, through Mr. Vicente
Tordesillas, sent a letter to the Register of Deeds at Imus, Cavite,
requesting the issuance of the corresponding certificates of title to eight
persons, among whom was Mabini Legaspi, specifying with respect to him
Lot No. 7449 with an area of 4.8182 located at Bacoor, Cavite Exh. 2).
Accordingly, the Register of Deeds of Cavite issued TCT No. A-2188 to
Mabini Legaspi who held ownership of the property up to December 6,
1957 when he executed a Deed of Sale transferring it to Antenor S. Virata
(Exh. 6). The deed was registered with the Registry of Deeds on December
10, 1957 . . . . On the same day, December 10, 1957, the Register of Deeds
issued TCT No. 11520 (Exh. 12) to Antenor Virata . . .
However, on June 7, 1959, the Provincial Capitol building of Cavite which
housed the Registry of Deeds was burned, destroying land records and
titles in d registry among which were the records relating to Lot No. 7449.
On September 1, 1959, the Registry of Deeds administratively
reconstituted the original of TCT No. T-11520 based on owner's duplicate
certificate (Exh. 12) and renumbered the same as TCT No. (T-11520) RT-
1660.
xxx xxx xxx
The sentence of TCT No. 80889 issued in the name of appellant on
February 24, 1976 came to the knowledge of Antenor Virata in August
1978 when he received a subpoena from the National Bureau of
Investigation (NBI) in connection with its investigation of the conflicting
land titles on Lot No. 7449. Virata presented Mabini Legaspi as his witness.
NBI Agent Manuel C. Dionisio took the sworn testimony of Mabini Legaspi
on August 27, 1978 (Exh. 10) and submitted a written report (Exhs. 9 to 9-
H) of his investigation on October 27, 1978. Mabini Legaspi in her sworn
testimony (Exh. 10) declared that she acquired Lot 7449 during the
Japanese occupation and in support of her acquisition, she presented to
NBI agent Dionisio the carbon or duplicate original of the notice of public
auction and the letters dated December 12, 1944 of Vicente Tordesillas of
the Bureau of Lands to the Register of Deeds requesting the issuance of a
certificate of title in favor of Mabini Legaspi, which documents were
substituted on the same occasion with xerox copies (Exh. 1 and 2) also
marked as Exhibits 10-C and 10-D, respectively, after a comparison with
the duplicate originals. Legaspi also presented the originals of the receipts
of payment she made to the Bureau of Lands, which were substituted with
xerox copies (Exhs. 7, 7-A, 7-B and 7-C, also marked as Exhibit 10-E, 10-F
10-G and 10-H) after comparison with the original. She (Mabini) also
testified on the sale of the lot in favor of Antenor Virata on December 6,
1957, presenting as proof thereof, the duplicate or carbon original of the
Absolute Deed of Sale of Agricultural Land, which was likewise, substituted
with xerox copies (Exhs. 6 to 6-F, inclusive, also marked Exh. 11).
Mabini Legaspi testified that the originals of Exhibits 1 and 2 got lost. She
said she placed the documents on the table in her house after returning
from the NBI investigation, thinking "all the while that those documents
will be useless because I had my property sold." (Tsn., p. 17, December 19,
1984). She denied having sold the land to Julian Pearanda, nor having
waived her right over the land in his favor (tsn., p. 12, March 18, 1985).
(pp. 113-116, Rollo).
On June 15, 1985, the trial court rendered its decision, the dispositive
portion of which reads:
WHEREFORE, by preponderance of evidence, judgment is hereby rendered
for defendant Virata and against the plaintiff, to wit:
a. Dismissing the complaint which states no cause of action;
b. Recognizing that defendant Virata is the true and lawful owner
of the land covered by Transfer Certificate of Title No. (T-11520) RT 1660
of the Register of Deeds of the Province of Cavite and holding that the
same is valid;
c. Declaring that Transfer Certificate of Title No. T-80889 in the
name of plaintiff, the Solid State Multi Products Corporation is null and
void and of no force and effect and is, therefore, ordered cancelled;
d. Sentencing the plaintiff to pay the costs of the proceeding.
SO ORDERED. (p. 70, Rollo).
Not satisfied with the decision of the trial court, the petitioner appealed to
the Court of Appeals. On July 13, 1987, the respondent appellate court
rendered its decision affirming the decision of the trial court.
Hence, this petition was filed with the petitioner assigning the following
errors:
THE RESPONDENT COURT GROSSLY ERRED WHEN IT IGNORED THE BASIC
CONSIDERATION THAT THE CONTESTED PROPERTY CAME FROM THE
FRIAR LANDS ESTATE THE DISPOSITION OF WHICH IS GOVERNED BY
SPECIAL LAWS SPECIFYING THE REQUIREMENTS FOR ITS ACQUISITION
FROM THE GOVERNMENT THROUGH SALE, WHICH LAW AND SPECIAL
REQUIREMENTS SHOULD SERVE AS THE MEASURE AGAINST WHICH THE
EVIDENCE OF THE PARTIES TO THIS CASE SHOULD BE WEIGHED, SUCH
GROSS ERROR LEADING THE APPELLATE COURT TO
(A) ERRONEOUSLY INFER THE EXISTENCE AND/OR DUE ISSUANCE
OF THE SUPPOSED TCT NO. A-2188 (IN THE NAME OF PRIVATE
RESPONDENTS PREDECESSOR-IN INTEREST), FROM DOCUMENTS THAT
CAME AFTER WERE BASED ON SUCH TCT NO. A-2188, CLEARLY BEGGING
THE ISSUE WHICH IS PRECISELY WHETHER OR NOT THE TRANSFER
CERTIFICATE OF TITLE WAS IN FACT ISSUED IN COMPLIANCE WITH THE
FRIAR LANDS ACT AND CA-32 TO COVER THE PROPERTY IN QUESTION;
(B) ERRONEOUSLY BASE ITS DECISION IN FAVOR OF PRIVATE
RESPONDENT ON TCTs ISSUED BY THE REGISTER OF DEEDS INSPITE OF THE
FACT THAT IT IS THE BUREAU OF LANDS UNDER THE DIRECTION OF THE
SECRETARY OF AGRICULTURE AND COMMERCE (NATURAL RESOURCES)
WHICH DISPOSES FRIAR LANDS AND NOT THE REGISTER OF DEEDS WHOSE
RECORDS CAN BE NO BETTER THAN THE RIGHT IT HAS REGISTERED;
(C) ERRONEOUSLY DISREGARD THE PATENT INADMISSIBILITY OF
THE DOCUMENTARY EVIDENCE OFFERED BY THE PRIVATE RESPONDENT
THE ORIGINALS OF WHICH WERE NEVER PRESENTED BEFORE THE TRIAL
COURT;
(D) ERRONEOUSLY IGNORE THE LACK OF PROBATIVE VALUE OF
SUCH DOCUMENTARY EVIDENCE SUCH LACK OF PROBATIVE VALUE BEING
PATENT ON THE FACE OF SUCH DOCUMENT;
(E) ERRONEOUSLY IGNORE THE VERITY THAT THE DOCUMENTARY
EVIDENCE COULD SUPPORT NO MORE THAN THE FACT THAT THE
RESPONDENTS PREDECESSOR-IN-INTEREST HAD MERELY A QUESTIONABLE
INCHOATE AND INCOMPLETE RIGHT TO ACQUIRE THE PROPERTY IN
QUESTION, WHICH QUESTIONABLE INCHOATE AND IN FACT
UNCOMPLETED RIGHT CANNOT PREVAIL OVER THE TITLE OF PETITIONER'S
PREDECESSOR IN INTEREST WHO WAS THE ACTUAL POSSESSOR THAT
APPLIED FOR THE PURCHASE OF THE LAND EVERY NEEDED STEP FOR THE
PURCHASE HAVING BEEN PASSED UPON AND RECORDED BY THE BUREAU
OF LANDS WHOSE RECORDS SHOW ONE AND ONLY TITLE ISSUED OVER
THE LAND, THAT IS, THE TITLE OF THE PETITIONER'S PREDECESSOR-IN-
INTEREST (pp. 20, 22, Rollo)
We find the petition impressed with merit.
Since the assigned errors were interrelated, it would be well for this Court
to discuss them jointly.
Petitioner does not question the factual findings made by the respondent
appellate court and supported by the records (p. 22, Rollo). It does not
however accept the legal conclusion made by the appellate court and trial
court that the registered title of private respondent to the land should
prevail over its own title.
Petitioner contends that Act No. 1120, otherwise known as the Friar Lands
Act provides the procedure for the sale and disposition of the friar lands to
private persons; that pursuant thereto, the acquisition by petitioner's
predecessor-in-interest Julian Pearanda of the disputed Lot 7449, which
was formerly part of the friar lands estate, was in compliance with all legal
requisites laid down in Act No. 1120, for the validity of the sale by the
government in favor of Pearanda of such friar lands.
It also argues that the sale of Lot No. 7449 to respondent's predecessor,
Mabini Legaspi, and the issuance of a certificate of title in her favor was in
violation of the Friar Lands Act as there was no required approval by the
Secretary of Agriculture and Natural Resources.
There is no dispute here that the land involved in this case is a friar land
and that the laws which are applicable are Act No. 1120, know as the Friar
Lands Act, providing for the administration and temporary leasing and sale
of certain haciendas and parcels of land, commonly known as friar lands,
and Commonwealth Act No. 32 dated September 15, 1936 as amended by
Commonwealth Act No. 316 dated June 9, 1938, which provided for the
subdivision and sale of all the portions of the friar lands estated remaining
undisposed of.
Sec. 12 of Act No. 1120 provides in part:
. . . the Chief of the Bureau of Public Lands shall give the said settler and
occupant a certificate which shall set forth in detail that the Government
has agreed to sell to such settler and occupant the amount of land so held
by him at the price so fixed payable as provided in this Act at the Office of
the Chief of the Bureau of Public Lands . . . and that upon the payment of
the final installment together with all accrued interest the Government
will convey to such settler and occupant the said land so held by him by
proper instrument of conveyance, which shall be issued and become
effective in the manner provided in section one hundred and twenty two
of the Land Registration Act.
Also, Sec. 18 of the same Act provides:
No lease or sale made by the Chief of the Bureau of Public Lands under the
provisions of this Act shall be valid until approved by the Secretary of the
Interior. (Emphasis ours)
Similarly, Sec. 2 of C.A. No. 32, as amended by C.A. No. 316 provides in
part:
. . . The persons who, at the time of the subdivision survey are actual and
bona fide occupants of any portion of the Friar Lands Estates, not
exceeding ten hectares, shall be given preference to purchase the portion
occupied at a private sale and at a price to be fixed in such case, by the
Director of Lands, subject to the approval of the Secretary of Agriculture
and Commerce, after taking into consideration its location, quality, and
any other circumstances as may affect its value, the provisions of section
twelve of Act Numbered Eleven hundred and twenty, as amended, to the
contrary, . . . (Emphasis ours)
It is clear from the foregoing provisions that the friar lands were
purchased by the government for sale to actual settlers and occupants at
the time said lands are acquired by the government. The Bureau of Lands
shall first issue a certificate stating therein that the government has
agreed to sell the land to such settler or occupant. The latter then shall
accept the certificate and agree to pay the purchase price so fixed and in
the installments and at the interest specified in the certificate.
The conveyance executed in favor of a buyer or purchaser, or the so called
certificate of sale, is a conveyance of the ownership of the property,
subject only to the resolutory condition that the sale may be cancelled if
the price agreed upon is not paid for in full. The purchaser becomes the
owner upon the issuance of the certificate of sale in his favor subject only
to the cancellation thereof in case the price agreed upon is not paid
(Pugeda vs. Trias, No. L-16925, March 31, 1962, 4 SCRA 849.)
Upon the payment of the final installment together with all accrued
interests, the government shall then issue a final deed of conveyance in
favor of the purchaser. However, the sale of such friar lands shall be valid
only if approved by the Secretary of Interior as provided in Act No. 1120.
Later laws, however, required that the sale shall be approved by the
Secretary of Agriculture and Commerce. In short, the approval by the
Secretary of Agriculture and Commerce is indispensable for the validity of
the sale.
It is undisputed that petitioner's predecessor, Julian Pearanda was the
actual occupant of Lot 7449 when he filed his application to purchase the
said lot on November 22, 1968; that on December 16, 1989, the Secretary
of Agriculture and Natural Resources approved the sale of the lot without
auction to Pearanda; that a sales contract was executed between the
Director of Lands and Pearanda on February 28, 1969 for a consideration
of P 1,198.00 payable in 10 monthly installments; that upon the full
payment of the price, the Undersecretary of Agriculture and Natural
Resources issued the final deed of conveyance of Lot No. 7449 in favor of
Pearanda. Subsequently, the Register of Deeds of Cavite issued TCT No.
39631 in the name of Pearanda, and when the latter sold the land to
petitioner, TCT No. 39631 was cancelled and TCT No. T-80889 was issued
in favor of the latter.
Clearly, the purchase of the friar land made by Pearanda was in
compliance with law. The execution of the sales contract vested the right
of ownership in Pearanda over the land. There is no doubt whatsoever
that the said sale was valid as it was approved by the Secretary of
Agriculture and Natural Resources. Hence, the sale made by Pearanda in
favor of the petitioner transferred the ownership of the land in favor of
the latter resulting in the proper issuance of TCT No. T-80889 in its name.
On the other hand, the antecedents leading to the acquisition of title by
respondent Virata are clearly shown in the records. The latter's
predecessor, Mabini Legaspi bought Lot 7449 in a sale by public auction
held on May 5, 1943 conducted by the Bureau of Lands and friar lands
agent Severino Rivera, and paid the purchase price thereof in installments
in 1943; that on December 12, 1944, the Bureau of Lands sent a letter to
the Register of Deeds of Cavite requesting the issuance of certificates of
title to several persons including Mabini Legaspi, in whose favor TCT A-
2188 was issued; that subsequently on December 6, 1957, she sold the
disputed land to respondent Virata, which was evidenced by a deed of sale
registered with the Registry of Deeds of Cavite on December 10, 1957;
that on the same date, TCT No. 11520 was issued in the name of Virata.
Due to the fire which gutted the building housing the Registry of Cavite on
June 7, 1959, the latter administratively reconstituted the original of TCT
No. 11520 on September 1, 1959, based on the owner's duplicate
certificate and renumbered the same as TCT No. 1120 RT 1660.
Apparently, the sale of the lot to Mabini Legaspi occurred much earlier
than the date of acquisition of same lot by petitioner's predecessor, and
the evidence presented by respondent Virata indicates that the latter's
predecessor paid the purchase price of Lot No. 7449 on installments.
Nowhere in the evidence for the respondent or in the records of this case
however, would show that a certificate of sale was ever issued by the
Bureau of Lands, which would vest ownership and title over the land in
favor of Mabini Legaspi. The existence of the official receipts showing
payment of the price of the land by Legaspi does not prove that the land
was legally conveyed to her without any contract of sale having been
executed by the government in her favor. Viewed from all angles, the
acquisition of the lot by Legaspi was highly irregular and void, and not in
compliance with the procedure mandated by law for the sale of friar lands.
For one thing, Mabini Legaspi allegedly purchased the land in a sale at
public auction, which procedure is nowhere provided in Act No. 1120 or in
C.A. 32, as amended by C.A. 316. The laws expressly state that an actual
occupant of the land shall purchase the lot occupied by him at a private
sale and not in a sale at public auction (Sec. 2, C.A. 32 as amended).
Further, neither was there any deed of conveyance issued to Legaspi by
the government after the full payment of the installments on the disputed
lot.
Highly significant at this point is the fact that there was neither allegation
nor proof that the sale was with the approval of the Secretary of
Agriculture and Commerce. The absence of such approval made the
supposed sale null and void ab initio. Without the certificate of sale to
prove the transfer of the ownership of the land from the government
Mabini Legaspi and without the required approval of the sale by the
Secretary of Agriculture and Commerce, We find that Mabini Legaspi did
not in any manner acquire ownership over the land in 1943. The
ownership or title over the friar land, specifically Lot No. 7449 remained in
the government until Pearanda, petitioners predecessor, lawfully
acquired ownership over the same lot on February 28, 1969 by virtue of a
sales contract executed in his favor.
The issuance of a certificate of title in favor of Mabini Legaspi did not vest
ownership upon her over the land nor did it validate the alleged purchase
of the lot, which is null and void. Time and again, it has been held that
registration does not vest title. It is merely evidence of such title over a
particular property. Our land registration laws do not give the holder any
better title than that what he actually has (De man et al. vs. Court of
Appeals, G.R. L- 46935 December 21, 1987, 156 SCRA 701; Cruz vs.
Cabana, No. 56232, June 22, 1984, 129 SCRA 656).
Although a period of one year has already expired from the time the
certificate of title was issued to Mabini Legaspi pursuant to the alleged
sale from the government, said title does not become incontrovertible but
is null and void since the acquisition of the property was in violation of
law. Further, the petitioner herein is in possession of the land in dispute.
Hence, its action to quiet title is imprescriptible (Coronel vs. Intermediate
Appellate Court, No. 70191, October 29, 1987, 155 SCRA 270).1wphi1 In
one case, this Court ruled that an adverse claimant of a registered land
who is in possession thereof for a long period of time is not barred from
bringing an action for reconveyance which in effect seeks to quiet title to
the property against a registered owner relying upon a Torrens title which
was illegally or wrongfully acquired (Caragay-Layno vs. Court of Appeals,
133 SCRA 718). In actions for reconveyance of property predicated on the
fact that the conveyance complained of was void ab initio, a claim of
prescription of the action would be unavailing (Corpus, et al. vs. Beltran, et
al., 97 Phil. 722; Agne vs. Director of Lands, G.R. L-40399, February 6,
1990, 181 SCRA 793). Being null and void, the sale made to Mabini Legaspi
and the subsequent titles issued pursuant thereto produced no legal
effects whatsoever. Quod nullum est nullum producit affectum (Agnes vs.
Director of Lands, supra). There being no title to the land that Mabini
Legaspi acquired from the government, it follows that no title to the same
land could be conveyed by the former to respondent Virata.
Even assuming that respondent Virata was a purchaser in good faith and
for value, the law is, as between two persons both of whom are in good
faith and both innocent of any negligence, the law must protect and prefer
the lawful holder of registered title over the transferee of a vendor bereft
of any transmissible rights (Baltazar vs. Court of Appeals, G.R. 78728,
December 8, 1988, 168 SCRA 354, emphasis ours). Further if a person
happened to obtain property by mistake or to the prejudice of another
with or without bad faith, the certificate of title which may have been
issued to him under the circumstances may and should be cancelled or
corrected.
Our unavoidable conclusion in this case is that the title of petitioner under
the Torrens land system should be upheld considering that no previous
valid title to the same land existed.
ACCORDINGLY, the petition is hereby GRANTED and the decision of the
respondent Court of Appeals dated July 13, 1987 is hereby REVERSED.
Petitioner Solid State Multi-Products Corporation is hereby declared the
true owner of the land covered by Transfer Certificate of Title No. T-80889.
The Register of Deeds of Cavite is ordered to cancer transfer Certificate of
Title No. (T-11520) RT 1660 in the name of respondent Antenor Virata.
SO ORDERED.
FIRST DIVISION
G.R. NO. 184079 : April 17, 2013
SPS. ARMANDO SILVERIO, SR. AND REMEDIOS SILVERIO, Petitioners, v.SPS.
RICARDO AND EVELYN MARCELO, Respondents.
G.R. NO. 184490
SPS. EVELYN AND RICARDO MARCELO, Petitioners, v.SPS. ARMANDO
SILVERIO, SR. AND REMEDIOS SILVERIO, Respondents.
DECISION
VILLARAMA, JR., J.:
Before the Court are twin petitions for review on certiorari under Rule 45
of the 1997 Rules of Civil Procedure, as amended.
The petition1 in G.R. NO. 184079 was filed by petitioners spouses
Armando Silverio, Sr. and Remedios Silverio to assail the Decision2 dated
March 18, 2008 and Resolution3 dated August 12, 2008 of the Court of
Appeals (CA) in CA-G.R. SP No. 98105. The CA had affirmed the Decision4
dated November 7, 2006 of the Regional Trial Court (RTC) of Paraaque
City, Branch 258, in Civil Case No. 06-0099, which in turn, affirmed the
Decision5 dated September 6, 2005 of the Metropolitan Trial Court
(MeTC), Branch 78 in Civil Case No. 2004-271. The Paraaque MeTC,
Branch 78, had ordered petitioners to demolish the improvements they
have introduced in Lot No. 3976, Paraaque Cad. 299 (Lot 3976), to
peacefully surrender possession of the same to respondents spouses
Ricardo and Evelyn Marcelo and to pay P1,000 per month from May 20,
2004 until they have done so. The court a quo likewise directed petitioners
to pay respondents P20,000 as attorney's fees plus P3,000 per appearance
of the latter's counsel and costs.
Meanwhile, the petition6 in G.R. NO. 184490 was filed by petitioners
spouses Evelyn and Ricardo Marcelo to contest the Decision7 dated March
27, 2008 and Resolution8 dated September 1, 2008 of the CA in CA-G.R. SP
No. 98713. The CA had reversed and set aside the Decision9 dated
December 29, 2006 of the RTC of Paraaque City, Branch 257, in Civil Case
No. 06-0237, which in turn, affirmed in toto the Decision10 dated April 25,
2006 of the MeTC of Paraaque City, Branch 77, in Civil Case No. 2004-
269. The Paraaque MeTC, Branch 77, had ordered respondents Armando
Silverio, Sr. and Remedios Silverio to vacate the Marcelo Compound in Lot
3976 and to surrender possession thereof to petitioners. The court a quo
likewise directed respondents to pay petitioners P1,000 per month from
May 20, 2004 until they have completely moved out of said property,
P10,000 as attorney's fees and costs.
The factual antecedents of these consolidated petitions are culled from
the records.
G.R. NO. 184079
On July 12, 2004, respondents spouses Ricardo and Evelyn Marcelo filed a
Complaint11 for unlawful detainer against petitioners spouses Armando
Silverio, Sr., and his mother, Remedios Silverio. The case was docketed as
Civil Case No. 2004-271 before the MeTC of Paraaque City, Branch 78.
Respondents represented themselves as the lawful owners and possessors
of Lot 3976, a residential land with an area of 5,004 square meters located
in Marcelo Compound, Philip St. Ext., Multinational Village, Paraaque
City. They claimed ownership over said lot by virtue of a Decision12 dated
December 12, 1996 of the Department of Environment and Natural
Resources (DENR) in DENR-NCR Case No. 95-253 and Tax Declaration No.
E-008-19942.13chanroblesvirtualawlibrary
Respondents alleged that sometime in May 1987, petitioners sought
permission to construct a house within Lot 3976. Respondents agreed on
the condition that petitioners will vacate the moment they need the land.
Subsequently, respondents made an oral demand on petitioners to leave
the house and return possession of the lot within 15 days from notice. In a
Letter14 dated May 18, 2004, respondents reiterated their demand for
petitioners to demolish the house, vacate the 120-square-meter lot on
which the house stands and to pay P1,000 as rent until they have done so.
As respondents' demands remained unheeded, they filed a complaint for
unlawful detainer against petitioners before Barangay Moonwalk in
Paraaque City. The case was docketed as Barangay Case No. 05/04-051.
On July 24, 2004, Atty. Wendell E. Coronel, Lupon/Pangkat Secretary of
Barangay Moonwalk issued a Certification to File Action15 in said case
upon the reasons "Failed or refused to accept/obey summons to appear
for hearing" and "Settlement has been repudiated."
In their Answer,16 petitioners sought the dismissal of the complaint on the
ground that respondents had filed a similar case against them before the
MeTC of Paraaque City, Branch 77, docketed as Civil Case No. 2004-269.
The latter case is the subject of the petition in G.R. NO. 184490.
On September 6, 2005, the MeTC of Paraaque City, Branch 78, rendered
judgment in favor of respondents Marcelo. The court a quo ruled out
forum shopping upon finding that the house subject of the present case is
different from that in Civil Case No. 2004-269. The structure involved in
the latter case was "originally occupied by petitioners' relative and later
taken over by them"17 while the house subject of the present case was
constructed by petitioners themselves. The MeTC held that petitioners
failed to refute the character of their possession as merely tolerated by
respondents and they became deforciants upon the latter's demand for
them to vacate the subject premises. The court ordered petitioners to pay
respondents P1,000 as reasonable compensation for the use and
occupation of the premises, attorney's fees of P20,000 and P3,000 per
appearance of counsel for respondents.
On appeal, the Paraaque RTC, Branch 258, affirmed the ruling of the
MeTC. In a Decision dated November 7, 2006, the RTC sustained
respondents' right to bring action to evict petitioners from the contested
property. It found petitioners' claim of ownership unsubstantiated and
their defense of forum shopping without merit since the properties
involved in Civil Case Nos. 2004-269 and 2004-271 are different from each
other.
Petitioners moved for reconsideration but their motion was denied in an
Order18 dated February 5, 2007. Thereafter, petitioners filed a Petition for
Review19 under Rule 42 of the Rules with the CA.
In the assailed Decision dated March 18, 2008, the appellate court
affirmed in toto the RTC judgment. It found no basis to dismiss
respondents' complaint based on either forum shopping or splitting a
cause of action. The CA disregarded petitioners' argument that the subject
property is public land in view of their admission in their Answer20 that
respondents are the owners and possessors thereof.
Petitioners filed a Motion for Reconsideration21 which the CA denied in a
Resolution22 dated August 12, 2008.
G.R. NO. 184490
On July 12, 2004, petitioners spouses Ricardo and Evelyn Marcelo filed a
Complaint23 for unlawful detainer against respondents Armando Silverio,
Sr., and Remedios Silverio. The case was docketed as Civil Case No. 2004-
269 before the MeTC of Paraaque City, Branch 77.
Petitioners' Complaint bore essentially the same allegations as their
Complaint in Civil Case No. 2004-271 save for two allegations: (1)
respondents requested petitioners' permission to construct a house in Lot
3976 in May 1986; and (2) respondents "improved the house and even
operated a sari-sari store"24 in Marcelo Compound.
In their Answer25 dated August 3, 2004, respondents belied petitioners'
claim of exclusive ownership and possession of the subject property.
According to respondents, the land in dispute was first occupied by
Graciano Marcelo along with his sons Armando Marcelo, petitioner
Ricardo Marcelo and Florante Marcelo. Respondents anchor their right of
possession on Florante Marcelo, in his capacity as an ostensible co-owner
of the contested property. Florante Marcelo is the husband of Marilou
Silverio, the daughter of respondents spouses Silverio.
Subsequently, petitioners submitted an Amended Complaint26 dated
August 14, 2004, in which they clarified that it was the spouses Florante
Marcelo and Marilou Silverio, and not the respondents, who sought their
consent to build a house and live in Marcelo Compound. Petitioners
recounted that it was after Florante Marcelo and Marilou Silverio
separated in 1998 and abandoned said house that respondents asked for
permission to stay therein. Petitioners agreed upon an understanding that
respondents shall "dismantle said house the moment petitioners need the
premises."27 However, respondents refused to move out and surrender
possession of the subject property upon demand.
In a Demand Letter28 dated May 18, 2004, petitioners insisted on their
demand for respondents to demolish the house they built, vacate the 80-
square-meter lot on which it stands, to surrender peaceful possession of
the same and to pay P1,000 as rent until they have done so.
As respondents ignored petitioners' demands, the latter brought a
complaint for unlawful detainer against respondents before Barangay
Moonwalk in Paraaque City. The case was docketed as Barangay Case No.
05/04-070. On July 24, 2004, Atty. Wendell E. Coronel, Lupon/Pangkat
Secretary of Barangay Moonwalk issued a Certification to File Action29 in
said case upon the reasons "Failed or refused to accept/obey summons to
appear for hearing" and "Settlement has been repudiated."
In an Answer30 dated September 8, 2004, respondents assailed the DENR
Decision dated December 12, 1996 for supposedly awarding ownership of
the subject property to petitioners. According to respondents, Graciano
Marcelo, Sr., petitioner Ricardo Marcelo's father, was a tenant of Fabian
Lumbos before the latter sold his land to Mike Velarde. Subsequently,
Velarde fenced the subject property, which respondents insist is not part
of the parcels that Lumbos sold to Velarde. Upon the belief that Lot 3976
is still government property, the sons of Graciano Marcelo, Sr., including
petitioner Ricardo Marcelo and Florante Marcelo, divided the land among
themselves and occupied the same. On the tract allotted to Florante, he
took in respondent Remedios Silverio to live with him and his wife,
Marilou.
Respondents averred that it was in 1997 when the Marcelos conceived the
idea of applying for a sales patent over Lot 3976 with the DENR. The
Marcelo siblings appointed petitioner Ricardo Marcelo to file the
Miscellaneous Sales Application (MSA) in their behalf, sharing the
expenses among themselves. However, it was not until later that the
Marcelo siblings learned that Ricardo had filed the application in his name
alone. Respondents revealed that Ricardo had sold several portions of Lot
3976 even before he could apply for a sales patent thereon.
On February 3, 2005, respondents filed a Supplemental Answer31 in which
they charged petitioners with forum shopping for filing another ejectment
case against them, docketed as Civil Case No. 2004-271 before Branch 78
of the Paraaque MeTC.
In a Decision dated April 25, 2006, the MeTC of Paraaque City, Branch 77,
ruled for petitioners Marcelo. The court a quo ordered respondents to
vacate the subject property, to surrender peaceful possession thereof to
petitioners, to give reasonable rent from May 20, 2004 until they have
moved out and to pay attorney's fees and costs.
On the basis of the Decision dated December 12, 1996 of the DENR, the
MeTC declared petitioners the owners of the subject property, with
concomitant right to possess it. The court found no evidence to support
respondents' possessory claim and considered their occupation of the
subject land as merely tolerated by petitioners. The court a quo
discounted forum shopping upon finding that the house concerned in Civil
Case No. 2004-271 was built by petitioners whereas the house in this case
was only taken over by them.
In a Decision dated December 29, 2006, the Paraaque RTC, Branch 257,
affirmed in toto the MeTC ruling. The RTC declared petitioners as the
lawful possessors of the subject property by virtue of Tax Declaration No.
E-008-19942 in the name of petitioner Ricardo Marcelo. It explained that
Florante Marcelo's affinity with petitioner Ricardo, alone, did not
automatically make him a co-owner of the contested property.
Dissatisfied, respondents elevated the case to the CA through a Petition32
for review under Rule 42.
In the assailed Decision dated March 27, 2008, the CA reversed and set
aside the RTC judgment. It brushed aside the alleged procedural infirmities
that attended the filing of respondents' petition for being trivial and
insufficient to warrant its dismissal. The appellate court found petitioners
guilty of forum shopping and splitting of a cause of action. It observed that
the two cases for unlawful detainer filed by petitioners are based on a
single claim of ownership over Lot 3976 which embraces the subject
properties. The CA explains that an adjudication in either suit that
petitioners are entitled to the possession of Lot No. 3976 would
necessarily mean res judicata in the other case. The appellate court noted
that the demand letter in both cases was served on respondents on the
same day.
Issues/Assignment of Errors
On September 29, 2008, spouses Armando Silverio, Sr. and Remedios
Silverio filed a petition for review on certiorari which was docketed as G.R.
NO. 184079. Said petition, which seeks to reverse and set aside the
Decision dated March 18, 2008 and Resolution dated August 12, 2008 of
the CA in CA-G.R. SP No. 98105, assigns a lone
error:chanroblesvirtualawlibrary
THE COURT OF APPEALS, WITH ALL DUE RESPECT, SERIOUSLY ERRED AND
GRAVELY ABUSED ITS DISCRETION IN DISMISSING THE APPEAL
INTERPOSED BY PETITIONERS IN THE ABOVE-ENTITLED CASE ON
TECHNICALITIES AND HAS DECIDED A QUESTION OF SUBSTANCE, NOT
THERETOFORE DETERMINED BY THE SUPREME COURT, AND/OR HAS
DECIDED IT IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE HONORABLE SUPREME
COURT.33chanroblesvirtualawlibrary
A few days later, on October 2, 2008, spouses Evelyn and Ricardo Marcelo
filed a Petition for Review on Certiorari which was docketed as G.R. NO.
184490. Said petition, in turn, contests the Decision dated March 27, 2008
and the Resolution dated September 1, 2008 of the CA in CA-G.R. SP No.
98713. Condensed, the issues presented by petitioners are as follows: (1)
Whether the filing of separate complaints for unlawful detainer against
the same lessees who refuse to vacate, on demand, two different houses
constitutes forum shopping and splitting of a cause of action; (2) Whether
the CA erred in dismissing Civil Case No. 2004-269; and (3) Whether the
instant petition was filed seasonably.
Essentially, the questions that must be addressed in the consolidated
petitions before us are common: (1) Are the spouses Ricardo and Evelyn
Marcelo guilty of forum shopping? and (2) Who between the spouses
Marcelo and the Silverios have better right to the physical possession of
Lot 3976?
The Parties' Arguments
Armando Silverio, Sr. and Remedios Silverio allege mainly that spouses
Ricardo and Evelyn Marcelo engaged in forum shopping and split a
common cause of action when they filed separate complaints for unlawful
detainer based on a single claim of ownership over Lot No. 3976. The
Silverios maintain that the spouses Marcelo are simply applicants for the
issuance of a sales patent over Lot No. 3976 and are actually occupying
only 50 square meters of the 5,020-square-meter property. In support
thereof, the Silverios invoke the Decision34 dated July 11, 2007 of the
DENR which annulled and canceled the MSA filed by the spouses Marcelo
over Lot No. 3976. Ultimately, the Silverios insist that the subject property
remains a public land.
In their consolidated Memorandum35 for G.R. Nos. 184079 and 184490,
spouses Ricardo and Evelyn Marcelo denied the allegations of forum
shopping and splitting a single cause of action. They assert the following
distinctions between the houses involved in Civil Case Nos. 2004-269 and
2004-271: (1) the house in Civil Case No. 2004-271 was built by the
Silverios in May 1987 while the house subject of Civil Case No. 2004-269
was constructed by Florante Marcelo and Marilou Silverio in May 1986;
and (2) the house in Civil Case No. 2004-271 has been occupied by the
Silverios from the beginning while they merely took over the house
referred to in Civil Case No. 2004-269 and put up a sari-sari store therein.
The spouses Marcelo contend that while they claim ownership of Lot No.
3976 as a whole, the portions thereof on which the two houses stand are
distinct -- one has an area of 80 square meters while the other measures
120 square meters. In view of this, the spouses Marcelo believe that the
refusal by the Silverios to vacate said houses violated at least two rights
and gave rise to separate causes of action.
The Court's Ruling
Unlawful detainer is an action to recover possession of real property from
one who illegally withholds possession after the expiration or termination
of his right to hold possession under any contract, express or implied. The
possession of the defendant in unlawful detainer is originally legal but
became illegal due to the expiration or termination of the right to
possess.36 In an unlawful detainer case, the sole issue for resolution is
physical or material possession of the property involved, independent of
any claim of ownership by any of the parties. Where the issue of
ownership is raised by any of the parties, the courts may pass upon the
same in order to determine who has the right to possess the property. The
adjudication is, however, merely provisional and would not bar or
prejudice an action between the same parties involving title to the
property.37chanroblesvirtualawlibrary
Here, the spouses Ricardo and Evelyn Marcelo brought separate
complaints for unlawful detainer against Armando Silverio, Sr. and
Remedios Silverio based on their refusal to vacate two houses inside the
Marcelo Compound. In both Civil Case Nos. 2004-26938 and 2004-271, the
spouses Marcelo anchor their right of possession over the subject
properties on Tax Declaration No. E-008-19942 and on the Decision dated
December 12, 1996 of the DENR in DENR-NCR Case No. 95-253. The DENR
gave due course to the MSA filed by the spouses Marcelo over Lot 3976,
where the Marcelo Compound is situated.
For their part, the Silverios seek the dismissal of both complaints on the
grounds of forum shopping and splitting a single cause of action.
Forum shopping is a deplorable practice of litigants consisting of resort to
two different fora for the purpose of obtaining the same relief, to increase
the chances of obtaining a favorable judgment.39 The grave evil sought to
be avoided by the rule against forum shopping is the rendition by two
competent tribunals of two separate and contradictory
decisions.40chanroblesvirtualawlibrary
In Chua v. Metropolitan Bank & Trust Company,41 the Court enumerated
the ways by which forum shopping may be
committed:chanroblesvirtualawlibrary
Forum shopping can be committed in three ways: (1) filing multiple cases
based on the same cause of action and with the same prayer, the previous
case not having been resolved yet (where the ground for dismissal is litis
pendentia); (2) filing multiple cases based on the same cause of action and
the same prayer, the previous case having been finally resolved (where the
ground for dismissal is res judicata); and (3) filing multiple cases based on
the same cause of action, but with different prayers (splitting of causes of
action, where the ground for dismissal is also either litis pendentia or res
judicata).42chanroblesvirtualawlibrary
Common to these types of forum shopping is the identity of the cause of
action in the different cases filed. Cause of action is defined as "the act or
omission by which a party violates the right of
another."43chanroblesvirtualawlibrary
In this case, the spouses Marcelo filed two cases for unlawful detainer
against Armando Silverio, Sr. and Remedios Silverio on July 12, 2004. In
Civil Case No. 2004-269, the cause of action is the alleged unlawful
withholding of possession by the Silverios of the house which Florante
Marcelo and Marilou Silverio constructed in Lot 3976. On the other hand,
the cause of action in Civil Case No. 2004-271 for unlawful detainer is the
supposed unlawful withholding of possession by the Silverios of the house
which they, themselves, built in Lot 3976. While the main relief sought in
Civil Case No. 2004-269 appears to be different from that in Civil Case No.
2004-271, the right on which both claims are hinged is the same the
purported ownership by the spouses Marcelo of Lot 3976. Indeed,
paragraph 3 of the spouses Marcelo's Complaint in both cases similarly
read:chanroblesvirtualawlibrary
3. Plaintiffs are the lawful owners and possessors of a residential lot
containing an area of 5,004 sq. m. known as Lot 3976 Paraaque Cad. 299
by virtue of a final and executory decision of the Land Management
Bureau (DENR) promulgated on Dec. 12, 1996 and Tax Dec. No. E-008083-
77 issued in their name by the City Assessor of Paraaque City. Certified
true copy of Tax Dec. No. E-008-19942 is hereto attached as "Annex "A".
44chanroblesvirtualawlibrary
Basically, the cause of action in both cases is the unlawful withholding by
the Silverios of Lot 3976.
We find no merit in the contention of the spouses Marcelo that Civil Case
Nos. 2004-269 and 2004-271 present distinct causes of action since they
pertain to separate portions of the Marcelo Compound. The analogy
drawn by the spouses Marcelo between the ejectment of a tenant leasing
several units of a condominium project and the unlawful detainer cases
they brought against the Silverios is misplaced. In the former, there exists
a lessor-lessee relationship between the owner of the condominium and
the tenant, respectively. Hence, the rights and duties of the condominium
owner and the tenant are defined by the terms of the contract. In
contrast, the parties in this case present adverse possessory claims over
those portions of Lot 3976 in which the houses concerned are situated.
In particular, the spouses Marcelo assert better right of possession based
on their alleged right as "lawful owners and possessors of a residential lot
containing an area of 5,004 sq. m. known as Lot 3976 Paraaque Cad. 299
by virtue of a final and executory decision of the Land Management
Bureau (DENR) promulgated on Dec. 12, 1996 and Tax Dec. No. E-008-083-
77 issued in their name by the City Assessor of Paraaque."45 For their
part, the Silverios claim better right of possession on account of their
actual occupation of the subject properties. In either case, a finding that
the spouses Marcelo have better right to possess the subject property
could only be premised on their lawful possession of the entire Lot No.
3976, Paraaque Cad. 299. It follows, therefore, that a final adjudication in
favor of the spouses Marcelo in one case would constitute res judicata in
the other.
In Agustin v. Delos Santos,46 the Court cited three tests to verify whether
there is identity of causes of action for purposes of applying the principle
of res judicata. The first test is the "absence of inconsistency test" where it
is determined whether the judgment sought will be inconsistent with the
prior judgment. If no inconsistency is shown, the prior judgment shall not
constitute a bar to subsequent actions.47 The more common approach in
ascertaining identity of causes of action is the "same evidence test,"
whereby the following question serves as a sufficient criterion: "would the
same evidence support and establish both the present and former causes
of action?" If the answer is in the affirmative, then the prior judgment is a
bar to the subsequent action; conversely, it is not.48 Aside from the
"absence of inconsistency test" and "same evidence test," we have also
ruled that a previous judgment operates as a bar to a subsequent one
when it had touched on a matter already decided, or if the parties are in
effect "litigating for the same thing."49chanroblesvirtualawlibrary
The "absence of inconsistency test" finds no application in this case since it
presupposes that a final judgment has been rendered in the first case. By
applying the "same evidence test," however, it becomes apparent that the
proof necessary to obtain affirmative relief in Civil Case No. 2004-269 is
the same as that in Civil Case No. 2004-271. Since the spouses Marcelo are
claiming sole ownership of Lot 3976 in their MSA, the evidence needed to
establish better right of possession over the house constructed by Florante
Marcelo and Marilou Silverio, and the one built by the Silverios is the
same, regardless of the fact that they were built on separate portions of
said lot. We have ruled time and again that "a party cannot, by varying the
form of action, or adopting a different method of presenting his case,
escape the operation of the principle that one and the same cause of
action shall not be twice litigated."50chanroblesvirtualawlibrary
Evidently, the spouses Marcelo engaged in forum shopping by filing
separate cases for unlawful detainer based on a single claim of ownership
over Lot 3976. Said act is likewise tantamount to splitting a cause of action
which, in this case, is a cause for dismissal on the ground of litis pendentia.
On this score alone, the petition for review on certiorari filed by the
spouses Marcelo in G.R. Nos. 184490 must fail, alongside their averments
in G.R. NO. 184079.
In any case, even if we confront the issue as to who between the spouses
Marcelo and the Silverios have better right of possession over the subject
properties, the former would still not prevail.
As earlier stated, the DENR-NCR had canceled the MSA filed by the
spouses Marcelo in its Decision51 dated July 11, 2007. The Department
found that the spouses Marcelo failed to satisfy the requirements for the
acquisition of Lot 3976 under the Public Land Act. The DENR-NCR clarified
that the Decision dated December 12, 1996 gave due course to the
application, not only of the spouses Marcelo, but also those of other
applicants. It gave weight to the findings in the ocular inspection that the
spouses Marcelo are actually occupying only 50 square meters of Lot 3976
while the remaining portions are inhabited by 111 families. The DENR-NCR
adds that the spouses Marcelo cannot claim the entire Lot No. 3976 since
Republic Act No. 73052 limits the area of land that may be applied for to
1,000 square meters.53 In conclusion, the DENR-NCR held that Lot 3976
remains a public land and its dwellers may apply for the purchase of those
portions that they are actually occupying.
Factual considerations relating to lands of the public domain properly rest
within the administrative competence of the Director of Lands and the
DENR. Findings of administrative agencies, which have acquired expertise
because of their jurisdiction, are confined to specific matters and are
accorded respect, if not finality, by the courts. Even if they are not binding
to civil courts exercising jurisdiction over ejectment cases, such factual
findings deserve great consideration and are accorded much
weight.54chanroblesvirtualawlibrary
Nonetheless, the declaration by the DENR-NCR that Lot 3976 is still part of
the public domain does not mean that neither of the parties is entitled to
the possession of the subject properties. In Pajuyo v. Court of Appeals,55
we reiterated the policy behind the summary action of forcible entry and
unlawful detainer, thus:chanroblesvirtualawlibrary
It must be stated that the purpose of an action of forcible entry and
detainer is that, regardless of the actual condition of the title to the
property, the party in peaceable quiet possession shall not be turned out
by strong hand, violence or terror. In affording this remedy of restitution
the object of the statute is to prevent breaches of the peace and criminal
disorder which would ensue from the withdrawal of the remedy, and the
reasonable hope such withdrawal would create that some advantage must
accrue to those persons who, believing themselves entitled to the
possession of property, resort to force to gain possession rather than to
some appropriate action in the courts to assert their claims. This is the
philosophy at the foundation of all these actions of forcible entry and
detainer which are designed to compel the party out of possession to
respect and resort to the law alone to obtain what he claims is
his.56chanroblesvirtualawlibrary

The parties in Pajuyo were informal settlers on the public land which was
the subject of said case. We ruled that since the government, which has
title or better right over the property was not impleaded in the case, the
Court cannot, on its own, evict the parties. We recognized better right of
possession in favor of the petitioner therein who began occupying the
disputed property ahead of the respondents in said case.
A case with parallel factual milieu is Modesto v. Urbina.57 Like the spouses
Marcelo, the respondents in said case relied on a MSA and tax
declarations to substantiate their claim of possession over the contested
land therein. In ruling for the petitioners in said case, the Court stressed
that the mere declaration of land for taxation purposes does not
constitute possession thereof nor is it proof of ownership in the absence
of the claimant's actual possession.58 We explained that unless a public
land is shown to have been reclassified as alienable or actually alienated
by the State to a private person, that piece of land remains part of the
public domain, and its occupation, in the concept of owner, no matter how
long, cannot confer ownership or possessory rights.59 This finds support in
Section 88 of the Public Land Act, which
provides:chanroblesvirtualawlibrary
Section 88. The tract or tracts of land reserved under the provisions of
section eighty-three shall be non-alienable and shall not be subject to
occupation, entry, sale, lease, or other disposition until again declared
alienable under the provisions of this Act or by proclamation of the
President.
In a Certification60 dated June 8, 2006, Samson G. de Leon, the Regional
Technical Director for Lands of the DENR-NCR stated
that:chanroblesvirtualawlibrary
This is to certify that Lot 3976 Cad 299, Paraaque Cadastre situated at
San Dionisio, Paraaque, Metro Manila, containing an area of 5,027.00
square meters has been verified based on available records of this Office
to be under Project No. 25, classified as Alienable or Disposable Public
Land, certified as such on 3 January 1968 per BFD L.C. Map No. 2323.
xxx
This is to further certify that as per Certification dated 15 December 2005
issued by Records Officer II Anita B. Ibardolasa which is hereto attached,
no land patent has been issued over the same or any portion thereof.
x x x. (Emphasis supplied.)
It is undisputed by the spouses Marcelo that the Silverios presently occupy
those portions of Lot 3976 which are the subjects of the consolidated
petitions before us. In particular, the Silverios tie their possession of the
parcel at issue in G.R. NO. 184490 to Florante Marcelo who appropriated a
portion of Lot 3976 for himself, and with his wife, constructed a house
thereon in 1986. As regards the portion of Lot 3976 subject of G.R. NO.
184079, the Silverios have established their dwelling thereon in 1987 -
long after Lot 3976 was classified as alienable and disposable public land
on January 3, 1968.
Meanwhile, the spouses Marcelo insist on their better right to possess the
contested parcels as holders of Tax Declaration No. E-008-19942 in the
name of Ricardo Marcelo. Said tax declaration, which covers Lot 3976, was
issued for the year 2005 and canceled Tax Declaration No. E-008-18821,
also under the name of Ricardo Marcelo. Other than said tax declaration,
however, we found nothing in the records of these cases to show that the
spouses Marcelo have been consistently paying taxes on Lot 3976. We
note that Tax Declaration No. E-008-19942 was issued fairly recently, and
by itself, is inadequate to convince the Court that the spouses Marcelo
have been in open, continuous and exclusive possession of the subject
portions of Lot 3976, by themselves or through a successor-in-interest,
since January 3, 1968. More importantly, it is ingrained in our
jurisprudence that the mere declaration of a land for taxation purposes
does not constitute possession thereof nor is it proof of ownership in the
absence of the claimant's actual possession.61chanroblesvirtualawlibrary
Considering that the Silverios are in actual possession of the subject
portions of Lot 3976, they are entitled to remain on the property until a
person who has a title or a better right lawfully ejects them. The ruling in
this case, however, does not preclude the Silverios and the spouses
Marcelo from introducing evidence and presenting arguments before the
proper administrative agency to establish any right to which they may be
entitled under the law.62chanroblesvirtualawlibrary
WHEREFORE, the Court RESOLVES:chanroblesvirtualawlibrary
(1) To GRANT the petition in G.R. NO. 184079. The Decision dated March
18, 2008 and Resolution dated August 12, 2008 of the Court of Appeals in
CA-G.R. SP No. 98105 are REVERSED and SET ASIDE;cralawlibrary
(2) To DENY the petition in G.R. NO. 184490. Consequently, the Decision
dated March 27, 2008 and Resolution dated September 1, 2008 of the
Court of Appeals in CA-G.R SP No. 98713 are AFFIRMED; and
(3) To DISMISS the complaints for unlawful detainer filed by the spouses
Ricardo and Evelyn Marcelo against Armando Silverio, Sr. and Remedios
Silverio for lack of merit.
No pronouncement as to costs.
SO ORDERED.
EN BANC
[G. R. No. 130876. January 31, 2002]
FRANCISCO M. ALONSO, substituted by his heirs, petitioners, vs. CEBU
COUNTRY CLUB, INC., respondent.
DECISION
PARDO, J.:
The Case
The case is an appeal via certiorari from a decision of the Court of
Appeals[1] affirming in toto that of the Regional Trial Court, Branch 8,
Cebu City,[2] declaring that the title to the contested Lot No. 727, Banilad
Friar Lands Estate, Cebu City, was validly re-constituted in the name of the
Cebu Country Club, Inc. and ordering petitioners to pay attorneys fees of
P400,000.00, and litigation expenses of P51,000.00, and costs.
In an appeal via certiorari, petitioners may raise only questions of law,
which shall be distinctly set forth.[3] The jurisdiction of the Supreme Court
in cases brought before it from the Court of Appeals is limited to the
review of errors of law and not to analyze or weigh the evidence all over
again, as its findings of facts are deemed final and conclusive.[4]
In this appeal, petitioners raise five (5) issues, all of which involve
questions of fact that have been resolved by the trial court and the Court
of Appeals in favor of the Cebu Country Club, Inc.
The Facts
The facts, as found by the Court of Appeals, are as follows:
(1) Petitioner Francisco M. Alonso, who died pendente lite and substituted
by his legal heirs, a lawyer by profession, the only son and sole heir of the
late Tomas N. Alonso and Asuncion Medalle, who died on June 16, 1962
and August 18, 1963, respectively (Exhibits P and P-1). Cebu Country Club,
Inc. is a non-stock, non-profit corporation duly organized and existing
under Philippine Laws the purpose of which is to cater to the recreation
and leisure of its members.
(2) Sometime in 1992, petitioner discovered documents and records Friar
Lands Sale Certificate Register/Installment Record Certificate No. 734,
Sales Certificate No. 734 and Assignment of Sales Certificate (Exhs. A, J and
K) showing that his father acquired Lot No. 727 of the Banilad Friar Lands
Estate from the Government of the Philippine Islands in or about the year
1911 in accordance with the Friar Lands Act (Act No. 1120). The
documents show that one Leoncio Alburo, the original vendee of Lot No.
727, assigned his sales certificate to petitioners father on December 18,
1911, who completed the required installment payments thereon under
Act No. 1120 and was consequently issued Patent No. 14353 on March 24,
1926. On March 27, 1926, the Director of Lands, acting for and in behalf of
the government, executed a final deed of sale in favor of petitioners father
Tomas N. Alonso (Exh. C). It appears, however, that the deed was not
registered with the Register of Deeds because of lack of technical
requirements, among them the approval of the deed of sale by the
Secretary of Agriculture and Natural Resources, as required by law.
(3) Upon investigation of the status of the land, petitioner found out from
the office of the Registrar of Deeds of Cebu City that title to Lot No. 727 of
the Banilad Friar Lands Estate had been administratively reconstituted
from the owners duplicate on July 26, 1948 under Transfer Certificate of
Title (TCT) No. RT-1310 (T-11351) in the name of United Service Country
Club, Inc., predecessor of Cebu Country Club, Inc. On March 8, 1960, upon
order of the Court of First Instance, the name of the registered owner in
TCT No. RT-1310 (T-11531) was changed to Cebu Country Club, Inc.
Moreover, the TCT provides that the reconstituted title was a transfer
from TCT No. 1021 (Exh. D and sub-markings).
(4) At present, TCT No. RT-1310 (T-11351) has been partially cancelled
when Lot No. 727 was subdivided in accordance with the Memorandum of
Agreement entered into by Cebu Country Club, Inc. and Susana Ingles
Marquiso and Simeon Ingles, Jr. by virtue of the ruling of the Court of
Appeals in the case of Heirs of Ramon Cabrera and Graciano Ingles v. Cebu
Country Club, Inc.[5] and affirmed by the Supreme Court in G. R. No.
60392, per resolution dated August 29, 1983. Lot 727-D-2 covered by TCT
No. 94905 remains registered in the name of Cebu Country Club, Inc. (Exh.
D-2).
(5) In the firm belief that petitioners father is still the rightful owner of Lot
No. 727 of the Banilad Friar Lands Estate since there are no records
showing that he ever sold or conveyed the disputed property to anyone,
on July 7, 1992, petitioner made a formal demand upon Cebu Country
Club, Inc. to restore to him the ownership and possession of said lot within
fifteen (15) days from receipt thereof. He indicated that his claim was
analogous to that of the heirs of the late Ramon Cabrera and Graciano
Ingles which was upheld by the Court of Appeals (Exh. H). Cebu Country
Club, Inc., however, denied petitioners claim and refused to deliver
possession to him.
(6) Left with no other recourse, on September 25, 1992, petitioner filed
with the Regional Trial Court, Cebu City,[6] a complaint for declaration of
nullity and non existence of deed/title, cancellation of certificates of title
and recovery of property against defendant Cebu Country Club, Inc.[7] He
alleged that the Cebu Country Club, Inc. fraudulently and illegally managed
to secure in its name the administrative reconstitution of TCT No. RT-13 10
(T-11351) despite the absence of any transaction of specific land dealing
that would show how Lot No. 727 had come to pass to Cebu Country Club,
Inc.; that TCT No. 11351 which is the source title of TCT No. RT-1310 (T-
11351) does not pertain to Lot No. 727; that the reconstituted title which
was issued on July 26, 1948, did not contain the technical description of
the registered land which was inserted only on March 8, 1960, twenty-
eight (28) years after the issuance of TCT No. RT-1310 (T-11351), hence,
Cebu Country Club, Inc.s title is null and void. Petitioner thus prayed for
the cancellation of TCT No. RT-1310 (T-11351) and the issuance of another
title in his name as the sole heir of Tomas Alonso, for Cebu Country Club,
Inc. to deliver possession of the property to petitioner, and render an
accounting of the fruits and income of the land. Petitioner likewise prayed
for the sum of P100,000.00 by way of attorneys fees plus P500.00 per
hearing as appearance fee, and P10,000.00 as reasonable litigation
expenses.
(7) On November 5, 1992, Cebu Country Club, Inc. filed with the trial court
its answer with counterclaim. It alleged that petitioner had no cause of
action against Cebu Country Club, Inc. since the same had prescribed and
was barred by laches, Cebu Country Club, Inc. having been in possession of
the land since 1935 until the present in the concept of an owner, openly,
publicly, peacefully, exclusively, adversely, continuously, paying regularly
the real estate taxes thereon; that Cebu Country Club, Inc. acquired the lot
in good faith and for value; that it caused the administrative reconstitution
of Lot No. 727 in 1948 from the owners duplicate, the original of TCT No.
11351 having been lost or destroyed during the war, pursuant to Republic
Act No. 26, its implementing Circular, GLRO Circular No. 17[8] and Circular
No. 6 of the General Land Registration Office;[9] that unlike Cebu Country
Club, Inc., petitioners father never had any registered title under the Land
Registration Act No. 496 nor did he pay the necessary taxes on Lot No. 727
during his lifetime; that petitioners father knew that the United Service
Country Club, Inc., predecessor of Cebu Country Club, Inc. was occupying
Lot No. 727 as owner; that petitioners father never reconstituted his
alleged title to Lot No. 727 but did so over Lot No. 810 of the Banilad Friar
Lands Estate, a lot adjacent to the disputed property, in 1946; that
petitioner himself lived in Cebu City, a few kilometers away from the land
in litigation; that petitioners father or petitioner himself, both of whom
are lawyers and the former a congressman as well, for more than sixty (60)
years, never made any demand on Cebu Country Club, Inc. for the
recovery of the property knowing fully well that said land was owned and
utilized by Cebu Country Club, Inc. as its main golf course. By way of
counterclaim, Cebu Country Club, Inc. prayed for the award of attorneys
fees in the amount of P900,000.00 and litigation expenses of P100,000.00,
moral damages of P500,000.00 and exemplary damages of
P2,000,000.00.[10]
(8) In the course of the trial, Cebu Country Club, Inc. to disprove
petitioners allegation that its title, TCT No. RT-1310 (T-11351), was
obtained illegally and fraudulently, submitted the deposition of an expert
witness, Atty. Benjamin Bustos, Chief of the Reconstitution Division, Land
Registration Authority, Central Office, Metro Manila (Exh. 8). He testified
that pursuant to GLRO Circular No. 17 dated February 19, 1947 and
Circular No. 6 (RD-3) dated August 5, 1946 (Exhs 2 and 3), titles issued
before the inauguration of the Republic of the Philippines were numbered
consecutively, and titles issued after the inauguration of the Republic were
likewise numbered consecutively, starting with the number one (1).
Eventually, therefore, the title numbers issued before the inauguration
would be duplicated by the title numbers issued after the inauguration of
the Republic.[11]
(9) On May 7, 1993, the trial court rendered a decision, the dispositive
portion of which reads:
THE FOREGOING CONSIDERED, judgment is hereby rendered in favor of
the defendant and against the plaintiff: declaring the contested property
or Lot 727 as legally belonging to the defendant; directing the plaintiff to
pay attorney' fee of P400,000.00; and litigation expenses of P51,000.00;
and finally, with costs against the plaintiff.
SO ORDERED.
Cebu City, May 7, 1993.
(s/t) BERNARDO LL. SALAS
Judge[12]
(10) In due time, both parties appealed to the Court of Appeals.[13]
After proceedings on appeal, on March 31, 1997, the Court of Appeals
promulgated a decision, the dispositive portion of which reads:
WHEREFORE, IN VIEW OF THE FOREGOING, the appeals interposed by
both parties are hereby DENIED, and the lower courts Decision dated May
7, 1993 is AFFIRMED in toto. No pronouncement as to costs.
SO ORDERED.[14]
On April 30, 1997, petitioner filed a motion for reconsideration; however,
on October 2, 1997, the Court of Appeals denied the motion.[15]
Hence, this appeal.[16]
On October 24, 2000, we required the Solicitor General to file comment on
the issue of the validity of the re-constituted title in dispute.[17]
On November 8, 2000, the Solicitor General submitted a comment stating
that on the basis of information received from the Land Registration
Authority (LRA) and the Land Management Bureau (LMB), the Cebu
Country Club, Inc. had been occupying the disputed property even before
the Second World War and developed it into a golf course and must have
acquired the property in a proper and valid manner.[18] Nonetheless, the
Solicitor General emphasized that the Cebu Country Clubs certificate of
title is a reconstituted title. A reconstituted title does not confirm or
adjudicate ownership of land covered by lost or destroyed title.[19] And
the Governments right to file reversion proceedings cannot be barred by
prescription that does not run against the State.[20]
The Issues
Petitioners raise the following issues:
1. Whether the Court of Appeals erred in affirming the validity of TCT No.
RT-1310 (T-11351).
2. Whether the Court of Appeals erred in sustaining respondents claim of
ownership over Lot No. 727;
3. Whether the Court of Appeals erred in holding that the present action is
barred by prescription and/or by laches;
4. Whether the Court of Appeals erred in not applying the doctrine of stare
decisis;
5. Whether the Court of Appeals erred in sustaining the trial courts award
for damages in the form of attorneys fees and litigation expenses.[21]
We resolve the issues in seriatim.
First Issue: Validity of Cebu Country Club, Inc.s Title
The first issue is whether the Court of Appeals lawfully adjudged the
validity of the administrative reconstitution of the title of Cebu Country
Club, Inc. over the OCT of the Government of the Philippine Islands and
Sales Patent No. 14353 on Lot No. 727 in the name of Tomas N. Alonso.
The issue is factual, which, as aforesaid, cannot be reviewed in this appeal.
Nevertheless, petitioners assail the validity of the administrative
reconstitution of Cebu Country Club, Inc.s title No. RT-1310 (T-11351) on
three (3) grounds:
1. Its source title bears the same number as another title which refers to
another parcel of land;
2. There is no recorded transaction of the land from Tomas Alonso in favor
of Cebu Country Club, Inc.; and
3. The technical description was not transcribed in the title within two (2)
years from the date of its reconstitution.
None of the grounds has any basis or merit.
On the question that TCT No. RT-1310 (T-11351) bears the same number
as another title to another land, we agree with the Court of Appeals that
there is nothing fraudulent with the fact that Cebu Country Club, Inc.s
reconstituted title bears the same number as the title of another parcel of
land. This came about because under General Land Registration Office
(GLRO) Circular No. 17, dated February 19, 1947, and Republic Act No. 26
and Circular No. 6, RD 3, dated August 5, 1946, which were in force at the
time the title was reconstituted on July 26, 1948, the titles issued before
the inauguration of the Philippine Republic were numbered consecutively
and the titles issued after the inauguration were numbered also
consecutively starting with No. 1, so that eventually, the titles issued
before the inauguration were duplicated by titles issued after the
inauguration of the Philippine Republic. This was testified to by Atty.
Benjamin Bustos, Chief of the Reconstitution Division, Land Registration
Authority, Central Office, Metro Manila, and by Atty. Dindo Nuez, Deputy
Register of Deeds of Cebu City, who declared that several titles in the
record of the Register of Deeds which were reconstituted after the
inauguration of the Philippine Republic had the same numbers as the titles
issued before the Second World War, due to the operation of the circulars
referred to.
Said the Court of Appeals:
As a third argument, plaintiff avers that the lower court erred in declaring
defendant as the owner of Lot 727 when it has a void title because it was
fraudulently acquired. Specifically, plaintiff points out that on the face of
defendants administratively reconstituted title- TCT No. RT-1310 (T-
11351), it would appear that its source title is TCT No. 11351. Going over
the said title further, it can be gleaned that the parent title of TCT No.
11351 is TCT No. 1021. However, plaintiff claims that defendant failed to
present said source titles. It appears likewise that the Register of Deeds of
Cebu City does not have a copy thereof.
On the other hand, plaintiff presented TCT No. 11351 issued on June 18,
1954 in the name of Pacita Raffinan covering Lot 925 of the Cadastral
Survey of Cebu with an area of 310 square meters, more or less, (Exh. L)
and TCT No. 1021 issued on July 12, 1947 in the name of Rosario Rubio
covering Lot No. 51-D of the subdivision plan being a portion of Lot No.
576 of the Banilad Friar lands Estate with an area of 230 sq. m., more or
less (Exh. E). In his motion for new trial, he likewise presented as one of his
newly discovered evidence a copy of TCT No. RT-1325 (T-1021) (Annex B,
Motion for New Trial, p. 60, Rollo) whose source title was presumably TCT
No. 1021, which apparently is the parent title of defendants TCT. Said TCT
No. RT-1325 (T-1021) was administratively reconstituted on July 27, 1948
and covers Lot No. 1314 of the Cadastral Survey of Cebu with an area of
110 sq. m., more or less, and registered in the name of Spouses Andres
Borres and Emiliana Enriquez. As stated in TCT No. RT-1325 (T-1021), its
parent title, TCT No. 1021, was entered in the record book on May 17,
1939.
Plaintiff concludes then that considering that TCT Nos. 11351 and 1021 as
well as RT-1325 (T-1021), which were purportedly the parent titles of TCT
No. RT-1310 (T-11351), do not cover Lot. 727, defendants TCT was void
having been obtained from a spurious or non-existent source (Citing the
case of Ramon Cabrera, et. al., vs. Cebu Country Club, Inc. CA-G.R. No.
65559-R, Exh. F).
That there seems to be no record on file of the existence of either TCT No.
11351 or 1021 covering Lot 727 of the Banilad Friar Lands Estate
containing an area of 377,622 sq. m., does not invalidate defendants title.
As defendant counters, which was corroborated by Atty. Dindo Nuez,
Deputy Register of Deeds for Cebu City, copies of these titles were lost and
could not be found despite diligent search thereof.
Moreover, the absence of said titles and the existence of TCT Nos. 11351
and 1021, which do not cover Lot 727, do not render TCT No. RT-1310 (T-
11351) invalid in the light of Circular No. 6 Exh. 3) re: numbering of
certificates of title, entries in the day book and registration books, and
GLRO Circular No. 17 (Exh. 2) the rules and regulations governing the
reconstitution of lost or destroyed certificates of title.[22]
Petitioners next argue that the reconstituted title of Cebu Country Club,
Inc. had no lawful source to speak of; it was reconstituted through
extrinsic and intrinsic fraud in the absence of a deed of conveyance in its
favor. In truth, however, reconstitution was based on the owners
duplicate of the title, hence, there was no need for the covering deed of
sale or other modes of conveyance. Cebu Country Club, Inc. was
admittedly in possession of the land since long before the Second World
War, or since 1931. In fact, the original title (TCT No. 11351) was issued to
the United Service Country Club, Inc. on November 19, 1931 as a transfer
from Transfer Certificate of Title No. 1021 (Exh. D-6). More importantly,
Cebu Country Club, Inc. paid the realty taxes on the land even before the
war, and tax declarations covering the property showed the number of the
TCT of the land. Cebu Country Club, Inc. produced receipts showing real
estate tax payments since 1949 (Exhs. 27 to 100-B). On the other hand,
petitioner failed to produce a single receipt of real estate tax payment
ever made by his father since the sales patent was issued to his father on
March 24, 1926. Worse, admittedly petitioner could not show any torrens
title ever issued to Tomas N. Alonso, because, as said, the deed of sale
executed on March 27, 1926 by the Director of Lands was not approved by
the Secretary of Agriculture and Natural Resources and could not be
registered. Under the law, it is the act of registration of the deed of
conveyance that serves as the operative act to convey the land registered
under the Torrens system. The act of registration creates constructive
notice to the whole world of the fact of such conveyance.[23] On this
point, petitioner alleges that Cebu Country Club, Inc. obtained its title by
fraud in connivance with personnel of the Register of Deeds in 1941 or in
1948, when the title was administratively reconstituted. Imputations of
fraud must be proved by clear and convincing evidence.[24] Petitioner
failed to adduce evidence of fraud. In an action for re-conveyance based
on fraud, he who charges fraud must prove such fraud in obtaining a title.
In this jurisdiction, fraud is never presumed.[25] The strongest suspicion
cannot sway judgment or overcome the presumption of regularity. The sea
of suspicion has no shore, and the court that embarks upon it is without
rudder or compass.[26] Worse, the imputation of fraud was so tardily
brought, some forty-four (44) years or sixty-one (61) years after its
supposed occurrence, that is, from the administrative reconstitution of
title on July 26, 1948, or from the issuance of the original title on
November 19, 1931, that verification is rendered extremely difficult, if not
impossible, especially due to the supervening event of the second world
war during which practically all public records were lost or destroyed, or
no longer available.
Petitioners next question the lack of technical description inscribed in the
reconstituted title in Cebu Country Club, Inc.s name. This is not a bar to
reconstitution of the title nor will it affect the validity of the reconstituted
title. A registered owner is given two (2) years to file a plan of such land
with the Chief of the General Land Registration Office.[27] The two-year
period is directory, not jurisdictional. In other words, the failure to submit
the technical description within two (2) years would not invalidate the
title. At most, the failure to file such technical description within the two-
year period would bar a transfer of the title to a third party in a voluntary
transaction.
Second Issue: Whether Francisco Alonso is owner of the land
The second issue is whether the Court of Appeals erred in ruling that the
Cebu Country Club, Inc. is owner of Lot No. 727.

