PROPERTY CASES 3. BODEGA constructed on Lot 1103, made of strong materials, G.I.

roofing, situated in
(Page 1) Centro I, Orani, Bataan, x x x with a floor area of 42.75 sq. m. more or less x x
x.11cräläwvirtualibräry
1.) SORIANO vs. SPOUSES GALIT At the sale of the above-enumerated properties at public auction held on December 23,
G.R. No. 156295 : September 23, 2003 1998, petitioner was the highest and only bidder with a bid price of P483,000.00.
MARCELO R. SORIANO, Petitioner, vs. SPOUSES RICARDO and ROSALINA Accordingly, on February 4, 1999, Deputy Sheriff Robles issued a Certificate of Sale of
GALIT, Respondents. Execution of Real Property,12 which reads:
DECISION
YNARES-SANTIAGO, J.: CERTIFICATE OF SALE ON EXECUTION OF REAL PROPERTY
Petitioner was issued a writ of possession in Civil Case No. 66431 for Sum of Money by the TO ALL WHO MAY SEE THESE PRESENTS:
Regional Trial Court of Balanga, Bataan, Branch 1. The writ of possession was, however, GREETINGS:
nullified by the Court of Appeals in CA-G.R. SP No. 658912 because it included a parcel of land I HEREBY that (sic) by virtue of the writ of execution dated October 16, 1998, issued in the
which was not among those explicitly enumerated in the Certificate of Sale issued by the above-entitled case by the HON. BENJAMIN T. VIANZON, ordering the Provincial Sheriff of
Deputy Sheriff, but on which stand the immovables covered by the said Certificate. Petitioner Bataan or her authorized Deputy Sheriff to cause to be made (sic) the sum of P350,000.00
contends that the sale of these immovables necessarily encompasses the land on which they plus 12% interest to be computed from the date of maturity of the promissory notes until the
stand. same are fully paid; P20,000.00 as attorneys fees plus legal expenses in the implementation
Dissatisfied, petitioner filed the instant petition for review on certiorari. of the writ of execution, the undersigned Deputy Sheriff sold at public auction on December
Respondent Ricardo Galit contracted a loan from petitioner Marcelo Soriano, in the total sum 23, 1998 the rights and interests of defendants Sps. Ricardo and Rosalina Galit, to the
of P480,000.00, evidenced by four promissory notes in the amount of P120,000.00 each plaintiff Marcelo Soriano, the highest and only bidder for the amount of FOUR HNDRED
dated August 2, 1996;3 August 15, 1996;4 September 4, 19965 and September 14, 1996.6 This EIGHTY THREE THOUSAND PESOS (P483,000.00, Philippine Currency), the following real
loan was secured by a real estate mortgage over a parcel of land covered by Original estate properties more particularly described as follows :
Certificate of Title No. 569.7 After he failed to pay his obligation, Soriano filed a complaint for ORIGINAL CERTIFICATE OF TITLE NO. T-569
sum of money against him with the Regional Trial Court of Balanga City, Branch 1, which was A parcel of land (Homestead Patent No. 14692) situated in the Bo. of Tapulac, Orani, Bataan,
docketed as Civil Case No. 6643.8cräläwvirtualibräry x x x. Bounded on the SW., along line 1-2 by Lot No. 3, Cad. 145, containing an area of THIRTY
Respondents, the Spouses Ricardo and Rosalina Galit, failed to file their answer. Hence, upon FIVE THOUSAND SEVEN HUNDRED FIFTY NINE (35,759) SQUARE METERS, more or less x x x
motion of Marcelo Soriano, the trial court declared the spouses in default and proceeded to TAX DEC. NO. PROPERTY INDEX NO. 018-09-001-02
receive evidence for petitioner Soriano ex parte. STOREHOUSE constructed on Lot 1103, made of strong materials G.I. roofing situated at
On July 7, 1997, the Regional Trial Court of Balanga City, Branch 1 rendered judgment9 in Centro I, Orani, Bataan x x x containing an area of 30 sq. meters, more or less x x (constructed
favor of petitioner Soriano, the dispositive portion of which reads: on TCT No. 40785)
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant TAX DEC. NO. 86 PROPERTY INDEX No. 018-09-001-02
ordering the latter to pay: BODEGA constructed on Lot 1103, made of strong materials G.I. roofing situated in Centro I,
1. the plaintiff the amount of P350,000.00 plus 12% interest to be computed from the dates Orani, Bataan, x x x with a floor area of 42.75 sq. m. more or less x x x
of maturity of the promissory notes until the same are fully paid; IT IS FURTHER CERTIFIED, that the aforesaid highest and lone bidder, Marcelo Soriano, being
2. the plaintiff P20,000.00, as attorneys fees; and the plaintiff did not pay to the Provincial Sheriff of Bataan the amount of P483,000.00, the
3. the costs of suit. sale price of the above-described property which amount was credited to partial/full
SO ORDERED.10cräläwvirtualibräry satisfaction of the judgment embodied in the writ of execution.
The judgment became final and executory. Accordingly, the trial court issued a writ of The period of redemption of the above described real properties together with all the
execution in due course, by virtue of which, Deputy Sheriff Renato E. Robles levied on the improvements thereon will expire One (1) year from and after the registration of this
following real properties of the Galit spouses: Certificate of Sale with the Register of Deeds.
1. A parcel of land covered by Original Certificate of Title No. T-569 (Homestead Patent No. This Certificate of Sheriffs Sale is issued to the highest and lone bidder, Marcelo Soriano,
14692) situated in the Bo. of Tapulac, Orani, Bataan. Bounded on the SW, along line 1-2 by under guarantees prescribed by law.
Lot No. 3, Cad. 145; containing an area of THIRTY FIVE THOUSAND SEVEN HUNDRED FIFTY Balanga, Bataan, February 4, 1999.
NINE (35,759) SQUARE METERS, more or less x x x; On April 23, 1999, petitioner caused the registration of the Certificate of Sale on Execution of
2. STORE/HOUSE CONSTRUCTED on Lot No. 1103 made of strong materials G.I. roofing Real Property with the Registry of Deeds.
situated at Centro I, Orani, Bataan, x x x containing an area of 30 sq. meters, more or less x x The said Certificate of Sale registered with the Register of Deeds includes at the dorsal
x (constructed on TCT No. T40785); portion thereof the following entry, not found in the Certificate of Sale on file with Deputy
Sheriff Renato E. Robles:13cräläwvirtualibräry

1 clioocampo
ORIGINAL CERTIFICATE OF TITLE NO. T-40785 by Deputy Sheriff Renato E. Robles as reflected in the Certificate of Sale on Execution of Real
A parcel of land (Lot No. 1103 of the Cadastral Survey of Orani) , with the improvements Property.
thereon, situated in the Municipality of Orani, Bounded on the NE; by Calle P. Gomez; on the In opposition, petitioner prayed for the dismissal of the petition because respondent spouses
E. by Lot No. 1104; on the SE by Calle Washington; and on the W. by Lot 4102, containing an failed to move for the reconsideration of the assailed order prior to the filing of the petition.
area of ONE HUNDRED THIRTY NINE (139) SQUARE METERS, more or less. All points referred Moreover, the proper remedy against the assailed order of the trial court is an appeal, or a
to are indicated on the plan; bearing true; declination 0 deg. 40E., date of survey, February motion to quash the writ of possession.
191-March 1920. On May 13, 2002, the Court of Appeals rendered judgment as follows:
On February 23, 2001, ten months from the time the Certificate of Sale on Execution was WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the writ of possession
registered with the Registry of Deeds, petitioner moved14 for the issuance of a writ of issued by the Regional Trial Court of Balanga City, Branch 1, on 18 July 2001 is
possession. He averred that the one-year period of redemption had elapsed without the declared NULL and VOID.
respondents having redeemed the properties sold at public auction; thus, the sale of said In the event that the questioned writ of possession has already been implemented, the
properties had already become final. He also argued that after the lapse of the redemption Deputy Sheriff of the Regional Trial Court of Balanga City, Branch 1, and private respondent
period, the titles to the properties should be considered, for all legal intents and purposes, in Marcelo Soriano are hereby ordered to cause the redelivery of Transfer Certificate of Title
his name and favor.15cräläwvirtualibräry No. T-40785 to the petitioners.
On June 4, 2001, the Regional Trial Court of Balanga City, Branch 1 granted the motion for SO ORDERED.19cräläwvirtualibräry
issuance of writ of possession.16 Subsequently, on July 18, 2001, a writ of possession17 was Aggrieved, petitioner now comes to this Court maintaining that
issued in petitioners favor which reads: 1.) THE SPECIAL CIVIL ACTION OF CERTIORARI UNDER RULE 65 IS NOT THE PLAIN, SPEEDY
WRIT OF POSSESSION AND ADEQUATE REMEDY OF THE RESPONDENTS IN ASSAILING THE WRIT OF POSSESSION
Mr. Renato E. Robles ISSUED BY THE LOWER COURT BUT THERE WERE STILL OTHER REMEDIES AVAILABLE TO
Deputy Sheriff THEM AND WHICH WERE NOT RESORTED TO LIKE THE FILING OF A MOTION FOR
RTC, Br. 1, Balanga City RECONSIDERATION OR MOTION TO QUASH OR EVEN APPEAL.
Greetings : 2.) THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARAING THE CERTIFICATE
WHEREAS on February 3, 2001, the counsel for plaintiff filed Motion for the Issuance of Writ OF SALE ON EXECUTION OF REAL PROPERTY AS NULL AND VOID AND SUBSEQUENTLY THE
of Possession; WRIT OF POSSESSION BECAUSE THE SAME IS A PUBLIC DOCUMENT WHICH ENJOYS THE
WHEREAS on June 4, 2001, this court issued an order granting the issuance of the Writ of PRESUMPTION OF REGULARITY AND IT CANNOT BE OVERCOME BY A MERE STRANGE
Possession; FEELING THAT SOMETHING IS AMISS ON ITS SURFACE SIMPLY BECAUSE THE TYPEWRITTEN
WHEREFORE, you are hereby commanded to place the herein plaintiff Marcelo Soriano in WORDS ON THE FRONT PAGE AND AT THE DORSAL PORTION THEREOF IS DIFFERENT OR
possession of the property involved in this case situated (sic) more particularly described as: THAT IT IS UNLIKELY FOR THE SHERIFF TO USE THE DORSAL PORTION OF THE FIRST PAGE
1. STORE HOUSE constructed on Lot No. 1103 situated at Centro 1, Orani, Bataan covered by BECAUSE THE SECOND PAGE IS MERELY HALF FILLED AND THE NOTATION ON THE DORSAL
TCT No. 40785; PORTION COULD STILL BE MADE AT THE SECOND PAGE.
2. BODEGA constructed on Lot No. 1103 with an area of 42.75 square meters under Tax On the first ground, petitioner contends that respondents were not without remedy before
Declaration No. 86 situated at Centro 1, Orani, Bataan; the trial court. He points out that respondents could have filed a motion for reconsideration
3. Original Certificate of Title No. 40785 with an area of 134 square meters known as Lot No. of the Order dated June 4, 1999, but they did not do so. Respondents could also have filed an
1103 of the Cadastral Survey of Orani appeal but they, likewise, did not do so. When the writ of possession was issued,
against the mortgagor/former owners Sps. Ricardo and Rosalinda (sic) Galit, her (sic) heirs, respondents could have filed a motion to quash the writ. Again they did not. Respondents
successors, assigns and all persons claiming rights and interests adverse to the petitioner and cannot now avail of the special civil action for certiorari as a substitute for these remedies.
make a return of this writ every thirty (30) days from receipt hereof together with all the They should suffer the consequences for sleeping on their rights.
proceedings thereon until the same has been fully satisfied. We disagree.
WITNESS THE HONORABLE BENJAMIN T. VIANZON, Presiding Judge, this 18th day of July 2001, Concededly, those who seek to avail of the procedural remedies provided by the rules must
at Balanga City. 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
Sgd) GILBERT S. ARGONZA and to make litigation as inexpensive as practicable and as convenient as can be done. 20 This
is in accordanceOwith the primary purpose of the 1997 Rules of Civil Procedure as provided in
IC Rule 1, Section 6, which reads:
Respondents filed a petition for certiorari with the Court of Appeals, which was docketed as Section 6. Construction. These rules shall be liberally construed in order to promote their
CA-G.R. SP No. 65891, assailing the inclusion of the parcel of land covered by Transfer objective of securing a just, speedy and inexpensive determination of every action and
Certificate of Title No. T-40785 among the list of real properties in the writ of proceeding.21cräläwvirtualibräry
possession.18 Respondents argued that said property was not among those sold on execution

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The rules of procedure are not to be applied in a very rigid, technical sense and are used only this case where the contents of a copy thereof subsequently registered for documentation
to help secure substantial justice. If a technical and rigid enforcement of the rules is made, purposes is being contested. No reason has been offered how and why the questioned entry
their aim would be defeated.22 They should be liberally construed so that litigants can have was subsequently intercalated in the copy of the certificate of sale subsequently registered
ample opportunity to prove their claims and thus prevent a denial of justice due to with the Registry of Deeds. Absent any satisfactory explanation as to why said entry was
technicalities.23 Thus, in China Banking Corporation v. Members of the Board of Trustees of belatedly inserted, the surreptitiousness of its inclusion coupled with the furtive manner of
Home Development Mutual Fund,24 it was held: its intercalation casts serious doubt on the authenticity of petitioners copy of the Certificate
while certiorari as a remedy may not be used as a substitute for an appeal, especially for a of Sale. Thus, it has been held that while a public document like a notarized deed of sale is
lost appeal, this rule should not be strictly enforced if the petition is genuinely vested with the presumption of regularity, this is not a guarantee of the validity of its
meritorious.25] It has been said that where the rigid application of the rules would frustrate contents.34cräläwvirtualibräry
substantial justice, or bar the vindication of a legitimate grievance, the courts are justified It must be pointed out in this regard that the issuance of a Certificate of Sale is an end result
in exempting a particular case from the operation of the rules.26 (Emphasis ours) of judicial foreclosure where statutory requirements are strictly adhered to; where even the
Indeed, well-known is the rule that departures from procedure may be forgiven where they slightest deviations therefrom will invalidate the proceeding35 and the sale.36 Among these
do not appear to have impaired the substantial rights of the parties.27 Apropos in this regard requirements is an explicit enumeration and correct description of what properties are to be
is Cometa v. CA,28 where we said that sold stated in the notice. The stringence in the observance of these requirements is such that
There is no question that petitioners were remiss in attending with dispatch to the protection an incorrect title number together with a correct technical description of the property to be
of their interests as regards the subject lots, and for that reason the case in the lower court sold and vice versa is deemed a substantial and fatal error which results in the invalidation of
was dismissed on a technicality and no definitive pronouncement on the inadequacy of the the sale.37cräläwvirtualibräry
price paid for the levied properties was ever made. In this regard, it bears stressing that The certificate of sale is an accurate record of what properties were actually sold to satisfy
procedural rules are not to be belittled or dismissed simply because their non-observance may the debt. The strictness in the observance of accuracy and correctness in the description of
have resulted in prejudice to a partyssubstantive rights as in this case. Like all rules, they are the properties renders the enumeration in the certificate exclusive. Thus, subsequently
required to be followed except when only for the most persuasive of reasons they may be including properties which have not been explicitly mentioned therein for registration
relaxed to relieve a litigant of an injustice not commensurate with the degree of his purposes under suspicious circumstances smacks of fraud. The explanation that the land on
thoughtlessness in not complying with the procedure prescribed.29 (emphasis and italics which the properties sold is necessarily included and, hence, was belatedly typed on the
supplied.) dorsal portion of the copy of the certificate subsequently registered is at best a lame excuse
In short, since rules of procedure are mere tools designed to facilitate the attainment of unworthy of belief.
justice, their strict and rigid application which would result in technicalities that tend to The appellate court correctly observed that there was a marked difference in the appearance
frustrate rather than promote substantial justice must always be avoided.30 Technicality of the typewritten words appearing on the first page of the copy of the Certificate of Sale
should not be allowed to stand in the way of equitably and completely resolving the rights registered with the Registry of Deeds38 and those appearing at the dorsal portion thereof.
and obligations of the parties.31cräläwvirtualibräry Underscoring the irregularity of the intercalation is the clearly devious attempt to let such an
Eschewing, therefore, the procedural objections raised by petitioner, it behooves us to insertion pass unnoticed by typing the same at the back of the first page instead of on the
address the issue of whether or not the questioned writ of possession is in fact a nullity second page which was merely half-filled and could accommodate the entry with room to
considering that it includes real property not expressly mentioned in the Certificate of Sale of spare.
Real Property. The argument that the land on which the buildings levied upon in execution is necessarily
Petitioner, in sum, dwells on the general proposition that since the certificate of sale is a included is, likewise, tenuous. Article 415 of the Civil Code provides:
public document, it enjoys the presumption of regularity and all entries therein are presumed ART. 415. The following are immovable property:
to be done in the performance of regular functions. (1) Land, buildings, roads and constructions of all kinds adhered to the soil.
The argument is not persuasive. xxx
There are actually two (2) copies of the Certificate of Sale on Execution of Real Properties (3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be
issued on February 4, 1999 involved, namely: (a) copy which is on file with the deputy sheriff; separated therefrom without breaking them material or deterioration of the object;
and (b) copy registered with the Registry of Deeds. The object of scrutiny, however, is not the (4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or
copy of the Certificate of Sale on Execution of Real Properties issued by the deputy sheriff on on lands by the owner of the immovable in such a manner that it reveals the intention to
February 4, 1999,32 but the copy thereof subsequently registered by petitioner with the attach them permanently to the tenements;
Registry of Deeds on April 23, 1999,33which included an entry on the dorsal portion of the (5) Machinery, receptacles, instruments or implements intended by the owner of the
first page thereof describing a parcel of land covered by OCT No. T-40785 not found in the tenement for an industry or works which may be carried on in a building or on a piece of
Certificate of Sale of Real Properties on file with the sheriff. land, and which tend directly to meet the needs of the said industry or works;
True, public documents by themselves may be adequate to establish the presumption of (6) Animal houses, pigeon houses, beehives, fish ponds or breeding places of similar nature,
their validity. However, their probative weight must be evaluated not in isolation but in in case their owner has placed them or preserves them with the intention to have them
conjunction with other evidence adduced by the parties in the controversy, much more so in

3 clioocampo
permanently attached to the land, and forming a permanent part of it; the animals in these
places are also included;
xxx
(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;
xxx.
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.
Davide, Jr., C.J., (Chairman), Vitug, and Carpio, JJ., concur.
Azcuna, J., on leave.

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2.) MIDWAY MARITIME & TECHNOLOGICAL FOUNDATION vs. CASTRO The petitioner, however, denied respondents’ ownership of the residential building and
claimed that Adoracion owns the building, having bought the same together with the land on
G.R. No. 189061 August 6, 2014 which it stands.4
MIDWAY MARITIME AND TECHNOLOGICAL FOUNDATION, represented by its In a Decision5 dated July 2, 2001, the Regional Trial Court (RTC) of Cabanatuan City, Branch
Chairman/President PhD in Education DR. SABINO M. MANGLICMOT, Petitioner, 28, rendered judgment in favor of the respondents, declared them as the absolute owners of
vs. the residential building and ordered petitioner to pay the respondents unpaidrentals from
MARISSA E. CASTRO, ET AL., Respondents. August 1995 until fully paid. The dispositive portion of the RTC decision reads:
DECISION WHEREFORE, judgment is hereby rendered:
REYES, J.: 1. Declaring the [respondents] asthe absolute owners of the building in question
The petitioner Midway Maritime and Technological Foundation (petitioner) is the lessee of described as follows:
two parcels of land in Cabanatuan City. Its president, Dr. Sabino Manglicmot (Manglicmot), is xxxx
married to Adoracion Cloma (Adoracion), who is the registered owner of the property under 2. Ordering the [petitioner] topay the [respondents] the sum of [P]672,000.00 by
Transfer Certificate of Title (TCT) Nos. T-71321 and T-71322. Inside said property stands a way of unpaid rentals from August 1995 at [P]6,000.00 and from October 1995 at
residential building, which is now the subject matter of the dispute, owned by the [P]10,000.00 until fully paid.
respondents. 3. The claim for moral damages,other litigation expenses and attorney’s fees are
The two parcels of land, on a portion of which the residential building stand, were originally dismissed for lack of merit.
owned by the respondents’ father Louis Castro, Sr. The elder Castro was also the president of SO ORDERED.6
Cabanatuan City Colleges (CCC). On August 15, 1974, Castro mortgaged the property to The Court of Appeals (CA) dismissed the petitioner’s appeal and affirmed the RTC decision in
Bancom Development Corporation (Bancom) to secure a loan. During the subsistence of the the assailed Decision7 dated October 29, 2008 and Resolution8 dated August 3, 2009. Hence,
mortgage, CCC’s board of directors agreed to a 15-year lease of a portion of the property to this petition.
the Castrochildren, herein respondents, who subsequently built the residential house nowin The petitioner contests the award ofrentals made by the RTC, which was affirmed by the CA,
dispute. The lease was to expire in 1992. contending that when Tomas bought the two parcels of land from Union Bank in 1993, the
When CCC failed to pay its obligation, Bancom foreclosed the mortgage and the property was sale included the improvements thereon, one of which was the residential house in dispute.
sold at public auction in 1979, with Bancom as the highest bidder. Bancom thereafter The petitioner also argues that the lease between CCC and the respondents already expired
assigned the credit to Union Bank of the Philippines (Union Bank), and later on, Union Bank at the time of the sale and they are now the current lessees of the property, albeit the
consolidated its ownership over the properties in 1984 due to CCC’s failure to redeem the residential house is still standing inside the school compound.9 The petitioner relies on a
property. When Union Bank sought the issuance of a writ of possession over the properties, decision rendered by the RTC of Cabanatuan City, Branch 26, in Civil Case No. 2939
which included the residential building, respondents opposed the same. The case reached (AF),which was an appeal from the trial court’s dismissal of the complaint for Ejectment with
the Court in G.R. No. 97401 entitled, Castro, Jr. v. CA,1 and in a Decision dated December 6, Damages filed by the respondents against the petitioner. In said decision, the RTC stated that
1995, the Court ruled that the residential house owned by the respondents should not have "in the advertised sale of the lots covered by TCT Nos. T-45816 and [T-45817] of the land
been included in the writ of possession issued by the trial court as CCC has no title over it. records of Cabanatuan City, all improvements were included, hence, the instant case has no
In the meantime, Adoracion’s father, Tomas Cloma (Tomas), bought the two parcels of land factual and legal basis."10 Ruling of the Court
from Union Bank in an auction sale conducted on July 13, 1993. Tomas subsequently leased The first issue to be resolved iswhether there was a lease agreement between the petitioner
the property to the petitioner and thereafter, sold the same to Adoracion.Several suits were and the respondents as regards the residential building. Such issue, it must beemphasized, is
brought by the respondents against the petitioner, including the case at bench, which is an a question of fact11 that has been resolved by the RTC in the affirmative, towit: "from June
action for Ownership, Recovery of Possession and Damages, docketed as Civil Case No. 3700 1993 to July 25, 1995 or for a period of 26 months, the [petitioner] has been paying rentals
(AF). for the building in question and paid a rental of [P]156,000.00 which rental was increasedto
In their Amended Complaint2 dated April 19, 2000, the respondents alleged that: (1) they are ₱10,000.00 beginning October 1995 when the caretaker of the [respondents] Mr. Josefino
the owners ofthe residential building subject of the dispute, which they used from 1977 to Castro was ejected therefrom and the entire building was leased to the [petitioner],
1985 when they left for the United States of America and instituted their uncle, Josefino C. represented by Dr. Sabino Manglicmot."12 Such finding is borne by the records of this case.
Castro (Josefino), as the caretaker; (2) Manglicmot, who was the President of the petitioner Exhibit "J"13 for the respondents is a cash disbursement voucher issued by the petitioner to
Midway Maritime and Technological Foundation, leased the building (except for the portion Mrs. Lourdes Castro. The voucher contained the statement "payment of building rentals x x x
occupied by Josefino) from Lourdes Castro, mother of the respondents, in June 1993 from June 01 to December 01, 1993" in the total amount of ₱36,000.00. The petitioner’s
withmonthly rent of ₱6,000.00, which was later to be increased to ₱10,000.00 in October payment of the foregoing rentals confirms the existence of its agreement to lease the
1995 after Josefino vacates his occupied portion; (3) the petitioner failed to pay rent starting residential building from the respondents.
August 1995, thus prompting the respondents to file the action. The respondents prayed that Given the existence of the lease,the petitioner’s claim denying the respondents’ ownership of
they be declared as the owners of the residential building, and that the petitioner be ordered the residential house must be rejected.1âwphi1 According to the petitioner, it is Adoracion
to vacate the same and pay rent arrearages and damages.3

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who actually owns the residential building having bought the same, together withthe two foreclosure would be ineffective unless the mortgagor has title to the property to be
parcels of land, from her father Tomas, who, in turn, bought it in an auction sale. foreclosed.20(Citations omitted and emphasis ours) The rule is that "when a decision
It is settled that "[o]nce a contact of lease is shown to exist between the parties, the lessee becomes final and executory, it becomes valid and binding upon the parties and their
cannot by any proof, however strong, overturn the conclusive presumption that the lessor successors in interest."21 Such being the case, Castro, which already determined with finality
has a valid title to or a better right of possession to the subject premises than the the respondents’ ownership of the residential house in question, is applicable and binding in
lessee."14 Section 2(b), Rule 131 of the Rules of Court prohibits a tenant from denying the this case and the petitioner cannotbe allowed to challenge the same. Thus, as correctlyruled
title of his landlord at the time of the commencement of the relation of landlord and tenant by the CA, "[t]o our mind, the pronouncement resolving the said issue necessarily touches
between them.15 In Santos v. National Statistics Office,16 the Court expounded on the rule on also the issue on the ownership of the building. x x x The finding of the Court [in Castro], now
estoppel against a tenant and further clarified that what a tenant is estopped from denying is being final and executory, is no longer open for inquiry and therefore, has attained its
the title of his landlord at the time of the commencement of the landlord-tenant relation. If immutability."22
the title asserted is one that is alleged to have been acquired subsequent to the As regards the ruling of the RTC of Cabanatuan City, Branch 26, in Civil Case No. 2939 (AF)
commencement of that relation, the presumption will not apply.17 that the advertised sale of the property included allthe improvements thereon,23 suffice it to
In this case, the petitioner’s basis for insisting on Adoracion’s ownership dates back to the say that said case involved an action for ejectment and any resolution by the RTC on the
latter’s purchase of the two parcels of land from her father, Tomas. It was Tomas who bought matter of the ownership of the improvements of the property is merely provisional and
the property in an auction sale by Union Bank in 1993 and leased the same to the petitioner cannot surpass the Court’s pronouncement in Castro and in the present case. The petitioner
in the same year. Note must be madethat the petitioner’s president, Manglicmot, is the should be reminded that "in ejectment suits, the only issue for resolution is the physical or
husband of Adoracion and son-in-law of Tomas. It is not improbable that at the time the materialpossession of the property involved, independent of any claim of ownership by any
petitioner leased the residential building from the respondents’ mother in 1993, it was aware of the party litigants. However, the issue of ownership may be provisionally ruled upon for
of the circumstances surrounding the sale of the two parcels of land and the natureof the the sole purpose of determining who is entitled to possession de facto."24 The MTC and RTC’s
respondents’ claim over the residential house. Yet, the petitioner still chose to lease the adjudication of ownership is merely provisionaland would not bar or prejudice an action
building. Consequently, the petitioner is now estopped from denying the respondents’ title between the same parties involving title to the property.25
over the residential building. Also, Adoracion’s subsequent acquisition of the two parcels of land from her father does not
More importantly, the respondents’ownership of the residential building is already an necessarily entail the acquisition of the residential building. "A building by itself is a realor
established fact. immovable property distinct from the land on which it is constructed and therefore can be a
"Nemo dat quod non habet. One can sell only what one owns or is authorized to sell, and the separate subject of contracts."26 Whatever Adoracion acquired from her father is still subject
buyer can acquire no more right than what the seller can transfer legally."18 It must be to the limitation pronounced by the Court in Castro, and the sale between Adoracion and
pointed out that what Tomas bought from Union Bank in the auction sale werethe two Tomas is confined only to the two parcels of land and excluded the residential building
parcels of land originally owned and mortgaged by CCC to Bancom, and which mortgage was owned by the respondents. It is beyond question that Tomas, and subsequently, Adoracion,
later assigned by Bancom to Union Bank. Contrary to the petitioner’s assertion, the property could nothave acquired a right greater than what their predecessors-in-interest – CCC and
subject of the mortgage and consequently the auction sale pertains only to these two parcels later, Union Bank – had.27
of land and did not include the residential house. This was precisely the tenor of Castro, Jr. v. The petitioner also insists thatthe lease between CCC and the respondents already expired
CA19 where the Court nullified the writ of possession issued by the trial court insofar as it whenAdoracion bought the property from Tomas. The foregoing issue, however, cannot be
affected the residential house constructed by the respondents on the mortgaged property as considered in the present action. As established from the facts ofthis case, the residential
it was not owned by CCC, which was the mortgagor. The Court ruled: house is located on a portion of the property that was leased by CCC to the respondents.
[Article 2127 of the Civil Code] extends the effects of the real estate mortgage to accessions Disputing the lease between CCC and the respondents, in effect, goes into the right of the
and accessories found on the hypothecated property when the secured obligation becomes respondents to maintain the residential house in question and eventually, their right to have
due. The law is predicated on an assumption that the ownership of such accessions and the same leased to the petitioner. Such argument, obviously, is a disguised effort to contest
accessories also belongs to the mortgagor as the owner of the principal. The provision has the title of the respondents over the residential house leased to the petitioner, which, as the
thus been seen by the Court, x x x, to mean that all improvements subsequently introduced Court previously discussed, cannot be allowed since they are estopped from denying the
or owned by the mortgagor on the encumbered property are deemed to form part of the same.
mortgage. That the improvements are to be considered so incorporated only if so owned by There is also nothing on record that will prove the petitioner’s claim that the lease between
the mortgagor is a rule that can hardly be debated since a contract of security, whether real CCC and the respondents already expired. The fact that Adoracion subsequently bought the
or personal, needs as an indispensable element thereof the ownership by the pledgor property did not ipso facto terminate the lease. While the lease between CCC and the
ormortgagor of the property pledged or mortgaged. The rationale shouldbe clear enough — respondents contained a 15-year period, to end in 1992, the petitioner failed to show that
in the event of default on the secured obligation, the foreclosure sale of the property would the subsequent transferors/purchasers of the two parcels of land opted to terminate the
naturally be the next step that can expectedly follow. A sale would result in the transmission lease or instituted any action for its termination. Bancom bought the property at an auction
of title to the buyer which is feasible only if the seller can be in a position to convey sale in 1979; Union Bank, in 1984; Tomas, and later, Adoracion, acquired the property in
ownership of the thing sold (Article 1458, Civil Code). It is to say, in the instant case, that a 1993.