Admittedly, neither petitioners nor their predecessor had any title to the
land in question. The most that petitioners could claim was that the
Director of Lands issued a sales patent in the name of Tomas N. Alonso.
The sales patent, however, and even the corresponding deed of sale were
not registered with the Register of Deeds and no title was ever issued in
the name of the latter. This is because there were basic requirements not
complied with, the most important of which was that the deed of sale
executed by the Director of Lands was not approved by the Secretary of
Agriculture and Natural Resources. Hence, the deed of sale was void.[28]
Approval by the Secretary of Agriculture and Commerce is indispensable
for the validity of the sale.[29] Moreover, Cebu Country Club, Inc. was in
possession of the land since 1931, and had been paying the real estate
taxes thereon based on tax declarations in its name with the title number
indicated thereon. Tax receipts and declarations of ownership for taxation
purposes are strong evidence of ownership.[30] This Court has ruled that
although tax declarations or realty tax payments are not conclusive
evidence of ownership, nevertheless, they are good indicia of possession
in the concept of owner for no one in his right mind will be paying taxes
for a property that is not in his actual or constructive possession.[31]
Notwithstanding this fatal defect, the Court of Appeals ruled that there
was substantial compliance with the requirement of Act No. 1120 to
validly convey title to said lot to Tomas N. Alonso.[32]
On this point, the Court of Appeals erred.
Under Act No. 1120, which governs the administration and disposition of
friar lands, the purchase by an actual and bona fide settler or occupant of
any portion of friar land shall be agreed upon between the purchaser and
the Director of Lands, subject to the approval of the Secretary of
Agriculture and Natural Resources (mutatis mutandis).[33]
In his Memorandum filed on May 25, 2001, the Solicitor General
submitted to this Court certified copies of Sale Certificate No. 734, in favor
of Leoncio Alburo, and Assignment of Sale Certificate No. 734, in favor of
Tomas N. Alonso. Conspicuously, both instruments do not bear the
signature of the Director of Lands and the Secretary of the Interior. They
also do not bear the approval of the Secretary of Agriculture and Natural
Resources.
Only recently, in Jesus P. Liao v. Court of Appeals,[34] the Court has ruled
categorically that approval by the Secretary of Agriculture and Commerce
of the sale of friar lands is indispensable for its validity, hence, the absence
of such approval made the sale null and void ab-initio.[35] Necessarily,
there can be no valid titles issued on the basis of such sale or
assignment.[36] Consequently, petitioner Franciscos father did not have
any registerable title to the land in question. Having none, he could not
transmit anything to his sole heir, petitioner Francisco Alonso or the
latters heirs.
In a vain attempt at showing that he had succeeded to the estate of his
father, on May 4, 1991, petitioner Francisco Alonso executed an affidavit
adjudicating the entire estate to himself (Exh. Q), duly published in a
newspaper of general circulation in the province and city of Cebu (Exh. Q-
1). Such affidavit of self-adjudication is inoperative, if not void, not only
because there was nothing to adjudicate, but equally important because
petitioner Francisco did not show proof of payment of the estate tax and
submit a certificate of clearance from the Commissioner of Internal
Revenue.[37] Obviously, petitioner Francisco has not paid the estate taxes.
Consequently, we rule that neither Tomas N. Alonso nor his son Francisco
M. Alonso or the latters heirs are the lawful owners of Lot No. 727 in
dispute. Neither has the respondent Cebu Country Club, Inc. been able to
establish a clear title over the contested estate. The reconstitution of a
title is simply the re-issuance of a lost duplicate certificate of title in its
original form and condition. It does not determine or resolve the
ownership of the land covered by the lost or destroyed title. A
reconstituted title, like the original certificate of title, by itself does not
vest ownership of the land or estate covered thereby.[38]
Third Issue: Action has prescribed or is barred by laches
The third issue is whether petitioners action for re-conveyance has
prescribed or is barred by laches.
An action based on implied or constructed trust prescribes in ten (10)
years... from the time of its creation or upon the alleged fraudulent
registration of the property.[39] Petitioner Franciscos action in the court
below was basically one of re-conveyance. It was filed on September 25,
1992, sixty-one (61) years after the title was issued on November 19,
1931, and forty-four (44) years after its reconstitution on July 26, 1948.
Thus, the failure of petitioner Francisco and his father to assert ownership
of the land for over sixty (60) years during which the Cebu Country Club,
Inc. was in possession is simply contrary to their claim of ownership.[40]
Petitioner Franciscos and his fathers long inaction or passivity in asserting
their rights over disputed property will preclude them from recovering the
same.[41]
Aside from the fact that, as herein-above stated, neither petitioner
Francisco nor his father held a valid title over the land, and that there was
no showing that his father owned the land at the time of his demise so as
to bequeath the same to petitioner Francisco as his sole heir, by now, the
rule is firmly settled that an action for re-conveyance based on fraud must
be filed within ten (10) years from discovery of the fraud which as to titled
lands referred to the registration of the title with the register of deeds.[42]
An action for re-conveyance is a legal remedy granted to a landowner
whose property has been wrongfully or erroneously registered in anothers
name, but then the action must be filed within ten years from the issuance
of the title since such issuance operates as a constructive notice.[43] In
addition, the action is barred by laches because of the long delay before
the filing of the case.[44]
Fourth Issue: No stare decisis
The next issue is whether the Court of Appeals erred in not ruling that the
decision in Ramon Cabrera-Graciano Ingles vs. Cebu Country Club, Inc., CA-
G. R. No. 65559-R, October 31, 1981, was binding on respondent Cebu
Country Club, Inc. as to the land in question.
Petitioners assert that as the Court of Appeals annulled Cebu Country
Club, Inc.s title in the Cabrera-Ingles case, so too must the title in this case
be declared void. In the first place, there is no identity of parties; secondly,
neither the titles to nor the parcels of land involved are the same.
Consequently, the doctrine of res-judicata does not apply.[45]
Momentarily casting aside the doctrine of res-judicata, there is an
important moiety in the Cabrera-Ingles case. There, the Director of Lands,
after the administrative reconstitution of the title, issued a directive to the
Register of Deeds to register the lot in question in favor of Graciano
Ingles.[46] This superseded the administrative reconstitution, rendering
allegations of fraud irrelevant. Here, the Director of Lands did not issue a
directive to register the land in favor of Tomas N. Alonso. And worse, the
sales patent and corresponding deed of sale executed in 1926 are now
stale.[47]
Petitioners further contend that the Supreme Courts minute resolution
refusing to review that decision is equivalent to a judgment on the merits.
The minute resolution may amount to a final action on the case but it is
not a precedent.[48] It can not bind non-parties to the action. To restate,
the rule is that: (1) a judgment in rem is binding upon the whole world,
such as a judgment in a land registration case or probate of a will; (2) a
judgment in personam is binding upon the parties and their successors in
interest but not upon strangers.[49] A judgment directing a party to
deliver possession of a property to another is in personam; it is binding
only against the parties and their successors in interest by title subsequent
to the commencement of the action.[50] Suits to quiet title are not
technically suits in rem, nor are they, strictly speaking, in personam, but
being against the person in respect of the res, these proceedings are
characterized as quasi in rem. The judgment in such proceedings is
conclusive only between the parties.[51] In this case, the action below is
basically one for declaration of nullity of title and recovery of ownership of
real property, or re-conveyance. An action to recover a parcel of land is a
real action but it is an action in personam, for it binds a particular
individual only although it concerns the right to a tangible thing.[52] Any
judgment therein is binding only upon the parties properly impleaded.[53]
What is more, the doctrine of stare decisis notwithstanding, the Court has
abandoned or overruled precedents whenever it realized that the Court
erred in the prior decisions. After all, more important than anything else is
that this Court should be right.[54]
Fifth Issue: Award of attorneys fees
The final issue raised is whether or not the Court of Appeals erred in
awarding in favor of the Cebu Country Club, Inc. attorneys fees of
P400,000.00 as damages and P51,000.00 as litigation expenses.[55]
 VILLARAMA, JR., J.:
An award of attorneys fees and expenses of litigation is proper under the
circumstances provided for in Article 2208 of the Civil Code, one of which At bar are the motions for reconsideration separately filed by the
is when the court deems it just and equitable that attorneys fees and Manotoks, Barques and Manahans of our Decision promulgated on August
expenses of litigation should be recovered[56] and when the civil action or 24, 2010, the dispositive portion of which reads:
proceeding is clearly unfounded and where defendant acted in gross and WHEREFORE, the petitions filed by the Manotoks under Rule 45 of the
evident bad faith.[57] The award of attorneys fees as damages is the 1997 Rules of Civil Procedure, as amended, as well as the petition-in-
exception rather than the rule; it is not to be given to the defendant every intervention of the Manahans, are DENIED. The petition for reconstitution
time the latter prevails. The right to litigate is so precious that a penalty of title filed by the Barques is likewise DENIED. TCT No. RT-22481 (372302)
should not be charged on those who may exercise it erroneously, unless, in the name of Severino Manotok IV, et al., TCT No. 210177 in the name of
of course such party acted in bad faith.[58] In this case, however, we Homer L. Barque and Deed of Conveyance No. V-200022 issued to Felicitas
would rather not award attorneys fees and expenses of litigation in the B. Manahan, are all hereby declared NULL and VOID. The Register of Deeds
absence of showing of gross and evident bad faith in filing the action.[59] of Caloocan City and/or Quezon City are hereby ordered to CANCEL the
said titles. The Court hereby DECLARES that Lot 823 of the Piedad Estate,
The Judgment Quezon City legally belongs to the NATIONAL GOVERNMENT OF THE
REPUBLIC OF THE PHILIPPINES, without prejudice to the institution of
WHEREFORE, we DENY the petition for review. However, we SET ASIDE the REVERSION proceedings by the State through the Office of the Solicitor
decision of the Court of Appeals[60] and that of the Regional Trial Court, General.
Cebu City, Branch 08.[61] With costs against the petitioners.
SO ORDERED.
IN LIEU THEREOF, we DISMISS the complaint and counterclaim of the The Manotoks raised the following grounds in their motion for
parties in Civil Case No. CEB 12926 of the trial court. We declare that Lot reconsideration with motion for oral arguments:
No. 727 D-2 of the Banilad Friar Lands Estate covered by Original 1. It is unjust and oppressive to deprive the Manotoks of property they
Certificate of Title Nos. 251, 232, and 253 legally belongs to the have long held and acquired from the State, on consideration fully paid
Government of the Philippines. and received, and under registered title issued by the State itself, on
nothing more than the assumed failure of the States agents to inscribe a
No costs. ministerial approval on the transaction deeds.
2. The annulment of Friar Land sales, simply because physical evidence of
SO ORDERED. the Secretarys ministerial approval can no longer be found, may void
transactions involving thousands of hectares of land, and affect possibly
EN BANC millions of people to whom the lands may have since been parceled out,
sold and resold.
SEVERINO M. MANOTOK IV, FROILAN M. MANOTOK, FERNANDO M. 3. The Manotoks were given no due notice of the issue of reversion, which
MANOTOK III, MA. MAMERTA M. MANOTOK, PATRICIA L. TIONGSON, this case on appeal did not include, and which was thrust upon the
PACITA L. GO, ROBERTO LAPERAL III, MICHAEL MARSHALL V. MANOTOK, Manotoks only in the final resolution disposing of the appeal.
MARYANN MANOTOK, FELISA MYLENE V. MANOTOK, IGNACIO V. It would be error for the Honorable Court to let this matter go without a
MANOTOK, JR., MILAGROS V. MANOTOK, SEVERINO MANOTOK III, ROSA serious and full re-examination. This can be accomplished, among others,
R. MANOTOK, MIGUEL A.B. SISON, GEORGE M. BOCANEGRA, MA. by allowing this motion for reconsideration to be heard on oral argument,
CRISTINA E. SISON, PHILIPP L. MANOTOK, JOSE CLEMENTE L. MANOTOK, to try to permit all pertinent considerations to be aired before the Court
RAMON SEVERINO L. MANOTOK, THELMA R. MANOTOK, JOSE MARIA and taken into account.
MANOTOK, JESUS JUDE MANOTOK, JR. and MA. THERESA L. MANOTOK, 4. These G.R. Nos. 162335 and 162605 were an appeal from administrative
represented by their Attorney- reconstitution proceedings before LRA Reconstitution officer Benjamin
in-fact, Rosa R. Manotok, Bustos. But the Resolution dated 18 December 2008 which finally reversed
Petitioners, the CAs rulings, affirmed the denial by Bustos of the application for
administrative reconstitution of the Barques purported transfer certificate
of title, and terminated the appeal introduced a new case on the Manotok
- versus - property. It ordered evidence-taking at the CA, on which the Supreme
G.R. Nos. 162335 & 162605 Court proposed itself to decide, in the first instance, an alleged ownership
controversy over the Manotok property.
Present: 5. The Manotoks objected to the remand on jurisdictional and due process
grounds. The original and exclusive jurisdiction over the subject matter of
CORONA, C.J., the case is vested by law on the regional trial courts.
CARPIO, 6. The Honorable Court erred in proceeding to judgment divesting the
VELASCO, JR., Manotoks of their title to Lot 823 of the Piedad Estate, without a trial in
LEONARDO-DE CASTRO, the courts of original and exclusive jurisdiction, and in disregard of process
BRION, which the law accords to all owners-in-possession.
PERALTA, 7. The Honorable Court erred in concluding that the Manotoks, despite
BERSAMIN, being owners in possession under a registered title, may be compelled to
DEL CASTILLO, produce the deeds by which the Government had transferred the property
ABAD, to them, and failing which can be divested of their ownership in favor of
VILLARAMA, JR., the Government, even if the latter has not demanded a reversion or
PEREZ, brought suit for that purpose.
MENDOZA, 8. The Honorable Court erred in imposing on the Manotoks, contrary to
SERENO, Art. 541 of the Civil Code, the obligation to prove their ownership of the
REYES, and subject property, and in awarding their title to the Government who has
PERLAS-BERNABE, JJ. not even sued to contest that ownership.
9. The Honorable Court erred in finding that Sale Certificate No. 1054,
which Severino Manotok acquired by assignment in 1923, was not
HEIRS OF HOMER L. BARQUE, represented by TERESITA BARQUE approved by the Director of Lands and the Secretary of Agriculture and
HERNANDEZ, Natural Resources, and in finding that a Sale Certificate without the
Respondents. Secretarys approval is void.
10. The Honorable Court erred in concluding that the Manotoks had no
valid Deed of Conveyance of Lot 823 from the Government The original of
Promulgated: Deed of Conveyance No. 29204 gave the register of deeds the authority to
issue the transfer certificate of title in the name of the buyer Severino
March 6, 2012 Manotok, which is required by law to be filed with and retained in the
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x custody of the register of deeds.We presume that the copy thereof
RESOLUTION actually transmitted to and received by the register of deeds did contain
the Secretarys signature because he in fact issued the TCT. And we rely on
this presumption because the document itself can no longer be found.
11. Assuming arguendo that the original Deed of Conveyance No. 29204
the register of deeds received did not bear the Department Secretarys
signature, DENR Memorandum Order No. 16-05 dated October 27, 2005
cured the defect. To deny the Manotoks the benefit of ratification under
said MO, on the erroneous interpretation that it covered only those found
in the records of the field offices of the DENR and LMB, would be
discriminatory. The Department Secretarys (assumed) failure to affix his
signature on the deed of conveyance could not defeat the Manotoks right
to the lot after they had fully paid for it.
Republic Act No. 9443 must be applied, mutatis mutandis, to the
Manotoks and the Piedad Estate.
12. The Honorable Court erred in denying their right to be informed of the
CAs report and be heard thereon prior to judgment, as basic requirements
of due process.
The Barques anchor their motion for reconsideration on the following:
I Upon the theory that this Court had no power to cancel their certificate of
THE HONORABLE SUPREME COURT GRAVELY ERRED IN DENYING THE
PETITION FOR RECONSTITUTION FILED BY RESPONDENTS HEIRS OF
BARQUE WITHOUT STATING THE GROUNDS FOR SUCH DENIAL.
II
THE HONORABLE SUPREME COURT GRAVELY ERRED IN INSTANTLY
DECLARING IN THE DISPOSITIVE PORTION OF THE DECISION THAT ALONG
WITH FELICITAS B. MANAHANS TITLE, RESPONDENTS HEIRS OF BARQUES
TITLE TCT NO. 210177 IS LIKEWISE NULL AND VOID, WITHOUT STATING A
CLEAR AND DEFINITE BASIS THEREFOR.
III
THE HONORABLE SUPREME COURT GRAVELY ERRED IN DECLARING
TRANSFER CERTIFICATE OF TITLE NO. 210177 IN THE NAME OF HOMER L.
BARQUE NULL AND VOID.
IV
THE HONORABLE COURT OF APPEALS FACTUAL FINDINGS, ADOPTED BY
THE HONORABLE SUPREME COURT IN THE DECISION DATED 24 AUGUST
2010, ARE CONTRARY TO THE EVIDENCE PRESENTED.
V reconstitution proceedings. The Court En Banc proceeded with the
THE HONORABLE SUPREME COURTS FINDINGS IN THE DECISION DATED 24
AUGUST 2010 ARE CONTRARY TO LAW.
As to the Manahans, they seek a partial reconsideration and to allow
further reception of evidence, stating the following grounds:
I. As the original of Sale Certificate No. 511 could not be found in the files
of the LMB or the DENR-NCR at the time of the hearings before the
Commissioners, the existence of the certificate was proven by secondary
evidence. The Commissioners erred in ignoring secondary evidence of the
contents of Sale Certificate No. 511 because of mere doubt and suspicion
as to its authenticity and in the absence of contradicting evidence.
II. The OSG which has been tasked by the Honorable Court to obtain
documents from the LMB and DENR-NCR relative to the conveyance of Lot
823, Piedad Estate, furnished intevenors with a certified true copy of Sale
Certificate No. 511 which it obtained from the DENR-NCR on September
11, 2010, together with the explanation of DENR-NCR why the document
is available only now. (Certified true copy of Sale Certificate No. 511 and
Sworn Explanation of Evelyn G. Celzo attached as Annexes I and II.
III. When Valentin Manahan offered to purchase Lot 823, Piedad Estate,
being the actual settler and occupant who under the law enjoyed
preference to buy the lot, his status as actual settler and occupant must
have been verified by the Bureau of Public Lands because the presumption
is that official duty has been regularly performed. The administrative
determination of the status of Valentin Manahan as actual settler and
occupant can not now be reviewed after the lapse of about eight (8)
decades when parties, witnesses, documents and other evidence are
hardly or no longer available.
IV. Abundant evidence was submitted by intervenors that they and their
predecessors-in-interest occupied and possessed Lot 823 up to 1948 when
they were dispossessed by armed men. It was error for the Commissioners
to ignore the evidence of the intervenors, there being no contradicting
proof.
V. The Commissioners committed palpable error in not according
evidentiary value to the Investigation Report of Evelyn dela Rosa because
it is allegedly practically a replica or summation of Felicitas B. Manahans
allegations embodied in her petition. Examination of the dates of the
documents will show that the Investigation Report preceded the Petition.
The Petition, therefore, is based on the Investigation Report, and not the
other way around.
VI. The pronouncement of the Commissioners that Sale Certificate No. 511
is stale is incorrect. Intervenors made continuing efforts to secure a deed
of conveyance based on Sale Certificate No. 511. Defense of staleness or
laches belongs to the party against whom the claim is asserted; it is only
that party who can raise it. It can also be waived, as in this case when the
LMB which had the sole authority under Act No. 1120 to convey friar
lands, issued to intervenor Felicitas B. Manahan Deed of Conveyance No.
V-2000-22.
VII. The requirement of Act No. 1120 that a deed of conveyance of friar
land must be signed by the Secretary of Interior was dispensed with
pursuant to law and Presidential issuances which have the force of law.
VIII. Deeds of conveyance lacking the signature of the Department
Secretary were ratified by President Joseph Estrada and DENR Secretary
Michael T. Defensor.
The motions are bereft of merit.
title over Lot 823, Piedad Estate in the resolution of the present
controversy, the Manotoks contend that our Resolution of December 18,
2008 terminated the appeal from the Land Registration Authority (LRA)
administrative reconstitution proceedings by reversing the CAs rulings and
affirming the denial by LRA Reconstitution Officer Benjamin M. Bustos of
the application for administrative reconstitution of the Barques Transfer
Certificate of Title (TCT) No. 210177. The appeal having been terminated,
the Manotoks argued that the remand to the CA for evidence-taking had
introduced a new case in which this Court will decide, in the first instance,
an alleged ownership issue over the property. Such action is legally infirm
since the law has vested exclusive original jurisdiction over civil actions
involving title to real property on the trial courts.
The argument is untenable.
In our December 18, 2008 Resolution, we set aside the December 12, 2005
Decision rendered by the First Division and recalled the entry of judgment.
We ruled that neither the CA nor the LRA had jurisdiction to cancel the
Manotok title, a relief sought by the Barques in the administrative
reevaluation of the cases on a pro hac vice basis. During the oral
arguments, there were controversial factual matters which emerged as
the parties fully ventilated their respective claims, in the course of which
the Barques claim of ownership was found to be exceedingly weak.
Indeed, both the LRA and CA erred in ruling that the Barques had the right
to seek reconstitution of their purported title. Reevaluation of the
evidence on record likewise indicated that the Manotoks claim to title is
just as flawed as that of the Barques. Following the approach in Alonso v.
Cebu Country Club, Inc.[1] also involving a Friar Land, Republic v. Court of
Appeals[2] and Manotok Realty Inc. v. CLT Realty Development
Corporation,[3] the majority resolved to remand this case for reception of
evidence on the parties competing claims of ownership over Lot 823 of the
Piedad Estate. Given the contentious factual issues, it was necessary for
this Court to resolve the same for the complete determination of the
present controversy involving a huge tract of friar land. It was thus not the
first time the Court had actually resorted to referring a factual matter
pending before it to the CA.
Maintaining their objection to the order for reception of evidence on
remand, the Manotoks argue that as owners in possession, they had no
further duty to defend their title pursuant to Article 541 of the Civil Code
which states that: [a] possessor in the concept of owner has in his favor
the legal presumption that he possesses with a just title and he cannot be
obliged to show or prove it. But such presumption is prima facie, and
therefore it prevails until the contrary is proved.[4]In the light of serious
flaws in the title of Severino Manotok which were brought to light during
the reconstitution proceedings, the Court deemed it proper to give all the
parties full opportunity to adduce further evidence, and in particular, for
the Manotoks to prove their presumed just title over the property also
claimed by the Barques and the Manahans. As it turned out, none of the
parties were able to establish by clear and convincing evidence a valid
alienation from the Government of the subject friar land. The declaration
of ownership in favor of the Government was but the logical consequence
of such finding.
We have ruled that the existence of Sale Certificate No. 1054 in the
records of the DENR-LMB was not duly established. No officer of the
DENR-NCR or LMB having official custody of sale certificates covering friar
lands testified as to the issuance and authenticity of Exh. 10 submitted by
the Manotoks. And even assuming that Exh. 10 was actually sourced from
the DENR-LMB, there was no showing that it was duly issued by the
Director of Lands and approved by the Secretary of Agriculture and
Natural Resources (DENR). On this point, the Manotoks hinted that the
LMBs certifying the document (Exh. 10) at the Manotoks request was a
deliberate fraud in order to give them either a false document, the usual alleged Sale Certificate No. 511 of the Manahans. The relevant portions of
unsigned copy of the signed original, or a fake copy. the transcript of stenographic notes of the cross- examination of said
The Manotoks further assert that this would imply that the LMB either did witness during the hearing before the CA are herein quoted:
not produce the genuine article, or could not produce it. This could only ATTY. SAN JUAN:
mean that the document which the NBI found to be fake or spurious, if How about this part concerning Valentin Manahan having applied for the
this Court accepts that finding, was planted evidenceor evidence inserted purchase of the land? Did you get this from the neighbors or from Felicitas
in the LMB files to discredit the Manotok title. Nonetheless, the Manotoks Manahan?
insist there were independent evidence which supposedly established the xxxx
prior existence of Sale Certificate No. 1054. These documents are: (a) WITNESS:
photocopy of Assignment of Sale Certificate No. 1054 dated 1929; (b) No, sir. Only the Records Section, sir, that Valentin Manahan applied, sir.
official receipt of payment for said certified copy; (c) photocopies of the ATTY. SAN JUAN:
other assignment deeds dated 1923; (d) official receipts of installment You did not see Valentin Manahans application but only the Records
payments on Lot 823 issued to Severino Manotok; (e) file copies in the Section saw it?
National Archives of the Deed of Conveyance No. 29204; and (f) the WITNESS:
notarial registers in which the said Deed of Conveyance, as well as the Yes, sir.
assignment documents, were entered. ATTY. SAN JUAN:
The contentions have no merit, and at best speculative. As this Court Did they tell you that they saw the application?
categorically ruled in Alonso v. Cebu Country Club, Inc.,[5] approval by the WITNESS:
Secretary of Agriculture and Commerce of the sale of friar lands is I did not go further, sir.
indispensable for its validity, hence, the absence of such approval made xxxx
the sale null and void ab initio. In that case, the majority declared that no ATTY. SAN JUAN:
valid titles can be issued on the basis of the sale or assignment made in And this report of yours says that Valentin Manahan was issued Sale
favor of petitioners father due to the absence of signature of the Director Certificate No. 511 after completing the payment of the price of P2,140?
of Lands and the Secretary of the Interior, and the approval of the WITNESS:
Secretary of Natural Resources in the Sale Certificate and Assignment of Yes, sir.
Sale Certificate. Applying the Alonso ruling to these cases, we thus held ATTY. SAN JUAN:
that no legal right over the subject friar land can be recognized in favor of You also got this from the records of the LMB, is that correct?
the Manotoks under the assignment documents in the absence of the WITNESS:
certificate of sale duly signed by the Director of Lands and approved by the Yes, sir.
Secretary of Agriculture and Natural Resources. ATTY. SAN JUAN:
That a valid certificate of sale was issued to Severino Manotoks assignors You actually saw the sale certificate that was issued to Valentin Manahan
cannot simply be presumed from the execution of assignment documents after he paid the price of P2,140?
in his favor. Neither can it be deduced from the alleged issuance of the WITNESS:
half-torn TCT No. 22813, itself a doubtful document as its authenticity was No, sir. I did not go further.
not established, much less the veracity of its recitals because the name of ATTY. SAN JUAN:
the registered owner and date of issuance do not appear at all. The You did not see the sale certificate?
Manotoks until now has not offered any explanation as to such condition WITNESS:
of the alleged title of Severino Manotok; they assert that it is the Register Yes, Sir, but I asked only.
of Deeds himself who should be in a position to explain that condition of ATTY. SAN JUAN:
the TCT in his custody. But then, no Register of Deeds had testified and Who did you ask?
attested to the fact that the original of TCT No. 22813 was under his/her WITNESS:
custody, nor that said certificate of title in the name of Severino Manotok The records officer, sir.
existed in the files of the Registry of Deeds of Caloocan or Quezon City. ATTY. SAN JUAN:
The Manotoks consistently evaded having to explain the circumstances as Whose name you can no longer recall, correct?
to how and where TCT No. 22813 came about. Instead, they urge this WITNESS:
Court to validate their alleged title on the basis of the disputable I can no longer recall, sir.
presumption of regularity in the performance of official duty. Such stance ATTY. SAN JUAN:
hardly satisfies the standard of clear and convincing evidence in these And the information to you was the Sale Certificate No. 511 was issued
cases. Even the existence of the official receipts showing payment of the after the price was fully paid?
price to the land by Severino Manotok does not prove that the land was WITNESS:
legally conveyed to him without any contract of sale having been executed Yes, sir.
by the government in his favor. Neither did the alleged issuance of TCT No. ATTY. SAN JUAN:
22183 in his favor vest ownership upon him over the land nor did it And it was only after he applied for the purchase of the lot sometime after
validate the alleged purchase of Lot 283, which is null and void. The the survey of 1939 that he was issued sale certificate No. 511?
absence of the Secretarys approval in Certificate of Sale No. 1054 made WITNESS:
the supposed sale null and void ab initio.[6] I am not aware of the issuance of sale certificate. I am aware only of the
In the light of the foregoing, the claim of the Barques who, just like the deed of assignment, Sir.
Manahans, were unable to produce an authentic and genuine sale x x x x[7] (Emphasis supplied.)
certificate, must likewise fail. The Decision discussed extensively the In view of the above admission, Celzos explanation that the copy of Sale
findings of the CA that the Barques documentary evidence were either Certificate No. 511 signed by the Director of Lands and Secretary of the
spurious or irregularly procured, which even buttressed the earlier Interior was originally attached to her Investigation Report, cannot be
findings mentioned in the December 18, 2008 Resolution. The CAs findings given credence. Even her testimony regarding the conduct of her
and recommendations with respect to the claims of all parties, have been investigation of Lot 823, Piedad Estate and the Investigation Report she
fully adopted by this Court, as evident in our disquisitions on the submitted thereafter, failed to impress the CA on the validity of the
indispensable requirement of a validly issued Certificate of Sale over Lot Manahans claim. Indeed, records showed that Celzos findings in her report
823, Piedad Estate. were merely based on what Felicitas Manahan told her about the alleged
As to the motion of the Manahans to admit an alleged certified true copy occupation and possession by Valentin Manahan of the subject land.
of Sale Certificate No. 511 dated June 23, 1913 in the name of Valentin
Manahan which, as alleged in the attached Sworn Explanation of Evelyn G. In their Offer of Additional Evidence, the Manahans submitted a
Celzo, the latter hadinadvertently failed to attach to her Investigation photocopy of a letter dated December 21, 2010 allegedly sent by Atty.
Report forwarded to the CENRO, this Court cannot grant said motion. Allan V. Barcena (OIC, Director) to their counsel, Atty. Romeo C. dela Cruz,
This belatedly submitted copy of Sale Certificate No. 511 was not among which reads:
those official documents which the Office of the Solicitor General (OSG)
offered as evidence, as in fact no copy thereof can be found in the records This has reference to your letter dated August 20, 2010 addressed to the
of either the DENR-NCR or LMB. Moreover, the sudden emergence of this Secretary of the Department of Environment and Natural Resources
unauthenticated document is suspicious, considering that Celzo who (DENR) requesting that Deed of Conveyance No. V-200022 issued on
testified, as witness for both the OSG and the Manahans, categorically October 30, 2000 over Lot 823 of the Piedad Estate in favor of Felicitas B.
admitted that she never actually saw the application to purchase and
Manahan be ratified or confirmed for reasons stated therein. The Office of
the DENR Secretary in turn referred the letter to us for appropriate action.
Records of this Office on Lot 823 of the Piedad Estate, show that the Deed
of Conveyance No. V-200022 covering said lot in favor of Felicitas
Manahan was issued by then Director of the Land Management Bureau
(LMB), now Undersecretary Ernesto D. Adobo, Jr., on October 30, 2000.
The Deed was issued based on General Memorandum Order (GMO) No. 1
issued by then Secretary Jose J. Leido, Jr. of the Department of Natural
Resources on January 17, 1977, which authorized the Director of Lands,
now Director of LMB, to approve contracts of sale and deeds of
conveyance affecting Friar Lands.
It is stressed that the confirmation of the Deed by this office is only as to
the execution and issuance based on the authority of LMB Director under
GMO No. 1. This is without prejudice to the final decision of the Supreme
Court as to its validity in the case of Severino Manotok IV, et al. versus
Heirs of Homer L, Barque (G.R. No. 162335 & 162605).
Please be guided accordingly.[8] (Emphasis supplied.)
However, in the absence of a valid certificate of sale duly signed by the
Secretary of Interior or Agriculture and Natural Resources, such alleged
confirmation of the execution and issuance by the DENR-LMB of Deed of
Conveyance No V-00022 in favor of Felicitas Manahan on October 30,
2000 is still insufficient to prove the Manahans claim over the subject land.
In a Supplemental Manifestation dated November 18, 2010, the Manotoks
submitted an affidavit supposedlyexecuted on November 11, 2010 by
former DENR Secretary Michael T. Defensor(Defensor Affidavit) clarifying
that MO 16-05 applies to all Deeds of Conveyance that do not bear the
signature of the Secretary of Natural Resources, contrary to the CA and
this Courts statement that said issuance refers only to those deeds of
conveyance on file with the records of the DENR field offices.
By its express terms, however, MO 16-05 covered only deeds of
conveyances and not unsigned certificates of sale. The explanation of
Secretary Defensor stated theavowed purpose behind the issuance, which
is to remove doubts or dispel objections as to the validity of all Torrens
transfer certificates of title issued over friar lands thereby ratifying the
deeds of conveyance to the friar land buyers who have fully paid the
purchase price, and are otherwise not shown to have committed any
wrong or illegality in acquiring such lands.
The Manahans propounded the same theory that contracts of sale over
friar lands without the approval of the Secretary of Natural Resources may
be subsequently ratified, but pointed out that unlike the Manotoks Deed
of Conveyance No. 29204 (1932), their Deed of Conveyance No. V-2000-22
(2000) was issued and approved by the Director of Lands upon prior
authority granted by the Secretary.
In their Consolidated Memorandum dated December 19, 2010, the
Manahans reiterated their earlier argument that the LMB Director himself
had the authority to approve contracts of sale and deeds of conveyance
over friar lands on the basis of General Memorandum Order No. 1 issued
in 1977 by then Secretary of Natural Resources Jose J. Leido, Jr. delegating
such function to the Director of Lands. This delegated power can also be
gleaned from Sec. 15, Chapter 1, Title XIV of the Administrative Code of
1987 which provides that the Director of Lands shall perform such other
functions as may be provided by law or assigned by the Secretary.
Moreover, former President Corazon C. Aquino issued Executive Order No.
131 dated January 20, 1987 reorganizing the LMB and providing that the
LMB Director shall, among others, perform other functions as may be
assigned by the Minister of Natural Resources.
On the basis of Art. 1317[9] of the Civil Code, the Manahans contend that
deeds of conveyance not bearing the signature of the Secretary can also
be ratified. Further, they cite Proclamation No. 172 issued by former
President Joseph Ejercito Estrada which declared that there should be no
legal impediment for the LMB to issue such deeds of conveyance since the
applicants/purchasers have already paid the purchase price of the lot, and
as sellers in good faith, it is the obligation of the Government to deliver to
said applicants/purchasers the friar lands sold free of any lien or
encumbrance whatsoever. Eventually, when MO 16-05 was issued by
Secretary Defensor, all these deeds of conveyance lacking the signature of
the Secretary of Natural Resources are thus deemed signed or otherwise
ratified. The CA accordingly erred in holding that MO 16-05 cannot
override Act No. 1120 which requires that a deed of conveyance must be
signed by the Secretary, considering that MO 16-05 is based on law and
presidential issuances, particularly EO 131, which have the force of law.
Meanwhile, in compliance with our directive, the Solicitor General filed his
Comment on the Defensor Affidavit submitted by the Manotoks. The
Solicitor General contends that said document is hearsay evidence, hence
inadmissible and without probative value. He points out that former DENR
Secretary Defensor was not presented as a witness during the hearings at
the CA, thus depriving the parties including the government of the right to
cross-examine him regarding his allegations therein. And even assuming
arguendo that such affidavit is admissible as evidence, the Solicitor
General is of the view that the Manotoks, Barques and Manahans still
cannot benefit from the remedial effect of MO 16-05 in view of the
decision rendered by this Court which ruled that none of the parties in this
case has established a valid alienation from the Government of Lot 823 of
the Piedad Estate, and also because the curative effect of MO 16-05 is
intended only for friar land buyers whose deeds of conveyance lack the
signature of the Secretary of the Interior or Agriculture and Natural
Resources, have fully paid the purchase price and are otherwise not shown
to have committed any wrong or illegality in acquiring the friar lands. He
then emphasizes that this Court has ruled that it is not only the deed of
conveyance which must be signed by the Secretary but also the certificate
of sale itself. Since none of the parties has shown a valid disposition to any
of them of Lot 823 of the Piedad Estate, this Court therefore correctly held
that said friar land is still part of the patrimonial property of the national
government.
The Court is not persuaded by the ratification theory espoused by the
Manotoks and Manahans.
The argument that the Director of Lands had delegated authority to
approve contracts of sale and deeds of conveyances over friar
landsignores the consistent ruling of this Court in controversies involving
friar lands. The aforementioned presidential/executive issuances
notwithstanding, this Court held in Solid State Multi-Products Corporation
v. CA,[10] Liao v. Court of Appeals,[11]and Alonso v. Cebu Country
Club[12] that approval of the Secretary of Agriculture and Commerce
(later the Natural Resources) is indispensable to the validity of sale of friar
land pursuant to Sec. 18 of Act No. 1120 and that the procedure laid down
by said law must be strictly complied with.
As to the applicability of Art. 1317 of the Civil Code, we maintain that
contracts of sale lacking the approval of the Secretary fall under the class
of void and inexistent contracts enumerated in Art. 1409[13] which cannot
be ratified. Section 18 of Act No. 1120 mandated the approval by the
Secretary for a sale of friar land to be valid.
In his dissenting opinion, Justice Antonio T. Carpio disagreed with the
majoritys interpretation of Section 18 of Act No. 1120, and proposed that
based on Section 12 of the same Act, it is the Deed of Conveyance that
must bear the signature of the Secretary of Interior/Agriculture and
Natural Resources because it is only when the final installment is paid that
the Secretary can approve the sale, the purchase price having been fully
paid. It was pointed out that the majority itself expressly admit that it is
only a ministerial duty on the part of the Secretary to sign the Deed of
Conveyance once the applicant had made full payment on the purchase
price of the land, citing jurisprudence to the effect that notwithstanding
the failure of the government to issue the proper instrument of
conveyance when the purchaser finally pays the final installment of the
purchase price, the purchase of the friar land still acquired ownership.
We are unable to agree with the view that it is only the Director of Lands
who signs the Certificate of Sale.
The official document denominated as Sale Certificate clearly required
both the signatures of the Director of Lands who issued such sale
certificate to an applicant settler/occupant and the Secretary of the
Interior/Agriculture and Natural Resources indicating his approval of the
sale. These forms had been prepared and issued by the Chief of the
Bureau of Public Lands under the supervision of the Secretary of the
Interior, consistent with Act No. 1120 as may be necessary x x x to carry
into effect all the provisions [thereof] that are to be administered by or
under [his] direction, and for the conduct of all proceedings arising under
such provisions.[14]
We reiterate that Section 18 of Act No. 1120, as amended, is plain and
categorical in stating that:
SECTION 18. No lease or sale made by the Chief of the Bureau of Public
Lands under the provisions of this Act shall be valid until approved by the
Secretary of the Interior.
Section 12 did not mention the requirement of signature or approval of
the Secretary in the sale certificate and deed of conveyance.
SECTION 12. It shall be the duty of the Chief of the Bureau of Public
Lands by proper investigation to ascertain what is the actual value of the
parcel of land held by each settler and occupant, taking into consideration
the location and quality of each holding of land, and any other
circumstances giving [it] value. The basis of valuation shall likewise be, so
far as practicable, such [as] the aggregate of the values of all the holdings
included in each particular tract shall be equal to the cost to the
Government to the entire tract, including the cost of surveys,
administration and interest upon the purchase money to the time of sale.
When the cost thereof shall have been thus ascertained, the Chief of the
Bureau of Public Lands shall give the said settler and occupant a certificate
which shall set forth in detail that the Government has agreed to sell to
such settler and occupant the amount of land so held by him, at the price
so fixed, payable as provided in this Act at the office of the Chief of Bureau
of Public Lands, in gold coin of the United States or its equivalent in
Philippine currency, and that upon the payment of the final installment
together with [the] accrued interest the Government will convey to such
settler and occupant the said land so held by him by proper instrument of
conveyance, which shall be issued and become effective in the manner
provided in section one hundred and twenty-two of the Land Registration
Act. The Chief of the Bureau of Public Lands shall, in each instance where a
certificate is given to the settler and occupant of any holding, take his
formal receipt showing the delivery of such certificate, signed by said
settler and occupant.
On the other hand, the first paragraph of Section 15 provides for the
reservation of title in the Government only for the purpose of ensuring
payment of the purchase price, which means that the sale was subject
only to the resolutory condition of non-payment, while the second
paragraph states that the purchaser thereby acquires the right of
possession and purchase by virtue of a certificate of sale signed under the
provisions [thereof]. The certificate of sale evidences the meeting of the
minds between the Government and the applicant regarding the price, the
specific parcel of friar land, and terms of payment. In Dela Torre v. Court
of Appeals,[15]we explained that the non-payment of the full purchase
price is the only recognized resolutory condition in the case of sale of friar
lands. We have also held that it is the execution of the contract to sell and
delivery of the certificate of sale that vests title and ownership to the
purchaser of friar land.[16] Where there is no certificate of sale issued, the
purchaser does not acquire any right of possession and purchase, as
implied from Section 15. By the mandatory language of Section 18, the
absence of approval of the Secretary of Interior/Agriculture and Natural
Resources in the lease or sale of friar land would invalidate the sale. These
provisions read together indicate that the approval of the Secretary is
required in both the certificate of sale and deed of conveyance, although
the lack of signature of the Secretary in the latter may not defeat the
rights of the applicant who had fully paid the purchase price.
Justice Conchita Carpio Morales dissent asserted that case law does not
categorically state that the required approval must be in the form of a
signature on the Certificate of Sale, and that there is no statutory basis for
the requirement of the Secretarys signature on the Certificate of Sale
apart from a strained deduction of Section 18.
As already stated, the official forms being used by the Government for this
purpose clearly show that the Director of Lands signs every certificate of
sale issued covering a specific parcel of friar land in favor of the
applicant/purchaser while the Secretary of Interior/Natural Resources
signs the document indicating that the sale was approved by him. To
approve is to be satisfied with; to confirm, ratify, sanction, or consent to
some act or thing done by another; to sanction officially.[17] The Secretary
of Interior/Natural Resources signs and approves the Certificate of Sale to
confirm and officially sanction the conveyance of friar lands executed by
the Chief of the Bureau of Public Lands (later Director of Lands). It is worth
mentioning thatSale Certificate No. 651 in the name of one Ambrosio
Berones dated June 23, 1913,[18]also covering Lot 823 of the Piedad
Estate and forming part of the official documents on file with the DENR-
LMB which was formally offered by the OSG as part of the official records
on file with the DENR and LMB pertaining to Lot 823, contains the
signature of both the Director of Lands and Secretary of the Interior. The
Assignment of Sale Certificate No. 651 dated April 19, 1930 was also
signed by the Director of Lands.[19]
Following the dissents interpretation that the Secretary is not required to
sign the certificate of sale while his signature in the Deed of Conveyance
may also appear although merely a ministerial act, it would result in the
absurd situation wherein thecertificate of sale and deed of conveyance
both lacked the signature and approval of the Secretary, and yet the
purchasers ownership is ratified, courtesy of DENR Memorandum Order
(MO) No. 16-05. It is also not farfetched that greater chaos will arise from
conflicting claims over friar lands, which could not be definitively settled
until the genuine and official manifestation of the Secretarys approval of
the sale is discerned from the records and documents presented. This
state of things is simply not envisioned under the orderly and proper
distribution of friar lands to bona fide occupants and settlers whom the
Chief of the Bureau of Public Lands was tasked to identify.[20]
The existence of a valid certificate of sale therefore must first be
established with clear and convincing evidence before a purchaser is
deemed to have acquired ownership over a friar land notwithstanding the
non-issuance by the Government, for some reason or another, of a deed
of conveyance after completing the installment payments. In the absence
of such certificate of sale duly signed by the Secretary, no right can be
recognized in favor of the applicant. Neither would any assignee or
transferee acquire any right over the subject land.
In Alonso v. Cebu Country Club, Inc.,[21] the Court categorically ruled that
the absence of approval by the Secretary of Agriculture and Commerce in
the sale certificate and assignment of sale certificate made the sale null
and void ab initio. Necessarily, there can be no valid titles issued on the
basis of such sale or assignment.[22]
Justice Carpio, however, opined that the ruling in Alonso was superseded
with the issuance by then Department of [Environment] and Natural
Resources (DENR) Secretary Michael T. Defensor of DENR Memorandum
Order No. 16-05. It was argued that the majority had construed a limited
application when it declared that the Manotoks could not benefit from
said memorandum order because the latter refers only to deeds of
conveyance on file with the records of the DENR field offices.
We disagree with the view that Alonso is no longer applicable to this
controversy after the issuance of DENR MO No. 16-05 which supposedly
cured the defect in the Manotoks title.
First, DENR MO No. 16-05 explicitly makes reference only to Deeds of
Conveyances, not to Sale Certificates by which, under the express
language of Section 15, the purchaser of friar land acquires the right of
possession and purchase pending final payment and the issuance of title,
such certificate being duly signed under the provisions of Act No. 1120.
Although the whereas clause of MO No. 16-05 correctly stated that it was
only a ministerial duty on the part of the Secretary to sign the Deed of
Conveyance once the applicant had made full payment on the purchase
price of the land, it must be stressed that in those instances where the
formality of the Secretarys approval and signature is dispensed with, there
was a valid certificate of sale issued to the purchaser or transferor. In this
case, there is no indication in the records that a certificate of sale was
actually issued to the assignors of Severino Manotok, allegedly the original
claimants of Lot 823, Piedad Estate.
Second, it is basic that an administrative issuance like DENR Memorandum
Order No. 16-05 must conform to and not contravene existing laws. In the
interpretation and construction of the statutes entrusted to them for
implementation, administrative agencies may not make rules and
regulations which are inconsistent with the statute it is administering, or
which are in derogation of, or defeat its purpose. In case of conflict
between a statute and an administrative order, the former must
prevail.[23] DENR Memorandum Order No. 16-05 cannot supersede or
amend the clear mandate of Section 18, Act No. 1120 as to dispense with
the requirement of approval by the Secretary of the Interior/Agriculture
and Natural Resources of every lease or sale of friar lands.
But what is worse, as the dissent suggests, is that MO 16-05 would apply
even to those deeds of conveyances not found in the records of DENR or
its field offices, such as the Manotoks Deed of Conveyance No. 29204
sourced from the National Archives. It would then cover cases of claimants
who have not been issued any certificate of sale but were able to produce
a deed of conveyance in their names. The Bureau of Lands was originally
charged with the administration of all laws relative to friar lands, pursuant
to Act No. 2657 and Act No. 2711. Under Executive Order No. 192,[24] the
functions and powers previously held by the Bureau of Lands were
absorbed by the Lands Management Bureau (LMB) of the DENR, while
those functions and powers not absorbed by the LMB were transferred to
the regional field offices.[25] As pointed out by the Solicitor General in the
Memorandum submitted to the CA, since the LMB and DENR-NCR exercise
sole authority over friar lands, they are naturally the sole repository of
documents and records relative to Lot No. 823 of the Piedad Estate.[26]
Third, the perceived disquieting effects on titles over friar lands long held
by generations of landowners cannot be invoked as justification for
legitimizing any claim or acquisition of these lands obtained through fraud
or without strict compliance with the procedure laid down in Act No. 1120.
This Court, in denying with finality the motion for reconsideration filed by
petitioner in Alonso v. Cebu Country Club, Inc.[27] reiterated the settled
rule that [a]pproval by the Secretary of the Interior cannot simply be
presumed or inferred from certain acts since the law is explicit in its
mandate.[28] Petitioners failed to discharge their burden of proving their
acquisition of title by clear and convincing evidence, considering the
nature of the land involved.
As consistently held by this Court, friar lands can be alienated only upon
proper compliance with the requirements of Act No. 1120. The issuance of
a valid certificate of sale is a condition sine qua non for acquisition of
ownership under the Friar Lands Act. Otherwise, DENR Memorandum
Order No. 16-05 would serve as administrative imprimatur to holders of
deeds of conveyance whose acquisition may have been obtained through
irregularity or fraud.
Contrary to the dissent of Justice Maria Lourdes P. A. Sereno that our
decision has created dangers for the system of property rights in the
Philippines, the Court simply adhered strictly to the letter and spirit of the
Friar Lands Act and jurisprudence interpreting its provisions. Such
imagined scenario of instability and chaos in the established property
regime, suggesting several other owners of lands formerly comprising the
Piedad Estate who are supposedly similarly situated, remains in the realm
of speculation. Apart from their bare allegations, petitioners (Manotoks)
failed to demonstrate how the awardees or present owners of around
more than 2,000 hectares of land in the Piedad Estate can be embroiled in
legal disputes arising from unsigned certificates of sale.
On the other hand, this Court must take on the task of scrutinizing even
certificates of title held for decades involving lands of the public domain
and those lands which form part of the Governments patrimonial
property, whenever necessary in the complete adjudication of the
controversy before it or where apparent irregularities and anomalies are
shown by the evidence on record. There is nothing sacrosanct about the
landholdings in the Piedad Estate as even prior to the years when Lot 823
could have been possibly sold or disposed by the Bureau of Lands, there
were already reported anomalies in the distribution of friar lands in
general.[29]
Significantly, subsequent to the promulgation of our decision in Alonso,
Republic Act No. (RA) 9443 was passed by Congress confirming and
declaring, subject to certain exceptions, the validity of existing TCTs and
reconstituted certificates of title covering the Banilad Friar Lands Estate
situated in Cebu. Alonso involved a friar land already titled but without a
sale certificate, and upon that ground we declared the registered owner as
not having acquired ownership of the land. RA 9443 validated the titles
notwithstanding the lack of signatures and/or approval of the then
Secretary of Interior (later Secretary of Agriculture and Natural Resources)
and/or the then Chief of the Bureau of Public lands (later Director of Public
Lands) in the copies of the duly executed Sale Certificate and Assignments
of Sale Certificates, as the case may be, now on file with the Community
Environment and Natural Resources Office (CENRO), Cebu City.
The enactment of RA 9443 signifies the legislatures recognition of the
statutory basis of the Alonso ruling to the effect that in the absence of
signature and/or approval of the Secretary of Interior/Natural Resources in
the Certificates of Sale on file with the CENRO, the sale is not valid and the
purchaser has not acquired ownership of the friar land. Indeed, Congress
found it imperative to pass a new law in order to exempt the already titled
portions of the Banilad Friar Lands Estate from the operation of Section
18. This runs counter to the dissents main thesis that a mere
administrative issuance (DENR MO No. 16-05) would be sufficient to cure
the lack of signature and approval by the Secretary in Certificate of Sale
No. 1054 covering Lot 823 of the Piedad Estate.
In any event, the Manotoks now seek the application of RA 9443 to the
Piedad Estate, arguing that for said law to be constitutionally valid, its
continued operation must be interpreted in a manner that does not collide
with the equal protection clause. Considering that the facts in Alonso from
which RA 9443 sprung are similar to those in this case, it is contended that
there is no reason to exclude the Piedad Estate from the ambit of RA 9443.
Justice Carpios dissent concurs with this view, stating that to limit its
application to the Banilad Friar Lands Estate will result in class legislation.
RA 9443 supposedly should be extended to lands similarly situated, citing
the case of Central Bank Employees Association, Inc. v. Bangko Sentral ng
Pilipinas.[30]
In the aforesaid case, the Court extended the benefits of subsequent laws
exempting all rank-and-file employees of other government financing
institutions (GFIs) from the Salary Standardization Law (SSL) to the rank-
and-file employees of the BSP. We upheld the position of petitioner
association that the continued operation of Section 15 (c), Article II of RA
7653 (the New Central Bank Act), which provides that the compensation
and wage structure of employees whose position fall under salary grade
19 and below shall be in accordance with the rates prescribed under RA
6758 (SSL), constitutes invidious discrimination on the 2,994 rank-and-file
employees of the [BSP]. Thus, as regards the exemption from the SSL, we
declared that there were no characteristics peculiar only to the seven GFIs
or their rank-and-file so as to justify the exemption from the SSL which BSP
rank-and-file employees were denied. The distinction made by the law is
superficial, arbitrary and not based on substantial distinctions that make
real differences between BSP rank-and-file and the seven other GFIs.[31]
We are of the opinion that the provisions of RA 9443 may not be applied
to the present case as to cure the lack of signature of the Director of Lands
and approval by the Secretary of Agriculture and Natural Resources in Sale
Certificate No. 1054.
The Court has explained the nature of equal protection guarantee in this
manner:
The equal protection of the law clause is against undue favor and
individual or class privilege, as well as hostile discrimination or the
oppression of inequality. It is not intended to prohibit legislation which is
limited either in the object to which it is directed or by territory within
which it is to operate. It does not demand absolute equality among
residents; it merely requires that all persons shall be treated alike, under
like circumstances and conditions both as to privileges conferred and
liabilities enforced. The equal protection clause is not infringed by
legislation which applies only to those persons falling within a specified
class, if it applies alike to all persons within such class, and reasonable
grounds exist for making a distinction between those who fall within such
class and those who do not.[32] (Emphasis and underscoring supplied.)
Section 1 of RA 9443 provides:
Section 1. All existing Transfer Certificates of Title and Reconstituted
Certificates of Title duly issued by the Register of Deeds of Cebu Province
and/or Cebu City covering any portion of the Banilad Friar Lands Estate,
notwithstanding the lack of signatures and/or approval of the then
Secretary of the Interior (later Secretary of Agriculture and Natural
Resources) and/or the then Chief of the Bureau of Public Lands (later
Director of Public Lands) in the copies of the duly executed Sale
Certificates and Assignments of Sales Certificates, as the case may be, now
on file with the Community Environment and Natural Resources Office
(CENRO), Cebu City, are hereby confirmed and declared as valid titles and
the registered owners recognized as absolute owners thereof.
This confirmation and declaration of validity shall in all respects be entitled
to like effect and credit as a decree of registration, binding the land and
quieting the title thereto and shall be conclusive upon and against all
persons, including the national government and al1 branches thereof;
except when, in a given case involving a certificate of title or
areconstituted certificate of title, there is clear evidence that such
certificate of title or reconstituted certificate of title was obtained through
fraud, in which case the solicitor general or his duly designated
representative shall institute the necessary judicial proceeding to cancel
the certificate of title or reconstituted certificate of title as the case may
be, obtained through such fraud.(Emphasis supplied.)
Without ruling on the issue of violation of equal protection guarantee if
the curative effect of RA 9443 is not made applicable to all titled lands of
the Piedad Estate, it is clear that the Manotoks cannot invoke this law to
confirm and validate their alleged title over Lot 823. It must be stressed
that the existence and due issuance of TCT No. 22813 in the name of
Severino Manotok was not established by the evidence on record. There is
likewise no copy of a duly executed certificate of sale on file with the
DENR regional office. In the absence of an existing certificate of title in the
name of the predecessor-in-interest of the Manotoks and certificate of
sale on file with the DENR/CENRO, there is nothing to confirm and validate
through the application of RA 9443.
Moreover, RA 9443 expressly excludes from its coverage those cases
involving certificates of title which were shown to have been fraudulently
or irregularly issued. As the reconstitution and remand proceedings in
these cases revealed, the Manotoks title to the subject friar land, just like
the Barques and Manahans, is seriously flawed. The Court cannot allow
them now to invoke the benefit of confirmation and validation of
ownership of friar lands under duly executed documents, which they
never had in the first place. Strict application by the courts of the
mandatory provisions of the Friar Lands Act is justified by the laudable
policy behind its enactment -- to ensure that the lands acquired by the
government would go to the actual occupants and settlers who were given
preference in their distribution.[33]
The dissent reiterates that the existence of Sale Certificate No. 1054 was
clearly and convincingly established by the original of Assignment of Sale
Certificate No. 1054 dated May 4, 1923 between M. Teodoro and Severino
Manotok as assignors and Severino Manotok as assignee (approved by the
Director of Lands on June 23, 1923), which is on file with the LMB, as well
as the Deed of Conveyance No. 29204 secured from the National Archives
which is the repository of government and official documents, the original
of Official Receipt No. 675257 dated 20 February 1920 for certified copy of
Assignment of Sale Certificate No. 1054 on Lot 823 and the original of the
Provincial Assessors declaration of title in Severino Manotoks name for tax
purposes on August 9, 1933 assessing him beginning with the year 1933.
The dissent further listed some of those alleged sale certificates,
assignment deeds and deeds of conveyance either signed by the Director
of Lands only or unsigned by both Director of Lands and Secretary of
Interior/Natural Resources, gathered by the Manotoks from the LMB. It
was stressed that if MO 16-05 is not applied to these huge tracts of land
within and outside Metro Manila, [H]undreds of thousands, if not millions,
of landowners would surely be dispossessed of their lands in these areas, a
blow to the integrity of our Torrens system and the stability of land titles
in this country.
The Court has thoroughly examined the evidence on record and
exhaustively discussed the merits of the Manotoks ownership claim over
Lot 823, in the light of established precedents interpreting the provisions
of the Friar Lands Act. The dissent even accused the majority of mistakenly
denigrating the records of the National Archives which, under R.A. No.
9470 enacted on May 21, 2007, is mandated to store and preserve any
public archive transferred to the National Archives and tasked with issuing
certified true copies or certifications on public archives and for extracts
thereof.
The Friar Lands Act mandated a system of recording all sale contracts to be
implemented by the Director of Lands, which has come to be known as the
Friar Lands Sales Registry.
SEC. 6. The title, deeds and instruments of conveyance pertaining to the
lands in each province, when executed and delivered by said grantors to
the Government and placed in the keeping of the Chief of the Bureau of
Public Lands, as above provided, shall be by him transmitted to the
register of deeds of each province in which any part of said lands lies, for
registration in accordance with law. But before transmitting the title,
deeds, and instruments of conveyance in this section mentioned to the
register of deeds of each province for registration, the Chief of the Bureau
of Public Lands shall record all such deeds and instruments at length in
one or more books to be provided by him for that purpose and retained in
the Bureau of Public Lands, when duly certified by him shall be received in
all courts of the Philippine Islands as sufficient evidence of the contents of
the instrument so recorded whenever it is not practicable to produce the
originals in court. (Section 1, Act No. 1287).
It is thus the primary duty of the Chief of the Bureau of Public Lands to
record all these deeds and instruments in sales registry books which shall
be retained in the Bureau of Public Lands. Unfortunately, the LMB failed to
produce the sales registry book in court, which could have clearly shown
the names of claimants, the particular lots and areas applied for, the sale
certificates issued and other pertinent information on the sale of friar
lands within the Piedad Estate. Witness Teresita J. Reyes, a retired
Assistant Chief of the Records Management Division (RMD), LMB who was
presented by the Manahans, testified that when the LMB was
decentralized, the sales registry books pertaining to friar lands were
supposedly turned over to the regional offices. These consisted of copies
of the appropriate pages of the sales registry books in the LMB RMD main
office which has an inventory of lots subject of deeds of conveyance and
sales certificates. However, Reyes said that the sales registry book itself is
no longer with the RMD. On the other hand, the alleged affidavit of
Secretary Defensor dated November 11, 2010 states that MO 16-05 was
intended to address situations when deeds of conveyance lacked the
signature of the Secretary of Agriculture and Commerce, or such deeds or
records from which the Secretarys signature or approval may be verified
were lost or unavailable.
Whether the friar lands registry book is still available in the LMB or
properly turned over to the regional offices remains unclear. With the
statutorily prescribed record-keeping of sales of friar lands apparently in
disarray, it behooves on the courts to be more judicious in settling
conflicting claims over friar lands. Titles with serious flaws must still be
carefully scrutinized in each case. Thus, we find that the approach in
Alonso remains as the more rational and prudent course than the
wholesale ratification introduced by MO 16-05.
The prospect of litigants losing friar lands they have possessed for years or
decades had never deterred courts from upholding the stringent
requirements of the law for a valid acquisition of these lands. The courts
duty is to apply the law. Petitioners concern for other landowners which
may be similarly affected by our ruling is, without doubt, a legitimate one.
The remedy though lies elsewhere -- in the legislature, as what R.A. 9443
sought to rectify.
WHEREFORE, the present motions for reconsideration are all hereby
DENIED withFINALITY.The motions for oral arguments and further
reception of evidence are likewise DENIED.
Let entry of judgment be made in due course.
SO ORDERED.
Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION
HEIRS OF SPOUSES TEOFILO M. RETERTA and ELISA RETERTA, namely:
EDUARDO M. RETERTA, CONSUELO M. RETERTA, and AVELINA M.
RETERTA,
Petitioners,
- versus -
SPOUSES LORENZO MORES and VIRGINIA LOPEZ,
Respondents.
G.R. No. 159941
Present:
CORONA, C.J., Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.
Promulgated:
August 17, 2011
x-----------------------------------------------------------------------------------------x
DECISION
BERSAMIN, J.:
The original and exclusive jurisdiction over a complaint for quieting of title
and reconveyance involving friar land belongs to either the Regional Trial
Court (RTC) or the Municipal Trial Court (MTC). Hence, the dismissal of
such a complaint on the ground of lack of jurisdiction due to the land in
litis being friar land under the exclusive jurisdiction of the Land
Management Bureau (LMB) amounts to manifest grave abuse of discretion
that can be corrected through certiorari.
The petitioners, whose complaint for quieting of title and reconveyance
the RTC had dismissed, had challenged the dismissal by petition for
certiorari, but the Court of Appeals (CA) dismissed their petition on the
ground that certiorari was not a substitute for an appeal, the proper
recourse against the dismissal. They now appeal that ruling of the CA
promulgated on April 25, 2003.[1]
Antecedents
On May 2, 2000, the petitioners commenced an action for quieting of title
and reconveyance in the RTC in Trece Martires City (Civil Case No. TM-
983),[2] averring that they were the true and real owners of the parcel of
land (the land) situated in Trez Cruzes, Tanza, Cavite, containing an area of
47,708 square meters, having inherited the land from their father who had
died on July 11, 1983; that their late father had been the grantee of the
land by virtue of his occupation and cultivation; that their late father and
his predecessors in interest had been in open, exclusive, notorious, and
continuous possession of the land for more than 30 years; that they had
discovered in 1999 an affidavit dated March 1, 1966 that their father had
purportedly executed whereby he had waived his rights, interests, and
participation in the land; that by virtue of the affidavit, Sales Certificate
No. V-769 had been issued in favor of respondent Lorenzo Mores by the
then Department of Agriculture and Natural Resources; and that Transfer
Certificate of Title No. T-64071 had later issued to the respondents.
On August 1, 2000, the respondents, as defendants, filed a motion to
dismiss, insisting that the RTC had no jurisdiction to take cognizance of
Civil Case No. TM-983 due to the land being friar land, and that the
petitioners had no legal personality to commence Civil Case No. TM-983.
On October 29, 2001, the RTC granted the motion to dismiss, holding:[3]
Considering that plaintiffs in this case sought the review of the propriety
of the grant of lot 2938 of the Sta. Cruz de Malabon Friar Lands Estate by
the Lands Management Bureau of the defendant Lorenzo Mores through
the use of the forged Affidavit and Sales Certificate No. V-769 which
eventually led to the issuance of T.C.T. No. T-64071 to defendant Lorenzo
Mores and wife Virginia Mores, and considering further that the land
subject of this case is a friar land and not land of the public domain,
consequently Act No. 1120 is the law prevailing on the matter which gives
to the Director of Lands the exclusive administration and disposition of
Friar Lands. More so, the determination whether or not fraud had been
committed in the procurement of the sales certificate rests to the
exclusive power of the Director of Lands. Hence this Court is of the opinion
that it has no jurisdiction over the nature of this action. On the second
ground relied upon by the defendants in their Motion To Dismiss, suffice it
to state that the Court deemed not to discuss the same.
IN VIEW OF THE FOREGOING, let this instant case be dismissed as it is
hereby dismissed.
SO ORDERED.
The petitioners then timely filed a motion for reconsideration, but the RTC
denied their motion for reconsideration on February 21, 2002.[4]
On May 15, 2002, therefore, the petitioners assailed the dismissal via
petition for certiorari, but the CA dismissed the petition on April 25, 2003,
holding: [5]
Thus, the basic requisite for the special civil action of certiorari to lie is that
there is no appeal, nor any plain, speedy and adequate remedy in the
ordinary course of law.
In the case at bench, when the court rendered the assailed decision, the
remedy of the petitioners was to have appealed the same to this Court.
But petitioners did not. Instead they filed the present special civil action
for certiorari on May 15, 2002 after the decision of the court a quo has
become final.
The Order dismissing the case was issued by the court a quo on 29
October 2001, which Order was received by the petitioners on November
16, 2001. Petitioners filed a motion for reconsideration dated November
26, 2001 but the same was denied by the court a quo on 21 February
2002. The Order denying the motion for reconsideration was received by
the petitioners on 20 March 2002.
Petitioners filed this petition for certiorari on May 15, 2002. Certiorari,
however cannot be used as a substitute for the lost remedy of appeal.
In Bernardo vs. Court of Appeals, 275 SCRA 423, the Supreme Court had
the following to say:
We have time and again reminded members of the bench and bar that a
special civil action for certiorari under Rule 65 lies only when there is no
appeal nor plain, speedy and adequate remedy in the ordinary course of
law. Certiorari cannot be allowed when a party to a case fails to appeal a
judgment despite the availability of that remedy, certiorari not being a
substitute for lost appeal. The remedies of appeal and certiorari are
mutually exclusive and not alternative or successive.
WHEREFORE, in view of the foregoing, the instant petition is hereby
DISMISSED.
SO ORDERED.
On September 9, 2003, the CA denied the petitioners motion for
reconsideration.[6]
Hence, this appeal.
Issues
The petitioners submit that:
I.
IT IS REVERSIBLE ERROR OF THE HONORABLE COURT OF APPEALS TO
DISREGARD THE PROVISIONS OF SECTION 1, RULE 41, SECOND
PARAGRAPH, SUBPARAGRAPH (a), AND SECTION 9, RULE 37, 1997 RULES
OF COURT;
II.
IT IS REVERSIBLE ERROR FOR THE HONORABLE COURT OF APPEALS TO
APPLY THE RULING IN THE CASE OF ROSETE vs. COURT OF APPEALS, 339
SCRA 193, 199, NOTWITHSTANDING THE FACT THAT THE 1997 RULES OF
CIVIL PROCEDURE ALREADY TOOK EFFECT ON JULY 1, 1997.
III.
IT IS REVERSIBLE ERROR FOR THE HONORABLE COURT OF APPEALS IN NOT
FINDING THAT THE TRIAL JUDGE GRAVELY ABUSED ITS DISCRETION WHEN
IT DISMISSED THE COMPLAINT RULING THAT IT HAS NO JURISDICTION
OVER THE NATURE OF THE ACTION, AND IN NOT FINDING THAT THE TRIAL
JUDGE HAS JURISDICTION OVER THE SAME.[7]
Briefly stated, the issue is whether or not the CA erred in dismissing the
petition for certiorari.
Ruling
The appeal is meritorious.
1.
Propriety of certiorari as remedy
against dismissal of the action
The CA seems to be correct in dismissing the petition for certiorari,
considering that the order granting the respondents motion to dismiss was
a final, as distinguished from an interlocutory, order against which the
proper remedy was an appeal in due course. Certiorari, as an
extraordinary remedy, is not substitute for appeal due to its being availed
of only when there is no appeal, or plain, speedy and adequate remedy in
the ordinary course of law.[8]
Nonetheless, the petitioners posit that a special civil action for certiorari
was their proper remedy to assail the order of dismissal in light of certain
rules of procedure, specifically pointing out that the second paragraph of
Section 1 of Rule 37 of the Rules of Court (An order denying a motion for
new trial or reconsideration is not appealable, the remedy being an appeal
from the judgment or final order) prohibited an appeal of a denial of the
motion for reconsideration, and that the second paragraph of Section 1 of
Rule 41 of the Rules of Court ( No appeal may be taken from: xxx An order
denying a motion for new trial or reconsideration) expressly declared that
an order denying a motion for reconsideration was not appealable. They
remind that the third paragraph of Section 1 of Rule 41 expressly provided
that in the instances where the judgment or final order is not appealable,
the aggrieved party may file an appropriate special civil action under Rule
65.
The petitioners position has no basis.
For one, the order that the petitioners really wanted to obtain relief from
was the order granting the respondents motion to dismiss, not the denial
of the motion for reconsideration. The fact that the order granting the
motion to dismiss was a final order for thereby completely disposing of the
case, leaving nothing more for the trial court to do in the action, truly
called for an appeal, instead of certiorari, as the correct remedy.
The fundamental distinction between a final judgment or order, on one
hand, and an interlocutory order, on the other hand, has been outlined in
Investments, Inc. v. Court of Appeals,[9] viz:
The concept of final judgment, as distinguished from one which has
become final (or executory as of right [final and executory]), is definite and
settled. A final judgment or order is one that finally disposes of a case,
leaving nothing more to be done by the Court in respect thereto, e.g., an
adjudication on the merits which, on the basis of the evidence presented
at the trial declares categorically what the rights and obligations of the
parties are and which party is in the right; or a judgment or order that
dismisses an action on the ground, for instance, of res judicata or
prescription. Once rendered, the task of the Court is ended, as far as
deciding the controversy or determining the rights and liabilities of the
litigants is concerned. Nothing more remains to be done by the Court
except to await the parties next move (which among others, may consist
of the filing of a motion for new trial or reconsideration, or the taking of
an appeal) and ultimately, of course, to cause the execution of the
judgment once it becomes final or, to use the established and more
distinctive term, final and executory.
xxx
Conversely, an order that does not finally dispose of the case, and does
not end the Courts task of adjudicating the parties contentions and
determining their rights and liabilities as regards each other, but obviously
indicates that other things remain to be done by the Court, is
interlocutory, e.g., an order denying a motion to dismiss under Rule 16 of
the Rules, or granting a motion for extension of time to file a pleading, or
authorizing amendment thereof, or granting or denying applications for
postponement, or production or inspection of documents or things, etc.
Unlike a final judgment or order, which is appealable, as above pointed
out, an interlocutory order may not be questioned on appeal except only
as part of an appeal that may eventually be taken from the final judgment
rendered in the case.
Moreover, even Section 9 of Rule 37 of the Rules of Court, cited by the
petitioners, indicates that the proper remedy against the denial of the
petitioners motion for reconsideration was an appeal from the final order
dismissing the action upon the respondents motion to dismiss. The said
rule explicitly states thusly:
Section 9. Remedy against order denying a motion for new trial or
reconsideration. An order denying a motion for new trial or
reconsideration is not appealable, the remedy being an appeal from the
judgment or final order.
The restriction against an appeal of a denial of a motion for
reconsideration independently of a judgment or final order is logical and
reasonable. A motion for reconsideration is not putting forward a new
issue, or presenting new evidence, or changing the theory of the case, but
is only seeking a reconsideration of the judgment or final order based on
the same issues, contentions, and evidence either because: (a) the
damages awarded are excessive; or (b) the evidence is insufficient to
justify the decision or final order; or (c) the decision or final order is
contrary to law.[10] By denying a motion for reconsideration, or by
granting it only partially, therefore, a trial court finds no reason either to
reverse or to modify its judgment or final order, and leaves the judgment
or final order to stand. The remedy from the denial is to assail the denial in
the course of an appeal of the judgment or final order itself.
The enumeration of the orders that were not appealable made in the 1997
version of Section 1, Rule 41 of the Rules of Court the version in force at
the time when the CA rendered its assailed decision on May 15, 2002
included an order denying a motion for new trial or motion for
reconsideration, to wit:
Section 1. Subject of appeal. An appeal may be taken from a judgment or
final order that completely disposes of the case, or of a particular matter
therein when declared by these Rules to be appealable.
No appeal may be taken from:
(a) An order denying a motion for new trial or reconsideration;
(b) An order denying a petition for relief or any similar motion seeking
relief from judgment;
(c) An interlocutory order;
(d) An order disallowing or dismissing an appeal;
(e) An order denying a motion to set aside a judgment by consent,
confession or compromise on the ground of fraud, mistake or duress, or
any other ground vitiating consent;
(f) An order of execution;
(g) A judgment or final order for or against one or more of several parties
or in separate claims, counterclaims, cross-claims and third-party
complaints, while the main case is pending, unless the court allows an
appeal therefrom; and
(h) An order dismissing an action without prejudice.
In all the above instances where the judgment or final order is not
appealable, the aggrieved party may file an appropriate special civil action
under Rule 65. (n)
It is true that Administrative Matter No. 07-7-12-SC, effective December
27, 2007, has since amended Section 1, Rule 41, supra, by deleting an
order denying a motion for new trial or motion for reconsideration from
the enumeration of non-appealable orders, and that such a revision of a
procedural rule may be retroactively applied. However, to reverse the CA
on that basis would not be right and proper, simply because the CA
correctly applied the rule of procedure in force at the time when it issued
its assailed final order.
2.
RTC or MTC has jurisdiction over the action
The settled rule precluding certiorari as a remedy against the final order
when appeal is available notwithstanding, the Court rules that the CA
should have given due course to and granted the petition for certiorari for
two exceptional reasons, namely: (a) the broader interest of justice
demanded that certiorari be given due course to avoid the undeserved
grossly unjust result that would befall the petitioners otherwise; and (b)
the order of the RTC granting the motion to dismiss on ground of lack of
jurisdiction over the subject matter evidently constituted grave abuse of
discretion amounting to excess of jurisdiction.
On occasion, the Court has considered certiorari as the proper remedy
despite the availability of appeal, or other remedy in the ordinary course
of law. In Francisco Motors Corporation v. Court of Appeals,[11] the Court
has declared that the requirement that there must be no appeal, or any
plain speedy and adequate remedy in the ordinary course of law admits of
exceptions, such as: (a) when it is necessary to prevent irreparable
damages and injury to a party; (b) where the trial judge capriciously and
whimsically exercised his judgment; (c) where there may be danger of a
failure of justice; (d) where an appeal would be slow, inadequate, and
insufficient; (e) where the issue raised is one purely of law; (f) where
public interest is involved; and (g) in case of urgency.
Specifically, the Court has held that the availability of appeal as a remedy
does not constitute sufficient ground to prevent or preclude a party from
making use of certiorari if appeal is not an adequate remedy, or an equally
beneficial, or speedy remedy. It is inadequacy, not the mere absence of all
other legal remedies and the danger of failure of justice without the writ,
that must usually determine the propriety of certiorari.[12] A remedy is
plain, speedy and adequate if it will promptly relieve the petitioner from
the injurious effects of the judgment, order, or resolution of the lower
court or agency.[13] It is understood, then, that a litigant need not mark
time by resorting to the less speedy remedy of appeal in order to have an
order annulled and set aside for being patently void for failure of the trial
court to comply with the Rules of Court.[14]
Nor should the petitioner be denied the recourse despite certiorari not
being available as a proper remedy against an assailed order, because it is
better on balance to look beyond procedural requirements and to
overcome the ordinary disinclination to exercise supervisory powers in
order that a void order of a lower court may be controlled to make it
conformable to law and justice.[15] Verily, the instances in which certiorari
will issue cannot be defined, because to do so is to destroy the
comprehensiveness and usefulness of the extraordinary writ. The wide
breadth and range of the discretion of the court are such that authority is
not wanting to show that certiorari is more discretionary than either
prohibition or mandamus, and that in the exercise of superintending
control over inferior courts, a superior court is to be guided by all the
circumstances of each particular case as the ends of justice may require.
Thus, the writ will be granted whenever necessary to prevent a substantial
wrong or to do substantial justice.[16]
The petitioners complaint self-styled as being for the quieting of title and
reconveyance, declaration of nullity of affidavit & Sales Certificate,
reconveyance and damages would challenge the efficacy of the
respondents certificate of title under the theory that there had been no
valid transfer or assignment from the petitioners predecessor in interest to
the respondents of the rights or interests in the land due to the affidavit
assigning such rights and interests being a forgery and procured by fraud.
The petitioners cause of action for reconveyance has support in
jurisprudence bearing upon the manner by which to establish a right in a
piece of friar land. According to Arayata v. Joya,[17] in order that a
transfer of the rights of a holder of a certificate of sale of friar lands may
be legally effective, it is necessary that a formal certificate of transfer be
drawn up and submitted to the Chief of the Bureau of Public Lands for his
approval and registration. The law authorizes no other way of transferring
the rights of a holder of a certificate of sale of friar lands. In other words,
where a person considered as a grantee of a piece of friar land transfers
his rights thereon, such transfer must conform to certain requirements of
the law. Under Director of Lands v. Rizal,[18] the purchaser in the sale of
friar lands under Act No. 1120 is already treated by law as the actual
owner of the lot purchased even before the payment of the full payment
price and before the execution of the final deed of conveyance, subject to
the obligation to pay in full the purchase price, the role or position of the
Government becoming that of a mere lien holder or mortgagee.[19]
Thus, pursuant to Section 16 of Act No. 1120,[20] had grantee Teofilo
Reterta perfected his title, the petitioners as his heirs would have
succeeded him and taken title from him upon his death. By law, therefore,
should the execution of the deed in favor of the respondents be held
invalid, the interests of Teofilo Reterta should descend to the petitioners
and the deed should issue in their favor. Adding significance to the
petitioners claim was their allegation in the complaint that they were in
possession of the land. Moreover, as alleged in the petitioners opposition
to the motion to dismiss of the respondents, Teofilo Reterta had partially
paid the price of the land.[21]
Given the foregoing, the petitioners complaint made out a good case for
reconveyance or reversion, and its allegations, if duly established, might
well warrant the reconveyance of the land from the respondents to the
petitioners. It did not matter that the respondents already held a
certificate of title in their names. In essence, an action for reconveyance
respects the incontrovertibility of the decree of registration but seeks the
transfer of the property to its rightful and legal owner on the ground of its
having been fraudulently or mistakenly registered in another persons
name. There is no special ground for an action for reconveyance, for it is
enough that the aggrieved party asserts a legal claim in the property
superior to the claim of the registered owner, and that the property has
not yet passed to the hands of an innocent purchaser for value.[22] On
this score, it is also worthy to stress that the title of a piece of a friar land
obtained by a grantee from the Government without conforming with the
requirements set by the law may be assailed and nullified.
Was the petitioners action for reconveyance within the jurisdiction of the
regular court?
We answer the query in the affirmative.
The law governing jurisdiction is Section 19 (2) of Batas Pambansa Blg.
129,[23] as amended by Republic Act No. 7691,[24] which provides:
Section 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise
exclusive original jurisdiction: xxx
xxx
(2) In all civil actions which involve the title to, or possession of, real
property, or any interest therein, where the assessed value of the property
involved exceeds Twenty thousand pesos (P20,000.00) or for civil actions
in Metro Manila, where such value exceeds Fifty thousand pesos
(P50,000.00) except actions for forcible entry into and unlawful detainer of
lands or buildings, original jurisdiction over which is conferred upon the
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit
Trial Courts;
xxx
Conformably with the provision, because an action for reconveyance or to
remove a cloud on ones title involves the title to, or possession of, real
property, or any interest therein, exclusive original jurisdiction over such
action pertained to the RTC, unless the assessed value of the property did
not exceed P20,000.00 (in which instance the MTC having territorial
jurisdiction would have exclusive original jurisdiction). Determinative of
which regular court had jurisdiction would be the allegations of the
complaint (on the assessed value of the property) and the principal relief
thereby sought.[25]
The respondents reliance on Section 12 and Section 18 of Act No. 1120 to
sustain their position that the Bureau of Public Lands (now LMB) instead
had exclusive jurisdiction was without basis. The provisions read:
Section 12. xxx the Chief of the Bureau of Public Lands shall give the said
settler and occupant a certificate which shall set forth in detail that the
Government has agreed to sell to such settler and occupant the amount of
land so held by him, at the price so fixed, payable as provided in this Act at
the office of the Chief of Bureau of Public Lands xxx and that upon the
payment of the final installment together with all accrued interest the
Government will convey to such settler and occupant the said land so held
by him by proper instrument of conveyance, which shall be issued and
become effective in the manner provided in section one hundred and
twenty-two of the Land Registration Act xxx.
Section 18. No lease or sale made by Chief of the Bureau of Public Lands
under the provisions of this Act shall be valid until approved by the
Secretary of the Interior.
As the provisions indicate, the authority of LMB under Act No. 1120, being
limited to the administration and disposition of friar lands, did not include
the petitioners action for reconveyance. LMB ceases to have jurisdiction
once the friar land is disposed of in favor of a private person and title duly
issues in the latters name. By ignoring the petitioners showing of its plain
error in dismissing Civil Case No. TM-983, and by disregarding the
allegations of the complaint, the RTC acted whimsically and capriciously.
Given all the foregoing, the RTC committed grave abuse of discretion
amounting to lack of jurisdiction. The term grave abuse of discretion
connotes whimsical and capricious exercise of judgment as is equivalent to
excess, or lack of jurisdiction.[26] The abuse must be so patent and gross
as to amount to an evasion of a positive duty or to a virtual refusal to
perform a duty enjoined by law, or to act at all in contemplation of law as
where the power is exercised in an arbitrary and despotic manner by
reason of passion or hostility.[27]
The dismissal of Civil Case No. TM-983, unless undone, would leave the
petitioners bereft of any remedy to protect their substantial rights or
interests in the land. As such, they would suffer grave injustice and
irreparable damage. In that situation, the RTCs dismissal should be
annulled through certiorari, for the task of the remedy was to do justice to
the unjustly aggrieved.[28]
WHEREFORE, the Court grants the petition for certiorari; sets aside the
decision the Court of Appeals promulgated on April 25, 2003; and directs
Branch 23 of the Regional Trial Court in Trece Martires City to resume the
proceedings in Civil Case No. TM-983 with dispatch.
The respondents shall pay the costs of suit.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 154080 January 22, 2008
NELSIE B. CAETE, RONA ANAS, MILAGROSA APUAN, ERLINDA AQUINO,
GODOFREDO AQUINO, CORITA BARREDO, TESSIE BARREDO, JESUS
BATRINA, ALBERTO BUENAVENTURA, BONIFACIO BUENAVENTURA,
EUSEBIO CAPIRAL, MARIO CAPIRAL, LOLITA CAPIRAL, ELENA CAPIRAL,
LETICIA CAPIRAL, RENATO CAPIRAL, ELY CABANGON, ERWIN CATALUNA,
JESSIE CONRADO, JOEL CONRADO, NARCISIO CONRADO, RICARDO
CALAMPIANO, ALUMNIO CORSANES, NILO COLATOY, MARJETO DAYAN,
HENRY DIAZ, SALVACION ESMANDE, REYNALDO FUENTEBELLA, GERRY
GEQUILLANA, DELSIE GARCIA, NERISSA GONZALES, VISITACION JUNSAY,
ESTELA JOVEN, JOSE LANZUELA, MARLON MALANGAYON, RENATO
MARCELO, ANITA MARZONIA, MARCELINO MONTALBO, AMADO MULI, JR.,
LEONITA MULI, EDUARDO OLVIDO, ALMARIO PACON, ASUNCION PACON,
SALVACION PAGAYUNAN, ESTER PANTALEON, SHERLITA RABE, ANITA
REYES, MEDELYN RIOS, BERTITO RIVAS, ENGRACIA RIVERA, GERALYN
RIVERA, ARMANDO RIVERA, MA. MERCY SHERVA, ALEXANDER SANGALAN,
ERNESTO SANTIAGO, JOY SANTIAGO, ELENA TALION, JOE RANDY
TRESVALLES, ELIAS VALENZUELA, GERRY VALENZUELA, LILIBETH
VALENZUELA, JOSEPHINE VICTORINO, JOJO VICTORINO, MAXIMINO
VICTORINO, NOEL VICTORINO, REYNANTE VICTORINO, ROBERTO
VICTORINO and JOVITO VILLAREAL, represented by NELSIE B. CAETE,
petitioners,
vs.
GENUINO ICE COMPANY, INC., respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari seeks to set aside the Decision1 of the
Court of Appeals dated January 9, 2002 in CA-G.R. SP No. 64337 entitled
"Genuino Ice Company, Inc. vs. Hon. Victorino P. Evangelista, Nelsie B.
Caete, et al.," and its Resolution2 dated June 26, 2002, dismissing
petitioners "Second Amended Complaint" in Civil Case No. Q-99-36483
filed in Branch 223 of the Regional Trial Court of Quezon City.
Records show that on January 11, 1999, petitioners filed a complaint for
cancellation of title to property covered by Transfer Certificate of Title
(TCT) Nos. N-140441;3 14399;4 RT-94384 (292245);5 RT-94794 (292246);6
and 292247.7 Petitioners alleged that said titles are spurious, fictitious and
were issued "under mysterious circumstances," considering that the
holders thereof including their predecessors-in-interest were never in
actual, adverse and physical possession of the property, rendering them
ineligible to acquire title to the said property under the Friar Lands Act.8
Petitioners also sought to nullify Original Certificate of Title (OCT) No. 614
from which the foregoing titles sought to be cancelled originated or were
derived.
Respondent Genuino Ice Co., Inc. filed a motion to dismiss9 on the ground
that the complaint states no cause of action because petitioners are not
real parties-in-interest; that no relief may be granted as a matter of law;
and that petitioners failed to exhaust administrative remedies, but it was
denied by the trial court. Respondent moved for reconsideration but the
same was denied.
On November 4, 1999, petitioners filed a "Second Amended Complaint"10
which sought to annul, in addition to the titles already alleged in the
original complaint, TCT Nos. 274095 and 274096;11 274097 and
274098;12 and 274099.13
The Second Amended Complaint alleged the following causes of action, as
well as the remedy sought to be obtained, thus:
4. That plaintiffs (petitioners) and their predecessors-in-interest are
among those who have been in actual, adverse, peaceful and continuous
possession in concept of owners of unregistered parcels of land situated at
Sitio Mabilog, Barangay Culiat, Quezon City, Metro Manila, which parcels
of land are more particularly described as follows:
(1) "A parcel of unregistered land known as Lot 668, situated at Barangay
Culiat, Quezon City x x x."
(2) "A parcel of unregistered land known as Lot 669, situated at Barangay
Culiat, Quezon City x x x."
5. That the above-described real property is a portion of a friar land known
as "Piedad Estate," which property is intended for distribution among the
bona fide occupants thereof pursuant to the Friar Lands Act.
6. That transfer certificates of title allegedly having originated or derived
from Original Certificate of Title No. 614 were issued by the Register of
Deeds of Quezon City, which transfer certificates of title are in truth and in
fact fictitious, spurious and null and void, for the following reasons: (a)
that no record of any agency of the government shows as to how and in
what manner was OCT 614 issued; (b) that no record of any proceedings
whatsoever, whether judicial or administrative, can support defendants
claim that the above-described property originated from OCT 614; and (c)
that the transfer certificates of title over the above-described property
were issued under mysterious circumstances for the above-named
defendants and their so-called predecessors-in-interest never had any
actual, adverse, physical possession of the said property, thus, not allowed
to acquire title over the property in litigation pursuant to the Friar Lands
Act.
7. That defendants are holders of transfer certificates of title of the above-
described property, which transfer certificates of title are null and void, for
reasons specifically mentioned in Paragraph 6 hereof x x x;
8. That the acts in acquiring and keeping the said transfer certificates of
title in violation of the Friar Lands Act and other existing laws are
prejudicial to plaintiffs rights over the above-described property.
9. That equity demands that defendants transfer certificates of title as
specified in Paragraph 7 hereof be declared fictitious, spurious and null
and void ab initio.
PRAYER
WHEREFORE, premises considered, it is most respectfully prayed of this
Honorable Court that judgment be rendered in favor of plaintiffs and
against defendants:
(1) Declaring as null and void ab initio OCT 614 and all transfer certificates
of title derived therefrom;
(2) Declaring as null and void defendants transfer certificates of title over
the property in litigation;
(3) Ordering defendant Register of Deeds of Quezon City to cancel
defendants transfer certificates of title and all transfer certificates of title
derived therefrom;
(4) Declaring the plaintiffs as bona fide occupants of the property in
litigation pursuant to the provisions of the Friar Lands Act and other
existing laws.14
Respondent moved to dismiss the Second Amended Complaint on the
following grounds:
a) The complaint states no cause of action because: (1) on the allegations
alone, plaintiffs (petitioners) are not real parties in interest who may bring
suit to cancel defendants (including respondent) titles; (2) based on the
allegations and prayer of the complaint, no relief, as a matter of law, may
be granted;
b) Prescription has set in;
c) There are earlier similar complaints (Civil Case Nos. Q-95-22834 and Q-
95-23111) filed by a different set of plaintiffs against a different set of
defendants but which involve the same subject matter, cause of action
and allegations of the plaintiffs, with respect to the cancellation of OCT
614 and succeeding titles derived from it. Said complaints have since been
dismissed by Branch 93 of the Regional Trial Court of Quezon City, the
dismissal of which is the subject of a pending certiorari proceeding in the
appellate court.15
On January 3, 2001,16 the trial court denied respondents motion to
dismiss the Second Amended Complaint. Its motion for reconsideration
was likewise denied hence respondent filed a petition for certiorari with
the Court of Appeals.
The appellate court granted respondents petition for certiorari and
dismissed petitioners Second Amended Complaint for failure to state a
cause of action. Hence, the instant petition raising the following issues:
A. THAT THE COURT OF APPEALS ERRED IN DECLARING THAT THE
COMPLAINT FILED BY THE PETITIONERS WITH THE REGIONAL TRIAL COURT
OF QUEZON CITY IN CIVIL CASE NO. Q-99-36483 DOES NOT STATE A VALID
CAUSE OF ACTION;
B. THAT THE COURT OF APPEALS ERRED IN DECLARING THAT THE
PETITIONERS ARE NOT REAL PARTIES IN INTEREST;
C. THAT THE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE OF
"EXHAUSTION OF ADMINISTRATIVE REMEDIES"; and,
D. THAT THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF
DISCRETION AND DENIED PETITIONERS RIGHT TO DUE PROCESS WHEN IT
DISMISSED THEIR COMPLAINT.17
We deny the petition.
The subject lots are part of the Piedad Estate, Quezon City, a Friar Land
acquired on December 23, 1903 by the Philippine Government from the
Philippine Sugar Estates Development Company, Ltd., La Sociedad Agricola
de Ultramar, the British-Manila Estate Company, Ltd., and the Recoleto
Order of the Philippine Islands, as indicated in Public Act No. 1120 (Friar
Lands Act) enacted on April 26, 1904.18
After the Piedad Estate was registered in OCT No. 614 in the name of the
Philippine Government in 1910 under the provisions of Act 496, the area
was subdivided originally into 874 lots. As a result of subsequent surveys
executed in the course of disposition, the number of lots increased to
1,305. Disposition of these lots was made by the Bureau of Lands thru
sales, under the Friar Lands Act, as early as 1910 and records show that
even before the Second World War, all lots in the Piedad Estate have been
disposed of.19 The Piedad Estate has long been segregated from the mass
of the public domain and has become private land duly registered under
the Torrens system following the procedure for the confirmation of private
lands prescribed in Act 496. Thus the lands inside the Piedad Estate are no
longer lands of the public domain.20
One who acquires land under the Friar Lands Act, as well as his successors-
in-interest, may not claim successional rights to purchase by reason of
occupation from time immemorial, as this contravenes the historical fact
that friar lands were bought by the Government of the Philippine Islands,
pursuant to an Act of Congress of the United States, approved on July 1,
1902, not from individual persons but from certain companies, a society
and a religious order. Under the Friar Lands Act, only "actual settlers and
occupants at the time said lands are acquired by the Government" were
given preference to lease, purchase, or acquire their holdings, in disregard
of the settlement and occupation of persons before the government
acquired the lands. 21
The basic rules of proper pleading and procedure require that every
pleading shall contain in a methodical and logical form, a plain, concise
and direct statement of the ultimate facts on which the party pleading
relies for his claim or defense, as the case may be, omitting the statement
of mere evidentiary facts.22 And in all averments of fraud or mistake, the
circumstances constituting fraud or mistake must be stated with
particularity.23
It is axiomatic that the averments of the complaint determine the nature
of the action, and consequently, the jurisdiction of the courts. This is
because the complaint must contain a concise statement of the ultimate
facts constituting the plaintiff's cause of action and must specify the relief
sought. No rule is better established than that which requires the
complaint to contain a statement of all the facts constituting the plaintiff's
cause of action. Additionally, Section 5, Rule 8 of the Rules of Court
provides that in all averments of fraud or mistake, the circumstances
constituting fraud or mistake must be stated with particularity. In the case
at bar, while there are allegations of fraud in the above quoted
complaints, the same are not particular enough to bring the controversy
within the SEC's jurisdiction. The said allegations are not statements of
ultimate facts but are mere conclusions of law.
A pleading should state the ultimate facts essential to the rights of action
or defense asserted, as distinguished from mere conclusions of fact, or
conclusions of law. General allegations that a contract is valid or legal, or is
just, fair and reasonable, are mere conclusions of law. Likewise, allegations
that a contract is void, voidable, invalid, illegal, ultra vires, or against public
policy, without stating facts showing its invalidity, are mere conclusions of
law.24
"Ultimate facts" means the essential facts constituting the plaintiff's cause
of action, or such facts as are so essential that they cannot be stricken out
without leaving the statement of the cause of action inadequate.25
"Cause of action" has been defined as an act or omission of one party in
violation of the legal right or rights of the other;26 and its essential
elements are: 1) a right in favor of the plaintiff by whatever means and
under whatever law it arises or is created; 2) an obligation on the part of
the named defendant to respect or not to violate such right; and 3) an act
or omission on the part of the named defendant violative of the right of
the plaintiff or constituting a breach of the obligation of defendant to the
plaintiff for which the latter may maintain an action for recovery of
damages. If these elements are not extant, the complaint becomes
vulnerable to a motion to dismiss on the ground of failure to state a cause
of action.27 In the resolution of a motion to dismiss based on failure to
state a cause of action, only the facts alleged in the complaint as well as its
annexes must be considered.28 The test in such case is whether a court
can render a valid judgment on the complaint based upon the facts alleged
and pursuant to the prayer therein.29
Corollarily, the question of whether or not a complaint states a cause of
action against a defendant or the action is premature is one of law. The
trial court can consider all the pleadings filed, including annexes, motions
and the evidence on record. However in so doing, the trial court does not
rule on the truth or falsity of such documents. It merely includes such
documents in the hypothetical admission. Any review of a finding of lack
of cause of action based on these documents would not involve a
calibration of the probative value of such pieces of evidence but would
only limit itself to the inquiry of whether the law was properly applied
given the facts and these supporting documents. Therefore, what would
inevitably arise from such a review are pure questions of law, and not
questions of fact.
The trial court must likewise apply relevant statutes and jurisprudence in
determining whether the allegations in a complaint establish a cause of
action. While it focuses on the complaint, a court clearly cannot disregard
decisions material to the proper appreciation of the questions before it. In
resolving a motion to dismiss, every court must take cognizance of
decisions this Court has rendered because they are proper subjects of
mandatory judicial notice. The said decisions, more importantly, form part
of the legal system, and failure of any court to apply them shall constitute
an abdication of its duty to resolve a dispute in accordance with law, and
shall be a ground for administrative action against an inferior court
magistrate.30
Considering the foregoing, it is not difficult to see the need for
particularity and incipient substantiation in the petitioners Second
Amended Complaint.
First, their initial claim that OCT 614 of which all the other subject titles
are derivatives is null and void, has been proven wrong. As has been held
in Pinlac and other cases, OCT 614 did legally exist and was previously
issued in the name of the Philippine Government in 1910 under the
provisions of Act 496.
Second, the Ad Hoc Committee of the then Ministry of Natural Resources,
which was specifically tasked to investigate the historical background of
the Piedad Estate, found that as early as the period prior to the Second
World War, all lots in the Piedad Estate had already been disposed of.
Third, the Piedad Estate has been placed under the Torrens system of land
registration, which means that all lots therein are titled.
Fourth, as held in the Balicudiong case, one who acquires land under the
Friar Lands Act, as well as his successors-in-interest, may not claim
successional rights to purchase by reason of occupation from time
immemorial, which means that petitioners claimed actual, adverse,
peaceful and continuous possession of the subject property is really of no
moment unless it is shown that their predecessors-in-interest were actual
settlers and occupants at the time said lands were acquired by the
Government, and whose rights were not disregarded even though they
were in occupation of the same before the government acquired the land;
yet, no period of time in relation to adverse possession is alleged.
Petitioners Second Amended Complaint betrays no more than an
incomplete narration of facts unsupported by documentary or other
exhibits; the allegations therein partake of conclusions of law unsupported
by a particular averment of circumstances that will show why or how such
inferences or conclusions were arrived at. It is replete with sweeping
generalizations and inferences derived from facts that are not found
therein. While there are allegations of fraud upon the claim that the
subject titles were fictitious, spurious and obtained under "mysterious
circumstances," the same are not specific to bring the controversy within
the trial courts jurisdiction. There is no explanation or narration of facts as
would show why said titles are claimed to be fictitious or spurious,
contrary to the requirement of the Rules that the circumstances
constituting fraud must be stated with particularity; otherwise, the
allegation of fraud would simply be an unfounded conclusion of law. In the
absence of specific averments, the complaint is defective, for it presents
no basis upon which the court should act, or for the defendant to meet it
with an intelligent answer.
As to the second issue raised, petitioners claim that they are bona fide
occupants of the subject property within the contemplation of the Friar
Lands Act, having allegedly been in actual, adverse, peaceful and
continuous possession of the property, although it is not stated for how
long and since when. In their second amended complaint, they seek
judgment
(4) Declaring the plaintiffs as bona fide occupants of the property in
litigation pursuant to the provisions of the Friar Lands Act and other
existing laws. (Emphasis supplied)
They do not pray to be declared owners of the subject property despite
their alleged adverse possession but only to be adjudged as the "bona
fide occupants" thereof. In other words, petitioners concede the States
ownership of the property.
Being so, petitioners may not be considered the real parties in interest for
the purpose of maintaining the suit for cancellation of the subject titles.
The Court of Appeals is correct in declaring that only the State, through
the Solicitor General, may institute such suit. Jurisprudence on the matter
has been settled and the issue need not be belabored. Thus
The Court also holds that private respondents are not the proper parties
to initiate the present suit. The complaint, praying as it did for the
cancellation of the transfer certificates of title of petitioners on the ground
that they were derived from a "spurious" OCT No. 4216, assailed in effect
the validity of said title. While private respondents did not pray for the
reversion of the land to the government, we agree with the petitioners
that the prayer in the complaint will have the same result of reverting the
land to the government under the Regalian doctrine. Gabila vs. Barriga
ruled that only the government is entitled to this relief. The Court in that
case held:
"The present motion to dismiss is actually predicated on Section 1(g), Rule
16 of the Revised Rules of Court, i.e., failure of the complaint to state a
cause of action, for it alleges in paragraph 12 thereof that the plaintiff
admits that he has no right to demand the cancellation or amendment of
the defendants title, because, even if the said title were canceled or
amended, the ownership of the land embraced therein, or of the portion
thereof affected by the amendment, would revert to the public domain. In
his amended complaint the plaintiff makes no pretense at all that any part
of the land covered by the defendants title was privately owned by him or
by his predecessors-in-interest. Indeed, it is admitted therein that the said
land was at all times a part of the public domain until December 18, 1964,
when the government issued a title thereon in favor of defendant. Thus, if
there is any person or entity to relief, it can only be the government.
In the case at bar, the plaintiffs own averments negate the existence of
such right, for it would appear therefrom that whatever right might have
been violated by the defendant belonged to the government, not to the
plaintiff. Plaintiff-appellant argues that although his complaint is captioned
as one for cancellation of title, he has nevertheless stated therein several
causes of action based on his alleged rights of possession and ownership
over the improvements, on defendant-appellees alleged fraudulent
acquisition of the land, and on the damages allegedly incurred by him
(plaintiff-appellant) in relation to the improvements. These matters are
merely ancillary to the central issue of whether or not defendant-
appellees title should be canceled or amended, and they may not be
leaned upon in an effort to make out a cause of action in relation to the
said focal issue. Indeed, the principal relief prayed for in the amended
complaint is the cancellation or amendment of defendant-appellees
title."31
Under Rule 3, Section 2 of the Rules of Court, a real party in interest is the
party who stands to be benefited or injured by the judgment in the suit, or
the party entitled to the avails of the suit. "Interest" within the meaning of
the rule means material interest, an interest in issue and to be affected by
the decree, as distinguished from mere interest in the question involved,
or a mere incidental interest. The interest of the party must also be
personal and not one based on a desire to vindicate the constitutional
right of some third and unrelated party. Real interest, on the other hand,
means a present substantial interest, as distinguished from a mere
expectancy or a future, contingent, subordinate, or consequential
interest.32
If petitioners are to be believed, they would possess a mere inchoate
interest in the properties covered by the subject titles, a mere expectancy
conditioned upon the fact that if the questioned titles are cancelled and
the property is reverted to the State, they would probably or possibly be
given preferential treatment as qualified buyers or lessees of the property
under the Friar Lands Act. But this certainly is not the "interest" required
by law that grants them license or the personality to prosecute their case.
Only to the State does the privilege belong.
On the issue of exhaustion of administrative remedies, suffice it to state
that since petitioners do not possess the necessary interest to prosecute
the case for cancellation of title in the courts, neither do they have the
right to pursue administrative remedies outside thereof. They are not the
owners; nor are they qualified applicants therefor. It has not been shown
by their complaint that they have previously taken steps to avail of the
benefits under the Friar Lands Act, since all they seek, should the
questioned titles be nullified, is to be declared bona fide occupants of the
property covered by the questioned titles. Neither is there any indication
that they possess the qualifications necessary to enable them to avail of
the preference granted under the Act.
Finally, there is no merit in petitioners contention that respondent
belatedly filed the petition for certiorari with the Court of Appeals, and
that the appellate court gravely abused its discretion when it entertained
and resolved the same.
The Order of the trial court dated January 3, 2001 denying respondents
motion to dismiss the Second Amended Complaint was received by the
respondent on January 16, 2001. Respondent filed a motion for
reconsideration on January 18, 2001 which was denied on February 28,
2001. Respondent received the order denying its motion for
reconsideration on March 27, 2001. On the same day, it filed a Notice to
File Petition for Certiorari. On April 2, 2001, the petition for certiorari was
filed with the Court of Appeals. Clearly, the same was timely filed hence,
the appellate court correctly entertained the same.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
dated January 9, 2002 in CA-G.R. SP No. 64337 dismissing petitioners
"Second Amended Complaint" in Civil Case No. Q-99-36483 and the
Resolution dated June 26, 2002 denying the motion for reconsideration,
are AFFIRMED.
SO ORDERED.
THIRD DIVISION
[G.R. No. 100709. November 14, 1997]
REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF LANDS,
petitioner, vs. COURT OF APPEALS, JOSEFINA L. MORATO, SPOUSES
NENITA CO and ANTONIO QUILATAN AND THE REGISTER OF DEEDS OF
QUEZON PROVINCE, respondents.
DECISION
PANGANIBAN, J.:
Will the lease and/or mortgage of a portion of a realty acquired through
free patent constitute sufficient ground for the nullification of such land
grant? Should such property revert to the State once it is invaded by the
sea and thus becomes foreshore land?
The Case
These are the two questions raised in the petition before us assailing the
Court of Appeals[1] Decision in CA-G.R. CV No. 02667 promulgated on
June 13, 1991 which answered the said questions in the negative.[2]
Respondent Courts Decision dismissed[3] petitioners appeal and affirmed
in toto the decision of the Regional Trial Court[4] of Calauag, Quezon,
dated December 28, 1983 in Civil Case No. C-608. In turn, the Regional
Trial Courts decision dismissed petitioners complaint for cancellation of
the Torrens Certificate of Title of Respondent Morato and for reversion of
the parcel of land subject thereof to the public domain.
The Facts
The petition of the solicitor general, representing the Republic of the
Philippines, recites the following facts:[5]
Sometime in December, 1972, respondent Morato filed a Free Patent
Application No. III-3-8186-B on a parcel of land with an area of 1,265
square meters situated at Pinagtalleran, Calauag, Quezon. On January 16,
1974, the patent was approved and the Register of Deeds of Quezon at
Lucena City issued on February 4, 1974 Original Certificate of Title No. P-
17789. Both the free patent and the title specifically mandate that the
land shall not be alienated nor encumbered within five (5) years from the
date of the issuance of the patent (Sections 118 and 124 of CA No. 141, as
amended).
Subsequently, the District Land Officer in Lucena City, acting upon reports
that respondent Morato had encumbered the land in violation of the
condition of the patent, conducted an investigation. Thereafter, it was
established that the subject land is a portion of the Calauag Bay, five (5) to
six (6) feet deep under water during high tide and two (2) feet deep at low
tide, and not suitable to vegetation. Moreover, on October 24, 1974, a
portion of the land was mortgaged by respondent Morato to respondents
Nenita Co and Antonio Quilatan for P10,000.00 (pp. 2, 25, Folder of
Exhibits). The spouses Quilatan constructed a house on the land. Another
portion of the land was leased to Perfecto Advincula on February 2, 1976
at P100.00 a month, where a warehouse was constructed.
On November 5, 1978, petitioner filed an amended complaint against
respondents Morato, spouses Nenita Co and Antonio Quilatan, and the
Register of Deeds of Quezon for the cancellation of title and reversion of a
parcel of land to the public domain, subject of a free patent in favor of
respondent Morato, on the grounds that the land is a foreshore land and
was mortgaged and leased within the five-year prohibitory period (p. 46,
Records).
After trial, the lower court, on December 28, 1983, rendered a decision
dismissing petitioners complaint. In finding for private respondents, the
lower court ruled that there was no violation of the 5-year period ban
against alienating or encumbering the land, because the land was merely
leased and not alienated. It also found that the mortgage to Nenita Co and
Antonio Quilatan covered only the improvement and not the land itself.
On appeal, the Court of Appeals affirmed the decision of the trial court.
Thereafter, the Republic of the Philippines filed the present petition.[6]
The Issues
Petitioner alleges that the following errors were committed by
Respondent Court:[7]
I
Respondent Court erred in holding that the patent granted and certificate
of title issued to Respondent Morato cannot be cancelled and annulled
since the certificate of title becomes indefeasible after one year from the
issuance of the title.
II
Respondent Court erred in holding that the questioned land is part of a
disposable public land and not a foreshore land.
The Courts Ruling
The petition is meritorious.
First Issue: Indefeasibility of a Free Patent Title
In resolving the first issue against petitioner, Respondent Court held:[8]
x x x. As ruled in Heirs of Gregorio Tengco vs. Heirs of Jose Alivalas, 168
SCRA 198. x x. The rule is well-settled that an original certificate of title
issued on the strength of a homestead patent partakes of the nature of a
certificate of title issued in a judicial proceeding, as long as the land
disposed of is really part of the disposable land of the public domain, and
becomes indefeasible and incontrovertible upon the expiration of one
year from the date of promulgation of the order of the Director of Lands
for the issuance of the patent. (Republic v. Heirs of Carle, 105 Phil. 1227
(1959); Ingaran v. Ramelo, 107 Phil. 498 (1960); Lopez v. Padilla, (G.R. No.
L-27559, May 18, 1972, 45 SCRA 44). A homestead patent, one registered
under the Land Registration Act, becomes as indefeasible as a Torrens
Title. (Pamintuan v. San Agustin, 43 Phil. 558 (1982); El Hogar Filipino v.
Olviga, 60 Phil. 17 (1934); Duran v. Oliva, 113 Phil. 144 (1961); Pajomayo v.
Manipon, G.R. No. L-33676, June 30, 1971, 39 SCRA 676). (p. 203).
Again, in Lopez vs. Court of Appeals, 169 SCRA 271, citing Iglesia ni Cristo
v. Hon. Judge, CFI of Nueva Ecija, Branch I, (123 SCRA 516 (1983) and
Pajomayo, et al. v. Manipon, et al. (39 SCRA 676 (1971) held that once a
homestead patent granted in accordance with the Public Land Act is
registered pursuant to Section 122 of Act 496, the certificate of title issued
in virtue of said patent has the force and effect of a Torrens Title issued
under the Land Registration Act.
Indefeasibility of the title, however, may not bar the State, thru the
Solicitor General, from filing an action for reversion, as ruled in Heirs of
Gregorio Tengo v. Heirs of Jose Aliwalas, (supra), as follows:
But, as correctly pointed out by the respondent Court of Appeals, Dr.
Aliwalas title to the property having become incontrovertible, such may no
longer be collaterally attacked. If indeed there had been any fraud or
misrepresentation in obtaining the title, an action for reversion instituted
by the Solicitor General would be the proper remedy (Sec. 101, C.A. No.
141; Director of Lands v. Jugado, G.R. No. L-14702, May 21, 1961, 2 SCRA
32; Lopez v. Padilla, supra). (p. 204).
Petitioner contends that the grant of Free Patent (IV-3) 275 and the
subsequent issuance of Original Certificate of Title No. P-17789 to
Respondent Josefina L. Morato were subject to the conditions provided for
in Commonwealth Act (CA) No. 141. It alleges that on October 24, 1974, or
nine (9) months and eight (8) days after the grant of the patent,
Respondent Morato, in violation of the terms of the patent, mortgaged a
portion of the land to Respondent Nenita Co, who thereafter constructed
a house thereon. Likewise, on February 2, 1976 and within the five-year
prohibitory period, Respondent Morato leased a portion of the land to
Perfecto Advincula at a monthly rent of P100.00 who, shortly thereafter,
constructed a house of concrete materials on the subject land.[9] Further,
petitioner argues that the defense of indefeasibility of title is inaccurate.
The original certificate of title issued to Respondent Morato contains the
seeds of its own cancellation: such certificate specifically states on its face
that it is subject to the provisions of Sections 118, 119, 121, 122, 124 of CA
No. 141, as amended.[10]
Respondent Morato counters by stating that although a portion of the
land was previously leased, it resulted from the fact that Perfecto
Advincula built a warehouse in the subject land without [her] prior
consent. The mortgage executed over the improvement cannot be
considered a violation of the said grant since it can never affect the
ownership.[11] She states further:
x x x. the appeal of the petitioner was dismissed not because of the
principle of indefeasibility of title but mainly due to failure of the latter to
support and prove the alleged violations of respondent Morato. The
records of this case will readily show that although petitioner was able to
establish that Morato committed some acts during the prohibitory period
of 5 years, a perusal thereof will also show that what petitioner was able
to prove never constituted a violation of the grant.[12]
Respondent-Spouses Quilatan, on the other hand, state that the mortgage
contract they entered into with Respondent Morato can never be
considered as [an] alienation inasmuch as the ownership over the property
remains with the owner.[13] Besides, it is the director of lands and not the
Republic of the Philippines who is the real party in interest in this case,
contrary to the provision of the Public Land Act which states that actions
for reversion should be instituted by the solicitor general in the name of
Republic of the Philippines.[14]
We find for petitioner.
Quoted below are relevant sections of Commonwealth Act No. 141,
otherwise known as the Public Land Act:
Sec. 118. Except in favor of the Government or any of its branches, units or
institutions, or legally constituted banking corporations, lands acquired
under free patent or homestead provisions shall not be subject to
encumbrance or alienation from the date of the approval of the
application and for a term of five years from and after the date of issuance
of the patent or grant nor shall they become liable to the satisfaction of
any debt contracted prior to the expiration of said period; but the
improvements or crops on the land may be mortgaged or pledged to
qualified persons, associations, or corporations.
No alienation, transfer, or conveyance of any homestead after five years
and before twenty-five years after issuance of title shall be valid without
the approval of the Secretary of Agriculture and Natural Resources, which
approval shall not be denied except on constitutional and legal grounds.
(As amended by Com. Act No. 456, approved June 8, 1939.)
xxxxxxxxx
Sec. 121. Except with the consent of the grantee and the approval of the
Secretary of Agriculture and Natural Resources, and solely for educational,
religious, or charitable purposes or for a right of way, no corporation,
association, or partnership may acquire or have any right, title, interest, or
property right whatsoever to any land granted under the free patent,
homestead, or individual sale provisions of this Act or to any permanent
improvement on such land. (As amended by Com. Act No. 615, approved
May 5, 1941)
Sec. 122. No land originally acquired in any manner under the provisions
of this Act, nor any permanent improvement on such land, shall be
encumbered, alienated or transferred, except to persons, corporations,
association, or partnerships who may acquire lands of the public domain
under this Act or to corporations organized in the Philippines authorized
therefore by their charters.
Except in cases of hereditary successions, no land or any portion thereof
originally acquired under the free patent, homestead, or individual sale
provisions of this Act, or any permanent improvement on such land, shall
be transferred or assigned to any individual, nor shall such land or any
permanent improvement thereon be leased to such individual, when the
area of said land, added to that of his own, shall exceed one hundred and
forty-four hectares. Any transfer, assignment, or lease made in violation
hereto shall be null and void. (As amended by Com. Act No. 615, Id.)
xxxxxxxxx
Sec. 124. Any acquisition, conveyance, alienation, transfer, or other
contract made or executed in violation of any of the provisions of sections
one hundred and eighteen, one hundred and twenty, one hundred and
twenty-one, one hundred and twenty-two, and one hundred and twenty-
three of this Act shall be unlawful and null and void from its execution and
shall produce the effect of annulling and cancelling the grant, title, patent,
or permit originally issued, recognized or confirmed, actually or
presumptively, and cause the reversion of the property and its
improvements to the State. (Underscoring supplied.)
The foregoing legal provisions clearly proscribe the encumbrance of a
parcel of land acquired under a free patent or homestead within five years
from the grant of such patent. Furthermore, such encumbrance results in
the cancellation of the grant and the reversion of the land to the public
domain. Encumbrance has been defined as [a]nything that impairs the use
or transfer of property; anything which constitutes a burden on the title; a
burden or charge upon property; a claim or lien upon property. It may be a
legal claim on an estate for the discharge of which the estate is liable; an
embarrassment of the estate or property so that it cannot be disposed of
without being subject to it; an estate, interest, or right in lands,
diminishing their value to the general owner; a liability resting upon an
estate.[15] Do the contracts of lease and mortgage executed within five
(5) years from the issuance of the patent constitute an encumbrance and
violate the terms and conditions of such patent? Respondent Court
answered in the negative:[16]
From the evidence adduced by both parties, it has been proved that the
area of the portion of the land, subject matter of the lease contract (Exh.
B) executed by and between Perfecto Advincula and Josefina L. Morato is
only 10 x 12 square meters, whereas the total area of the land granted to
Morato is 1,265 square meters. It is clear from this that the portion of the
land leased by Advincula does not significantly affect Moratos ownership
and possession. Above all, the circumstances under which the lease was
executed do not reflect a voluntary and blatant intent to violate the
conditions provided for in the patent issued in her favor. On the contrary,
Morato was compelled to enter into that contract of lease out of
sympathy and the goodness of her heart to accommodate a fellow man. x
xx
It is indisputable, however, that Respondent Morato cannot fully use or
enjoy the land during the duration of the lease contract. This restriction on
the enjoyment of her property sufficiently meets the definition of an
encumbrance under Section 118 of the Public Land Act, because such
contract impairs the use of the property by the grantee. In a contract of
lease which is consensual, bilateral, onerous and commutative, the owner
temporarily grants the use of his or her property to another who
undertakes to pay rent therefor.[17] During the term of the lease, the
grantee of the patent cannot enjoy the beneficial use of the land leased.
As already observed, the Public Land Act does not permit a grantee of a
free patent from encumbering any portion of such land. Such
encumbrance is a ground for the nullification of the award.
Moratos resort to equity, i.e. that the lease was executed allegedly out of
the goodness of her heart without any intention of violating the law,
cannot help her. Equity, which has been aptly described as justice outside
legality, is applied only in the absence of, and never against, statutory law
or judicial rules of procedure. Positive rules prevail over all abstract
arguments based on equity contra legem.[18]
Respondents failed to justify their position that the mortgage should not
be considered an encumbrance. Indeed, we do not find any support for
such contention. The questioned mortgage falls squarely within the term
encumbrance proscribed by Section 118 of the Public Land Act.[19] Verily,
a mortgage constitutes a legal limitation on the estate, and the foreclosure
of such mortgage would necessarily result in the auction of the
property.[20]
Even if only part of the property has been sold or alienated within the
prohibited period of five years from the issuance of the patent, such
alienation is a sufficient cause for the reversion of the whole estate to the
State. As a condition for the grant of a free patent to an applicant, the law
requires that the land should not be encumbered, sold or alienated within
five years from the issuance of the patent. The sale or the alienation of
part of the homestead violates that condition.[21]
The prohibition against the encumbrance -- lease and mortgage included --
of a homestead which, by analogy applies to a free patent, is mandated by
the rationale for the grant, viz.:[22]
It is well-known that the homestead laws were designed to distribute
disposable agricultural lots of the State to land-destitute citizens for their
home and cultivation. Pursuant to such benevolent intention the State
prohibits the sale or encumbrance of the homestead (Section 116) within
five years after the grant of the patent. After that five-year period the law
impliedly permits alienation of the homestead; but in line with the
primordial purpose to favor the homesteader and his family the statute
provides that such alienation or conveyance (Section 117) shall be subject
to the right of repurchase by the homesteader, his widow or heirs within
five years. This section 117 is undoubtedly a complement of section 116. It
aims to preserve and keep in the family of the homesteader that portion
of public land which the State had gratuitously given to him. It would,
therefore, be in keeping with this fundamental idea to hold, as we hold,
that the right to repurchase exists not only when the original homesteader
makes the conveyance, but also when it is made by his widow or heirs.
This construction is clearly deducible from the terms of the statute.
By express provision of Section 118 of Commonwealth Act 141 and in
conformity with the policy of the law, any transfer or alienation of a free
patent or homestead within five years from the issuance of the patent is
proscribed. Such transfer nullifies said alienation and constitutes a cause
for the reversion of the property to the State.
The prohibition against any alienation or encumbrance of the land grant is
a proviso attached to the approval of every application.[23] Prior to the
fulfillment of the requirements of law, Respondent Morato had only an
inchoate right to the property; such property remained part of the public
domain and, therefore, not susceptible to alienation or encumbrance.
Conversely, when a homesteader has complied with all the terms and
conditions which entitled him to a patent for [a] particular tract of public
land, he acquires a vested interest therein and has to be regarded an
equitable owner thereof.[24] However, for Respondent Moratos title of
ownership over the patented land to be perfected, she should have
complied with the requirements of the law, one of which was to keep the
property for herself and her family within the prescribed period of five (5)
years. Prior to the fulfillment of all requirements of the law, Respondent
Moratos title over the property was incomplete. Accordingly, if the
requirements are not complied with, the State as the grantor could
petition for the annulment of the patent and the cancellation of the title.
Respondent Morato cannot use the doctrine of the indefeasibility of her
Torrens title to bar the state from questioning its transfer or
encumbrance. The certificate of title issued to her clearly stipulated that
its award was subject to the conditions provided for in Sections 118, 119,
121, 122 and 124 of Commonwealth Act (CA) No. 141. Because she
violated Section 118, the reversion of the property to the public domain
necessarily follows, pursuant to Section 124.
Second Issue: Foreshore Land Reverts to the Public Domain
There is yet another reason for granting this petition.
Although Respondent Court found that the subject land was foreshore
land, it nevertheless sustained the award thereof to Respondent
Morato:[25]
First of all, the issue here is whether the land in question, is really part of
the foreshore lands. The Supreme Court defines foreshore land in the case
of Republic vs. Alagad, 169 SCRA 455, 464, as follows:
Otherwise, where the rise in water level is due to, the extraordinary action
of nature, rainful, for instance, the portions inundated thereby are not
considered part of the bed or basin of the body of water in question. It
cannot therefore be said to be foreshore land but land outside of the
public dominion, and land capable of registration as private property.
A foreshore land, on the other hand has been defined as follows:
... that part of (the land) which is between high and low water and left dry
by the flux and reflux of the tides x x x x (Republic vs. C.A., Nos. L-43105, L-
43190, August 31, 1984, 131 SCRA 532; Government vs. Colegio de San
Jose, 53 Phil 423)
The strip of land that lies between the high and low water marks and that
is alternatively wet and dry according to the flow of the tide. (Rep. vs. CA,
supra, 539).
The factual findings of the lower court regarding the nature of the parcel
of land in question reads:
Evidence disclose that the marginal area of the land radically changed
sometime in 1937 up to 1955 due to a strong earthquake followed by
frequent storms eventually eroding the land. From 1955 to 1968, however,
gradual reclamation was undertaken by the lumber company owned by
the Moratos. Having thus restored the land thru mostly human hands
employed by the lumber company, the area continued to be utilized by
the owner of the sawmill up to the time of his death in 1965. On or about
March 17, 1973, there again was a strong earthquake unfortunately
causing destruction to hundreds of residential houses fronting the Calauag
Bay including the Santiago Building, a cinema house constructed of
concrete materials. The catastrophe totally caused the sinking of a
concrete bridge at Sumulong river also in the municipality of Calauag,
Quezon.
On November 13, 1977 a typhoon code named Unding wrought havoc as it
lashed the main land of Calauag, Quezon causing again great erosion this
time than that which the area suffered in 1937. The Court noted with the
significance of the newspaper clipping entitled Baryo ng Mangingisda
Kinain ng Dagat (Exh. 11).
xxxxxxxxx
Evidently this was the condition of the land when on or about December 5,
1972 defendant Josefina L. Morato filed with the Bureau of Lands her free
patent application. The defendant Josefina Morato having taken
possession of the land after the demise of Don Tomas Morato, she
introduced improvement and continued developing the area, planted it to
coconut trees. Having applied for a free patent, defendant had the land
area surveyed and an approved plan (Exh. 9) based on the cadastral survey
as early as 1927 (Exh. 10) was secured. The area was declared for taxation
purposes in the name of defendant Josefina Morato denominated as Tax
Declaration No. 4115 (Exh. 8) and the corresponding realty taxes
religiously paid as shown by Exh. 8-A). (pp. 12-14, DECISION).
Being supported by substantial evidence and for failure of the appellant to
show cause which would warrant disturbance, the afore-cited findings of
the lower court, must be respected.
Petitioner correctly contends, however, that Private Respondent Morato
cannot own foreshore land:
Through the encroachment or erosion by the ebb and flow of the tide, a
portion of the subject land was invaded by the waves and sea advances.
During high tide, at least half of the land (632.5 square meters) is 6 feet
deep under water and three (3) feet deep during low tide. The Calauag Bay
shore has extended up to a portion of the questioned land.
While at the time of the grant of free patent to respondent Morato, the
land was not reached by the water, however, due to gradual sinking of the
land caused by natural calamities, the sea advances had permanently
invaded a portion of subject land. As disclosed at the trial, through the
testimony of the court-appointed commissioner, Engr. Abraham B. Pili, the
land was under water during high tide in the month of August 1978. The
water margin covers half of the property, but during low tide, the water is
about a kilometer (TSN, July 19, 1979, p. 12). Also, in 1974, after the grant
of the patent, the land was covered with vegetation, but it disappeared in
1978 when the land was reached by the tides (Exhs. E-1; E-14). In fact, in
its decision dated December 28, 1983, the lower court observed that the
erosion of the land was caused by natural calamities that struck the place
in 1977 (Cf. Decision, pp. 17-18).[26]
Respondent-Spouses Quilatan argue, however, that it is unfair and unjust
if Josefina Morato will be deprived of the whole property just because a
portion thereof was immersed in water for reasons not her own doing.[27]
As a general rule, findings of facts of the Court of Appeals are binding and
conclusive upon this Court, unless such factual findings are palpably
unsupported by the evidence on record or unless the judgment itself is
based on a misapprehension of facts.[28] The application for a free patent
was made in 1972. From the undisputed factual findings of the Court of
Appeals, however, the land has since become foreshore. Accordingly, it
can no longer be subject of a free patent under the Public Land Act.
Government of the Philippine Islands vs. Cabagis[29] explained the
rationale for this proscription:
Article 339, subsection 1, of the Civil Code, reads:
Art. 339. Property of public ownership is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, riverbanks, shores, roadsteads, and
that of a similar character.
********
Article 1, case 3, of the Law of Waters of August 3, 1866, provides as
follows:
ARTICLE 1. The following are part of the national domain open to public
use:
********
3. The Shores. By the shore is understood that space covered and
uncovered by the movement of the tide. Its interior or terrestrial limit is
the line reached by the highest equinoctal tides. Where the tides are not
appreciable, the shore begins on the land side at the line reached by the
sea during ordinary storms or tempests.
In the case of Aragon vs. Insular Government (19 Phil. 223), with reference
to article 339 of the Civil Code just quoted, this Court said:
We should not be understood, by this decision, to hold that in a case of
gradual encroachment or erosion by the ebb and flow of the tide, private
property may not become property of public ownership. as defined in
article 339 of the code, where it appear that the owner has to all intents
and purposes abandoned it and permitted it to be totally destroyed, so as
to become a part of the playa (shore of the sea), rada (roadstead), or the
like. * * *
In the Enciclopedia Jurdica Espaola, volume XII, page 558, we read the
following:
With relative frequency the opposite phenomenon occurs; that is, the sea
advances and private properties are permanently invaded by the waves,
and in this case they become part of the shore or beach. They then pass to
the public domain, but the owner thus dispossessed does not retain any
right to the natural products resulting from their new nature; it is a de
facto case of eminent domain, and not subject to indemnity.
In comparison, Article 420 of the Civil Code provides:
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores, roadsteads, and
others of similar character;
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.
When the sea moved towards the estate and the tide invaded it, the
invaded property became foreshore land and passed to the realm of the
public domain. In fact, the Court in Government vs. Cabangis[30] annulled
the registration of land subject of cadastral proceedings when the parcel
subsequently became foreshore land.[31] In another case, the Court
voided the registration decree of a trial court and held that said court had
no jurisdiction to award foreshore land to any private person or entity.[32]
The subject land in this case, being foreshore land, should therefore be
returned to the public domain.
WHEREFORE, the petition is GRANTED. This Court hereby REVERSES and
SETS ASIDE the assailed Decision of Respondent Court and ORDERS the
CANCELLATION of Free Patent No. (IV-3) 275 issued to Respondent Morato
and the subsequent Original Certificate of Title No. P-17789. The subject
land therefore REVERTS to the State. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-69002 June 30, 1988
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
AMANDA LAT VDA. DE CASTILLO, FLORENCIO T. CASTILLO, SOLEDAD LOTA
CASTILLO, CARLOS L. CASTILLO, NIEVES KATIGBAK CASTILLO, MARIANO L.
CASTILLO, HIPOLITA DYTIAPCO CASTILLO, AIDA CASTILLO HERRERA,
HERMITO HERRERA, JOSE L. CASTILLO, LILIA MACEDA CASTILLO, TERESITA
L. CASTILLO, REGISTER OF DEEDS OF BATANGAS and THE INTERMEDIATE
APPELLATE COURT, respondents.
Castro, Nardo, Quintanilla, Gonzales & Macatangay Law Office for
respondents.
PARAS, J.:
This is a petition for review on certiorari of the April 26, 1984 Decision of
the then Intermediate Appellate Court * reversing the February 6, 1976
Decision of the then Court of First Instance of Batangas, Branch VI, in Civil
Case No. 2044.
The antecedental facts of this case, as found by the then Intermediate
Appellate Court, are as follows:
Sometime in 1951, the late Modesto Castillo applied for the registration of
two parcels of land, Lots 1 and 2, located in Banadero, Tanauan, Batangas,
described in Plan Psu-119166, with a total area of 39,755 square meters.
In a decision dated August 31, 1951, the said Modesto Castillo, married to
Amanda Lat, was declared the true and absolute owner of the land with
the improvements thereon, for which Original Certificate of Title No. 0-665
was, issued to him by the Register of Deeds at Batangas, Batangas, on
February 7, 1952. By virtue of an instrument dated March 18, 1960, the
said Lots 1 and 2 covered by Original Certificate of Title No. 0-665,
together with Lot No. 12374 covered by Transfer Certificate of Title No.
3254-A and Lot No. 12377 covered by Transfer Certificate of Title No.
3251-A, were consolidated and sub-divided into Lots 1 to 9 under Pcs-
1046. After the death of Modesto Castillo, or on August 31, 1960, Amanda
Lat Vda. de Castillo, et al., executed a deed of partition and assumption of
mortgage in favor of Florencio L. Castillo, et al., as a result of which
Original Certificate of Title No. D-665 was cancelled, and in lieu thereof,
new transfer cerfificates of title were issued to Florencio Castillo, et al., to
wit: Transfer Certificate of Title No. 21703 (Lot 4) (and) Transfer Certificate
of Title No. 21704 to Florencio Castillo (Lot 5); Transfer Certificate of Title
No. T-21708 to Carlos L. Castillo (Lot 7); Transfer Certificate of Title No. T-
21712 to Mariano L. Castillo (Lot 6); Transfer Certificate of Title No. T-
21713 to Jose L. Castillo (Lot 9); Transfer Certificate of Title No. T-21718 to
Aida C. Herrera (Lot 2); and Transfer Certificate of Title No. T-21727 to
Teresita L. Castillo (Lot 8).
The Republic of the Philippines filed Civil Case No. 2044 with the lower
court for the annulment of the certificates of title issued to defendants
Amanda Lat Vda. de Castillo, et al., as heirs/successors of Modesto Castillo,
and for the reversion of the lands covered thereby (Lots 1 and 2, Psu-
119166) to the State. It was alleged that said lands had always formed part
of the Taal Lake, washed and inundated by the waters thereof, and being
of public ownership, it could not be the subject of registration as private
property. Appellants herein, defendants below, alleged in their answer
that the Government's action was already barred by the decision of the
registration court; that the action has prescribed; and that the
government was estopped from questioning the ownership and
possession of appellants.
After trial, the then Court of First Instance of Batangas, Branch VI, presided
over by Honorable Benjamin Relova, in a Decision dated February 6, 1976
(Record on Appeal, pp. 62-69), ruled in favor of herein petitioner Republic
of the Philippines. The decretal portion of the said decision, reads:
WHEREFORE, the Register of Deeds of Batangas is hereby ordered to
cancel Original Certificate of Title No. 0-665 in the name of Modesto
Castillo and the subsequent Transfer of Certificates of Title issued over the
property in the names of the defendants. Lots Nos. 1 and 2 of Plan Psu-
19166 are hereby declared public lands belonging to the state. Without
pronouncement as to costs.
The Court of Appeals, on appeal, in a Decision promulgated on April
26,1984, reversed and set aside the appealed decision, and dismissed the
complaint (Record, pp. 31-41). Herein petitioner filed a Motion for
Reconsideration (Record, pp. 42-51), but the same was denied in a
Resolution promulgated on October 12,1984 (Record, p. 52). Hence, the
instant petition.
The sole issue raised in this case is whether or not the decision of the Land
Registration Court involving shore lands constitutes res adjudicata.
There is no question that one of the requisites of res judicata is that the
court rendering the final judgment must have jurisdiction over the subject
matter (Ramos v. Pablo, 146 SCRA 24 [1986]; that shores are properties of
the public domain intended for public use (Article 420, Civil Code) and,
therefore, not registrable. Thus, it has long been settled that portions of
the foreshore or of the territorial waters and beaches cannot be
registered. Their inclusion in a certificate of title does not convert the
same into properties of private ownership or confer title upon the
registrant (Republic v. Ayala y Cia, 14 SCRA, 259 [1965], citing the cases of
Dizon, et al. v. Bayona, et al., 98 Phil. 943; and Dizon, et al. v. Rodriguez, et
al., 13 SCRA 704).
But an important bone of contention is the nature of the lands involved in
this case.
Petitioner contends "that "Lots 1 and 2, PSU-119166 had always formed
part of the Taal Lake, washed and inundated by the waters thereof.
Consequently, the same were not subject to registration, being outside the
commerce of men; and that since the lots in litigation are of public domain
(Art. 502), par. 4 Civil Code) the registration court (of 1951) did not have
jurisdiction to adjudicate said lands as private property, hence, res judicata
does not apply. (Rollo, pp. 37-38).
The Government presented both oral and documentary evidence.
As summarized by the Intermediate Appelate Court (now Court of
Appeals), the testimonies of the witnesses for the petitioner are as
follows:
1. Rosendo Arcenas, a Geodetic Engineer connected with the Bureau of
Lands since 1961, testified to the effect that Lots 1 and 2, Psu-119166,
which are the lots in question, adjoin the cadastral survey of Tanauan,
Batangas (Cad. 168); that the original boundary of the original cadastral
survey was foreshore land as indicated on the plan; that the cadastral
survey of Tanauan was executed sometime in 1923; that the first survey
executed of the land after 1923 was the one executed in 1948 under Plan
Psu-119166 that in the relocation survey of the disputed lots in 1962
under SWO-40601, said lots were annotated on the plan as claimed by the
Republic of the Philippines in the same manner that it was so annotated in
Plan Psu-119166; thus showing that the Government was the only
claimant of the land during the survey in 1948; that during the relocation
survey made in 1962, old points cannot be Identified or located because
they were under water by about forty centimeters; that during the ocular
inspection of the premises on November 23, 1970, he found that 2
monuments of the lots in question were washed out by the waters of the
Baloyboy Creek; that he also found duck pens along the lots in question;
that there are houses in the premises as well as some camotes and
bananas; and that he found also some shells ('suso') along the banks of the
Taal lake (Tsn, Nov. 16, 1970, pp. 13-21; Feb. 16, 1971, pp. 4-36).
2. Braulio Almendral testified to the effect that he is a resident of Tanauan,
Batangas, near the Taal lake; that like himself there are other occupants of
the land among whom are Atanacio Tironas, Gavino Mendoza, Juliano
Tirones, Agapito Llarena, etc.; that it was they who filled up the area to
make it habitable; that they filled up the area with shells and sand; that
their occupation is duck raising; and that the Castillos never stayed in or
occupied the premises (Tsn, Nov. 16, 1970, pp. 32-50).
3. Arsenio Ibay, a Geodetic Engineer connected with the Bureau of Lands
since 1968, also testified to the effect that in accordance with the
cadastral plan of Tanauan, the only private claim of Sixto Castillo referred
to Lots 1006 to 1008; that the Castillos never asserted any private claim to
the lots in question during the cadastral survey;' that in the preparation of
plan Psu-119166, Lots 12374 and 12377 were made as reference to
conform to previously approved plans; that lot 12374 is a portion of
cadastral lot 10107, SWO-86738 while Lot 22377 is a portion of Lot 10108
of the same plan (Tsn, Nov. 25, 1970, pp. 115-137).
4. Jose Isidro, a Land Investigator of the Bureau of Lands, testified to the
effect that pursuant to the order of the Director of Lands, he, together
with Engineer Rufino Santiago and the barrio captain of Tanauan,
Batangas, conducted an investigation of the land in question; that he
submitted a report of investigation, dated October 19, 1970 (Exh. H-1);
that portions of the lot in question were covered by public land
applications filed by the occupants thereof; that Engineer Santiago also
submitted a report (Exh. H-8); that he had notified Dr. Mariano Castillo
before conducting the investigation (Tsn, Nov. 25,1970, pp. 137-162).
5. Rufino Santiago, another Geodetic Engineer connected with the Bureau
of Lands, testified to the effect that on October 19,1970, he submitted a
report of investigation regarding the land in question; that he noted on
the plan Exhibit H-9 the areas on which the houses of Severo Alcantara
and others were built; that he found that the land was planted to coconuts
which are about 15 years old; that the land is likewise improved with rice
paddies; that the occupants thereof are duck raisers; that the area had
been elevated because of the waste matters and duck feeds that have
accumulated on the ground through the years (Tsn, Nov. 26,1970, pp. 163-
196).
6. Pablo Tapia, Barrio Captain of Tanauan, Batangas, since 1957, testified
to the effect that the actual occupants of Lots I and 2 are Atanacio
Tirones,tc.; that during the war the water line reached up to a point
marked Exhibit A-9 and at present the water has receded to a point up to
Exhibit A-12; that the reasons why the waters of Taal lake have receded to
the present level is because of the fillings made by the people living in Lots
1 and 2; that there are several duck pens all over the place; that the
composition of the soil is a mixture of mud and duck feeds; that
improvements consist of bananas, bamboos and palay; that the shoreline
is not even in shape because of the Baloyboy Creek; that the people in the
area never came to know about the registration case in which the lots in
question were registered; that the people living in the area, even without
any government aid, helped one another in the construction of irrigated
rice paddies; that he helped them file their public land applications for the
portions occupied by them; that the Castillos have never been in
possession of the premises; that the people depend upon duck raising as
their means of their livelihood; that Lots 1 and 2 were yet inexistent during
the Japanese occupation; and that the people started improving the area
only during liberation and began to build their houses thereon. (Tsn, Nov.
26,1970, pp. 197-234).
Among the exhibits formally offered by the Government are: the Original
Plan of Tanauan, Batangas, particularly the Banader Estate, the Original
Plan of PSU-119166, Relocation Verification Survey Plan, maps, and
reports of Geodetic Engineers, all showing the original shoreline of the
disputed areas and the fact that the properties in question were under
water at the time and are still under water especially during the rainy
season (Hearing, March 17,1971, TSN, pp. 46-47).
On the other hand, private respondents maintain that Lots 1 and 2 have
always been in the possession of the Castillo family for more than 76 years
and that their possession was public, peaceful, continuous, and adverse
against the whole world and that said lots were not titled during the
cadastral survey of Tanauan, because they were still under water as a
result of the eruption of Taal Volcano on May 5, 1911 and that the
inundation of the land in question by the waters of Taal Lake was merely
accidental and does not affect private respondents' ownership and
possession thereof pursuant to Article 778 of the Law of Waters. They
finally insisted that this issue of facts had been squarely raised at the
hearing of the land registration case and, therefore, res judicata (Record
on Appeal, pp. 63-64). They submitted oral and documentary evidence in
support of their claim.
Also summarized by respondent Appellate Court, the testimonies of the
witnesses of private respondents are as follows:
1. Silvano Reano, testified to the effect that he was the overseer of the
property of the late Modesto Castillo located at Banadero,Tanauan,
Batangas since 1944 to 1965; that he also knows Lots 1 and 2, the parcels
of land in question, since he was managing said property; that the
occupants of said Lots 1 and 2 were engaged in duck raising; that those
occupants were paying the Castillos certain amount of money because
their animals used to get inside the lots in question; that he was present
during the survey of the land in 1948; and that aside from the duck pens
which are built in the premises, the land is planted to rice (Tsn, April 14,
1971, pp. 62-88).
2. Dr. Mariano Castillo, testified to the effect that the late Modesto Castillo
was a government official who held high positions in the Government; and
that upon his death the land was subdivided among his legal heirs.
(Appellee's Brief, pp. 4-9).
As above-stated, the trial court decided the case in favor of the
government but the decision was reversed on appeal by the Court of
Appeals.
A careful study of the merits of their varied contentions readily shows that
the evidence for the government has far outweighed the evidence for the
private respondents. Otherwise stated, it has been satisfactorily
established as found by the trial court, that the properties in question
were the shorelands of Taal Lake during the cadastral survey of 1923.
Explaining the first survey of 1923, which showed that Lots 1 and 2 are
parts of the Taal Lake, Engineer Rosendo Arcenas testified as follows:
ATTY. AGCAOILI:
Q Now, you mentioned Engineer that a subject matter of that
plan which appears to be Lots 1 and 2 are adjoining cadastral lots of the
Tanauan Cadastre, now, will you please state to the Court what is the basis
of that statement of yours?
A The basis of that statement is the plan itself, because there is here an
annotation that the boundary on the northeastern side is Tanauan
Cadastre 168 which indicates that the boundary of the original cadastral
survey of Tanauan Cadastre way back in the year 1923 adjoins a foreshore
land which is also indicated in this plan as foreshore lands of Taal lake, sir.
xxx xxx xxx
Q Now, on this plan Exhibit "A-2", there are two lots indicated namely,
Lots 12374 and 12377, what do these lots represent?
A This is the cadastral lot executed in favor of a certain Modesto Castillo
that corresponds to Lots 12374 and another Lot 12377, sir.
Q At the time this survey plan Psu-119166 and marked as Exhibit "A-2"
was executed in 1948, were these lots 1 and 2 already in existence as part
of the cadastral survey?
A No, sir, because there is already a foreshore boundary.
Q Do I understand from you Mr. Witness at the time of the survey of this
land these two lots form part of this portion?
A Yes, sir.
Q When again was the cadastral survey of Tanauan, Batangas, executed if
you know?
A In the year 1923, sir. (Hearing of Nov. 16, 1970, TSN pp. 15-17).
Such fact was further verified in the Verification-Relocation Survey of 1948
by Engineer Arcenas who conducted said survey himself and reported the
following:
That as per original plan Psu-119166, it appears that Lot 1 and Lot 2, Psu-
119166 surveyed and approved in the name of Modesto Castillo is a
portion of Taal Lake and as such it appears to be under water during the
survey of cadastral Lot No. 12374 and Lot No. 12377, which was surveyed
and approved in the name of Modesto Castillo under Cad. 168. To support
this theory is the annotation appearing and printed along lines 2-3-4-5 of
Lot 1, Psu-119166 and along lines 4-5-6 of Lot 2, Psu-119166 which
notations clearly indicates that such boundary of property was a former
shorelines of Taal Lake, in other words, it was the extent of cultivation
being the shorelines and the rest of the area going to the southwestern
direction are already covered by water level.
Another theory to bolster and support this Idea is the actual location now
in the verification-relocation survey of a known geographic point were
Barrio Boundary Monument (BBM N. 22) is under water level quite for
sometimes as evidence by earthworks (collection of mud) that amount
over its surface by eighty (80) centimeters below the ground, see notation
appearing on verification-relocation plan previously submitted. (Re-
Verification-Relocation Survey Exhibits, pp. 64-65).
Said surveys were further confirmed by the testimonies of witnesses to
the effect that from 1950 to 1969, during rainy season, the water of Taal
lake even went beyond the questioned lots; and that the water, which was
about one (1) foot, stayed up to more or less two (2) to three (3) months
(Testimonies of Braulio Almendral and Anastacio Tirones both residents of
Banadero, Tanauan, Batangas (Hearing of Nov. 16, 1970, TSN, pp. 41-42
and Hearing of Nov. 23, 1970, TSN, pp. 93, 98-99, respectively). In the
Relocation Survey of 1962, there were no definite boundary or area of Lots
1 and 2 because a certain point is existing which was under water by 40
centimeters (Testimony of Engineer Arcena, Hearing of Nov. 16,1970, TSN,
p. 20).
Lakeshore land or lands adjacent to the lake, like the lands in question
must be differentiated from foreshore land or that part of the land
adjacent to the sea which is alternately covered and left dry by the
ordinary flow of the tides (Castillo, Law on Natural Resources, Fifth Edition,
1954, p. 67).
Such distinction draws importance from the fact that accretions on the
bank of a lake, like Laguna de Bay, belong to the owners of the estate to
which they have been added (Gov't. v. Colegio de San Jose, 53 Phil. 423)
while accretion on a sea bank still belongs to the public domain, and is not
available for private ownership until formally declared by the government
to be no longer needed for public use (Ignacio v. Director of Lands, 108
Phil. 335 [1960]).
But said distinction will not help private respondents because there is no
accretion shown to exist in the case at bar. On the contrary, it was
established that the occupants of the lots who were engaged in duck
raising filled up the area with shells and sand to make it habitable.
The defense of long possession is likewise not available in this case
because, as already ruled by this Court, mere possession of land does not
by itself automatically divest the land of its public character (Cuevas v.
Pineda, 143 SCRA 674 [1968]).
PREMISES CONSIDERED, the April 26,1984 Decision of the then
Intermediate Appellate Court is hereby SET ASIDE and REVERSED and the
February 6,1976 Decision of the then Court of First Instance of Batangas is
hereby AFFIRMED and REINSTATED.
SO ORDERED.
THIRD DIVISION
[G.R. No. 136438. November 11, 2004]
TEOFILO C. VILLARICO, petitioner, vs. VIVENCIO SARMIENTO, SPOUSES
BESSIE SARMIENTO-DEL MUNDO & BETH DEL MUNDO, ANDOKS LITSON
CORPORATION and MARITES CARINDERIA, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari of the Decision[1] of the
Court of Appeals dated December 7, 1998 in CA-G.R. CV No. 54883,
affirming in toto the Decision[2] of the Regional Trial Court (RTC) of
Paraaque City, Branch 259, dated November 14, 1996, in Civil Case No. 95-
044.
The facts of this case, as gleaned from the findings of the Court of Appeals,
are:
Teofilo C. Villarico, petitioner, is the owner of a lot in La Huerta, Paraaque
City, Metro Manila with an area of sixty-six (66) square meters and
covered by Transfer Certificate of Title (T.C.T.) No. 95453 issued by the
Registry of Deeds, same city.
Petitioners lot is separated from the Ninoy Aquino Avenue (highway) by a
strip of land belonging to the government. As this highway was elevated
by four (4) meters and therefore higher than the adjoining areas, the
Department of Public Works and Highways (DPWH) constructed stairways
at several portions of this strip of public land to enable the people to have
access to the highway.
Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and
her husband Beth Del Mundo, respondents herein, had a building
constructed on a portion of said government land. In November that same
year, a part thereof was occupied by Andoks Litson Corporation and
Marites Carinderia, also impleaded as respondents.
In 1993, by means of a Deed of Exchange of Real Property, petitioner
acquired a 74.30 square meter portion of the same area owned by the
government. The property was registered in his name as T.C.T. No. 74430
in the Registry of Deeds of Paraaque City.
In 1995, petitioner filed with the RTC, Branch 259, Paraaque City, a
complaint for accion publiciana against respondents, docketed as Civil
Case No. 95-044. He alleged inter alia that respondents structures on the
government land closed his right of way to the Ninoy Aquino Avenue; and
encroached on a portion of his lot covered by T.C.T. No. 74430.
Respondents, in their answer, specifically denied petitioners allegations,
claiming that they have been issued licenses and permits by Paraaque City
to construct their buildings on the area; and that petitioner has no right
over the subject property as it belongs to the government.
After trial, the RTC rendered its Decision, the dispositive portion of which
reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Declaring the defendants to have a better right of possession over
the subject land except the portion thereof covered by Transfer Certificate
of Title No. 74430 of the Register of Deeds of Paraaque;
2. Ordering the defendants to vacate the portion of the subject
premises described in Transfer Certificate of Title No. 74430 and gives its
possession to plaintiff; and
3. Dismissing the claim for damages of the plaintiff against the
defendants, and likewise dismissing the claim for attorneys fees of the
latter against the former.
Without pronouncement as to costs.
SO ORDERED.[3]
The trial court found that petitioner has never been in possession of any
portion of the public land in question. On the contrary, the defendants are
the ones who have been in actual possession of the area. According to the
trial court, petitioner was not deprived of his right of way as he could use
the Kapitan Tinoy Street as passageway to the highway.
On appeal by petitioner, the Court of Appeals issued its Decision affirming
the trial courts Decision in toto, thus:
WHEREFORE, the judgment hereby appealed from is hereby AFFIRMED in
toto, with costs against the plaintiff-appellant.
SO ORDERED.[4]
In this petition, petitioner ascribes to the Court of Appeals the following
assignments of error:
I
THE FINDINGS OF FACT OF THE HON. COURT OF APPEALS CONTAINED A
CONCLUSION WITHOUT CITATION OF SPECIFIC EVIDENCE ON WHICH THE
SAME WAS BASED.
II

THE HON. COURT OF APPEALS ERRED IN CONSIDERING THAT THE ONLY
ISSUE IN THIS CASE IS WHETHER OR NOT THE PLAINTIFF-APPELLANT HAS
ACQUIRED A RIGHT OF WAY OVER THE LAND OF THE GOVERNMENT
WHICH IS BETWEEN HIS PROPERTY AND THE NINOY AQUINO AVENUE.
III
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT ACCION
PUBLICIANA IS NOT THE PROPER REMEDY IN THE CASE AT BAR.
IV
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT THE
EXISTENCE OF THE PLAINTIFF-APPELLANTS RIGHT OF WAY DOES NOT
CARRY POSSESSION OVER THE SAME.
V This is an original Petition for Mandamus with prayer for a writ of
THE HON. COURT OF APPEALS ERRED IN NOT RESOLVING THE ISSUE OF
WHO HAS THE BETTER RIGHT OF POSSESSION OVER THE SUBJECT LAND
BETWEEN THE PLAINTIFF-APPELLANT AND THE DEFENDANT-APPELLEES.[5]
In their comment, respondents maintain that the Court of Appeals did not
err in ruling that petitioners action for accion publiciana is not the proper
remedy in asserting his right of way on a lot owned by the government.
Here, petitioner claims that respondents, by constructing their buildings
on the lot in question, have deprived him of his right of way and his right
of possession over a considerable portion of the same lot, which portion is
covered by his T.C.T. No. 74430 he acquired by means of exchange of real
property.
It is not disputed that the lot on which petitioners alleged right of way
exists belongs to the state or property of public dominion. Property of
public dominion is defined by Article 420 of the Civil Code as follows:
ART. 420. The following things are property of public dominion:
(1) Those intended for public use such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores, roadsteads, and
other of similar character.
(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national
wealth.
Public use is use that is not confined to privileged individuals, but is open
to the indefinite public.[6] Records show that the lot on which the
stairways were built is for the use of the people as passageway to the
highway. Consequently, it is a property of public dominion.
Property of public dominion is outside the commerce of man and hence it:
(1) cannot be alienated or leased or otherwise be the subject matter of
contracts; (2) cannot be acquired by prescription against the State; (3) is
not subject to attachment and execution; and (4) cannot be burdened by
any voluntary easement.[7]
Considering that the lot on which the stairways were constructed is a
property of public dominion, it can not be burdened by a voluntary
easement of right of way in favor of herein petitioner. In fact, its use by
the public is by mere tolerance of the government through the DPWH.
Petitioner cannot appropriate it for himself. Verily, he can not claim any
right of possession over it. This is clear from Article 530 of the Civil Code
which provides:
ART. 530. Only things and rights which are susceptible of being
appropriated may be the object of possession.
Accordingly, both the trial court and the Court of Appeals erred in ruling
that respondents have better right of possession over the subject lot.
However, the trial court and the Court of Appeals found that defendants
buildings were constructed on the portion of the same lot now covered by
T.C.T. No. 74430 in petitioners name. Being its owner, he is entitled to its
possession.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of
Appeals dated December 7, 1998 in CA-G.R. CV No. 54883 is AFFIRMED
with MODIFICATION in the sense that neither petitioner nor respondents
have a right of possession over the disputed lot where the stairways were
built as it is a property of public dominion. Costs against petitioner.
SO ORDERED.
EN BANC
[G.R. No. 133250. July 9, 2002]
FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and
AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
DECISION
CARPIO, J.:
preliminary injunction and a temporary restraining order. The petition
seeks to compel the Public Estates Authority (PEA for brevity) to disclose
all facts on PEAs 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.
The Facts
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 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, x x x 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 x x x shall be funded and owned by PEA. Accordingly, PEA and
CDCP executed a Memorandum of Agreement dated December 29, 1981,
which stated:
(i) CDCP shall undertake all reclamation, construction, and such other
works in the MCCRRP as may be agreed upon by the parties, to be paid
according to progress of works on a unit price/lump sum basis for items of
work to be agreed upon, subject to price escalation, retention and other
terms and conditions provided for in Presidential Decree No. 1594. All the
financing required for such works shall be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to
cede and transfer in favor of PEA, all of the rights, title, interest and
participation of CDCP in and to all the areas of land reclaimed by CDCP in
the MCCRRP as of December 30, 1981 which have not yet been sold,
transferred or otherwise disposed of by CDCP as of said date, which areas
consist of approximately Ninety-Nine Thousand Four Hundred Seventy
Three (99,473) square meters in the Financial Center Area covered by land
pledge No. 5 and approximately Three Million Three Hundred Eighty Two
Thousand Eight Hundred Eighty Eight (3,382,888) square meters of
reclaimed areas at varying elevations above Mean Low Water Level
located outside the Financial Center Area and the First Neighborhood
Unit.[3]
On January 19, 1988, then President Corazon C. Aquino issued Special
Patent No. 3517, granting and transferring to PEA the parcels of land so
reclaimed under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP) containing a total area of one million nine hundred fifteen
thousand eight hundred ninety four (1,915,894) square meters.
Subsequently, on April 9, 1988, the Register of Deeds of the Municipality
of Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and
7312, in the name of PEA, covering the three reclaimed islands known as
the Freedom Islands located at the southern portion of the Manila-Cavite
Coastal Road, Paraaque City. The Freedom Islands have a total land area of
One Million Five Hundred Seventy Eight Thousand Four Hundred and Forty
One (1,578,441) square meters or 157.841 hectares.
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 December 5, 1997, then President Fidel V. Ramos issued Presidential
Administrative Order No. 365 creating a Legal Task Force to conduct a
study on the legality of the JVA in view of Senate Committee Report No.
560. The members of the Legal Task Force were the Secretary of Justice,[8]
the Chief Presidential Legal Counsel,[9] and the Government Corporate
Counsel.[10] The Legal Task Force upheld the legality of the JVA, contrary
to the conclusions reached by the Senate Committees.[11]
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published
reports that there were on-going renegotiations between PEA and AMARI
under an order issued by then President Fidel V. Ramos. According to
these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and
retired Navy Officer Sergio Cruz composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for
Prohibition with Application for the Issuance of a Temporary Restraining
Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to
nullify the JVA. The Court dismissed the petition for unwarranted disregard
of judicial hierarchy, without prejudice to the refiling of the case before
the proper court.[12]
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 contends the government stands to lose billions of pesos
in the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that
PEA publicly disclose the terms of any renegotiation of the JVA, invoking
Section 28, Article II, and Section 7, Article III, of the 1987 Constitution on
the right of the people to information on matters of public concern.
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. Finally, petitioner asserts that he seeks to enjoin the loss of
billions of pesos in properties of the State that are of public dominion.
After several motions for extension of time,[13] PEA and AMARI filed their
Comments on October 19, 1998 and June 25, 1998, respectively.
Meanwhile, on December 28, 1998, petitioner filed an Omnibus Motion:
(a) to require PEA to submit the terms of the renegotiated PEA-AMARI
contract; (b) for issuance of a temporary restraining order; and (c) to set
the case for hearing on oral argument. Petitioner filed a Reiterative
Motion for Issuance of a TRO dated May 26, 1999, which the Court denied
in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the
petition and required the parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture
Agreement (Amended JVA, for brevity). On May 28, 1999, the Office of the
President under the administration of then President Joseph E. Estrada
approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President,
petitioner now prays that on constitutional and statutory grounds the
renegotiated contract be declared null and void.[14]
The Issues
The issues raised by petitioner, PEA[15] and AMARI[16] are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE
MOOT AND ACADEMIC BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE
THE PRINCIPLE GOVERNING THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES
OFFICIAL INFORMATION ON ON-GOING NEGOTIATIONS BEFORE A FINAL
AGREEMENT;
VI. 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; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE
OF WHETHER THE AMENDED JOINT VENTURE AGREEMENT IS GROSSLY
DISADVANTAGEOUS TO THE GOVERNMENT.
The Courts Ruling
First issue: whether the principal reliefs prayed for in the petition are moot
and academic because of subsequent events.
The petition prays that PEA publicly disclose the terms and conditions of
the on-going negotiations for a new agreement. The petition also prays
that the Court enjoin PEA from privately entering into, perfecting and/or
executing any new agreement with AMARI.
PEA and AMARI claim the petition is now moot and academic because
AMARI furnished petitioner on June 21, 1999 a copy of the signed
Amended JVA containing the terms and conditions agreed upon in the
renegotiations. Thus, PEA has satisfied petitioners prayer for a public
disclosure of the renegotiations. Likewise, petitioners prayer to enjoin the
signing of the Amended JVA is now moot because PEA and AMARI have
already signed the Amended JVA on March 30, 1999. Moreover, the Office
of the President has approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional
issue by simply fast-tracking the signing and approval of the Amended JVA
before the Court could act on the issue. Presidential approval does not
resolve the constitutional issue or remove it from the ambit of judicial
review.
We rule that the signing of the Amended JVA by PEA and AMARI and its
approval by the President cannot operate to moot the petition and divest
the Court of its jurisdiction. PEA and AMARI have still to implement the
Amended JVA. The prayer to enjoin the signing of the Amended JVA on
constitutional grounds necessarily includes preventing its implementation
if in the meantime PEA and AMARI have signed one in violation of the
Constitution. Petitioners principal basis in assailing the renegotiation of
the JVA is its violation of Section 3, Article XII of the Constitution, which
prohibits the government from alienating lands of the public domain to
private corporations. If the Amended JVA indeed violates the Constitution,
it is the duty of the Court to enjoin its implementation, and if already
implemented, to annul the effects of such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which
seeks to transfer title and ownership to 367.5 hectares of reclaimed lands
and submerged areas of Manila Bay to a single private corporation. It now
becomes more compelling for the Court to resolve the issue to insure the
government itself does not violate a provision of the Constitution intended
to safeguard the national patrimony. Supervening events, whether
intended or accidental, cannot prevent the Court from rendering a
decision if there is a grave violation of the Constitution. In the instant case,
if the Amended JVA runs counter to the Constitution, the Court can still
prevent the transfer of title and ownership of alienable lands of the public
domain in the name of AMARI. Even in cases where supervening events
had made the cases moot, the Court did not hesitate to resolve the legal
or constitutional issues raised to formulate controlling principles to guide
the bench, bar, and the public.[17]
Also, the instant petition is a case of first impression. All previous decisions
of the Court involving Section 3, Article XII of the 1987 Constitution, or its
counterpart provision in the 1973 Constitution,[18] covered agricultural
lands sold to private corporations which acquired the lands from private
parties. The transferors of the private corporations claimed or could claim
the right to judicial confirmation of their imperfect titles[19] under Title II
of Commonwealth Act. 141 (CA No. 141 for brevity). In the instant case,
AMARI seeks to acquire from PEA, a public corporation, reclaimed lands
and submerged areas for non-agricultural purposes by purchase under PD
No. 1084 (charter of PEA) and Title III of CA No. 141. Certain undertakings
by AMARI under the Amended JVA constitute the consideration for the
purchase. Neither AMARI nor PEA can claim judicial confirmation of their
titles because the lands covered by the Amended JVA are newly reclaimed
or still to be reclaimed. Judicial confirmation of imperfect title requires
open, continuous, exclusive and notorious occupation of agricultural lands
of the public domain for at least thirty years since June 12, 1945 or earlier.
Besides, the deadline for filing applications for judicial confirmation of
imperfect title expired on December 31, 1987.[20]
Lastly, there is a need to resolve immediately the constitutional issue
raised in this petition because of the possible transfer at any time by PEA
to AMARI of title and ownership to portions of the reclaimed lands. Under
the Amended JVA, PEA is obligated to transfer to AMARI the latters
seventy percent proportionate share in the reclaimed areas as the
reclamation progresses. The Amended JVA even allows AMARI to
mortgage at any time the entire reclaimed area to raise financing for the
reclamation project.[21]
Second issue: whether the petition merits dismissal for failing to observe
the principle governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking
relief directly from the Court. The principle of hierarchy of courts applies
generally to cases involving factual questions. As it is not a trier of facts,
the Court cannot entertain cases involving factual issues. The instant case,
however, raises constitutional issues of transcendental importance to the
public.[22] The Court can resolve this case without determining any factual
issue related to the case. Also, the instant case is a petition for mandamus
which falls under the original jurisdiction of the Court under Section 5,
Article VIII of the Constitution. We resolve to exercise primary jurisdiction
over the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of
administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to
disclose publicly certain information without first asking PEA the needed
information. PEA claims petitioners direct resort to the Court violates the
principle of exhaustion of administrative remedies. It also violates the rule
that mandamus may issue only if there is no other plain, speedy and
adequate remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. Tuvera[23] where the
Court granted the petition for mandamus even if the petitioners there did
not initially demand from the Office of the President the publication of the
presidential decrees. PEA points out that in Taada, the Executive
Department had an affirmative statutory duty under Article 2 of the Civil
Code[24] and Section 1 of Commonwealth Act No. 638[25] to publish the
presidential decrees. There was, therefore, no need for the petitioners in
Taada to make an initial demand from the Office of the President. In the
instant case, PEA claims it has no affirmative statutory duty to disclose
publicly information about its renegotiation of the JVA. Thus, PEA asserts
that the Court must apply the principle of exhaustion of administrative
remedies to the instant case in view of the failure of petitioner here to
demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a
government corporation. Under Section 79 of the Government Auditing
Code,[26]2 the disposition of government lands to private parties requires
public bidding. PEA was under a positive legal duty to disclose to the public
the terms and conditions for the sale of its lands. The law obligated PEA to
make this public disclosure even without demand from petitioner or from
anyone. PEA failed to make this public disclosure because the original JVA,
like the Amended JVA, was the result of a negotiated contract, not of a
public bidding. Considering that PEA had an affirmative statutory duty to
make the public disclosure, and was even in breach of this legal duty,
petitioner had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of
exhaustion of administrative remedies does not apply when the issue
involved is a purely legal or constitutional question.[27] The principal issue
in the instant case is the capacity of AMARI to acquire lands held by PEA in
view of the constitutional ban prohibiting the alienation of lands of the
public domain to private corporations. We rule that the principle of
exhaustion of administrative remedies does not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus
proceedings to enforce his constitutional right to information without a
showing that PEA refused to perform an affirmative duty imposed on PEA
by the Constitution. PEA also claims that petitioner has not shown that he
will suffer any concrete injury because of the signing or implementation of
the Amended JVA. Thus, there is no actual controversy requiring the
exercise of the power of judicial review.
The petitioner has standing to bring this taxpayers suit because the
petition seeks to compel PEA to comply with its constitutional duties.
There are two constitutional issues involved here. First is the right of
citizens to information on matters of public concern. Second is the
application of a constitutional provision intended to insure the equitable
distribution of alienable lands of the public domain among Filipino citizens.
The thrust of the first issue is to compel PEA to disclose publicly
information on the sale of government lands worth billions of pesos,
information which the Constitution and statutory law mandate PEA to
disclose. The thrust of the second issue is to prevent PEA from alienating
hundreds of hectares of alienable lands of the public domain in violation of
the Constitution, compelling PEA to comply with a constitutional duty to
the nation.
Moreover, the petition raises matters of transcendental importance to the
public. In Chavez v. PCGG,[28] the Court upheld the right of a citizen to
bring a taxpayers suit on matters of transcendental importance to the
public, thus -
Besides, petitioner emphasizes, the matter of recovering the ill-gotten
wealth of the Marcoses is an issue of transcendental importance to the
public. He asserts that ordinary taxpayers have a right to initiate and
prosecute actions questioning the validity of acts or orders of government
agencies or instrumentalities, if the issues raised are of paramount public
interest, and if they immediately affect the social, economic and moral
well being of the people.
Moreover, the mere fact that he is a citizen satisfies the requirement of
personal interest, when the proceeding involves the assertion of a public
right, such as in this case. He invokes several decisions of this Court which
have set aside the procedural matter of locus standi, when the subject of
the case involved public interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue concerns a
public right and the object of mandamus is to obtain the enforcement of a
public duty, the people are regarded as the real parties in interest; and
because it is sufficient that petitioner is a citizen and as such is interested
in the execution of the laws, he need not show that he has any legal or
special interest in the result of the action. In the aforesaid case, the
petitioners sought to enforce their right to be informed on matters of
public concern, a right then recognized in Section 6, Article IV of the 1973
Constitution, in connection with the rule that laws in order to be valid and
enforceable must be published in the Official Gazette or otherwise
effectively promulgated. In ruling for the petitioners' legal standing, the
Court declared that the right they sought to be enforced is a public right
recognized by no less than the fundamental law of the land.
Legaspi v. Civil Service Commission, while reiterating Taada, further
declared that when a mandamus proceeding involves the assertion of a
public right, the requirement of personal interest is satisfied by the mere
fact that petitioner is a citizen and, therefore, part of the general 'public'
which possesses the right.
Further, in Albano v. Reyes, we said that while expenditure of public funds
may not have been involved under the questioned contract for the
development, management and operation of the Manila International
Container Terminal, public interest [was] definitely involved considering
the important role [of the subject contract] . . . in the economic
development of the country and the magnitude of the financial
consideration involved. We concluded that, as a consequence, the
disclosure provision in the Constitution would constitute sufficient
authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to
information and access to official records, documents and papers a right
guaranteed under Section 7, Article III of the 1987 Constitution. Petitioner,
a former solicitor general, is a Filipino citizen. Because of the satisfaction
of the two basic requisites laid down by decisional law to sustain
petitioner's legal standing, i.e. (1) the enforcement of a public right (2)
espoused by a Filipino citizen, we rule that the petition at bar should be
allowed.
We rule that since the instant petition, brought by a citizen, involves the
enforcement of constitutional rights - to information and to the equitable
diffusion of natural resources - matters of transcendental public
importance, the petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official
information on on-going negotiations before a final agreement.
Section 7, Article III of the Constitution explains the peoples right to
information on matters of public concern in this manner:
Sec. 7. The right of the people to information on matters of public concern
shall be recognized. Access to official records, and to documents, and
papers pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development, shall be
afforded the citizen, subject to such limitations as may be provided by law.
(Emphasis supplied)
The State policy of full transparency in all transactions involving public
interest reinforces the peoples right to information on matters of public
concern. This State policy is expressed in Section 28, Article II of the
Constitution, thus:
Sec. 28. Subject to reasonable conditions prescribed by law, the State
adopts and implements a policy of full public disclosure of all its
transactions involving public interest. (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in
policy-making and in the operations of the government, as well as provide
the people sufficient information to exercise effectively other
constitutional rights. These twin provisions are essential to the exercise of
freedom of expression. If the government does not disclose its official acts,
transactions and decisions to citizens, whatever citizens say, even if
expressed without any restraint, will be speculative and amount to
nothing. These twin provisions are also essential to hold public officials at
all times x x x accountable to the people,[29] for unless citizens have the
proper information, they cannot hold public officials accountable for
anything. Armed with the right information, citizens can participate in
public discussions leading to the formulation of government policies and
their effective implementation. An informed citizenry is essential to the
existence and proper functioning of any democracy. As explained by the
Court in Valmonte v. Belmonte, Jr.[30]
An essential element of these freedoms is to keep open a continuing
dialogue or process of communication between the government and the
people. It is in the interest of the State that the channels for free political
discussion be maintained to the end that the government may perceive
and be responsive to the peoples will. Yet, this open dialogue can be
effective only to the extent that the citizenry is informed and thus able to
formulate its will intelligently. Only when the participants in the discussion
are aware of the issues and have access to information relating thereto
can such bear fruit.
PEA asserts, citing Chavez v. PCGG,[31] that in cases of on-going
negotiations the right to information is limited to definite propositions of
the government. PEA maintains the right does not include access to intra-
agency or inter-agency recommendations or communications during the
stage when common assertions are still in the process of being formulated
or are in the exploratory stage.
Also, AMARI contends that petitioner cannot invoke the right at the pre-
decisional stage or before the closing of the transaction. To support its
contention, AMARI cites the following discussion in the 1986
Constitutional Commission:
Mr. Suarez. And when we say transactions which should be distinguished
from contracts, agreements, or treaties or whatever, does the Gentleman
refer to the steps leading to the consummation of the contract, or does he
refer to the contract itself?
Mr. Ople: The transactions used here, I suppose is generic and therefore, it
can cover both steps leading to a contract and already a consummated
contract, Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the
consummation of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national
interest.
Mr. Suarez: Thank you.[32] (Emphasis supplied)
AMARI argues there must first be a consummated contract before
petitioner can invoke the right. Requiring government officials to reveal
their deliberations at the pre-decisional stage will degrade the quality of
decision-making in government agencies. Government officials will
hesitate to express their real sentiments during deliberations if there is
immediate public dissemination of their discussions, putting them under
all kinds of pressure before they decide.
We must first distinguish between information the law on public bidding
requires PEA to disclose publicly, and information the constitutional right
to information requires PEA to release to the public. Before the
consummation of the contract, PEA must, on its own and without demand
from anyone, disclose to the public matters relating to the disposition of
its property. These include the size, location, technical description and
nature of the property being disposed of, the terms and conditions of the
disposition, the parties qualified to bid, the minimum price and similar
information. PEA must prepare all these data and disclose them to the
public at the start of the disposition process, long before the
consummation of the contract, because the Government Auditing Code
requires public bidding. If PEA fails to make this disclosure, any citizen can
demand from PEA this information at any time during the bidding process.
Information, however, on on-going evaluation or review of bids or
proposals being undertaken by the bidding or review committee is not
immediately accessible under the right to information. While the
evaluation or review is still on-going, there are no official acts,
transactions, or decisions on the bids or proposals. However, once the
committee makes its official recommendation, there arises a definite
proposition on the part of the government. From this moment, the publics
right to information attaches, and any citizen can access all the non-
proprietary information leading to such definite proposition. In Chavez v.
PCGG,[33] the Court ruled as follows:
Considering the intent of the framers of the Constitution, we believe that
it is incumbent upon the PCGG and its officers, as well as other
government representatives, to disclose sufficient public information on
any proposed settlement they have decided to take up with the ostensible
owners and holders of ill-gotten wealth. Such information, though, must
pertain to definite propositions of the government, not necessarily to
intra-agency or inter-agency recommendations or communications during
the stage when common assertions are still in the process of being
formulated or are in the exploratory stage. There is need, of course, to
observe the same restrictions on disclosure of information in general, as
discussed earlier such as on matters involving national security, diplomatic
or foreign relations, intelligence and other classified information.
(Emphasis supplied)