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Article 1676 of the Civil Code provides:
The purchaser of a piece of land which is under a lease that is not recorded in the Registry of
property may terminate the lease, save when there is a stipulation to the contrary in the
contract of sale, or when the purchaser knows of the existence of the lease.
x x x x.
It cannot be denied that the transferors/purchasers of the property all had knowledge of the
lease between CCC and the respondents; yet, not any of the transferors/purchasers moved
to terminate the lease. In Bernabe v. Judge Luna,28 the Court stated:
[P]etitioners are in error when they say that because they are the buyers of the lot involved
herein, they ipso facto have the right to terminate an existing lease. They can do so but only
if the lease itself is not recorded, and they, as buyers, are not aware of the lease's existence
and duration, thus Art. 1676 of the Civil Code says:
xxxx
In the present case, the lease is not recorded, and although petitioner knew of its existence,
there was no fixed period for its duration - hence the lease was generally terminable at the
will of the buyerspetitioners. But of course they had to make a demand for its termination. x
x x.29 (Citation omitted and emphasis ours)
This was, in fact, the significance of the Court's statement in Castro, that –
[I]n respect of the lease on the foreclosed property, the buyer at the foreclosure sale merely
succeeds to the rights and obligations of the pledgor-mortgagor subject, however, to the
fcrovisions of Article 1676 of the Civil Code on its possible termination.30 (Citation omitted,
emphasis and underscoring ours)
Given, however, the lack of substantiation, the petitioner's insistence on the expiry of the
lease between CCC and the respondents, at this point, must fail.
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice

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3. PRUDENTIAL BANK vs. PANIS AND IT IS FURTHER AGREED that in the event the Sales Patent on
G.R. No. L-50008 August 31, 1987 the lot applied for by the Mortgagors as herein stated is released
PRUDENTIAL BANK, petitioner, or issued by the Bureau of Lands, the Mortgagors hereby
vs. authorize the Register of Deeds to hold the Registration of same
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of First Instance of until this Mortgage is cancelled, or to annotate this encumbrance
Zambales and Olongapo City; FERNANDO MAGCALE & TEODULA BALUYUT- on the Title upon authority from the Secretary of Agriculture and
MAGCALE, respondents. Natural Resources, which title with annotation, shall be released
in favor of the herein Mortgage.
PARAS, J.: From the aforequoted stipulation, it is obvious that the
This is a petition for review on certiorari of the November 13, 1978 Decision * of the then mortgagee (defendant Prudential Bank) was at the outset aware
Court of First Instance of Zambales and Olongapo City in Civil Case No. 2443-0 entitled of the fact that the mortgagors (plaintiffs) have already filed a
"Spouses Fernando A. Magcale and Teodula Baluyut-Magcale vs. Hon. Ramon Y. Pardo and Miscellaneous Sales Application over the lot, possessory rights
Prudential Bank" declaring that the deeds of real estate mortgage executed by respondent over which, were mortgaged to it.
spouses in favor of petitioner bank are null and void. Exhibit "A" (Real Estate Mortgage) was registered under the
The undisputed facts of this case by stipulation of the parties are as follows: Provisions of Act 3344 with the Registry of Deeds of Zambales on
... on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and November 23, 1971.
Teodula Baluyut Magcale secured a loan in the sum of P70,000.00 from On May 2, 1973, plaintiffs secured an additional loan from
the defendant Prudential Bank. To secure payment of this loan, plaintiffs defendant Prudential Bank in the sum of P20,000.00. To secure
executed in favor of defendant on the aforesaid date a deed of Real payment of this additional loan, plaintiffs executed in favor of the
Estate Mortgage over the following described properties: said defendant another deed of Real Estate Mortgage over the
l. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse same properties previously mortgaged in Exhibit "A." (Exhibit "B;"
spaces containing a total floor area of 263 sq. meters, more or less, also Exhibit "2" for defendant). This second deed of Real Estate
generally constructed of mixed hard wood and concrete materials, under Mortgage was likewise registered with the Registry of Deeds, this
a roofing of cor. g. i. sheets; declared and assessed in the name of time in Olongapo City, on May 2,1973.
FERNANDO MAGCALE under Tax Declaration No. 21109, issued by the On April 24, 1973, the Secretary of Agriculture issued Miscellaneous Sales
Assessor of Olongapo City with an assessed value of P35,290.00. This Patent No. 4776 over the parcel of land, possessory rights over which
building is the only improvement of the lot. were mortgaged to defendant Prudential Bank, in favor of plaintiffs. On
2. THE PROPERTY hereby conveyed by way of MORTGAGE includes the the basis of the aforesaid Patent, and upon its transcription in the
right of occupancy on the lot where the above property is erected, and Registration Book of the Province of Zambales, Original Certificate of Title
more particularly described and bounded, as follows: No. P-2554 was issued in the name of Plaintiff Fernando Magcale, by the
A first class residential land Identffied as Lot No. 720, (Ts-308, Ex-Oficio Register of Deeds of Zambales, on May 15, 1972.
Olongapo Townsite Subdivision) Ardoin Street, East Bajac-Bajac, For failure of plaintiffs to pay their obligation to defendant Bank after it
Olongapo City, containing an area of 465 sq. m. more or less, became due, and upon application of said defendant, the deeds of Real
declared and assessed in the name of FERNANDO MAGCALE Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed.
under Tax Duration No. 19595 issued by the Assessor of Olongapo Consequent to the foreclosure was the sale of the properties therein
City with an assessed value of P1,860.00; bounded on the mortgaged to defendant as the highest bidder in a public auction sale
NORTH: By No. 6, Ardoin Street conducted by the defendant City Sheriff on April 12, 1978 (Exhibit "E").
SOUTH: By No. 2, Ardoin Street The auction sale aforesaid was held despite written request from
EAST: By 37 Canda Street, and plaintiffs through counsel dated March 29, 1978, for the defendant City
WEST: By Ardoin Street. Sheriff to desist from going with the scheduled public auction sale
All corners of the lot marked by conc. cylindrical monuments of (Exhibit "D")." (Decision, Civil Case No. 2443-0, Rollo, pp. 29-31).
the Bureau of Lands as visible limits. ( Exhibit "A, " also Exhibit "1" Respondent Court, in a Decision dated November 3, 1978 declared the deeds of Real Estate
for defendant). Mortgage as null and void (Ibid., p. 35).
Apart from the stipulations in the printed portion of the On December 14, 1978, petitioner filed a Motion for Reconsideration (Ibid., pp. 41-53),
aforestated deed of mortgage, there appears a rider typed at the opposed by private respondents on January 5, 1979 (Ibid., pp. 54-62), and in an Order dated
bottom of the reverse side of the document under the lists of the January 10, 1979 (Ibid., p. 63), the Motion for Reconsideration was denied for lack of merit.
properties mortgaged which reads, as follows: Hence, the instant petition (Ibid., pp. 5-28).

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The first Division of this Court, in a Resolution dated March 9, 1979, resolved to require the As to restrictions expressly mentioned on the face of respondents' OCT No. P-2554, it will be
respondents to comment (Ibid., p. 65), which order was complied with the Resolution dated noted that Sections 121, 122 and 124 of the Public Land Act, refer to land already acquired
May 18,1979, (Ibid., p. 100), petitioner filed its Reply on June 2,1979 (Ibid., pp. 101-112). under the Public Land Act, or any improvement thereon and therefore have no application to
Thereafter, in the Resolution dated June 13, 1979, the petition was given due course and the the assailed mortgage in the case at bar which was executed before such eventuality.
parties were required to submit simultaneously their respective memoranda. (Ibid., p. 114). Likewise, Section 2 of Republic Act No. 730, also a restriction appearing on the face of private
On July 18, 1979, petitioner filed its Memorandum (Ibid., pp. 116-144), while private respondent's title has likewise no application in the instant case, despite its reference to
respondents filed their Memorandum on August 1, 1979 (Ibid., pp. 146-155). encumbrance or alienation before the patent is issued because it refers specifically to
In a Resolution dated August 10, 1979, this case was considered submitted for decision (Ibid., encumbrance or alienation on the land itself and does not mention anything regarding the
P. 158). improvements existing thereon.
In its Memorandum, petitioner raised the following issues: But it is a different matter, as regards the second mortgage executed over the same
1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID; AND properties on May 2, 1973 for an additional loan of P20,000.00 which was registered with the
2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE RESPONDENTS OF Registry of Deeds of Olongapo City on the same date. Relative thereto, it is evident that such
MISCELLANEOUS SALES PATENT NO. 4776 ON APRIL 24, 1972 UNDER ACT NO. 730 AND THE mortgage executed after the issuance of the sales patent and of the Original Certificate of
COVERING ORIGINAL CERTIFICATE OF TITLE NO. P-2554 ON MAY 15,1972 HAVE THE EFFECT Title, falls squarely under the prohibitions stated in Sections 121, 122 and 124 of the Public
OF INVALIDATING THE DEEDS OF REAL ESTATE MORTGAGE. (Memorandum for Petitioner, Land Act and Section 2 of Republic Act 730, and is therefore null and void.
Rollo, p. 122). Petitioner points out that private respondents, after physically possessing the title for five
This petition is impressed with merit. years, voluntarily surrendered the same to the bank in 1977 in order that the mortgaged may
The pivotal issue in this case is whether or not a valid real estate mortgage can be constituted be annotated, without requiring the bank to get the prior approval of the Ministry of Natural
on the building erected on the land belonging to another. Resources beforehand, thereby implicitly authorizing Prudential Bank to cause the
The answer is in the affirmative. annotation of said mortgage on their title.
In the enumeration of properties under Article 415 of the Civil Code of the Philippines, this However, the Court, in recently ruling on violations of Section 124 which refers to Sections
Court ruled that, "it is obvious that the inclusion of "building" separate and distinct from the 118, 120, 122 and 123 of Commonwealth Act 141, has held:
land, in said provision of law can only mean that a building is by itself an immovable ... Nonetheless, we apply our earlier rulings because we believe that as
property." (Lopez vs. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958; Associated Inc. and Surety in pari delicto may not be invoked to defeat the policy of the State
Co., Inc. vs. Iya, et al., L-10837-38, May 30,1958). neither may the doctrine of estoppel give a validating effect to a void
Thus, while it is true that a mortgage of land necessarily includes, in the absence of contract. Indeed, it is generally considered that as between parties to a
stipulation of the improvements thereon, buildings, still a building by itself may be contract, validity cannot be given to it by estoppel if it is prohibited by
mortgaged apart from the land on which it has been built. Such a mortgage would be still a law or is against public policy (19 Am. Jur. 802). It is not within the
real estate mortgage for the building would still be considered immovable property even if competence of any citizen to barter away what public policy by law was
dealt with separately and apart from the land (Leung Yee vs. Strong Machinery Co., 37 Phil. to preserve (Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alino supra).
644). In the same manner, this Court has also established that possessory rights over said ... (Arsenal vs. IAC, 143 SCRA 54 [1986]).
properties before title is vested on the grantee, may be validly transferred or conveyed as in This pronouncement covers only the previous transaction already alluded to and does not
a deed of mortgage (Vda. de Bautista vs. Marcos, 3 SCRA 438 [1961]). pass upon any new contract between the parties (Ibid), as in the case at bar. It should not
Coming back to the case at bar, the records show, as aforestated that the original mortgage preclude new contracts that may be entered into between petitioner bank and private
deed on the 2-storey semi-concrete residential building with warehouse and on the right of respondents that are in accordance with the requirements of the law. After all, private
occupancy on the lot where the building was erected, was executed on November 19, 1971 respondents themselves declare that they are not denying the legitimacy of their debts and
and registered under the provisions of Act 3344 with the Register of Deeds of Zambales on appear to be open to new negotiations under the law (Comment; Rollo, pp. 95-96). Any new
November 23, 1971. Miscellaneous Sales Patent No. 4776 on the land was issued on April 24, transaction, however, would be subject to whatever steps the Government may take for the
1972, on the basis of which OCT No. 2554 was issued in the name of private respondent reversion of the land in its favor.
Fernando Magcale on May 15, 1972. It is therefore without question that the original PREMISES CONSIDERED, the decision of the Court of First Instance of Zambales & Olongapo
mortgage was executed before the issuance of the final patent and before the government City is hereby MODIFIED, declaring that the Deed of Real Estate Mortgage for P70,000.00 is
was divested of its title to the land, an event which takes effect only on the issuance of the valid but ruling that the Deed of Real Estate Mortgage for an additional loan of P20,000.00 is
sales patent and its subsequent registration in the Office of the Register of Deeds (Visayan null and void, without prejudice to any appropriate action the Government may take against
Realty Inc. vs. Meer, 96 Phil. 515; Director of Lands vs. De Leon, 110 Phil. 28; Director of private respondents.
Lands vs. Jurado, L-14702, May 23, 1961; Pena "Law on Natural Resources", p. 49). Under the SO ORDERED.
foregoing considerations, it is evident that the mortgage executed by private respondent on
his own building which was erected on the land belonging to the government is to all intents
and purposes a valid mortgage.

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4. BURGOS vs. AFP CHIEF OF STAFF justifies this Court to exercise its inherent power to suspend its rules. In the words of the
G.R. No. L-64261 December 26, 1984 revered Mr. Justice Abad Santos in the case of C. Vda. de Ordoveza v. Raymundo, 4 "it is
JOSE BURGOS, SR., JOSE BURGOS, JR., BAYANI SORIANO and J. BURGOS MEDIA SERVICES, always in the power of the court [Supreme Court] to suspend its rules or to except a
INC., petitioners, particular case from its operation, whenever the purposes of justice require it...".
vs. Respondents likewise urge dismissal of the petition on ground of laches. Considerable stress
THE CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, THE CHIEF, PHILIPPINE is laid on the fact that while said search warrants were issued on December 7, 1982, the
CONSTABULARY, THE CHIEF LEGAL OFFICER, PRESIDENTIAL SECURITY COMMAND, THE instant petition impugning the same was filed only on June 16, 1983 or after the lapse of a
JUDGE ADVOCATE GENERAL, ET AL., respondents. period of more than six [6] months.
Lorenzo M. Tañada, Wigberto E. Tañada, Martiniano Vivo, Augusto Sanchez, Joker P. Arroyo, Laches is failure or negligence for an unreasonable and unexplained length of time to do that
Jejomar Binay and Rene Saguisag for petitioners. which, by exercising due diligence, could or should have been done earlier. It is negligence or
The Solicitor General for respondents. omission to assert a right within a reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert it. 5
ESCOLIN, J.: Petitioners, in their Consolidated Reply, explained the reason for the delay in the filing of the
Assailed in this petition for certiorari prohibition and mandamus with preliminary mandatory petition thus:
and prohibitory injunction is the validity of two [2] search warrants issued on December 7, Respondents should not find fault, as they now do [p. 1, Answer, p. 3,
1982 by respondent Judge Ernani Cruz-Pano, Executive Judge of the then Court of First Manifestation] with the fact that the Petition was filed on June 16, 1983,
Instance of Rizal [Quezon City], under which the premises known as No. 19, Road 3, Project 6, more than half a year after the petitioners' premises had been raided.
Quezon City, and 784 Units C & D, RMS Building, Quezon Avenue, Quezon City, business The climate of the times has given petitioners no other choice. If they had
addresses of the "Metropolitan Mail" and "We Forum" newspapers, respectively, were waited this long to bring their case to court, it was because they tried at
searched, and office and printing machines, equipment, paraphernalia, motor vehicles and first to exhaust other remedies. The events of the past eleven fill years
other articles used in the printing, publication and distribution of the said newspapers, as had taught them that everything in this country, from release of public
well as numerous papers, documents, books and other written literature alleged to be in the funds to release of detained persons from custody, has become a matter
possession and control of petitioner Jose Burgos, Jr. publisher-editor of the "We Forum" of executive benevolence or largesse
newspaper, were seized. Hence, as soon as they could, petitioners, upon suggestion of persons
Petitioners further pray that a writ of preliminary mandatory and prohibitory injunction be close to the President, like Fiscal Flaminiano, sent a letter to President
issued for the return of the seized articles, and that respondents, "particularly the Chief Legal Marcos, through counsel Antonio Coronet asking the return at least of
Officer, Presidential Security Command, the Judge Advocate General, AFP, the City Fiscal of the printing equipment and vehicles. And after such a letter had been
Quezon City, their representatives, assistants, subalterns, subordinates, substitute or sent, through Col. Balbino V. Diego, Chief Intelligence and Legal Officer of
successors" be enjoined from using the articles thus seized as evidence against petitioner the Presidential Security Command, they were further encouraged to
Jose Burgos, Jr. and the other accused in Criminal Case No. Q- 022782 of the Regional Trial hope that the latter would yield the desired results.
Court of Quezon City, entitled People v. Jose Burgos, Jr. et al. 1 After waiting in vain for five [5] months, petitioners finally decided to
In our Resolution dated June 21, 1983, respondents were required to answer the petition. come to Court. [pp. 123-124, Rollo]
The plea for preliminary mandatory and prohibitory injunction was set for hearing on June Although the reason given by petitioners may not be flattering to our judicial system, We find
28, 1983, later reset to July 7, 1983, on motion of the Solicitor General in behalf of no ground to punish or chastise them for an error in judgment. On the contrary, the
respondents. extrajudicial efforts exerted by petitioners quite evidently negate the presumption that they
At the hearing on July 7, 1983, the Solicitor General, while opposing petitioners' prayer for a had abandoned their right to the possession of the seized property, thereby refuting the
writ of preliminary mandatory injunction, manifested that respondents "will not use the charge of laches against them.
aforementioned articles as evidence in the aforementioned case until final resolution of the Respondents also submit the theory that since petitioner Jose Burgos, Jr. had used and
legality of the seizure of the aforementioned articles. ..." 2 With this manifestation, the prayer marked as evidence some of the seized documents in Criminal Case No. Q- 022872, he is now
for preliminary prohibitory injunction was rendered moot and academic. estopped from challenging the validity of the search warrants. We do not follow the logic of
Respondents would have this Court dismiss the petition on the ground that petitioners had respondents. These documents lawfully belong to petitioner Jose Burgos, Jr. and he can do
come to this Court without having previously sought the quashal of the search warrants whatever he pleases with them, within legal bounds. The fact that he has used them as
before respondent judge. Indeed, petitioners, before impugning the validity of the warrants evidence does not and cannot in any way affect the validity or invalidity of the search
before this Court, should have filed a motion to quash said warrants in the court that issued warrants assailed in this petition.
them. 3 But this procedural flaw notwithstanding, we take cognizance of this petition in view Several and diverse reasons have been advanced by petitioners to nullify the search warrants
of the seriousness and urgency of the constitutional issues raised not to mention the public in question.
interest generated by the search of the "We Forum" offices, which was televised in Channel 7 1. Petitioners fault respondent judge for his alleged failure to conduct an examination under
and widely publicized in all metropolitan dailies. The existence of this special circumstance oath or affirmation of the applicant and his witnesses, as mandated by the above-quoted

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constitutional provision as wen as Sec. 4, Rule 126 of the Rules of Court .6 This objection, fact, under subsection [b] of the above-quoted Section 2, one of the properties that may be
however, may properly be considered moot and academic, as petitioners themselves seized is stolen property. Necessarily, stolen property must be owned by one other than the
conceded during the hearing on August 9, 1983, that an examination had indeed been person in whose possession it may be at the time of the search and seizure. Ownership,
conducted by respondent judge of Col. Abadilla and his witnesses. therefore, is of no consequence, and it is sufficient that the person against whom the warrant
2. Search Warrants No. 20-82[a] and No. 20- 82[b] were used to search two distinct places: is directed has control or possession of the property sought to be seized, as petitioner Jose
No. 19, Road 3, Project 6, Quezon City and 784 Units C & D, RMS Building, Quezon Avenue, Burgos, Jr. was alleged to have in relation to the articles and property seized under the
Quezon City, respectively. Objection is interposed to the execution of Search Warrant No. 20- warrants.
82[b] at the latter address on the ground that the two search warrants pinpointed only one 4. Neither is there merit in petitioners' assertion that real properties were seized under the
place where petitioner Jose Burgos, Jr. was allegedly keeping and concealing the articles disputed warrants. Under Article 415[5] of the Civil Code of the Philippines, "machinery,
listed therein, i.e., No. 19, Road 3, Project 6, Quezon City. This assertion is based on that receptables, instruments or implements intended by the owner of the tenement for an
portion of Search Warrant No. 20- 82[b] which states: industry or works which may be carried on in a building or on a piece of land and which tend
Which have been used, and are being used as instruments and means of directly to meet the needs of the said industry or works" are considered immovable property.
committing the crime of subversion penalized under P.D. 885 as In Davao Sawmill Co. v. Castillo9 where this legal provision was invoked, this Court ruled that
amended and he is keeping and concealing the same at 19 Road 3, machinery which is movable by nature becomes immobilized when placed by the owner of
Project 6, Quezon City. the tenement, property or plant, but not so when placed by a tenant, usufructuary, or any
The defect pointed out is obviously a typographical error. Precisely, two search warrants other person having only a temporary right, unless such person acted as the agent of the
were applied for and issued because the purpose and intent were to search two distinct owner.
premises. It would be quite absurd and illogical for respondent judge to have issued two In the case at bar, petitioners do not claim to be the owners of the land and/or building on
warrants intended for one and the same place. Besides, the addresses of the places sought to which the machineries were placed. This being the case, the machineries in question, while in
be searched were specifically set forth in the application, and since it was Col. Abadilla fact bolted to the ground remain movable property susceptible to seizure under a search
himself who headed the team which executed the search warrants, the ambiguity that might warrant.
have arisen by reason of the typographical error is more apparent than real. The fact is that 5. The questioned search warrants were issued by respondent judge upon application of Col.
the place for which Search Warrant No. 20- 82[b] was applied for was 728 Units C & D, RMS Rolando N. Abadilla Intelligence Officer of the P.C. Metrocom.10 The application was
Building, Quezon Avenue, Quezon City, which address appeared in the opening paragraph of accompanied by the Joint Affidavit of Alejandro M. Gutierrez and Pedro U.
the said warrant. 7 Obviously this is the same place that respondent judge had in mind when Tango, 11 members of the Metrocom Intelligence and Security Group under Col. Abadilla
he issued Warrant No. 20-82 [b]. which conducted a surveillance of the premises prior to the filing of the application for the
In the determination of whether a search warrant describes the premises to be searched search warrants on December 7, 1982.
with sufficient particularity, it has been held "that the executing officer's prior knowledge as It is contended by petitioners, however, that the abovementioned documents could not have
to the place intended in the warrant is relevant. This would seem to be especially true where provided sufficient basis for the finding of a probable cause upon which a warrant may validly
the executing officer is the affiant on whose affidavit the warrant had issued, and when he issue in accordance with Section 3, Article IV of the 1973 Constitution which provides:
knows that the judge who issued the warrant intended the building described in the affidavit, SEC. 3. ... and no search warrant or warrant of arrest shall issue except
And it has also been said that the executing officer may look to the affidavit in the official upon probable cause to be determined by the judge, or such other
court file to resolve an ambiguity in the warrant as to the place to be searched." 8 responsible officer as may be authorized by law, after examination under
3. Another ground relied upon to annul the search warrants is the fact that although the oath or affirmation of the complainant and the witnesses he may
warrants were directed against Jose Burgos, Jr. alone, articles b belonging to his co- produce, and particularly describing the place to be searched and the
petitioners Jose Burgos, Sr., Bayani Soriano and the J. Burgos Media Services, Inc. were persons or things to be seized.
seized. We find petitioners' thesis impressed with merit. Probable cause for a search is defined as
Section 2, Rule 126 of the Rules of Court, enumerates the personal properties that may be such facts and circumstances which would lead a reasonably discreet and prudent man to
seized under a search warrant, to wit: believe that an offense has been committed and that the objects sought in connection with
Sec. 2. Personal Property to be seized. — A search warrant may be issued the offense are in the place sought to be searched. And when the search warrant applied for
for the search and seizure of the following personal property: is directed against a newspaper publisher or editor in connection with the publication of
[a] Property subject of the offense; subversive materials, as in the case at bar, the application and/or its supporting affidavits
[b] Property stolen or embezzled and other proceeds must contain a specification, stating with particularity the alleged subversive material he has
or fruits of the offense; and published or is intending to publish. Mere generalization will not suffice. Thus, the broad
[c] Property used or intended to be used as the statement in Col. Abadilla's application that petitioner "is in possession or has in his control
means of committing an offense. printing equipment and other paraphernalia, news publications and other documents which
The above rule does not require that the property to be seized should be owned by the were used and are all continuously being used as a means of committing the offense of
person against whom the search warrant is directed. It may or may not be owned by him. In subversion punishable under Presidential Decree 885, as amended ..." 12 is a mere