Contrary to AMARIs contention, the commissioners of the 1986
Constitutional Commission understood that the right to information
contemplates inclusion of negotiations leading to the consummation of
the transaction. Certainly, a consummated contract is not a requirement
for the exercise of the right to information. Otherwise, the people can
never exercise the right if no contract is consummated, and if one is
consummated, it may be too late for the public to expose its defects.
Requiring a consummated contract will keep the public in the dark until
the contract, which may be grossly disadvantageous to the government or
even illegal, becomes a fait accompli. This negates the State policy of full
transparency on matters of public concern, a situation which the framers
of the Constitution could not have intended. Such a requirement will
prevent the citizenry from participating in the public discussion of any
proposed contract, effectively truncating a basic right enshrined in the Bill
of Rights. We can allow neither an emasculation of a constitutional right,
nor a retreat by the State of its avowed policy of full disclosure of all its
transactions involving public interest.
The right covers three categories of information which are matters of
public concern, namely: (1) official records; (2) documents and papers
pertaining to official acts, transactions and decisions; and (3) government
research data used in formulating policies. The first category refers to any
document that is part of the public records in the custody of government
agencies or officials. The second category refers to documents and papers
recording, evidencing, establishing, confirming, supporting, justifying or
explaining official acts, transactions or decisions of government agencies
or officials. The third category refers to research data, whether raw,
collated or processed, owned by the government and used in formulating
government policies.
The information that petitioner may access on the renegotiation of the
JVA includes evaluation reports, recommendations, legal and expert
opinions, minutes of meetings, terms of reference and other documents
attached to such reports or minutes, all relating to the JVA. However, the
right to information does not compel PEA to prepare lists, abstracts,
summaries and the like relating to the renegotiation of the JVA.[34] The
right only affords access to records, documents and papers, which means
the opportunity to inspect and copy them. One who exercises the right
must copy the records, documents and papers at his expense. The exercise
of the right is also subject to reasonable regulations to protect the
integrity of the public records and to minimize disruption to government
operations, like rules specifying when and how to conduct the inspection
and copying.[35]
The right to information, however, does not extend to matters recognized
as privileged information under the separation of powers.[36] The right
does not also apply to information on military and diplomatic secrets,
information affecting national security, and information on investigations
of crimes by law enforcement agencies before the prosecution of the
accused, which courts have long recognized as confidential.[37] The right
may also be subject to other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is
privileged information rooted in the separation of powers. The
information does not cover Presidential conversations, correspondences,
or discussions during closed-door Cabinet meetings which, like internal
deliberations of the Supreme Court and other collegiate courts, or
executive sessions of either house of Congress,[38] are recognized as
confidential. This kind of information cannot be pried open by a co-equal
branch of government. A frank exchange of exploratory ideas and
assessments, free from the glare of publicity and pressure by interested
parties, is essential to protect the independence of decision-making of
those tasked to exercise Presidential, Legislative and Judicial power.[39]
This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes
official information on on-going negotiations before a final contract. The
information, however, must constitute definite propositions by the
government and should not cover recognized exceptions like privileged
information, military and diplomatic secrets and similar matters affecting
national security and public order.[40] Congress has also prescribed other
limitations on the right to information in several legislations.[41]
Sixth issue: whether stipulations in the Amended JVA for the transfer to
AMARI of lands, reclaimed or to be reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is
rooted in the Regalian doctrine which holds that the State owns all lands
and waters of the public domain. Upon the Spanish conquest of the
Philippines, ownership of all lands, territories and possessions in the
Philippines passed to the Spanish Crown.[42] The King, as the sovereign
ruler and representative of the people, acquired and owned all lands and
territories in the Philippines except those he disposed of by grant or sale
to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine
substituting, however, the State, in lieu of the King, as the owner of all
lands and waters of the public domain. The Regalian doctrine is the
foundation of the time-honored principle of land ownership that all lands
that were not acquired from the Government, either by purchase or by
grant, belong to the public domain.[43] Article 339 of the Civil Code of
1889, which is now Article 420 of the Civil Code of 1950, incorporated the
Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing
the ownership and disposition of reclaimed lands in the Philippines. On
May 18, 1907, the Philippine Commission enacted Act No. 1654 which
provided for the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. Later, on November 29, 1919,
the Philippine Legislature approved Act No. 2874, the Public Land Act,
which authorized the lease, but not the sale, of reclaimed lands of the
government to corporations and individuals. On November 7, 1936, the
National Assembly passed Commonwealth Act No. 141, also known as the
Public Land Act, which authorized the lease, but not the sale, of reclaimed
lands of the government to corporations and individuals. CA No. 141
continues to this day as the general law governing the classification and
disposition of lands of the public domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets
and all waters within the maritime zone of the Spanish territory belonged
to the public domain for public use.[44] The Spanish Law of Waters of
1866 allowed the reclamation of the sea under Article 5, which provided
as follows:
Article 5. Lands reclaimed from the sea in consequence of works
constructed by the State, or by the provinces, pueblos or private persons,
with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the
grant of authority.
Under the Spanish Law of Waters, land reclaimed from the sea belonged
to the party undertaking the reclamation, provided the government issued
the necessary permit and did not reserve ownership of the reclaimed land
to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion
as follows:
Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, riverbanks, shores, roadsteads, and
that of a similar character;
2. That belonging exclusively to the State which, without being of general
public use, is employed in some public service, or in the development of
the national wealth, such as walls, fortresses, and other works for the
defense of the territory, and mines, until granted to private individuals.
Property devoted to public use referred to property open for use by the
public. In contrast, property devoted to public service referred to property
used for some specific public service and open only to those authorized to
use the property.
Property of public dominion referred not only to property devoted to
public use, but also to property not so used but employed to develop the
national wealth. This class of property constituted property of public
dominion although employed for some economic or commercial activity to
increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of
property of public dominion into private property, to wit:
Art. 341. Property of public dominion, when no longer devoted to public
use or to the defense of the territory, shall become a part of the private
property of the State.
This provision, however, was not self-executing. The legislature, or the
executive department pursuant to law, must declare the property no
longer needed for public use or territorial defense before the government
could lease or alienate the property to private parties.[45]
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which
regulated the lease of reclaimed and foreshore lands. The salient
provisions of this law were as follows:
Section 1. The control and disposition of the foreshore as defined in
existing law, and the title to all Government or public lands made or
reclaimed by the Government by dredging or filling or otherwise
throughout the Philippine Islands, shall be retained by the Government
without prejudice to vested rights and without prejudice to rights
conceded to the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or
public lands made or reclaimed by the Government by dredging or filling
or otherwise to be divided into lots or blocks, with the necessary streets
and alleyways located thereon, and shall cause plats and plans of such
surveys to be prepared and filed with the Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-General shall
give notice to the public that such parts of the lands so made or reclaimed
as are not needed for public purposes will be leased for commercial and
business purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and
best bidder therefore, subject to such regulations and safeguards as the
Governor-General may by executive order prescribe. (Emphasis supplied)
Act No. 1654 mandated that the government should retain title to all lands
reclaimed by the government. The Act also vested in the government
control and disposition of foreshore lands. Private parties could lease
lands reclaimed by the government only if these lands were no longer
needed for public purpose. Act No. 1654 mandated public bidding in the
lease of government reclaimed lands. Act No. 1654 made government
reclaimed lands sui generis in that unlike other public lands which the
government could sell to private parties, these reclaimed lands were
available only for lease to private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of
Waters of 1866. Act No. 1654 did not prohibit private parties from
reclaiming parts of the sea under Section 5 of the Spanish Law of Waters.
Lands reclaimed from the sea by private parties with government
permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874,
the Public Land Act.[46] The salient provisions of Act No. 2874, on
reclaimed lands, were as follows:
Sec. 6. The Governor-General, upon the recommendation of the Secretary
of Agriculture and Natural Resources, shall from time to time classify the
lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or
disposable public lands, the Governor-General, upon recommendation by
the Secretary of Agriculture and Natural Resources, shall from time to time
declare what lands are open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or
concession which have been officially delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber
nor mineral land, shall be classified as suitable for residential purposes or
for commercial, industrial, or other productive purposes other than
agricultural purposes, and shall be open to disposition or concession, shall
be disposed of under the provisions of this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other
means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six
shall be disposed of to private parties by lease only and not otherwise, as
soon as the Governor-General, upon recommendation by the Secretary of
Agriculture and Natural Resources, shall declare that the same are not
necessary for the public service and are open to disposition under this
chapter. The lands included in class (d) may be disposed of by sale or lease
under the provisions of this Act. (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to classify
lands of the public domain into x x x alienable or disposable[47] lands.
Section 7 of the Act empowered the Governor-General to declare what
lands are open to disposition or concession. Section 8 of the Act limited
alienable or disposable lands only to those lands which have been officially
delimited and classified.
Section 56 of Act No. 2874 stated that lands disposable under this title[48]
shall be classified as government reclaimed, foreshore and marshy lands,
as well as other lands. All these lands, however, must be suitable for
residential, commercial, industrial or other productive non-agricultural
purposes. These provisions vested upon the Governor-General the power
to classify inalienable lands of the public domain into disposable lands of
the public domain. These provisions also empowered the Governor-
General to classify further such disposable lands of the public domain into
government reclaimed, foreshore or marshy lands of the public domain, as
well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of
the public domain classified as government reclaimed, foreshore and
marshy lands shall be disposed of to private parties by lease only and not
otherwise. The Governor-General, before allowing the lease of these lands
to private parties, must formally declare that the lands were not necessary
for the public service. Act No. 2874 reiterated the State policy to lease and
not to sell government reclaimed, foreshore and marshy lands of the
public domain, a policy first enunciated in 1907 in Act No. 1654.
Government reclaimed, foreshore and marshy lands remained sui generis,
as the only alienable or disposable lands of the public domain that the
government could not sell to private parties.
The rationale behind this State policy is obvious. Government reclaimed,
foreshore and marshy public lands for non-agricultural purposes retain
their inherent potential as areas for public service. This is the reason the
government prohibited the sale, and only allowed the lease, of these lands
to private parties. The State always reserved these lands for some future
public service.
Act No. 2874 did not authorize the reclassification of government
reclaimed, foreshore and marshy lands into other non-agricultural lands
under Section 56 (d). Lands falling under Section 56 (d) were the only lands
for non-agricultural purposes the government could sell to private parties.
Thus, under Act No. 2874, the government could not sell government
reclaimed, foreshore and marshy lands to private parties, unless the
legislature passed a law allowing their sale.[49]
Act No. 2874 did not prohibit private parties from reclaiming parts of the
sea pursuant to Section 5 of the Spanish Law of Waters of 1866. Lands
reclaimed from the sea by private parties with government permission
remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its ratification by
the Filipino people. The 1935 Constitution, in adopting the Regalian
doctrine, declared in Section 1, Article XIII, that
Section 1. All agricultural, timber, and mineral lands of the public domain,
waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy and other natural resources of the Philippines belong to
the State, and their disposition, exploitation, development, or utilization
shall be limited to citizens of the Philippines or to corporations or
associations at least sixty per centum of the capital of which is owned by
such citizens, subject to any existing right, grant, lease, or concession at
the time of the inauguration of the Government established under this
Constitution. Natural resources, with the exception of public agricultural
land, shall not be alienated, and no license, concession, or lease for the
exploitation, development, or utilization of any of the natural resources
shall be granted for a period exceeding twenty-five years, renewable for
another twenty-five years, except as to water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water
power, in which cases beneficial use may be the measure and limit of the
grant. (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except
public agricultural lands, which were the only natural resources the State
could alienate. Thus, foreshore lands, considered part of the States natural
resources, became inalienable by constitutional fiat, available only for
lease for 25 years, renewable for another 25 years. The government could
alienate foreshore lands only after these lands were reclaimed and
classified as alienable agricultural lands of the public domain. Government
reclaimed and marshy lands of the public domain, being neither timber
nor mineral lands, fell under the classification of public agricultural
lands.[50] However, government reclaimed and marshy lands, although
subject to classification as disposable public agricultural lands, could only
be leased and not sold to private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of
government reclaimed and marshy lands of the public domain was only a
statutory prohibition and the legislature could therefore remove such
prohibition. The 1935 Constitution did not prohibit individuals and
corporations from acquiring government reclaimed and marshy lands of
the public domain that were classified as agricultural lands under existing
public land laws. Section 2, Article XIII of the 1935 Constitution provided as
follows:
Section 2. No private corporation or association may acquire, lease, or
hold public agricultural lands in excess of one thousand and twenty four
hectares, nor may any individual acquire such lands by purchase in excess
of one hundred and forty hectares, or by lease in excess of one thousand
and twenty-four hectares, or by homestead in excess of twenty-four
hectares. Lands adapted to grazing, not exceeding two thousand hectares,
may be leased to an individual, private corporation, or association.
(Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not
repeal Section 58 of Act No. 2874 to open for sale to private parties
government reclaimed and marshy lands of the public domain. On the
contrary, the legislature continued the long established State policy of
retaining for the government title and ownership of government
reclaimed and marshy lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth
Act No. 141, also known as the Public Land Act, which compiled the then
existing laws on lands of the public domain. CA No. 141, as amended,
remains to this day the existing general law governing the classification
and disposition of lands of the public domain other than timber and
mineral lands.[51]
Section 6 of CA No. 141 empowers the President to classify lands of the
public domain into alienable or disposable[52] lands of the public domain,
which prior to such classification are inalienable and outside the
commerce of man. Section 7 of CA No. 141 authorizes the President to
declare what lands are open to disposition or concession. Section 8 of CA
No. 141 states that the government can declare open for disposition or
concession only lands that are officially delimited and classified. Sections
6, 7 and 8 of CA No. 141 read as follows:
Sec. 6. The President, upon the recommendation of the Secretary of
Agriculture and Commerce, shall from time to time classify the lands of the
public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class
to another,[53] for the purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable
or disposable public lands, the President, upon recommendation by the
Secretary of Agriculture and Commerce, shall from time to time declare
what lands are open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or
concession which have been officially delimited and classified and, when
practicable, surveyed, and which have not been reserved for public or
quasi-public uses, nor appropriated by the Government, nor in any
manner become private property, nor those on which a private right
authorized and recognized by this Act or any other valid law may be
claimed, or which, having been reserved or appropriated, have ceased to
be so. x x x.
Thus, before the government could alienate or dispose of lands of the
public domain, the President must first officially classify these lands as
alienable or disposable, and then declare them open to disposition or
concession. There must be no law reserving these lands for public or
quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore
and marshy lands of the public domain, are as follows:
Sec. 58. Any tract of land of the public domain which, being neither timber
nor mineral land, is intended to be used for residential purposes or for
commercial, industrial, or other productive purposes other than
agricultural, and is open to disposition or concession, shall be disposed of
under the provisions of this chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other
means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold,
as the case may be, to any person, corporation, or association authorized
to purchase or lease public lands for agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine
shall be disposed of to private parties by lease only and not otherwise, as
soon as the President, upon recommendation by the Secretary of
Agriculture, shall declare that the same are not necessary for the public
service and are open to disposition under this chapter. The lands included
in class (d) may be disposed of by sale or lease under the provisions of this
Act. (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935
Constitution, Section 58 of Act No. 2874 prohibiting the sale of
government reclaimed, foreshore and marshy disposable lands of the
public domain. All these lands are intended for residential, commercial,
industrial or other non-agricultural purposes. As before, Section 61
allowed only the lease of such lands to private parties. The government
could sell to private parties only lands falling under Section 59 (d) of CA
No. 141, or those lands for non-agricultural purposes not classified as
government reclaimed, foreshore and marshy disposable lands of the
public domain. Foreshore lands, however, became inalienable under the
1935 Constitution which only allowed the lease of these lands to qualified
private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the
public domain intended for residential, commercial, industrial or other
productive purposes other than agricultural shall be disposed of under the
provisions of this chapter and not otherwise. Under Section 10 of CA No.
141, the term disposition includes lease of the land. Any disposition of
government reclaimed, foreshore and marshy disposable lands for non-
agricultural purposes must comply with Chapter IX, Title III of CA No.
141,[54] unless a subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate
Corporation v. Court of Appeals,[55] Justice Reynato S. Puno summarized
succinctly the law on this matter, as follows:
Foreshore lands are lands of public dominion intended for public use. So
too are lands reclaimed by the government by dredging, filling, or other
means. Act 1654 mandated that the control and disposition of the
foreshore and lands under water remained in the national government.
Said law allowed only the leasing of reclaimed land. The Public Land Acts
of 1919 and 1936 also declared that the foreshore and lands reclaimed by
the government were to be disposed of to private parties by lease only
and not otherwise. Before leasing, however, the Governor-General, upon
recommendation of the Secretary of Agriculture and Natural Resources,
had first to determine that the land reclaimed was not necessary for the
public service. This requisite must have been met before the land could be
disposed of. But even then, the foreshore and lands under water were not
to be alienated and sold to private parties. The disposition of the
reclaimed land was only by lease. The land remained property of the State.
(Emphasis supplied)
As observed by Justice Puno in his concurring opinion, Commonwealth Act
No. 141 has remained in effect at present.
The State policy prohibiting the sale to private parties of government
reclaimed, foreshore and marshy alienable lands of the public domain,
first implemented in 1907 was thus reaffirmed in CA No. 141 after the
1935 Constitution took effect. The prohibition on the sale of foreshore
lands, however, became a constitutional edict under the 1935
Constitution. Foreshore lands became inalienable as natural resources of
the State, unless reclaimed by the government and classified as
agricultural lands of the public domain, in which case they would fall under
the classification of government reclaimed lands.
After the effectivity of the 1935 Constitution, government reclaimed and
marshy disposable lands of the public domain continued to be only leased
and not sold to private parties.[56] These lands remained sui generis, as
the only alienable or disposable lands of the public domain the
government could not sell to private parties.
Since then and until now, the only way the government can sell to private
parties government reclaimed and marshy disposable lands of the public
domain is for the legislature to pass a law authorizing such sale. CA No.
141 does not authorize the President to reclassify government reclaimed
and marshy lands into other non-agricultural lands under Section 59 (d).
Lands classified under Section 59 (d) are the only alienable or disposable
lands for non-agricultural purposes that the government could sell to
private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional
authority before lands under Section 59 that the government previously
transferred to government units or entities could be sold to private
parties. Section 60 of CA No. 141 declares that
Sec. 60. x x x The area so leased or sold shall be such as shall, in the
judgment of the Secretary of Agriculture and Natural Resources, be
reasonably necessary for the purposes for which such sale or lease is
requested, and shall not exceed one hundred and forty-four hectares:
Provided, however, That this limitation shall not apply to grants,
donations, or transfers made to a province, municipality or branch or
subdivision of the Government for the purposes deemed by said entities
conducive to the public interest; but the land so granted, donated, or
transferred to a province, municipality or branch or subdivision of the
Government shall not be alienated, encumbered, or otherwise disposed of
in a manner affecting its title, except when authorized by Congress: x x x.
(Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors
the legislative authority required in Section 56 of Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141
exempted government units and entities from the maximum area of public
lands that could be acquired from the State. These government units and
entities should not just turn around and sell these lands to private parties
in violation of constitutional or statutory limitations. Otherwise, the
transfer of lands for non-agricultural purposes to government units and
entities could be used to circumvent constitutional limitations on
ownership of alienable or disposable lands of the public domain. In the
same manner, such transfers could also be used to evade the statutory
prohibition in CA No. 141 on the sale of government reclaimed and marshy
lands of the public domain to private parties. Section 60 of CA No. 141
constitutes by operation of law a lien on these lands.[57]
In case of sale or lease of disposable lands of the public domain falling
under Section 59 of CA No. 141, Sections 63 and 67 require a public
bidding. Sections 63 and 67 of CA No. 141 provide as follows:
Sec. 63. Whenever it is decided that lands covered by this chapter are not
needed for public purposes, the Director of Lands shall ask the Secretary
of Agriculture and Commerce (now the Secretary of Natural Resources) for
authority to dispose of the same. Upon receipt of such authority, the
Director of Lands shall give notice by public advertisement in the same
manner as in the case of leases or sales of agricultural public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication
shall be made to the highest bidder. x x x. (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all
leases or sales of alienable or disposable lands of the public domain.[58]
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal
Section 5 of the Spanish Law of Waters of 1866. Private parties could still
reclaim portions of the sea with government permission. However, the
reclaimed land could become private land only if classified as alienable
agricultural land of the public domain open to disposition under CA No.
141. The 1935 Constitution prohibited the alienation of all natural
resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property
of public dominion found in the Civil Code of 1889. Articles 420 and 422 of
the Civil Code of 1950 state that
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.
x x x.
Art. 422. 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.
Again, the government must formally declare that the property of public
dominion is no longer needed for public use or public service, before the
same could be classified as patrimonial property of the State.[59] In the
case of government reclaimed and marshy lands of the public domain, the
declaration of their being disposable, as well as the manner of their
disposition, is governed by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of
public dominion those properties of the State which, without being for
public use, are intended for public service or the development of the
national wealth. Thus, government reclaimed and marshy lands of the
State, even if not employed for public use or public service, if developed to
enhance the national wealth, are classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise
adopted the Regalian doctrine. Section 8, Article XIV of the 1973
Constitution stated that
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum
and other mineral oils, all forces of potential energy, fisheries, wildlife, and
other natural resources of the Philippines belong to the State. With the
exception of agricultural, industrial or commercial, residential, and
resettlement lands of the public domain, natural resources shall not be
alienated, and no license, concession, or lease for the exploration,
development, exploitation, or utilization of any of the natural resources
shall be granted for a period exceeding twenty-five years, renewable for
not more than twenty-five years, except as to water rights for irrigation,
water supply, fisheries, or industrial uses other than the development of
water power, in which cases, beneficial use may be the measure and the
limit of the grant. (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources
with the exception of agricultural, industrial or commercial, residential,
and resettlement lands of the public domain. In contrast, the 1935
Constitution barred the alienation of all natural resources except public
agricultural lands. However, the term public agricultural lands in the 1935
Constitution encompassed industrial, commercial, residential and
resettlement lands of the public domain.[60] If the land of public domain
were neither timber nor mineral land, it would fall under the classification
of agricultural land of the public domain. Both the 1935 and 1973
Constitutions, therefore, prohibited the alienation of all natural resources
except agricultural lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the
public domain to individuals who were citizens of the Philippines. Private
corporations, even if wholly owned by Philippine citizens, were no longer
allowed to acquire alienable lands of the public domain unlike in the 1935
Constitution. Section 11, Article XIV of the 1973 Constitution declared that
Sec. 11. The Batasang Pambansa, taking into account conservation,
ecological, and development requirements of the natural resources, shall
determine by law the size of land of the public domain which may be
developed, held or acquired by, or leased to, any qualified individual,
corporation, or association, and the conditions therefor. No private
corporation or association may hold alienable lands of the public domain
except by lease not to exceed one thousand hectares in area nor may any
citizen hold such lands by lease in excess of five hundred hectares or
acquire by purchase, homestead or grant, in excess of twenty-four
hectares. No private corporation or association may hold by lease,
concession, license or permit, timber or forest lands and other timber or
forest resources in excess of one hundred thousand hectares. However,
such area may be increased by the Batasang Pambansa upon
recommendation of the National Economic and Development Authority.
(Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold
alienable lands of the public domain only through lease. Only individuals
could now acquire alienable lands of the public domain, and private
corporations became absolutely barred from acquiring any kind of
alienable land of the public domain. The constitutional ban extended to all
kinds of alienable lands of the public domain, while the statutory ban
under CA No. 141 applied only to government reclaimed, foreshore and
marshy alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential
Decree No. 1084 creating PEA, a wholly government owned and controlled
corporation with a special charter. Sections 4 and 8 of PD No. 1084, vests
PEA with the following purposes and powers:
Sec. 4. Purpose. The Authority is hereby created for the following
purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging,
filling or other means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose,
lease and sell any and all kinds of lands, buildings, estates and other forms
of real property, owned, managed, controlled and/or operated by the
government;
(c) To provide for, operate or administer such service as may be necessary
for the efficient, economical and beneficial utilization of the above
properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in
carrying out the purposes for which it is created, have the following
powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area permitted to
private corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any
stream, watercourse, canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be necessary
for the attainment of the purposes and objectives herein specified.
(Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged
areas of the public domain. Foreshore areas are those covered and
uncovered by the ebb and flow of the tide.[61] Submerged areas are those
permanently under water regardless of the ebb and flow of the tide.[62]
Foreshore and submerged areas indisputably belong to the public
domain[63] and are inalienable unless reclaimed, classified as alienable
lands open to disposition, and further declared no longer needed for
public service.
The ban in the 1973 Constitution on private corporations from acquiring
alienable lands of the public domain did not apply to PEA since it was then,
and until today, a fully owned government corporation. The constitutional
ban applied then, as it still applies now, only to private corporations and
associations. PD No. 1084 expressly empowers PEA to hold lands of the
public domain even in excess of the area permitted to private corporations
by statute. Thus, PEA can hold title to private lands, as well as title to lands
of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable
lands of the public domain, there must be legislative authority
empowering PEA to sell these lands. This legislative authority is necessary
in view of Section 60 of CA No.141, which states
Sec. 60. x x x; but the land so granted, donated or transferred to a
province, municipality, or branch or subdivision of the Government shall
not be alienated, encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by Congress; x x x. (Emphasis
supplied)
Without such legislative authority, PEA could not sell but only lease its
reclaimed foreshore and submerged alienable lands of the public domain.
Nevertheless, any legislative authority granted to PEA to sell its reclaimed
alienable lands of the public domain would be subject to the constitutional
ban on private corporations from acquiring alienable lands of the public
domain. Hence, such legislative authority could only benefit private
individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has
adopted the Regalian doctrine. The 1987 Constitution declares that all
natural resources are owned by the State, and except for alienable
agricultural lands of the public domain, natural resources cannot be
alienated. Sections 2 and 3, Article XII of the 1987 Constitution state that
Section 2. All lands of the public domain, waters, minerals, coal, petroleum
and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by
the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development, and
utilization of natural resources shall be under the full control and
supervision of the State. x x x.
Section 3. Lands of the public domain are classified into agricultural, forest
or timber, mineral lands, and national parks. Agricultural lands of the
public domain may be further classified by law according to the uses which
they may be devoted. Alienable lands of the public domain shall be limited
to agricultural lands. Private corporations or associations may not hold
such alienable lands of the public domain except by lease, for a period not
exceeding twenty-five years, renewable for not more than twenty-five
years, and not to exceed one thousand hectares in area. Citizens of the
Philippines may lease not more than five hundred hectares, or acquire not
more than twelve hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation, ecology, and
development, and subject to the requirements of agrarian reform, the
Congress shall determine, by law, the size of lands of the public domain
which may be acquired, developed, held, or leased and the conditions
therefor. (Emphasis supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution
banning private corporations from acquiring any kind of alienable land of
the public domain. Like the 1973 Constitution, the 1987 Constitution
allows private corporations to hold alienable lands of the public domain
only through lease. As in the 1935 and 1973 Constitutions, the general law
governing the lease to private corporations of reclaimed, foreshore and
marshy alienable lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from
acquiring, except through lease, alienable lands of the public domain is not
well understood. During the deliberations of the 1986 Constitutional
Commission, the commissioners probed the rationale behind this ban,
thus:
FR. BERNAS: Mr. Vice-President, my questions have reference to page 3,
line 5 which says:
`No private corporation or association may hold alienable lands of the
public domain except by lease, not to exceed one thousand hectares in
area.
If we recall, this provision did not exist under the 1935 Constitution, but
this was introduced in the 1973 Constitution. In effect, it prohibits private
corporations from acquiring alienable public lands. But it has not been
very clear in jurisprudence what the reason for this is. In some of the cases
decided in 1982 and 1983, it was indicated that the purpose of this is to
prevent large landholdings. Is that the intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were
instances where the Iglesia ni Cristo was not allowed to acquire a mere
313-square meter land where a chapel stood because the Supreme Court
said it would be in violation of this. (Emphasis supplied)
In Ayog v. Cusi,[64] the Court explained the rationale behind this
constitutional ban in this way:
Indeed, one purpose of the constitutional prohibition against purchases of
public agricultural lands by private corporations is to equitably diffuse land
ownership or to encourage owner-cultivatorship and the economic family-
size farm and to prevent a recurrence of cases like the instant case. Huge
landholdings by corporations or private persons had spawned social
unrest.
However, if the constitutional intent is to prevent huge landholdings, the
Constitution could have simply limited the size of alienable lands of the
public domain that corporations could acquire. The Constitution could
have followed the limitations on individuals, who could acquire not more
than 24 hectares of alienable lands of the public domain under the 1973
Constitution, and not more than 12 hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic family-size farms,
placing the land in the name of a corporation would be more effective in
preventing the break-up of farmlands. If the farmland is registered in the
name of a corporation, upon the death of the owner, his heirs would
inherit shares in the corporation instead of subdivided parcels of the
farmland. This would prevent the continuing break-up of farmlands into
smaller and smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional
limitation on individuals from acquiring more than the allowed area of
alienable lands of the public domain. Without the constitutional ban,
individuals who already acquired the maximum area of alienable lands of
the public domain could easily set up corporations to acquire more
alienable public lands. An individual could own as many corporations as his
means would allow him. An individual could even hide his ownership of a
corporation by putting his nominees as stockholders of the corporation.
The corporation is a convenient vehicle to circumvent the constitutional
limitation on acquisition by individuals of alienable lands of the public
domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to
transfer ownership of only a limited area of alienable land of the public
domain to a qualified individual. This constitutional intent is safeguarded
by the provision prohibiting corporations from acquiring alienable lands of
the public domain, since the vehicle to circumvent the constitutional
intent is removed. The available alienable public lands are gradually
decreasing in the face of an ever-growing population. The most effective
way to insure faithful adherence to this constitutional intent is to grant or
sell alienable lands of the public domain only to individuals. This, it would
seem, is the practical benefit arising from the constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas
clause, consists of three properties, namely:
1. [T]hree partially reclaimed and substantially eroded islands along Emilio
Aguinaldo Boulevard in Paranaque and Las Pinas, Metro Manila, with a
combined titled area of 1,578,441 square meters;
2. [A]nother area of 2,421,559 square meters contiguous to the three
islands; and
3. [A]t AMARIs option as approved by PEA, an additional 350 hectares
more or less to regularize the configuration of the reclaimed area.[65]
PEA confirms that the Amended JVA involves the development of the
Freedom Islands and further reclamation of about 250 hectares x x x, plus
an option granted to AMARI to subsequently reclaim another 350 hectares
x x x.[66]
In short, the Amended JVA covers a reclamation area of 750 hectares. Only
157.84 hectares of the 750-hectare reclamation project have been
reclaimed, and the rest of the 592.15 hectares are still submerged areas
forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of
P1,894,129,200.00 for PEAs actual cost in partially reclaiming the Freedom
Islands. AMARI will also complete, at its own expense, the reclamation of
the Freedom Islands. AMARI will further shoulder all the reclamation costs
of all the other areas, totaling 592.15 hectares, still to be reclaimed.
AMARI and PEA will share, in the proportion of 70 percent and 30 percent,
respectively, the total net usable area which is defined in the Amended
JVA as the total reclaimed area less 30 percent earmarked for common
areas. Title to AMARIs share in the net usable area, totaling 367.5
hectares, will be issued in the name of AMARI. Section 5.2 (c) of the
Amended JVA provides that
x x x, PEA shall have the duty to execute without delay the necessary deed
of transfer or conveyance of the title pertaining to AMARIs Land share
based on the Land Allocation Plan. PEA, when requested in writing by
AMARI, shall then cause the issuance and delivery of the proper
certificates of title covering AMARIs Land Share in the name of AMARI, x x
x; provided, that if more than seventy percent (70%) of the titled area at
any given time pertains to AMARI, PEA shall deliver to AMARI only seventy
percent (70%) of the titles pertaining to AMARI, until such time when a
corresponding proportionate area of additional land pertaining to PEA has
been titled. (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a
maximum of 367.5 hectares of reclaimed land which will be titled in its
name.
To implement the Amended JVA, PEA delegated to the unincorporated
PEA-AMARI joint venture PEAs statutory authority, rights and privileges to
reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the
Amended JVA states that
PEA hereby contributes to the joint venture its rights and privileges to
perform Rawland Reclamation and Horizontal Development as well as own
the Reclamation Area, thereby granting the Joint Venture the full and
exclusive right, authority and privilege to undertake the Project in
accordance with the Master Development Plan.
The Amended JVA is the product of a renegotiation of the original JVA
dated April 25, 1995 and its supplemental agreement dated August 9,
1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire
and own under the Amended JVA 367.5 hectares of reclaimed foreshore
and submerged areas in Manila Bay in view of Sections 2 and 3, Article XII
of the 1987 Constitution which state that:

Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural lands, all other
natural resources shall not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain shall be limited to
agricultural lands. Private corporations or associations may not hold such
alienable lands of the public domain except by lease, x x x.(Emphasis
supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or submerged
areas of Manila Bay are alienable or disposable lands of the public domain.
In its Memorandum,[67] PEA admits that
Under the Public Land Act (CA 141, as amended), reclaimed lands are
classified as alienable and disposable lands of the public domain:
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the government by dredging, filling, or other
means;
x x x. (Emphasis supplied)
Likewise, the Legal Task Force[68] constituted under Presidential
Administrative Order No. 365 admitted in its Report and Recommendation
to then President Fidel V. Ramos, [R]eclaimed lands are classified as
alienable and disposable lands of the public domain.[69] The Legal Task
Force concluded that
D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory
authority, the rights of ownership and disposition over reclaimed lands
have been transferred to PEA, by virtue of which PEA, as owner, may
validly convey the same to any qualified person without violating the
Constitution or any statute.
The constitutional provision prohibiting private corporations from holding
public land, except by lease (Sec. 3, Art. XVII,[70] 1987 Constitution), does
not apply to reclaimed lands whose ownership has passed on to PEA by
statutory grant.
Under Section 2, Article XII of the 1987 Constitution, the foreshore and
submerged areas of Manila Bay are part of the lands of the public domain,
waters x x x and other natural resources and consequently owned by the
State. As such, foreshore and submerged areas shall not be alienated,
unless they are classified as agricultural lands of the public domain. The
mere reclamation of these areas by PEA does not convert these
inalienable natural resources of the State into alienable or disposable
lands of the public domain. There must be a law or presidential
proclamation officially classifying these reclaimed lands as alienable or
disposable and open to disposition or concession. Moreover, these
reclaimed lands cannot be classified as alienable or disposable if the law
has reserved them for some public or quasi-public use.[71]
Section 8 of CA No. 141 provides that only those lands shall be declared
open to disposition or concession which have been officially delimited and
classified.[72] The President has the authority to classify inalienable lands
of the public domain into alienable or disposable lands of the public
domain, pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,[73] the
Executive Department attempted to sell the Roppongi property in Tokyo,
Japan, which was acquired by the Philippine Government for use as the
Chancery of the Philippine Embassy. Although the Chancery had
transferred to another location thirteen years earlier, the Court still ruled
that, under Article 422[74] of the Civil Code, a property of public dominion
retains such character until formally declared otherwise. The Court ruled
that
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]. (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of
special land patents for lands reclaimed by PEA from the foreshore or
submerged areas of Manila Bay. On January 19, 1988 then President
Corazon C. Aquino issued Special Patent No. 3517 in the name of PEA for
the 157.84 hectares comprising the partially reclaimed Freedom Islands.
Subsequently, on April 9, 1999 the Register of Deeds of the Municipality of
Paranaque issued TCT Nos. 7309, 7311 and 7312 in the name of PEA
pursuant to Section 103 of PD No. 1529 authorizing the issuance of
certificates of title corresponding to land patents. To this day, these
certificates of title are still in the name of PEA.
PD No. 1085, coupled with President Aquinos actual issuance of a special
patent covering the Freedom Islands, is equivalent to an official
proclamation classifying the Freedom Islands as alienable or disposable
lands of the public domain. PD No. 1085 and President Aquinos issuance of
a land patent also constitute a declaration that the Freedom Islands are no
longer needed for public service. The Freedom Islands are thus alienable
or disposable lands of the public domain, open to disposition or
concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had
already reclaimed the Freedom Islands although subsequently there were
partial erosions on some areas. The government had also completed the
necessary surveys on these islands. Thus, the Freedom Islands were no
longer part of Manila Bay but part of the land mass. Section 3, Article XII of
the 1987 Constitution classifies lands of the public domain into
agricultural, forest or timber, mineral lands, and national parks. Being
neither timber, mineral, nor national park lands, the reclaimed Freedom
Islands necessarily fall under the classification of agricultural lands of the
public domain. Under the 1987 Constitution, agricultural lands of the
public domain are the only natural resources that the State may alienate
to qualified private parties. All other natural resources, such as the seas or
bays, are waters x x x owned by the State forming part of the public
domain, and are inalienable pursuant to Section 2, Article XII of the 1987
Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP,
then a private corporation, reclaimed the islands under a contract dated
November 20, 1973 with the Commissioner of Public Highways. AMARI,
citing Article 5 of the Spanish Law of Waters of 1866, argues that if the
ownership of reclaimed lands may be given to the party constructing the
works, then it cannot be said that reclaimed lands are lands of the public
domain which the State may not alienate.[75] Article 5 of the Spanish Law
of Waters reads as follows:
Article 5. Lands reclaimed from the sea in consequence of works
constructed by the State, or by the provinces, pueblos or private persons,
with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the
grant of authority. (Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could
reclaim from the sea only with proper permission from the State. Private
parties could own the reclaimed land only if not otherwise provided by the
terms of the grant of authority. This clearly meant that no one could
reclaim from the sea without permission from the State because the sea is
property of public dominion. It also meant that the State could grant or
withhold ownership of the reclaimed land because any reclaimed land, like
the sea from which it emerged, belonged to the State. Thus, a private
person reclaiming from the sea without permission from the State could
not acquire ownership of the reclaimed land which would remain property
of public dominion like the sea it replaced.[76] Article 5 of the Spanish Law
of Waters of 1866 adopted the time-honored principle of land ownership
that all lands that were not acquired from the government, either by
purchase or by grant, belong to the public domain.[77]
Article 5 of the Spanish Law of Waters must be read together with laws
subsequently enacted on the disposition of public lands. In particular, CA
No. 141 requires that lands of the public domain must first be classified as
alienable or disposable before the government can alienate them. These
lands must not be reserved for public or quasi-public purposes.[78]
Moreover, the contract between CDCP and the government was executed
after the effectivity of the 1973 Constitution which barred private
corporations from acquiring any kind of alienable land of the public
domain. This contract could not have converted the Freedom Islands into
private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws
authorizing the reclamation of areas under water and revested solely in
the National Government the power to reclaim lands. Section 1 of PD No.
3-A declared that
The provisions of any law to the contrary notwithstanding, the reclamation
of areas under water, whether foreshore or inland, shall be limited to the
National Government or any person authorized by it under a proper
contract. (Emphasis supplied)
x x x.
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866
because reclamation of areas under water could now be undertaken only
by the National Government or by a person contracted by the National
Government. Private parties may reclaim from the sea only under a
contract with the National Government, and no longer by grant or
permission as provided in Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as
the National Governments implementing arm to undertake all reclamation
projects of the government, which shall be undertaken by the PEA or
through a proper contract executed by it with any person or entity. Under
such contract, a private party receives compensation for reclamation
services rendered to PEA. Payment to the contractor may be in cash, or in
kind consisting of portions of the reclaimed land, subject to the
constitutional ban on private corporations from acquiring alienable lands
of the public domain. The reclaimed land can be used as payment in kind
only if the reclaimed land is first classified as alienable or disposable land
open to disposition, and then declared no longer needed for public
service.
The Amended JVA covers not only the Freedom Islands, but also an
additional 592.15 hectares which are still submerged and forming part of
Manila Bay. There is no legislative or Presidential act classifying these
submerged areas as alienable or disposable lands of the public domain
open to disposition. These submerged areas are not covered by any patent
or certificate of title. There can be no dispute that these submerged areas
form part of the public domain, and in their present state are inalienable
and outside the commerce of man. Until reclaimed from the sea, these
submerged areas are, under the Constitution, waters x x x owned by the
State, forming part of the public domain and consequently inalienable.
Only when actually reclaimed from the sea can these submerged areas be
classified as public agricultural lands, which under the Constitution are the
only natural resources that the State may alienate. Once reclaimed and
transformed into public agricultural lands, the government may then
officially classify these lands as alienable or disposable lands open to
disposition. Thereafter, the government may declare these lands no longer
needed for public service. Only then can these reclaimed lands be
considered alienable or disposable lands of the public domain and within
the commerce of man.
The classification of PEAs reclaimed foreshore and submerged lands into
alienable or disposable lands open to disposition is necessary because PEA
is tasked under its charter to undertake public services that require the
use of lands of the public domain. Under Section 5 of PD No. 1084, the
functions of PEA include the following: [T]o own or operate railroads,
tramways and other kinds of land transportation, x x x; [T]o construct,
maintain and operate such systems of sanitary sewers as may be
necessary; [T]o construct, maintain and operate such storm drains as may
be necessary. PEA is empowered to issue rules and regulations as may be
necessary for the proper use by private parties of any or all of the
highways, roads, utilities, buildings and/or any of its properties and to
impose or collect fees or tolls for their use. Thus, part of the reclaimed
foreshore and submerged lands held by the PEA would actually be needed
for public use or service since many of the functions imposed on PEA by its
charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA shall be
primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government. The
same section also states that [A]ll reclamation projects shall be approved
by the President upon recommendation of the PEA, and shall be
undertaken by the PEA or through a proper contract executed by it with
any person or entity; x x x. Thus, under EO No. 525, in relation to PD No. 3-
A and PD No.1084, PEA became the primary implementing agency of the
National Government to reclaim foreshore and submerged lands of the
public domain. EO No. 525 recognized PEA as the government entity to
undertake the reclamation of lands and ensure their maximum utilization
in promoting public welfare and interests.[79] Since large portions of these
reclaimed lands would obviously be needed for public service, there must
be a formal declaration segregating reclaimed lands no longer needed for
public service from those still needed for public service.
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA shall
belong to or be owned by the PEA, could not automatically operate to
classify inalienable lands into alienable or disposable lands of the public
domain. Otherwise, reclaimed foreshore and submerged lands of the
public domain would automatically become alienable once reclaimed by
PEA, whether or not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No.
1084 or EO No. 525, vests in the Department of Environment and Natural
Resources (DENR for brevity) the following powers and functions:
Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and
disposable public lands, mineral resources and, in the process of exercising
such control, impose appropriate taxes, fees, charges, rentals and any such
form of levy and collect such revenues for the exploration, development,
utilization or gathering of such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of
licenses, permits, concessions, lease agreements and such other privileges
concerning the development, exploration and utilization of the countrys
marine, freshwater, and brackish water and over all aquatic resources of
the country and shall continue to oversee, supervise and police our natural
resources; cancel or cause to cancel such privileges upon failure, non-
compliance or violations of any regulation, order, and for all other causes
which are in furtherance of the conservation of natural resources and
supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of
all lands of the public domain and serve as the sole agency responsible for
classification, sub-classification, surveying and titling of lands in
consultation with appropriate agencies.[80] (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the
State, DENR exercises supervision and control over alienable and
disposable public lands. DENR also exercises exclusive jurisdiction on the
management and disposition of all lands of the public domain. Thus, DENR
decides whether areas under water, like foreshore or submerged areas of
Manila Bay, should be reclaimed or not. This means that PEA needs
authorization from DENR before PEA can undertake reclamation projects
in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands
of the public domain. Hence, DENR decides whether reclaimed lands of
PEA should be classified as alienable under Sections 6[81] and 7[82] of CA
No. 141. Once DENR decides that the reclaimed lands should be so
classified, it then recommends to the President the issuance of a
proclamation classifying the lands as alienable or disposable lands of the
public domain open to disposition. We note that then DENR Secretary
Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in
compliance with the Revised Administrative Code and Sections 6 and 7 of
CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of
areas under water, while PEA is vested with the power to undertake the
physical reclamation of areas under water, whether directly or through
private contractors. DENR is also empowered to classify lands of the public
domain into alienable or disposable lands subject to the approval of the
President. On the other hand, PEA is tasked to develop, sell or lease the
reclaimed alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or
submerged areas does not make the reclaimed lands alienable or
disposable lands of the public domain, much less patrimonial lands of PEA.
Likewise, the mere transfer by the National Government of lands of the
public domain to PEA does not make the lands alienable or disposable
lands of the public domain, much less patrimonial lands of PEA.
Absent two official acts a classification that these lands are alienable or
disposable and open to disposition and a declaration that these lands are
not needed for public service, lands reclaimed by PEA remain inalienable
lands of the public domain. Only such an official classification and formal
declaration can convert reclaimed lands into alienable or disposable lands
of the public domain, open to disposition under the Constitution, Title I
and Title III[83] of CA No. 141 and other applicable laws.[84]
PEAs Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands
of the public domain, the reclaimed lands shall be disposed of in
accordance with CA No. 141, the Public Land Act. PEA, citing Section 60 of
CA No. 141, admits that reclaimed lands transferred to a branch or
subdivision of the government shall not be alienated, encumbered, or
otherwise disposed of in a manner affecting its title, except when
authorized by Congress: x x x.[85] (Emphasis by PEA)
In Laurel vs. Garcia,[86] the Court cited Section 48 of the Revised
Administrative Code of 1987, which states that
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: x x x.
Thus, the Court concluded that a law is needed to convey any real
property belonging to the Government. The Court declared that -
It is not for the President to convey real property of the government on his
or her own sole will. Any such conveyance must be authorized and
approved by a law enacted by the Congress. It requires executive and
legislative concurrence. (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative
authority allowing PEA to sell its reclaimed lands. PD No. 1085, issued on
February 4, 1977, provides that
The land reclaimed in the foreshore and offshore area of Manila Bay
pursuant to the contract for the reclamation and construction of the
Manila-Cavite Coastal Road Project between the Republic of the
Philippines and the Construction and Development Corporation of the
Philippines dated November 20, 1973 and/or any other contract or
reclamation covering the same area is hereby transferred, conveyed and
assigned to the ownership and administration of the Public Estates
Authority established pursuant to PD No. 1084; Provided, however, That
the rights and interests of the Construction and Development Corporation
of the Philippines pursuant to the aforesaid contract shall be recognized
and respected.
Henceforth, the Public Estates Authority shall exercise the rights and
assume the obligations of the Republic of the Philippines (Department of
Public Highways) arising from, or incident to, the aforesaid contract
between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public
Estates Authority shall issue in favor of the Republic of the Philippines the
corresponding shares of stock in said entity with an issued value of said
shares of stock (which) shall be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public
Estates Authority shall execute such contracts or agreements, including
appropriate agreements with the Construction and Development
Corporation of the Philippines, as may be necessary to implement the
above.
Special land patent/patents shall be issued by the Secretary of Natural
Resources in favor of the Public Estates Authority without prejudice to the
subsequent transfer to the contractor or his assignees of such portion or
portions of the land reclaimed or to be reclaimed as provided for in the
above-mentioned contract. On the basis of such patents, the Land
Registration Commission shall issue the corresponding certificate of title.
(Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979,
provides that -
Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA
which shall be responsible for its administration, development, utilization
or disposition in accordance with the provisions of Presidential Decree No.
1084. Any and all income that the PEA may derive from the sale, lease or
use of reclaimed lands shall be used in accordance with the provisions of
Presidential Decree No. 1084.
There is no express authority under either PD No. 1085 or EO No. 525 for
PEA to sell its reclaimed lands. PD No. 1085 merely transferred ownership
and administration of lands reclaimed from Manila Bay to PEA, while EO
No. 525 declared that lands reclaimed by PEA shall belong to or be owned
by PEA. EO No. 525 expressly states that PEA should dispose of its
reclaimed lands in accordance with the provisions of Presidential Decree
No. 1084, the charter of PEA.
PEAs charter, however, expressly tasks PEA to develop, improve, acquire,
administer, deal in, subdivide, dispose, lease and sell any and all kinds of
lands x x x owned, managed, controlled and/or operated by the
government.[87] (Emphasis supplied) There is, therefore, legislative
authority granted to PEA to sell its lands, whether patrimonial or alienable
lands of the public domain. PEA may sell to private parties its patrimonial
properties in accordance with the PEA charter free from constitutional
limitations. The constitutional ban on private corporations from acquiring
alienable lands of the public domain does not apply to the sale of PEAs
patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to
private individuals since, with the legislative authority, there is no longer
any statutory prohibition against such sales and the constitutional ban
does not apply to individuals. PEA, however, cannot sell any of its alienable
or disposable lands of the public domain to private corporations since
Section 3, Article XII of the 1987 Constitution expressly prohibits such
sales. The legislative authority benefits only individuals. Private
corporations remain barred from acquiring any kind of alienable land of
the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands
could be transferred by PEA to the contractor or his assignees (Emphasis
supplied) would not apply to private corporations but only to individuals
because of the constitutional ban. Otherwise, the provisions of PD No.
1085 would violate both the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or
disposable lands open to disposition, and further declared no longer
needed for public service, PEA would have to conduct a public bidding in
selling or leasing these lands. PEA must observe the provisions of Sections
63 and 67 of CA No. 141 requiring public auction, in the absence of a law
exempting PEA from holding a public auction.[88] Special Patent No. 3517
expressly states that the patent is issued by authority of the Constitution
and PD No. 1084, supplemented by Commonwealth Act No. 141, as
amended. This is an acknowledgment that the provisions of CA No. 141
apply to the disposition of reclaimed alienable lands of the public domain
unless otherwise provided by law. Executive Order No. 654,[89] which
authorizes PEA to determine the kind and manner of payment for the
transfer of its assets and properties, does not exempt PEA from the
requirement of public auction. EO No. 654 merely authorizes PEA to
decide the mode of payment, whether in kind and in installment, but does
not authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the
Government Auditing Code, the government is required to sell valuable
government property through public bidding. Section 79 of PD No. 1445
mandates that
Section 79. When government property has become unserviceable for any
cause, or is no longer needed, it shall, upon application of the officer
accountable therefor, be inspected by the head of the agency or his duly
authorized representative in the presence of the auditor concerned and, if
found to be valueless or unsaleable, it may be destroyed in their presence.
If found to be valuable, it may be sold at public auction to the highest
bidder under the supervision of the proper committee on award or similar
body in the presence of the auditor concerned or other authorized
representative of the Commission, after advertising by printed notice in
the Official Gazette, or for not less than three consecutive days in any
newspaper of general circulation, or where the value of the property does
not warrant the expense of publication, by notices posted for a like period
in at least three public places in the locality where the property is to be
sold. In the event that the public auction fails, the property may be sold at
a private sale at such price as may be fixed by the same committee or
body concerned and approved by the Commission.
It is only when the public auction fails that a negotiated sale is allowed, in
which case the Commission on Audit must approve the selling price.[90]
The Commission on Audit implements Section 79 of the Government
Auditing Code through Circular No. 89-296[91] dated January 27, 1989.
This circular emphasizes that government assets must be disposed of only
through public auction, and a negotiated sale can be resorted to only in
case of failure of public auction.
At the public auction sale, only Philippine citizens are qualified to bid for
PEAs reclaimed foreshore and submerged alienable lands of the public
domain. Private corporations are barred from bidding at the auction sale
of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on
December 10, 1991. PEA imposed a condition that the winning bidder
should reclaim another 250 hectares of submerged areas to regularize the
shape of the Freedom Islands, under a 60-40 sharing of the additional
reclaimed areas in favor of the winning bidder.[92] No one, however,
submitted a bid. On December 23, 1994, the Government Corporate
Counsel advised PEA it could sell the Freedom Islands through negotiation,
without need of another public bidding, because of the failure of the
public bidding on December 10, 1991.[93]
However, the original JVA dated April 25, 1995 covered not only the
Freedom Islands and the additional 250 hectares still to be reclaimed, it
also granted an option to AMARI to reclaim another 350 hectares. The
original JVA, a negotiated contract, enlarged the reclamation area to 750
hectares.[94] The failure of public bidding on December 10, 1991,
involving only 407.84 hectares,[95] is not a valid justification for a
negotiated sale of 750 hectares, almost double the area publicly
auctioned. Besides, the failure of public bidding happened on December
10, 1991, more than three years before the signing of the original JVA on
April 25, 1995. The economic situation in the country had greatly
improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987
Constitution is absolute and clear: Private corporations or associations
may not hold such alienable lands of the public domain except by lease, x x
x. Even Republic Act No. 6957 (BOT Law, for brevity), cited by PEA and
AMARI as legislative authority to sell reclaimed lands to private parties,
recognizes the constitutional ban. Section 6 of RA No. 6957 states
Sec. 6. Repayment Scheme. - For the financing, construction, operation
and maintenance of any infrastructure projects undertaken through the
build-operate-and-transfer arrangement or any of its variations pursuant
to the provisions of this Act, the project proponent x x x may likewise be
repaid in the form of a share in the revenue of the project or other non-
monetary payments, such as, but not limited to, the grant of a portion or
percentage of the reclaimed land, subject to the constitutional
requirements with respect to the ownership of the land: x x x. (Emphasis
supplied)
A private corporation, even one that undertakes the physical reclamation
of a government BOT project, cannot acquire reclaimed alienable lands of
the public domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and
AMARI, authorizes local governments in land reclamation projects to pay
the contractor or developer in kind consisting of a percentage of the
reclaimed land, to wit:
Section 302. Financing, Construction, Maintenance, Operation, and
Management of Infrastructure Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the
repayment plan may consist of the grant of a portion or percentage of the
reclaimed land or the industrial estate constructed.
Although Section 302 of the Local Government Code does not contain a
proviso similar to that of the BOT Law, the constitutional restrictions on
land ownership automatically apply even though not expressly mentioned
in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the
contractor or developer, if a corporate entity, can only be paid with
leaseholds on portions of the reclaimed land. If the contractor or
developer is an individual, portions of the reclaimed land, not exceeding
12 hectares[96] of non-agricultural lands, may be conveyed to him in
ownership in view of the legislative authority allowing such conveyance.
This is the only way these provisions of the BOT Law and the Local
Government Code can avoid a direct collision with Section 3, Article XII of
the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the act of conveying the ownership of the
reclaimed lands to public respondent PEA transformed such lands of the
public domain to private lands. This theory is echoed by AMARI which
maintains that the issuance of the special patent leading to the eventual
issuance of title takes the subject land away from the land of public
domain and converts the property into patrimonial or private property. In
short, PEA and AMARI contend that with the issuance of Special Patent
No. 3517 and the corresponding certificates of titles, the 157.84 hectares
comprising the Freedom Islands have become private lands of PEA. In
support of their theory, PEA and AMARI cite the following rulings of the
Court:
1. Sumail v. Judge of CFI of Cotabato,[97] where the Court held
Once the patent was granted and the corresponding certificate of title was
issued, the land ceased to be part of the public domain and became
private property over which the Director of Lands has neither control nor
jurisdiction.
2. Lee Hong Hok v. David,[98] where the Court declared -
After the registration and issuance of the certificate and duplicate
certificate of title based on a public land patent, the land covered thereby
automatically comes under the operation of Republic Act 496 subject to all
the safeguards provided therein.
3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,[99] where the Court
ruled -
While the Director of Lands has the power to review homestead patents,
he may do so only so long as the land remains part of the public domain
and continues to be under his exclusive control; but once the patent is
registered and a certificate of title is issued, the land ceases to be part of
the public domain and becomes private property over which the Director
of Lands has neither control nor jurisdiction.
4. Manalo v. Intermediate Appellate Court,[100] where the Court held
When the lots in dispute were certified as disposable on May 19, 1971,
and free patents were issued covering the same in favor of the private
respondents, the said lots ceased to be part of the public domain and,
therefore, the Director of Lands lost jurisdiction over the same.
5.Republic v. Court of Appeals,[101] where the Court stated
Proclamation No. 350, dated October 9, 1956, of President Magsaysay
legally effected a land grant to the Mindanao Medical Center, Bureau of
Medical Services, Department of Health, of the whole lot, validly sufficient
for initial registration under the Land Registration Act. Such land grant is
constitutive of a fee simple title or absolute title in favor of petitioner
Mindanao Medical Center. Thus, Section 122 of the Act, which governs the
registration of grants or patents involving public lands, provides that
Whenever public lands in the Philippine Islands belonging to the
Government of the United States or to the Government of the Philippines
are alienated, granted or conveyed to persons or to public or private
corporations, the same shall be brought forthwith under the operation of
this Act (Land Registration Act, Act 496) and shall become registered lands.
The first four cases cited involve petitions to cancel the land patents and
the corresponding certificates of titles issued to private parties. These four
cases uniformly hold that the Director of Lands has no jurisdiction over
private lands or that upon issuance of the certificate of title the land
automatically comes under the Torrens System. The fifth case cited
involves the registration under the Torrens System of a 12.8-hectare public
land granted by the National Government to Mindanao Medical Center, a
government unit under the Department of Health. The National
Government transferred the 12.8-hectare public land to serve as the site
for the hospital buildings and other facilities of Mindanao Medical Center,
which performed a public service. The Court affirmed the registration of
the 12.8-hectare public land in the name of Mindanao Medical Center
under Section 122 of Act No. 496. This fifth case is an example of a public
land being registered under Act No. 496 without the land losing its
character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those
in the name of PEA, a wholly government owned corporation performing
public as well as proprietary functions. No patent or certificate of title has
been issued to any private party. No one is asking the Director of Lands to
cancel PEAs patent or certificates of title. In fact, the thrust of the instant
petition is that PEAs certificates of title should remain with PEA, and the
land covered by these certificates, being alienable lands of the public
domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the
registrant private or public ownership of the land. Registration is not a
mode of acquiring ownership but is merely evidence of ownership
previously conferred by any of the recognized modes of acquiring
ownership. Registration does not give the registrant a better right than
what the registrant had prior to the registration.[102] The registration of
lands of the public domain under the Torrens system, by itself, cannot
convert public lands into private lands.[103]
Jurisprudence holding that upon the grant of the patent or issuance of the
certificate of title the alienable land of the public domain automatically
becomes private land cannot apply to government units and entities like
PEA. The transfer of the Freedom Islands to PEA was made subject to the
provisions of CA No. 141 as expressly stated in Special Patent No. 3517
issued by then President Aquino, to wit:
NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the
Philippines and in conformity with the provisions of Presidential Decree
No. 1084, supplemented by Commonwealth Act No. 141, as amended,
there are hereby granted and conveyed unto the Public Estates Authority
the aforesaid tracts of land containing a total area of one million nine
hundred fifteen thousand eight hundred ninety four (1,915,894) square
meters; the technical description of which are hereto attached and made
an integral part hereof. (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on
matters not covered by PD No. 1084. Section 60 of CA No. 141 prohibits,
except when authorized by Congress, the sale of alienable lands of the
public domain that are transferred to government units or entities. Section
60 of CA No. 141 constitutes, under Section 44 of PD No. 1529, a statutory
lien affecting title of the registered land even if not annotated on the
certificate of title.[104] Alienable lands of the public domain held by
government entities under Section 60 of CA No. 141 remain public lands
because they cannot be alienated or encumbered unless Congress passes
a law authorizing their disposition. Congress, however, cannot authorize
the sale to private corporations of reclaimed alienable lands of the public
domain because of the constitutional ban. Only individuals can benefit
from such law.
The grant of legislative authority to sell public lands in accordance with
Section 60 of CA No. 141 does not automatically convert alienable lands of
the public domain into private or patrimonial lands. The alienable lands of
the public domain must be transferred to qualified private parties, or to
government entities not tasked to dispose of public lands, before these
lands can become private or patrimonial lands. Otherwise, the
constitutional ban will become illusory if Congress can declare lands of the
public domain as private or patrimonial lands in the hands of a
government agency tasked to dispose of public lands. This will allow
private corporations to acquire directly from government agencies
limitless areas of lands which, prior to such law, are concededly public
lands.
Under EO No. 525, PEA became the central implementing agency of the
National Government to reclaim foreshore and submerged areas of the
public domain. Thus, EO No. 525 declares that
EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily
Responsible for all Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or
being proposed to be undertaken in various parts of the country which
need to be evaluated for consistency with national programs;
Whereas, there is a need to give further institutional support to the
Governments declared policy to provide for a coordinated, economical
and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of
areas shall be limited to the National Government or any person
authorized by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National
Government which shall ensure a coordinated and integrated approach in
the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates
Authority as a government corporation to undertake reclamation of lands
and ensure their maximum utilization in promoting public welfare and
interests; and
Whereas, Presidential Decree No. 1416 provides the President with
continuing authority to reorganize the national government including the
transfer, abolition, or merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution and pursuant to
Presidential Decree No. 1416, do hereby order and direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible
for integrating, directing, and coordinating all reclamation projects for and
on behalf of the National Government. All reclamation projects shall be
approved by the President upon recommendation of the PEA, and shall be
undertaken by the PEA or through a proper contract executed by it with
any person or entity; Provided, that, reclamation projects of any national
government agency or entity authorized under its charter shall be
undertaken in consultation with the PEA upon approval of the President.
xxx.
As the central implementing agency tasked to undertake reclamation
projects nationwide, with authority to sell reclaimed lands, PEA took the
place of DENR as the government agency charged with leasing or selling
reclaimed lands of the public domain. The reclaimed lands being leased or
sold by PEA are not private lands, in the same manner that DENR, when it
disposes of other alienable lands, does not dispose of private lands but
alienable lands of the public domain. Only when qualified private parties
acquire these lands will the lands become private lands. In the hands of
the government agency tasked and authorized to dispose of alienable of
disposable lands of the public domain, these lands are still public, not
private lands.
Furthermore, PEAs charter expressly states that PEA shall hold lands of the
public domain as well as any and all kinds of lands. PEA can hold both
lands of the public domain and private lands. Thus, the mere fact that
alienable lands of the public domain like the Freedom Islands are
transferred to PEA and issued land patents or certificates of title in PEAs
name does not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be
transferred to PEA as private lands will sanction a gross violation of the
constitutional ban on private corporations from acquiring any kind of
alienable land of the public domain. PEA will simply turn around, as PEA
has now done under the Amended JVA, and transfer several hundreds of
hectares of these reclaimed and still to be reclaimed lands to a single
private corporation in only one transaction. This scheme will effectively
nullify the constitutional ban in Section 3, Article XII of the 1987
Constitution which was intended to diffuse equitably the ownership of
alienable lands of the public domain among Filipinos, now numbering over
80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands
of the public domain since PEA can acquire x x x any and all kinds of lands.
This will open the floodgates to corporations and even individuals
acquiring hundreds of hectares of alienable lands of the public domain
under the guise that in the hands of PEA these lands are private lands. This
will result in corporations amassing huge landholdings never before seen
in this country - creating the very evil that the constitutional ban was
designed to prevent. This will completely reverse the clear direction of
constitutional development in this country. The 1935 Constitution allowed
private corporations to acquire not more than 1,024 hectares of public
lands.[105] The 1973 Constitution prohibited private corporations from
acquiring any kind of public land, and the 1987 Constitution has
unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under
Act No. 496 or PD No. 1529, automatically become private lands is
contrary to existing laws. Several laws authorize lands of the public
domain to be registered under the Torrens System or Act No. 496, now PD
No. 1529, without losing their character as public lands. Section 122 of Act
No. 496, and Section 103 of PD No. 1529, respectively, provide as follows:
Act No. 496
Sec. 122. Whenever public lands in the Philippine Islands belonging to the
x x x Government of the Philippine Islands are alienated, granted, or
conveyed to persons or the public or private corporations, the same shall
be brought forthwith under the operation of this Act and shall become
registered lands.
PD No. 1529
Sec. 103. Certificate of Title to Patents. Whenever public land is by the
Government alienated, granted or conveyed to any person, the same shall
be brought forthwith under the operation of this Decree. (Emphasis
supplied)
Based on its legislative history, the phrase conveyed to any person in
Section 103 of PD No. 1529 includes conveyances of public lands to public
corporations.
Alienable lands of the public domain granted, donated, or transferred to a
province, municipality, or branch or subdivision of the Government, as
provided in Section 60 of CA No. 141, may be registered under the Torrens
System pursuant to Section 103 of PD No. 1529. Such registration,
however, is expressly subject to the condition in Section 60 of CA No. 141
that the land shall not be alienated, encumbered or otherwise disposed of
in a manner affecting its title, except when authorized by Congress. This
provision refers to government reclaimed, foreshore and marshy lands of
the public domain that have been titled but still cannot be alienated or
encumbered unless expressly authorized by Congress. The need for
legislative authority prevents the registered land of the public domain
from becoming private land that can be disposed of to qualified private
parties.
The Revised Administrative Code of 1987 also recognizes that lands of the
public domain may be registered under the Torrens System. Section 48,
Chapter 12, Book I of the Code states
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) x x x
(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)
Thus, private property purchased by the National Government for
expansion of a public wharf may be titled in the name of a government
corporation regulating port operations in the country. Private property
purchased by the National Government for expansion of an airport may
also be titled in the name of the government agency tasked to administer
the airport. Private property donated to a municipality for use as a town
plaza or public school site may likewise be titled in the name of the
municipality.[106] All these properties become properties of the public
domain, and if already registered under Act No. 496 or PD No. 1529,
remain registered land. There is no requirement or provision in any
existing law for the de-registration of land from the Torrens System.
Private lands taken by the Government for public use under its power of
eminent domain become unquestionably part of the public domain.
Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds
to issue in the name of the National Government new certificates of title
covering such expropriated lands. Section 85 of PD No. 1529 states
Sec. 85. Land taken by eminent domain. Whenever any registered land, or
interest therein, is expropriated or taken by eminent domain, the National
Government, province, city or municipality, or any other agency or
instrumentality exercising such right shall file for registration in the proper
Registry a certified copy of the judgment which shall state definitely by an
adequate description, the particular property or interest expropriated, the
number of the certificate of title, and the nature of the public use. A
memorandum of the right or interest taken shall be made on each
certificate of title by the Register of Deeds, and where the fee simple is
taken, a new certificate shall be issued in favor of the National
Government, province, city, municipality, or any other agency or
instrumentality exercising such right for the land so taken. The legal
expenses incident to the memorandum of registration or issuance of a
new certificate of title shall be for the account of the authority taking the
land or interest therein. (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not
exclusively private or patrimonial lands. Lands of the public domain may
also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI
of the Freedom Islands or of the lands to be reclaimed from submerged
areas of Manila Bay. In the words of AMARI, the Amended JVA is not a sale
but a joint venture with a stipulation for reimbursement of the original
cost incurred by PEA for the earlier reclamation and construction works
performed by the CDCP under its 1973 contract with the Republic.
Whether the Amended JVA is a sale or a joint venture, the fact remains
that the Amended JVA requires PEA to cause the issuance and delivery of
the certificates of title conveying AMARIs Land Share in the name of
AMARI.[107]
This stipulation still contravenes Section 3, Article XII of the 1987
Constitution which provides that private corporations shall not hold such
alienable lands of the public domain except by lease. The transfer of title
and ownership to AMARI clearly means that AMARI will hold the reclaimed
lands other than by lease. The transfer of title and ownership is a
disposition of the reclaimed lands, a transaction considered a sale or
alienation under CA No. 141,[108] the Government Auditing Code,[109]
and Section 3, Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore
and submerged areas form part of the public domain and are inalienable.
Lands reclaimed from foreshore and submerged areas also form part of
the public domain and are also inalienable, unless converted pursuant to
law into alienable or disposable lands of the public domain. Historically,
lands reclaimed by the government are sui generis, not available for sale
to private parties unlike other alienable public lands. Reclaimed lands
retain their inherent potential as areas for public use or public service.
Alienable lands of the public domain, increasingly becoming scarce natural
resources, are to be distributed equitably among our ever-growing
population. To insure such equitable distribution, the 1973 and 1987
Constitutions have barred private corporations from acquiring any kind of
alienable land of the public domain. Those who attempt to dispose of
inalienable natural resources of the State, or seek to circumvent the
constitutional ban on alienation of lands of the public domain to private
corporations, do so at their own risk.
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[110] 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.
Seventh issue: whether the Court is the proper forum to raise the issue of
whether the Amended JVA is grossly disadvantageous to the government.
Considering that the Amended JVA is null and void ab initio, there is no
necessity to rule on this last issue. Besides, the Court is not a trier of facts,
and this last issue involves a determination of factual matters.
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.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 55134 December 4, 1995
PEDRO PILAPIL and TEODORICA PENARANDA, petitioners,
vs.
HONORABLE COURT OF APPEALS, Spouses CARMEN OTADORA and LUIS
MASIAS, VITALIANA OTADORA, Spouses MACARIO BENSIG and MARCELA
ALIGWAY, Spouses DIONISIO BENSIG and JUANITA ARSENAL, Spouses
SINFOROSO ANDRIN and VISITACION OTADORA, and H. SERAFICA & SONS
CORPORATION, respondents.
ROMERO, J.:
Felix Otadora was the registered owner of a 273,796-square meter parcel
of land in Ormoc City known as Lot 8734 and covered by Original
Certificate of Title No. 26026. He died in 1940 survived by his wife, Leona
Garbo, and their children Vitaliana, Maxima and Agaton. Another son,
Sergio, predeceased him. From 1946 to 1947, Leona and the three children
sold portions of Lot 8734 to separate buyers, leaving a segregated portion
known as Lot 8734-B-5 with an area of 51,019 square meters. Leona died
in 1956.
On March 21, 1962, the Otadora siblings, together with Sergio's son
Antonio, executed a deed of extrajudicial partition and confirmation of
sales, 1 giving each of them a one-fourth undivided share in the remaining
property. 2
That very same day, Vitaliana and Agaton sold to petitioners an undivided
portion, measuring 18,626 square meters, of Lot 8734-B-5. 3 The deed of
sale, which was executed in the presence of Antonio and a certain Eulogio
Simon, specified that the possession and ownership of the property sold
shall be transferred to the buyers from the date of the instrument.
The deed of extrajudicial partition was annotated on OCT No. 26026 on
March 26, 1962 under Entry No. 10897. Because of such partition, OCT No.
26026 was cancelled and replaced by Transfer Certificate of Title No. 4026
which, in turn, was superseded by TCT No. 4029, indicating as owners
Agaton, Vitaliana, Maxima, and Antonio. The sale to petitioners was
inscribed at the back of TCT No. 4029 as Entry No. 10903 on March 29,
1962.
Meanwhile, Antonio sold on October 11, 1962 his one-fourth share in the
lot to his cousin Macario Bensig, Maxima's son, who ceded one-half
thereof, or one-eighth of the entire partitioned lot, to the spouses
Visitacion Otadora and Sinforoso Andrin, by way of a Deed of Quitclaim
dated February 12, 1963, 4 and in recognition of Visitacion's hereditary
rights as Antonio's sister.
Thus, TCT No. 4029 was cancelled on February 15, 1963 and supplanted by
TCT No. 4484, 5 which showed Agaton, Vitaliana, Maxima, Macario, and
the spouses Visitacion and Sinforoso Andrin as owners of Lot 8734-B-5.
Petitioners' names did not appear among the owners, although in the
memorandum of encumbrances at the back of TCT No. 4484, Entry No.
10903 regarding the sale to them by Vitaliana and Agaton was retained.
Despite the sale of 18,626 square meters of their undivided share in Lot
No. 8734-B-5 earlier made in favor of petitioners, however, Agaton again
sold his one-fourth share in the lot to his daughter Carmen on February
12, 1970; 6 Vitaliana, on the other hand, re-sold her one-fourth share to
Maxima on January 28, 1971. 7 Four days later, Maxima sold her now one-
half share to her sons Dionisio and Macario Bensig, 8 who were able to
register on August 12, 1971 the said properties in their and their wives'
names, respectively, as Lot 8734-B-5-D, under TCT No. 9096 9 covering an
area of 5,508 square meters, and as Lot 8734-B-5-C, under TCT No. 9094
10 covering an area of 26,378 square meters.
On September 8, 1971, TCT No. 9129 11 was issued to the spouses
Sinforoso and Visitacion Andrin for their 6,378-square meter lot now
known as Lot No. 8734-B-5-B, and TCT No. 9130 12 was issued to Carmen
and her husband Luis Masias for their 12,755-square meter lot now known
as Lot No. 8734-B-5-A.
It must be noted that while Entry No. 10903 does not seem to have been
inscribed on TCT Nos. 9096 and 9129, the records show that it appears on
the back of TCT Nos. 9094 and 9130. 13 With the issuance of these four
certificates of title, TCT No. 4484 was finally cancelled.
Upon discovery of the new titles, petitioners filed a protest with the
Register of Deeds of Ormoc City who, in a letter dated December 9, 1971,
informed Carmen, Sinforoso, Macario, and Dionisio of the existence of the
deed of sale in favor of petitioners and required them to present their
(original) titles for proper annotation. 14 Such request was, however,
ignored.
On July 10, 1972, Carmen and Luis Masias sold Lot No. 8734-8-5-A to H.
Serafica & Sons Corporation, 15 which was not able to register the same
because of the annotation in TCT No. 9130 earlier made showing the sale
in favor of petitioners. Because of this, the corporation charged the
vendors with estafa before the City Fiscal's Office, but the complaint did
not prosper.
Petitioners therefore filed, on December 8, 1973, a complaint for quieting
of title, annulment of deeds, cancellation of titles, partition, and recovery
of ownership with damages, against herein private respondents. The
complaint alleged, among other things, that petitioners succeeded in
possessing only 12,000 square meters of the lot and needed 6,626 square
meters more to complete the total area purchased from Vitaliana and
Agaton in 1962.
In its decision dated June 20, 1994, the court a quo concluded that the
annotation on TCT No. 4484 of the sale by Vitaliana and Agaton in favor of
petitioners was null and void because the latter failed to surrender the
owner's duplicate copy of the title, in violation of Section 55 of the Land
Registration Act (Act No. 496). 16 It states:
WHEREFORE, decision is hereby rendered in favor of the defendants and
against the plaintiffs hereby dismissing plaintiffs' complaint, and ordering
the plaintiffs to pay the defendants at the rate of P1,000.00 for each
counsel for and as attorney's fees, to vacate Lot No. 8734-B-5-A, and
deliver the same to defendant H. Serafica & Sons Corporation, and further
ordering the plaintiffs and defendants spouses Luis Masias and Carmen
Otadora to jointly and severally pay H. Serafica & Sons Corporation actual
damages at the rate of P1,275.00 a year from July 10, 1972, until said land
shall have been delivered to H. Serafica & Sons Corporation all of which
amounts shall bear legal rate of interest from the filing of the complaint
until paid, with costs against the plaintiffs.
On appeal, the appellate court made the following findings:
. . . However, it is clear from the documents presented, particularly Exhibit
C, that the certificate of title mentioned therein as covering the land at the
time of the sale was Original Certificate of Title No. 26026. But it appears
from OCT No. 26026 that the owners thereof were Felix Otadora and
Leona Garbo. It may, therefore, be deduced therefrom that at the time of
the registration of the deed, OCT No. 26026 had already been cancelled,
and the certificate of title covering the land sold was TCT No. 4029 which
was issued on March 29, 1962 (should be March 26, 1962) and the
inscription of the deed of sale was made on March 29, 1962. OCT No.
26026 thereby became inexistent, it having been already cancelled by
TCT(s) Nos. 4026 and 4029. It would have been against the law to have the
deed of sale registered in TCT No. 4029 without an order from the proper
court authorizing such registration, specifically because OCT No. 26026
had already undergone two cancellations, first by TCT No. 4026 and then
by TCT No. 4029. Appellants should have filed the necessary petition with
the proper court asking that the Register of Deeds be authorized to
annotate the deed of sale executed by Agaton Otadora and Vitaliana
Otadora in their favor because OCT No. 26026 was omitted. The said title
was, therefore, null and void, and the same did not acquire the effect of a
constructive notice to the whole world of the interest over the land in
question of the plaintiffs-appellants. At most, the deed of sale is merely a
contract between the plaintiffs-appellants and the vendors appearing
therein but without any binding effect upon their persons and upon whom
bad faith cannot be imputed.
The whole property has not been subdivided into specific portions to be
owned by each co-owners (sic). No definite portion having been clearly
allocated to them, the plaintiffs-appellants cannot take possession of the
land allegedly sold to them. They should have demanded a subdivision of
the land, or forged an agreement with the other co-owners as to which
portion they would be allowed to take possession while awaiting for (sic)
the actual subdivision thereof. But this, the plaintiffs-appellants had not
done, and their entry into the land without those conditions previously
complied with amounts to a transgression on the property rights of the
other co-owners.
Plaintiffs-appellants claim to have bought an area of 18,626 square meters
out of the total share of the vendors of 25,510 square meters but they had
taken possession over an area of 12,000 square meters. The deed of sale
did not specify what part of the 1/4 share of each of the registered owners
who executed the sale was sold to the appellants.
The Court of Appeals also agreed with the lower court that H. Serafica &
Sons Corporation was an innocent purchaser for value as it was not
required by law to go beyond TCT No. 9130 which, on its face, appeared to
be unencumbered. It ruled that while the Pilapil spouses "may have a
cause of action against the other defendants-appellees, there is no ground
or reason upon which the same action would lie against appellee
corporation." Hence, the Court of Appeals affirmed the decision of the
lower court with the modification that the award of damages of P1,275.00
a year from July 10, 1972 be cancelled.
In the instant petition for review on certiorari, petitioners argue that the
Court of Appeals erred in holding that: (a) the annotation of the sale in
their favor on TCT No. 4029 is ineffectual; (b) the deeds of sale
respectively executed by Agaton and Vitaliana in favor of Carmen and
Maxima are valid and superior to that executed earlier by Agaton and
Vitaliana in their favor; (c) their entry into Lot No. 8734-B-5 is illegal; (d)
the sale between Maxima and her children is valid; and (e) H. Serafica &
Sons Corporation is a buyer in good faith, when it was "at least negligent in
not verifying or inspecting the land or title of its vendors." Petitioners
contend that the liability of the Otadoras who sold the same property
twice should have been determined to avoid multiplicity of suits and that
by upholding the award of attorney's fees, a travesty of justice had been
tolerated by the appellate court.
After examining the records of the case, as well as the applicable law and
jurisprudence, the Court is convinced of the merits of the petition.
The court below correctly ruled that the annotation of Entry No. 10903 in
the certificates of title was not made in accordance with law. To affect the
land sold, the presentation of the deed of sale and its entry in the day
book must be done with the surrender of the owner's duplicate of the
certificate of title. 17 Production of the owner's duplicate of the certificate
of title is required by Section 55 of Act No. 496 (now Section 53 of
Presidential Decree No. 1529), and only after compliance with this and
other requirements shall actual registration retroact to the date of entry in
the day book. 18
However, nonproduction of the owner's duplicate of the certificate of title
may not invalidate petitioners' claim of ownership over the lot involved
considering the factual circumstances of this case.
It is undisputed that after the sale of the lot to petitioners, the same
vendors sold the same property to persons who cannot be considered in
law to be unaware of the prior sale to the petitioners.
Thus, Agaton sold his one-fourth share of the lot to his daughter Carmen,
while Vitaliana also sold her one-fourth share to her sister Maxima.
Considering these relationships and contrary to the findings of the courts
below, the vendees, Carmen and Maxima, cannot be considered as third
parties who are not bound by the prior sale between Agaton and Vitaliana
as vendors and petitioners as vendees, because there is privity of interest
between them and their predecessors. 19 The reason for this is that the
validity of a title to a piece of property depends on the buyer's knowledge,
actual or constructive, of a prior sale. 20 While there is no direct proof that
Carmen and Maxima actually knew of the sale to petitioners, they are
deemed to have constructive knowledge thereof by virtue of their
relationship to both Agaton and Vitaliana.
Hence, it has become immaterial if the sale to petitioners was properly
annotated on the correct certificate of title or not. As we held in Abuyo v.
De Suazo: 21
[t]he purpose of the registration is to give notice to third persons. And,
privies are not third persons. The vendor's heirs are his privies. Against
them, failure to register will not vitiate or annul the vendee's right of
ownership conferred by such unregistered deed of sale.
It is not disputed that of the 25,510 square meters which pertain to
Vitaliana and Agaton as their combined undivided share in Lot No. 8734-B-
5, an area of 18,626 square meters had been sold to petitioners who, in
turn, were able to possess only 12,000 square meters thereof. Thus, at
most, Vitaliana and Agaton had a remainder of 6,884 square meters of
undivided share which they could have legally disposed of. As it turned
out, however, they sold their entire individual one-fourth shares to
Carmen and Maxima who, as earlier concluded, were privy to the prior
sale to petitioners.
Thus, when Carmen sold the property to H. Serafica and Sons Corporation,
she no longer had any rights of dominion to transmit, since her own father
who sold to her the property had himself earlier relinquished his
ownership rights in favor of the petitioners. Accordingly, Carmen
transmitted no right to the corporation.
Under these circumstances, the corporation, having failed to obtain relief
through the criminal complaint filed against the spouses Carmen Otadora
and Luis Masias, and having relied on the unencumbered transfer
certificate of title shown to it by the Masias spouses, is entitled to
damages of P1,275.00 a year from July 10, 1972, which was awarded to it
by the trial court. Needless to say, the corporation may file a case against
the assurance funder under Section 101 of the Land Registration Act and
Section 95 of P.D. No. 1529; but to obviate multiplicity of suits, the award
of damages in its favor should now be upheld.
As regards the sale made by Vitaliana to her sister Maxima, the former can
no longer transmit any property rights over the subject lot when she sold
it to her own sister as she had previously sold the same property to
petitioners. Moreover, as Vitaliana's sister, Maxima was actually a co-
owner of Lot No. 8734-B-5 which, at the time of the sale to petitioners,
was not yet partitioned and segregated. Maxima was, therefore, privy to
the contract. As defined in Basa v. Aguilar, 22 a third person, within the
meaning of Article 1620 of the Civil Code (on the right of legal redemption
of a co-owner) is anyone who is not a co-owner.
On the matter of whether the rights of co-owners had been transgressed
by the sale to the petitioners, the trial court erroneously ruled that there
should be proof of compliance with Article 1623 of the Civil Code requiring
the vendor of the property to give a written notice of sale to the other co-
owners. Said provision of law had been rendered inutile by the fact that
petitioners took possession of the property immediately after the
execution of the deed of sale in their favor and continue to possess the
same. Since the fact of possession by the petitioners had not been
questioned by any of the co-owners, the latter may be deemed to have
knowledge of the sale.
In view of the foregoing, the sale to the petitioners must be respected by
the successors-in-interest of Agaton and Vitaliana. Inasmuch as petitioners
had managed to possess only 12,000 square meters of the 18,625 square
meters they bought from Agaton and Vitaliana, the whole area purchased
by them should be taken from the shares of Agaton and Vitaliana upon
partition of the property.
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE.
Consequently, petitioners are declared the lawful owners of 18,626 square
meters of Lot 8734-B-5, which should be partitioned as prayed for, and the
lot of petitioners taken in equal portions from the shares thereof of
Agaton and Vitaliana or their successors-in-interest. Transfer Certificates
of Title Nos. 9129, 9130, 9094, and 9096 are hereby declared null and
void. Private respondents spouses Luis Masias and Carmen Otadora are
also ordered to pay actual damages to H. Serafica & Sons Corporation at
the rate of P1,275.00 a year from July 10, 1972. Costs against private
respondents except H. Serafica & Sons Corporation.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 97764 August 10, 1992
LEVY D. MACASIANO, Brigadier General/PNP Superintendent,
Metropolitan Traffic Command, petitioner,
vs.
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62, Regional
Trial Court of Makati, Metro Manila, MUNICIPALITY OF PARAAQUE,
METRO MANILA, PALANYAG KILUSANG BAYAN FOR SERVICE, respondents.
Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service.
Manuel de Guia for Municipality of Paraaque.
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking
the annulment of the decision of the Regional Trial Court of Makati,
Branch 62, which granted the writ of preliminary injunction applied for by
respondents Municipality of Paraaque and Palanyag Kilusang Bayan for
Service (Palanyag for brevity) against petitioner herein.
The antecedent facts are as follows:
On June 13, 1990, the respondent municipality passed Ordinance No. 86,
Series of 1990 which authorized the closure of J. Gabriel, 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 said ordinance was approved by the municipal council pursuant to
MMC 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 respondent municipality subject
to the following conditions:
1. That the aforenamed 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;
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 Paraaque Mayor Walfrido N. Ferrer to enter into contract
with any service cooperative for the establishment, operation,
maintenance and management of flea markets and/or vending areas.
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. Consequently, market stalls were put up by
respondent Palanyag on the said streets.
On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP
Superintendent of the Metropolitan Traffic Command, ordered the
destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in
Baclaran. These stalls were later returned to respondent Palanyag.
On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to
respondent Palanyag giving the latter ten (10) days to discontinue the flea
market; otherwise, the market stalls shall be dismantled.
Hence, on October 23, 1990, respondents municipality and Palanyag filed
with the trial court a joint petition for prohibition and mandamus with
damages and prayer for preliminary injunction, to which the petitioner
filed his memorandum/opposition to the issuance of the writ of
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.
On December 17, 1990, the trial court issued an order upholding the
validity of Ordinance No. 86 s. 1990 of the Municipality' of Paraaque and
enjoining petitioner Brig. Gen. Macasiano from enforcing his letter-order
against respondent Palanyag.
Hence, this petition was filed by the petitioner thru the Office of the
Solicitor General alleging grave abuse of discretion tantamount to lack or
excess of jurisdiction on the part of the trial judge in issuing the assailed
order.
The sole issue to be resolved in this case is whether or not an ordinance or
resolution issued by the municipal council of Paraaque authorizing the
lease and use of public streets or thoroughfares as sites for flea markets is
valid.
The Solicitor General, in behalf of petitioner, 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 of
Paraaque. 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 Municipality of Paraaque has been granted by the
legislature 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.
Petitioner also submits that assuming that the respondent municipality is
authorized to close streets, it failed to comply with the conditions set forth
by the Metropolitan Manila Authority for the approval of the ordinance
providing for the establishment of flea markets on public streets. Lastly,
petitioner contends that by allowing the municipal streets to be used by
market vendors the municipal council of respondent municipality violated
its duty under the Local Government Code to promote the general welfare
of the residents of the municipality.
In upholding the legality of the disputed ordinance, the trial court ruled:
. . . that Chanter II Section 10 of the Local Government Code is a statutory
grant of power given to local government units, the Municipality of
Paraaque as such, is empowered under that law to close its roads, streets
or alley subject to limitations stated therein (i.e., that it is in accordance
with existing laws and the provisions of this code).
xxx xxx xxx
The actuation of the respondent Brig. Gen. Levi Macasiano, though
apparently within its power is in fact an encroachment of power legally
vested to the municipality, precisely because when the municipality
enacted the ordinance in question the authority of the respondent as
Police Superintendent ceases to be operative on the ground that the
streets covered by the ordinance ceases to be a public thoroughfare. (pp.
33-34, Rollo)
We find the petition meritorious. In resolving the question of whether the
disputed municipal ordinance authorizing the flea market on the public
streets is valid, it is necessary to examine the laws in force during the time
the said ordinance was enacted, namely, Batas Pambansa Blg. 337,
otherwise known as Local Government Code, in connection with
established principles embodied in the Civil Code an property and settled
jurisprudence on the matter.
The property of provinces, cities and municipalities is divided into property
for public use and patrimonial property (Art. 423, Civil Code). As to what
consists of property for public use, Article 424 of Civil Code states:
Art. 424. 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. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia
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 (Province
of Zamboanga del Norte v. City of Zamboanga, L-24440, March 28, 1968,
22 SCRA 1334). 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 such example of this authority given
by Congress to the local governments is the power to close roads as
provided in Section 10, Chapter II of the Local Government Code, which
states:
Sec. 10. Closure of roads. 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 of thereof shall be close 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. (Emphasis ours).
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. These basic principles 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 (Article 422, Civil Code;
Cebu Oxygen, etc. et al. v. Bercilles, et al., G.R. No. L-40474, August 29,
1975, 66 SCRA 481). 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, Chapter II of Blg. 337,
known as Local Government Code. 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 passes 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 (Cebu Oxygen and Acetylene Co., Inc. v. Bercilles,
et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). 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 by this Court en banc in "Francisco V. Dacanay,
petitioner v. Mayor Macaria Asistio, Jr., et al., respondents, G.R. No.
93654, May 6, 1992." This Court ruled:
There is no doubt that the disputed areas from which the private
respondents' market stalls are sought to be evicted are public streets, as
found by the trial court in Civil Case No. C-12921. A public street is
property for public use hence outside the commerce of man (Arts. 420,
424, Civil Code). Being outside the commerce of man, it may not be the
subject of lease or others contract (Villanueva, et al. v. Castaeda and
Macalino, 15 SCRA 142 citing the Municipality of Cavite v. Rojas, 30 SCRA
602; Espiritu v. Municipal Council of Pozorrubio, 102 Phil. 869; And Muyot
v. De la Fuente, 48 O.G. 4860).
As the stallholders pay fees to the City Government for the right to occupy
portions of the public street, the City Government, contrary to law, has
been leasing portions of the streets to them. Such leases or licenses are
null and void for being contrary to law. The right of the public to use the
city streets may not be bargained away through contract. The interests of
a few should not prevail over the good of the greater number in the
community whose health, peace, safety, good order and general welfare,
the respondent city officials are under legal obligation to protect.
The Executive Order issued by acting Mayor Robles authorizing the use of
Heroes del '96 Street as a vending area for stallholders who were granted
licenses by the city government contravenes the general law that reserves
city streets and roads for public use. Mayor Robles' Executive Order may
not infringe upon the vested right of the public to use city streets for the
purpose they were intended to serve: i.e., as arteries of travel for vehicles
and pedestrians.
Even assuming, in gratia argumenti, 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, to wit:
1. That the aforenamed streets are not used for vehicular traffic,
and that the majority of the residents do(es) 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;
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. (p. 38, Rollo)
Respondent municipality has not shown any iota of proof that it has
complied with the foregoing conditions precedent to the approval of the
ordinance. The allegations of respondent municipality that the closed
streets were not used for vehicular traffic and that the majority of the
residents do not oppose the establishment of a flea market on said streets
are unsupported by any evidence that will show that this first condition
has been met. Likewise, the designation by respondents of a time schedule
during which the flea market shall operate is absent.
Further, it is of public notice that the streets along Baclaran area are
congested with people, houses and traffic brought about by the
proliferation of vendors occupying the streets. To license and allow the
establishment of a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt.
Garcia Extension and Opena streets in Baclaran would not help in solving
the problem of congestion. We take note of the other observations of the
Solicitor General when he said:
. . . There have been many instances of emergencies and fires where
ambulances and fire engines, instead of using the roads for a more direct
access to the fire area, have to maneuver and look for other streets which
are not occupied by stalls and vendors thereby losing valuable time which
could, otherwise, have been spent in saving properties and lives.
Along G.G. Cruz Street is a hospital, the St. Rita Hospital. However, its
ambulances and the people rushing their patients to the hospital cannot
pass through G.G. Cruz because of the stalls and the vendors. One can only
imagine the tragedy of losing a life just because of a few seconds delay
brought about by the inaccessibility of the streets leading to the hospital.
The children, too, suffer. In view of the occupancy of the roads by stalls
and vendors, normal transportation flow is disrupted and school children
have to get off at a distance still far from their schools and walk, rain or
shine.
Indeed one can only imagine the garbage and litter left by vendors on the
streets at the end of the day. Needless to say, these cause further
pollution, sickness and deterioration of health of the residents therein.
(pp. 21-22, Rollo)
Respondents do not refute the truth of the foregoing findings and
observations of petitioners. Instead, respondents want this Court to focus
its attention solely on the argument that the use of public spaces for the
establishment of a flea market is well within the powers granted by law to
a local government which should not be interfered with by the courts.
Verily, the powers of a local government unit are not absolute. They are
subject to limitations laid down by toe 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. Every local government unit has the sworn
obligation to enact measures that will enhance the public health, safety
and convenience, maintain peace and order, and promote the general
prosperity of the inhabitants of the local units. Based on this objective, the
local government should refrain from acting towards that which might
prejudice or adversely affect the general welfare.
As what we have said 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.
The instant case as well as the Dacanay case, involves an ordinance which
is void and illegal for lack of basis and authority in laws applicable during
its time. However, at this point, We find it worthy to note that Batas
Pambansa Blg. 337, known as Local Government Lode, has already been
repealed by Republic Act No. 7160 known as Local Government Code of
1991 which took effect on January 1, 1992. Section 5(d) of the new Code
provides that rights and obligations existing on the date of effectivity of
the new Code and arising out of contracts or any other source of
prestation involving a local government unit shall be governed by the
original terms and conditions of the said contracts or the law in force at
the time such rights were vested.
ACCORDINGLY, the petition is GRANTED and the decision of the
respondent Regional Trial Court dated December 17, 1990 which granted
the writ of preliminary injunction enjoining petitioner as PNP
Superintendent, Metropolitan Traffic Command from enforcing the
demolition of market stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt.
Garcia Extension and Opena streets is hereby RESERVED and SET ASIDE.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24440 March 28, 1968
THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee,
vs.
CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF
INTERNAL REVENUE, defendants-appellants.
Fortugaleza, Lood, Sarmiento, M. T. Yap & Associates for plaintiff-appellee.
Office of the Solicitor General for defendants-appellants.
BENGZON, J.P., J.:
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. As far as can be gleaned from the records, 1 said
properties were being utilized as follows
No. of Lots Use
1 ................................................ Capitol Site
3 ................................................ School Site
3 ................................................ Hospital Site
3 ................................................ Leprosarium
1 ................................................ Curuan School
1 ................................................ Trade School
2 ................................................ Burleigh School
2 ................................................ High School Playground
9 ................................................ Burleighs
1 ................................................ Hydro-Electric Site (Magay)
1 ................................................ San Roque
23 ................................................ vacant
It appears that in 1945, the capital of Zamboanga Province was
transferred to Dipolog. 2 Subsequently, or on June 16, 1948, Republic Act
286 was approved creating the municipality of Molave and making it the
capital of Zamboanga Province.
On May 26, 1949, the Appraisal Committee formed by the Auditor
General, pursuant to Commonwealth Act 39, fixed the value of the
properties and buildings in question left by Zamboanga Province in
Zamboanga City at P1,294,244.00. 3
 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 that law
provided:
Upon the approval of this Act, 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 thereto, 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.
On March 17, 1959, the Executive Secretary, by order of the
President, issued a ruling 4 holding that Zamboanga del Norte had a
vested right as owner (should be co-owner pro-indiviso) of the properties
mentioned in Sec. 50 of Commonwealth Act 39, and is entitled to the price
thereof, payable by Zamboanga City. This ruling revoked the previous
Cabinet Resolution of July 13, 1951 conveying all the said 50 lots and
buildings thereon to Zamboanga City for P1.00, effective as of 1945, when
the provincial capital of the then Zamboanga Province was transferred to
Dipolog.
The Secretary of Finance then authorized the Commissioner of
Internal Revenue to deduct an amount equal to 25% of the regular internal
revenue allotment for the City of Zamboanga for the quarter ending
March 31, 1960, then for the quarter ending June 30, 1960, and again for
the first quarter of the fiscal year 1960-1961. The deductions, all
aggregating P57,373.46, was credited to the province of Zamboanga del
Norte, in partial payment of the P764,220.05 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.
(Stressed for emphasis).
Consequently, the Secretary of Finance, on July 12, 1961, ordered
the Commissioner of Internal Revenue to stop from effecting further
payments to Zamboanga del Norte and to return to Zamboanga City the
sum of P57,373.46 taken from it out of the internal revenue allotment of
Zamboanga del Norte. Zamboanga City admits that since the enactment of
Republic Act 3039, P43,030.11 of the P57,373.46 has already been
returned to it.
This constrained plaintiff-appellee Zamboanga del Norte to file on
March 5, 1962, a complaint entitled "Declaratory Relief with Preliminary
Mandatory Injunction" in the Court of First Instance of Zamboanga del
Norte against defendants-appellants Zamboanga City, the Secretary of
Finance and the Commissioner of Internal Revenue. It was prayed that: (a)
Republic Act 3039 be declared unconstitutional for depriving plaintiff
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 Internal Revenue Commissioner be enjoined
from reimbursing the sum of P57,373.46 to defendant City; and (d) The
latter be ordered to continue paying the balance of P704,220.05 in
quarterly installments of 25% of its internal revenue allotments.
On June 4, 1962, the lower court ordered the issuance of preliminary
injunction as prayed for. After defendants filed their respective answers,
trial was held. On August 12, 1963, judgment was rendered, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring Republic Act
No. 3039 unconstitutional insofar as it deprives plaintiff Zamboanga del
Norte of its private properties, consisting of 50 parcels of land and the
improvements thereon under certificates of title (Exhibits "A" to "A-49") in
the name of the defunct province of Zamboanga; ordering defendant City
of Zamboanga to pay to the plaintiff the sum of P704,220.05 payment
thereof to be deducted from its regular quarterly internal revenue
allotment equivalent to 25% thereof every quarter until said amount shall
have been fully paid; ordering defendant Secretary of Finance to direct
defendant Commissioner of Internal Revenue to deduct 25% from the
regular quarterly internal revenue allotment for defendant City of
Zamboanga and to remit the same to plaintiff Zamboanga del Norte until
said sum of P704,220.05 shall have been fully paid; ordering plaintiff
Zamboanga del Norte to execute through its proper officials the
corresponding public instrument deeding to defendant City of Zamboanga
the 50 parcels of land and the improvements thereon under the
certificates of title (Exhibits "A" to "A-49") upon payment by the latter of
the aforesaid sum of P704,220.05 in full; dismissing the counterclaim of
defendant City of Zamboanga; and declaring permanent the preliminary
mandatory injunction issued on June 8, 1962, pursuant to the order of the
Court dated June 4, 1962. No costs are assessed against the defendants.
It is SO ORDERED.
Subsequently, but prior to the perfection of defendants' appeal,
plaintiff province 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. Over defendants' opposition, the lower court granted plaintiff
province's motion.
The defendants then brought the case before Us on appeal.
Brushing aside the procedural point concerning the property of
declaratory relief filed in the lower court on the assertion that the law had
already been violated and that plaintiff sought to give it coercive effect,
since assuming the same to be true, the Rules anyway authorize the
conversion of the proceedings to an ordinary action, 5 We proceed to the
more important and principal question of the validity of Republic Act 3039.
The validity of the law ultimately depends on the nature of the 50
lots and buildings thereon in question. For, the matter involved here is the
extent of legislative control over the properties of a municipal corporation,
of which a province is one. The principle itself is simple: If the property is
owned by the municipality (meaning municipal corporation) 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. 6
The capacity in which the property is held is, however, dependent on
the use to which it is intended and devoted. Now, which of two norms,
i.e., that of the Civil Code or that obtaining under the law of Municipal
Corporations, must be used in classifying the properties in question?
The Civil Code classification is embodied in its Arts. 423 and 424
which provide:1wph1.t
ART. 423. The property of provinces, cities, and municipalities is
divided into property for public use and patrimonial property.
ART. 424. Property for public use, in the provinces, cities, and
municipalities, consists of the provincial roads, city streets, municipal
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.
(Stressed for emphasis).
Applying the above cited norm, all the properties in question, except
the two (2) lots used as High School playgrounds, could be considered as
patrimonial properties of the former Zamboanga province. Even the
capital site, the hospital and leprosarium sites, and the school sites will be
considered patrimonial for they are not for public use. They would fall
under the phrase "public works for public service" for it has been held that
under the ejusdem generis rule, such public works must be for free and
indiscriminate use by anyone, just like the preceding enumerated
properties in the first paragraph of Art 424. 7 The playgrounds, however,
would fit into this category.
This was the norm applied by the lower court. And it cannot be said
that its actuation was without jurisprudential precedent for in Municipality
of Catbalogan v. Director of Lands, 8 and in Municipality of Tacloban v.
Director of Lands, 9 it was held that the capitol site and the school sites in
municipalities constitute their patrimonial properties. This result is
understandable because, unlike in the classification regarding State
properties, properties for public service in the municipalities are not
classified as public. Assuming then the Civil Code classification to be the
chosen norm, the lower court must be affirmed except with regard to the
two (2) lots used as playgrounds.
On the other hand, applying the norm obtaining under the principles
constituting the law of Municipal Corporations, all those of the 50
properties in question which are devoted to public service are deemed
public; the rest remain patrimonial. Under this norm, 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. 10
Supporting jurisprudence are found in the following cases: (1)
HINUNANGAN V. DIRECTOR OF LANDS, 11 where it was stated that "...
where the municipality has occupied lands distinctly for public purposes,
such as for the municipal court house, the public school, the public
market, or other necessary municipal building, we will, in the absence of
proof to the contrary, presume a grant from the States in favor of the
municipality; but, as indicated by the wording, that rule may be invoked
only as to property which is used distinctly for public purposes...." (2)
VIUDA DE TANTOCO V. MUNICIPAL COUNCIL OF ILOILO 12 held that
municipal properties necessary for governmental purposes are public in
nature. Thus, the auto trucks used by the municipality for street sprinkling,
the police patrol automobile, police stations and concrete structures with
the corresponding lots used as markets were declared exempt from
execution and attachment since they were not patrimonial properties. (3)
MUNICIPALITY OF BATANGAS VS. CANTOS 13 held squarely that a
municipal lot which had always been devoted to school purposes is one
dedicated to public use and is not patrimonial property of a municipality.
Following this classification, Republic Act 3039 is valid 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 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. Said lots considered as public property are the following:
TCT Number Lot Number Use
2200 ...................................... 4-B
...................................... Capitol Site
2816 ...................................... 149
...................................... School Site
3281 ...................................... 1224
...................................... Hospital Site
3282 ...................................... 1226
...................................... Hospital Site
3283 ...................................... 1225
...................................... Hospital Site
3748 ...................................... 434-A-1
...................................... School Site
5406 ...................................... 171
...................................... School Site
5564 ...................................... 168
...................................... High School Play-ground
5567 ...................................... 157 & 158
...................................... Trade School
5583 ...................................... 167
...................................... High School Play-ground
6181 ...................................... (O.C.T.)
...................................... Curuan School
11942 ...................................... 926
...................................... Leprosarium
11943 ...................................... 927
...................................... Leprosarium
11944 ...................................... 925
...................................... Leprosarium
5557 ...................................... 170
...................................... Burleigh School
5562 ...................................... 180
...................................... Burleigh School
5565 ...................................... 172-B
...................................... Burleigh
5570 ...................................... 171-A
...................................... Burleigh
5571 ...................................... 172-C
...................................... Burleigh
5572 ...................................... 174
...................................... Burleigh
5573 ...................................... 178
...................................... Burleigh
5585 ...................................... 171-B
...................................... Burleigh
5586 ...................................... 173
...................................... Burleigh
5587 ...................................... 172-A
...................................... Burleigh
We noticed that the eight Burleigh lots above described are adjoining
each other and in turn are between the two lots wherein the Burleigh
schools are built, as per records appearing herein and in the Bureau of
Lands. Hence, there is sufficient basis for holding that said eight lots
constitute the appurtenant grounds of the Burleigh schools, and partake
of the nature of the same.
Regarding the several buildings existing on the lots above-
mentioned, the records do not disclose whether they were constructed at
the expense of the former Province of Zamboanga. Considering however
the fact that said buildings must have been erected even before 1936
when Commonwealth Act 39 was enacted and the further fact that
provinces then had no power to authorize construction of buildings such
as those in the case at bar at their own expense, 14 it can be assumed that
said buildings were erected by the National Government, using national
funds. Hence, Congress could very well dispose of said buildings in the
same manner that it did with the lots in question.
But even assuming that provincial funds were used, still the buildings
constitute mere accessories to the lands, which are public in nature, and
so, they follow the nature of said lands, i.e., public. Moreover, said
buildings, though located in the city, will not be for the exclusive use and
benefit of city residents for they could be availed of also by the provincial
residents. The province then and its successors-in-interest are not
really deprived of the benefits thereof.
But 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. Said lots are:
TCT Number Lot Number Use
5577 ...................................... 177
...................................... Mydro, Magay
13198 ...................................... 127-0
...................................... San Roque
5569 ...................................... 169
...................................... Burleigh 15
5558 ...................................... 175
...................................... Vacant
5559 ...................................... 188
...................................... "
5560 ...................................... 183
...................................... "
5561 ...................................... 186
...................................... "
5563 ...................................... 191
...................................... "
5566 ...................................... 176
...................................... "
5568 ...................................... 179
...................................... "
5574 ...................................... 196
...................................... "
5575 ...................................... 181-A
...................................... "
5576 ...................................... 181-B
...................................... "
5578 ...................................... 182
...................................... "
5579 ...................................... 197
...................................... "
5580 ...................................... 195
...................................... "
5581 ...................................... 159-B
...................................... "
5582 ...................................... 194
...................................... "
5584 ...................................... 190
...................................... "
5588 ...................................... 184
...................................... "
5589 ...................................... 187
...................................... "
5590 ...................................... 189
...................................... "
5591 ...................................... 192
...................................... "
5592 ...................................... 193
...................................... "
5593 ...................................... 185
...................................... "
7379 ...................................... 4147
...................................... "
Moreover, the fact that these 26 lots are registered strengthens the
proposition that they are truly private in nature. On the other hand, that
the 24 lots used for governmental purposes are also registered is of no
significance since registration cannot convert public property to private.
16
We are more inclined to uphold this latter view. The controversy
here is more along the domains of the Law of Municipal Corporations
State vs. Province than along that of Civil Law. Moreover, this Court is
not inclined to hold that municipal property held and devoted to public
service is in the same category as ordinary private property. The
consequences are dire. As ordinary private properties, they can be levied
upon and attached. They can even be acquired thru adverse possession
all these to the detriment of the local community. Lastly, the classification
of properties other than those for public use in the municipalities as
patrimonial under Art. 424 of the Civil Code is "... without prejudice to
the provisions of special laws." For purpose of this article, the principles,
obtaining under the Law of Municipal Corporations can be considered as
"special laws". Hence, the classification of municipal property devoted for
distinctly governmental purposes as public should prevail over the Civil
Code classification in this particular case.
Defendants' claim that plaintiff and its predecessor-in-interest are
"guilty of laches is without merit. Under Commonwealth Act 39, Sec. 50,
the cause of action in favor of the defunct Zamboanga Province arose only
in 1949 after the Auditor General fixed the value of the properties in
question. While in 1951, the Cabinet resolved transfer said properties
practically for free to Zamboanga City, a reconsideration thereof was
seasonably sought. In 1952, the old province was dissolved. As successor-
in-interest to more than half of the properties involved, Zamboanga del
Norte was able to get a reconsideration of the Cabinet Resolution in 1959.
In fact, partial payments were effected subsequently and it was only after
the passage of Republic Act 3039 in 1961 that the present controversy
arose. Plaintiff brought suit in 1962. All the foregoing, negative laches.
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 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.
Plaintiff'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 plaintiff
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
Commissioner of Internal Revenue, and not in lump sum. Plaintiff's prayer,
particularly pars. 5 and 6, read together with pars. 10 and 11 of the first
cause of action recited in the complaint 17 clearly shows that the relief
sought was merely the continuance of the quarterly payments from the
internal revenue allotments of defendant City. Art. 1169 of the Civil Code
on reciprocal obligations invoked by plaintiff to justify lump sum payment
is inapplicable since there has been so far in legal contemplation no
complete delivery of the lots in question. The titles to the registered lots
are not yet in the name of defendant Zamboanga City.
WHEREFORE, the decision appealed from is hereby set aside and
another judgment is hereby entered as follows:.
(1) Defendant Zamboanga City is hereby ordered to return to plaintiff
Zamboanga del Norte in lump sum the amount of P43,030.11 which the
former took back from the latter out of the sum of P57,373.46 previously
paid to the latter; and
(2) Defendants are hereby ordered to effect payments in favor of
plaintiff of whatever balance remains of plaintiff's 54.39% share in the 26
patrimonial properties, after deducting therefrom the sum of P57,373.46,
on the basis of Resolution No. 7 dated March 26, 1949 of the Appraisal
Committee formed by the Auditor General, by way of quarterly payments
from the allotments of defendant City, in the manner originally adopted by
the Secretary of Finance and the Commissioner of Internal Revenue. No
costs. So ordered.
FIRST DIVISION
ROMAN CATHOLIC BISHOP OF G.R. No. 149145
KALIBO, AKLAN, represented by
BISHOP JUAN N. NILMAR, Present:
Petitioner,
PANGANIBAN, C.J.,
Chairperson,
- versus - YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
MUNICIPALITY OF BURUANGA,
AKLAN, represented by the HON.
PROTACIO S. OBRIQUE, Promulgated:
Respondent.
March 31, 2006
x-----------------------------------------------------------------------------------------x
DECISION
CALLEJO, SR., J.:
Before the Court is the petition for review on certiorari filed by the Roman
Catholic Bishop[1] of Kalibo, Aklan, seeking the partial review of the
Decision[2] dated January 31, 2001 of the Court of Appeals in CA-G.R. CV
No. 52626. Likewise sought to be reviewed is the Resolution dated July 18,
2001 of the appellate court denying the petitioners motion for partial
reconsideration.
Factual and Procedural Antecedents
Some time in 1990, the Roman Catholic Bishop of Kalibo, Aklan, filed with
the Regional Trial Court (RTC) thereof a complaint for declaration of
ownership and quieting of title to land with prayer for preliminary
injunction against the Municipality of Buruanga, Aklan. The case was
docketed as Civil Case No. 4164 and raffled to Branch 1 of the said RTC.
The complaint alleged, among others, that the Roman Catholic Bishop of
Kalibo is the lawful owner and possessor of a parcel of residential and
commercial land (Cadastral Lot No. 138) located at the poblacion of the
Municipality of Buruanga, Aklan. The said lot, with an area of 9,545 square
meters, is a block bounded by four streets on all sides. It is more
particularly described as follows:
A parcel of commercial and residential land known as Cadastral Lot No.
138, GSS-06-00012, located at Poblacion, Buruanga, Aklan, containing an
area of NINE THOUSAND FIVE HUNDRED FORTY- FIVE (9,545) SQUARE
METERS, more or less. Bounded on the North by Viven Ostan Street; on
the East by the Provincial Road; on the South by Nitoy Sualog Street; and
on the West by Emilio Ostan Street, and declared for taxation purposes in
the name of the Roman Catholic Church, Buruanga, Aklan, under Tax
Declaration No. 6339 (1985) and assessed at P23,850.00, including the
improvements thereon.[3]
In 1894, the Roman Catholic Church was built in the middle portion of the
said lot and has been in existence since then up to the present.
The complaint further alleged that some time in 1978,[4] the Municipality
of Buruanga constructed its municipal building on the northeastern
portion of the subject lot after it obtained the permission of Fr. Jesus
Patio, then parish priest of Buruanga. The municipality promised to
remove all the improvements it constructed thereon if and when the
Roman Catholic Bishop of Kalibo needed the said land.
In October 1989, the said municipal building was razed by fire allegedly
perpetrated by members of the New Peoples Army. On November 25,
1989, the Roman Catholic Bishop of Kalibo, through its counsel, wrote to
the Municipal Mayor of Buruanga requesting the officials of the said
municipality to refrain from constructing its new building on the same site
because it is the property of the church. Further, it needed the said land
for its social action projects. The letter reads in part:
I am writing you on behalf of my client THE ROMAN CATHOLIC BISHOP OF
KALIBO, AKLAN, a corporation sole and represented by Bishop Juan N.
Nilmar requesting you and the Honorable Members of the Municipal
Council (Sangguniang Bayan) to refrain from constructing your new
Municipal Building on the same site where your old Municipal Building was
burned down because it is constructed on the property of the Church.
Please be informed that the land of the Church is needed for its social
action projects and additional building, hence, kindly relocate your New
Municipal Building in your own land located along Emilio Ostan Street,
known as Cadastral Lot No. 87.
With respect to your other public buildings such as the Rural Hospital,
Buruanga Community Medicare Hospital, the Basketball Court and the
Grandstand which are all occupying the Church property, you can continue
using the same land subject to your recognition of the true ownership of
the property of the Church The Roman Catholic Church of Buruanga,
Aklan, under the Roman Catholic Bishop of Kalibo, Aklan, the lawful
administrator of all church properties in the Province of Aklan.[5]
On March 12, 1990, the Roman Catholic Bishop of Kalibo wrote the
Department of Public Works and Highways of the said province requesting
the said office not to issue any building permit to the Municipal Mayor
and/or the Municipality of Buruanga in connection with the construction
of its municipal building on the land owned by the Roman Catholic Bishop
of Kalibo.[6]
These letters went unheeded as the construction of the new municipal
building on the same site proceeded. Consequently, the Roman Catholic
Bishop of Kalibo filed the complaint a quo and prayed that it be declared
the lawful owner and possessor of Lot 138. It likewise prayed that a
temporary restraining order be issued to enjoin the said municipality and
its authorized representatives from constructing the new municipal
building thereon and that the latter be directed to pay damages to the
Roman Catholic Bishop of Kalibo.
In its Answer,[7] the Municipality of Buruanga, represented by Mayor
Protacio Obrique, denied that the Roman Catholic Bishop of Kalibo ever
acquired ownership and possession over the land subject of the complaint.
It raised as affirmative defenses that the said lot was surveyed as property
of the municipality on February 3, 1909 in accordance with Section 58 of
Act 926 by A.W. Bushell and approved by the Bureau of Lands on May 15,
1909.[8] Thereafter, a decree was issued on March 14, 1919 in favor of the
Municipality of Buruanga under Case No. 12871 of then Court of Land
Registration, Bureau of Lands.
It was further alleged that the said land was again surveyed in the name of
the Municipality of Buruanga under Act No. 2259 and denominated as Lot
No. 138 GSS-06-00012 from the approved cadastral map and that the said
municipality alone had possessed the said land under the claim of title
exclusively for over fifty (50) years, exclusive of all other rights and adverse
to all other claimants.
The Municipality of Buruanga urged the court a quo to dismiss the
complaint and, instead, declare it the absolute and exclusive owner of the
disputed lot.
On November 29, 1990, the court a quo issued the Order[9] appointing
Geodetic Engineer Rodrigo Santiago of the Bureau of Lands as
Commissioner and directing him to identify and delineate the lot in
question.
In compliance therewith, Engr. Santiago submitted the Commissioners
Report and Sketch stating in part:
That as per order of the court dated November 29, 1990 to delineate the
land [in] question, the undersigned court commissioner notified both
parties and the schedule of survey was January 12, 1991 but it was
postponed and moved to January 15 as requested by the representative
from the Municipality of Buruanga.
That the land in question involved was pointed to me by the Honorable
Mayor of the Municipality of Buruanga, identified on the plan as [L]ot 138
located at Poblacion Buruanga with survey no. GSS-06-00012 approved by
the Director Lands last February 19, 1985, listed as Public Plaza on file in
the CENR Office Land Management Sector, Kalibo, Aklan.
That the Honorable Mayor of the Municipality of Buruanga pointed also
the boundary between the Public Plaza and the Roman Catholic Church.
The Technical Descriptions are as follows:
Lot 138-A (Public Plaza)
corner 1-2 S86 - 03E 65.54 m.
2-3 S03 - 17E 32.36 m.
3-4 N88 - 54W 71.31 m
4-1 N06 - 33E 35.68 m.
containing an area of 2,319 square meters
Lot 138-B (Roman Catholic Church)
1-2 S86 - 03E 65.54 m.
2-3 S03 - 17E 32.36 m.
3-4 N88 - 54W 71.31 m.
4-1 N06 - 33E 35.68 m.
containing an area of 3,836 square meters
Lot 138-C (Public Plaza)
1-2 N81 - 19W 87.70 m.
2-3 N06 - 33E 38.90 m.
3-4 S83 - 17E 80.35 m.
4-1 S03 - 17E 42.57 m.
containing an area of 3,389 square meters[10]
Consistent with the above technical description, the sketch submitted by
Engr. Santiago showed the delineation of Lot 138 into three parts: Lots
138-A, 138-B and 138-C. The municipal building stood on Lot 138-A; the
Roman Catholic Church stood on Lot 138-B and the municipal health
center and the Buruanga Community Medicare building stood on Lot 138-
C. It also showed that portions of Lots 138-A and 138-C were being used as
public plaza.
At the pre-trial, the parties stipulated on the following facts:
1. The identity of the lot in question which is Lot 138 consisting of Lots
138-A, 138-B and 138-C as reflected in the commissioners sketch with an
area of 9,544 square meters and subdivided as follows:
Lot 138-A 2,319 square meters
Lot 138-B 3,836 square meters
Lot 138-C 3,389 square meters
2. Lot 138-B is the present site of the Roman Catholic Church of
Buruanga.[11]
The parties also agreed that the sole issue for resolution is who between
the Roman Catholic Bishop of Kalibo and the Municipality of Buruanga is
the owner of Lot 138.
After due trial, the court a quo rendered its Decision dated October 30,
1995 declaring the Roman Catholic Bishop of Kalibo as the lawful owner
and possessor of Lot 138-B and the Municipality of Buruanga as the lawful
owner and possessor of Lots 138-A and 138-C, the said lots being public
plaza for public use.
The court a quo found that of the various tax declarations[12] presented
by the Roman Catholic Bishop of Kalibo to support its claim, only one
referred to a portion of Lot 138. Said tax declaration[13] covered the
church site and the parish house situated within Lot 138-B. The other
pieces of evidence[14] could not be relied upon because they contained
hearsay information relating to the disputed lot that occurred before the
affiants were born. The affidavit executed by Fr. Jesus Patio[15] stating
that he was the one who gave verbal permission to then Municipal Mayor
Pedro Omugtong to construct the municipal building on the vacant lot
owned by the church was not accorded any evidentiary value because he
(Fr. Patio) did not testify during the trial.
On the other hand, the court a quo did not give credence to the
Municipality of Buruangas Exhibit 1, a microfilm enlargement of a plan
showing that the land consisting of 12,615 square meters was subject of
Land Registration Case No. 12871. The plan showed that the survey was
approved on May 15, 1909 and the notations therein indicated that a
decree was issued on March 14, 1919. But no such decree was shown. It
was further found by the court a quo that the plan was requested from the
Bureau of Lands Survey Division on December 22, 1976. However, the
same was not duly certified by the issuing government agency. Even
assuming that the disputed lot was indeed subject of a land registration
proceeding and a decree had been issued therefor in March 1919, the
Municipality of Buruanga, despite lapse of decades, failed to take the
necessary judicial steps for the issuance of a title in its name based on the
decree. Neither did it take any other course of action that would render its
title thereto indefeasible.
The court a quo, however, gave probative weight to the testimony of
Manuel Sualog, Chief of the Lands Management Section of the
Department of Environment and National Resources, who was presented
by the Municipality of Buruanga. Sualog testified that the disputed lot was
the public plaza of the said municipality. Standing thereon are the Roman
Catholic Church and its parish house, the new municipal hall, the rural
health center, the barangay community hospital and a basketball court.
During the court a quos ocular inspection conducted on May 7, 1992, the
town was celebrating its town fiesta. It observed that the public was using
the whole plaza (in Lots 138-A and 138-C) for the festivities. Also, the
existence of the health centers, basketball court and the municipal hall
showed that portions of the disputed lot were being used by the public.
Upon inspection of the church, the court a quo further observed that it
was indeed an old stone structure and probably built in 1894, the year
carved on its left side entrance. It described the church as vintage turn-of-
the century colonial Filipino church architecture. Moss and ficus grow out
of its wall crevices. The age of the church shows that it has been occupying
that particular space for almost one hundred (100) years long enough for
the plaintiff to have possessed it in the concept of owner continuously,
adversely and publicly against the whole world.[16]
The court a quo held that the facts of the present case were similar to
those in Harty v. Municipality of Victoria,[17] where the Court ruled that:
For the above reasons, x x x it should be held, as we do hereby hold, that
the whole of the land not occupied by the church of the town of Victoria
and its parish house, is a public plaza of said town, of public use and that
in consequence thereof, the defendant is absolved of the complaint
without any special ruling as to the costs of both instances.[18]
The dispositive portion of the court a quos decision reads:
WHEREFORE, judgment is hereby rendered as follows:
1. The Roman Catholic Bishop of Kalibo, Aklan, is declared the lawful
owner and possessor of Lot 138-B with an area of 3,836 square meters in
the Commissioners Report as against the defendant;
2. Defendant Municipality of Buruanga is declared the lawful owner
and possessor of Lot 138-A with an area of 2,319 square meters and Lot
138-C with an area of 3,389 square meters in the Commissioners Report,
said lots being public plaza destined for public use.[19]
The Roman Catholic Bishop of Kalibo seasonably filed its appeal with the
Court of Appeals. It sought the reversal of that portion of the court a quos
judgment adjudicating the ownership of Lots 138-A and 138-C to the
Municipality of Buruanga.
During the pendency of the case in the appellate court, the Roman
Catholic Bishop of Kalibo moved to submit additional evidence to support
its claim of ownership over the entire Lot 138. The additional evidence
consisted of affidavits of old residents of Buruanga stating that the
municipal building was constructed on the disputed lot only in the late
1950s. Prior thereto, the municipal building stood at a place called Sunset
Park, a block totally different from the disputed lot. The said motion was
denied by the appellate court on the ground that the Roman Catholic
Bishop of Kalibo had already been accorded full opportunity to present its
evidence in the court a quo.
The Municipality of Buruanga did not file its appellees brief with the CA.
On January 31, 2001, the appellate court rendered the assailed Decision
affirming with modification the decision of the court a quo. The CA
affirmed the ownership of the Roman Catholic Bishop of Kalibo over Lot
138-B but reversed the court a quos ruling relative to the ownership of
Lots 138-A and 138-C. The appellate court declared the said lots property
of public dominion, hence, not owned by either of the parties.
The CA stated that the court a quo correctly relied on the ruling in Harty,
which was reiterated in Bishop of Calbayog v. Director of Lands,[20] where
the Court held that the public plaza and public thoroughfare were not
subject to registration by the church. In the latter case, it was ruled that
since neither the Church nor the municipality presented positive proof of
ownership or exclusive possession for an appreciable period of time, and
the only indubitable fact was the free and continuous use of the lot in
question by the residents of the town, which had no other public plaza to
speak of other than the disputed lot, there was a strong presumption that
the same had been segregated as a public plaza upon the founding of the
municipality therein.
As mentioned earlier, the appellate court reversed that portion of the
court a quos judgment declaring the Municipality of Buruanga as the
owner of Lots 138-A and 138-C which form part of the public plaza. Citing
Articles 419[21] and 420[22] of the Civil Code, the appellate court
classified these lots as property of public dominion; hence, not susceptible
to private ownership by the Municipality of Buruanga. The said lots are
merely under its jurisdiction and administration. Being intended for the
common and public welfare, they could not be appropriated either by the
State or by private persons.
The dispositive portion of the assailed CA decision reads:
WHEREFORE, upon the premises, the appealed decision is AFFIRMED with
the MODIFICATION that Lots 138-A and 138-C are declared property of
public dominion not owned by either of the parties.[23]
The Roman Catholic Bishop of Kalibo moved for a partial reconsideration
of the appellate courts ruling that Lots 138-A and 138-C, being the public
plaza, are property of public dominion. The Roman Catholic Bishop of
Kalibo averred that the appellate court erred in affirming the finding of the
court a quo that these lots comprise the public plaza. It maintained that it
owned the entire Lot 138.
The appellate court denied the motion for partial reconsideration, hence,
the recourse to this Court by the Roman Catholic Bishop of Kalibo (the
petitioner).
The Petitioners Arguments
The present petition for review on certiorari alleges that:
I. THE COURT OF APPEALS GRIEVOUSLY ERRED IN RELYING UPON THE
CASES OF HARTY V. MUNICIPALITY OF VICTORIA, TARLAC (13 Phil. 152
[1909]) and BISHOP OF CALBAYOG V. DIRECTOR OF LANDS (45 SCRA 418
[1972]) TO SUPPORT ITS CONCLUSION THAT THE PETITIONER IS NOT THE
OWNER OF LOTS 138-A AND 138-C.
II. THE COURT OF APPEALS GRIEVOUSLY ERRED IN FINDING THAT LOTS
138-A AND 138-C [WHICH ARE WITHIN THE ORIGINAL LOT 138] ARE
PROPERTIES OF THE PUBLIC [DOMAIN] AND NOT SUSCEPTIBLE TO PRIVATE
OWNERSHIP BY THE PETITIONER.