11 clioocampo
conclusion of law and does not satisfy the requirements of probable cause. Bereft of such instruments concerning the Communist Party in Texas," was declared void by the U.S.
particulars as would justify a finding of the existence of probable cause, said allegation Supreme Court for being too general. In like manner, directions to "seize any evidence in
cannot serve as basis for the issuance of a search warrant and it was a grave error for connectionwith the violation of SDC 13-3703 or otherwise" have been held too general, and
respondent judge to have done so. that portion of a search warrant which authorized the seizure of any "paraphernalia which
Equally insufficient as basis for the determination of probable cause is the statement could be used to violate Sec. 54-197 of the Connecticut General Statutes [the statute dealing
contained in the joint affidavit of Alejandro M. Gutierrez and Pedro U. Tango, "that the with the crime of conspiracy]" was held to be a general warrant, and therefore
evidence gathered and collated by our unit clearly shows that the premises above- invalid. 17 The description of the articles sought to be seized under the search warrants in
mentioned and the articles and things above-described were used and are continuously question cannot be characterized differently.
being used for subversive activities in conspiracy with, and to promote the objective of, In the Stanford case, the U.S. Supreme Courts calls to mind a notable chapter in English
illegal organizations such as the Light-a-Fire Movement, Movement for Free Philippines, and history: the era of disaccord between the Tudor Government and the English Press, when
April 6 Movement." 13 "Officers of the Crown were given roving commissions to search where they pleased in order
In mandating that "no warrant shall issue except upon probable cause to be determined by to suppress and destroy the literature of dissent both Catholic and Puritan Reference herein
the judge, ... after examination under oath or affirmation of the complainant and the to such historical episode would not be relevant for it is not the policy of our government to
witnesses he may produce; 14 the Constitution requires no less than personal knowledge by suppress any newspaper or publication that speaks with "the voice of non-conformity" but
the complainant or his witnesses of the facts upon which the issuance of a search warrant poses no clear and imminent danger to state security.
may be justified. In Alvarez v. Court of First Instance, 15 this Court ruled that "the oath As heretofore stated, the premises searched were the business and printing offices of the
required must refer to the truth of the facts within the personal knowledge of the petitioner "Metropolitan Mail" and the "We Forum newspapers. As a consequence of the search and
or his witnesses, because the purpose thereof is to convince the committing magistrate, not seizure, these premises were padlocked and sealed, with the further result that the printing
the individual making the affidavit and seeking the issuance of the warrant, of the existence and publication of said newspapers were discontinued.
of probable cause." As couched, the quoted averment in said joint affidavit filed before Such closure is in the nature of previous restraint or censorship abhorrent to the freedom of
respondent judge hardly meets the test of sufficiency established by this Court in Alvarez the press guaranteed under the fundamental law, 18 and constitutes a virtual denial of
case. petitioners' freedom to express themselves in print. This state of being is patently
Another factor which makes the search warrants under consideration constitutionally anathematic to a democratic framework where a free, alert and even militant press is
objectionable is that they are in the nature of general warrants. The search warrants describe essential for the political enlightenment and growth of the citizenry.
the articles sought to be seized in this wise: Respondents would justify the continued sealing of the printing machines on the ground that
1] All printing equipment, paraphernalia, paper, ink, photo (equipment, they have been sequestered under Section 8 of Presidential Decree No. 885, as amended,
typewriters, cabinets, tables, communications/recording equipment, tape which authorizes "the sequestration of the property of any person, natural or artificial,
recorders, dictaphone and the like used and/or connected in the printing engaged in subversive activities against the government and its duly constituted authorities
of the "WE FORUM" newspaper and any and all documents ... in accordance with implementing rules and regulations as may be issued by the Secretary
communication, letters and facsimile of prints related to the "WE of National Defense." It is doubtful however, if sequestration could validly be effected in view
FORUM" newspaper. of the absence of any implementing rules and regulations promulgated by the Minister of
2] Subversive documents, pamphlets, leaflets, books, and other National Defense.
publication to promote the objectives and piurposes of the subversive Besides, in the December 10, 1982 issue of the Daily Express, it was reported that no less
organization known as Movement for Free Philippines, Light-a-Fire than President Marcos himself denied the request of the military authorities to sequester the
Movement and April 6 Movement; and, property seized from petitioners on December 7, 1982. Thus:
3] Motor vehicles used in the distribution/circulation of the "WE FORUM" The President denied a request flied by government prosecutors for
and other subversive materials and propaganda, more particularly, sequestration of the WE FORUM newspaper and its printing presses,
1] Toyota-Corolla, colored yellow with Plate No. NKA according to Information Minister Gregorio S. Cendana.
892; On the basis of court orders, government agents went to the We Forum
2] DATSUN pick-up colored white with Plate No. NKV offices in Quezon City and took a detailed inventory of the equipment
969 and all materials in the premises.
3] A delivery truck with Plate No. NBS 524; Cendaña said that because of the denial the newspaper and its
4] TOYOTA-TAMARAW, colored white with Plate No. equipment remain at the disposal of the owners, subject to the discretion
PBP 665; and, of the court. 19
5] TOYOTA Hi-Lux, pick-up truck with Plate No. NGV That the property seized on December 7, 1982 had not been sequestered is further
427 with marking "Bagong Silang." confirmed by the reply of then Foreign Minister Carlos P. Romulo to the letter dated
In Stanford v. State of Texas 16 the search warrant which authorized the search for "books, February 10, 1983 of U.S. Congressman Tony P. Hall addressed to President Marcos,
records, pamphlets, cards, receipts, lists, memoranda, pictures, recordings and other written

12 clioocampo
expressing alarm over the "WE FORUM " case. 20 In this reply dated February 11, 1983, known as Movement for Free Philippines, Light-a-Fire Movement and
Minister Romulo stated: April 6 Movement.
2. Contrary to reports, President Marcos turned down the The obvious question is: Why were the documents, pamphlets, leaflets, books, etc.
recommendation of our authorities to close the paper's printing facilities subversive? What did they contain to make them subversive? There is nothing in the
and confiscate the equipment and materials it uses. 21 applications nor in the warrants which answers the questions. I must, therefore, conclude
IN VIEW OF THE FOREGOING, Search Warrants Nos. 20-82[a] and 20-82[b] issued by that the warrants are general warrants which are obnoxious to the Constitution.
respondent judge on December 7, 1982 are hereby declared null and void and are In point of fact, there was nothing subversive published in the WE FORUM just as there is
accordingly set aside. The prayer for a writ of mandatory injunction for the return of the nothing subversive which has been published in MALAYA which has replaced the former and
seized articles is hereby granted and all articles seized thereunder are hereby ordered has the same content but against which no action has been taken.
released to petitioners. No costs. Conformably with existing jurisprudence everything seized pursuant to the warrants should
SO ORDERED. be returned to the owners and all of the items are subject to the exclusionary rule of
Fernando, C.J., Teehankee, Makasiar, Concepcion, Jr., Melencio-Herrera, Plana, Relova, evidence.
Gutierrez, Jr., De la Fuente and Cuevas, JJ., concur. Teehankee, J., concur.
Aquino, J., took no part.

Separate Opinions
ABAD SANTOS, J., concurring
Separate Opinions I am glad to give my concurrence to the ponencia of Mr. Justice Escolin At the same time I
wish to state my own reasons for holding that the search warrants which are the subject of
ABAD SANTOS, J., concurring the petition are utterly void.
I am glad to give my concurrence to the ponencia of Mr. Justice Escolin At the same time I The action against "WE FORUM" was a naked suppression of press freedom for the search
wish to state my own reasons for holding that the search warrants which are the subject of warrants were issued in gross violation of the Constitution.
the petition are utterly void. The Constitutional requirement which is expressed in Section 3, Article IV, stresses two
The action against "WE FORUM" was a naked suppression of press freedom for the search points, namely: "(1) that no warrant shall issue but upon probable cause, to be determined
warrants were issued in gross violation of the Constitution. by the judge in the manner set forth in said provision; and (2) that the warrant shall
The Constitutional requirement which is expressed in Section 3, Article IV, stresses two particularly describe the things to be seized." (Stonehill vs. Diokno, 126 Phil. 738, 747: 20
points, namely: "(1) that no warrant shall issue but upon probable cause, to be determined SCRA 383 [1967].)
by the judge in the manner set forth in said provision; and (2) that the warrant shall Any search warrant is conducted in disregard of the points mentioned above will result in
particularly describe the things to be seized." (Stonehill vs. Diokno, 126 Phil. 738, 747: 20 wiping "out completely one of the most fundamental rights guaranteed in our Constitution,
SCRA 383 [1967].) for it would place the sanctity of the domicile and the privacy of communication and
Any search warrant is conducted in disregard of the points mentioned above will result in correspondence at the mercy of the whims caprice or passion of peace officers." (Ibid, p.
wiping "out completely one of the most fundamental rights guaranteed in our Constitution, 748.)
for it would place the sanctity of the domicile and the privacy of communication and The two search warrants were issued without probable cause. To satisfy the requirement of
correspondence at the mercy of the whims caprice or passion of peace officers." (Ibid, p. probable cause a specific offense must be alleged in the application; abstract averments will
748.) not suffice. In the case at bar nothing specifically subversive has been alleged; stated only is
The two search warrants were issued without probable cause. To satisfy the requirement of the claim that certain objects were being used as instruments and means of committing the
probable cause a specific offense must be alleged in the application; abstract averments will offense of subversion punishable under P.D. No. 885, as amended. There is no mention of
not suffice. In the case at bar nothing specifically subversive has been alleged; stated only is any specific provision of the decree. I n the words of Chief Justice C Concepcion, " It would be
the claim that certain objects were being used as instruments and means of committing the legal heresy of the highest order, to convict anybody" of violating the decree without
offense of subversion punishable under P.D. No. 885, as amended. There is no mention of reference to any determinate provision thereof.
any specific provision of the decree. I n the words of Chief Justice C Concepcion, " It would be The search warrants are also void for lack of particularity. Both search warrants authorize
legal heresy of the highest order, to convict anybody" of violating the decree without Col. Rolando Abadilla to seize and take possession, among other things, of the following:
reference to any determinate provision thereof. Subversive documents, pamphlets, leaflets, books and other publication
The search warrants are also void for lack of particularity. Both search warrants authorize to promote the objectives and purposes of the subversive organizations
Col. Rolando Abadilla to seize and take possession, among other things, of the following: known as Movement for Free Philippines, Light-a-Fire Movement and
Subversive documents, pamphlets, leaflets, books and other publication April 6 Movement.
to promote the objectives and purposes of the subversive organizations The obvious question is: Why were the documents, pamphlets, leaflets, books, etc.
subversive? What did they contain to make them subversive? There is nothing in the

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applications nor in the warrants which answers the questions. I must, therefore, conclude
that the warrants are general warrants which are obnoxious to the Constitution.
In point of fact, there was nothing subversive published in the WE FORUM just as there is
nothing subversive which has been published in MALAYA which has replaced the former and
has the same content but against which no action has been taken.
Conformably with existing jurisprudence everything seized pursuant to the warrants should
be returned to the owners and all of the items are subject to the exclusionary rule of
evidence.
Teehankee, J., concur.

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5. FELS ENERGY vs. PROV. OF BATANGAS setting aside of the assessment and the declaration of the barges as non-taxable items; it also
G.R. No. 168557 February 16, 2007 prayed that should LBAA find the barges to be taxable, the Provincial Assessor be directed to
FELS ENERGY, INC., Petitioner, make the necessary corrections.9
vs. In its Answer to the petition, the Provincial Assessor averred that the barges were real
THE PROVINCE OF BATANGAS and property for purposes of taxation under Section 199(c) of Republic Act (R.A.) No. 7160.
THE OFFICE OF THE PROVINCIAL ASSESSOR OF BATANGAS, Respondents. Before the case was decided by the LBAA, NPC filed a Manifestation, informing the LBAA that
x----------------------------------------------------x the Department of Finance (DOF) had rendered an opinion10 dated May 20, 1996, where it is
G.R. No. 170628 February 16, 2007 clearly stated that power barges are not real property subject to real property assessment.
NATIONAL POWER CORPORATION, Petitioner, On August 26, 1996, the LBAA rendered a Resolution11 denying the petition. The fallo reads:
vs. WHEREFORE, the Petition is DENIED. FELS is hereby ordered to pay the real estate tax in the
LOCAL BOARD OF ASSESSMENT APPEALS OF BATANGAS, LAURO C. ANDAYA, in his capacity amount of ₱56,184,088.40, for the year 1994.
as the Assessor of the Province of Batangas, and the PROVINCE OF BATANGAS represented SO ORDERED.12
by its Provincial Assessor, Respondents. The LBAA ruled that the power plant facilities, while they may be classified as movable or
DECISION personal property, are nevertheless considered real property for taxation purposes because
CALLEJO, SR., J.: they are installed at a specific location with a character of permanency. The LBAA also
Before us are two consolidated cases docketed as G.R. No. 168557 and G.R. No. 170628, pointed out that the owner of the barges–FELS, a private corporation–is the one being taxed,
which were filed by petitioners FELS Energy, Inc. (FELS) and National Power Corporation not NPC. A mere agreement making NPC responsible for the payment of all real estate taxes
(NPC), respectively. The first is a petition for review on certiorari assailing the August 25, and assessments will not justify the exemption of FELS; such a privilege can only be granted
2004 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 67490 and its Resolution2 dated to NPC and cannot be extended to FELS. Finally, the LBAA also ruled that the petition was
June 20, 2005; the second, also a petition for review on certiorari, challenges the February 9, filed out of time.
2005 Decision3 and November 23, 2005 Resolution4 of the CA in CA-G.R. SP No. 67491. Both Aggrieved, FELS appealed the LBAA’s ruling to the Central Board of Assessment Appeals
petitions were dismissed on the ground of prescription. (CBAA).
The pertinent facts are as follows: On August 28, 1996, the Provincial Treasurer of Batangas City issued a Notice of Levy and
On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW Warrant by Distraint13over the power barges, seeking to collect real property taxes
diesel engine power barges moored at Balayan Bay in Calaca, Batangas. The contract, amounting to ₱232,602,125.91 as of July 31, 1996. The notice and warrant was officially
denominated as an Energy Conversion Agreement5 (Agreement), was for a period of five served to FELS on November 8, 1996. It then filed a Motion to Lift Levy dated November 14,
years. Article 10 reads: 1996, praying that the Provincial Assessor be further restrained by the CBAA from enforcing
10.1 RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all taxes, import the disputed assessment during the pendency of the appeal.
duties, fees, charges and other levies imposed by the National Government of the Republic of On November 15, 1996, the CBAA issued an Order14 lifting the levy and distraint on the
the Philippines or any agency or instrumentality thereof to which POLAR may be or become properties of FELS in order not to preempt and render ineffectual, nugatory and illusory any
subject to or in relation to the performance of their obligations under this agreement (other resolution or judgment which the Board would issue.
than (i) taxes imposed or calculated on the basis of the net income of POLAR and Personal Meantime, the NPC filed a Motion for Intervention15 dated August 7, 1998 in the proceedings
Income Taxes of its employees and (ii) construction permit fees, environmental permit fees before the CBAA. This was approved by the CBAA in an Order16 dated September 22, 1998.
and other similar fees and charges) and (b) all real estate taxes and assessments, rates and During the pendency of the case, both FELS and NPC filed several motions to admit bond to
other charges in respect of the Power Barges.6 guarantee the payment of real property taxes assessed by the Provincial Assessor (in the
Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS. The NPC event that the judgment be unfavorable to them). The bonds were duly approved by the
initially opposed the assignment of rights, citing paragraph 17.2 of Article 17 of the CBAA.
Agreement. On April 6, 2000, the CBAA rendered a Decision17 finding the power barges exempt from real
On August 7, 1995, FELS received an assessment of real property taxes on the power barges property tax. The dispositive portion reads:
from Provincial Assessor Lauro C. Andaya of Batangas City. The assessed tax, which likewise WHEREFORE, the Resolution of the Local Board of Assessment Appeals of the Province of
covered those due for 1994, amounted to ₱56,184,088.40 per annum. FELS referred the Batangas is hereby reversed. Respondent-appellee Provincial Assessor of the Province of
matter to NPC, reminding it of its obligation under the Agreement to pay all real estate taxes. Batangas is hereby ordered to drop subject property under ARP/Tax Declaration No. 018-
It then gave NPC the full power and authority to represent it in any conference regarding the 00958 from the List of Taxable Properties in the Assessment Roll. The Provincial Treasurer of
real property assessment of the Provincial Assessor. Batangas is hereby directed to act accordingly.
In a letter7 dated September 7, 1995, NPC sought reconsideration of the Provincial Assessor’s SO ORDERED.18
decision to assess real property taxes on the power barges. However, the motion was denied Ruling in favor of FELS and NPC, the CBAA reasoned that the power barges belong to NPC;
on September 22, 1995, and the Provincial Assessor advised NPC to pay the assessment.8 This since they are actually, directly and exclusively used by it, the power barges are covered by
prompted NPC to file a petition with the Local Board of Assessment Appeals (LBAA) for the the exemptions under Section 234(c) of R.A. No. 7160.19 As to the other jurisdictional issue,

15 clioocampo
the CBAA ruled that prescription did not preclude the NPC from pursuing its claim for tax On August 3, 2005, FELS filed the petition docketed as G.R. No. 168557 before this Court,
exemption in accordance with Section 206 of R.A. No. 7160. The Provincial Assessor filed a raising the following issues:
motion for reconsideration, which was opposed by FELS and NPC. A.
In a complete volte face, the CBAA issued a Resolution20 on July 31, 2001 reversing its earlier Whether power barges, which are floating and movable, are personal properties and
decision. The fallo of the resolution reads: therefore, not subject to real property tax.
WHEREFORE, premises considered, it is the resolution of this Board that: B.
(a) The decision of the Board dated 6 April 2000 is hereby reversed. Assuming that the subject power barges are real properties, whether they are exempt from
(b) The petition of FELS, as well as the intervention of NPC, is dismissed. real estate tax under Section 234 of the Local Government Code ("LGC").
(c) The resolution of the Local Board of Assessment Appeals of Batangas is hereby C.
affirmed, Assuming arguendo that the subject power barges are subject to real estate tax, whether or
(d) The real property tax assessment on FELS by the Provincial Assessor of Batangas not it should be NPC which should be made to pay the same under the law.
is likewise hereby affirmed. D.
SO ORDERED.21 Assuming arguendo that the subject power barges are real properties, whether or not the
FELS and NPC filed separate motions for reconsideration, which were timely opposed by the same is subject to depreciation just like any other personal properties.
Provincial Assessor. The CBAA denied the said motions in a Resolution22 dated October 19, E.
2001. Whether the right of the petitioner to question the patently null and void real property tax
Dissatisfied, FELS filed a petition for review before the CA docketed as CA-G.R. SP No. 67490. assessment on the petitioner’s personal properties is imprescriptible.29
Meanwhile, NPC filed a separate petition, docketed as CA-G.R. SP No. 67491. On January 13, 2006, NPC filed its own petition for review before this Court (G.R. No.
On January 17, 2002, NPC filed a Manifestation/Motion for Consolidation in CA-G.R. SP No. 170628), indicating the following errors committed by the CA:
67490 praying for the consolidation of its petition with CA-G.R. SP No. 67491. In a I
Resolution23 dated February 12, 2002, the appellate court directed NPC to re-file its motion THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE APPEAL TO THE LBAA WAS
for consolidation with CA-G.R. SP No. 67491, since it is the ponente of the latter petition who FILED OUT OF TIME.
should resolve the request for reconsideration. II
NPC failed to comply with the aforesaid resolution. On August 25, 2004, the Twelfth Division THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE POWER BARGES ARE
of the appellate court rendered judgment in CA-G.R. SP No. 67490 denying the petition on NOT SUBJECT TO REAL PROPERTY TAXES.
the ground of prescription. The decretal portion of the decision reads: III
WHEREFORE, the petition for review is DENIED for lack of merit and the assailed Resolutions THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE ASSESSMENT ON THE
dated July 31, 2001 and October 19, 2001 of the Central Board of Assessment Appeals are POWER BARGES WAS NOT MADE IN ACCORDANCE WITH LAW.30
AFFIRMED. Considering that the factual antecedents of both cases are similar, the Court ordered the
SO ORDERED.24 consolidation of the two cases in a Resolution31 dated March 8, 2006.1awphi1.net
On September 20, 2004, FELS timely filed a motion for reconsideration seeking the reversal In an earlier Resolution dated February 1, 2006, the Court had required the parties to submit
of the appellate court’s decision in CA-G.R. SP No. 67490. their respective Memoranda within 30 days from notice. Almost a year passed but the parties
Thereafter, NPC filed a petition for review dated October 19, 2004 before this Court, had not submitted their respective memoranda. Considering that taxes—the lifeblood of our
docketed as G.R. No. 165113, assailing the appellate court’s decision in CA-G.R. SP No. 67490. economy—are involved in the present controversy, the Court was prompted to dispense with
The petition was, however, denied in this Court’s Resolution25 of November 8, 2004, for the said pleadings, with the end view of advancing the interests of justice and avoiding
NPC’s failure to sufficiently show that the CA committed any reversible error in the further delay.
challenged decision. NPC filed a motion for reconsideration, which the Court denied with In both petitions, FELS and NPC maintain that the appeal before the LBAA was not time-
finality in a Resolution26 dated January 19, 2005. barred. FELS argues that when NPC moved to have the assessment reconsidered on
Meantime, the appellate court dismissed the petition in CA-G.R. SP No. 67491. It held that September 7, 1995, the running of the period to file an appeal with the LBAA was tolled. For
the right to question the assessment of the Provincial Assessor had already prescribed upon its part, NPC posits that the 60-day period for appealing to the LBAA should be reckoned
the failure of FELS to appeal the disputed assessment to the LBAA within the period from its receipt of the denial of its motion for reconsideration.
prescribed by law. Since FELS had lost the right to question the assessment, the right of the Petitioners’ contentions are bereft of merit.
Provincial Government to collect the tax was already absolute. Section 226 of R.A. No. 7160, otherwise known as the Local Government Code of 1991,
NPC filed a motion for reconsideration dated March 8, 2005, seeking reconsideration of the provides:
February 5, 2005 ruling of the CA in CA-G.R. SP No. 67491. The motion was denied in a SECTION 226. Local Board of Assessment Appeals. – Any owner or person having legal
Resolution27 dated November 23, 2005. interest in the property who is not satisfied with the action of the provincial, city or municipal
The motion for reconsideration filed by FELS in CA-G.R. SP No. 67490 had been earlier denied assessor in the assessment of his property may, within sixty (60) days from the date of
for lack of merit in a Resolution28 dated June 20, 2005. receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of

16 clioocampo
the province or city by filing a petition under oath in the form prescribed for the purpose, of the assessment, or from invoking any defense that would reopen the question of its
together with copies of the tax declarations and such affidavits or documents submitted in liability on the merits.39
support of the appeal. In fine, the LBAA acted correctly when it dismissed the petitioners’ appeal for having been
We note that the notice of assessment which the Provincial Assessor sent to FELS on August filed out of time; the CBAA and the appellate court were likewise correct in affirming the
7, 1995, contained the following statement: dismissal. Elementary is the rule that the perfection of an appeal within the period therefor is
If you are not satisfied with this assessment, you may, within sixty (60) days from the date of both mandatory and jurisdictional, and failure in this regard renders the decision final and
receipt hereof, appeal to the Board of Assessment Appeals of the province by filing a petition executory.40
under oath on the form prescribed for the purpose, together with copies of ARP/Tax In the Comment filed by the Provincial Assessor, it is asserted that the instant petition is
Declaration and such affidavits or documents submitted in support of the appeal.32 barred by res judicata; that the final and executory judgment in G.R. No. 165113 (where
Instead of appealing to the Board of Assessment Appeals (as stated in the notice), NPC opted there was a final determination on the issue of prescription), effectively precludes the claims
to file a motion for reconsideration of the Provincial Assessor’s decision, a remedy not herein; and that the filing of the instant petition after an adverse judgment in G.R. No.
sanctioned by law. 165113 constitutes forum shopping.
The remedy of appeal to the LBAA is available from an adverse ruling or action of the FELS maintains that the argument of the Provincial Assessor is completely misplaced since it
provincial, city or municipal assessor in the assessment of the property. It follows then that was not a party to the erroneous petition which the NPC filed in G.R. No. 165113. It avers
the determination made by the respondent Provincial Assessor with regard to the taxability that it did not participate in the aforesaid proceeding, and the Supreme Court never acquired
of the subject real properties falls within its power to assess properties for taxation purposes jurisdiction over it. As to the issue of forum shopping, petitioner claims that no forum
subject to appeal before the LBAA.33 shopping could have been committed since the elements of litis pendentia or res judicata are
We fully agree with the rationalization of the CA in both CA-G.R. SP No. 67490 and CA-G.R. SP not present.
No. 67491. The two divisions of the appellate court cited the case of Callanta v. Office of the We do not agree.
Ombudsman,34 where we ruled that under Section 226 of R.A. No 7160,35 the last action of Res judicata pervades every organized system of jurisprudence and is founded upon two
the local assessor on a particular assessment shall be the notice of assessment; it is this last grounds embodied in various maxims of common law, namely: (1) public policy and
action which gives the owner of the property the right to appeal to the LBAA. The procedure necessity, which makes it to the interest of the
likewise does not permit the property owner the remedy of filing a motion for State that there should be an end to litigation – republicae ut sit litium; and (2) the hardship
reconsideration before the local assessor. The pertinent holding of the Court in Callanta is as on the individual of being vexed twice for the same cause – nemo debet bis vexari et eadem
follows: causa. A conflicting doctrine would subject the public peace and quiet to the will and
x x x [T]he same Code is equally clear that the aggrieved owners should have brought their dereliction of individuals and prefer the regalement of the litigious disposition on the part of
appeals before the LBAA. Unfortunately, despite the advice to this effect contained in their suitors to the preservation of the public tranquility and happiness. 41 As we ruled in Heirs of
respective notices of assessment, the owners chose to bring their requests for a Trinidad De Leon Vda. de Roxas v. Court of Appeals:42
review/readjustment before the city assessor, a remedy not sanctioned by the law. To allow x x x An existing final judgment or decree – rendered upon the merits, without fraud or
this procedure would indeed invite corruption in the system of appraisal and assessment. It collusion, by a court of competent jurisdiction acting upon a matter within its authority – is
conveniently courts a graft-prone situation where values of real property may be initially set conclusive on the rights of the parties and their privies. This ruling holds in all other actions
unreasonably high, and then subsequently reduced upon the request of a property owner. In or suits, in the same or any other judicial tribunal of concurrent jurisdiction, touching on the
the latter instance, allusions of a possible covert, illicit trade-off cannot be avoided, and in points or matters in issue in the first suit.
fact can conveniently take place. Such occasion for mischief must be prevented and excised xxx
from our system.36 Courts will simply refuse to reopen what has been decided. They will not allow the same
For its part, the appellate court declared in CA-G.R. SP No. 67491: parties or their privies to litigate anew a question once it has been considered and decided
x x x. The Court announces: Henceforth, whenever the local assessor sends a notice to the with finality. Litigations must end and terminate sometime and somewhere. The effective
owner or lawful possessor of real property of its revised assessed value, the former shall no and efficient administration of justice requires that once a judgment has become final, the
longer have any jurisdiction to entertain any request for a review or readjustment. The prevailing party should not be deprived of the fruits of the verdict by subsequent suits on the
appropriate forum where the aggrieved party may bring his appeal is the LBAA as provided same issues filed by the same parties.
by law. It follows ineluctably that the 60-day period for making the appeal to the LBAA runs This is in accordance with the doctrine of res judicata which has the following elements: (1)
without interruption. This is what We held in SP 67490 and reaffirm today in SP 67491.37 the former judgment must be final; (2) the court which rendered it had jurisdiction over the
To reiterate, if the taxpayer fails to appeal in due course, the right of the local government to subject matter and the parties; (3) the judgment must be on the merits; and (4) there must
collect the taxes due with respect to the taxpayer’s property becomes absolute upon the be between the first and the second actions, identity of parties, subject matter and causes of
expiration of the period to appeal.38 It also bears stressing that the taxpayer’s failure to action. The application of the doctrine of res judicata does not require absolute identity of
question the assessment in the LBAA renders the assessment of the local assessor final, parties but merely substantial identity of parties. There is substantial identity of parties when
executory and demandable, thus, precluding the taxpayer from questioning the correctness there is community of interest or privity of interest between a party in the first and a party in
the second case even if the first case did not implead the latter.43