III. THE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT REFUSED TO
RECOGNIZE THAT PETITIONERS OWNERSHIP OF THE ENTIRE LOT 138 WAS
GRANTED AND RECOGNIZED UNDER SPANISH LAW, AND AFFIRMED IN THE
TREATY OF PARIS.[24]
The petitioner clarifies that it is seeking a partial review of the appellate
courts Decision dated January 31, 2001 classifying Lots 138-A and 138-C as
property of public dominion and not susceptible to private ownership and
that the petitioner is not entitled to the possession and ownership
thereof. It is not contesting the portion of the CA decision upholding its
ownership over Lot 138-B.
The petitioner opines that the case of Harty, relied upon by the court a
quo and the CA to hold that Lots 138-A and 138-C comprise the public
plaza, are inapplicable because the facts therein are not similar to those of
the present case. The petitioner points out that the public plaza referred
to in Harty was the lot across the street from the church lot. It was not
referring to the land surrounding the Catholic church and the convent of
the town of Victoria, which was bounded by streets on each of its four
sides. Thus, when the Court in Harty limited the ownership of the church
to the land occupied by the church of the town of Victoria and its parish
house, it was not confining the ownership to a portion of the lot on which
the church and parish house were situated. Rather, the Court in Harty
referred to the entire lot or block (bounded by a street on each of the four
sides) on which the church and its parish house were erected.
The petitioner asserts that the following facts that have been established
support its claim of ownership over the entire Lot 138 as against the claim
of the Municipality of Buruanga (respondent municipality):
[a] The church is built in the middle of Lot 138 (which is now Lot 138-B). It
was built therein in 1894. The church was almost 100 years old (at the
time the case was instituted with the trial court in 1990). x x x
[b] The Municipality of Buruanga is an old municipality constituted or
created during the colonial period, when the Philippine Islands was under
the Spanish sovereignty. x x x
[c] No building was built on Lot 138 earlier than or at about the same time
as the church. No municipal building was built around the church for many
decades after 1894. x x x
[d] The municipal hall of Buruanga was built on what is now Lot 138-A only
in the late 1950s. x x x
[e] It was not controverted by the private respondent that then Mayor
Omugtong of Buruanga sought and obtained the permission of the then
parish priest, Fr. Jesus Patino, to allow the municipal government to build
its municipal hall on Lot 138-A in the late 1950s only. x x x
[f] No evidence was adduced by private respondent that it had obtained
title of Lot 138-A or 138-C from the church (the owner of these lots) or
that its possession of any portion of Lot 138 was adverse to that of the
church. x x x
[g] When the municipal hall was burned down by the NPA rebels in 1989
the church asked the municipal government to relocate the municipal hall
elsewhere since it (church) needed the lot for itself.
[h] Because the municipal government resisted and for the first time
exhibited a possession adverse to the church, the petitioner promptly filed
the instant suit before the lower court for quieting of title to the subject
lot (the entire Lot 138) and to be declared the owner of such property.
[i] The church has been in continuous, open, adverse, notorious
possession of the entire Lot 138 in the concept of owner since at least
1894 until the late 1950s. x x x
[j] No evidence has been shown that Lots 138-A and 138-C were devoted
for public use or for use as a public plaza before 1894 or even at about the
time the church was built on Lot 138. x x x
[k] The only evidence as to the supposed character of Lot 138-C as a public
plaza is a survey plan allegedly approved on 15 May 1909 denominated as
[GSS]-06-00012, Buruanga Settlement Project, approved only in 1984.
Petitioner was not notified of this survey. x x x
[l] The real property tax declaration presented by private respondent to
establish its supposed possession (Exhs. 4, 4-a, and 4-b, Record, pages 45-
47) covered the year 1992 only.
[m] Witness Jaime S. Prado, Sr. (who was born on 17 December 1905 and
coming to the age of reason when he was about 10 years old) testified
that as far as he can remember (since he was grade 1) he was brought to
mass by his elders at the church of Buruanga, which was the very same
church as of the time he testified in 1992, and was active in church
activities in that church (e.g., tsn, 9 January 1992, pages 5, 16); that the
property of the church was bounded on all four sides by the very same
streets that bounded it at the time he testified (ibid., at page 6-8).
[n] Private respondent indirectly judicially admitted that it has no title
(Torrens or otherwise) to the subject properties when its star witness (the
incumbent Mayor Protacio Obrique of Buruanga) testified that the
properties in the poblacion of Buruanga are not covered by any title (tsn,
27 July 1992, page 5).[25]
The petitioner contends that the pronouncement in Bishop of Calbayog,
cited by the appellate court, does not support its decision. Instead, it
actually supports the petitioners claim of ownership over Lot 138,
including Lots 138-A and 138-C. In the said case, the lot (Lot 2) that was
declared by the Court as plaza was a separate and distinct lot separated
from the church lot (Lot 1) by a provincial road. Lot 1, held to be owned by
the church in the said case, included not only the space occupied by the
church, belfry, convent, parish school and nuns residence, but also the
empty space which only had concrete benches as improvements thereon
and which was used as a public playground.
The petitioner also cites Roman Catholic Bishop of Jaro v. Director of
Lands,[26] where the Court recognized that under the Laws of the Indies
(Leyes de las Indias), the law in force in the Philippine Islands during the
Spanish regime, the property of the church in the pueblos consisted of one
parcel of land which meant not only the two buildings but also the land
adjacent and contiguous to said buildings, that is, the parcel which by itself
constitutes one whole piece of land bounded on its four sides by streets,
and within which said buildings, the church and the convent, are
situated.[27]
According to the petitioner, the appellate court erred in affirming the
finding of the court a quo that Lots 138-A and 138-C comprise the public
plaza. Unlike in Harty, no evidence was allegedly adduced to show that
from the time respondent municipality was created these two lots had
been set aside for the public.
Harty is not applicable, the petitioner expounds, because it was
indubitably established therein that the plaza was used without let or
hindrance by the public and the residents of Victoria ever since its
creation. In contrast, in the present case, there was allegedly no evidence
to show that Lots 138-A and 138-C were set aside as the public plaza, or
for any public purpose, when the Municipality of Buruanga was created
during the Spanish period. The evidence, in fact, show that the entire Lot
138, bounded on all its four sides by streets, belonged to the church and it
had continuous use and occupation thereof since 1894 when it
constructed its church in the middle of Lot 138. No such use of Lot 138-A
and 138-C as the public plaza for the same length of time or from 1894
had been shown.
The petitioner assails the reliance by the appellate court on the court a
quos statement during its ocular inspection on Lot 138 in 1992 that it
observed that the property was occupied by the Roman Catholic Church, a
parish house, the municipal hall and three of its municipal edifices, and a
basketball court. Based on this observation, the court a quo concluded,
and the appellate court affirmed, that Lots 138-A and 138-C comprise the
public plaza. The petitioner objects to this conclusion stating that the same
cannot overcome the evidence in favor of the church as to its ownership
over these lots traced back to 1894 when it constructed the church in the
middle of Lot 138 or what is now Lot 138-B.
It reiterates that under the Laws of the Indies, when a municipality was
created, the church was assigned a property consisting of a parcel of land
bounded on all its four sides by streets, and that the public plaza was
situated not on the same parcel of land assigned to the church but on a
distinct lot separated by a street from that assigned to the church.
The petitioner likewise argues that even if it, as the owner of the entire Lot
138, allowed respondent municipality to build its municipal hall on what is
now Lot 138-A in the late 1950s by mere tolerance of the parish priest, it
does not necessarily follow that Lot 138-A had become property of public
dominion. It does not allegedly lose its possession or ownership over the
property if the possession or use by another of the same is by mere
tolerance.
Respondent municipality, through its Mayor Protacio Obrique during his
testimony, allegedly admitted that respondent municipalitys lot was
located in a portion designated as Lot 2 in its Exhibit 1. The said lot was
along the beach and separated from Lot 138 by Emilio Ostan Street. The
alleged import of this admission is that the entire Lot 138 (designated as
Lot 1 in Exhibit 1) was assigned solely to the church since a different lot
was assigned to respondent municipality.
The petitioner avers that Buruanga is an ancient Spanish town and that
when it was created the Spanish authorities assigned a distinct and
separate lot for its municipal government or pueblo where it could build
its municipal hall or casa real. It could thus be assumed that the casa real
of respondent municipality would be built at about the same time as the
church or around 1894. The petitioner contends that nothing in the
evidence suggests that the casa real was built on Lot 138 during the said
period. It was only in the late 1950s that the municipal hall was built
thereon upon the permission granted by the parish priest.
Refuting respondent municipalitys view that it is unthinkable that the
church would be given a bigger property than the municipal government,
the petitioner submits that such notion is not far fetched considering that
the primary aim of the Spaniards at the time was to spread the Catholic
faith to the colonies.
That the entire Lot 138 belonged to the petitioner is allegedly supported
by the practice during the Spanish period, as shown by the layout of the
church convent and church plaza in practically all the old towns in the
Philippines and the early cases[28] decided by the Court, to invariably
provide the church with spacious grounds bounded by the four principal
streets of the town.
Even without any document or certificate of title thereto, the petitioner
bases its claim of ownership over Lot 138 under the Spanish Law as
recognized and affirmed under the Treaty of Paris. It cites Roman Catholic
Apostolic Church v. Municipality of Placer[29] where the Court recognized
that the church is entitled not only to possession of its properties but to
ownership thereof. Bishop of Jaro was again invoked by the petitioner as
the Court explained therein that it did not find it strange that the church
was unable to exhibit a written title to its property since the Laws of the
Indies in force during the Spanish regime dictated the layout of the towns
and assigned the locations of the church, square and government
administration buildings. The provisions of the Laws of the Indies
pertaining thereto were held to be sufficient to secure the registration in
the name of the church of its land.
The petitioner asserts that even granting arguendo that Lot 138 was not
assigned to it during the Spanish regime or is not owned by it pursuant to
the Laws of the Indies, still, it had acquired ipso jure or by operation of law
a government grant, a vested title, to the disputed lot by virtue of its open,
continuous, exclusive and notorious possession and occupation thereof
since 1894. In support of this contention, the petitioner cites Subsection 6
of
Section 54 of Act No. 926, which became effective on July 26, 1904, and
which provided that:
6. All persons who by themselves or their predecessors in interest have
been in the open, continuous, exclusive and notorious possession and
occupation of agricultural public lands, as defined by said Act of Congress
of July first, nineteen hundred and two, under a bona fide claim of
ownership except as against the Government, for a period of ten years
next preceding the taking effect of this Act, except when prevented by war
or force majeure, shall be conclusively presumed to have performed all
the conditions essential to a government grant and to have received the
same, and shall be entitled to a certificate of title to such land under the
provisions of this chapter.
It is allegedly clear that as early as July 26, 1904, when Act No. 926 took
effect, the petitioner had already acquired a government grant, a vested
title, to Lot 138.
Subsection b of Section 45 of Act No. 2874, approved on November 9,
1919, which amended Act No. 926, is similarly cited by the petitioner. It
provided that:
(b) Those who by themselves or their predecessors in interest have been
in the open, continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain, under a bona fide
claim of acquisition of ownership, except as against the Government, since
July twenty-sixth, eighteen hundred and ninety-four, except when
prevented by war or force majeure. These shall be conclusively presumed
to have performed all the conditions essential to a government grant and
shall be entitled to a certificate of title under the provisions of this
chapter.
On the basis of the foregoing provisions, a land registration proceeding
instituted would, according to the petitioner, in truth be little more than a
formality, at the most limited to ascertaining whether the possession
claimed is of the required character and length of time, and registration
thereunder would not confer title, but simply recognize a title already
vested.
In addition to its arguments on the merits of the case, the petitioner
assails the appellate courts denial of its motion to submit additional
evidence which would have showed that the casa real of respondent
municipality, together with its plaza (Sunset Park Plaza), was located on a
distinct lot (Lot 2) separated from Lot 138 by Emilio Ostan Street.
The petitioner urges the Court to reverse and set aside the portion of the
appellate courts decision declaring Lots 138-A and 138-C as property of
public dominion and to declare the petitioner the absolute owner of the
entire Lot 138. In the alternative, the petitioner prays that it be allowed to
submit additional evidence of its ownership over Lots 138-A and 138-C.
Respondent Municipalitys Counter-arguments
For its part, respondent municipality contends that, except for the figures
1894 etched on the left wall of the church, the petitioner has not
presented any evidence to show that it had continuous possession of the
entire Lot 138 since the turn of the twentieth century. The petitioner is
allegedly of the mistaken belief that because it possessed Lot 138-B, it
must have likewise possessed Lots 138-A and 138-C. Respondent
municipality claims that it is the one that has been exercising acts of
exclusive ownership over the disputed lot.
The petitioner has allegedly misread Harty and Bishop of Calbayog in
claiming that in cases involving the church, the lot adjudicated to it
invariably consisted of the entire block, bounded by a street on each of the
four sides, and the public plazas were situated in separate blocks. While it
may true that many church properties occupy an entire block in certain
municipalities, it is allegedly equally true that other church properties
occupy only portions thereof depending on the exigencies of the locality at
the time when the church was being established.
In those instances that the Court allegedly adjudicated an open space in
favor of the church, the local government was not shown to have
exercised dominion over the property and the church has consistently
established some control over it, like the putting up of a religious
monument thereon. On the other hand, in the present case, respondent
municipality insists that it has laid adverse claim over Lot 138 as early as
1909 when it applied for title over it and was even issued a decree over
the said lot. Respondent municipality places its actual, public and adverse
possession of Lot 138 at the latest in 1958 when it built its old municipal
hall on the said site. Its occupation prior thereto could also be allegedly
presumed from its actual possession thereof.
The petitioner has allegedly failed to establish that the construction of the
old municipal building in 1958 was by mere tolerance on its part.
Respondent municipality harps on the failure of the petitioner to present
as its witness Fr. Patio, the parish priest who supposedly gave respondent
municipality permission to construct its municipal building on the disputed
lot. Respondent municipality denies ever seeking such permission. Further,
the tax declaration (Exhibit B) of the petitioner only pertained to Lot 138-B
proving that its ownership was limited to the said lot and did not extend to
Lots 138-A and 138-C.
Respondent municipality avers that it is already contented with the
decision of the appellate court although the latter allegedly erred in
concluding that Lots 138-A and 138-C are property of public dominion
without taking into consideration that respondent municipality applied for
the issuance of title covering the disputed lot and was issued a decree
thereto in 1919. The admission of Mayor Obrique, during his testimony,
that respondent municipality owned the lot along the beach (Lot 2) and
situated across the street from Lot 138 could not be allegedly taken to
mean that the Mayor was disclaiming ownership over Lot 138.
Respondent municipality theorizes that in those cases[30] that the Court
upheld the ownership of the church over a subject property, the same
have ever since remained the property of the church and have been in its
peaceful possession. Further, there were no adverse claimants and the
primary issue being resolved was whether, despite non-compliance with
procedural requirements, title may be granted in favor of the church.
Respondent municipality distinguishes the present case from those cases
in that there is an open contest over the ownership and possession of Lots
138-A and 138-C and respondent municipality has in its favor actual and
adverse possession thereof. It emphasizes that there is nothing in fact and
in law that would support the petitioners bare claim of ownership and
possession over Lots 138-A and 138-C. On the contrary, there is allegedly
strong evidence showing respondent municipalitys exercise of proprietary
and governmental rights over the said lots where it has constructed
permanent structures, e.g., municipal building, community hospital, health
center, social hall/basketball court, and where public functions are openly
conducted.
Respondent municipality urges the Court to dismiss the petition and,
instead, to affirm the decision of the court a quo declaring it the lawful
owner and possessor of Lots 138-A and 138-C.
Issue
The substantive issue to be resolved is whether the appellate court
correctly declared Lots 138-A and 138-C as property of public dominion,
hence, not susceptible to ownership by either the petitioner and
respondent municipality.
Since respondent municipality no longer sought the review of the assailed
decision of the appellate court, the Court shall mainly resolve the merits of
the petitioners claim of ownership over Lots 138-A and 138-C vis--vis the
appellate courts holding that they are of public dominion, hence, not
susceptible to private ownership.
The Courts Ruling
The petition is denied.
The Laws of the Indies and the cases cited
by the petitioner do not support its claim
of ownership over Lots 138-A and 138-C
The petitioner anchors its claim of ownership over Lots 138-A and 138-C
on its theory that the entire Lot 138, bounded on all its four sides by
streets, was assigned to it as far back as 1894 when the church was built in
the middle of the said lot. The cases it cited allegedly stand for the
proposition that under the Laws of the Indies, when a municipality was
created, the church was assigned a property consisting of a parcel of land
bounded on all its (four) sides by streets, and that the public plaza was
situated not on the same parcel of land assigned to the church but on a
distinct parcel of land separated from the parcel of land assigned to the
church by a street.[31]
This allegation fails to persuade. The pertinent provision of the Laws of the
Indies relating to the designation of a parcel of land for the church upon
the establishment of a town or pueblo during the Spanish regime reads:
Ley viij. Que se fabriquen el Templo principal en el sitio, y disposicion, que
se ordena, y otras Iglesias, y Monasterios.
En lugares Mediterrneos no se fabrique el Templo en la plaza, sino algo
distante de ella, donde est separado de otro qualquier edificio, que no
pertenezca su comodidad y ordenato, y porque de todas partes sea visto, y
mejor venerado, est algo levantado de suelo, de forma que se haya de
entrar por gradas, y entre la plaza mayor, y Templo se edifiquen las Casas
Reales, Cabildo, Concejo, Aduana, y Atarazana, en tal distancia, que
autoricen al Templo, y no le embaracen, y en caso de necesidad se puedan
socorrer, y si la poblacion fuere en Costa, dispngase de forma que en
saliendo de Mar sea visto, y su fbrica como defensa del Puerto, sealando
solares cerca de l, y no su continuacion, en que se fabriquen Casas Reales,
y tiendas en la plaza para propios, imponiendo algun
moderado tributo en las mercaderas: y asmismo sitios en otras plazas
menores para Iglesias Parroquiales, y Monasterios donde sean
convenientes.[32]
The above provision prescribed that the church be built at some distance
from the square, separate from other buildings in order that it may be
better seen and venerated, and raised from the ground with steps leading
to it. It decreed that government administration buildings, including casas
reales, be built between the main square and the church and at such
distance as not to shut the church from view. In cases of coastal towns,
the church was to be constructed in such location as to be seen by those
coming from the sea and serve for the defense of the port.
The other provisions of the Laws of the Indies on the establishment of new
towns or pueblos in the archipelago, including the designation of lands for
the church, casa reales (municipal buildings) and public squares, had been
discussed by the Court in this wise:
xxx
The executive authorities and other officials who then represented the
Spanish Government in these Islands were obliged to adjust their
procedure, in the fulfillment of their duties with regard to the
establishment and laying out of new towns, to the Laws of the Indies,
which determined the course that they were to pursue for such purposes,
as may be seen by the following:
Law 6, title 5, book 4, of the Recompilation of the Laws of the Indies,
provides, among other things:
"That within the boundaries which may be assigned to it, there must be at
least thirty residents, and each one of them must have a house," etc.
Law 7 of the same title and book contains this provision:
"Whoever wishes to undertake to establish a new town in the manner
provided for, of not more than thirty nor less than ten residents, shall be
granted the time and territory necessary for the purpose and under the
same conditions."
It may be affirmed that years afterwards all the modern pueblos of the
Archipelago were formed by taking as a basis for their establishment the
barrios already populated by a large number of residents who, under the
agreement to build the church of the new pueblo, the court-house and
afterwards the schoolhouse, obtained from the General Government the
administrative separation of their barrio from the pueblo on which it
depended and in whose territory it was previously comprised. In such
cases procedure analogous to that prescribed by the Laws of the Indies
was observed.
For the establishment, then, of new pueblos, the administrative authority
of the province, in representation of the Governor-General, designated
the territory for their location and extension and the metes and bounds of
the same; and before the allotting the lands among the new settlers, a
special demarcation was made of the places which were to serve as the
public square of the pueblo, for the erection of the church, and as sites for
the public buildings, among others, the municipal building or the casa real,
as well as of the lands which were to constitute the commons, pastures,
and propios of the municipality and the streets and roads which were to
intersect the new town were laid out, as may be seen by the following
laws:
Law 7, title 7, book 4, of the Recompilation of the Laws of the Indies,
provides:
"The district or territory to be given for settlement by composition shall be
allotted in the following manner: There shall first be set apart the portion
required for the lots of the pueblo, the exido or public lands, and pastures
amply sufficient for the stock which the residents may have, and as much
more as propios del lugar or common lands of the locality; the rest of the
territory and district shall be divided into four parts one of them, of his
choice, shall be for him who takes upon himself the obligation to found
the pueblo, and the other three shall be apportioned equally among the
settlers."
Law 8, of the same title and book, prescribes, among other things:

"That, between the main square and the church, there shall be
constructed the casas reales or municipal buildings, the cabildo, concejo,
customs buildings," etc.
Law 14 of the said title and book, also directs among other things:
"That the viceroys shall have set aside such lands as to them appear
suitable as the common lands (propios) of the pueblos that have none,
therewith to assist in the payment of the salaries of the corregidores, and
sufficient public lands (exidos) and pasture lands as provided for and
prescribed by law."
Law 1, title 13 of the aforesaid book, provides the following:
"Such viceroys and governors as have due authority shall designate to
each villa and lugar newly founded and settled the lands and lots which
they may need and may be given to them, without detriment to a third
party, as propios, and a statement shall be sent to us of what was
designated and given to each, in order that we may have such action
approved."[33]
Nowhere in the above provisions was it stated that the parcel of land
designated for the church of the town or pueblo was, in all cases, to be an
entire block or bounded on all its four sides by streets. The petitioner thus
erroneously asseverates that the said ancient laws sustain its claim of
ownership over the entire Lot 138.
Neither can it find support in the cases that it cited. A careful review of
these cases reveal that, in those instances where the Court upheld the
claim of the church over a parcel of land vis--vis that of the municipality or
national government, the ownership and possession by the church of the
same had been indubitably established by its exclusive exercise thereon of
proprietary acts or acts of dominion.
For example, in Bishop of Calbayog v. Director of Lands,[34] which
according to the petitioner supports its case, the Court adjudicated in
favor of the church the ownership of Lot 1 (except the portion thereof
occupied by a public thoroughfare) including not only the space occupied
by the church, belfry, convent, parish school and nuns residence, but also
the empty space which only had concrete benches as improvements
thereon.
With respect to the empty space (eastern portion of Lot 1), the Court
noted the following:
x x x The eastern portion of Lot 1, the area in contention, is an empty
space except for concrete benches along the perimeter. A partly cemented
path runs across this lot from east to west leading up to the front or
entrance of the church and appears to be an extension of Anunciacion St.,
which runs from the bank of the Catarman river up to Mendiola St. In the
middle of this path, half-way between Mendiola St. and the church, is a
statue of the Sacred Heart of Jesus.
xxx
x x x The Roman Catholic Church had made no improvements on this
eastern portion of Lot 1, which at present is being used as a public
playground, although a bandstand stood there for about three years after
it was constructed in 1926 by the members of an orchestra which was
organized by a Fr. Ranera and which used to give musical performances on
the bandstand. On the feast of Corpus Christi the parishioners would
construct an altar on this lot and hold the procession there.[35]
It is apparent that the Court adjudicated to the church the ownership of
Lot 1 (except a portion thereof which was a public thoroughfare) because
the latter was able to establish that it had exercised acts of possession or
ownership over the same including over its empty space. In particular, the
empty space was used for religious functions, such as the Feast of Corpus
Christi and the procession held on the occasion and the church did not ask
for any permit from the local authorities whenever it used the said space
for such activities.
In the present case, the petitioner has not shown that, at one time after
the church was built in 1894 in the middle of Lot 138 (now Lot 138-B), it
exercised acts of ownership or possession over Lots 138-A and 138-C as
well.
It must be emphasized that the petitioners allegation that it merely
tolerated the construction of not only the municipal building but also the
other improvements thereon, e.g., the rural health center, Buruanga
community Medicare hospital, basketball court, Rizal monument and
grandstand, has remained unsubstantiated. The affidavit of Fr. Patio was
correctly not given any credence since he was not presented on the
witness stand; thus, considered hearsay. Hearsay evidence is generally
excluded because the party against whom it is presented is deprived of his
right and opportunity to cross-examine the person to whom the statement
or writing is attributed.[36]
The testimony of Mr. Jaime S. Prado, Sr., an octogenarian and resident of
Buruanga, cannot likewise be given any credence because it consisted only
of a bare assertion that the church building and the land on which it was
built, bounded by streets on all its four sides, were the petitioners
property.[37] He based this statement on the fact that as a child he heard
masses at the church with his parents. This assertion, without more or
without any corroborative evidence, is not sufficient to establish the
petitioners ownership over Lots 138-A and 138-C especially in light of the
fact that Mr. Prado is not competent to testify on the matter because he
had no actual personal knowledge with respect to any transactions
involving Lot 138:
FISCAL DEL ROSARIO:
Q Now, when you were President of the Parish Council, have you access of
any documents relating to church properties in Buruanga, Aklan?
A Never.
Q Now, you have stated that the boundaries of the property of the
[R]oman [C]atholic [C]hurch in Buruanga, Aklan has previous names thus,
the present name of Viven Ostan, Nitoy Sualog and Emilio Ostan is at
present now. My question is, what was the previous names of these
roads?
A Of Nitoy Sualog, that was Malilipayon Street. The Provincial road street,
before that was Kaaganhon street, West, Emilio Ostan, before that was
Kahaponanon Street and instead of Viven Ostan, that was Kabulakan
Street.
Q So, you will agree with me Mr. Witness so, that previous names is not in
any way related to the names of former parish priest[s] of Buruanga, Aklan
or saints, am I right?
A No, sir.
Q You know very well Rev. Jesus Patinio and Mayor Pedro Omugtong?
A Yes, sir.
Q Now, do you remember if there was any transaction of them during
your lifetime?
A This Padre Patinio and I were close friends. Mr. Omugtong met Patinio[,]
talked together about the land they agreed[,] and I dont know what is
there (sic) agreement but the building was constructed then.
Q Were you present during the talked (sic) of Rev. Jesus Patinio and Mayor
Pedro Omugtong?
A No, sir.
Q You identified in this Exhibit F as Municipal Hall, Rural Health Unit
Hospital, the Buruanga Community Hospital, Basketball Court and the
Grandstand. Now, my question is, are these buildings constructed by the
[R]oman [C]atholic [C]hurch?
A Not one.[38]
Even the affidavits of the other residents of Buruanga, which were also
properly considered hearsay, made no mention of any instance where the
petitioner exercised acts of dominion over Lots 138-A and 138-C. These
affidavits uniformly stated:
That we have been residing in this Municipality since birth and that we
have full knowledge of the site where the church now stands;
That during the Pre-Spanish time, the site of the town proper was
swampy, fishermen used to fish in the swamp, trees of different kinds
grows (sic) along the beach;
That when the Spaniards arrived in our town, they introduced education
and religion;
That because there was no site for the church, the Spaniards forced the
inhabitants to work for the filling up of the swamp, men are hauling
stones[,] and women[,] sand and gravel;
That after so many years of hard labor the swamp was filled up and then
the friars build a church in the center of the town;
That as far as we are concerned the site where the church now stand and
the surrounding area and the site where the present Municipal building
now stands is even the part of the property of the church and not the
property of the municipality as allege (sic) by the Mayor;
That we execute this affidavit with our own free act and voluntary
deed.[39]
The information proffered by these affidavits could not have been based
on the personal knowledge of the affiants because they obviously were
not yet born when the events they narrated took place.[40]
Like in Bishop of Calbayog, the Court in Hacbang v. Director of Lands[41]
adjudicated to the church the ownership of two parcels of land,
designated as Lots 1 and 2 despite the opposition of the Director of Lands
who claimed that a portion on the eastern part of Lot 1 and the entire Lot
2 were public plazas. The Court affirmed the ownership of the church over
these lots upon the following findings:
It is inferred from the foregoing facts which are held to have been
indisputably established by the evidence, that the disputed portion of lot
No. 1 as well as the entire lot No. 2 belongs to the Roman Catholic
Apostolic Church of the Diocese of Samar and Leyte. It cannot be denied
that said church, for more than half a century, was in the possession of
said lands together with the church, belfry and convent which existed first
on lot No. 1 and later provisionally on lot No. 2. The fact that the catholic
cemetery was located on lot No. 2 and that the stone posts and pillars
were later erected thereon, thereby converting it into a place for the
celebration of the Way of the Cross, conclusively proves that the property
belonged to the church and that the latter's possession has constantly
been under claim of ownership.
x x x [I]t must be presumed upon these facts that said portion formed part
of the parcels of land assigned and adjudicated by the authorities to the
Roman Catholic Apostolic Church in said town for the erection of the
church, belfry, convent and cemetery, all of which, as everybody knows,
are necessary for the practice and celebration of the cults of said
religion.[42]
The proprietary acts exercised by the church over the disputed lots
consisted of the construction thereon of the church, belfry, convent and
cemetery. Moreover, it conducted thereon the Way of the Cross and other
religious celebrations.
Unlike in the Bishop of Calbayog and Hacbang, in the present case, the
petitioner has not shown that it exercised proprietary acts or acts of
dominion over Lots 138-A and 138-C, to the exclusion of others, to
buttress its claim of ownership over these lots.
Neither can the petitioner rely on Roman Catholic Bishop of Jaro v.
Director of Lands[43] where the Court categorically made the finding that
the lot in question (Lot 3) had been in the possession of the church, as
owner, for a time sufficiently long for purposes of prescription. In a prior
case[44] involving the said lot, the Court adjudged that the church was
entitled to the possession of the following property situated in the
Municipality of Sibalom: The Church of Sibalom, the convent, contiguous
to the same, and the land occupied by these two buildings.
The Court interpreted the phrase "land occupied by the church and its
convent" to mean not only the two buildings, but also the land adjacent
and contiguous to said buildings, that is, the parcel which by itself
constitutes one whole piece of land bounded on its four sides by streets,
and within which said buildings, the church and the convent, are
situated.[45]
Significantly, the parcel of land that was adjudicated in favor of the church
was the land adjacent and contiguous to said buildings, i.e., church and
convent. The word adjacent has been defined as follows:
The word adjacent is of Latin derivation. An examination of its original use
clearly indicates that in order that things shall be adjacent they shall be
thrown near together.
Webster in his International Dictionary defines adjacent as lying near,
close or contiguous; neighboring; bordering upon; and gives as synonyms
the words adjoining, contiguous, near.
Roque Barcia in his Diccionario General Etimolgico de la Lengua Espaola, in
defining the word adjacent, uses as synonyms inmediato, junto, prximo.
Things cannot be inmediatas, juntas, prximas where other objects
intervene.
Vicente Salva in his Nuevo Diccionario Francs-Espaol defines the word
adjacent as qui est situ aupres, aux environs.
Black in his Law Dictionary defines adjacent as lying near or close to;
contiguous. The difference between adjacent and adjoining seems to be
that the former implies that two objects are not widely separated, though
they may not actually touch.
Harpers Latin Dictionary as revised by Lewis and Short, in defining the
word ad-jaceo, which is equivalent to the English word adjacent, says it
means to lie at or near, to be contiguous to, to border upon.
The Universal Encyclopedia defines an adjacent angle as an angle
contiguous to another, so that one side is common to both angles.
In the case of Miller v. Cabell (81 Ky., 184) it was held that where a change
of venue was taken to an adjacent county it must be taken to an adjoining
county.
In the case of Camp Hill Borough (142 Penn. State, 517), it was held that
the word adjacent meant adjoining or contiguous.
In the case of In re Municipality, etc. (7 La. Ann., 76), the court said: We
think the word adjacent, applied to lots, is synonymous with the word
contiguous.
In the case of the People v. Schemerhorne (19 Barber [N.Y.], 576), the
court said: The interpretations given to the adjacent by Walker are lying
close, bordering upon something.[46]
Blacks Law Dictionary defines contiguous as in close proximity;
neighboring; adjoining; near in succession; in actual close contact;
touching in at a point or along a boundary; bounded or traversed by.[47]
Applying the foregoing definitions, the land adjacent and contiguous to
the church and the parish house in the present case is the land comprising
Lot 138-B. On the other hand, Lots 138-A and 138-C are the lands adjacent
and contiguous to the municipal building, rural health center, Buruanga
community Medicare hospital, basketball court, Rizal monument and
grandstand thereon.
Roman Catholic Bishop of Jaro therefore is not squarely applicable to the
present case because of significant factual differences. Specifically, in the
former, the buildings or structures on the disputed land all belonged to
the church; hence, this fact was construed by the Court in favor of the
church as constituting its exercise of acts of dominion over the land
adjacent and contiguous to these buildings. On the other hand, the
municipal building, rural health center, Buruanga community Medicare
hospital, basketball court, Rizal monument and grandstand, all standing on
Lots 138-A and 138-C, are not owned by the petitioner. Moreover, the
petitioner has not shown that it had, at any time, exercised acts of
dominion over these lots. Consequently, given its tenuous claim of
ownership, Lots 138-A and 138-C,
the lands adjacent and contiguous to the buildings and improvements
which admittedly do not belong to the petitioner, cannot be adjudicated
to the latter under the circumstances.
Seminary of San Carlos v. Municipality of Cebu,[48] cited in Roman
Catholic Bishop of Jaro, is also unavailing to the petitioner because the
Court, among others, simply explained therein that the word church refers
to the land upon which the church stands, and not to the church building
itself. In the present case, the petitioners ownership has not been limited
by the court a quo and the appellate court to the church structure itself
but also as including Lot 138-B, on which it stands.

In Roman Catholic Apostolic Church v. Municipality of Placer,[49] the Court
definitively recognized the juridical personality and proprietary rights of
the church citing the Treaty of Paris[50] and other pertinent Spanish laws.
It held therein that the church not only was entitled to the possession of
the church, convent and cemetery of Placer but was also the lawful owner
thereof.
It bears stressing that the crux in the foregoing cases, particularly Bishop
of Calbayog, Hacbang and Jaro, is that the church had indubitably
established its exercise of exclusive proprietary acts on the lots that were
subject of the controversy. The same cannot be said with respect to the
petitioner in relation to Lots 138-A and 138-C. In fact, not one of the
enumeration ([a] to [n]) made by the petitioner in its Petition for Review
as allegedly showing its ownership over Lots 138-A and 138-C categorically
establishes that it exercised thereon exclusive proprietary acts or acts of
dominion.
The ruling in Harty v. Municipality of
Victoria is applicable to the present case
Contrary to the stance taken by the petitioner, the ruling in Harty v.
Municipality of Victoria[51] is applicable to the present case. The said case
involved the dispute between the church and the Municipality of Victoria
over the parcel of land that surrounded the parish church of the said town,
and which was called the public plaza of the same. The Court therein held
that the whole of the land not occupied by the church of the town of
Victoria and its parish house, is a public plaza of the said town, of public
use. It justified its conclusion, thus:
xxx
From the evidence presented by both parties it appears that the town of
Victoria, which was formerly only a barrio of the town of Tarlac and known
as Canarum, was converted into a town in 1855, and named Victoria; to
this end they must have laid out the streets and the plaza of the town, in
the center of which were situated the church and parish house from the
commencement, and at the expiration of about twelve years the parish of
said town was constituted and the priest, who was to perform the office of
curate, was appointed; that from the very beginning, the large tract of
land that surrounds the church and the parish house was known as a
public plaza, destined to the use of all the residents of the recently
founded town; public performances and religious processions were held
thereon without hindrance either on the part of the local authorities or of
the curate of said town.
It must be assumed that the principal residents of the old barrio, being
interested in the conversion of the barrio into a civil town, arranged in
such a way that the barrio, as the center of the future town which was
subsequently called Victoria, should have streets and a public plaza with
its church and parish house, and also a tribunal or building destined for the
use of the municipality and the local official at the time called the
gobernadorcillo and later on capitan municipal, as has occurred in the
foundation of all the towns in these Islands, under the old administrative
laws.
It may be true that the father of the witness Casimiro Taedo, who owned
the space of land where the church and parish house were erected, had
voluntarily donated it to the Catholic Church, the only one known at the
time, but proper proof is lacking that the donation affirmed by the said
Taedo comprehended the whole of the large tract which at the present
time constitutes the plaza of the town.
It was a custom observed by all the towns established administratively in
these Islands under the old Laws of the Indies, that on their creation, a
certain amount of land was always reserved for plazas, commons, and
special and communal property, and as it is unquestionable that the said
large space of land was left vacant in the center of the town of Victoria
when it was constituted as a civil town, more than twelve years prior to
the appointment of a permanent curate therein, there are good grounds
to suppose that the late Vicente Taedo donated the land now occupied by
the church and parish house in said municipality for religious purposes, or
to the church, but not to the parish curate, because at the time there was
no curate at the new town of Victoria.
Even though all the remaining space of land which now forms the great
plaza of the town of Victoria had been owned by the said Taedo, it must
be presumed that he waived his right thereto for the benefit of the
townspeople, since from the creation or establishment of the town, down
to the present day, all the residents, including the curate of said town,
have enjoyed the free use of said plaza; it has not been satisfactorily
shown that the municipality or the principales of the town of Victoria had
donated the whole of said land to the curate of Victoria or to the Catholic
Church, as alleged, nor could it have been so donated, it being a public
plaza destined to public use and was not private ownership, or patrimony
of the town of Victoria, or of the Province of Tarlac.
It should be noted that, among other things, plazas destined to the public
use are not subject to prescription. (Art. 1936, Civil Code.) That both the
curates and the gobernadorcillos of the said town procured fruit trees and
plants to be set out in the plaza, does not constitute an act of private
ownership, but evidences the public use thereof, or perhaps the intention
to improve and embellish the said plaza for the benefit of the
townspeople.
Certain it is that the plaintiff has not proven that the Catholic Church or
the parish of Victoria was the owner or proprietor of the said extensive
piece of land which now forms the public plaza of said town, nor that it
was in possession thereof under the form and conditions required by law,
inasmuch as it has been fully proven that said plaza has been used without
let or hindrance by the public and the residents of the town of Victoria
ever since its creation. For the above reasons, it is our opinion that the
judgment appealed from should be reversed, and that it should be held, as
we do hereby hold, that the whole of the land not occupied by the church
of the town of Victoria and its parish house, is a public plaza of the said
town, of public use, and that in consequence thereof, the defendant is
absolved of the complaint without any special ruling as to the costs of
both instances.[52]
The petitioner argues against the applicability of Harty as it makes much of
the fact that the disputed lot therein was situated across the street from
the church lot. When the Court therein limited the ownership of the
church to the land occupied by the church of the town of Victoria and its
parish house, it did not allegedly confine its ownership to a portion of the
lot on which the church and parish house were situated but to the block
occupied by these structures.
To the Courts mind, however, whether the disputed lot was on the same
block as the church or separated therefrom by a street was not the crucial
factor which constrained the Court in Harty to rule against the churchs
claim of ownership over the said property. Rather, it was the fact that the
church was not able to prove its ownership or possession thereof. The
ruling on this point is reiterated below:
Certain it is that the plaintiff has not proven that the Catholic Church or
the parish of Victoria was the owner or proprietor of the said extensive
piece of land which now forms the public plaza of said town, nor that it
was in possession thereof under the form and conditions required by law,
x x x[53]
As applied to the present case, that Lots 138-A and 138-C are on the same
block as the lot on which the church and its parish house stand do not
necessarily make them (Lots 138-A and 138-C) also the property of the
petitioner absent any evidence that its ownership or possession extended
to these lots and under the conditions required by law.
Contrary to its submission, the petitioner had
not acquired ipso jure or by operation of law
a government grant or title to the entire Lot 138
The petitioner submits that even granting arguendo that the entire Lot 138
was not assigned to it during the Spanish regime or it is not the owner
thereof pursuant to the Laws of the Indies, its open, continuous, exclusive
and notorious possession and occupation of Lot 138 since 1894 and for
many decades thereafter vests ipso jure or by operation of law upon the
petitioner a government grant, a vested title, to the subject property. It
cites Subsection 6 of Section 54 of Act No. 926[54] and Subsection b of
Section 45 of Act No. 2874.[55]
This contention is likewise not persuasive.
One of the important requisites for the application of the pertinent
provisions of Act No. 926 and Act No. 2874 is the open, continuous,
exclusive and notorious possession and occupation of the land by the
applicant. Actual possession of land consists in the manifestation of acts of
dominion over it of such a nature as a party would naturally exercise over
his own property.[56] The phrase possession and occupation was
explained as follows:
It must be underscored that the law speaks of possession and occupation.
Since these words are separated by the conjunction and, the clear
intention of the law is not to make one synonymous with the order [sic].
Possession is broader than occupation because it includes constructive
possession. When, therefore, the law adds the word occupation, it seeks
to delimit the all-encompassing effect of constructive possession. Taken
together with the words open, continuous, exclusive and notorious, the
word occupation serves to highlight the fact that for one to qualify under
paragraph (b) of the aforesaid section, his possession of the land must not
be mere fiction. As this Court stated, through then Mr. Justice Jose P.
Laurel, in Lasam v. The Director of Lands:
x x x Counsel for the applicant invokes the doctrine laid down by us in
Ramos v. Director of Lands. But it should be observed that the application
of the doctrine of constructive possession in that case is subject to certain
qualifications, and this court was careful to observe that among these
qualifications is one particularly relating to the size of the tract in
controversy with reference to the portion actually in possession of the
claimant. While, therefore, possession in the eyes of the law does not
mean that a man has to have his feet on every square meter of ground
before it can be said that he is in possession, possession under paragraph
6 of section 54 of Act No. 926, as amended by paragraph (b) of section 45
of Act No. 2874, is not gained by mere nominal claim. The mere planting of
a sign or symbol of possession cannot justify a Magellan-like claim of
dominion over an immense tract of territory. Possession as a means of
acquiring ownership, while it may be constructive, is not a mere fiction. x x
x opened and improved as a public thoroughfare by the municipality, it had
xxx
Possession is open when it is patent, visible, apparent, notorious and not
clandestine. It is continuous when uninterrupted, unbroken and not
intermittent or occasional; exclusive when the adverse possessor can
show exclusive dominion over the land and an appropriation of it to his
own use and benefit; and notorious when it is so conspicuous that it is
generally known and talked of by the public or the people in the
neighborhood.
Use of land is adverse when it is open and notorious.[57]
Indisputably, the petitioner has been in open, continuous, exclusive and
notorious possession and occupation of Lot 138-B since 1894 as evidenced
by the church structure built thereon. However, the record is bereft of any
evidence that would tend to show that such possession and occupation
extended to Lots 138-A and 138-C beginning the same period. No single
instance of the exercise by the petitioner of proprietary acts or acts of
dominion over these lots was established. Its unsubstantiated claim that
the construction of the municipal building as well as the subsequent
improvements thereon, e.g., the rural health center, Buruanga community
Medicare hospital, basketball court, Rizal monument and grandstand, was
by its tolerance does not constitute proof of possession and occupation on
its (the petitioners) part.
Absent the important requisite of open, continuous, exclusive and
notorious possession and occupation thereon since 1894, no government
grant or title to Lots 138-A and 138-C had vested upon the petitioner ipso
jure or by operation of law. Possession under paragraph 6 of section 54 of
Act No. 926, as amended by paragraph (b) of section 45 of Act No. 2874, is
not gained by mere nominal claim.[58]
Lots 138-A and 138-C comprise the public
plaza and are property of public dominion;
hence, not susceptible to private ownership
by the petitioner or respondent municipality
The appellate court correctly declared that Lots 138-A and 138-C comprise
the public plaza and are property of public dominion; hence, may not be
the object of appropriation either by the petitioner or respondent
municipality. In support thereof, it cited Bishop of Calbayog ratiocinating:
This ruling [referring to Harty] was, in fact, reiterated in Bishop of
Calbayog v. Director of Lands (45 SCRA 418) involving the same question of
ownership of the land which surrounded the parish church of the town.
The Supreme Court therein declared that the public plaza and public
thoroughfare are not subject to registration by the church; that since
neither the Church nor the municipality presented positive proof of
ownership or exclusive possession for an appreciable period of time, and
the only indubitable fact is the free and continuous use of Lot 2 by
residents of Catarman, and the town had no public plaza to speak of other
than the disputed parcel of land, there was a strong presumption that the
same had been segregated as a public plaza upon the founding of the
municipality of Catarman. x x x[59]
As can be gleaned, the above discussion principally pertained to Lot 2, a
public plaza the ownership of which was disputed by the Bishop of
Calbayog and the Municipality of Catarman.
The appellate court correctly cited Bishop of Calabayog. However, the
ruling therein pertaining to a portion of Lot 1 occupied by a public
thoroughfare is more apropos to the present case. To recall, in the said
case, the application of the Bishop of Calabayog as to the eastern portion
of Lot 1 was also being opposed by the Municipality of Catarman on the
ground that it was part of the public plaza. As mentioned earlier, the Court
upheld the ownership of the church over Lot 1 including not only the
space occupied by the church, belfry, convent, parish school and nuns
residence, but also the empty space which only had some benches as
improvements thereon. Significantly, the portion of Lot 1 occupied by a
public thoroughfare (Nalazon Street) was ordered excluded from the
application for registration filed by the church. The Court therein made the
following findings with respect to the public thoroughfare:
Admittedly Nalazon St. was originally merely a trail used by the
parishioners in going to and from the church. But since 1910, when it was
been continuously used as such by the townspeople of Catarman without
objection from the Church authorities. The acacia trees along both sides of
the street were planted by the municipality in 1920, although these trees
were cut down recently upon order of the priest. There is no proof that
the Church merely tolerated and limited the use of this street for the
benefit of its parishioners, considering that the street traverses the entire
length of the poblacion from south to north and that Lot 1, on which the
church stands, is located almost at the center of the poblacion. The street
does not stop on Lot 1 but extends north toward the sea, passing along
the lot occupied by the Central Elementary School and the Northern Samar
General Hospital. Thus, it is clear that Nalazon St. inside Lot 1 is used by
the residents not only in going to the church but to the public school and
the general hospital north of Lot 1.[60]
In the present case, the following improvements now stand on Lots 138-A
and 138-C: the municipal building, rural health center, Buruanga
community Medicare hospital, basketball court, Rizal monument and
grandstand. Except for the construction of the municipal building, the
other improvements were made on Lots 138-A and 138-C, and
continuously used by the public without the petitioners objection. Further,
there is no proof that the petitioner merely tolerated the construction of
these improvements. On the other hand, the free and continuous use by
the public of Lots 138-A and 138-C, as found by the court a quo and
affirmed by the appellate court, incontrovertibly establishes that they are
property for public use.
On this point, Articles 420, quoted anew below, and 424 of the Civil Code
are applicable:
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;
Art. 424. Property for public use, in the provinces, cities, and
municipalities, consist of the provincial roads, city streets, municipal
streets, the squares, fountains, public waters, promenades, and public
works for public service paid for by said provinces, cities or municipalities.
Property for public use of provinces and towns are governed by the same
principles as property of public dominion of the same character.[61] The
ownership of such property, which has the special characteristics of a
collective ownership for the general use and enjoyment, by virtue of their
application to the satisfaction of the collective needs, is in the social
group, whether national, provincial, or municipal.[62] Their purpose is not
to serve the State as a juridical person, but the citizens; they are intended
for the common and public welfare, and so they cannot be the object of
appropriation, either by the State or by private persons.[63]
The appellate court committed no reversible
error in denying the petitioners motion for
reception of evidence
In denying the petitioners motion for reception evidence, the appellate
court reasoned that based on the records, the petitioner was already
accorded the full opportunity to present its evidence in the court a quo
and that the evidence to be introduced in the desired hearing would not
directly establish its ownership of the disputed lots.[64]
The petitioners motion for reception of evidence filed with the appellate
court stated that the additional evidence that it sought to submit
consisted of affidavits of old residents of Buruanga attesting to the fact
that the old municipal building was in fact at a place called Sunset Park
prior to its transfer to the present site.[65] These affidavits would allegedly
establish that respondent municipality could not be the owner of Lots 138-
A and 138-C which it had neither possessed nor occupied.[66]
The appellate court did not err in denying the petitioners motion for
reception of evidence. Indeed, the petitioner was already given full
opportunity during the trial in the court a quo to adduce any and all
relevant evidence to substantiate its claim of ownership over the entire
Lot 138. In no sense, therefore, may it be argued that it was denied due
process of law.[67]
With the reality that those documents were never presented and formally
offered during the trial in the court a quo, their belated admission for
purposes of having them duly considered in the resolution of the case on
appeal would certainly collide with Section 34, Rule 132 of the Rules of
Court which reads:
SECTION 34. Offer of Evidence. The court shall consider no evidence which
has not been formally offered. The purpose for which the evidence is
offered must be specified.[68]
In any case, as correctly stated by the appellate court, these affidavits
would not directly establish the petitioners ownership over Lots 138-A and
138-C.
WHEREFORE, premises considered, the petition is DENIED. The Decision
dated January 31, 2001 of the Court of Appeals and its Resolution dated
July 18, 2001 in CA-G.R. CV No. 52626 are AFFIRMED in toto.
SO ORDERED.
EN BANC
[G.R. Nos. 117589-92. May 22, 1996]
ROMEO R. SALALIMA, DANILO S. AZAA, JUAN VICTORIA, LORENZO REYEG,
ARTURO OSIA, CLENIO CABREDO, VICENTE GO, SR., RAMON FERNANDEZ,
JR., MASIKAP FONTANILLA, WILBOR RONTAS and NEMESIO BACLAO,
petitioners, vs. HON. TEOFISTO T. GUINGONA, JR., in his capacity as the
Executive Secretary, VICTOR R. SUMULONG, RENATO C. CORONA and
ANGEL V. SALDIVAR, in their capacity as Members of the Ad Hoc
Committee, MAYOR NAOMI C. CORRAL, KGD. FRANCISCO ALARTE, MAYOR
ANTONIO DEMETRIOU; and DOMINADOR LIM, JESUS JAMES CALISIN,
EVELYN SILVERIO, SILVERIO COPE, TOBIAS BETITO, MANUEL LANUZA,
JAMES ENRICO SALAZAR, RODOLFO ANTE, JUAN RIVERA, MARCIAL
TUANQUI, DR. SALVADOR SAMBITAN, ATTY. EUTIQUIO NEPOMUCENO, in
their capacity as ACTING GOVERNOR, ACTING VICE-GOVERNOR, and
ACTING MEMBERS OF THE SANGGUNIANG PANLALAWIGAN OF ALBAY,
respectively, respondents.
DECISION
DAVIDE, JR., J.:
Petitioners seek to annul and set aside Administrative Order No. 153,
signed on 7 October 1994 by the President and by public respondent
Executive Secretary Teofisto T. Guingona, Jr., approving the findings of fact
and recommendations of the Ad Hoc Committee and holding the
petitioners administratively liable for the following acts or omissions: (a)
wanton disregard of law amounting to abuse of authority in O.P. Case No.
5470; (b) grave abuse of authority under Section 60(e) of the Local
Government Code of 1991 (R.A. No. 7160) in O.P. Case No. 5469; (c)
oppression and abuse of authority under Section 60(c) and (e) of R.A. No.
7160 in O.P. Case No. 5471; and (d) abuse of authority and negligence in
O.P. Case No. 5450. The said order meted out on each of the petitioners
penalties of suspension of different durations, to be served successively
but not to go beyond their respective unexpired terms in accordance with
Section 66(b) of R.A. No. 7160.
Prefacing the petition with a claim that the challenged administrative
order is an oppressive and capricious exercise of executive power, the
petitioners submit that:
I.
THE PUBLIC RESPONDENT HONORABLE EXECUTIVE SECRETARY TEOFISTO
T. GUINGONA, JR. ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN SUSPENDING THE
PETITIONERS FOR PERIODS RANGING FROM TWELVE MONTHS TO TWENTY
MONTHS IN VIOLATION OF THE CONSTITUTIONAL MANDATES ON LOCAL
AUTONOMY AND SECURITY OF TENURE AND APPOINTING UNQUALIFIED
PERSONS TO NON-VACANT POSITIONS AS THEIR SUCCESSORS IN OFFICE.
II.
THE PUBLIC RESPONDENT HONORABLE EXECUTIVE SECRETARY TEOFISTO
T. GUINGONA, JR. ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THE
PETITIONERS GUILTY OF ABUSE OF AUTHORITY FOR FAILURE TO SHARE
WITH THE MUNICIPALITY OF TIWI THE AMOUNT OF P40,724,47 1.74 PAID
BY NAPOCOR TO THE PROVINCE OF ALBAY, PURSUANT TO THE
MEMORANDUM OF AGREEMENT DATED JULY 29, 1992.
III.
THE PUBLIC RESPONDENT TEOFISTO T. GUINGONA, JR. ACTED WITH
ABUSE OF DISCRETION IN SUSPENDING THE PETITIONERS BASED UPON
THE PROVISIONS OF THE LOCAL GOVERNMENT CODE:
A. WHAT WERE NOT COMPLAINED OF;
B. UPON ACTS COMMITTED PRIOR TO ITS EFFECTIVITY; AND
C. WHERE THE ADMINISTRATIVE CASES WHEN FILED WERE ALREADY
COVERED BY PRESCRIPTION.
IV.
THE PUBLIC RESPONDENT EXCEEDED ITS JURISDICTION WHEN IT
PREMATURELY DECIDED THESE CASES ON THE BASIS OF THE SAO REPORT
NO. 93-11 WHICH IS PENDING APPEAL TO THE COMMISSION ON AUDIT
SITTING EN BANC.
We resolved to give due course to this petition and to decide it on the
basis of the pleadings thus far submitted, after due consideration of the
satisfactory explanation of the petitioners that his case has not been
mooted by the expiration of their term of office on 30 June 1995 and the
comment of the Office of the Solicitor General that this case be resolved
on the merits. In seeking a resolution of this case on the merits, Office of
the Solicitor General invites the attention of the Court to the following:
(a) While the periods of suspension have been served by petitioners and
that some of them have even been elected to other government positions,
there is the primary issue of whether the suspensions were valid and
grounded on sufficient cause.
(b) If the suspensions are found to be valid, petitioners are not entitled to
reimbursement of salaries during their suspension periods.
(c) If upheld, Administrative Order No. 15 would be used as a strong
ground in filing cases against petitioners for violations of the Anti-Graft
and Corrupt Practices Act.
(d) Corollary [sic] to these issues is the issue of the interpretation and
application of the [R]eal Property Tax Code and the Local Government
Code under the circumstances of this case.
(e) The resolution of these issues would finally put to rest whether
respondents acted with grave abuse of discretion amounting to lack of
jurisdiction for having suspended petitioners on the basis of their findings
in the four (4) administrative cases filed against the petitioners.
The factual antecedents are not complicated.
Sometime in 1993, several administrative complaints against the
petitioners, who were elective officials of the Province of Albay, were filed
with the Office of the President and later docketed as O.P. Cases Nos.
5450, 5469, 5470, and 5471. Acting thereon, the President issued
Administrative Order No. 94 creating an Ad Hoc Committee to investigate
the charges and to thereafter submit its findings and recommendations.
The Ad Hoc Committee was composed of Undersecretary Victor R.
Sumulong of the Department of the Interior and Local Government (DILG),
Assistant Executive Secretary Renato C. Corona, and Presidential Assistant
Angel V. Saldivar.
On 26 August 1994, after conducting hearings, the Ad Hoc Committee
submitted its report to the Office of the President.
On 7 October 1994, the President promulgated Administrative Order No.
153 quoting with approval the following pertinent findings and
recommendations of the Committee; thus:
The finding of the Ad-Hoc Committee in O.P. Case Nos. 5470, 5469, 5471
and 5450 are as follows:
I. O.P. Case No. 5470
This refers to the administrative complaint filed by Tiwi Mayor Naomi
Corral against Albay Governor Romeo Salalima, Vice- Governor Danilo
Azaa, and Albay Sangguniang Panlalawigan Members Juan Victoria,
Lorenzo Reyeg, Arturo Osia, Clenio Cabredo, Vicente Go, [S]r., Jesus
Marcellana, Ramon Fernandez, Jr., Masikap-Fontanilla, and Wilbor Rontas.
Docketed as O.P. Case No. 5470, the complaint charges the respondents
for malversation and consistent & habitual violation of pars. (c) and (d) of
Section 60 of Republic Act (RA) No. 7160, otherwise known as the Local
Government Code.
The antecedent facts are as follows:
On 4 June 1990, the Supreme Court in the case entitled National Power
Corporation (NPC) v. The Province of Albay, et al., G.R. No. 87479 rendered
judgment (Exhs. D to D-14) declaring, inter alia, NPC liable for unpaid real
estate taxes on its properties in Albay covering the period 11 June 1984 to
10 March 1987.
Citing the fact that its tax exemption privileges had been revoked, the
Supreme Court held that NPCs real properties, consisting mainly of
geothermal plants in Tiwi and substation facilities in Daraga, are subject to
real estate tax in accordance with Presidential Decree (PD) No. 464, as
amended, otherwise known as the Real Property Tax Decree.
Earlier, said properties were sold at an auction sale conducted by the
Province of Albay (the Province) to satisfy NPCs tax liabilities. Being the
sole bidder at the auction, the Province acquired ownership over said
properties.
On 29 July 1992, the NPC through then President Pablo Malixi and the
Province represented by respondent Salalima, entered into a
Memorandum of Agreement (MOA) [Exhs. 7 to 7-A] whereby the former
agreed to settle its tax liabilities, then estimated at P214,845,104.76.
Under the MOA, the parties agreed that:
- the actual amount collectible from NPC will have to be
recomputed/revalidated;
- NPC shall make an initial payment of P17,763,000.00 upon signing of the
agreement;
- the balance of the recomputed/revalidated amount (less the aforesaid
initial payment), shall be paid in twenty-four (24) equal monthly
installments to commence in September 1992; and
- ownership over the auctioned properties shall revert to NPC upon
satisfaction of the tax liabilities.
On 3 August 1992, Mayor Corral formally requested the Province through
respondent Salalima, to remit the rightful tax shares of Tiwi and certain
barangays of Tiwi where NPCs properties are located (concerned
barangays) relative to the payments made by NPC (Exh. B).
On the same day, 3 August 1992, the Tiwi Sangguniang Bayan passed
Resolution No. 12-92 (Exhs. G to G-1) requesting the Albay Sangguniang
Panlalawigan to hold a joint session with the former together with Mayor
Corral and the Sangguniang Pambarangays of the concerned barangays,
for the purpose of discussing the distribution or application of the NPC
payments.
On 10 August 1992, respondent Salalima replied that the request cannot
be granted as the initial payment amounting to P17,763,000.00 was only
an earnest money and that the total amount to be collected from NPC was
still being validated (Exh. I).
Not satisfied with respondent Salalimas response, Mayor Corral
complained to NPC about the Provinces failure to remit Tiwis and the
concerned barangays shares in the payments made by NPC (Exh. 50-C).
On 14 August 1992, President Malixi informed respondent Salalima that
the representatives of both NPC and the Province have reconciled their
accounts and determined that the amount due from NPC was down to
P207,375,774.52 (Exh. 20).
Due to the brewing misunderstanding between Tiwi and the concerned
barangays on the one hand, and the Province on the other, and so as not
to be caught in the middle of the controversy, NPC requested a
clarification from the Office of the President as to the scope and extent of
the shares of local government units in real estate tax collections (Exh. 6 to
6-A).
Meantime, the Albay Sangguniang Panlalawigan passed Resolution No.
178-92 dated 8 October 1992 (Exh. R) and Resolution No. 204-92 dated 5
November 1992 (Exh. S) appropriating P9,778,932.57 and P17,663,43 1.58
or a total of P27,442,364.15 from the general fund to satisfy prior years
obligations and to implement certain projects of the Province. These
resolutions were approved by respondent Salalima on 22 October 1992
and 6 November 1992, respectively.
On 3 December 1992, the Office of the President through Chief
Presidential Legal Counsel Antonio Carpio opined that the MOA entered
into by NPC and the Province merely recognized and established NPCs tax
liability. He further clarified that the sharing scheme and those entitled to
the payments to be made by NPC under the MOA should be that provided
under the law, and since Tiwi is entitled to share in said tax liabilities, NPC
may remit such share directly to Tiwi. The pertinent portion of Chief
Presidential Legal Counsel Carpios letter dated 3 December 1992 (Exhs. H
to H-1) addressed to President Malixi reads:
xxx xxx xxx
The Memorandum of Agreement entered into by the Province of Albay
and NPC merely enunciates the tax liability of NPC. The Memorandum of
Agreement does not provide for the manner of payment of NPCs liability.
Thus, the manner of payment as provided for by law shall govern. In any
event, the Memorandum of Agreement cannot amend the law allowing
the payment of said taxes to the Municipality of Tiwi.
The decision in the case of NPC v. Province of Albay (186 SCRA 198),
likewise, only established the liability of NPC for real property taxes but
does not specifically provide that said back taxes be paid exclusively to
Albay province.
Therefore, it is our opinion that the NPC may pay directly to the
municipality of Tiwi the real property taxes accruing to the same.
Please be guided accordingly.
Very truly yours,
(Sgd.) ANTONIO T. CARPIO
Chief Presidential Legal Counsel
Because of this opinion, President Malixi, through a letter dated 9
December 1992 (Exhs. Ito I-1), informed Mayor Corral and respondent
Salalima that starting with the January 1993 installment, NPC will directly
pay Tiwi its share in the payments under the MOA. He also invited the
parties to a clarificatory meeting on 17 December 1992 at his Quezon City
office to discuss the matter in detail.
Only Mayor Corral attended the 17 December 1992 meeting with
President Malixi as respondent Salalima was indisposed. President Malixi
then provided Mayor Corral with schedules (Exhs. J to J-2) of the payments
already made by NPC under the MOA and the computation and the
distribution of shares.
As of 9 December 1992, payments made by NPC to the Province reached
P40,724,471.74, broken down as follows:
Payment Dates Amount
July 29, 1992 P17,763,000.00
Sept. 3, 1992 4,660,255.80
Oct. 5, 1992 6,820,480.12
Nov. 5, 1992 5,740,367.96
Dec. 9, 1992 5,740,367.66
Total P40,724,471.74
On 19 December 1992, in an apparent reaction to NPCs decision to directly
remit to Tiwi its share in the payments made and still to be made pursuant
to the MOA, the Albay Sangguniang Panlalawigan passed Ordinance No.
09-92 (Exhs. K to K-1), which, among others:
- authorized the Provincial Treasurer upon the direction of the Provincial
Governor to sell the real properties (acquired by the Province at the
auction sale) at a public auction, and to cause the immediate transfer
thereof to the winning bidder; and
- declared as forfeited in favor of the Province, all the payments already
made by NPC under the MOA.
Realizing from the actuations of the respondents that Tiwis share in the
P40,724,47 1.74 payments already made by NPC will not be forthcoming,
Mayor Corral filed the present complaint with the Office of the President
on 25 January 1993.
In determining whether the respondents are guilty of the charges against
them, the threshold issue of whether the payments to be made by NPC
under the MOA should accrue solely and exclusively in favor of the
Province, must first be resolved.
Sections 38, 39, 41, 86 and 87 of P.D. No. 464, as amended, prescribe the
authority of local government units to levy real property tax as well as the
sharing scheme among local government units including the national
government with respect thereto. Said provisions; read:
SEC. 38. Incidence of Real Property Tax. - There shall be levied, assessed,
and collected in all provinces, cities and municipalities an annual ad
valorem tax or real property, such as land, buildings, machinery and other
improvements affixed or attached to real property not hereinafter
specifically exempted.
SEC. 39. Rates of Levy. - The provincial, city or municipal board or council
shall fix a uniform rate of real property tax applicable to their respective
localities as follows:
(1) In the case of a province, the tax shall be fixed by ordinance of the
provincial board at the rate of not less than one-fourth of one percent but
not more than one-half of one percent of the assessed value of real
property;
(2) In the case of a city, the tax shall be fixed by ordinance of the municipal
board or city council at the rate of not less than one-half of one percent
but not more than two percent of the assessed value of real property; and
(3) In the case of a municipality, the tax shall be fixed by ordinance of the
municipal council subject to the approval of the provincial board at the
rate of not less than one-fourth of one percent but not more than one-half
of one percent of the assessed value of real property.
SEC. 41. An additional one percent tax on real property for the Special
Education Fund. - There is hereby imposed an annual tax of one percent
on real property to accrue to the Special Education Fund created under
Republic Act No. 5447, which shall be in addition to the basic real property
tax which local governments are authorized to levy, assess and collect
under this Code; Provided, That real property granted exemption under
Section 40 of this code shall also be exempt from the imposition accruing
to the Special Education Fund. (as amended by P.D. No. 1913)
SEC. 86. Distribution of proceeds. - (a) The proceeds of the real property
tax, except as otherwise provided in this Code, shall accrue to the
province, city or municipality where the property subject to the tax is
situated and shall be applied by the respective local government unit for
its own use and benefit.
(b) Barrio shares on real property tax collections. -The annual shares of the
barrios in real property tax collections shall be as follows:
(1) Five percent of the real property tax collections of the province and
another five percent of the collections of the municipality shall accrue in
the barrio where the property subject to the tax is situated.
(2) In the case of the city, ten percent of the collections of the tax shall
likewise accrue to the barrio where the property is situated.
xxx xxx xxx
SEC. 87. Application of proceeds. - (a) The proceeds of the real property
tax pertaining to the city and to the municipality shall accrue entirely to
their respective general funds. In the case of the province, one-fourth
thereof shall accrue to its road and bridge fund and remaining three-
fourths of its general fund.
(b) The entire proceeds of the additional one percent real property tax
levied for the Special Education Fund created under RA. No. 5447 collected
in the province or city on real property situated in their respective
territorial jurisdictions shall be distributed as follows:
(1) Collections in the provinces: Fifty-five percent shall accrue to the
municipality where the property subject to the tax is situated; twenty-five
percent shall accrue to the province; and twenty percent shall be remitted
to the Treasurer of the Philippines. (as amended by PD. No. 1969)
xxx xxx xxx
(c) The proceeds of all delinquent taxes and penalties, as well as the
income realized from the use, lease or other disposition of real property
acquired by the province or city at a public auction in accordance with the
provisions of this Code, and the proceeds of the sale of the delinquent real
property or of the redemption thereof, shall accrue to the province, city or
municipality in the same manner and proportion as if the tax or taxes had
been paid in regular course.
x x x x x x x x x (Italics supplied)
The foregoing provisions clearly show that local government units may
levy and collect real property tax ranging from a low of one-fourth of one
percent (0.25%) to a high of two percent (2.0%) of the assessed value of
real property depending on the local government unit levying the same. It
is likewise clear that a province, a municipality and a city may each
separately levy said tax on real property located within their respective
jurisdictions but not exceeding the rates prescribed under Sec. 39 of P.D.
No. 464.
And apart from said basic tax, the law authorizes the collection of an
additional tax equivalent to one percent (1.0%) of the assessed value of
the real property to accrue to the Special Education Fund (SEF).
In accordance with the authority conferred upon them by P.D. No. 464,
the following tax resolutions or ordinances were passed:
By the Province
Resolution No. 30, series of 1978, of the Provincial Board of Albay,
enacting Provincial Tax Ordinance No.4 whose Section 1, provides:
There shall be levied, assessed and collected an annual ad valorem tax on
real properties including improvements thereon equivalent to one-half of
one percent of the assessed value of real property.
By the Municipality of Tiwi
Ordinance No. 25. series of 1974, of the Sangguniang Bayan of Tiwi, Albay,
whose Section 2 provides:
That the tax rate of real property shall be one-half of one percent of the
assessed value of real property.
By the Municipality of Daraga
Ordinance No. 27, series of 1980, of the Sangguniang Bayan of Daraga,
Albay, whose Section 3 provides:
Rates of Levy - The tax herein levied is hereby fixed at one-half of one
percent (1/2 of 1%) of the assessed value of real property. (see Exhs. 50-G;
Italics supplied)
Applying said rates of levy, the real property taxes collectible from the NPC
are:
1. A basic tax of 1%, levied by the Province (0. 5%) and Tiwi (0.5%) on the
one hand; and the Province (0.5%) and Daraga (0.5%) on the other; and
2. The additional 1% tax pertaining to the SEF.
or a total of 2.0% on the assessed value of NPCs real properties.
On the other hand, sharing on said taxes, shall be as follows:
1. On the basic tax:
Province 47.5%
Municipality 47.5%
Barangay 5.0%
Total 100.0%
2. On the additional tax pertaining to the SEF:
Province 25.0%
Municipality 55.0%
National Government 20.0
Total 100.0%
In real terms, the P40,724,471.74 in payments earlier made by NPC should
be shared by the Province, Tiwi and Daraga, the concerned barangays; and
the national government, as follows:
Province Municipalities Barangay Natl. Govt.
Basic Tax
P9,672,062.04 9,672,062.04 1,018,111.79 none
SEF
4,072,447.18 10,181,117.93 none 6,108,670.76
Total
P13,744,509.22 19,853,179.97 1,018,111.79 6,108,670.76
This shows that the Province is entitled only to P 13,744,509.21 of the
P40,724,47 1.74 aggregate payments by NPC. On the other hand, the
balance of P26,979,962.52 represents the collective shares of Tiwi, Daraga,
the concerned barangays and the national government.
The Province maintains, however, that considering that it acquired
ownership over the properties of NPC subject matter of the auction, all the
payments to be made by NPC under the MOA should accrue exclusively to
the Province.
This is untenable. The law clearly provides that the proceeds of all the
delinquent taxes and penalties as well as the income realized from the x x
x disposition of real property acquired by the province or city at a public
auction x x x, and the sale of delinquent property or the redemption
thereof shall accrue to the province, city or municipality in the same
manner and proportion as if the tax or taxes have been paid in the regular
course (Sec. 87(c) supra).
It is immaterial that the Province was the highest bidder and eventually
became the owner of the properties sold at the auction sale. What is
essential is that the proceeds of the re-sale of said properties acquired by
the Province, be distributed in the same manner and proportion among
the rightful beneficiaries thereof as provided by law.
This was the import and essence of Chief Presidential Legal Counsel
Carpios opinion when he stated that the sharing scheme provided by law
cannot be amended by a mere agreement between the taxpayer, in this
case NPC, and the collecting authority, in this instance the Province of
Albay.
Likewise, it is axiomatic that while contracting parties may establish
stipulations, clauses, terms and conditions as they may deem convenient,
they may not do so if these are contrary to law, morals, good customs,
public order or public policy (Art. 1306, New Civil Code).
Also relevant to the discussion are the following provisions of the Local
Government Code of 1991:
Sec. 307. Remittance of Government Monies to the Local Treasury. -
Officers of Local government authorized to receive and collect monies
arising from taxes, revenues, or receipts of any kind shall remit the full
amount received and collected to the treasury of such local government
unit which shall be credited to the particular account or accounts to which
the monies in question properly belong.
SEC. 308. Local Funds. - Every local government unit shall maintain a
General Fund which shall be used to account for such monies and
resources as may be received by and disbursed from the local treasury.
The General Fund shall consist of monies and resources of the local
government which are available for the payment of expenditures,
obligations or purposes not specifically declared by law as accruing and
chargeable to, or payable from any other fund.
SEC. 309. Special Funds. - There shall be maintained in every provincial,
city, or municipal treasury the following special funds:
(a) Special Education Fund (SEF) shall consist of the respective shares of
provinces, cities, municipalities and barangays in the proceeds of the
additional tax on real property to be appropriated for purposes prescribed
in Section 272 of this Code; and
(b) Trust Funds shall consist of private and public monies which have
officially come into the possession of the local government or of a local
government official as trustee, agent or administrator, or which have been
received as a guaranty for the fulfillment of some obligation. A trust fund
shall only be used for the specific purpose for which it was created or for
which it came into the possession of the local government unit. (Italics
supplied)
These provisions are restatements of Sec. 3(4) and (5) of P.D. No. 1445 and
both Sec. 43, Book V and Sec. 2(4) of Book V(B) of Executive Order No.
292, otherwise known as the Administrative Code of 1987.
It is unmistakable from the foregoing provisions that the shares of Tiwi,
Daraga, the concerned barangays and the national government in the
payments made by NPC under the MOA, should be, as they are in fact,
trust funds. As such, the Province should have, upon receipt of said
payments, segregated and lodged in special accounts, the respective
shares of Tiwi, Daraga, the concerned barangays and the national
government for eventual remittance to said beneficiaries. Said shares
cannot be lodged in, nor remain part of, the Provinces general fund.
Moreover, the Province cannot utilize said amounts for its own benefit or
account (see also Sec. 86, PD. No. 464, as amended).
Therefore, the balance of P26,979,962.52 representing the collective
shares of Tiwi and Daraga, the concerned barangays and the national
government, cannot be appropriated nor disbursed by the Province for the
payment of its own expenditures or contractual obligations.
However, in total disregard of the law, the Province treated the
P40,724,47 1.74 NPC payments as surplus adjustment (Account 7-92-4 19)
and lodged the same in its general fund. No trust liability accounts were
created in favor of the rightful beneficiaries thereof as required by law.
Report No. 93-11 (Exh. N), prepared and made by the Special Audit Office
(SAO) of the Commission on Audit (COA) further support our findings, thus
- ordinance or law (par. [a], Sec. 305, Republic Act No. 7160).
xxx xxx xxx
Part II. Findings and Observations
The audit findings, which are discussed in detail in the attached report, are
summarized below:
1. The remittances of the NPC of the P40,724,471 .74 from July to
December 1992 representing partial payments of real tax delinquencies
from June 22, 1984 to March 10, 1989, were not shared with the
Municipalities of Tiwi, Daraga, and the concerned barangays and the
National Government in violation of P.D. 464. The Memorandum of
Agreement entered into between the Province of Albay and Napocor
cannot amend the provisions of P.D. No. 464 which specifies the sharing
scheme of the real property tax among the province, city or municipality
where the property subject to tax is situated and the National
Government.
xxx xxx xxx
2. The collection of P40,724,471.74 was fully treated as surplus adjustment
(Account 7-92-4 19) being prior years income, without creating a trust
liability for the municipality and barangays concerned and national
government, As of December 31, 1992, the balance of the account was
only P25,668,653. 12 thus, stressing that P15,255,818.62 was spent. x x x
Under the General Fund, cash available was only P4,92 1,353.44 leaving
practically no cash to answer for the shares of the Municipalities of Tiwi
and Daraga and their baran gays where the properties are located. (pp. 4
and 16; (Italics supplied)
xxx xxx xxx
As pointed out earlier, the Province was entitled only to P13,744,509.21 of
the P40,724,471.74 in payments made by NPC. Thus, it may only
appropriate and disburse P13,744,509.21. Any disbursements exceeding
this amount would therefore be illegal.
This Committee particularly notes the factual finding of COA that as of 31
December 1992, the actual cash balance of the Provinces general fund was
only P4,92 1,353.44. This means that of the P40,724,471.74 actually paid
by the NPC and lodged in the Provinces general fund, P35,803,118.30 was
disbursed or spent by the Province. This exceeds the P13,744,509.21 share
of the Province by P22,058,609.09.
The foregoing may be illustrated as follows:
NPC Payments received by
the Province P40,724,471.74
Less Actual Cash Balance
(general fund)
as of 12-31-92 - 4,921,353.44
P35,803,118.30
Less Share of the Province 13,744,509.21
Amount Illegally Disbursed
by the Province P22,058,609.09
We have already shown that Ordinance No. 09-92 (Exhs. K to K-1)
declaring as forfeited in favor of the Province the entire amount of
P40,724,471.74 paid by NPC to be patently illegal as it unlawfully deprives
Tiwi and Daraga, the barangays concerned, and the national government
of their rightful shares in said payments. Being illegal, said ordinance may
not be used or relied upon by the respondents to justify the
disbursements of funds in excess of their share.
Neither may Resolution Nos. 178-92 and 204-92 be used to justify the
disbursements considering that the appropriations made thereunder
totalling P27,442,364.51 are to be funded by the P40,724,471.74 surplus
adjustment that includes the trust funds not belonging to the Province.
Even assuming that Resolution No. 178-92 authorizing the expenditure of
P9,778,932.57 were to be taken from the Provinces share amounting to
P13,744,509.21, the rest of the disbursements still have no legal basis.
Clearly, this is violative of the fundamental rule that (n)o money shall be
paid out of the local treasury except in pursuance of an appropriation
Respondents raise the common defense that the findings contained in SAO
Report No. 93-11 are not yet final as they have filed an appeal therefrom.
It is important to stress that the exceptions (Exhs. 50-B, 50-I, & 50-J) raised
by the respondents to COA merely involve questions of law, i.e., as to
whether the Province alone should be entitled to the payments made by
NPC under the MOA, and whether the shares of Tiwi and Daraga, the
concerned barangays, and the national government, should be held in
trust for said beneficiaries.
Considering that the factual findings under SAO Report 93-11 are not
disputed, this Committee has treated said factual findings as final or, at
the very least, as corroborative evidence.
Respondents contention that COAs factual findings, contained in SAO
Report No. 93-11 cannot be considered in this investigation is untenable.
For no administrative or criminal investigation can proceed, if a
respondent is allowed to argue that a particular COA finding is still the
subject of an appeal and move that the resolution of such administrative
or criminal case be held in abeyance. This will inevitably cause
unnecessary delays in the investigation of administrative and criminal
cases since an appeal from a COA finding may be brought all the way up to
the Supreme Court.
Besides, the matters raised by the respondents on appeal involve only
conclusions/interpretation of law. Surely, investigative bodies, such as
COA, the Ombudsman and even this Committee, are empowered to make
their own conclusions of law based on a given set of facts.
Finally, sufficient evidence has been adduced in this case apart from the
factual findings contained in SAO Report 93-11 to enable this Committee
to evaluate the merits of the instant complaint.
We also reject respondent Azaas defense that since he did not participate
in the deliberation and passage of Resolution No. 09-92, merely signing
the same as presiding officer of the Sangguniang Panlalawigan, and only
certifying that the same had been passed, he did not incur any
administrative liability.
The fact remains that as presiding officer of the Sangguniang Panlalawigan
and being the second highest official of the Province, respondent Azaa is
jointly responsible with other provincial officials in the administration of
fiscal and financial transactions of the Province. As presiding officer of the
Sangguniang Panlalawigan, respondent Azaa has a duty to see to it that
resolutions or ordinances passed are within the bounds of the law. He
cannot merely preside over the sessions of the Sangguniang Panlalawigan
unmindful of the legality and propriety of resolutions or ordinances being
proposed or deliberated upon by his colleagues.
This collective responsibility is provided under Secs. 304 and 305 of
Republic Act. No. 7160, thus
SEC. 304. Scope. - This Title shall govern the conduct and management of
financial affairs, transactions and operations of provinces, cities,
municipalities, and barangays.
SEC. 305. Fundamental Principles. - The financial affairs, transactions, and
operations of local government units shall be governed by the following
fundamental principles:
xxx xxx xxx
(1) Fiscal responsibility shall be shared by all those exercising authority
over the financial affairs, transactions, and operations of local government
units; and
x x x x x x x x x (Italics supplied.)
It cannot be denied that the Sangguniang Panlalawigan has control over
the Provinces purse as it may approve or not resolutions or ordinances
generating revenue or imposing taxes as well as appropriating and
authorizing the disbursement of funds to meet operational requirements
or for the prosecution of projects.
Being entrusted with such responsibility, the provincial governor, vice-
governor and the members of the Sangguniang Panlalawigan, must always
be guided by the so-called fundamental principles enunciated under the
Local Government Code, i.e., No money shall be paid out of the local
treasury except in pursuance of an appropriations ordinance or law; local
revenue is generated only from sources authorized by law or ordinance
and collection thereof shall at all times be acknowledged properly; all
monies officially received by a local government officer in any capacity or
on any occasion shall be accounted for as local funds, unless otherwise
provided by law; and trust funds in the local treasury shall not be paid out
except in fulfillment of the purposes for which the trust was created or the
funds received (Sec. 305, R.A. 7160).
All the respondents could not claim ignorance of the law especially with
respect to the provisions of P.D. No. 464 that lay down the sharing scheme
among local government units concerned and the national government,
for both the basic real property tax and additional tax pertaining to the
Special Education Fund. Nor can they claim that the Province could validly
forfeit the P40,724,471.74 paid by NPC considering that the Province is
only entitled to a portion thereof and that the balance was merely being
held in trust for the other beneficiaries.
As a public officer, respondent Azaa (and the other respondents as well)
has a duty to protect the interests not only of the Province but also of the
municipalities of Tiwi and Daraga and even the national government.
When the passage of an illegal or unlawful ordinance by the Sangguniang
Panlalawigan is imminent, the presiding officer has a duty to act
accordingly, but actively opposing the same by temporarily relinquishing
his chair and participating in the deliberations. If his colleagues insist on its
passage, he should make known his opposition thereto by placing the
same on record. No evidence of any sort was shown in this regard by
respondent Azaa.
Clearly, all the respondents have, whether by act or omission, denied the
other beneficiaries of their rightful shares in the tax delinquency payments
made by the NPC and caused the illegal forfeiture, appropriation and
disbursement of funds not belonging to the Province, through the passage
and approval of Ordinance No. 09-92 and Resolution Nos. 178-92 and 204-
92.
The foregoing factual setting shows a wanton disregard of law on the part
of the respondents tantamount to abuse of authority. Moreover, the
illegal disbursements made can qualify as technical malversation.
This Committee, thus, finds all the respondents guilty of abuse of
authority, and accordingly, recommends the imposition of the following
penalties of suspension without pay:
a. Respondent Salalima five (5) months; and
b. All the other four (4) months each.
respondents
II. OP Case No. 5469
This refers to the administrative complaint filed against Albay Governor
Romeo Salalima, Vice-Governor Danilo Azafla, Albay Sangguniang
Panlalawigan Members Juan Victoria, Lorenzo Reyeg, Jesus Marcellana,
Arturo Osia, Clenio Cabredo, Ramon Fernandez, Jr., Masikap Fontanilla,
Vicente Go, Sr., and Nemesio Baclao relative to the retainer contract for
legal services entered into between the Province of Albay, on the one
hand, and Atty. Jesus R. Cornago and the Cortes & Reyna Law Firm, on the
other, and the disbursement of public fund in payment thereof. The
complaint was docketed as OP Case No. 5469.
The antecedent facts are as follows.
Because of the refusal by the National Power Corporation (NPC) to pay
real property taxes assessed by the Province of Albay (the Province)
covering the period from 11 June 1984 up to 10 March 1987 amounting to
P2 14,845,184.76, the Province sold at public auction the properties of
NPC consisting of geothermal power plants, buildings, machinery and
other improvements located at Tiwi and Daraga, Albay. The Province was
the sole and winning bidder at the auction sale.
As NPC failed to redeem its properties sold at the auction, the Province
petitioned the Regional Trial Court in Tabaco, Albay to issue a writ of
possession over the same.
Sometime in 1989, NPC filed a petition with the Supreme Court, which was
docketed as G.R. No. 87479, questioning the validity of the auction sale
conducted by the Province. NPC claims, inter alia, that its properties are
not subject to real property tax.
On 17 May 1989, the Province, through Atty. Romulo Ricafort, the legal
officer of the Province, filed its comment on the NPC petition with the
Supreme Court.
On 2 June 1989, the Albay Sangguniang Panlalawigan adopted Resolution
No. 129-89 (Exhs. B to B-I) authorizing respondent Governor to engage the
services of a Manila-based law firm to handle the case against NPC.
On 25 August 1989, Atty. Jesus R. Cornago entered his appearance with
the Supreme Court as collaborating counsel for the Province in G.R. No.
87479. The entry of appearance of Atty. Cornago bore the conformity of
respondent Governor.
On 14 November 1989, Atty. Antonio Jose F. Cortes of the Cortes & Reyna
Law Firm sent respondent Governor a letter (Exhs. D to D-1) informing him
that Atty. Jesus R. Cornago, as collaborating counsel for the Province, has
filed a memorandum with the Supreme Court, suggesting that a retainer
agreement be signed between the Province, on the one hand, and Atty.
Cornago and Cortes & Reyna Law Firm, on the other hand, and setting
forth the conditions of the retainer agreement, thus:
As collaborating counsels for the respondents in the aforementioned case,
our law firm and that of Atty. Jesus R. Cornago request that you pay us an
Acceptance Fee of FIFTY THOUSAND (P50,000.00) PESOS, while the
aforementioned case is pending in the Supreme Court. Thereafter, we will
charge you a contingent fee equivalent to eighteen percent (18%) of the
value of the property subject matter of the case which is P214 Million,
payable to us in the event that we obtain a favorable judgment for you
from the Supreme Court in the case. Xerox expenses for copies of motions,
memorandum and other matters to be filed with the Supreme Court in the
case, together with xerox copies of documentary evidence, as well as
mailing expenses, will be for your account also.
On 8 January 1990, the Albay Sangguniang Panlalawigan passed Resolution
No. 01-90 (Exhs. C to C- 1) authorizing respondent Governor to sign and
confirm the retainer contract with the Cortes & Reyna Law Firm.
Respondent Salalima signed the retainer agreement.
On 4 June 1990, the Supreme Court issued a decision dismissing the NPC
petition and upholding the validity of the auction sale conducted by the
Province to answer for NPCs tax liabilities.
Subsequently, the following payments amounting to P7,380,410.31 (Exhs.
E to N-l) were made by the Province to Atty. Antonio Jose Cortes and Atty.
Jesus R. Cornago:
Particulars Claimant/Payee Amount
Disbursement Cortes & Reyna P50,508.75
Voucher (DV)
No. 4, Jan.
8, 1990
Check No.
931019
DV No. 1889 Atty. Antonio Jose Cortes P1,421,040.00
Aug. 13, 1992.
Check No.
236063-S
DV No. 1890 Atty. Jesus R. Cornago P1,786,300.00
Aug. 13, 1992
Check No.
236064-S
DV No. 2151 Atty. Antonio Jose Cortes P838,85 1.44
Sept. 28,
1992, Check
No. 238174-S
DV No. 2226 Atty. Antonio Jose Cortes P886,662.40
Oct. 8,. 1992
Check No.
239528-S
DV No. 2227 Atty. Jesus R. Cornago P341,024.00
Oct. 8, 1992
Check No.
239529-S
DV No. 2474 Atty. Jesus R. Cornago P287,018.40
Nov. 6, 1992
Check No.
250933
DV No. 2475 Atty. Antonio Jose Cortes P746,247.83
Dec. 9, 1992
Check No.
253163
DV No. 2751 Atty. Antonio Jose Cortes P747,247.84
Dec. 9, 1992
Check No.
253163
DV No. 2752 Atty. Jesus R. Cornago P287,018.40
Dec. 9, 1992
Check No.
253164 ____________
TOTAL P7,380,410.31
Disbursement Voucher Nos. 2474 and 2475 were approved by respondent
Azaa. The rest were approved by respondent Governor.
In a letter dated 31 May 1993 (Exh. O) and certificate of settlement and
balances dated 17 May 1993 (Exh. P), the Provincial Auditor of Albay
informed respondent Governor that payments made by the Province as
attorneys fees amounting to P7,380,410.31 have been disallowed by the
Commission on Audit (COA, with the following notation:
The disbursement vouchers detailed hereunder represent payments for
attorneys fees of Cortes & Reyna Law Office for legal services rendered re:
G.R. No. 87479 NAPOCOR, Petitioner vs. The Province of Albay, et al.,
Respondent, Supreme Court, en banc. Total payments of P7,380,410.31
are disallowed for lack of the requisite prior written conformity and
acquiescence of the Solicitor General x x x as well as the written
concurrence of the commission on Audit as provided for and required
under COA Circular No. 86-255 dated April 2, 1986, re: Inhibition against
employment by government: agencies and instrumentalities x x x of
private lawyers to handle their legal cases, viz.
The complaint alleges that by entering into the retainer agreement with
private lawyers and paying P7, 380, 410.31 to the said private lawyers,
respondents violated several provisions of law which warrants the
imposition of administrative penalties against them. It is to be noted that
respondents Victoria, Reyeg, Cabredo, Marcellana and Osia were not yet
members of the Sangguniang Panlalawigan when Resolution No. 129 was
passed. However, the complaint alleges that these respondents were
named in the complaint because they approved the supplemental
budget/appropriation ordinances providing for the payment of the
attorneys fees.
The sole issue in this case is whether or not respondents have incurred
administrative liability in entering into the retainer agreement with Atty.
Cornago and the Cortes & Reyna Law Firm and in making payments
pursuant to said agreement for purposes of the case filed by NPC with the
Supreme Court against the Province.
We find merit in the complaint and hold that under the circumstances
surrounding the transaction in question the respondents abused their
authority.
Sec. 481 of the Local Government Code (R.A. No. 7160) requires the
appointment of a legal officer for the province whose functions include
the following:
Represent the local government unit in all civil actions and special
proceedings wherein the local government unit or any official thereof, in
his official capacity is a party; Provided, That, in actions or proceeding
where a component city or municipality is a party adverse to the provincial
government or to another component city or municipality, a special legal
officer may be employed to represent the adverse party.
The Supreme Court has ruled in Municipality of Bocaue, et al. v. Manotok,
93 Phil. 173 (1953), that local governments [sic] units cannot be
represented by private lawyers and it is solely the Provincial Fiscal who can
rightfully represent them, thus:
Under the law, the Provincial Fiscal of Bulacan, and his assistants are
charged with the duty to represent the province and any municipality
thereof in all civil actions xxx
It would seem clear that the Provincial Fiscal is the only counsel who can
rightfully represent the plaintiffs and therefore, Attys. Alvir and Macapagal
[the private lawyers hired by the Province of Bulacan] have no standing in
the case. The appeal herein interposed in behalf of the plaintiffs cannot
therefore be maintained.
This ruling applies squarely to the case at hand because Sec. 481 of the
Local Government Code is based on Sec. 1681 of the Revised
Administrative Code which was the subject of interpretation in the
abovecited case of Municipality of Bocaue, et al. v. Manotok.
In hiring private lawyers to represent the Province of Albay, respondents
exceeded their authority and violated the abovequoted section of the
Local Government Code and the doctrine laid down by the Supreme Court.
Moreover, the entire transaction was attended by irregularities. First, the
disbursements to the lawyers amounting to P7,380,410.31 were
disallowed by the Provincial Auditor on the ground that these were made
without the prior written conformity of the Solicitor General and the
written concurrence of the Commission on Audit (COA) as required by COA
Circular No. 86-25 5 dated 2 April 1986.
The respondents attempted to dispute this finding by presenting the
Solicitor Generals conformity dated 15 July 1993. This conformity was,
however obtained after the disbursements were already made in 1990
and 1992. What is required by COA Circular No. 86-255 is a prior written
conformity and acquiescence of the Solicitor General.
Another irregularity in the transaction concerns the lawyers. Resolution
No. 0 1-90 authorized the respondent Governor to sign and confirm a
retainer contract for legal services with the Cortes & Reyna Law Firm at
202 E. Rodriguez Sr. Blvd., Quezon City. The retainer contract signed by
respondent Governor was, however, not only with the Cortes & Reyna Law
Firm but also with Atty. Jesus R. Cornago of Jamecca Building, 280 Tomas
Morato Avenue, Quezon City. That Atty. Jesus R. Cornago and the Cortes &
Reyna Law Firm are two separate entities is evident from the retained
contract itself:
As collaborating counsels for the respondents in the aforementioned case,
our law firm and that of Atty. Jesus R. Cornago request that you pay us an
Acceptance Fee of FIFTY THOUSAND (P50,000.00) PESOS, while the
aforementioned case is pending in the Supreme Court. Thereafter, we will
charge you a contingent fee equivalent to eighteen percent (18%) of the
value of the property subject matter of the case which is P214 million,
payable to us in the event we obtain a favorable judgment for you from
the Supreme Court in the case. Xerox expenses for copies of motions,
memorandum and other matters to be filed with the Supreme Court in the
case, together with xerox copies of documentary evidence, as well as
mailing expenses, will be for your account also.
xxx xxx xxx
Very truly yours,
CORTES & REYNA
LAW FIRM
- and -
Atty. JESUS R. CORNAGO
Jarnecca Building
280 Tomas Morato Avenue
by:
(Sgd.) ANTONIO JOSE F. CORTES