17 clioocampo
To recall, FELS gave NPC the full power and authority to represent it in any proceeding to dismiss, the Supreme Court of New York held that the barges on which were mounted gas
regarding real property assessment. Therefore, when petitioner NPC filed its petition for turbine power plants designated to generate electrical power, the fuel oil barges which
review docketed as G.R. No. 165113, it did so not only on its behalf but also on behalf of supplied fuel oil to the power plant barges, and the accessory equipment mounted on the
FELS. Moreover, the assailed decision in the earlier petition for review filed in this Court was barges were subject to real property taxation.
the decision of the appellate court in CA-G.R. SP No. 67490, in which FELS was the petitioner. Moreover, Article 415 (9) of the New Civil Code provides that "[d]ocks and structures which,
Thus, the decision in G.R. No. 165116 is binding on petitioner FELS under the principle of though floating, are intended by their nature and object to remain at a fixed place on a river,
privity of interest. In fine, FELS and NPC are substantially "identical parties" as to warrant the lake, or coast" are considered immovable property. Thus, power barges are categorized as
application of res judicata. FELS’s argument that it is not bound by the erroneous petition immovable property by destination, being in the nature of machinery and other implements
filed by NPC is thus unavailing. intended by the owner for an industry or work which may be carried on in a building or on a
On the issue of forum shopping, we rule for the Provincial Assessor. Forum shopping exists piece of land and which tend directly to meet the needs of said industry or work.51
when, as a result of an adverse judgment in one forum, a party seeks another and possibly Petitioners maintain nevertheless that the power barges are exempt from real estate tax
favorable judgment in another forum other than by appeal or special civil action or certiorari. under Section 234 (c) of R.A. No. 7160 because they are actually, directly and exclusively used
There is also forum shopping when a party institutes two or more actions or proceedings by petitioner NPC, a government- owned and controlled corporation engaged in the supply,
grounded on the same cause, on the gamble that one or the other court would make a generation, and transmission of electric power.
favorable disposition.44 We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is
Petitioner FELS alleges that there is no forum shopping since the elements of res judicata are petitioner FELS, which in fine, is the entity being taxed by the local government. As stipulated
not present in the cases at bar; however, as already discussed, res judicata may be properly under Section 2.11, Article 2 of the Agreement:
applied herein. Petitioners engaged in forum shopping when they filed G.R. Nos. 168557 and OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures,
170628 after the petition for review in G.R. No. 165116. Indeed, petitioners went from one fittings, machinery and equipment on the Site used in connection with the Power Barges
court to another trying to get a favorable decision from one of the tribunals which allowed which have been supplied by it at its own cost. POLAR shall operate, manage and maintain
them to pursue their cases. the Power Barges for the purpose of converting Fuel of NAPOCOR into electricity. 52
It must be stressed that an important factor in determining the existence of forum shopping It follows then that FELS cannot escape liability from the payment of realty taxes by invoking
is the vexation caused to the courts and the parties-litigants by the filing of similar cases to its exemption in Section 234 (c) of R.A. No. 7160, which reads:
claim substantially the same reliefs.45 The rationale against forum shopping is that a party SECTION 234. Exemptions from Real Property Tax. – The following are exempted from
should not be allowed to pursue simultaneous remedies in two different fora. Filing multiple payment of the real property tax:
petitions or complaints constitutes abuse of court processes, which tends to degrade the xxx
administration of justice, wreaks havoc upon orderly judicial procedure, and adds to the (c) All machineries and equipment that are actually, directly and exclusively used by local
congestion of the heavily burdened dockets of the courts.46 water districts and government-owned or controlled corporations engaged in the supply and
Thus, there is forum shopping when there exist: (a) identity of parties, or at least such parties distribution of water and/or generation and transmission of electric power; x x x
as represent the same interests in both actions, (b) identity of rights asserted and relief Indeed, the law states that the machinery must be actually, directly and exclusively used by
prayed for, the relief being founded on the same facts, and (c) the identity of the two the government owned or controlled corporation; nevertheless, petitioner FELS still cannot
preceding particulars is such that any judgment rendered in the pending case, regardless of find solace in this provision because Section 5.5, Article 5 of the Agreement provides:
which party is successful, would amount to res judicata in the other.47 OPERATION. POLAR undertakes that until the end of the Lease Period, subject to the supply
Having found that the elements of res judicata and forum shopping are present in the of the necessary Fuel pursuant to Article 6 and to the other provisions hereof, it will operate
consolidated cases, a discussion of the other issues is no longer necessary. Nevertheless, for the Power Barges to convert such Fuel into electricity in accordance with Part A of Article 7.53
the peace and contentment of petitioners, we shall shed light on the merits of the case. It is a basic rule that obligations arising from a contract have the force of law between the
As found by the appellate court, the CBAA and LBAA power barges are real property and are parties. Not being contrary to law, morals, good customs, public order or public policy, the
thus subject to real property tax. This is also the inevitable conclusion, considering that G.R. parties to the contract are bound by its terms and conditions. 54
No. 165113 was dismissed for failure to sufficiently show any reversible error. Tax Time and again, the Supreme Court has stated that taxation is the rule and exemption is the
assessments by tax examiners are presumed correct and made in good faith, with the exception.55 The law does not look with favor on tax exemptions and the entity that would
taxpayer having the burden of proving otherwise.48 Besides, factual findings of administrative seek to be thus privileged must justify it by words too plain to be mistaken and too
bodies, which have acquired expertise in their field, are generally binding and conclusive categorical to be misinterpreted.56 Thus, applying the rule of strict construction of laws
upon the Court; we will not assume to interfere with the sensible exercise of the judgment of granting tax exemptions, and the rule that doubts should be resolved in favor of provincial
men especially trained in appraising property. Where the judicial mind is left in doubt, it is a corporations, we hold that FELS is considered a taxable entity.
sound policy to leave the assessment undisturbed.49 We find no reason to depart from this The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be
rule in this case. responsible for the payment of all real estate taxes and assessments, does not justify the
In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al., 50 a exemption. The privilege granted to petitioner NPC cannot be extended to FELS. The
power company brought an action to review property tax assessment. On the city’s motion

18 clioocampo
covenant is between FELS and NPC and does not bind a third person not privy thereto, in this
case, the Province of Batangas.
It must be pointed out that the protracted and circuitous litigation has seriously resulted in
the local government’s deprivation of revenues. The power to tax is an incident of
sovereignty and is unlimited in its magnitude, acknowledging in its very nature no perimeter
so that security against its abuse is to be found only in the responsibility of the legislature
which imposes the tax on the constituency who are to pay for it.57 The right of local
government units to collect taxes due must always be upheld to avoid severe tax erosion.
This consideration is consistent with the State policy to guarantee the autonomy of local
governments58 and the objective of the Local Government Code that they enjoy genuine and
meaningful local autonomy to empower them to achieve their fullest development as self-
reliant communities and make them effective partners in the attainment of national goals.59
In conclusion, we reiterate that the power to tax is the most potent instrument to raise the
needed revenues to finance and support myriad activities of the local government units for
the delivery of basic services essential to the promotion of the general welfare and the
enhancement of peace, progress, and prosperity of the people.60
WHEREFORE, the Petitions are DENIED and the assailed Decisions and Resolutions AFFIRMED.
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice

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6. PLDT vs. ALVAREZ telephone number (2–8243285) as the calling number used, as if the call was originating
G.R. No. 179408, March 05, 2014 from a local telephone in Metro Manila. Upon verification with the PLDT’s Integrated
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Petitioner, v. ABIGAIL R. RAZON Customer Management (billing) System, the ACPDD learned that the subscriber of the
ALVAREZ AND VERNON R. RAZON, Respondents. reflected telephone number is Abigail R. Razon Alvarez, with address at 17 Dominic Savio St.,
DECISION Savio Compound, Barangay Don Bosco, Parañaque City. It further learned that several lines
BRION, J.: are installed at this address with Abigail and Vernon R. Razon (respondents), among others,
Before the Court is a petition for review on certiorari1 assailing the decision2 dated August 11, as subscribers.10
2006 and the resolution3 dated August 22, 2007 of the Court of Appeals (CA) in CA–G.R. SP
No. 89213 on the validity of the four search warrants issued by the Regional Trial Court (RTC) To validate its findings, the ACPDD conducted the same test calls on November 5, 2003 at the
of Pasay City, Branch 115. premises of the NTC in Quezon City (and in the presence of an NTC representative11) using
the same prepaid card (validation test). The receiving phone at the NTC premises reflected
The CA rulings (i) quashed the first two search warrants, similarly docketed as Search the telephone numbers registered in the name of Abigail as the calling number from the
Warrant No. 03–063, issued for violation of Article 308, in relation to Article 309, of the United Kingdom.12
Revised Penal Code (RPC), and (ii) declared void paragraphs 7, 8 and 9 of the other two
search warrants, also similarly docketed as Search Warrant No. 03–064, issued for violation Similar test calls subsequently conducted using the prepaid cards Unity Card and IDT
of Presidential Decree (PD) No. 401.4 Supercalling Cardrevealed the same results. The caller–id–equipped receiving phone
FACTUAL ANTECEDENTS reflected telephone numbers13 that are in the names of Experto Enterprises and Experto
Phils, as subscribers, with a common address at No. 38 Indonesia St., Better Living
Philippine Long Distance Telephone Company (PLDT) is the grantee of a legislative Subdivision, Barangay Don Bosco, Parañaque City. It turned out that the actual occupant of
franchise5 which authorizes it to carry on the business of providing basic and enhanced these premises is also Abigail. Subsequently, a validation test was also conducted, yielding
telecommunications services in and between areas in the Philippines and between the several telephone numbers registered in the name of Experto Phils./Experto Enterprises as
Philippines and other countries and territories,6and, accordingly, to establish, operate, the calling numbers supposedly from the United Kingdom.14
manage, lease, maintain and purchase telecommunications system for both domestic and
international calls.7 Pursuant to its franchise, PLDT offers to the public wide range of services According to PLDT, had an ordinary and legitimate call been made, the screen of the caller–
duly authorized by the National Telecommunications Commission (NTC). id–equipped receiving phone would not reflect a local number or any number at all. In the
cards they tested, however, once the caller enters the access and pin numbers, the
PLDT’s network is principally composed of the Public Switch Telephone Network, telephone respondents would route the call via the internet to a local telephone number (in this case, a
handsets and/or telecommunications equipment used by its subscribers, the wires and PLDT telephone number) which would connect the call to the receiving phone. Since calls
cables linking these handsets and/or equipment, antennae, transmission facilities, the through the internet never pass the toll center of the PLDT’s IGF, users of these prepaid cards
international gateway facility (IGF) and other telecommunications equipment providing can place a call to any point in the Philippines (provided the local line is NDD–capable)
interconnections.8 To safeguard the integrity of its network, PLDT regularly conducts without the call appearing as coming from abroad.15
investigations on various prepaid cards marketed and sold abroad to determine alternative
calling patterns (ACP) and network fraud that are being perpetrated against it. On November 6, 2003 and November 19, 2003, Mr. Lawrence Narciso of the PLDT’s Quality
Control Division, together with the operatives of the Philippine National Police (PNP),
To prevent or stop network fraud, PLDT’s ACP Detection Division (ACPDD) regularly visits conducted an ocular inspection at 17 Dominic Savio St., Savio Compound and at No. 38
foreign countries to conduct market research on various prepaid phone cards offered abroad Indonesia St., Better Living Subdivision – both in Barangay Don Bosco, Paranaque City – and
that allow their users to make overseas calls to PLDT subscribers in the Philippines at a discovered that PLDT telephone lines were connected to several pieces of equipment.16 Mr.
cheaper rate. Narciso narrated the results of the inspection, thus –
10. During [the] ocular inspection [at 17 Dominic Savio St., Savio Compound], Ms. Abigail
The ACPDD bought The Number One prepaid card — a card principally marketed to Filipinos Razon Alvarez allowed us to gain entry and check the telephone installations within their
residing in the United Kingdom for calls to the Philippines – to make test calls using two premises. First, we checked the location of the telephone protectors that are commonly
telephone lines: the dialing phone – an IDD–capable9 telephone line which makes the call installed at a concrete wall boundary inside the compound. Some of these protectors are
and through which the access number and the PIN number printed at the back of the card covered with a fabricated wooden cabinet. Other protectors are installed beside the said
are entered; and the receiving phone – a caller identification (caller id) unit–equipped wooden cabinet, xxx. The inside wiring installations from telephone protectors to connecting
telephone line which would receive the call and reflect the incoming caller’s telephone block were routed to the said adjacent room passing through the house ceiling.
number.
11. xxx. Upon entering the so–called adjacent room, we immediately noticed that the PLDT
During a test call placed at the PLDT–ACPDD office, the receiving phone reflected a PLDT

20 clioocampo
telephone lines were connected to the equipment situated at multi–layered rack. The 1. MERIDIAN SUBSCRIBERS UNIT AND PLDT DSL LINES and/or CABLES AND ANTENNAS and/or
equipment room contains the following: similar equipment or device capable of transmitting air waves or frequency, such as a
a. 6 Quintum router; Meridian Subscriber’s Unit, Broadband DSL and telephone lines;

b. 13 Com router; 2. PERSONAL COMPUTERS or any similar equipment or device capable of accepting
information applying the prescribed process of the information and supplying the result of
c. 1 Cisco 800 router; this process;

d. 1 Nokia Modem for PLDT DSL; 3. NOKIA MODEM or any similar equipment or device that enables data terminal equipment
such as computers to communicate with other data terminal equipment via a telephone line;
e. 1 Meridian Subscriber’s Unit[;]
4. QUINTUM Equipment or any similar equipment capable of receiving digital signals from
f. 5 Personal Computers[;] the internet and converting those signals to voice;

g. 1 Computer Printer[; and] 5. QUINTUM, 3COM AND CISCO Routers or any similar equipment capable of switching
packets of data to their assigned destination or addresses;
h. 1 Flat–bed Scanner[.]
12. We also noticed that these routers are connected to the Meridian’s subscriber unit ("SU” 6. LINKS DSL SWITCH or any similar equipment capable of switching data;
) that has an outdoor antenna installed on the top of the roof. Meridian’s SU and outdoor
antenna are service components used to connect with wireless broadband internet access 7. COMPUTER PRINTERS AND SCANNERS or any similar equipment or device used for copying
service of Meridian Telekoms. and/or printing data and/or information;

xxxx 8. SOFTWARE, DISKETTES, TAPES or any similar equipment or device used for recording or
storing information; and
18. During the site inspection [at No. 38 Indonesia St., Better Living Subdivision], we noticed
that the protector of each telephone line/number xxx were enclosed in a fabricated wooden 9. Manuals, phone cards, access codes, billing statements, receipts, contracts, checks, orders,
cabinet with safety padlock. Said wooden cabinet was situated on the concrete wall inside communications and documents, lease and/or subscription agreements or contracts,
the compound near the garage entrance gate. The telephone inside the wiring installations communications and documents relating to securing and using telephone lines and/or
from the protector to the connecting blocks were placed in a plastic electrical conduit routed equipment[.]21
to the adjacent room at the second floor.17 On the same date, the PNP searched the premises indicated in the warrants. On December
On December 3, 2003, Police Superintendent Gilbert C. Cruz filed a consolidated application 10, 2003, a return was made with a complete inventory of the items seized.22 On January 14,
for a search warrant18 before Judge Francisco G. Mendiola of the RTC, for the crimes of theft 2004, the PLDT and the PNP filed with the Department of Justice a joint complaint–affidavit
and violation of PD No. 401. According to PLDT, the respondents are engaged in a form of for theft and for violation of PD No. 401 against the respondents.23
network fraud known as International Simple Resale (ISR) which amounts to theft under the
RPC. On February 18, 2004, the respondents filed with the RTC a motion to quash24 the search
warrants essentially on the following grounds: first, the RTC had no authority to issue search
ISR is a method of routing and completing international long distance calls using lines, cables, warrants which were enforced in Parañaque City; second, the enumeration of the items to be
antennae and/or wave frequencies which are connected directly to the domestic exchange searched and seized lacked particularity; and third, there was no probable cause for the
facilities of the country where the call is destined (terminating country); and, in the process, crime of theft.
bypassing the IGF at the terminating country.19
On March 12, 2004, PLDT opposed the respondents' motion.25
Judge Mendiola found probable cause for the issuance of the search warrants applied for.
Accordingly, four search warrants20 were issued for violations of Article 308, in relation to In a July 6, 2004 order,26 the RTC denied the respondents' motion to quash. Having been
Article 309, of the RPC (SW A–1 and SW A–2) and of PD No. 401, as amended (SW B–1 and rebuffed27 in their motion for reconsideration,28 the respondents filed a petition
SW B–2) for the ISR activities being conducted at 17 Dominic Savio St., Savio Compound and for certiorari with the CA.” 29
at No. 38 Indonesia St., Better Living Subdivision, both in Barangay Don Bosco, Paranaque RULING OF THE CA
City. The four search warrants enumerated the objects to be searched and seized as follows:
On August 11, 2006, the CA rendered the assailed decision and resolution, granting the

21 clioocampo
respondents' petition for certiorari. The CA quashed SW A–l and SW A–2 (for theft) on the telephone lines, then these items bear a direct relation to the offense of violation of PD No.
ground that they were issued for “non–existent crimes.” 30 According to the CA, inherent in 401, justifying their seizure.
the determination of probable cause for the issuance of search warrant is the accompanying
determination that an offense has been committed. Relying on this Court’s decision in Laurel The enumeration in paragraph 8 is likewise a proper subject of seizure because they are the
v. Judge Abrogar,31 the CA ruled that the respondents could not have possibly committed the fruits of the offense as they contain information on PLDT’s business profit and other
crime of theft because PLDT’s business of providing telecommunication services and these information relating to the commission of violation of PD No. 401. Similarly, paragraph 9
services themselves are not personal properties contemplated under Article 308 of the RPC. specifies the fruits and evidence of violation of PD No. 401 since it supports PLDT’s claim that
the respondents have made a business out of their illegal connections to PLDT lines.
With respect to SW B–l and SW B–2 (for violation of PD No. 401), the CA upheld paragraphs THE RESPONDENTS' ARGUMENTS
one to six of the enumeration of items subject of the search. The CA held that the stock
phrase “or similar equipment or device” found in paragraphs one to six of the search The respondents counter that while Laurel may not yet be final, at least it has a persuasive
warrants did not make it suffer from generality since each paragraph’s enumeration of items effect as the current jurisprudence on the matter. Even without Laurel, the CA’s nullification
was sufficiently qualified by the citation of the specific objects to be seized and by its of SW A–l and SW A–2 can withstand scrutiny because of the novelty of the issue presented
functions which are inherently connected with the crime allegedly committed. before it. The nullification of paragraphs 7, 8 and 9 of SW B–l and SW B–2 must be upheld not
only on the ground of broadness but for lack of any relation whatsoever with PD No. 401
The CA, however, nullified the ensuing paragraphs, 7, 8 and 9, for lack of particularity and which punishes the theft of electricity.
ordered the return of the items seized under these provisions. While the same stock phrase OUR RULING
appears in paragraphs 7 and 8, the properties described therein – i.e., printer and scanner,
software, diskette and tapes – include even those for the respondents' personal use, making We partially grant the petition.
the description of the things to be seized too general in nature.
Laurel and its reversal by the Court En Banc
With the denial of its motion for reconsideration,32 PLDT went to this Court via this Rule 45
petition. Before proceeding with the case, a review of Laurel is in order as it involves substantially
THE PETITIONER'S ARGUMENTS similar facts as in the present case.

PLDT faults the CA for relying on Laurel on three grounds: first, Laurel cannot be cited yet as Baynet Co., Ltd. (Baynet) sells prepaid cards, “Bay Super Orient Card,” that allow their users
an authority under the principle of stare decisis because Laurel is not yet final and executory; to place a call to the Philippines from Japan. PLDT asserted that Baynet is engaged in ISR
in fact, it is the subject of a pending motion for reconsideration filed by PLDT itself; second, activities by using an international private leased line (IPL) to course Baynet’s incoming
even assuming that Laurel is already final, the facts in Laurel vary from the present international long distance calls. The IPL is linked to a switching equipment, which is then
case. Laurel involves the quashal of an information on the ground that the information does connected to PLDT telephone lines/numbers and equipment, with Baynet as subscriber.
not charge any offense; hence, the determination of the existence of the elements of the
crime of theft is indispensable in resolving the motion to quash. In contrast, the present case To establish its case, PLDT obtained a search warrant. On the strength of the items seized
involves the quashal of a search warrant. Third, accordingly, in resolving the motion, the during the search of Baynet’s premises, the prosecutor found probable cause for theft
issuing court only has to be convinced that there is probable cause to hold that: (i) the items against Luis Marcos Laurel (Laurel) and other Baynet officials. Accordingly, an information
to be seized are connected to a criminal activity; and (ii) these items are found in the place to was filed, alleging that the Baynet officials “take, steal and use the international long distance
be searched. Since the matter of quashing a search warrant may be rooted on matters calls belonging to PLDT by [ISR activities] xxx effectively stealing this business from PLDT
“extrinsic of the search warrant,” 33 the issuing court does not need to look into the elements while using its facilities in the estimated amount of P20,370,651.92 to the damage and
of the crime allegedly committed in the same manner that the CA did in Laurel. prejudice of PLDT[.]” 35

PLDT adds that a finding of grave abuse of discretion in the issuance of search warrant may Laurel moved to quash the information on the bold assertion that ISR activities do not
be justified only when there is “disregard of the requirements for the issuance of a search constitute a crime under Philippine law. Laurel argued that an ISR activity cannot entail taking
warrant[.]” 34 In the present case, the CA did not find (and could not have found) any grave of personal property because the international long distance telephone calls using PLDT
abuse of discretion on the part of the RTC because at the time the RTC issued the search telephone lines belong to the caller himself; the amount stated in the information, if at all,
warrants in 2003, Laurel had not yet been promulgated. represents the rentals due PLDT for the caller’s usage of its facilities. Laurel argued that the
business of providing international long distance calls, i.e., PLDT’s service, and the revenue
In defending the validity of the nullified provisions of SW B–l and SW B–2, PLDT argues that derived therefrom are not personal property that can be appropriated.
PD No. 401 also punishes unauthorized installation of telephone connections. Since the
enumerated items are connected to the computers that are illegally connected to PLDT Laurel went to the Court after failing to secure the desired relief from the trial and appellate

22 clioocampo
courts,36raising the core issue of whether PLDT’s business of providing telecommunication prior to the passage of the RPC, jurisprudence is settled that “any personal property, tangible
services for international long distance calls is a proper subject of theft under Article 308 of or intangible, corporeal or incorporeal, capable of appropriation can be the object of
the RPC. The Court’s First Division granted Laurel’s petition and ordered the quashal of the theft.” 40 This jurisprudence, in turn, applied the prevailing legal meaning of the term
information. “personal property” under the old Civil Code as “anything susceptible of appropriation and
not included in the foregoing chapter (not real property).” 41 PLDT’s telephone service or its
Taking off from the basic rule that penal laws are construed strictly against the State, the business of providing this was appropriable personal property and was, in fact, the subject of
Court ruled that international long distance calls and the business of providing appropriation in an ISR operation, facilitated by means of the unlawful use of PLDT’s facilities.
telecommunication or telephone services by PLDT are not personal properties that can be In this regard, the Amended Information inaccurately describes the offense by making it
the subject of theft. appear that what [Laurel] took were the international long distance telephone calls, rather
One is apt to conclude that “personal property” standing alone, covers both tangible and than respondent PLDT’s business.
intangible properties and are subject of theft under the Revised Penal Code. But the words
“Personal property” under the Revised Penal Code must be considered in tandem with the xxxx
word “take” in the law. The statutory definition of “taking” and movable property indicates
that, clearly, not all personal properties may be the proper subjects of theft. The general rule Indeed, while it may be conceded that “international long distance calls,” the matter alleged
is that, only movable properties which have physical or material existence and susceptible of to be stolen xxx, take the form of electrical energy, it cannot be said that such international
occupation by another are proper objects of theft, xxx. 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
xxxx 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
xxx. Business, like services in business, although are properties, are not proper subjects of calls were taken without its consent. It is the use of these communications facilities without
theft under the Revised Penal Code because the same cannot be “taken” or “occupied.” If it the consent of PLDT that constitutes the crime of theft, which is the unlawful taking of the
were otherwise, xxx there would be no juridical difference between the taking of the telephone services and business.
business of a person or the services provided by him for gain, vis–a–vis, the taking of goods,
wares or merchandise, or equipment comprising his business. If it was its intention to include Therefore, the business of providing telecommunication and the telephone service are
“business” as personal property under Article 308 of the Revised Penal Code, the Philippine personal property under Article 308 of the Revised Penal Code, and the act of engaging in ISR
Legislature should have spoken in language that is clear and definite: that business is is an act of “subtraction” penalized under said article.42
personal property under Article 308 of the Revised Penal Code. The Court En Banc’s reversal of its Laurel Division ruling during the pendency of this petition
significantly impacts on how the Court should resolve the present case for two
xxxx reasons:chanRoblesvirtualLawlibrary

The petitioner is not charged, under the Amended Information, for theft of First, the Laurel En Banc ruling categorically equated an ISR activity to theft under the RPC. In
telecommunication or telephone services offered by PLDT. Even if he is, the term “personal so doing, whatever alleged factual variance there may be between Laurel and the present
property” under Article 308 of the Revised Penal Code cannot be interpreted beyond its case cannot render Laurel inapplicable.
seams so as to include “telecommunication or telephone services” or computer services for
that matter. xxx. Even at common law, neither time nor services may be taken and occupied Second, and more importantly, in a Rule 45 petition, the Court basically determines whether
or appropriated. A service is generally not considered property and a theft of service would the CA was legally correct in determining whether the RTC committed grave abuse of
not, therefore, constitute theft since there can be no caption or asportation. Neither is the discretion. Under this premise, the CA ordinarily gauges the grave abuse of discretion at the
unauthorized use of the equipment and facilities of PLDT by [Laurel] theft under [Article 308]. time the RTC rendered its assailed resolution. In quashing SW A–l and SW A–2, note that the
CA relied on the Laurel Division ruling at the time when it was still subject of a pending
If it was the intent of the Philippine Legislature, in 1930, to include services to be the subject motion for reconsideration. The CA, in fact, did not expressly impute grave abuse of
of theft, it should have incorporated the same in Article 308 of the Revised Penal Code. The discretion on the RTC when the RTC issued the search warrants and later refused to quash
Legislature did not. In fact, the Revised Penal Code does not even contain a definition of these. Understandably, the CA could not have really found the presence of grave abuse of
services.37 discretion for there was no Laurel ruling to speak of at the time the RTC issued the search
PLDT38 moved for reconsideration and referral of the case to the Court En Banc. The Court’s warrants.
First Division granted the referral.
These peculiar facts require us to more carefully analyze our prism of review under Rule 45.
On January 13, 2009 (or while the present petition was pending in court), the Court En
Bancunanimously granted PLDT’s motion for reconsideration.39 The Court ruled that even Requisites for the issuance of search warrant; probable cause requires the probable

23 clioocampo
existence of an offense
One of the constitutional requirements for the validity of a search warrant is that it must be
Section 2, Article III of the 1987 Constitution guarantees the right of persons to be free from issued based on probable cause which, under the Rules, must be in connection with one
unreasonable searches and seizures. specific offense. In search warrant proceedings, probable cause is defined as such facts and
Section 2. The right of the people to be secure in their persons, houses, papers, and effects circumstances that would lead a reasonably discreet and prudent man to believe that an
against unreasonable searches and seizures of whatever nature and for any purpose shall be offense has been committed and that the objects sought in connection with the offense are
inviolable, and no search warrant or warrant of arrest shall issue except upon probable in the place sought to be searched.49
cause to be determined personally by the judge after examination under oath or affirmation
of the complainant and the witnesses he may produce, and particularly describing the place In the determination of probable cause, the court must necessarily determine whether an
to be searched and the persons or things to be seized. offense exists to justify the issuance or quashal of the search warrant50 because the personal
The purposes of the constitutional provision against unlawful searches and seizures are to: (i) properties that may be subject of the search warrant are very much intertwined with the
prevent the officers of the law from violating private security in person and property and “one specific offense” requirement of probable cause.51 Contrary to PLDT’s claim, the only
illegally invading the sanctity of the home; and (ii) give remedy against such usurpations way to determine whether a warrant should issue in connection with one specific offense is
when attempted or committed.43 to juxtapose the facts and circumstances presented by the applicant with the elements of the
offense that are alleged to support the search warrant.
The constitutional requirement for the issuance of a search warrant is reiterated under
Sections 4 and 5, Rule 126 of the Revised Rules of Criminal Procedure. These sections lay Reviewing the RTC’s denial of the motion to quash SWA–l and SW A–2
down the following requirements for the issuance of a search warrant: (1) the existence of
probable cause; (2) the probable cause must be determined personally by the judge; (3) the a. From the prism of Rule 65
judge must examine, in writing and under oath or affirmation, the complainant and the
witnesses he or she may produce; (4) the applicant and the witnesses testify on the facts The facts of the present case easily call to mind the case of Columbia Pictures, Inc. v.
personally known to them; and (5) the warrant specifically describes the place to be searched CA52 involving copyright infringement. In that case, the CA likewise voided the search warrant
and the things to be seized.44 Should any of these requisites be absent, the party aggrieved issued by the trial court by applying a doctrine that added a new requirement (i.e., the
by the issuance and enforcement of the search warrant may file a motion to quash the production of the master tape for comparison with the allegedly pirate copies) in
search warrant with the issuing court or with the court where the action is subsequently determining the existence of probable cause for the issuance of search warrant in copyright
instituted.45 infringement cases. The doctrine referred to was laid down in 20th Century Fox Film
Corporation v. Court of Appeals. 20th Century Fox, however, was promulgated more than
A search warrant proceeding is a special criminal and judicial process akin to a writ of eight months after the search warrants were issued by the RTC. In reversing the CA, the
discovery. It is designed by the Rules of Criminal Procedure to respond only to an incident in Court ruled:chanRoblesvirtualLawlibrary
the main case, if one has already been instituted, or in anticipation thereof. Since it is at most
incidental to the main criminal case, an order granting or denying a motion to quash a search Mindful as we are of the ramifications of the doctrine of stare decisis and the rudiments of
warrant may be questioned only via a petition for certiorari under Rule 65.46 fair play, it is our considered view that the 20th Century Fox ruling cannot be retroactively
applied to the instant case to justify the quashal of Search Warrant No. 87–053. [The]
When confronted with this petition, the higher court must necessarily determine the validity petitioners' consistent position that the order of the lower court[,] xxx [which denied the
of the lower court’s action from the prism of whether it was tainted with grave abuse of respondents'] motion to lift the order of search warrant^] was properly issued, [because
discretion. By grave abuse of discretion, jurisprudence refers to the capricious and whimsical there was] satisfactory compliance with the then prevailing standards under the law for
exercise of judgment equivalent to lack of jurisdiction, or to the exercise of power in an determination of probable cause, is indeed well taken. The lower court could not possibly
arbitrary or despotic manner by reason of passion or personal hostility or in a manner so have expected more evidence from petitioners in their application for a search warrant other
patent and gross as to amount to an invasion of positive duty or to the virtual refusal to than what the law and jurisprudence, then existing and judicially accepted, required with
perform the duty enjoined or to act at all in contemplation of the law.47 respect to the finding of probable cause.53

In a certiorari proceeding, the determination translates to an inquiry on whether the Columbia could easily be cited in favor of PLDT to sustain the RTC’s refusal to quash the
requirements and limitations provided under the Constitution and the Rules of Court were search warrant. Indeed, in quashing SW A–l and SW A–2, the CA never intimated that the RTC
properly complied with, from the issuance of the warrant up to its implementation. In view disregarded any of the requisites for the issuance of a search warrant as these requirements
of the constitutional objective of preventing stealthy encroachment upon or the gradual were interpreted and observed under the then prevailing jurisprudence. The CA could not
depreciation of the rights secured by the Constitution, strict compliance with the have done so because precisely the issue of whether telephone services or the business of
constitutional and procedural requirements is required. A judge who issues a search warrant providing these services could be the subject of theft under the RPC had not yet reached the
without complying with these requirements commits grave abuse of discretion.48 Court when the search warrants were applied for and issued.

24 clioocampo
However, what distinguishes Columbia from the present case is the focus of Columbia’s legal Under Article 8 of the Civil Code, the decisions of this Court form part of the country’s legal
rationale. Columbia’s focus was not on whether the facts and circumstances would system. While these decisions are not laws pursuant to the doctrine of separation of powers,
reasonably lead to the conclusion that an offense has been or is being committed and that they evidence the laws' meaning, breadth, and scope and, therefore, have the same binding
the objects sought in connection with the offense were in the place to be searched – the force as the laws themselves.57 Hence, the Court’s interpretation of a statute forms part of
primary points of focus of the present case. Columbia’s focus was on whether the law as of the date it was originally passed because the Court’s construction merely
the evidence presented at the time the search warrant was applied for was sufficient to establishes the contemporaneous legislative intent that the interpreted law carries into
establish the facts and circumstances required for establishing probable cause to issue a effect.58
search warrant.
Article 8 of the Civil Code embodies the basic principle of stare decisis et non quieta
Nonetheless, Columbia serves as a neat guide for the CA to decide the movere (to adhere to precedents and not to unsettle established matters) that enjoins
respondents' certiorari petition. In Columbia, the Court applied the principle of non– adherence to judicial precedents embodied in the decision of the Supreme Court. That
retroactivity of its ruling in 20th Century Fox, whose finality was not an issue, in reversing a CA decision becomes a judicial precedent to be followed in subsequent cases by all courts in the
ruling. The Court’s attitude in that case should have been adopted by the CA in the present land. The doctrine of stare decisis, in turn, is based on the principle that once a question of
case a fortiori since the ruling that the CA relied upon was not yet final at the time the CA law has been examined and decided, it should be deemed settled and closed to further
resolved to quash the search warrants. argument.59 The doctrine of (horizontal) stare decisis is one of policy, grounded on the
necessity of securing certainty and stability of judicial decisions.60
b. Supervening events justifying a broader review under Rule 65
In the field of adjudication, a case cannot yet acquire the status of a “decided” case that is
Ordinarily, the CA’s determination under Rule 65 is limited to whether the RTC gravely “deemed settled and closed to further argument” if the Court’s decision is still the subject of
abused its discretion in granting or denying the motion to quash based on facts then existing. a motion for reconsideration seasonably filed by the moving party. Under the Rules of Court,
Nonetheless, the Court recognizes that supervening facts may transpire after the issuance a party is expressly allowed to file a motion for reconsideration of the Court’s decision within
and implementation of the search warrant that may provide justification for the quashal of 15 days from notice.61 Since the doctrine of stare decisis is founded on the necessity of
the search warrant via a petition for certiorari. securing certainty and stability in law, then these attributes will spring only once the Court’s
ruling has lapsed to finality in accordance with law. In Ting v. Velez–Ting,62 we ruled that:
For one, if the offense for which the warrant is issued is subsequently decriminalized during The principle of stare decisis enjoins adherence by lower courts to doctrinal rules established
the pendency of the petition for certiorari, then the warrant may be quashed.54 For another, by this Court in its final decisions. It is based on the principle that once a question of law has
a subsequent ruling from the Court that a similar set of facts and circumstances does not been examined and decided, it should be deemed settled and closed to further argument.
constitute an offense, as alleged in the search warrant application, may be used as a ground In applying Laurel despite PLDT’s statement that the case is still subject of a pending motion
to quash a warrant.55 In both instances, the underlying reason for quashing the search for reconsideration,63 the CA legally erred in refusing to reconsider its ruling that largely
warrant is the absence of probable cause which can only possibly exist when the combination relied on a non–fmal ruling of the Court. While the CA’s dutiful desire to apply the latest
of facts and circumstances points to the possible commission of an offense that may be pronouncement of the Court in Laurel is expected, it should have acted with caution, instead
evidenced by the personal properties sought to be seized. To the CA, the second instance of excitement, on being informed by PLDT of its pending motion for reconsideration; it
mentioned justified the quashal of the search warrants. should have then followed the principle of stare decisis. The appellate court’s application of
an exceptional circumstance when it may order the quashal of the search warrant on
We would have readily agreed with the CA if the Laurel Division ruling had not been grounds not existing at the time the warrant was issued or implemented must still rest on
subsequently reversed. As things turned out, however, the Court granted PLDT’s motion for prudential grounds if only to maintain the limitation of the scope of the remedy
reconsideration of the Court First Division’s ruling in Laurel and ruled that “the act of of certiorari as a writ to correct errors of jurisdiction and not mere errors of judgment.
engaging in ISR is xxx penalized under xxx article [308 of the RPC].” 56 As the RTC itself found,
PLDT successfully established in its application for a search warrant a probable cause for theft Still, the respondents attempt to justify the CA’s action by arguing that the CA would still rule
by evidence that Laurel’s ISR activities deprived PLDT of its telephone services and of its in the way it did64 even without Laurel. As PLDT correctly pointed out, there is simply nothing
business of providing these services without its consent. in the CA’s decision that would support its quashal of the search warrant independently
of Laurel. We must bear in mind that the CA’s quashal of SW A–l and SW A–2 operated under
b1. the stare decisis aspect the strictures of a certiorari petition, where the presence of grave abuse of discretion is
necessary for the corrective writ to issue since the appellate court exercises its supervisory
With the Court En Banc’s reversal of the earlier Laurel ruling, then the CA’s quashal of these jurisdiction in this case. We simply cannot second–guess what the CA’s action could have
warrants would have no leg to stand on. This is the dire consequence of failing to appreciate been.
the full import of the doctrine of stare decisis that the CA ignored.

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Lastly, the CA’s reliance on Savage v. Judge Taypin65 can neither sustain the quashal of SW A– search warrant is to obtain evidence to be used in a subsequent prosecution for an offense
l and SW A–2. In Savage, the Court granted the certiorari petition and quashed the search for which the search warrant was applied, a judge issuing a particular warrant must satisfy
warrant because the alleged crime (unfair competition involving design patents) that himself that the evidence presented by the applicant establishes the facts and circumstances
supported the search warrant had already been repealed, and the act complained of, if at all, relating to this specific offense for which the warrant is sought and issued.72Accordingly, in a
gave rise only to civil liability (for patent infringement). Having been decriminalized, probable subsequent challenge against the validity of the warrant, the applicant cannot be allowed to
cause for the crime alleged could not possibly exist. maintain its validity based on facts and circumstances that may be related to other search
warrants but are extrinsic to the warrant in question.
In the present case, the issue is whether the commission of an ISR activity, in the manner
that PLDT’s evidence shows, sufficiently establishes probable cause for the issuance of Under the Rules, the following personal property may be subject of search warrant: (i) the
search warrants for the crime of theft. Unlike in Savage, the Court in Laurel was not subject of the offense; (ii) fruits of the offense; or (iii) those used or intended to be used as
confronted with the issue of decriminalization (which is a legislative prerogative) but whether the means of committing an offense. In the present case, we sustain the CA’s ruling nullifying
the commission of an ISR activity meets the elements of the offense of theft for purposes of paragraphs 7, 8 and 9 of SW B–l and SW B–2 for failing the test of particularity. More
quashing an information. Since the Court, in Laurel, ultimately ruled then an ISR activity specifically, these provisions do not show how the enumerated items could have possibly
justifies the elements of theft that must necessarily be alleged in the information a fortiori, been connected with the crime for which the warrant was issued, i.e., P.D. No. 401. For
the RTC’s determination should be sustained on certiorari. clarity, PD No. 401 punishes:
Section 1. Any person who installs any water, electrical, telephone or piped gas connection
The requirement of particularity in SWB–1 and SWB–2 without previous authority from xxx the Philippine Long Distance Telephone Company, xxx,
tampers and/or uses tampered water, electrical or gas meters, jumpers or other devices
On the issue of particularity in SW B–l and SW B–2, we note that the respondents have not whereby water, electricity or piped gas is stolen; steals or pilfers water, electric or piped gas
appealed to us the CA ruling that sustained paragraphs 1 to 6 of the search warrants. Hence, meters, or water, electric and/or telephone wires, or piped gas pipes or conduits; knowingly
we shall limit our discussion to the question of whether the CA correctly ruled that the RTC possesses stolen or pilfered water, electrical or gas meters as well as stolen or pilfered water,
gravely abused its discretion insofar as it refused to quash paragraphs 7 to 9 of SW B–l and electrical and/or telephone wires, or piped gas pipes and conduits, shall, upon conviction, be
SWB–2. punished with prision correccional in its minimum period or a fine ranging from two
thousand to six thousand pesos, or both.73
Aside from the requirement of probable cause, the Constitution also requires that the search Paragraphs 7 to 8 of SW B–l and SW B–2 read as follows:
warrant must particularly describe the place to be searched and the things to be seized. This 7. COMPUTER PRINTERS AND SCANNERS or any similar equipment or device used for copying
requirement of particularity in the description, especially of the things to be seized, is meant and/or printing data and/or information;
to enable the law enforcers to readily identify the properties to be seized and, thus, prevent
the seizure of the wrong items. It seeks to leave the law enforcers with no discretion at all 8. SOFTWARE, DISKETTES, TAPES or any similar equipment or device used for recording or
regarding these articles and to give life to the constitutional provision against unreasonable storing information; and
searches and seizures.66 In other words, the requisite sufficient particularity is aimed at
preventing the law enforcer from exercising unlimited discretion as to what things are to be 9. Manuals, phone cards, access codes, billing statements, receipts, contracts, checks, orders,
taken under the warrant and ensure that only those connected with the offense for which communications and documents, lease and/or subscription agreements or contracts,
the warrant was issued shall be seized.67 communications and documents relating to securing and using telephone lines and/or
equipment[.]74
The requirement of specificity, however, does not require technical accuracy in the According to PLDT, the items in paragraph 7 have a direct relation to violation of PD No. 401
description of the property to be seized. Specificity is satisfied if the personal properties' because the items are connected to computers that, in turn, are linked to the unauthorized
description is as far as the circumstances will ordinarily allow it to be so described. The connections to PLDT telephone lines. With regard to the software, diskette and tapes in
nature of the description should vary according to whether the identity of the property or its paragraph 8, and the items in paragraph 9, PLDT argues that these items are “fruits of the
character is a matter of concern.68 One of the tests to determine the particularity in the offense” and that the information it contains “constitutes the business profit” of PLDT.
description of objects to be seized under a search warrant is when the things described are According to PLDT, it corroborates the fact that the respondents have made a business out of
limited to those which bear direct relation to the offense for which the warrant is being their illegal connections to its telephone lines.
issued.69
We disagree with PLDT. The fact that the printers and scanners are or may be connected to
Additionally, the Rules require that a search warrant should be issued “in connection with the other illegal connections to the PLDT telephone lines does not make them the subject of
one specific offense” to prevent the issuance of a scatter–shot warrant.70 The one–specific– the offense or fruits of the offense, much less could they become a means of committing an
offense requirement reinforces the constitutional requirement that a search warrant should offense.
issue only on the basis of probable cause.71 Since the primary objective of applying for a

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It is clear from PLDT’s submission that it confuses the crime for which SW B–l and SW B–
2 were issued with the crime for which SW A–l and SWA–2 were issued: SW B–l and SW B–2
were issued for violation of PD No. 401, to be enforced in two different places as identified in
the warrants. The crime for which these search warrants were issued does not pertain to the
crime of theft – where matters of personal property and the taking thereof with intent to
gain become significant – but to PD No. 401.

These items could not be the subject of a violation of PD No. 401 since PLDT itself does not
claim that these items themselves comprise the unauthorized installations. For emphasis,
what PD No. 401 punishes is the unauthorized installation of telephone connection without
the previous consent of PLDT. In the present case, PLDT has not shown that connecting
printers, scanners, diskettes or tapes to a computer, even if connected to a PLDT telephone
line, would or should require its prior authorization.

Neither could these items be a means of committing a violation of PD No. 401 since these
copying, printing and storage devices in no way aided the respondents in making the
unauthorized connections. While these items may be accessory to the computers and other
equipment linked to telephone lines, PD No. 401 does not cover this kind of items within the
scope of the prohibition. To allow the seizure of items under the PLDT’s interpretation would,
as the CA correctly observed, allow the seizure under the warrant of properties for personal
use of the respondents.

If PLDT seeks the seizure of these items to prove that these installations contain the
respondents' financial gain and the corresponding business loss to PLDT, then that purpose is
served by SW A–l and SW A–2 since this is what PLDT essentially complained of in charging
the respondents with theft. However, the same reasoning does not justify its seizure under a
warrant for violation of PD No. 401 since these items are not directly connected to the PLDT
telephone lines and PLDT has not even claimed that the installation of these items requires
prior authorization from it.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The decision and
the resolution of the Court of Appeals in CA–G.R. SP No. 89213 are hereby MODIFIED in that
SW A–l and SW A–2 are hereby declared valid and constitutional.

SO ORDERED.

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7. REPUBLIC vs. CHING the land in the concept of owner since June 12, 1945 or prior and the tax
G.R. No. 186166 October 20, 2010 declaration and tax payment receipts appear not to be genuine and are of recent
REPUBLIC OF THE PHILIPPINES, Petitioner, vintage;
vs. (3) That the claim of ownership in fee simple on the basis of Spanish title or grant
JOSE T. CHING represented by his Attorney-in-fact, ANTONIO V. CHING, Respondent. can no longer be availed of by the applicant who have failed to file an appropriate
DECISION application for registration within six (6) months from 16 February 1976 under P.D.
MENDOZA, J.: No. 892 as the instant application appears to have been filed on December 17,
In this Petition for Review on certiorari under Rule 45, the Republic of the Philippines, 1998; and
represented by the Office of the Solicitor General (OSG), assails the November 28, 2008 (4) That the parcels of land applied for are portions of the public domain belonging
Decision1 of the Court of Appeals (CA), in CA-G.R. CV No. 00318-MIN, reversing the December to the Republic of the Philippines not subject to private appropriation.12
3, 2002 Resolution2 of the Regional Trial Court, Butuan City, Branch 2 (RTC), disallowing the On June 28, 2001, the Department of Environment and Natural Resources likewise filed its
Application for Registration of Title of respondent Jose Ching, represented by his Attorney-in- opposition to the application.
Fact, Antonio Ching, in Land Registration Case No. N-290. On December 3, 2002, the RTC resolved to dismiss the respondent’s application for
THE FACTS registration.13 The dispositive portion reads:
On August 9, 1999, respondent Jose Ching, represented by his Attorney-in-Fact, Antonio IN VIEW OF THE FOREGOING, the court resolves to dismiss as it hereby dismisses the instant
Ching, filed a verified Application for Registration of Title covering a parcel of land with application for registration of title for insufficiency of evidence.
improvements identified as Lot 1, SGS-13-000037-D, being a portion of Lot 2738, GSS-10- SO ORDERED.
000043, before the RTC. The subject lot is a consolidation of three (3) contiguous lots The RTC was not convinced that respondent’s Deed of Sale sufficiently established that he
situated in Banza, Butuan City, Agusan del Norte, with an area of 58,229 square meters. The was the owner in fee simple of the land sought to be registered. The RTC wrote "[e]vidence
first parcel of land is covered by Tax Declaration No. 96GR-11-003-0556-A; the second parcel only shows that the applicant and his vendor as predecessor-in-interest have been in open,
by Tax Declaration No. 96GR-11-003-0444-I; and the third parcel by Tax Declaration No. peaceful, notorious and exclusive possession starting from 1965. Among the tax declarations
96GR-11-003-0537-A. In support of his application, respondent attached the (a) Sketch marked Exhibits ‘R’ to ‘R-7’ includes the oldest one marked Exhibit ‘R-7’ shown in the back
plan;3 (b) Technical description;4 (c) Tracing Cloth of Plan of Portion of Lot 2738, Gss-10- lower portion that it was effective beginning the year 1980, and among the tax declarations
000043, which is a Segregation Plan of Portion of Lot 2738, Gss-10-0000431, as surveyed for marked Exhibit ‘S’ to ‘S-8’ inclusive, the oldest one marked Exhibit ‘S-8’ is effective in the year
Jose T. Ching and duly approved by the Bureau of Land DENR Region XIII on July 08, 1998 1980 and among the Tax Declaration marked Exhibit ‘T’ to ‘T-7’ inclusive, the oldest one
covering the subject land;5 and (d) Special Power of Attorney executed by Jose T. Ching marked Exhibit ‘T-7’ shows that it began to be effective in the year 1980 also. In the
authorizing Antonio V. Ching, Jr. to file an application for title over the land.6 Certification (Exhibit ‘U’) issued by the Office of the City Treasurer of Butuan shows that the
Respondent alleged that on April 10, 1979, he purchased the subject land from the late payment of the realty taxes paid for the 3 parcels started only in the year 1980."14
former governor and Congressman Democrito O. Plaza as evidenced by a Deed of Sale of Respondent filed a motion for reconsideration and a subsequent supplemental motion for
Unregistered Lands.7 reconsideration with attached additional tax declarations. The RTC denied both motions in its
Initially, the RTC, acting as a land registration court, ordered respondent to show cause why December 11, 2003 Resolution15 stating that it could not consider the additional tax
his application for registration of title should not be dismissed for his failure to state the declarations attached in the Supplemental Motion for Reconsideration as these were not
current assessed value of the subject land and his non-compliance with the last paragraph of formally offered in evidence. The RTC also noted that the additional documents were mere
Section 17 of Presidential Decree (P.D.) No. 1529.8 photocopies and would not have any probative value because they were not in accord with
Accordingly, on September 3, 1999, respondent filed a Verified Amended Application9 which the requirements under Act 49616 and P.D. 152917 that only original muniments of title or
the RTC found to be sufficient in form and substance. The case was set for initial hearing on copies thereof must be presented.
December 22, 1999.10 Respondent appealed the RTC ruling before the CA. Respondent claimed that the RTC erred
On December 16, 1999, the OSG duly deputized the Provincial Prosecutor of Agusan del in dismissing the application for registration of title for insufficiency of evidence and in failing
Norte to appear on behalf of the State.11 Thereafter, on January 20, 2000, the OSG filed an to consider the additional tax declarations attached in his Supplemental Motion for
Opposition to the application for registration of title. Specifically, the OSG alleged: Reconsideration.18
(1) That neither the applicant nor his predecessors-in-interest have been in open, On November 28, 2008, the CA reversed the RTC’s earlier resolution and granted
continuous, exclusive and notorious possession and occupation of the land in respondent’s application for registration of title.19 The decretal portion of said decision reads:
question since June 12, 1945 or prior thereto [Sec. 48 (b) C.A. 141, as amended by WHEREFORE, the appealed Decision of the Regional Trial Court, Branch 2, Butuan City acting
P.D. 1073]; as land registration court, dismissing the application for registration of title for insufficiency
(2) That the muniments of title and/or any tax declarations and tax payments of evidence is hereby REVERSED and SET ASIDE. The Appellant’s application for land
receipts of applicant attached to or alleged in the application, do not constitute registration is GRANTED.
competent and sufficient evidence of a bona fide acquisition of the land applied for SO ORDERED.20
or of his open, continuous, exclusive and notorious possession and occupation of

28 clioocampo
The CA ruled that the RTC erred in failing to consider the additional documents attached in lands of the public domain under a bona fide claim of ownership since June 12, 1945, or
respondent’s Supplemental Motion for Reconsideration. The CA ratiocinated: earlier.
Clearly from the foregoing tax declarations which all went unchallenged and formed part of Xxx
the record of the instant case, it could clearly be seen that the same parcels of land had been Section 48. The following described citizens of the Philippines, occupying lands of the public
in possession of the petitioner-appellant’s (respondent) predecessors-in-interest since 1948 domain or claiming to own any such lands or an interest therein, but whose titles have not
until these parcels were purchased by him on 10 April 1979. Since the applicant and his been perfected or completed, may apply to the Court of First Instance [now Regional Trial
predecessors-in-interest had been in possession of the land for more than thirty (30) years Court] of the province where the land is located for confirmation of their claims and the
continuously, peacefully, adversely, publicly and to the exclusion of everybody, the same was issuance of a certificate of title therefor, under the Land Registration Act, to wit:
"in the concept of owners." This also means that petitioner-appellant is no longer required Xxx
to prove that the property in question is classified as alienable and disposable land of the (b) Those who by themselves or through their predecessors-in-interest have been in open,
public domain.21 The long and continuous possession thereof by petitioner-appellant and his continuous, exclusive and notorious possession and occupation of agricultural lands of the
predecessors-in-interest since 1948 or a total period of fifty-one (51) years before the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945, or
application was filed on 09 August 1999 converted the property to a private one. This is but a earlier, immediately preceding the filing of the application for confirmation of title except
mere reiteration of the established rule that alienable public land held by a possessor, when prevented by war or force majeure. These shall be conclusively presumed to have
personally, or through his predecessor-in-interest, openly, continuously and exclusively for performed all the conditions essential to a Government grant and shall be entitled to a
the prescribed statutory period of thirty (30) years under the Public Land Act, as amended, is certificate of title under the provisions of this chapter.
converted to private property by the mere lapse or completion of said period, ipso jure.22 Based on these legal parameters, applicants for registration of title under Section 14(1) must
Hence, this petition.23 sufficiently establish: (1) that the subject land forms part of the disposable and alienable
In its Memorandum,24 the OSG submits the following lands of the public domain; (2) that the applicant and his predecessors-in-interest have been
ISSUES in open, continuous, exclusive and notorious possession and occupation of the same; and (3)
I that it is under a bona fide claim of ownership since June 12, 1945, or earlier.
The Court of Appeals erred in reversing and setting aside the Resolution dated December Thus, before an applicant can adduce evidence of open, continuous, exclusive and notorious
23, 2002 of the Land Registration Court denying the BELATED submission of tax possession and occupation of the property in question, he must first prove that the land
declarations which the herein respondent merely attached in its supplemental motion for belongs to the alienable and disposable lands of the public domain. It is doctrinal that, under
reconsideration and which were NOT FORMALLY OFFERED in evidence during the trial of the Regalian doctrine, all lands of the public domain pertain to the State and the latter is the
the case, as required under Section 34 of Rule 132 of the 1997 Revised Rules of Civil foundation of any asserted right to ownership in land. Accordingly, the State presumably
Procedure; owns all lands not otherwise appearing to be clearly within private ownership. To overcome
II such presumption, irrefutable evidence must be shown by the applicant that the land subject
The Court of Appeals erred in reversing and setting aside the Resolution dated December of registration has been declassified and now belongs to the alienable and disposable portion
23, 2002 of the Land Registration Court denying the admission of MERE PHOTOCOPIES of of the public domain.28
tax declarations which have not been verified or authenticated, in flagrant violation of the Notably, the Court finds no evidence in this case that would show that the land in question
requirements of both Act 496 (Land Registration Act) and PD 1529 (Property Registration has been classified as alienable and disposable land of the public domain. The sketch plan,
Act)providing that only ORIGINAL muniments of titles or original copies thereof shall be technical description and the tracing clothing plan that respondent presented do not show
filed; the actual legal status of the land. Hence, the conclusion reached by the CA that it was no
III longer necessary for the respondent to prove the alienability of the land in question on the
The Court of Appeals erred in reversing and setting aside the subject Resolution of the Land assumption that he had already completed the thirty-year possessory requirement was
Registration Court which denied the application for registration on the ground that the misplaced. The requirements of alienability and possession and occupation since June 12,
respondent herein failed to prove that the subject land is alienable and disposable land of 1945 or earlier under Section 14(1) are indispensable prerequisites to a favorable registration
the public domain and have been in possession for the length of time and manner and of his title to the property. Absent one, the application for registration is materially infirmed.
concept prescribed in Section 48(b) of the CA 141 as amended.25 Since respondent provided no competent and persuasive evidence to show that the land has
The petition is meritorious. been classified as alienable and disposable, then the application for registration should be
Sec. 14(1) of P.D. 152926 in relation to Section 48(b) of Commonwealth Act 141, as amended denied.
by Section 4 of P.D. 1073,27 provides: At any rate, after reviewing the documents submitted by the respondent, it is clear that there
SEC. 14. Who may apply.—The following persons may file in the proper Court of First was no substantive evidence to show that he complied with the requirement of possession
Instance [now Regional Trial Court] an application for registration of title to land, whether and occupation since June 12, 1945 or earlier.
personally or through their duly authorized representatives: The earliest tax declaration that respondent tried to incorporate in his Supplemental Motion
(1) Those who by themselves or through their predecessors-in-interest have been in open, for Reconsideration does not measure up to the time requirement. In particular, the tax
continuous, exclusive and notorious possession and occupation of alienable and disposable declaration on the first lot, as shown by Tax Declaration No. 6932 in the name of Adulfo Calo,

29 clioocampo
only began in 1948.29 On the second lot, Tax Declaration No. 3852 in the name of Marcos The import of this ruling is clear. Under Section 14(2) of P.D. 1529, before acquisitive
Azote merely appeared in 1952.30 While on the third lot, Tax Declaration No. 6891 registered prescription could commence, the property sought to be registered must not only be
in the name of the Heirs of Felipe Calo came up in 1948.31 Unmistakably, the respondent classified as alienable and disposable; it must also be expressly declared by the State that it is
cannot avail of registration under Section 14(1) of P.D. 1529. no longer intended for public service or the development of the national wealth or that the
In his Memorandum,32 respondent proffered that should not the land be registrable under property has been converted into patrimonial. Thus, absent an express declaration by the
Section 14(1) of P.D. 1529, it could still be registered under Section 14(2) of P.D. 1529.33 State, the land remains to be property of public dominion.
He cannot. WHEREFORE, the petition is GRANTED. The November 28, 2008 Decision of the Court of
The case of Heirs of Mario Malabanan vs. Republic34 summarized the distinctions between Appeals is hereby REVERSED and SET ASIDE. The Application for Registration of Title of
the legal requisites in applications for registration of title under Section 14(1) and Section respondent Jose T. Ching in Land Registration Case No. N-290 is DENIED.
14(2) of P.D. 1529, to wit: SO ORDERED.
(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.35
(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.36 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.lawp++il
(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 person’s
uninterrupted adverse possession of patrimonial property for at least
thirty (30) years, regardless of good faith or just title, ripens into
ownership.