With my conformity:
(Sgd.) GOV. ROMEO R. SALALIMA
Province of Albay
(Italics supplied.)
In entering into a retainer agreement not only with the Cortes & Reyna
Law Firm but also with Atty. Jose R. Cornago, respondent Governor
exceeded his authority under Resolution No. 01-90.
Complicating further the web of deception surrounding the transaction is
the fact that it was only Atty. Cornago who appeared as collaborating
counsel of record of the Province in the Supreme Court case (G.R. No.
87479). We quote the entry of appearance of Any. Cornago in full in said
case:
APPEARANCE
COMES NOW, the undersigned counsel, and to this Honorable Supreme
Court, respectfully enters his appearance as counsel for the respondents in
the above-entitled case, in collaboration with Atty. Romulo L. Ricafort,
counsel of record for the respondents. This appearance bears the
conformity of the respondent Gov. Romeo R. Salalima, as shown by his
signature appearing at the space indicated below. In this connection, it is
respectfully requested that, henceforth, the undersigned counsel be
furnished with a copy of all notices, orders, resolutions and other matters
that may be issued in this case at its office address indicated below.
Quezon City, for Manila, August 24, 1989.
(Sgd.) JESUS R. CORNAGO
Counsel for Respondents
280 Tomas Morato Avenue
Quezon City
PTR No. 561005-89 Mandaluyong
IBP No. 279351-89 Pasig, MM
With my conformity:
(Sgd.) ROMEO R. SALALIMA
Respondent
Office of the Governor of Albay
Legaspi City
Even the Solicitor General, in his letter to respondent Governor dated 15
July 1993, noted that the Province is represented in the Supreme Court by
Attys. Ricafort Cornago and Glenn Manahan but not by the Cortes & Reyna
Law Firm, thus:
Incidentally, a check with our office records of the case G.R. No. 87479
reveals that the Province of Albay and its officials named respondents
therein were represented in the Supreme Court by Atty. Romulo Ricafort
the Provinces Legal Officer II, and Attys. Jesus R. Cornago and Glenn
Manahan of JAMECCA Building, 280 Tomas Morato Avenue, Quezon City;
no appearance was entered therein by the Cortes & Reyna Law Firm.
(Italics supplied)
Furthermore, the memorandum with the Supreme Court filed for the
Province was signed by Atty. Cornago and not by the Cortes & Reyna Law
Firm. Consequently, the Cortes & Reyna Law Firm was not counsel of
record of the Province in G.R. No. 87479. And yet, six of the ten checks
paid by the Province and amounting to more than P3.6 million were issued
in favor of the Cortes & Reyna Law Firm through Atty. Antonio Jose Cortes.
In other words, respondents disbursed money to the Cortes & Reyna Law
Firm although the latter did not appear as counsel for the Province in the
Supreme Court in G.R. No. 87479.
Finally, the attorneys fees agreed upon by respondent Salalima and
confirmed by the other respondents are not only unreasonable but also
unconscionable. The contingent fee of 18% of the P2l4 million claim of the
Province against NPC amounts to P38.5 million. The word unconscionable,
as applied to attorneys fee, means nothing more than that the fee
contracted for, standing alone and unexplained would be sufficient to
show that an unfair advantage had been taken of the client, or that a legal
fraud had been taken of the client, or that a legal fraud had been
perpetrated on him. (Moran, Comments on the Rules of Court, Vol. 6, p.
236.)
The Province has a legal officer, Atty. Ricafort, who had already filed a
comment on NPCs petition against the Province. The comment filed by
Atty. Ricafort already covers the basic issues raised in the petition. When
Atty. Cornago filed an appearance and subsequently a memorandum for
the Province, the petition was already been given due course by the
Supreme Court and the only pleading to be filed by the parties before the
Court would issue its decision was a memorandum. Surely, one
memorandum could not be worth P38.5 million.
Furthermore, the professional character and social standing of Atty.
Cornago are not such as would merit a P38.5 million fee for the legal
services rendered for the Province. During the hearing, respondent
Governor admitted that he had hired Atty. Cornago because they were
schoolmates at San Beda College, thus:
SECRETARY CORONA:
May I ask a question Governor, what was your basis for choosing this
particular Law office? Why not ACCRA, why not Sycip Salazar, why not
Carpio Villaraza, why this particular Law office? Frankly, I never heard of
this law office. Who recommended it?
GOVERNOR SALALIMA:
Atty. Cornago was then a graduate of San Beda and I am a graduate of San
Beda.
SECRETARY CORONA:
Were you classmates?
GOVERNOR SALALIMA:
No.
SECRETARY CORONA:
How many years apart were you?
GOVERNOR SALALIMA:
Two (2) years.
SECRETARY CORONA:
So, you knew each other from the law school?
GOVERNOR SALALIMA:
Yes.
SECRETARY CORONA:
Were you members of the same fraternity in San Beda?
GOVERNOR SALALIMA:
Yes.
(TSN, 12 July 1992, pp. 27-29.)
It is evident that respondent Governor hired Atty. Cornago not on the
basis of his competency and standing in the legal community but purely
for personal reasons. Likewise, the standing of the Cortes & Reyna Law
Firm is not such as would merit P38.5 million for one memorandum,
which, in this case, it had not even filed because it was not the counsel of
record. Hence, considering the labor and time involved, the skill and
experience called for in the performance of the services and the
professional character and social standing of the lawyers, the attorneys
fee of P38.5 million is unconscionable. By allowing such scandalously
exorbitant attorneys fees which is patently disadvantageous to the
government, respondents betrayed a personal bias to the lawyers involved
and committed abuse of authority.
Parenthetically, the retainer contract containing such exorbitant attorneys
fees may also be violative of the following: (a) COA Circular No. 85-55-A (8
September 1985) prohibiting irregular, unnecessary, excessive or
extravagant expenditures or uses of funds; and (b) Sec. 3 (e) and (g) of R.A.
No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act.
Finally, the Committee again applies in this case, as was applied in OP Case
No. 5470, the rule of joint responsibility as enunciated under Sec. 305(1) of
the Local Government Code.
In view of the foregoing, the Committee holds that respondents
committed abuse of authority under Sec. 60(e) of the Local Government
Code for the following:
1. Hiring private lawyers, in violation of Sec. 481 of the Local Government
Code, to handle the case of the Province of Albay before the Supreme
Court in G.R. No. 87479;
2. Disbursing public money in violation of COA rules and regulations;
3. Paying the Cortes & Reyna Law Firm public money although it was only
Atty. Cornago who was the counsel of record of the Province of Albay in
the Supreme Court case;
4. Authorizing an unconscionable and grossly disadvantageous attorneys
fees of P38.5 million; and
5. Additionally, as to respondent Governor, entering into a retainer
agreement not only with the Cortes & Reyna Law Firm but also with Atty.
Cornago, thus exceeding his authority under Resolution No. 0 1-90 passed
by the Sangguniang Panlalawigan.
After taking all the attendant circumstances into consideration, the
Committee recommends that the following penalties of suspensions
without pay be meted out:
a. Respondents Salalima six (6) months
and Azaa each; and
b. All the other
respondents four (4) months
each.
III. OP Case No. 5471
This refers to the administrative complaint filed by the Tiwi Mayor Naomi
Corral against Albay Governor Romeo Salalima, Albay Sangguniang
Panlalawigan Members Juan Victoria, Lorenzo Reyeg, Arturo Osia, Jesus
Marcellana, Nemesio Baclao, Ramon Fernandez, Jr., Masikap Fontanilla,
Vicente Go, Sr., Wilbor Rontas and Clenio Cabredo, and Tiwi Vice-Mayor
Rodolfo Benibe for abuse of authority and oppression under Sec. 60 (c)
and (e) of R.A. No. 7160.
The antecedent facts are as follows:
On 20 October 1992, Mayor Corral and seven (7) Kagawads of the Tiwi
Sangguniang Bayan charged herein respondent Governor Salalima and
Vice-Governor Azana for abuse of authority, misconduct in office and
oppression. This administrative complaint, initially docketed as OP Case
No. 4982 (DILG Adm. Case No. P-8- 93), arose from the refusal of said
respondents to remit Tiwis share in the P40,724,47 1.74 tax delinquency
payments made by NPC. This case was subsequently substituted by OP
Case No. 54790 filed on 25 January 1993 which now included as
respondents Albay Sangguniang Panlalawigan Members Victoria, Reyeg,
Osia, Cabredo, Go, Marcellana, Fernandez, Fontanilla, and Rontas.
Subsequently, Mayor Corral became the subject of several administrative
and criminal complaints filed by certain individuals with the following
offices:
a. Achilles Berces v. Mayor Naomi Corral
(1) Albay Sangguniang Pan lalawigan, Adm. Case No. 02-92
(2) Albay Sangguniang Panlalawigan, Adm. Case No. 05-92
(3) Office of the Ombudsman, OMB Adm. Case No. 1930163
(4) Office of the Ombudsman, OMB Case No. 0930682
(5) Office of the Ombudsman, OMB-092-3008
b. Muriel Cortezano v. Mayor Naomi Corral
(6) Albay Sangguniang Panlalawigan, Adm. Case No. 10-93
(7) Office of the Ombudsman, OMB-0-92-3000
c. Amelia Catorce v. Mayor Naomi Corral
(8) Albay Sangguniang Panlalawigan, Adm. Case No. 09-93
d. Aida Marfil v. Mayor Naomi Corral
(9) Albay Sangguniang Panlalawigan, Adm. Case No. 07-93
(10) Office of the Ombudsman, 0MB Case No. 5-93-0110
e. Rodolfo Belbis v. Mayor Naomi Corral
(11) Albay Sangguniang Panlalawigan, Adm. Case No. 06-93
(12) Office of the Ombudsman, 0MB Case No. 0-93-0098
f. Kin. Juan Victoria, et al. v. Mayor Naomi Corral
(13) Office of the Prosecutor, I.S. No. 93-046 (for Libel). Legaspi City
g. Governor Romeo Salalima, et al. v. Mayor Naomi Corral
(14) Office of the Prosecutor, I.S. No. 93-044 (for Libel and Perjury),
Legaspi City
(15) Office of the Prbsecutor, I.S. No. 93-045 (for Libel and Perjury),
Legaspi City
or a total of fifteen (15) cases.
On 7 January 1993, the respondent-members of the Sangguniang
Panlalawigan passed Omnibus Resolution No. 2 recommending that Mayor
Corral be placed under preventive suspension for sixty (60) days pending
the resolution of Adm. Case No. 05-92 (Exh. 18).
On 11 January 1993, respondent Salalima approved said resolution and, on
the same date, officially directed herein respondent Tiwi Vice-Mayor
Benibe to assume the office and discharge the functions of Tiwi Mayor
(Exh. 18).
On 21 January 1993, Department of the Interior and Local Government
(DILG) Secretary Rafael Alunan III directed the lifting of the 11 January
1993 suspension order issued by respondent Salalima. In his letter to
Mayor Corral (Exh. C), he stated, thus:
Considering that the preventive suspension imposed upon you by
Governor Romeo R. Salalima of that province, was issued after the latters
refusal to accept your answer, therefore, the issuance of subject order of
preventive suspension is premature, the issues having not been joined.
In view thereof, the Order of Preventive Suspension dated 11 January
1993, issued by Governor Salalima, is hereby lifted.
On 26 January 1993, the Office of the President (OP), acting in OP Case No.
4982, after finding that the evidence of guilt is strong, and given the
gravity of the offense and the great probability that the continuance in
office of respondent Governor Romeo R. Salalima could influence the
witnesses or pose a threat to the safety and integrity of the records and
other evidence, placed respondent Salalima under preventive suspension
for sixty (60) days (Exhs. D to D-2).
Respondent Salalima subsequently sought the reversal of the OP Order
dated 26 January 1993 but the same was dismissed by the Supreme Court
on 26 May 1993 in the case entitled Salalima v. the Hon. Executive
Secretary, G.R. No. 108585 (Exh. E).
On 2 February 1993, Mayor Corral filed a motion to inhibit the
respondents from hearing the six cases filed against her with the
Sangguniang Panlalawigan (Adm. Case Nos. 02-92, 05-92,06-93,07-93,09-
93 and 10-93) asserting her constitutional right to due process of law. This
motion was however denied with the respondent-members of the
Sangguniang Panlalawigan assuming jurisdiction over the cases.
After conducting marathon hearings, respondent-members of the
Sangguniang Panlalawigan rendered judgments against Mayor Corral and
imposing, among others, the following penalties of suspension:
1. In Adm. Case No. 02-92 - suspension for two (2) months (see Decision
dated 1 July 1993, [Exhs. F to F-2]);
2. In Adm. Case No. 05-92 - suspension for three (3) months (see
Resolution dated 5 July 1993, [Exhs. 0 to G-2]);
3. In Adm. Case No. 06-93 and 07-93 - suspension for one (1) month (see
Resolution dated 8 July 1993, (Exhs. H to H-3]); and
4. In Adm. Case No. 10-93 - suspension for the period of unexpired term
(see Resolution dated 9 July 1993, (Exhs. I to 1-2]).
On 22 July 1993, respondent Salalima issued a directive addressed to the
Provincial Treasurer, Provincial Auditor, PNP Provincial Director, Provincial
Assessor, Provincial Accountant, Provincial Budget Officer, Provincial DILG
Officer, the Sangguniang Panlalawigan and Provincial Prosecutor enjoining
them to assist in the implementation of the decisions suspending
Mayor Corral by decreeing directives to your subordinate officials in Tiwi,
Albay to strictly adheres thereto.
Subsequently, Mayor Corral interposed appeals from the decisions of
respondent-members of the Sangguniang Panlalawigan suspending her
from office to the OP (docketed as OP Case Nos. 5337 and 5345) with a
prayer that the implementation of said decisions be stayed.
On 28 July 1993, the OP ordered the suspension/stay of execution of the
decisions in Adm. Case Nos. 02-92 and 05-92 (Exhs. J to J-2).
Similarly, on 3 August 1993, the OP ordered the suspension/stay of
execution of the decisions in Adm. Case Nos. 06-93, 07-93 and 10-93 (Exhs.
K to K-i).
Also, with respect to Adm. Case Nos. 6-93 and 7- 93, the Civil Service
Commission (CSC) issued Resolution Nos. 93- 005 (dated 5 January 1993)
and 92- 817 (dated 4 March 1993), which provided the bases and
justifications for the acts of Mayor Corral complained of in these two (2)
cases. The Supreme Court subsequently affirmed said CSC resolutions
(Exhs. L to L-2).
In the multiple charges for libel and perjury against Mayor Corral, arising
from her complaint in OP Case No. 5470, filed with the Regional Trial Court
of Legaspi City, the Supreme Court ordered the lower court to cease and
desist from proceeding with the case in a resolution dated 16 September
1993 (Exhs. Q to Q-2).
In determining whether respondents are guilty of the charges levelled
against them, the following issue has to be resolved, i.e., whether the
conduct of the proceedings in the administrative cases filed and the series
of suspension orders imposed by the respondent- members of the
Sangguniang Panlalawigan on Mayor Corral constitute oppression and
abuse of authority?
Oppression has been defined as an act of cruelty, severity, unlawful
exaction, domination or excessive use of authority. (Ochate v. Ty Deling, L-
13298, March 30, 1959, 105 Phil. 384, 390.)
Abuse means to make excessive or improper use of a thing, or to employ it
in a manner contrary to the natural or legal rules for its use. To make an
extravagant or excessive use, as to abuse ones authority (Blacks Law
Dictionary <5th Ed.>, II). It includes misuse (City of Baltimore t.
Cornellsville & S.P. Ry, Co., 6 Phils. 190, 191, 3 Pitt 20, 23).
Moreover, Section 63(d) of R.A. No. 7 160 expressly states that, [a]ny
abuse of the exercise of the powers of preventive suspension shall be
penalized as abuse of authority.
Now, does the above narration of facts show commission by respondents
of the administrative offenses complained of?
A review of the proceedings reveal that the same were marked by haste
and arbitrariness. This was evident from the start when Mayor Corral was
preventively suspended (in Adm. Case No. 05-92) even before she could
file her answer. In the other cases, respondent-members of Sangguniang
Panlalawigan ruled that Mayor Corral had waived her right to adduce
evidence in her defense.
Consequently, respondents did not also fully evaluate the evidences
presented to support the charges made. As such, all the decisions of
respondents suspending Mayor Corral were ordered lifted suspended by
the DILG and OP. Thus, even the cases filed with the Office of the
Ombudsman, which were based on the same incidents complained of in
the said administrative cases, were subsequently dismissed.
Respondents should have inhibited themselves from assuming jurisdiction
over said cases (Adm. Case Nos. 02-92, 05-92, 06-93, 07-93, 09-93, and 10-
93) as timely moved by Mayor Corral considering that they were the
respondents in various administrative complaints she earlier filed with the
OP and with the DILG starting with OP Case No. 4892. However, despite
the violation of due process resulting from their collective acts,
respondents, in their determination and eagerness to suspend and harass
Mayor Corral, proceeded to hear and decide said cases.
The OP has no jurisdiction over administrative complaints filed against
elective municipal officials. Under Sec. 6 1(b) of R.A. No. 7160, [a]
complaint against any elective official of a municipality shall be filed
before the Sangguniang Panlalawigan whose decision may be appealed to
the Office of the President.
WHEREFORE, thecharges against Vice Mayor Benibe are dismissed.
However, all the other respondents herein are found guilty of oppression
and abuse of authority under Section 60(c) and (e) of R.A. No. 7160.
Accordingly, it is recommended that each of them be meted the penalty of
four (4) months suspension without pay.
IV. OP Case No. 5450
This refers to the administrative charges filed by Tabaco Mayor Antonio
Demetriou against Governor Romeo Salalima for violation of - Section 60,
pars. (c) and (d) of the Local Government Code, Section 3, par. (g) of
Republic Act No. 3019, and the provisions of PD No. 1594, as amended.
This case was filed with the Office of the President (OP) on 18 October
1993 and docketed as OP Case No. 5450.
The facts as found by this Committee are as follows:
On 27 September 1989 the Tabaco Public Market was destroyed by fire
(Exh. A, par. 1).
On 26 September 1990, the OP advised Mayor Demetriou and respondent
Salalima that the P12.0 Million in Budgetary Assistance to Local
Government Units (BALGU) funds earlier remitted by the national
government to the Province, should be used for the rehabilitation of the
Tabaco Public Market, and that the project should be implemented by the
Provincial Governor in consultation with the Mayor of Tabaco (Exh. 37).
On 8 May 1991, a public bidding was conducted by the Albay Provincial
Government for the repair and rehabilitation of the Tabaco Public Market
(Exh. A, par. 1).
On 29 May 1991, the Province represented by respondent Salalima and
RYU Construction entered into a contract for P6,783,737.59 for said repair
and rehabilitation (Exh. H). Among others, the contract stipulated that the
contracted work should be completed in 150 days.
The contractor started the project on 1 July 1991 and completed the same
on 2 June 1992 (Exh. 41).
On 6 March 1992, the Province represented by respondent Salalima
entered into another contract (Exh. 1) for P4,304,474.00 with RYU
Construction for additional repair and rehabilitation works for the Tabaco
Public Market. The terms and conditions of this contract are the same as
those stipulated in the 29 May 1991 contract except for the construction
period which is only for 90 days.
Construction of the second project commenced on 27 March 1992 and
was completed on 2 June 1992 (Exh. 42).
In his complaint, Mayor Demetriou alleged that despite the delay in the
completion of work under the first contract, liquidated damages were not
imposed on, nor collected from, RYU Construction by the Province.
Moreover, he claims that the second contract with RYU Construction was
entered into in violation of P.D. No. 1594 as RYU incurred delay with
respect to the first contract.
We find merit in the complaint:
Pars. 1 and 2 of item CI 8, par. 1 of item CI 11, and par. 10.4.2 of item lB of
the implementing Rules and Regulations (IRR) of PD No. 1594, as
amended, read:
CI 8 - LIQUIDATED DAMAGES
1. Where the contractor refuses or fails to satisfactorily complete the work
within the specified contract time, plus any time extension duly granted
and is hereby in default under the contract, the contractor shall pay the
Government for liquidated damages, and not by way of penalty, an
amount to be determined in accordance with the following formula for
each calendar day of delay, until the work is completed and accepted or
taken over by the Government:
xxx xxx xxx
2. To be entitled to such liquidated damages, the Government does not
have to prove that it has incurred actual damages. Such amount shall be
deducted from an) money due or which may become due the contractor
under the contract and/or collect such liquidated damages from the
retention money or other securities posted by the contractor whichever is
convenient to the Government.
CI 1 - Extension of Contract time
1. Should the amount of additional work of any kind or other special
circumstances of any kind whatsoever occur such as to fairly entitle the
contractor to an extension of contract time, the Government shall
determine the amount of such extension; provided that the Government is
not bound to take into account any claim for an extension of time unless
the contractor has prior to the expiration of the contract time and within
thirty (30) calendar days after such work has been commenced or after the
circumstances leading to such claim have arisen, delivered to the
Government notices in order that it could have investigated them at that
time. Failure to provide such notice shall constitute a waiver by the
contractor of any claim. Upon receipt of full and detailed particulars, the
Government shall examine the facts and extent of the delay and shall
extend the contract time for completing the contract work when, in the
Governments opinion, the finding of facts justify an extension.
xxx xxx xxx
IB 10.4.2 - By Negotiated Contract
1. Negotiated contract may be entered into only where any of the
following conditions exists and the implementing
office/agency/corporation is not capable of undertaking the project by
administration:
xxx xxx xxx
c. Where the subject project is adjacent or contiguous to an ongoing
project and it could be economically prosecuted by the same contractor, in
which case, direct negotiation may be undertaken with the said contractor
at the same unit prices adjusted to price levels prevailing at the time of
negotiation using parametric formulae herein prescribed without the 5%
deduction and contract conditions, less mobilization cost, provided that he
has no negative slippage and has demonstrated a satisfactory
performance. (Italics supplied)
A reading of items CI 8 and CI 11 above shows that the collection of
liquidated damages is mandatory in cases of delay unless there are valid
orders of extension of contract work given by the Government.
Under the 29 May 1991 contract, the repair works should have been
completed on 26 December 1991 since the project was started on 1 July.
But then the project was finished only on 2 June 1992.
This is confirmed by the COA through SAO Report No. 93-11 (Exh. N), thus
- rehabilitation works for the Tabaco Public market. Failing to comply with
xxx xxx xxx
xx x The project was completed only on June 2, 1992 or a delay of 132
working days, as shown in the following tabulation
Billing As of Days Lapsed %Accomplishment
First Dec. 2, 1991 130 26.48
Second Jan. 8, 1992 187 53.19
Third Feb. 10, 1992 100 75.23
Final June 2, 1992 202 100.00
In view of the delays in project completion the Team requested from the
Provincial Engineer any copy of the order suspending and resuming the
work (suspension and resume order) since the same was not attached to
the claims of the contractor or paid vouchers. Unfortunately, the
Provincial Engineer could not provide said document as the Engineering
Office had not issued any. In effect, there was no basis for the extension of
contract time and the contractor should have been considered as behind
schedule in the performance of the contract. Despite its deficiency, no
liquidated damages was ever imposed against the contractor. (pp. 25-26)
[Italics supplied]
Respondent Salalima failed to submit any evidence concerning any order
issued by the Provincial Government extending RYU Constructions
contract.
The law requires that requests for contract extension as well as the orders
granting the same must be made and given prior to the expiration of the
contract. The rationale for this requirement is obviously to prevent a
contractor from justifying any delay after the contract expires.
Before signing the 6 March 1992 contract, which was entered into on a
negotiated basis and not through bidding, respondent Salalima should
have inquired whether or not RYU Construction incurred negative
slippage. Had he done so, the matter of imposing and collecting liquidated
damages would have been given appropriate attention. This is aggravated
by the fact that respondent knew that RYU Construction was the
contractor for the original rehabilitation and repair work for the Tabaco
Public market being the signatory to the first contract.
Clearly, therefore, there was a failure on the part of the Province to
impose and collect liquidated damages from the erring contractor, RYU
Construction.
Going to the second charge, we find that respondent Salalima
unmistakably violated the provisions of P.D. No. 1594, as amended.
Fundamental is the rule that government contracts especially
infrastructure contracts are awarded only through bidding. As explicitly
ordained by Sec. 4 of P.D. No. 1594, construction projects shall generally
be undertaken by contract after competitive bidding. By its very nature
and characteristic, a competitive public bidding aims to protect the public
interest by giving the public the best possible advantages through open
competition. At the same time, bidding seeks to prevent or curtail
favoritism, fraud and corruption in the award of the contract which
otherwise might prevail were the government official concerned is vested
with the full or absolute authority to select the prospective contractor
(Fernandez, Treatise on Government Contracts Under Philippine Law, 1991
Ed. citing Caltex Phil. Inc. v. Delgado Bros., 96 Phil. 368; San Diego v.
Municipality of Naujan, 107 Phil. 118; and Matute v. Hernandez, 66 Phil.
68).
This is precisely the reason why negotiated contracts can be resorted to
only in a few instances such as that provided under par. 1 (c) of item IB
10.4.2 of the IRR of PD No. 1594, supra. However, said proviso requires
that the contractor had not incurred negative slippage and has
demonstrated a satisfactory performance.
And since RYU Construction incurred negative slippage with respect to the
repair works under the 29 May 1991 contract as found by COA, it was
anomalous for the Province through respondent Salalima to enter into a
negotiated contract with said contractor for additional repair and
the requirements of law, the 6 March 1992 contract is clearly irregular, if
not illegal.
Finally, said contract may also be violative of the following: (a) COA
Circular No. 85-55-A. (dated 8 September 1985) prohibiting irregular
expenditures or uses of funds; and (b) Sec. 3(e) and (g) of R.A. No. 3019,
otherwise known as the Anti-Graft and Corrupt Practices Act.
Premises considered, this Committee finds the respondent guilty of abuse
of authority and gross negligence. Accordingly, it is recommended that the
penalty of suspension without pay be meted out on respondent Salalima
for five (5) months. (pp. 2-35)

The President then concluded and disposed as follows:
After a careful review of the cases, 1 agree with and adopt the findings
and recommendations of the Ad Hoc Committee, supported as they are by
the evidence on record.
WHEREFORE, the following penalties are meted out on each of the
respondents, to wit:
In OP Case No. 5470 -
a. Governor Romeo Salalima - suspension without pay for five (5) months:
b. Vice-Governor Danilo Azaa, Albay Sangguniang Panlalawigan Members
Juan Victoria, Lorenzo Reyeg, Arturo Osia, Clenio Cabredo, Vicente Go, Sr.,
Jesus Marcellana, Ramon Fernandez, Jr., Masikap Fontanilla, and Wilbor
Rontas - suspension without pay for four (4) months.
In OP Case No. 5469 -
a. Governor Romeo Salalima and Vice-Governor Danilo Azaa - suspension
without pay for six (6) months; and
b. Albay Sangguniang Members Juan Victoria, Lorenzo Reyeg, Jesus
Marcellana, Arturo Osia, Clenio Cabredo, Ramon Fernandez, Jr., Masikap
Fontilla, Vicente Go, Sr., and Nemesio Baclao - suspension without pay for
four (4) months;
In OP Case No. 5471 -
a. Governor Romeo Salalima and Albay Sangguniang Members Juan
Victoria, Lorenzo Reyeg, Jesus Marcellana, Arturo Osia, Wilbor Rontas,
Clenio Cabredo, Ramon Fernandez, Jr., Masikap Fontilla, Vicente Go, Sr.,
and Nemesio Baclao suspension without pay for four (4) months;
In OP Case No. 5450 -
a. Governor Romeo Salalima - suspension without pay for five (5) months.
The suspension imposed on respondents shall be served successively but
shall not exceed their respective unexpired terms, in accordance with the
limitation imposed under Section 66(b) of the Local Government Code.
It must at once be pointed out that insofar as O.P. Case No. 5471 is
concerned, nothing of its substantive aspect is challenged in this petition.
The petitioners mentioned it only in their claim of prematurity of
Administrative Order No. 153 in view of their appeal from Special Audit
Office (SAO) Report No. 93-11 to the COA en banc. O.P. Case No. 5471 is
the administrative complaint filed by Tiwi Mayor Corral against the
petitioners for abuse of authority and oppression in connection with their
conduct in the several administrative cases filed by certain individuals
against Mayor Corral. It has no logical nexus to the appeal. The decision
then in O.P. Case No. 5471 stands unchallenged in this petition.
As to O.P. Cases Nos. 5450, 5469, and 5470, the issues presented by the
petitioners may be reformulated in this wise:
I. Did the Office of the President act with grave abuse of discretion
amounting to lack or excess of jurisdiction in suspending the petitioners
for periods ranging from twelve to twenty months?
II. Did the Office of the President commit grave abuse of discretion in
deciding O.P. Cases Nos. 5450, 5469, and 5470 despite the pendency of
the petitioners appeal to the COA en bane from Special Audit Office (SAO)
Report No. 93-11 and the Certificate of Settlement and Balances (CSB)?
III. Did the Office of the President commit grave abuse of discretion in
holding the petitioners guilty of abuse of authority in denying the
Municipality of Tiwi of its rightful share in the P40,724,471.74 which the
Province of Albay had received from the NPC under the Memorandum of
Agreement?
IV. Did the Office of the President commit grave abuse of discretion in
suspending in O.P. Cases Nos. 5469 and 5450 petitioner Salalima, who was
reelected on 11 May 1992, for an alleged administrative offense
committed during his first term; and in suspending in O.P. Case No. 5469
the other petitioners, some of whom were elected and others reelected
on 11 May 1992, for an alleged administrative offense committed in 1989?
V. Did the Office of the President commit grave abuse of discretion in
holding the petitioners in O.P. Case No. 5469 guilty of grave abuse of
authority under Section 60(e) of the Local Government Code of 1991
although they were charged under Section 3(g) of R.A. No. 3019, as
amended, and Section 60(d) of the Local Government Code of 1991,
thereby depriving them of due process of law?
We shall take up these issues in the order they are presented.
I
Anent the first issue, the petitioners contend that the challenged
administrative order deprived them of their respective offices without
procedural and substantive due process. Their suspensions ranging from
twelve months to twenty months or for the entire duration of their
unexpired term, which was then only seven months, constituted
permanent disenfranchisement or removal from office in clear violation of
Section 60 of R.A. No. 7160 which mandates that an elective local official
may be removed from office by order of the court.
The Comment of the Solicitor General is silent on this issue. However,
respondents Mayor Corral and newly appointed provincial officials
maintain that the suspension imposed upon the petitioners in each of the
four cases was within the limits provided for in Section 66(b) of R.A. No.
7160 and that the aggregate thereof ranging from twelve months to
twenty months, but not to exceed the unexpired portion of the petitioners
term of office, did not change its nature as to amount to removal.
Section 66(b) of R.A. No. 7160 expressly provides:
SEC. 66. Form and Notice of Decision. - x x x
(b) The penalty of suspension shall not exceed the unexpired term of the
respondent or a period of six (6) months for every administrative offense,
nor shall said penalty be a bar to the candidacy of the respondent so
suspended as long as he meets the qualifications for the office.
This provision sets the limits to the penalty of suspension, viz., it should
not exceed six months or the unexpired portion of the term of office of the
respondent for every administrative offense.[1] An administrative offense
means every act or conduct or omission which amounts to, or constitutes,
any of the grounds for disciplinary action. The offenses for which
suspension may be imposed are enumerated in Section 60 of the Code,
which reads:
SEC. 60. Grounds for Disciplinary Action. - An elective local official may be
disciplined, suspended, or removed from office on any of the following
grounds:
(a) Disloyalty to the Republic of the Philippines;
(b) Culpable violation of the Constitution;
(c) Dishonesty, oppression, misconduct in office, gross negligence, or
dereliction of duty;
(d) Commission of any offense involving moral turpitude or an offense
punishable by at least prision mayor;
(e) Abuse of authority;
(f) Unauthorized absence for fifteen (15) consecutive working days, except
in the case of members of the sangguniang panialawigan, sangguniang
panlungsod, sangguniang bayan, and sangguniang barangay;
(g) Acquisition for, or acquisition of, foreign citizenship or residence or the
status of an immigrant of another country; and
(h) Such other grounds as may be provided in this Code and other laws.
An elective local official may be removed from office on the grounds
enumerated above by order of the proper court.
Assuming then that the findings and conclusions of the Office of the
President in each of the subject four administrative cases arc correct, it
committed no grave abuse of discretion in imposing the penalty of
suspension, although the aggregate thereof exceeded six months and the
unexpired portion of the petitioners term of office. The fact remains that
the suspension imposed for each administrative offense did not exceed six
months and there was an express provision that the successive service of
the suspension should not exceed the unexpired portion of the term of
office of the petitioners. Their term of office expired at noon of 30 June
1995.[2] And this Court is not prepared to rule that the suspension
amounted to the petitioners removal from office.[3]
II
Petitioners contend that the decisions in OP. Cases Nos. 5450, 5470, and
5471 are predicated on SAO Report No. 93-11 of the COA Audit Team,
while that in O.P. Case No. 5469 is based on the CSB issued by the
Provincial Auditor of Albay. Since the Report and the CSB are on appeal
with, and pending resolution by, the Commission on Audit En Banc, they
are not yet final, conclusive, and executory as admitted by the team leader
of the COA Audit Team that submitted the SAO Report and by the
Provincial Auditor who issued the CSB. The petitioners also point out that
the COA Chairman had already reversed the recommendation in the SAO
Report No. 93- 11 that the Provincial Government of Albay should share
with the Municipality of Tiwi the P40,724,471.74 representing payments of
the NPC as of December 1992. They then submit that Administrative Order
No. 153 suspending all the petitioners is premature in view of the
pendency of the appeal to the COA en banc from SAO Report No. 93-11
and the CSB.
This issue of prematurity was raised before the Ad Hoc Committee. In
rejecting it, the Committee explained as follows:
It is important to stress that the exceptions (Exhs. 50-B, 50-I, & 50-J) raised
by the respondents to COA nierely involve questions of law, i.e., as to
whether the Province alone should be entitled to the payments made by
NPC under the MOA, and whether the shares of Tiwi and Daraga, the
concerned barangays, and the national government, should be held in
trust for said beneficiaries.
Considering that the factual findings under SAO Report 93-11 are not
disputed, this Committee has treated said factual findings as final or, at
the very least, as corroborative evidence.
Respondents contention that COAs factual findings, as contained in SAO
Report No. 93-11 cannot be considered in this investigation is untenable.
For no administrative and criminal investigation can proceed, if a
respondent is allowed to argue that a particular COA finding is still the
subject of an appeal and move that the resolution of such administrative
or criminal case be held in abeyance. This will inevitably cause
unnecessary delays in the investigation of administrative and criminal
cases since an appeal from a COA finding may be brought all the way up to
the Supreme Court.
Besides, the matters raised by the respondents on appeal involve only
conclusions/interpretation of law. Surely, investigative bodies, such as
COA, the Ombudsman and even this Committee, are empowered to make
their own conclusions of law based on a given set of facts.
Finally, sufficient evidence has been adduced in this case apart from the
factual findings contained in SAO Report No. 93-11 to enable this
Committee to evaluate the merits of the instant complaint.
The alleged appeal from the CSB is unclear from the records, and in light of
the foregoing statement of the Ad Hoc Committee it is obvious that such
appeal was not raised.
We agree with the Ad Hoc Committee that the pendency of the appeal
was no obstacle to the investigation and resolution of the administrative
cases.
It may be further stressed that a special audit has a different purpose in
line with the constitutional power, authority, and duty of the COA under
Section 2, Subdivision D, Article IX of the Constitution to examine, audit,
and settle all accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held in trust by, or
pertaining to, the Government, or any of its subdivisions, agencies, or
instrumentalities, including government-owned or controlled corporations
with original charters and its exclusive authority .. . to define the scope of
its audit and examination, establish the techniques and methods required
therefor, and promulgate accounting and auditing rules and regulations,
including those for the prevention and disallowance of irregular,
unnecessary, excessive, extravagant, or unconscionable expenditures, or
uses of government funds and properties.[4]
III
As to the third issue, the petitioners aver that the P40,724,471.74 received
by the Province of Albay from the NPC represents part of the price paid for
properties owned by the province in a corporate capacity and repurchased
by the former owner. It constitutes payment of a debt and not of a tax,
which debt arose from and was a consequence of, the Memorandum of
Agreement dated July 29, 1992. They further contend that the
Memorandum of Agreement (MOA) partakes of a deed of sale. And
nowhere in the Real Property Tax Code (P.D. No. 464)[5] is there any
provision requiring provinces to share with the municipalities the proceeds
of a private sale. What are required to be shared are only the collections
of real property taxes and Special Education Fund (SEF); proceeds of
delinquent taxes and penalties, or of the sale of delinquent real property,
or of the redemption thereof; and income realized from the use, lease, or
disposition of real property seized by the province.
It must be recalled that in August 1992, Governor Sal alima and NPC
President, Pablo Malixi, were already agreed that the basic tax due from
the NPC was P207,375,774 72.[6] But later, Malixi informed the former
that upon recomputation of the real property tax payable to the Province
of Albay at the minimum of one-fourth of one percent pursuant to Section
39(1) of the Real Property Tax Code, the NPC came up with an adjusted
figure of P 129,609,859.20.[7] Governor Salalima then explained that one
percent was applied in the computation for the reconciled figure of
P207,375,774.72 because the one-half percent imposed by the respective
ordinances of the municipalities where the delinquent properties are
located was added to the one-half percent imposed by the tax ordinance
of the Province. His reply reads as follows:
September 9, 1992
Hon. Pablo V. Malixi
President, National Power
Corporation
Diliman, Quezon City
Dear President Malixi:
As suggested in your letter of August 31, 1992, we are very pleased to
furnish you herewith the certified true copies of the local tax ordinances
which served as our basis in imposing the rate of 1% of the reconciled
figure of P207,375,774.72, to wit:
(a) Resolution No. 30, series of 1974 of the Provincial Board of Albay,
enacting Provincial Tax Ordinance No.4, whose Section I, provides:
There shall be levied, assessed and collected as annual ad valorem tax on
real properties including improvements thereon equivalent to one half of
one percent of the assessed value of real property.
(b) Ordinance No. 25, series of 1974, of the Sangguniang Bayan of Tiwi,
Albay, whose Section 2 provides:
That the tax rate of real property shall be one-half of one percent of the
assessed value of real property.
(c) Ordinance No. 27, series of 1980, of the Sangguniang Bayan of Daraga.
Albay, whose Section 3 provides:
Rates of Levy - The tax herein levied is hereby fixed at one-half of one
percent (1/2 of 1%) of the assessed value of the real property.
These tax ordinances were in pursuance to Sec. 39 (1)(3) of P.D. 464, the
applicable law during the period 1984 to 1987. By adding the one half
percent imposed in the tax Ordinance of Tiwi to the one ha If percent also
imposed in the Provincial Tax Ordinance, we have a total of one percent
which we used as the rate of levy in computing the basic tax due on the
real properties in Tiwi.
On the real properties in Daraga, we also added the one half percent
imposed by the Daraga Tax Ordinance to the one-half percent of the
Provincial Tax Ordinance.

The additional tax of one percent for the Special Educational Fund (SEF)
was imposed pursuant to Section 41 of P.D. 464, which provides as
follows:
There is hereby imposed annual tax of one percent on real property to
accrue to the Special Educational Fund created under Republic Act No.
5447, which shall be in addition to the basic real property tax which local
governments are authorized to levy, assess and collect under this Code; x x
x immediately become due and demandable.
We hope that the foregoing clarification will settle whatever doubt there is
on why we applied 1% for basic tax and another 1% for SEP in arriving at
P207,375,774.72.[8] (Italics supplied).
The petitioners even emphasized in the instant petition that Governor
Salalima specifically included the amounts due to the Municipalities of Tiwi
and Daraga in asking Napocor to settle its obligations. In other words, the
original claim of P214,845,184.76 or the reconciled figure of
P207,375,774.72 representing real property taxes from 11 June 1984 to 10
March 1987 already covered the real property taxes payable to the
municipalities concerned.
Hence, when the Province sold at public auction the delinquent properties
consisting of buildings, machines, and similar improvements, it was acting
not only in its own behalf but also in behalf of the municipalities
concerned. And rightly so, because under Section 60 of P.D. No. 477, the
Province, thru the Provincial Treasurer, is duty bound to collect taxes
throughout the province, including the national, provincial, and municipal
taxes and other revenues authorized by law. Moreover, under Section 73
of the Real Property Tax Code, the provincial or city treasurer is the one
authorized to advertise the sale at public auction of the entire delinquent
real property, except real property mentioned in Subsection (a) of Section
40, to satisfy all the taxes and penalties due and costs of sale. He is also
authorized to buy the delinquent real property in the name of the
province if there is no bidder or if the highest bid is for an amount not
sufficient to pay the taxes, penalties, and costs of sale.[9]
Since in this case, there was no bidder, the provincial treasurer could buy,
as he did, the delinquent properties in the name of the province for the
amount of taxes, penalties due thereon, and the costs of sale, which
included the amounts of taxes due the municipalities concerned. It is
therefore wrong for the petitioners to say that the subject NPC properties
are exclusively owned by the Province. The Municipalities of Tiwi and
Daraga may be considered co-owners thereof to the extent of their
respective shares in the real property taxes and the penalties thereon.
It must further be noted that it is the provincial treasurer who has charge
of the delinquent real property acquired by the province.[10] He is the one
whom the delinquent taxpayer or any person holding a lien or claim to the
property deal with in case the latter wishes to redeem the property.[11]
He is also the one authorized to effect the resale at public auction of the
delinquent property.[12] Thus, the municipalities concerned had to
depend on him for the effective collection of real property taxes payable
to them. Accordingly, when the Province entered into the Memorandum
of Agreement with the NPC, it was also acting in behalf of the
municipalities concerned. And whatever benefits that might spring from
that agreement should also be shared with the latter.
The MOA, contrary to the position of the petitioners, is not an ordinary
contract of sale. Hereinbelow is the pertinent portion of that agreement:
WHEREAS, the Supreme Court ruled in the NATIONAL POWER
CORPORATION VS. THE PROVINCE OF ALBAY, et al., G.R. No. 87479 that
NAPOCOR is liable to pay Realty Tax for its properties in the municipalities
of Tiwi and Daraga, Albay for the period June 11, 1984 to March 10, 1987;
WHEREAS, NAPOCOR is willing to settle its realty tax liability in favor of the
PROVINCE OF ALBAY;
WHEREAS, there is a need to further validate/reconcile the computation of
the realty tax in the total amount of P2 14,845, 184.76;
NOW, THEREFORE, in view of the foregoing premises and for and in
consideration of the mutual covenant and stipulations hereinafter
provided, the parties hereto have agreed as follows:
1. NAPOCOR will make an initial payment of P17,783,000.00 receipt of
which is hereby acknowledged.
2. The balance of the validated/reconciled amount of the real estate taxes
will be paid in 24 equal monthly installments, payable within the first five
(5) working days of the month. The first monthly installment will
commence in September 1992.
3. Should NAPOCOR default in any monthly installment, the balance will
4. NAPOCOR will pay such other taxes and charges, such as the franchise
tax as provided for in the Local Government Code of 1991.
5. In consideration of settlement of NAPOCOR s tax liability, the PROVINCE
OF ALBAY hereby waives its claim of ownership over NAPOCOR properties
subject in G.R. No. 87479 upon full payment of the balance due to the
PROVINCE OF ALBAY.[13] (Italics supplied).
The tenor of the abovequoted agreement shows that the intention of the
parties was for the redemption of the subject properties in that the
Province would waive ownership over the properties in consideration of
settlement of Napocors tax liability.
Under Section 78 of the Real Property Tax Code, the delinquent real
property sold at public auction may be redeemed by paying the total
amount of taxes and penalties due up to the date of redemption, costs of
sale, and the interest at 20% of the purchase price.
The petitioners are estopped from claiming that the amounts received by
the Province from the NPC constitute payments of a debt under the MOA
or of contract price in a private sale. They constitute redemption price or
payments of NPCs tax liabilities. This is evident from the MOA as well as
the entry in the receipt issued by the Province, thru the Provincial
Treasurer, which reads:
Date: July 29, 1992
Received from National Power Corp.
Manila
In the amount of Seventeen Million Seven Hundred Sixty-Three Thousand
Pesos Philippine Currency P17,763,000.00.
In payment of the following:
For Partial Payment = P17,763,000.00
of Realty Tax Delinquency of Case No. 87479, NPC
vs. Province of Albay
Total P17,763,000.00
(Sgd.) Abundio M. Nuez
Provincial Treasurer[14]
Also worth noting is Provincial Ordinance No. 09-92 adopted by the
petitioners which provides: That the installments paid by said corporation
for the months of September to December 1992, representing partial
payments of the principal tax due are declared forfeited in favor of the
Provincial Government of Albay.
Moreover, in Resolution No. 197-92, the petitioners referred as tax
benefits the shares of certain municipalities and barangays from the
amount paid by the NPC under the MOA. The resolution reads in part as
follows:
WHEREAS, by virtue of the Memorandum Agreement, signed by the
petitioner, Province of Albay and respondent-oppositor, National Power
Corporation (NPC), the latter have agreed and paid an initial payment to
the Province of Albay;
WHEREAS, the sharing based on the Local Government Code of 1991, the
municipalities of Malinao and Ligao are entitled to their shares of
P1,435.00 and P4,4 16.82 respectively and the barangays Bay in Lingao
(sic) to P319.00 and Tagoytoy in Malinao to P98 1.00;
WHEREAS, these tax benefits due them are not enough to pursue a
worthwhile project in said municipalities and barangays considering the
present economic situation.[15] (Italics supplied)

As pointed out by the respondents, if the MOA was merely for the
repurchase by NPC of its properties from Albay, what could have been
executed was a simple deed of absolute sale in favor of NPC at an agreed
price not necessarily P214 million which was the total amount of the realty
tax in arrears Additionally, there would have been no need for the parties
to further validate/reconcile the tax computation of the realty tax in the
total amount of P214,845,184 76
Clearly, the P40,724,471 74 paid by the NPC to the Province pursuant to
the MOA was part of the redemption price or of the realty taxes in arrears.
It is conceded that under Section 78 of the Real Property Tax Code,
redemption of delinquency property must be made within one year from
the date of registration of sale of the property The auction sale of the NPC
properties was held on 30 March 1989 and declared valid by this Court in
its 4 June 1990 decision. It was only on 29 July 1992 that the NPC offered
to repurchase its former properties by paying its tax liabilities. When the
Province accepted the offer, it virtually waived the one-year redemption
period. And having thus allowed the NPC to redeem the subject properties
and having received part of the redemption price, the Province should
have shared with the municipalities concerned those amounts paid by the
NPC in the same manner and proportion as if the taxes had been paid in
regular course conformably with Section 87(c) of the Real Property Tax
Code, which provides:
(c) the proceeds of all delinquent taxes and penalties, as well as the
income realized from the use, lease or other disposition of real property
acquired by the province or city at a public auction in accordance with the
provisions of this Code, and the proceeds of the sale of the delinquent real
property or of the redemption thereof shall accrue to the province, city or
municipality in the same proportion as if the tax or taxes had been paid in
regular course.
As early as 3 August 1992, respondent Mayor Corral had already made a
written demand for payment or remittance of the shares accruing to the
Municipality of Tiwi. Petitioner Governor Salalima refused saying that the
initial check of P 17,763,000.00 was merely an earnest money. Yet, on 22
October 1992, the petitioners passed the aforequoted Resolution No. 197-
92 giving some local government units, where smaller portions of the
delinquent properties are situated, shares from the payments made by the
NPC under the MOA.
The petitioners cannot claim to have acted in good faith in refusing to give
the municipalities of Tiwi and Daraga their share. As pointed out by the
Office of the Solicitor General, the petitioners were aware of the local tax
ordinances passed by the respective Sanggunian Bayan of Tiwi and Daraga
relative to the realty tax to be imposed on properties located in their
respective localities. Petitioner Salalima had even quoted the said
ordinances in his letter to Mr. Pablo Malixi and attached copies thereof to
that letter. Significantly, the petitioners averred in the instant petition that
Governor Salalima specifically included the amounts due to the
municipalities of Tiwi and Daraga in asking NPC to settle its obligations.
When doubt arose as to whether the municipalities concerned are entitled
to share in the amounts paid by the NPC, the province filed on 20
November 1992 a petition for declaratory relief, which the Regional Trial
Court of Albay decided only on 12 May 1994. Yet, as of 31 December 1992,
the province had already disbursed or spent a large part of the NPC
payments. As found by COA, of the P40,724,471.74 actually paid by the
NPC and lodged in the provinces general fund, P35,803,118.30 was
disbursed or spent by the Province.
If petitioners were really in good faith, they should have held the shares of
Tiwi and Daraga in trust[16] pursuant to Section 309(b) of the Local
Government Code of 1991, which provides:
Trust funds shall consist of private and public monies which have officially
come into the possession of the local government or of a local government
official as trustee, agent or administrator ...A trust fund shall only be used
for the specific purpose for which it came into the possession of the local
government unit.
As pointed out by the Ad Hoc Committee in its report, which was adopted
by the Office of the President:
It is unmistakable from the foregoing provisions that the shares of Tiwi,
Daraga, the concerned barangays and the national government in the
payments made by NPC under the MOA, should be, as they are in fact,
trust funds. As such, the Province should have, upon receipt of said
payments, segregated and lodged in special accounts, the respective
shares of Tiwi, Daraga, the concerned barangays and the national
government for eventual remittance to said beneficiaries. Said shares
cannot be lodged in, nor remain part of, the Provinces general fund.
Moreover, the Province cannot utilize said amounts for its own benefit or
account (see also Sec. 86, P.D. No. 464, as amended).
Therefore, the balance of P26,979,962.52 representing the collective
shares of Tiwi and Daraga, the concerned barangays and the national
government, cannot be appropriated nor disbursed by the Province for the
payment of its own expenditures or contractual obligations.
However, in total disregard of the law, the Province treated the
P40,724,471.74 NPC payments as surplus adjustment (Account 7-92-419)
and lodged the same in its general fund. No trust liability accounts were
created in favor of the rightful beneficiaries thereof as required by law.
We cannot therefore fault the public respondents with grave abuse of
discretion in holding the petitioners guilty of abuse of authority for failure
to share with the municipalities of Tiwi and Daiaga the amount of
P40,724,471.74 paid by the NPC.
IV
We agree with the petitioners that Governor Salalima could no longer be
held administratively liable in O.P. Case No. 5450 in connection with the
negotiated contract entered into on 6 March 1992 with RYU Construction
for additional rehabilitation work at the Tabaco Public Market. Nor could
the petitioners be held administratively liable in O.P. Case No. 5469 for the
execution in November 1989 of the retainer contract with Atty. Jesus
Cornago and the Cortes and Reyna Law Firm. This is so because public
officials cannot be subject to disciplinary action for administrative
misconduct committed during a prior term, as held in Pascual vs.
Provincial Board of Nueva Ecija[17] and Aguinaldo vs. Santos.[18] In
Pascual, this Court ruled:
We now come to one main issue of the controversy - the legality of
disciplining an elective municipal official for a wrongful act committed by
him during his immediately preceding term of office.
In the absence of any precedent in this jurisdiction, we have resorted to
American authorities. We found that cases on the matter are conflicting
due in part, probably, to differences in statutes and constitutional
provisions, and also, in part, to a divergence of views with respect to the
question of whether the subsequent election or appointment condones
the prior misconduct. The weight of authority, however, seems to incline
to the rule denying the right to remove one from office because of
misconduct during a prior term, to which we fully subscribe.
Offenses committed, or acts done, during previous term are generally held
not to furnish cause for removal and this is especially true where the
constitution provides that the penalty in proceedings for removal shall not
extend beyond the removal from office, and disqualification from holding
office for the term for which the officer was elected or appointed. (67
C.J.S. p. 248, citing Rice vs. State, 161 S.W. 2d. 401; Montgomery vs.
Nowell, 40 S.W. 2d 418; People ex rel. Bagshaw vs. Thompson, 130 P. 2d
237; Board of Comrs. of Kingfisher County vs. Shutler, 281 P. 222; State vs.
Blake, 280 P. 388; In re Fudula, 147 A. 67; State vs. Ward, 43 S.W. 2d. 217).
The underlying theory is that each term is separate from other terms, and
that the reelection to office operates as a condonation of the officers
previous misconduct to the extent of cutting off the right to remove him
therefor (43 Am. Jur. P. 45, citing Atty. Gen. vs. Hasty, 184 Ala. 121, 63 So.
559, 50 L.R.A. (NS) 553. As held on Conant vs. Brogan (1887) 6 N.Y.S.R.
332, cited in 17 A.I.R. 281, 63 So. 559, 50 LRA (NS) 553
The Court should never remove a public officer for acts done prior to his
present term of office. To do otherwise would be to deprive the people of
their right to elect their officers. When the people have elected a man to
office, it must be assumed that they did this with knowledge of his life and
character, and that they disregard or forgave his faults or misconduct, if he
had been guilty of any. It is not for the court, by reason of such faults or
misconduct to practically overrule the will of the people.
This Court reiterated this rule in Aguinaldo and explicitly stated therein:
Clearly then, the rule is that a public official can not be removed for
administrative misconduct committed during a prior term, since his re-
election to office operates a condonation of the officers previous
misconduct to the extent of cutting off the right to remove him therefor.
The foregoing rule, however, finds no application to criminal cases
pending against petitioner for acts he may have committed during the
failed coup.

However, the Office of the Solicitor General maintains that Aguinaldo does
not apply because the case against the official therein was already pending
when he filed his certificate of candidacy for his reelection bid. It is of the
view that an officials reelection renders moot and academic an
administrative complaint against him for acts done during his previous
term only if the complaint was filed before his reelection. The fine
distinction does not impress us. The rule makes no distinction. As a matter
of fact, in Pascual the administrative complaint against Pascual for acts
committed during his first term as Mayor of San Jose, Nueva Ecija, was
filed only a year after he was reelected.

The rule adopted in Pascual, qualified inAguinaldo insofar as criminal cases

are concerned, is still a good law. Such a rule is not only founded on the
theory that an officials reelection expresses the sovereign will of the
electorate to forgive or condone any act or omission constituting a ground
for administrative discipline which was committed during his previous
term. We may add that sound public policy dictates it. To rule otherwise
would open the floodgates to exacerbating endless partisan contests
between the reelected official and his political enemies, who may not stop
to hound the former during his new term with administrative cases for
acts, alleged to have been committed during his previous term. His second
term may thus be devoted to defending himself in the said cases to the
detriment of public service. This doctrine of forgiveness or condonation
cannot, however, apply to criminal acts which the reelected official may
have committed during his previous term.

We thus rule that any administrative liability which petitioner Salalima

might have incurred in the execution of the retainer contract in O.P. Case
No. 5469 and the incidents related therewith and in the execution on 6
March 1992 of a contract for additional repair and rehabilitation works for
the Tabaco Public Market in O.P. Case No. 5450 are deemed extinguished
by his reelection in the 11 May 1992 synchronized elections. So are the
liabilities, if any, of petitioner members of the Sangguniang Panlalawigan
ng Albay, who signed Resolution No. 129 authorizing petitioner Salalima to
enter into the retainer contract in question and who were reelected in the
1992 elections. This is, however, without prejudice to the institution of
appropriate civil and criminal cases as may be warranted by the attendant
circumstances. As to petitioners Victoria, Marcellana, Reyeg, Osia, and
Cabredo who became members of the Sangguniang Panlalawigan only
after their election in 1992, they could not be held administratively liable
in O.P. Case No. 5469, for they had nothing to do with the said resolution
which was adopted in April 1989 yet.

Having thus held that the petitioners could no longer be administratively

liable in O.P. Case No. 5469, we find it unnecessary to delve into, and pass
upon, the fifth issue.

WHEREFORE, the instant special action for certiorari is hereby partly

GRANTED. That part of the challenged Administrative Order No. 153
imposing the penalty of suspension on petitioner Governor Romeo
Salalima in O.P. Cases Nos. 5450 and 5469 and on petitioners Vice
Governor Danilo Azaa and Sangguniang Panlalawigan Members Juan
Victoria, Lorenzo Reyeg, Arturo Osia, Wilbor Rontas, Clenio Cabredo,
Ramon Fernandez, Jr., Masikap Fontanilla, Vicente Go, Sr., and Nemesio
Baclao in O.P. Case No. 5469 are hereby ANNULLED and SET ASIDE,
without prejudice to the filing of appropriate civil or criminal actions
against them if warranted by the attendant circumstances.

No pronouncement as to costs.

SO ORDERED.