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8. REPUBLIC vs. CITY OF PARANAQUE On April 3, 2003, after due hearing, the RTC issued an order denying PRA’s petition for the
G.R. No. 191109 July 18, 2012 issuance of a temporary restraining order.
REPUBLIC OF THE PHILIPPINES, represented by the PHILIPPINE RECLAMATION AUTHORITY On April 4, 2003, PRA sent a letter to Carabeo requesting the latter not to proceed with the
(PRA),Petitioner, public auction of the subject reclaimed properties on April 7, 2003. In response, Carabeo sent
vs. a letter stating that the public auction could not be deferred because the RTC had already
CITY OF PARANAQUE, Respondent. denied PRA’s TRO application.
DECISION On April 25, 2003, the RTC denied PRA’s prayer for the issuance of a writ of preliminary
MENDOZA, J.: injunction for being moot and academic considering that the auction sale of the subject
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, properties on April 7, 2003 had already been consummated.
on pure questions of law, assailing the January 8, 2010 Order1 of the Regional Trial Court, On August 3, 2009, after an exchange of several pleadings and the failure of both parties to
Branch 195, Parafiaque City (RTC), which ruled that petitioner Philippine Reclamation arrive at a compromise agreement, PRA filed a Motion for Leave to File and Admit Attached
Authority (PRA) is a government-owned and controlled corporation (GOCC), a taxable entity, Supplemental Petition which sought to declare as null and void the assessment for real
and, therefore, . not exempt from payment of real property taxes. The pertinent portion of property taxes, the levy based on the said assessment, the public auction sale conducted on
the said order reads: April 7, 2003, and the Certificates of Sale issued pursuant to the auction sale.
In view of the finding of this court that petitioner is not exempt from payment of real On January 8, 2010, the RTC rendered its decision dismissing PRA’s petition. In ruling that
property taxes, respondent Parañaque City Treasurer Liberato M. Carabeo did not act xxx PRA was not exempt from payment of real property taxes, the RTC reasoned out that it was a
without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or in GOCC under Section 3 of P.D. No. 1084. It was organized as a stock corporation because it
excess of jurisdiction in issuing the warrants of levy on the subject properties. had an authorized capital stock divided into no par value shares. In fact, PRA admitted its
WHEREFORE, the instant petition is dismissed. The Motion for Leave to File and Admit corporate personality and that said properties were registered in its name as shown by the
Attached Supplemental Petition is denied and the supplemental petition attached thereto is certificates of title. Therefore, as a GOCC, local tax exemption is withdrawn by virtue of
not admitted. Section 193 of Republic Act (R.A.) No. 7160 Local Government Code (LGC) which was the
The Public Estates Authority (PEA) is a government corporation created by virtue of prevailing law in 2001 and 2002 with respect to real property taxation. The RTC also ruled
Presidential Decree (P.D.) No. 1084 (Creating the Public Estates Authority, Defining its Powers that the tax exemption claimed by PRA under E.O. No. 654 had already been expressly
and Functions, Providing Funds Therefor and For Other Purposes) which took effect on repealed by R.A. No. 7160 and that PRA failed to comply with the procedural requirements in
February 4, Section 206 thereof.
1977 to provide a coordinated, economical and efficient reclamation of lands, and the Not in conformity, PRA filed this petition for certiorari assailing the January 8, 2010 RTC
administration and operation of lands belonging to, managed and/or operated by, the Order based on the following GROUNDS
government with the object of maximizing their utilization and hastening their development I
consistent with public interest. THE TRIAL COURT GRAVELY ERRED IN FINDING THAT PETITIONER IS LIABLE TO PAY REAL
On February 14, 1979, by virtue of Executive Order (E.O.) No. 525 issued by then President PROPERTY TAX ON THE SUBJECT RECLAIMED LANDS CONSIDERING
Ferdinand Marcos, PEA was designated as the agency primarily responsible for integrating, THAT PETITIONER IS AN INCORPORATED INSTRUMENTALITY OF THE NATIONAL
directing and coordinating all reclamation projects for and on behalf of the National GOVERNMENT AND IS, THEREFORE, EXEMPT FROM PAYMENT OF REAL PROPERTY TAX
Government. UNDER SECTIONS 234(A) AND 133(O) OF REPUBLIC ACT 7160 OR THE LOCAL GOVERNMENT
On October 26, 2004, then President Gloria Macapagal-Arroyo issued E.O. No. 380 CODE VIS-À-VIS MANILA INTERNATIONAL AIRPORT AUTHORITY V. COURT OF APPEALS.
transforming PEA into PRA, which shall perform all the powers and functions of the PEA II
relating to reclamation activities. THE TRIAL COURT GRAVELY ERRED IN FAILING TO CONSIDER THAT RECLAIMED LANDS ARE
By virtue of its mandate, PRA reclaimed several portions of the foreshore and offshore areas PART OF THE PUBLIC DOMAIN AND, HENCE, EXEMPT FROM REAL PROPERTY TAX.
of Manila Bay, including those located in Parañaque City, and was issued Original Certificates PRA asserts that it is not a GOCC under Section 2(13) of the Introductory Provisions of the
of Title (OCT Nos. 180, 202, 206, 207, 289, 557, and 559) and Transfer Certificates of Title Administrative Code. Neither is it a GOCC under Section 16, Article XII of the 1987
(TCT Nos. 104628, 7312, 7309, 7311, 9685, and 9686) over the reclaimed lands. Constitution because it is not required to meet the test of economic viability. Instead, PRA is
On February 19, 2003, then Parañaque City Treasurer Liberato M. Carabeo (Carabeo) issued a government instrumentality vested with corporate powers and performing an essential
Warrants of Levy on PRA’s reclaimed properties (Central Business Park and Barangay San public service pursuant to Section 2(10) of the Introductory Provisions of the Administrative
Dionisio) located in Parañaque City based on the assessment for delinquent real property Code. Although it has a capital stock divided into shares, it is not authorized to distribute
taxes made by then Parañaque City Assessor Soledad Medina Cue for tax years 2001 and dividends and allotment of surplus and profits to its stockholders. Therefore, it may not be
2002. classified as a stock corporation because it lacks the second requisite of a stock corporation
On March 26, 2003, PRA filed a petition for prohibition with prayer for temporary restraining which is the distribution of dividends and allotment of surplus and profits to the
order (TRO) and/or writ of preliminary injunction against Carabeo before the RTC. stockholders.

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It insists that it may not be classified as a non-stock corporation because it has no members (10) Instrumentality refers to any agency of the National Government, not integrated within
and it is not organized for charitable, religious, educational, professional, cultural, the department framework, vested with special functions or jurisdiction by law, endowed
recreational, fraternal, literary, scientific, social, civil service, or similar purposes, like trade, with some if not all corporate powers, administering special funds, and enjoying operational
industry, agriculture and like chambers as provided in Section 88 of the Corporation Code. autonomy, usually through a charter. x x x
Moreover, PRA points out that it was not created to compete in the market place as there From the above definitions, it is clear that a GOCC must be "organized as a stock or non-stock
was no competing reclamation company operated by the private sector. Also, while PRA is corporation" while an instrumentality is vested by law with corporate powers. Likewise,
vested with corporate powers under P.D. No. 1084, such circumstance does not make it a when the law makes a government instrumentality operationally autonomous, the
corporation but merely an incorporated instrumentality and that the mere fact that an instrumentality remains part of the National Government machinery although not integrated
incorporated instrumentality of the National Government holds title to real property does with the department framework.
not make said instrumentality a GOCC. Section 48, Chapter 12, Book I of the Administrative When the law vests in a government instrumentality corporate powers, the instrumentality
Code of 1987 recognizes a scenario where a piece of land owned by the Republic is titled in does not necessarily become a corporation. Unless the government instrumentality is
the name of a department, agency or instrumentality. organized as a stock or non-stock corporation, it remains a government instrumentality
Thus, PRA insists that, as an incorporated instrumentality of the National Government, it is exercising not only governmental but also corporate powers.
exempt from payment of real property tax except when the beneficial use of the real Many government instrumentalities are vested with corporate powers but they do not
property is granted to a taxable person. PRA claims that based on Section 133(o) of the LGC, become stock or non-stock corporations, which is a necessary condition before an agency or
local governments cannot tax the national government which delegate to local governments instrumentality is deemed a GOCC. Examples are the Mactan International Airport Authority,
the power to tax. the Philippine Ports Authority, the University of the Philippines, and Bangko Sentral ng
It explains that reclaimed lands are part of the public domain, owned by the State, thus, Pilipinas. All these government instrumentalities exercise corporate powers but they are not
exempt from the payment of real estate taxes. Reclaimed lands retain their inherent organized as stock or non-stock corporations as required by Section 2(13) of the Introductory
potential as areas for public use or public service. While the subject reclaimed lands are still Provisions of the Administrative Code. These government instrumentalities are sometimes
in its hands, these lands remain public lands and form part of the public domain. Hence, the loosely called government corporate entities. They are not, however, GOCCs in the strict
assessment of real property taxes made on said lands, as well as the levy thereon, and the sense as understood under the Administrative Code, which is the governing law defining the
public sale thereof on April 7, 2003, including the issuance of the certificates of sale in favor legal relationship and status of government entities.2
of the respondent Parañaque City, are invalid and of no force and effect. Correlatively, Section 3 of the Corporation Code defines a stock corporation as one whose
On the other hand, the City of Parañaque (respondent) argues that PRA since its creation "capital stock is divided into shares and x x x authorized to distribute to the holders of such
consistently represented itself to be a GOCC. PRA’s very own charter (P.D. No. 1084) declared shares dividends x x x." Section 87 thereof defines a non-stock corporation as "one where no
it to be a GOCC and that it has entered into several thousands of contracts where it part of its income is distributable as dividends to its members, trustees or officers." Further,
represented itself to be a GOCC. In fact, PRA admitted in its original and amended petitions Section 88 provides that non-stock corporations are "organized for charitable, religious,
and pre-trial brief filed with the RTC of Parañaque City that it was a GOCC. educational, professional, cultural, recreational, fraternal, literary, scientific, social, civil
Respondent further argues that PRA is a stock corporation with an authorized capital stock service, or similar purposes, like trade, industry, agriculture and like chambers."
divided into 3 million no par value shares, out of which 2 million shares have been subscribed Two requisites must concur before one may be classified as a stock corporation, namely: (1)
and fully paid up. Section 193 of the LGC of 1991 has withdrawn tax exemption privileges that it has capital stock divided into shares; and (2) that it is authorized to distribute
granted to or presently enjoyed by all persons, whether natural or juridical, including GOCCs. dividends and allotments of surplus and profits to its stockholders. If only one requisite is
Hence, since PRA is a GOCC, it is not exempt from the payment of real property tax. present, it cannot be properly classified as a stock corporation. As for non-stock corporations,
THE COURT’S RULING they must have members and must not distribute any part of their income to said members.3
The Court finds merit in the petition. In the case at bench, PRA is not a GOCC because it is neither a stock nor a non-stock
Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines a corporation. It cannot be considered as a stock corporation because although it has a capital
GOCC as follows: stock divided into no par value shares as provided in Section 74 of P.D. No. 1084, it is not
SEC. 2. General Terms Defined. – x x x x authorized to distribute dividends, surplus allotments or profits to stockholders. There is no
(13) Government-owned or controlled corporation refers to any agency organized as a stock provision whatsoever in P.D. No. 1084 or in any of the subsequent executive issuances
or non-stock corporation, vested with functions relating to public needs whether pertaining to PRA, particularly, E.O. No. 525,5 E.O. No. 6546 and EO No. 7987 that authorizes
governmental or proprietary in nature, and owned by the Government directly or through its PRA to distribute dividends, surplus allotments or profits to its stockholders.
instrumentalities either wholly, or, where applicable as in the case of stock corporations, to PRA cannot be considered a non-stock corporation either because it does not have members.
the extent of at least fifty-one A non-stock corporation must have members.8 Moreover, it was not organized for any of the
(51) percent of its capital stock: x x x. purposes mentioned in Section 88 of the Corporation Code. Specifically, it was created to
On the other hand, Section 2(10) of the Introductory Provisions of the Administrative Code manage all government reclamation projects.
defines a government "instrumentality" as follows: Furthermore, there is another reason why the PRA cannot be classified as a GOCC. Section
SEC. 2. General Terms Defined. –– x x x x 16, Article XII of the 1987 Constitution provides as follows:

32 clioocampo
Section 16. The Congress shall not, except by general law, provide for the formation, The test of economic viability applies only to government-owned or controlled corporations
organization, or regulation of private corporations. Government-owned or controlled that perform economic or commercial activities and need to compete in the market place.
corporations may be created or established by special charters in the interest of the common Being essentially economic vehicles of the State for the common good — meaning for
good and subject to the test of economic viability. economic development purposes — these government-owned or controlled corporations
The fundamental provision above authorizes Congress to create GOCCs through special with special charters are usually organized as stock corporations just like ordinary private
charters on two conditions: 1) the GOCC must be established for the common good; and 2) corporations.
the GOCC must meet the test of economic viability. In this case, PRA may have passed the In contrast, government instrumentalities vested with corporate powers and performing
first condition of common good but failed the second one - economic viability. Undoubtedly, governmental or public functions need not meet the test of economic viability. These
the purpose behind the creation of PRA was not for economic or commercial activities. instrumentalities perform essential public services for the common good, services that every
Neither was it created to compete in the market place considering that there were no other modern State must provide its citizens. These instrumentalities need not be economically
competing reclamation companies being operated by the private sector. As mentioned viable since the government may even subsidize their entire operations. These
earlier, PRA was created essentially to perform a public service considering that it was instrumentalities are not the "government-owned or controlled corporations" referred to in
primarily responsible for a coordinated, economical and efficient reclamation, administration Section 16, Article XII of the 1987 Constitution.
and operation of lands belonging to the government with the object of maximizing their Thus, the Constitution imposes no limitation when the legislature creates government
utilization and hastening their development consistent with the public interest. Sections 2 instrumentalities vested with corporate powers but performing essential governmental or
and 4 of P.D. No. 1084 reads, as follows: public functions. Congress has plenary authority to create government instrumentalities
Section 2. Declaration of policy. It is the declared policy of the State to provide for a vested with corporate powers provided these instrumentalities perform essential
coordinated, economical and efficient reclamation of lands, and the administration and government functions or public services. However, when the legislature creates through
operation of lands belonging to, managed and/or operated by the government, with the special charters corporations that perform economic or commercial activities, such entities
object of maximizing their utilization and hastening their development consistent with the — known as "government-owned or controlled corporations" — must meet the test of
public interest. economic viability because they compete in the market place.
Section 4. Purposes. The Authority is hereby created for the following purposes: This is the situation of the Land Bank of the Philippines and the Development Bank of the
(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or Philippines and similar government-owned or controlled corporations, which derive their
other means, or to acquire reclaimed land; incometo meet operating expenses solely from commercial transactions in competition with
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and the private sector. The intent of the Constitution is to prevent the creation of government-
sell any and all kinds of lands, buildings, estates and other forms of real property, owned or controlled corporations that cannot survive on their own in the market place and
owned, managed, controlled and/or operated by the government. thus merely drain the public coffers.
(c) To provide for, operate or administer such services as may be necessary for the Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the
efficient, economical and beneficial utilization of the above properties. Constitutional Commission the purpose of this test, as follows:
The twin requirement of common good and economic viability was lengthily discussed in the MR. OPLE: Madam President, the reason for this concern is really that when the government
case of Manila International Airport Authority v. Court of Appeals, 9 the pertinent portion of creates a corporation, there is a sense in which this corporation becomes exempt from the
which reads: test of economic performance. We know what happened in the past. If a government
Third, the government-owned or controlled corporations created through special charters corporation loses, then it makes its claim upon the taxpayers' money through new equity
are those that meet the two conditions prescribed in Section 16, Article XII of the infusions from the government and what is always invoked is the common good. That is the
Constitution. reason why this year, out of a budget of P115 billion for the entire government, about P28
The first condition is that the government-owned or controlled corporation must be billion of this will go into equity infusions to support a few government financial institutions.
established for the common good. The second condition is that the government-owned or And this is all taxpayers' money which could have been relocated to agrarian reform, to social
controlled corporation must meet the test of economic viability. Section 16, Article XII of the services like health and education, to augment the salaries of grossly underpaid public
1987 Constitution provides: employees. And yet this is all going down the drain.
SEC. 16. The Congress shall not, except by general law, provide for the formation, Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common
organization, or regulation of private corporations. Government-owned or controlled good," this becomes a restraint on future enthusiasts for state capitalism to excuse
corporations may be created or established by special charters in the interest of the common themselves from the responsibility of meeting the market test so that they become viable.
good and subject to the test of economic viability. And so, Madam President, I reiterate, for the committee's consideration and I am glad that I
The Constitution expressly authorizes the legislature to create "government-owned or am joined in this proposal by Commissioner Foz, the insertion of the standard of "ECONOMIC
controlled corporations" through special charters only if these entities are required to meet VIABILITY OR THE ECONOMIC TEST," together with the common good.1âwphi1
the twin conditions of common good and economic viability. In other words, Congress has no Father Joaquin G. Bernas, a leading member of the Constitutional Commission, explains in his
power to create government-owned or controlled corporations with special charters unless textbook The 1987 Constitution of the Republic of the Philippines: A Commentary:
they are made to comply with the two conditions of common good and economic viability.

33 clioocampo
The second sentence was added by the 1986 Constitutional Commission. The significant subject reclaimed lands to a taxable entity. There is no showing on record either that PRA
addition, however, is the phrase "in the interest of the common good and subject to the test leased the subject reclaimed properties to a private taxable entity.
of economic viability." The addition includes the ideas that they must show capacity to This exemption should be read in relation to Section 133(o) of the same Code, which
function efficiently in business and that they should not go into activities which the private prohibits local governments from imposing "taxes, fees or charges of any kind on the
sector can do better. Moreover, economic viability is more than financial viability but also National Government, its agencies and instrumentalities x x x." The Administrative Code
includes capability to make profit and generate benefits not quantifiable in financial terms. allows real property owned by the Republic to be titled in the name of agencies or
Clearly, the test of economic viability does not apply to government entities vested with instrumentalities of the national government. Such real properties remain owned by the
corporate powers and performing essential public services. The State is obligated to render Republic and continue to be exempt from real estate tax.
essential public services regardless of the economic viability of providing such service. The Indeed, the Republic grants the beneficial use of its real property to an agency or
non-economic viability of rendering such essential public service does not excuse the State instrumentality of the national government. This happens when the title of the real property
from withholding such essential services from the public. is transferred to an agency or instrumentality even as the Republic remains the owner of the
However, government-owned or controlled corporations with special charters, organized real property. Such arrangement does not result in the loss of the tax exemption, unless "the
essentially for economic or commercial objectives, must meet the test of economic viability. beneficial use thereof has been granted, for consideration or otherwise, to a taxable
These are the government-owned or controlled corporations that are usually organized person."10
under their special charters as stock corporations, like the Land Bank of the Philippines and The rationale behind Section 133(o) has also been explained in the case of the Manila
the Development Bank of the Philippines. These are the government-owned or controlled International Airport Authority,11 to wit:
corporations, along with government-owned or controlled corporations organized under the Section 133(o) recognizes the basic principle that local governments cannot tax the national
Corporation Code, that fall under the definition of "government-owned or controlled government, which historically merely delegated to local governments the power to tax.
corporations" in Section 2(10) of the Administrative Code. [Emphases supplied] While the 1987 Constitution now includes taxation as one of the powers of local
This Court is convinced that PRA is not a GOCC either under Section 2(3) of the Introductory governments, local governments may only exercise such power "subject to such guidelines
Provisions of the Administrative Code or under Section 16, Article XII of the 1987 and limitations as the Congress may provide."
Constitution. The facts, the evidence on record and jurisprudence on the issue support the When local governments invoke the power to tax on national government instrumentalities,
position that PRA was not organized either as a stock or a non-stock corporation. Neither was such power is construed strictly against local governments. The rule is that a tax is never
it created by Congress to operate commercially and compete in the private market. Instead, presumed and there must be clear language in the law imposing the tax. Any doubt whether
PRA is a government instrumentality vested with corporate powers and performing an a person, article or activity is taxable is resolved against taxation. This rule applies with
essential public service pursuant to Section 2(10) of the Introductory Provisions of the greater force when local governments seek to tax national government instrumentalities.
Administrative Code. Being an incorporated government instrumentality, it is exempt from Another rule is that a tax exemption is strictly construed against the taxpayer claiming the
payment of real property tax. exemption. However, when Congress grants an exemption to a national government
Clearly, respondent has no valid or legal basis in taxing the subject reclaimed lands managed instrumentality from local taxation, such exemption is construed liberally in favor of the
by PRA. On the other hand, Section 234(a) of the LGC, in relation to its Section 133(o), national government instrumentality. As this Court declared in Maceda v. Macaraig, Jr.:
exempts PRA from paying realty taxes and protects it from the taxing powers of local The reason for the rule does not apply in the case of exemptions running to the benefit of the
government units. government itself or its agencies. In such case the practical effect of an exemption is merely
Sections 234(a) and 133(o) of the LGC provide, as follows: to reduce the amount of money that has to be handled by government in the course of its
SEC. 234. Exemptions from Real Property Tax – The following are exempted from payment of operations. For these reasons, provisions granting exemptions to government agencies may
the real property tax: be construed liberally, in favor of non tax-liability of such agencies.
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions There is, moreover, no point in national and local governments taxing each other, unless a
except when the beneficial use thereof has been granted, for consideration or otherwise, to sound and compelling policy requires such transfer of public funds from one government
a taxable person. pocket to another.
xxxx There is also no reason for local governments to tax national government instrumentalities
SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless for rendering essential public services to inhabitants of local governments. The only
otherwise provided herein, the exercise of the taxing powers of provinces, cities, exception is when the legislature clearly intended to tax government instrumentalities for the
municipalities, and barangays shall not extend to the levy of the following: delivery of essential public services for sound and compelling policy considerations. There
xxxx must be express language in the law empowering local governments to tax national
(o) Taxes, fees or charges of any kinds on the National Government, its agencies and government instrumentalities. Any doubt whether such power exists is resolved against local
instrumentalities, and local government units. [Emphasis supplied] governments.
It is clear from Section 234 that real property owned by the Republic of the Philippines (the Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in
Republic) is exempt from real property tax unless the beneficial use thereof has been granted the Code, local governments cannot tax national government instrumentalities. As this Court
to a taxable person. In this case, there is no proof that PRA granted the beneficial use of the held in Basco v. Philippine Amusements and Gaming Corporation:

34 clioocampo
The states have no power by taxation or otherwise, to retard, impede, burden or in any that alienable lands of the public domain were transferred to the PEA (now PRA) and issued
manner control the operation of constitutional laws enacted by Congress to carry into land patents or certificates of title in PEA’s name did not automatically make such lands
execution the powers vested in the federal government. (MC Culloch v. Maryland, 4 Wheat private. This Court also held therein that reclaimed lands retained their inherent potential as
316, 4 L Ed. 579) areas for public use or public service.
This doctrine emanates from the "supremacy" of the National Government over local As the central implementing agency tasked to undertake reclamation projects nationwide,
governments. with authority to sell reclaimed lands, PEA took the place of DENR as the government agency
"Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of charged with leasing or selling reclaimed lands of the public domain. The reclaimed lands
power on the part of the States to touch, in that way (taxation) at least, the instrumentalities being leased or sold by PEA are not private lands, in the same manner that DENR, when it
of the United States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or disposes of other alienable lands, does not dispose of private lands but alienable lands of the
political subdivision can regulate a federal instrumentality in such a way as to prevent it from public domain. Only when qualified private parties acquire these lands will the lands become
consummating its federal responsibilities, or even to seriously burden it in the private lands. In the hands of the government agency tasked and authorized to dispose of
accomplishment of them." (Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis alienable of disposable lands of the public domain, these lands are still public, not private
supplied) lands.
Otherwise, mere creatures of the State can defeat National policies thru extermination of Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain"
what local authorities may perceive to be undesirable activities or enterprise using the power as well as "any and all kinds of lands." PEA can hold both lands of the public domain and
to tax as "a tool for regulation." (U.S. v. Sanchez, 340 US 42) private lands. Thus, the mere fact that alienable lands of the public domain like the Freedom
The power to tax which was called by Justice Marshall as the "power to destroy" (McCulloch Islands are transferred to PEA and issued land patents or certificates of title in PEA's name
v. Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very does not automatically make such lands private.13
entity which has the inherent power to wield it. [Emphases supplied] Likewise, it is worthy to mention Section 14, Chapter 4, Title I, Book III of the Administrative
The Court agrees with PRA that the subject reclaimed lands are still part of the public Code of 1987, thus:
domain, owned by the State and, therefore, exempt from payment of real estate taxes. SEC 14. Power to Reserve Lands of the Public and Private Dominion of the Government.-
Section 2, Article XII of the 1987 Constitution reads in part, as follows: (1)The President shall have the power to reserve for settlement or public use, and for specific
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other public purposes, any of the lands of the public domain, the use of which is not otherwise
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and directed by law. The reserved land shall thereafter remain subject to the specific public
fauna, and other natural resources are owned by the State. With the exception of agricultural purpose indicated until otherwise provided by law or proclamation.
lands, all other natural resources shall not be alienated. The exploration, development, and Reclaimed lands such as the subject lands in issue are reserved lands for public use. They are
utilization of natural resources shall be under the full control and supervision of the State. properties of public dominion. The ownership of such lands remains with the State unless
The State may directly undertake such activities, or it may enter into co-production, joint they are withdrawn by law or presidential proclamation from public use.
venture, or production-sharing agreements with Filipino citizens, or corporations or Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of
associations at least 60 per centum of whose capital is owned by such citizens. Such Manila Bay are part of the "lands of the public domain, waters x x x and other natural
agreements may be for a period not exceeding twenty-five years, renewable for not more resources" and consequently "owned by the State." As such, foreshore and submerged areas
than twenty-five years, and under such terms and conditions as may provided by law. In "shall not be alienated," unless they are classified as "agricultural lands" of the public
cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the domain. The mere reclamation of these areas by PEA does not convert these inalienable
development of waterpower, beneficial use may be the measure and limit of the grant. natural resources of the State into alienable or disposable lands of the public domain. There
Similarly, Article 420 of the Civil Code enumerates properties belonging to the State: must be a law or presidential proclamation officially classifying these reclaimed lands as
Art. 420. The following things are property of public dominion: alienable or disposable and open to disposition or concession. Moreover, these reclaimed
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and lands cannot be classified as alienable or disposable if the law has reserved them for some
bridges constructed by the State, banks, shores, roadsteads, and others of similar public or quasi-public use.
character; As the Court has repeatedly ruled, properties of public dominion are not subject to execution
(2) Those which belong to the State, without being for public use, and are intended or foreclosure sale.14Thus, the assessment, levy and foreclosure made on the subject
for some public service or for the development of the national wealth. [Emphases reclaimed lands by respondent, as well as the issuances of certificates of title in favor of
supplied] respondent, are without basis.
Here, the subject lands are reclaimed lands, specifically portions of the foreshore and WHEREFORE, the petition is GRANTED. The January 8, 2010 Order of the Regional Trial Court,
offshore areas of Manila Bay. As such, these lands remain public lands and form part of the Branch 195, Parañaque City, is REVERSED and SET ASIDE. All reclaimed properties owned by
public domain. In the case of Chavez v. Public Estates Authority and AMARI Coastal the Philippine Reclamation Authority are hereby declared EXEMPT from real estate taxes. All
Development Corporation,12 the Court held that foreshore and submerged areas irrefutably real estate tax assessments, including the final notices of real estate tax delinquencies, issued
belonged to the public domain and were inalienable unless reclaimed, classified as alienable by the City of Parañaque on the subject reclaimed properties; the assailed auction sale, dated
lands open to disposition and further declared no longer needed for public service. The fact

35 clioocampo
April 7, 2003; and the Certificates of Sale subsequently issued by the Parañaque City
Treasurer in favor of the City of Parañaque, are all declared VOID.
SO ORDERED.

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9. DACANAY vs. ASISTIO Sec. 2. The streets, roads and open spaces to be used as sites for flea
G.R. No. 93654 May 6, 1992 markets (tiangge) or vending areas; the design, measurement or
FRANCISCO U. DACANAY, petitioner, specification of the structures, equipment and apparatuses to be used or
vs. put up; the allowable distances; the days and time allowed for the
MAYOR MACARIO ASISTIO, JR., CITY ENGR. LUCIANO SARNE, JR. of Kalookan City, Metro conduct of the businesses and/or activities herein authorized; the rates
Manila, MILA PASTRANA AND/OR RODOLFO TEOFE, STALLHOLDERS AND REPRESENTING or fees or charges to be imposed, levied and collected; the kinds of
CO-STALLHOLDERS, respondents. merchandise, goods and commodities sold and services rendered; and
David D. Advincula, Jr. for petitioner. other matters and activities related to the establishment, maintenance
Juan P. Banaga for private respondents. and management and operation of flea markets and vending areas, shall
be determined and prescribed by the mayors of the cities and
GRIÑO-AQUINO, J.: municipalities in the Metropolitan Manila where the same are
May public streets or thoroughfares be leased or licensed to market stallholders by virtue of located, subject to the approval of the Metropolitan Manila
a city ordinance or resolution of the Metro Manila Commission? This issue is posed by the Commission and consistent with the guidelines hereby prescribed.
petitioner, an aggrieved Caloocan City resident who filed a special civil action Further, it is so provided in the guidelines under the said Ordinance No. 2
of mandamus against the incumbent city mayor and city engineer, to compel these city of the MMC that —
officials to remove the market stalls from certain city streets which the aforementioned city Sec. 6. In the establishment, operation, maintenance and management of
officials have designated as flea markets, and the private respondents (stallholders) to vacate flea markets and vending areas, the following guidelines, among others,
the streets. shall be observed:
On January 5, 1979, MMC Ordinance No. 79-02 was enacted by the Metropolitan Manila xxx xxx xxx
Commission, designating certain city and municipal streets, roads and open spaces as sites (m) That the permittee shall remove the equipment, facilities and other
for flea markets. Pursuant, thereto, the Caloocan City mayor opened up seven (7) flea appurtenances used by him in the conduct of his business after the close
markets in that city. One of those streets was the "Heroes del '96" where the petitioner lives. or termination of business hours. (Emphasis ours; pp. 15-16, Rollo.)
Upon application of vendors Rodolfo Teope, Mila Pastrana, Carmen Barbosa, Merle Castillo, The trial court found that Heroes del '96, Gozon and Gonzales streets are of public dominion,
Bienvenido Menes, Nancy Bugarin, Jose Manuel, Crisaldo Paguirigan, Alejandro Castron, hence, outside the commerce of man:
Ruben Araneta, Juanita and Rafael Malibaran, and others, the respondents city mayor and The Heroes del '96 street, V. Gozon street and Gonzales street, being of
city engineer, issued them licenses to conduct vending activities on said street. public dominion must, therefore, be outside of the commerce of man.
In 1987, Antonio Martinez, as OIC city mayor of Caloocan City, caused the demolition of the Considering the nature of the subject premises, the following
market stalls on Heroes del '96, V. Gozon and Gonzales streets. To stop Mayor Martinez' jurisprudence co/principles are applicable on the matter:
efforts to clear the city streets, Rodolfo Teope, Mila Pastrana and other stallowners filed an 1) They cannot be alienated or leased or otherwise be
action for prohibition against the City of Caloocan, the OIC City Mayor and the City Engineer the subject matter of contracts. (Municipality of
and/or their deputies (Civil Case No. C-12921) in the Regional Trial Court of Caloocan City, Cavite vs. Rojas, 30 Phil. 602);
Branch 122, praying the court to issue a writ of preliminary injunction ordering these city 2) They cannot be acquired by prescription against
officials to discontinue the demolition of their stalls during the pendency of the action. the state (Insular Government vs. Aldecoa, 19 Phil.
The court issued the writ prayed for. However, on December 20, 1987, it dismissed the 505). Even municipalities can not acquire them for
petition and lifted the writ of preliminary injunction which it had earlier issued. The trial use as communal lands against the state (City of
court observed that: Manila vs. Insular Government, 10 Phil. 327);
A perusal of Ordinance 2, series of 1979 of the Metropolitan Manila 3) They are not subject to attachment and execution
Commission will show on the title itself that it is an ordinance –– (Tan Toco vs. Municipal Council of Iloilo, 49 Phil. 52);
Authorizing and regulating the use of certain city 4) They cannot be burdened by any voluntary
and/or municipal streets, roads and open spaces easement (2-II Colin & Capitant 520) (Tolentino, Civil
within Metropolitan Manila as sites for flea market Code of the Phils., Vol. II, 1983 Ed. pp. 29-30).
and/or vending areas, under certain terms and In the aforecited case of Municipality of Cavite vs.
conditions, subject to the approval of the Rojas, it was held that properties for public use may
Metropolitan Manila Commission, and for other not be leased to private individuals. Such a lease is
purposes null and void for the reason that a municipal council
which is further amplified in Section 2 of the said ordinance, quoted cannot withdraw part of the plaza from public use. If
hereunder: possession has already been given, the lessee must
restore possession by vacating it and the municipality

37 clioocampo
 must thereupon restore to him any sums it may have (k) With the previous approval of the City Mayor in each case, order the
collected as rent. removal of materials employed in the construction or repair of any
In the case of City of Manila vs. Gerardo Garcia, 19 building or structures made in violation of law or ordinance, and cause
SCRA 413, the Supreme Court held: buildings and structures dangerous to the public to made secure or torn
The property being a public one, the Manila Mayors did not down;
have the authority to give permits, written or oral, to the xxx xxx xxx
squatters, and that the permits granted are therefore Further, the Charter of the City of Caloocan, Republic Act No. 5502, Art.
considered null and void. VII, Sec. 27, par. g, 1 and m, grants the City Engineer similar powers.
This doctrine was reiterated in the case of Baguio Citizens (Emphasis supplied; pp. 17-20, Rollo.)
Action Inc. vs. The City Council, 121 SCRA 368, where it was However, shortly after the decision came out, the city administration in Caloocan City
held that: changed hands. City Mayor Macario Asistio, Jr., as successor of Mayor Martinez, did not
An ordinance legalizing the occupancy by squatters of public pursue the latter's policy of clearing and cleaning up the city streets.
land is null and void. Invoking the trial court's decision in Civil Case No. C-12921, Francisco U. Dacanay, a
The authority of respondent Municipality of Makati to concerned citizen, taxpayer and registered voter of Barangay 74, Zone 7, District II of
demolish the shanties of the petitioner's members is Caloocan City, who resides on Heroes del '96 Street, one of the affected streets, wrote a
mandated by letter dated March 7, 1988 to Mayor Asistio, Jr., calling his attention to the illegally-
P.D. 772, and Sec. 1 of Letter of Instruction No. 19 orders constructed stalls on Heroes del '96 Street and asked for their demolition.
certain public officials, one of whom is the Municipal Mayor Dacanay followed up that letter with another one dated April 7, 1988 addressed to the mayor
to remove all illegal constructions including buildings on and and the city engineer, Luciano Sarne, Jr. (who replaced Engineer Arturo Samonte), inviting
along esteros and river banks, those along railroad tracks their attention to the Regional Trial Court's decision in Civil Case No. 12921. There was still no
and those built without permits on public or private response.
property (Zansibarian Residents Association vs. Mun. of Dacanay sought President Corazon C. Aquino's intervention by writing her a letter on the
Makati, 135 SCRA 235). The City Engineer is also among matter. His letter was referred to the city mayor for appropriate action. The acting Caloocan
those required to comply with said Letter of Instruction. City secretary, Asuncion Manalo, in a letter dated August 1, 1988, informed the Presidential
The occupation and use of private individuals of sidewalks Staff Director that the city officials were still studying the issue of whether or not to proceed
and other public places devoted for public use constitute with the demolition of the market stalls.
both public and private nuisances and nuisance per se, and Dacanay filed a complaint against Mayor Asistio and Engineer Sarne (OMB-0-89-0146) in the
this applies to even case involving the use or lease of public Office of the OMBUDSMAN. In their letter-comment dated April 3, 1989, said city officials
places under permits and licenses issued by competent explained that in view of the huge number of stallholders involved, not to mention their
authority, upon the theory that such holders could not take dependents, it would be harsh and inhuman to eject them from the area in question, for
advantage of their unlawful permits and license and claim their relocation would not be an easy task.
that the land in question is a part of a public street or a In reply, Dacanay maintained that respondents have been derelict in the performance of
public place devoted to public use, hence, beyond the their duties and through manifest partiality constituting a violation of Section 3(e) of R.A.
commerce of man. (Padilla, Civil Code Annotated, Vol. II, p. 3019, have caused undue injury to the Government and given unwarranted benefits to the
59, 6th Ed., citing Umali vs. Aquino, IC. A. Rep. 339.) stallholders.
From the aforequoted jurisprudence/principles, the Court opines that After conducting a preliminary investigation, the OMBUDSMAN rendered a final evaluation
defendants have the right to demolish the subject stalls of the plaintiffs, and report on August 28, 1989, finding that the respondents' inaction is purely motivated by
more so when Section 185, par. 4 of Batas Pambansa Blg. 337, otherwise their perceived moral and social responsibility toward their constituents, but "the fact
known as the Local Government Code provides that the City Engineer remains that there is an omission of an act which ought to be performed, in clear violation of
shall: Sections 3(e) and (f) of Republic Act 3019." (pp. 83-84, Rollo.) The OMBUDSMAN
(4) . . . recommended the filing of the corresponding information in court.
(c) Prevent the encroachment of private buildings and fences on the As the stallholders continued to occupy Heroes del '96 Street, through the tolerance of the
streets and public places; public respondents, and in clear violation of the decision it Civil Case No. C-12921, Dacanay
xxx xxx xxx filed the present petition for mandamus on June 19, 1990, praying that the public
(j) Inspect and supervise the construction, repair, removal and safety of respondents be ordered to enforce the final decision in Civil Case No. C-12921 which upheld
private buildings; the city mayor's authority to order the demolition of market stalls on V. Gozon, Gonzales and
xxx xxx xxx Heroes del '96 Streets and to enforce P.D. No. 772 and other pertinent laws.

38 clioocampo
On August 16, 1990, the public respondents, through the City Legal Officer, filed their SO ORDERED.
Comment' on the petition. The Office of the Solicitor General asked to be excused from filing
a separate Comment in behalf of the public respondents. The City Legal Officer alleged that
the vending area was transferred to Heroes del '96 Street to decongest Malonzo Street,
which is comparatively a busier thoroughfare; that the transfer was made by virtue of
Barangay Resolution No. 30 s'78 dated January 15, 1978; that while the resolution was
awaiting approval by the Metropolitan Manila Commission, the latter passed Ordinance No.
79-2, authorizing the use of certain streets and open spaces as sites for flea markets and/or
vending areas; that pursuant thereto, Acting MMC Mayor Virgilio P. Robles issued Executive
Order No. 135 dated January 10, 1979, ordering the establishment and operation of flea
markets in specified areas and created the Caloocan City Flea Market Authority as a
regulatory body; and that among the sites chosen and approved by the Metro Manila
Commission, Heroes del '96 Street has considered "most viable and progressive, lessening
unemployment in the city and servicing the residents with affordable basic necessities."
The petition for mandamus is meritorious.
There is no doubt that the disputed areas from which the private respondents' market stalls
are sought to be evicted are public streets, as found by the trial court in Civil Case No. C-
12921. A public street is property for public use hence outside the commerce of man (Arts.
420, 424, Civil Code). Being outside the commerce of man, it may not be the subject of lease
or other contract (Villanueva et al. vs. Castañeda and Macalino, 15 SCRA 142, citing the
Municipality of Cavite vs. Rojas, 30 SCRA 602; Espiritu vs. Municipal Council of Pozorrubio,
102 Phil. 869; and Muyot vs. De la Fuente, 48 O.G. 4860).
As the stallholders pay fees to the City Government for the right to occupy portions of the
public street, the City Government, contrary to law, has been leasing portions of the streets
to them. Such leases or licenses are null and void for being contrary to law. The right of the
public to use the city streets may not be bargained away through contract. The interests of a
few should not prevail over the good of the greater number in the community whose health,
peace, safety, good order and general welfare, the respondent city officials are under legal
obligation to protect.
The Executive Order issued by Acting Mayor Robles authorizing the use of Heroes del '96
Street as a vending area for stallholders who were granted licenses by the city government
contravenes the general law that reserves city streets and roads for public use. Mayor
Robles' Executive Order may not infringe upon the vested right of the public to use city
streets for the purpose they were intended to serve: i.e., as arteries of travel for vehicles and
pedestrians. As early as 1989, the public respondents bad started to look for feasible
alternative sites for flea markets. They have had more than ample time to relocate the street
vendors.
WHEREFORE, it having been established that the petitioner and the general public have a
legal right to the relief demanded and that the public respondents have the corresponding
duty, arising from public office, to clear the city streets and restore them to their specific
public purpose (Enriquez vs. Bidin, 47 SCRA 183; City of Manila vs. Garcia et al., 19 SCRA, 413
citing Unson vs. Lacson, 100 Phil. 695), the respondents City Mayor and City Engineer of
Caloocan City or their successors in office are hereby ordered to immediately enforce and
implement the decision in Civil Case No. C-1292 declaring that Heroes del '96, V. Gozon, and
Gonzales Streets are public streets for public use, and they are ordered to remove or
demolish, or cause to be removed or demolished, the market stalls occupying said city streets
with utmost dispatch within thirty (30)days from notice of this decision. This decision is
immediately executory.

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10. DOMALSIN vs. SPOUSES VALENCIANO September 1998, they filed an Answer to the Amended Complaint10 to which petitioner filed
[G.R. NO. 158687 - January 27, 2006] a Reply.11
FRISCO F. DOMALSIN, Petitioner, v. SPOUSES JUANITO VALENCIANO and AMALIA On 15 September 1998, the MCTC issued another TRO.12
VALENCIANO, Respondents. The pre-trial order dated 6 November 1998 contained, among other things, petitioner's
DECISION admission that he was temporarily not operating any business in the area, and respondents'
CHICO-NAZARIO, J.: admission regarding the issuance of Tax Declarations on the property in dispute in
Before Us is a Petition for Review which seeks to set aside the decision1 of the Court of petitioner's name.13
Appeals in CA-G.R. SP No. 69415 dated 20 August 2002 which reversed and set aside the Trial ensued. Petitioner presented Mariano Suyam and Tonsing Binay-an, two of his former
decision2 of Branch 63 of the Regional Trial Court (RTC) of La Trinidad, Benguet, in Civil Case truck drivers from 1981 to 1985 in his business of hauling sand, gravel and other aggregates
No. 01-CV-1582(150) dated 23 January 2002, which affirmed the decision3 of the Municipal at Riverside, Camp 3, Tuba, Benguet.
Circuit Trial Court (MCTC) of Tuba-Sablan, Tuba, Benguet, in Civil Case No. 150 dated 20 Mariano Suyam testified that sometime in 1981, petitioner caused the construction of a
November 2000, declaring petitioner Frisco F. Domalsin the actual possessor of the lot in private road leading to the Bued River from Kennon Road. He added that petitioner
dispute and ordering, inter alia, respondent spouses Juanito and Amalia Valenciano to vacate constructed two houses, the first was located along the road-right-of-way of Kennon Road
and deliver the physical possession thereof to the former, and its Resolution4 dated 20 May where respondents are now constructing their house, while the second was located below
2003 denying petitioner's motion for reconsideration. the private road around 40 to 60 meters down from Kennon Road. He explained that the first
The respective allegations of the parties as contained in the complaint and answer are house was used for sleeping quarters and resting center for laborers, while petitioner used
substantially summarized by the Court of Appeals as follows: the second one as his quarters. He said William Banuca was hired as foreman in 1983 and
The property subject of this action for forcible entry is a parcel of land located at sitio that the latter and his family stayed in the second house.
Riverside, Camp 3, Tuba, Benguet. Respondent Frisco B. Domalsin claims to be the lawful Tonsing Binay-an corroborated the testimony of Suyam as regards the two houses
owner and possessor of said parcel of land since 1979 up to the present. He declared it for constructed by petitioner and added that petitioner was the manager of Salamander
taxation purposes in 1983 as (per) Tax Declaration No. 9540 issued on September 12, 1983 by Enterprises and had a concession permit from the Bureau of Mines to haul gravel and sand.
the Municipal Assessor of Tuba Benguet. He allegedly introduced improvements consisting of Petitioner testified that he is a lawyer-businessman formerly engaged in trucking business,
levelling, excavation, riprapping of the earth and a private road to the river, fruitbearing trees hauling sand and gravel, and operated under the name Salamander Enterprises. 14 He
and other agricultural plants of economic value. He was in continuous, adverse possession narrated that while he was passing Kennon Road, he discovered that a portion of the Bued
and in the concept of an owner for the past nineteen (19) years. River, Camp 3, Tuba Benguet, can be a potential source of supplies for his business. Though
On August 1, 1998, petitioners Spouses Juanito Valenciano and Amalia Valenciano (Sps. the area was steep and deep, he scouted a place where he can construct a road from Kennon
Valenciano, for brevity) allegedly entered the premises to construct a building made of Road to the Bued River. In the course of cleaning the area, his workers noticed that the place
cement and strong materials, without the authority and consent of respondent, by means of had been tilled. A certain Castillo Binay-an appeared informing him that he was the occupant
force and strategy, and without a building permit from the Department of Public Works and of the site of the proposed private road. After agreeing on the consideration, the former
Highways (DPWH, for brevity). Respondent protested and demanded that petitioners Sps. executed a Deed of Waiver and Quitclaim15 over the land in his favor.
Valenciano halt construction of said building, but the latter refused to do so. Hence, he filed Thereafter, the Office of the Highway District Engineer of Baguio, Ministry of Public Highways
the instant case. (now Department of Public Works and Highways [DPWH]) issued a permit in favor of
Petitioners Sps. Valenciano, on the other hand, claimed that the ongoing construction was petitioner to extract construction materials at Camp 3, Tuba, Benguet,16 which was followed
with the consent and conformity of the DPWH and in fact the improvements found in the by the issuance on 1 October 1981 of Commercial Permit No. 147 by the Office of the Mines
property were introduced by the residents thereof, including its first residents, William and Regional Officer, Mineral Region No. 1, Bureau of Mines and Geo-Sciences (Bureau of
Gloria Banuca, and not by respondent. The premises on which petitioners Sps. Valenciano are Mines).17 The Commercial Permit, which was renewable every year, was last renewed in
constructing their house were leveled after the earthquake in 1990 by the Banuca spouses. 1987.18
Petitioners Sps. Valenciano are just starting the construction because the permission was Based on the Deed of Waiver and Quitclaim executed by Castillo Binay-an, petitioner was
only given now by Gloria Banuca.5 able to apply for, and was issued, a tax declaration over the land covering one hectare. Tax
On 18 August 1998, petitioner filed before the MCTC of Tuba, Benguet, a complaint for Declaration No. 954019 dated 12 September 1983 was issued to petitioner describing the land
Forcible Entry with Prayer for Preliminary Mandatory Injunction with Application for Issuance bounded on the North by Bued River, on the South by Kennon Road, on the East by Kennon
of a Temporary Restraining Order plus Damages.6 The complaint was amended on 27 August Road, and on the West by a Creek. With the revision of the fair market value and assessed
1998.7 Per Order dated 19 August 1998, a Temporary Restraining Order (TRO) was issued value of lands, Tax Declaration No. 94-004-00327 dated 12 November 1994 was issued to
ordering respondents to desist and cease and refrain from continuing the construction of a him.20 From 1983 up to 1998, petitioner has been regularly paying real property taxes over
house on the land in question.8 the land.
On 27 August 1998, respondent spouses Juanito and Amalia Valenciano filed their Answer Petitioner disclosed that in 1983, William Banuca applied for, and was accepted, as
with Opposition to the Prayer for Issuance of Writ of Preliminary Injunction.9 On 07 foreman.21 Due to the nature of his job, Banuca was permitted to stay in the second house
beside the private road.22 Banuca now lives permanently in said house after petitioner gave it

40 clioocampo
to him. Petitioner revealed that the houses his former laborers constructed were awarded to The MCTC found that what is being contested is the possession of a portion of the road-right-
them as a kind gesture to them. As to the land he occupied along the Kennon Road where the of way of Kennon Road which is located in front of a parcel of land that petitioner bought by
first house was erected, he claims that same still belongs to him. This house, which his way of Deed of Waiver and Quitclaim from Castillo Binay-an. It held that petitioner had prior
laborers and drivers used as a resting area, was cannibalized and leveled, and the land over material possession over the subject land. It ruled that the destruction of his house built
which it once stood was taken possession by respondents who are now building their house thereon by the earthquake in 1990, and later cannibalized without being reconstructed was
thereon. not tantamount to abandonment of the site by the petitioner because it was destroyed by a
Gloria Banuca testified for respondents. She disclosed that it was she who invited fortuitous event which was beyond his control. It explained that his possession over the land
respondents to come and reside at Riverside, Camp 3, Tuba, Benguet. She said she knew must be recognized by respondents who came later after the earthquake. It brushed aside
petitioner to be engaged in the sand and gravel business in Tuba, Benguet, from 1981 to respondents' allegation that the land in dispute was abandoned by the latter after he
1985, and that the latter stopped in 1985 and never returned to haul sand and gravel at the stopped operating his sand and gravel business in 1985 and never returned anymore, and
Bued River. She claimed she never saw petitioner introduce any improvements on the land when the house erected on it was destroyed during the 1990 earthquake, it was no longer
he claimed he bought from Castillo Binay-an, and that it was she and the other residents who reconstructed and was subsequently leveled or demolished by Gloria Banuca. However, it
introduced the existing improvements. pronounced that respondents' action to occupy the land was done in good faith considering
She narrated that in 1983, she planted fruit-bearing trees in the area where respondents that their occupation of the land was with the assurance of the seller (Gloria Banuca) and
were constructing their house which is located along the Kennon Road's road-right-of-way, that they were armed with the permit issued by the DPWH for him to construct his house
fronting petitioner's property. After the earthquake of 1990, the private road constructed by thereon.
petitioner became impassable and it was she who hired the equipment used to clear the On 20 November 2000, the MCTC came out with its decision, the decretal portion of which
same. She even leveled the area where respondents were building their home. Based on the reads:
ocular inspection, she said this area is within the 15-meter radius from the center of the WHEREFORE PREMISES CONSIDERED, decision is hereby rendered in favor of plaintiff, FRISCO
road. This area, she claims, was sold to her by the Spouses Jularbal. However, the agreement DOMALSIN, and against defendants, JUANITO VALENCIANO and AMALIA VALENCIANO, with
between them shows that what was sold to her were the improvements near her house the following:
which was 40 meters down from Kennon Road and the improvements along Kennon Road.23 1. Order to declare the injunction permanent.
Agustin Domingo next testified for respondents. He testified that in 1986, upon the invitation 2. Order the plaintiff as the actual possessor of the lot in question.
of Gloria Banuca, he transferred his residence to sitio Riverside because of its proximity to his 3. Order the defendant(s) to vacate and deliver the physical possession voluntarily of the
place of work. He stayed there for good and even buried his father near his house. He said disputed land to plaintiff within 60 days from receipt of this decision.
that in 1990, the private road constructed by petitioner was covered by boulders, soil and 4. Order defendant(s) to remove his structure within from receipt of this decision.
rocks, and it was Mrs. Banuca who initiated the clearing of the road. Finally, he declared that 5. Order the defendant(s) to (sic) plaintiff the amount of P10,000.00, as litigation expenses.
since 1986, he never saw petitioner introduce any improvement in the area. 6. Order defendant(s) to pay the cost of suit26
Respondent Juanito Valenciano revealed that he is the cousin of Gloria Banuca. He narrated Respondents appealed the decision to the RTC.27 In affirming the decision in toto the RTC
that in 1984, he went to Riverside to see the latter whose husband, William Banuca, was ratiocinated:
working as foreman of petitioner. At that time, the lot under litigation was still a hill. It was It may be well to consider that even after plaintiff's business ceased operation, he religiously
Gloria Banuca who leveled the hill and told him to construct his house there. Finding the paid the taxes due thereon.
place to be an ideal place to build his house, he paid the Banucas P10,000.00 for the Appellant's theory that the plaintiff-appellee abandoned the property does not sit well and
improvements. finds no support in the record. Notice that since 1985 up to mid-1990, the Banucas never laid
He explained that before he started building his house, he sought the permission of the claim over the property taking into consideration that they were already residents of the
Benguet District Engineer, DPWH, which the latter granted. In August 1998, he received a place. This only goes to show that they acknowledged and respected the prior possession of
notice24 to stop and desist from continuing the construction of a permanent one-storey the plaintiff-appellee. Besides, what right has Gloria to cause the leveling of the property
house made of hollow blocks and cement since the condition was only to utilize light destroying the natural contour thereof, to presume that plaintiff-appellee abandoned it and
materials. Thereafter, a letter dated 22 January 1999 was sent to him informing him that the to invite and allow other persons to settle thereat? Absolutely none. Knowing fully well that
temporary permit issued to him for the improvement/utilization of a portion of the national the plaintiff-appellee has prior possession of the property, Gloria's actions are unjustified, to
road along Kennon Road had been revoked for non-submission of the waiver as required by say the least. Her consummated act of leveling the property without the knowledge of the
the Office of the District Engineer and his non-compliance with the condition that no plaintiff-appellee is viewed as a test to determine whether or not the latter is still interested
permanent structures are to be constructed within the road-right-of-way. He, however, in the property. From then on until 1998 (but before the construction), the Banucas still
denied receiving said letter. recognize the plaintiff's possession. But as Gloria claims to have heard no word from the
Juan de Vera, a retired DPWH foreman, testified last for the respondents. He claimed he plaintiff, she unilaterally declared that the place is now abandoned as she "invited and
witnessed the execution of the document25 regarding the sale by Adriano Jularbal to Gloria allowed" the defendants to live and construct their house thereat.
Banuca of improvements found near the house of the latter in the amount of P1,000.00. 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

41 clioocampo
promptly objected to the construction of the defendants-appellants' house. These are clear mound on which it stood was later leveled by Gloria Banuca and in 1998 petitioners Sps.
manifestations of his intention not to abandon the property. Sad to say though that here is a Valenciano began construction thereat. Petitioners Sps. Valenciano claim there was
former employer. By passing off such property to be hers is so unkind, unfair and against abandonment, but the lower court ruled that respondent did not abandon the subject
social order. It is very clear that the Banucas knew of the prior possession of the plaintiff way property as he continued to pay the realty taxes thereon and objected to petitioners Sps.
back then so that they themselves never personally build construction over the property. If Valenciano's construction. We believe, and so hold, that at this point in time, it is immaterial
they honestly believe that they now "own" the land, why will they still have to invite other whether or not there was abandonment by respondent. The fact remains that Gloria Banuca
people who are not their relatives to settle thereat? Why the preference of strangers over took possession of the subject property soon after the earthquake. She leveled the mound
relatives? The Court does not believe that they did not receive any compensation for having and the ruins of respondent's house, yet respondent remained silent. Respondent objected
"allowed" strangers, the defendants included, to settle on the land. only after petitioners Sps. Valenciano started construction of the house on the subject
From all the foregoing, Gloria is clearly in bad faith. And her being in bad faith must be property. Respondent cannot now interpose an action for forcible entry against petitioners
corrected and if warranted, must be meted appropriate penalty. If the Banucas are in bad Sps. Valenciano, which he should have filed against Gloria Banuca, petitioners Sps.
faith, then the appellants cannot have better rights either. The Banucas transferred nothing Valenciano's predecessor-in-interest. But more than a year had passed and his right to do so
to them. Defendants-appellants cannot even be considered as builders in good faith. It must lapsed. Thus, respondent's prior possession is material only as against Gloria Banuca and only
be noted that they were prohibited by the plaintiff from going further but they ignored it. within a period of one year from the time she wrested possession of the property from
They shall lose what was built (Art. 449, Civil Code). Again, if the Banucas believe that they respondent.
have an action or a right to deprive the plaintiff's possession, why did they not invoke judicial We view with distate Gloria Banuca's ingratitude toward her husband's former employer. Her
interference as required under Art. 536 of the same code? Nonetheless, notwithstanding the actions smack of the proverbial hand being offered in aid but the person to whom it is
fact of leveling without the knowledge of the plaintiff-appellee, the same did not affect his offered would rather have the whole arm instead. This is an instance where it is the
possession (Art. 537, Civil Code).28 employees who commit injustice against their employer. Nonetheless, petitioners Sps.
Via a Petition for Review, respondents appealed to the Court of Appeals. The Court of Valenciano should not suffer because of Gloria Banuca's ingratitude for the former came
Appeals made a sudden turn-around and reversed the decision under review. Its decision across the property in good faith.
dated 20 August 2002 reads in part: But respondent is also reminded that he only has himself to blame. His failure to assert his
[T]here is a need to clarify a few things. What is undisputed are the identity and nature of the right for an unreasonable and unexplained length of time allowed Gloria Banuca to wrest
property subject of the action for forcible entry. The subject of the action concerns a portion possession from him. Especially in this case where they do not and cannot own the subject
of the road-right-of-way along Kennon Road just above the private road constructed by property, actual possession becomes particularly important.29
respondent. The problem, however, is that petitioners Sps. Valenciano started constructing a The case was disposed as follows:
house on the same spot where a house belonging to respondent once stood. Both parties are WHEREFORE, in view of the foregoing, the petition is GRANTED and the decision of the
now asserting that they are entitled to the possession of said lot. But the decision of the Municipal Circuit Trial Court of tuba-Sablan dated November 20, 2000 as affirmed by the
lower court seems to imply that respondent's right to possess the subject property stems Regional Trial Court on January 23, 2002 is hereby REVERSED and SET ASIDE.30
from his acquisition of the one-hectare property below it. That is not the case. The Motion for Reconsideration filed by petitioner was denied in a resolution31 dated 20 May
We must emphasize that the subject of the deed of quitclaim and waiver of rights of Castillo 2003.
Binay-an was not the road-right-of-way but the sloping terrain below it. This was the Petitioner is now before us seeking redress. He assigns the following as the errors committed
property acquired by the respondent to have access to the sand and gravel on the Bued by the Court of Appeals:
River. It did not include the road-right-of-way. As regards Gloria Banucas's claims, the I.
evidence show that her agreement with Jularbal involved only the improvements near her THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PRIVATE RESPONDENT (NOW
residence down the private road and not the road-right-of-way. Since the subject property is PETITIONER) FRISCO DOMALSIN ABANDONED THE PROPERTY SUBJECT OF THE LITIGATION.
a road-right-of-way, it forms part of the public dominion. It is not susceptible to private II.
acquisition or ownership. Prolonged occupation thereof, improvements introduced thereat THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING ASIDE THE
or payment of the realty taxes thereon will never ripen into ownership of said parcel of land. DECISION OF THE REGIONAL TRIAL COURT OF LA TRINIDAD, BENGUET, BRANCH 63 WHICH
Thus, what We have are two parties, neither of which can be owners, only possessors of the AFFIRMED THE DECISION OF THE MUNICIPAL CIRCUIT TRIAL COURT OF TUBA-SABLAN.
subject property. Beyond these two, only the government has a better right to the subject At the outset, it must be made clear that the property subject of this case is a portion of the
property which right it may exercise at any time. This bears emphasizing because if either road-right-of way of Kennon Road which is located in front of a parcel of land that petitioner
party has possessory rights to the subject property, it is not predicated on ownership but bought by way of Deed of Waiver and Quitclaim from Castillo Binay-an.32 The admission33 of
only on their actual possession of the subject property. petitioner in his Amended Complaint that respondents started constructing a building within
xxxx the Kennon Road road-right-of-way belies his claim that the lot in question is his.
There is no doubt that respondent had prior physical possession of the subject property. He In light of this exposition, it is clear that neither the petitioner nor the respondents can own
entered and acquired possession of the subject property when he built his house thereon. nor possess the subject property the same being part of the public dominion. Property of
The house was destroyed during the 1990 earthquake and respondent did not rebuild it. The public dominion is defined by Article 420 of the Civil Code as follows:

42 clioocampo
ART. 420. The following things are property of public dominion: possession. Since title is never in issue in a forcible entry case, the Court of Appeals should
(1) Those intended for public use such as roads, canals, rivers, torrents, ports and bridges have based its decision on who had prior physical possession. The main thing to be proven in
constructed by the State, banks, shores, roadsteads, and other of similar character. an action for forcible entry is prior possession and that same was lost through force,
(2) Those which belong to the State, without being for public use, and are intended for some intimidation, threat, strategy and stealth, so that it behooves the court to restore possession
public service or for the development of the national wealth. regardless of title or ownership.38
Properties of public dominion are owned by the general public.34 Public use is "use that is not Inasmuch as prior physical possession must be respected, the Court of Appeals should have
confined to privileged individuals, but is open to the indefinite public."35 As the land in ruled squarely on the issue of abandonment because it gave precedence to the actual
controversy is a portion of Kennon Road which is for the use of the people, there can be no present possession of respondents. If, indeed, there was abandonment of the land under
dispute that same is part of public dominion. This being the case, the parties cannot consideration by petitioner, only then should respondents be given the possession of the
appropriate the land for themselves. Thus, they cannot claim any right of possession over it. same since abandonment is one way by which a possessor may lose his possession. 39
This is clear from Article 530 of the Civil Code which provides: Abandonment of a thing is the voluntary renunciation of all rights which a person may have
ART. 530. Only things and rights which are susceptible of being appropriated may be the in a thing, with the intent to lose such thing.40 A thing is considered abandoned and
object of possession. possession thereof lost if the spes recuperandi (the hope of recovery) is gone and the animus
Notwithstanding the foregoing, it is proper to discuss the position of the Court of Appeals for revertendi (the intention of returning) is finally given up.41
comprehensive understanding of the facts and the law involved. In the case before us, we find that petitioner never abandoned the subject land. His
Petitioner maintains that the Court of Appeals erred when it ruled that he abandoned the opposition to the construction of respondents' house upon learning of the same and the
land being disputed contrary to the rulings of the MCTC and RTC. The MCTC found there was subsequent filing of the instant case are clear indicia of non-abandonment; otherwise, he
no abandonment of the land because the house erected thereon was destroyed by a could have just allowed the latter to continue with the construction. Moreover, the fact that
fortuitous event (earthquake), while the RTC ruled there was no abandonment because the house petitioner built was destroyed by the earthquake in 1990, was never rebuilt nor
petitioner paid taxes due on the land and that he promptly objected to the construction of repaired and that same was leveled to the ground by Gloria Banuca do not signify
respondents' house which are clear manifestations of his intention not to abandon the abandonment. Although his house was damaged by the earthquake, Gloria Banuca, the
property. person who supposedly demolished said house, had no right to do the same. Her act of
A reading of the decision of the Court of Appeals shows that it did not reverse the two lower removing the house and depriving petitioner of possession of the land was an act of forcible
courts on the issue of abandonment. It merely declared that such issue is not material in the entry. The entry of respondents in 1998 was likewise an act of forcible entry.
resolution of the case at bar. It faulted petitioner for not asserting his right for a long time The next question is: Was the action filed the correct one and was it timely
allowing Gloria Banuca to wrest the possession of the land in question from petitioner by filed?cralawlibrary
leveling the house he built thereon and pronounced that actual possession becomes Well-settled is the rule that what determines the nature of the action as well as the court
important in a case where parties do not and cannot own the land in question. which has jurisdiction over the case are the allegations in the complaint. 42 In actions for
From the foregoing it appears that the Court of Appeals did not give weight or importance to forcible entry, the law tells us that two allegations are mandatory for the municipal court to
the fact that petitioner had prior physical possession over the subject land. It anchored its acquire jurisdiction: First, the plaintiff must allege prior physical possession of the property.
decision on the fact that the parties do not and cannot own the land and that respondents Second, he must also allege that he was deprived of his possession by any of the means
now have actual possession over it. provided for in Section 1, Rule 70 of the Rules of Court.43 To effect the ejectment of an
Ejectment proceedings are summary proceedings intended to provide an expeditious means occupant or deforciant on the land, the complaint should embody such a statement of facts
of protecting actual possession or right to possession of property. Title is not involved. The as to bring the party clearly within the class of cases for which the statutes provide a remedy,
sole issue to be resolved is the question as to who is entitled to the physical or material as these proceedings are summary in nature. The complaint must show enough on its face to
possession of the premises or possession de facto.36 give the court jurisdiction without resort to parol evidence.44
The Court of Appeals erred when it preferred the present and actual possession of A look at the Amended Complaint filed by petitioner clearly shows a case for forcible entry.
respondents vis - à-vis the prior possession of petitioner on the ground that the parties do Petitioner alleged therein that he has been in possession of the subject land for the last
not and cannot own the lot in question. Regardless of the actual condition of the title to the nineteen years and that respondents, in the first week of August 1998, without his
property, the party in peaceable, quiet possession shall not be thrown out by a strong hand, permission and consent, entered the land by means of force, strategy and stealth and started
violence or terror. Neither is the unlawful withholding of property allowed. Courts will always the construction of a building thereon; and upon being informed thereof, he requested them
uphold respect for prior possession. Thus, a party who can prove prior possession can to stop their construction but respondents refused to vacate the land forcing him to file the
recover such possession even against the owner himself. Whatever may be the character of instant case to recover possession thereof.
his possession, if he has in his favor prior possession in time, he has the security that entitles The Court of Appeals pronounced that petitioner cannot interpose an action for forcible
him to remain on the property until a person with a better right lawfully ejects him.37 entry against respondents and that the same should have been filed against Gloria Banuca. It
The fact that the parties do not and cannot own the property under litigation does not mean added that the right to file against the latter had already lapsed because more than a year
that the issue to be resolved is no longer priority of possession. The determining factor for had passed by from the time she wrestled possession of the property from the petitioner.
one to be entitled to possession will be prior physical possession and not actual physical

43 clioocampo
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.45 Under Section 1,46 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.47 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.

44 clioocampo
11. REPUBLIC vs. TRI-PLUS above-mentioned for no less than thirty (30) years prior to the filing of the instant
G.R. No. 150000 September 26, 2006 petition for registration of its imperfect title. This being so, the applicant is entitled
REPUBLIC OF THE PHILIPPINES, petitioner, that its title be confirmed under the provisions of the Torrens System of
vs. Registration.10
TRI-PLUS CORPORATION, respondent. Accordingly, it disposed of the case as follows:
DECISION WHEREFORE, in view of the foregoing, judgment is hereby rendered declaring the
AUSTRIA-MARTINEZ, J.: applicant TRI-PLUS LAND CORPORATION the exclusive and absolute owner of Lot
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court 1061 of the Cadastral Survey of Consolacion, Cebu, as shown on plan Ap-07-002362
assailing the Decision1dated September 14, 2001 of the Court of Appeals (CA) in CA-G.R. CV (Exhibit "J") and described in its corresponding technical description (Exhibit "K"),
No. 60671, which affirmed the judgment of the Municipal Trial Court (MTC) of Consolacion, and Lot 1062 of the Cadastral Survey of Consolacion, Cebu, as shown on plan Ap-
Metro Cebu in LRC Case No. N-21 granting herein respondent's application for registration of 07-002366 (Exhibit "O") and described in its corresponding technical description
title to Lots Nos. 1061 and 1062 of the Cadastral Survey of Consolacion, Cebu. (Exhibit "P").
The facts of the case are as follows: Once this decision becomes final, let an Order for the issuance of the decree of
On April 30, 1997 Tri-Plus Corporation2, through its president, Euclid C. Po, filed with the MTC registration for Lots 1061 and 1062, Consolacion Cadastre, be issued in the name of
of Consolacion, Metro Cebu,3 an Application for Registration of Title over two parcels of land TRI-PLUS LAND CORPORATION.
designated as Lots 1061 and 1062 of the cadastral survey of Consolacion, Cebu, containing an SO ORDERED.11
area of 3,939 and 4,796 square meters, respectively, and located at Barangay Tayud, The OSG appealed the trial court's judgment with the CA.12
Consolacion, Cebu.4 In its application, Tri-Plus alleged that it is the owner in fee simple of the Subsequently, the Land Registration Authority (LRA), through its Director on Registration,
subject parcels of land, including the improvements thereon, having acquired the same submitted a Report dated August 6, 1998 to the MTC, pertinent portions of which read as
through purchase; and that it is in actual, continuous, public, notorious, exclusive and follows:
peaceful possession of the subject properties in the concept of an owner for more than 30 1. Two (2) parcels of land described as Lots 1062 and 1061, Cad. 545-D, Consolacion
years, including that of its predecessors-in-interest.5 The case was docketed as LRC Case No. Cadastre on Plan Ap-07-002366 and Ap-07-002362, both situated in the Barangay
N-21.6 of Tayud, Municipality of Consolacion, Province of Cebu, are being applied for
On September 4, 1997, the trial court received an Opposition to the Application for original registration of title;
Registration filed by the Republic of the Philippines through the Office of the Solicitor 2. After examining the afore-said plan discrepancy was noted in the bearings and
General (OSG) on the grounds that neither the applicant nor its predecessors-in-interest have distances of line 3-4 and 4-5 of Lot 1061, Ap-07-002362, being S.57 deg. 19'W
been in open, continuous, exclusive and notorious possession and occupation of the land in 8.02m. and S.52 deg. 10'W 18.24, which do not conform with the bearings and
question since June 12, 1945 or prior thereto; that the muniments of title submitted by the distances (N. 52 deg. 01'E., 18.00m) and (N. 52 deg. 47'E., 17.71m.) along lines 12-
applicant which consists, among others, of tax declarations and receipts of tax payments, do 13 and 11-12, respectively of plan Rs-07-01-000358, lot 1508, Consolacion Cad.
not constitute competent and sufficient evidence of a bona fide acquisition of the land 545-D, decreed in LRA (NALTDRA) Record No. N-60851.
applied for or of its open, continuous, exclusive and notorious possession and occupation 3. That the above discrepancy was brought to the attention of the Regional
thereof in the concept of owner since June 12, 1945 or prior thereto; that the claim of Technical Director, DENR, Land Management Services, Region VII, Mandaue City,
ownership in fee simple on the basis of a Spanish title or grant may no longer be availed of by for verification and correction in a letter dated 7 July 1998.
the applicant because it failed to file an appropriate application for registration in accordance 4. This Authority is not in a position to verify whether or not the parcels of land
with the provisions of Presidential Decree (P.D.) No. 892; and that the subject parcels of land subject of registration are already covered by land patent.13
are portions of the public domain belonging to the Republic of the Philippines and are not On September 14, 2001, the CA rendered the presently assailed Decision finding no
subject to private appropriation.7 reversible error in the appealed judgment, thereby, affirming the same.14
On September 19, 1997, Tri-Plus presented documentary evidence to prove compliance with Hence, herein petition based on the following assignments of errors:
the jurisdictional requirements of the law. On even date, a Manifestation and Motion was I
filed by the heirs of Toribio Pepito praying that they be given a period of 10 days within THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT FINDING THAT
which to file their written opposition.8 However, the oppositors failed to file their written THE TRIAL COURT DID NOT ACQUIRE JURISDICTION TO HEAR AND DECIDE THE
opposition on time. The trial court then commissioned its clerk of court to receive evidence CASE, BECAUSE THE IDENTITY OF THE LAND REMAINS UNCERTAIN.
from the applicant and directed the former to submit a report thereon. Accordingly, a II
Commissioner's Report was submitted on the proceedings taken. 9 THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT FINDING THAT
In its Judgment dated February 26, 1998, the MTC made the following finding and conclusion: RESPONDENT FAILED TO DISCHARGE THE BURDEN OF PROVING THAT THE
The totality of the evidence, both documentary and testimonial, of the applicant PROPERTY IS ALIENABLE AND DISPOSABLE.
clearly shows that it and its predecessors-in-interest had been in actual, public, III
exclusive and continuous possession in concept of owner of the parcels of land

45 clioocampo
 THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT FINDING THAT At the outset, however, the Court does not agree with petitioner's contention in its first
RESPONDENT IS DISQUALIFIED FROM ACQUIRING LANDS OF THE PUBLIC assigned error that respondent failed to properly identify Lot 1061 which is one of the lots
DOMAIN.15 sought to be titled.
As to the first assigned error, petitioner contends that the CA erred in relying on the original Insofar as the identity of the land subject of an application for original registration is
survey plan approved by the Lands Management Services of the Department of Environment concerned, this Court has laid down the rule, as follows:
and Natural Resources (DENR) when it ruled that the applicant was able to duly establish the The submission in evidence of the original tracing cloth plan, duly approved by the
identity of Lot 1061. This reliance, petitioner argues, is mistaken considering that the Report Bureau of Lands, in cases for application of original registration of land is a
of the Director on Registration of the LRA pointed to a discrepancy in the bearings and mandatory requirement. The reason for this rule is to establish the true identity of
distances of the boundaries which separate Lot 1061 from an adjoining land, Lot 1058. This the land to ensure that it does not overlap a parcel of land or a portion thereof
discrepancy, petitioners submit, casts doubt on the identity of the land subject of the already covered by a previous land registration, and to forestall the possibility that
application for registration. Petitioner then concludes that if there is uncertainty in the metes it will be overlapped by a subsequent registration of any adjoining land. The failure
and bounds of the property sought to be titled, the trial court cannot acquire jurisdiction to comply with this requirement is fatal to petitioner's application for registration. 17
over the subject matter of the case. Hence, the proceedings before the trial court, including However, in Republic of the Philippines v. Court of Appeals18 and in the more recent cases
its decision granting the application for registration, are void. of Spouses Recto v. Republic of the Philippines19 and Republic of the Philippines v. Hubilla20,
As to the second assignment of error, petitioner argues that the CA erred in holding that the the Court ruled that while the best evidence to identify a piece of land for registration
applicant was able to prove that the subject properties are alienable and disposable lands of purposes is the original tracing cloth plan from the Bureau of Lands (now the Lands
the public domain. Petitioner contends that a mere notation appearing in the survey plans of Management Services of the DENR), blueprint copies and other evidence could also provide
the disputed properties showing that the subject lands had been classified as alienable and sufficient identification. In the present case, respondent submitted in evidence a blueprint
disposable on June 25, 1963 is not sufficient to establish the nature and character of these copy of the Advance Plan of Lot 106121 and a Technical Description22 thereof, both of which
lands. Petitioner asserts that there should be a positive act on the part of the government, had been duly certified and approved by the Lands Management Services of the DENR. The
such as a certification from the DENR, to prove that the said lands are indeed alienable and Court finds these pieces of evidence as substantial compliance with the legal requirements
disposable. Petitioner further contends that even if the subject properties were classified as for the proper identification of Lot 1061. The discrepancy in the common boundary that
alienable and disposable on June 25, 1963, the law, nonetheless, requires that such separates Lot 1061 from Lot 1058, as contained in the LRA Report does not cast doubt on the
classification should have been made on June 12, 1945 or earlier. identity of the subject lot. As the CA correctly held, the discrepancy is not substantial because
Anent the last assigned error, petitioner contends that since the applicant failed to discharge it does not unduly increase or affect the total area of the subject lot and at the same time
the burden of proving that the subject properties are alienable and disposable, there is no prejudice the adjoining lot owner. It is only when the discrepancy results to an unexplained
basis for the CA to rule that these properties are private lands. increase in the total area of the land sought to be registered that its identity is made
In its Comment, respondent contends that it was able to prove the identity of Lot 1061 with doubtful. Besides, only a portion of the many boundaries of Lot 1061 has been found to bear
certainty. While it admits the discrepancy in the bearings and distances which form the a discrepancy in relation to the boundary of one adjoining lot and the LRA Report simply
boundary between Lot 1061 and the adjoining Lot 1058, respondent contends that such recommends that the Lands Management Services of the DENR verify the reported
discrepancy is merely technical in nature because Lots 1058 and 1061 remain the same and discrepancy and make the necessary corrections, if needed, in order to avoid duplication in
that there is neither an increase nor decrease in the area of the subject lot sought to be the issuance of titles covering the same parcels of land.
titled; and that what was required by the LRA in its Report was for the applicant to correct Petitioner's argument that, on the basis of the LRA Report, the MTC should have dismissed
and adjust the bearings and distances of Lot 1061 in order to conform to the boundaries of respondent's application for registration for lack of jurisdiction over the subject matter, is
Lot 1058. without merit. The MTC could not have possibly done this because said Report was
Respondent also argues that the notations appearing in the survey plans of the subject submitted to the trial court more than five months after the latter rendered its Decision. A
properties serve as sufficient proof that these lands are alienable and disposable. copy of the LRA Report attached to the present petition shows that it is dated August 6, 1998
Respondent asserts that the survey plans were duly approved by the DENR, Lands while the MTC decision was rendered much earlier on February 26, 1998. In fact, the Office
Management Services whose official acts are presumed to be in accordance with law. of the Solicitor General (OSG) perfected its appeal by filing a notice of appeal of the MTC
Lastly, respondent argues that its predecessor-in-interest's continuous, actual, adverse and Decision on April 2, 1998, which is also prior to the submission of the LRA report. Hence, by
peaceful possession of the subject properties in the concept of an owner for a period of more the time the LRA report was submitted to the MTC, the latter has already lost jurisdiction
than 30 years, coupled with the fact that they declared these lands in their name, gives a over the case, not on the ground cited by petitioner but because the appeal to the CA was
strong presumption in respondent's favor that the subject properties no longer form part of already perfected, vesting jurisdiction upon the appellate court.
the public domain. In any case, while the subject lands were properly identified, the Court finds that respondent
Parties filed their respective Memoranda.16 failed to comply with the other legal requirements for its application for registration to be
The Court finds the petition meritorious. granted.
Applicants for confirmation of imperfect title must prove the following: (a) that the land
forms part of the alienable and disposable agricultural lands of the public domain; and (b)

46 clioocampo
that they have been in open, continuous, exclusive and notorious possession and occupation relatively recent considering that respondent's predecessors-in-interest claim to have been in
of the same under a bona fide claim of ownership either since time immemorial or since June possession of the subject properties as early as 1947. While belated declaration of a property
12, 1945.23 for taxation purposes does not necessarily negate the fact of possession, tax declarations or
In the present case, the Court finds merit in petitioner's contention that respondent failed to realty tax payments of property are, nevertheless, good indicia of possession in the concept
prove the first requirement that the properties sought to be titled forms part of the alienable of an owner, for no one in his right mind would be paying taxes for a property that is not in
and disposable agricultural lands of the public domain. his actual, or at least, constructive possession.35 In the present case, respondent failed to
Section 6 of Commonwealth Act No. 141, as amended, provides that the classification and explain why, despite the claim of its predecessors-in interest that they possessed the subject
reclassification of public lands into alienable or disposable, mineral or forest land is the properties in the concept of an owner as early as 1947, it was only in 1961 that they started
prerogative of the Executive Department. Under the Regalian doctrine, which is embodied in to declare the same for purposes of taxation.
our Constitution, all lands of the public domain belong to the State, which is the source of From the foregoing, it is clear that respondent and its predecessors-in-interest failed to prove
any asserted right to any ownership of land.24 All lands not appearing to be clearly within that they had been in open, continuous, exclusive and notorious possession of the subject
private ownership are presumed to belong to the State.25 Accordingly, public lands not properties under a bona fide claim of ownership since June 12, 1945 or earlier, as required by
shown to have been reclassified or released as alienable agricultural land or alienated to a law.
private person by the State remain part of the inalienable public domain.26 Well-entrenched is the rule that the burden of proof in land registration cases rests on the
It must be stressed that incontrovertible evidence must be presented to establish that the applicant who must show clear, positive and convincing evidence that his alleged possession
land subject of the application is alienable or disposable.27 and occupation were of the nature and duration required by law.36 In the present case, the
In the present case, the only evidence to prove the character of the subject lands as required Court finds that respondent failed to prove, by clear and convincing evidence, the legal
by law is the notation appearing in the Advance Plan stating in effect that the said properties requirements that the lands sought to be titled are alienable and disposable and that its
are alienable and disposable. However, this is hardly the kind of proof required by law. To predecessors-in-interest were already in possession of the subject lots since 1945 or earlier.
prove that the land subject of an application for registration is alienable, an applicant must As to the last assigned error, respondent having failed to prove that the subject properties
establish the existence of a positive act of the government such as a presidential are alienable and disposable public lands, the Court agrees with petitioner that there would
proclamation or an executive order, an administrative action, investigation reports of Bureau be no basis in concluding that these lands have already become private. The presumption
of Lands investigators, and a legislative act or statute.28 The applicant may also secure a remains that said properties remain part of the inalienable public domain and, therefore,
certification from the Government that the lands applied for are alienable and could not become the subject of confirmation of imperfect title.
disposable.29 In the case at bar, while the Advance Plan bearing the notation was certified by Finally, while it is an acknowledged policy of the State to promote the distribution of
the Lands Management Services of the DENR, the certification refers only to the technical alienable public lands as a spur to economic growth and in line with the ideal of social justice,
correctness of the survey plotted in the said plan and has nothing to do whatsoever with the the law imposes stringent safeguards upon the grant of such resources lest they fall into the
nature and character of the property surveyed. Respondents failed to submit a certification wrong hands to the prejudice of the national patrimony.37 The Court must not, therefore,
from the proper government agency to prove that the lands subject for registration are relax the stringent safeguards relative to the registration of imperfect titles.
indeed alienable and disposable. WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated
As to the second requirement, testimonial evidence were presented to prove that September 14, 2001 in CA-G.R. CV No. 60671 is REVERSED and SET ASIDE. Respondent Tri-
respondent's predecessors-in-interest had been in possession of the subject lots in the Plus Corporation's application for registration and issuance of title to Lots 1061 and 1062,
concept of an owner for the period required by law. The first witness was Thelma Pilapil who Consolacion Cad-545-D, in LRC Case No. N-21 filed with the Municipal Trial Court of
claims to be the daughter of Constancia Frias from whom respondent bought Lot 1061. Pilapil Consolacion, Metro Cebu, is DISMISSED.
testified that her family has been in possession of Lot 1061 since her birth.30 When her SO ORDERED.
testimony was offered on October 7, 1997, she was 40 years old.31 Deducting 40 years from
1997, it means that her family started possession of Lot 1061 only in 1957. The second
witness who was presented was Tomas Frias from whom respondent bought Lot 1062. Frias
testified that he was 67 years old at the time that his testimony was taken on October 7,
1997.32 He claims that he started owning the subject lot when he was 17 years old and had
been in possession of the same since then.33 Hence, by simple arithmetic, the testimony of
Frias proves that he came to possess Lot 1062 only in 1947. While he testified that Lot 1062
was previously owned by his father and that he inherited the property from his parents, no
evidence was presented to show that the latter indeed previously owned the said property
and that they had been in possession of the same on or before June 12, 1945.
Moreover, other pieces of evidence presented by respondent to prove the period of its
possession and that of its predecessors-in-interest show that the subject properties were
declared for taxation purposes beginning only in 1961.34 This date may be considered as

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12. MANESE vs. VELASCO for reversion or any action which may have the effect of canceling a free patent and the
[G.R. NO. 164024 : January 29, 2009] corresponding certificate of title issued on the basis of the patent; (2) the sale of the property
LUIS B. MANESE, ANTONIA ELLA, HEIRS OF ROSARIO M. ORDOñEZ, represented by CESAR by Velasco to Flores is valid even without approval of the Secretary of Agriculture and Natural
ORDOñEZ, SESINANDO PINEDA and AURORA CASTRO, Petitioners, v. SPOUSES DIOSCORO Resources as the required approval may be obtained after the sale had been consummated;
VELASCO and GLICERIA SULIT, MILDRED CHRISTINE L. FLORES TANTOCO and SYLVIA L. (3) the certificate of title issued to Velasco can no longer be reviewed on the ground of fraud
FLORES, Respondents. since a homestead patent registered in conformity with the provisions of Act No.
DECISION 49615partakes of the nature of a certificate issued in a judicial proceeding and becomes
QUISUMBING, J.: indefeasible and incontrovertible upon the expiration of one year from its issuance; and (4)
For review on certiorari are the Decision1 dated April 28, 2004 and the Resolution2 dated petitioners' action is barred by laches since for almost 28 years, they failed to assert their
June 22, 2004 of the Court of Appeals in CA-G.R. CV No. 68934. The appellate court had alleged right over said property.
affirmed the Order3 dated June 15, 2000 of the Regional Trial Court (RTC) of Lucena City, On June 15, 2000, the RTC granted the Motion to Dismiss and ruled that petitioners do not
Branch 59, in Civil Case No. 99-129, dismissing the petitioners' complaint for annulment of have the legal personality to file the complaint. It held that the government, not petitioners,
title and damages against the respondents. is the real party in interest and, therefore, only the Solicitor General may bring the action in
The subject matter of the controversy is the alleged foreshore land with an area of about court. The dispositive portion of the RTC's Order states:
85,521 square meters, fronting Tayabas Bay in Guisguis, Sariaya, Quezon.4 WHEREFORE, the instant Motion is granted and the plaintiffs['] complaint dismissed.
On October 13, 1971, respondent Dioscoro Velasco was issued Original Certificate of Title No. SO ORDERED.16
P-167835covering said property by the Register of Deeds of Quezon Province, based on The Court of Appeals affirmed the RTC's Order, disposing as follows:
Homestead Patent No. 133300. On March 22, 1977, Velasco sold the property to respondent WHEREFORE, premises considered, the appeal is DISMISSED for lack of merit. The Order
Sylvia Flores, and Transfer Certificate of Title (TCT) No. T-1609236 was issued in her name. On dated June 15, 2000 of the Regional Trial Court (RTC), Branch 59, Lucena City dismissing
January 4, 1981, the property was sold by Flores to Mildred Christine Flores-Tantoco and TCT plaintiffs-appellants' complaint for annulment of title with damages
No. T-1777357 was issued in the latter's name. Later, the property was divided into seven lots is AFFIRMED and UPHELD.
and TCT Nos. T-177777, T-177778, T-177779, T-177780, T-177781, T-177782, and T-177783 SO ORDERED.17
were issued in the name of Mildred Christine Flores-Tantoco. On January 18, 1992, the lots Hence, this petition.
covered by TCT Nos. T-1777808 and T-1777819 were sold back to Flores such that TCT No. T- Petitioners raise the following issue for our resolution:
27811210 and TCT No. 27811011 were issued in her name. [WHETHER OR NOT] THE COURT OF APPEALS ERRED IN DISMISSING THE APPEAL AND IN
Adjacent and contiguous to the alleged foreshore land is the agricultural land owned by AFFIRMING AND UPHOLDING THE ORDER OF DISMISSAL OF THE REGIONAL TRIAL COURT OF
petitioners. LUCENA, BRANCH 59 THAT THE PETITIONERS DO NOT HAVE THE LEGAL PERSONALITY TO
On August 31, 1999, the petitioners filed a Complaint12 for Annulment of Title and Damages INSTITUTE THE COMPLAINT FOR CANCELLATION OF OCT NO. P-16789 ISSUED PURSUANT TO
against respondents before the RTC of Lucena City. They alleged that the issuance of the HOMESTEAD PATENT NO. 133300 IN THE NAME OF DIOSCORO VELASCO AND THE TRANSFER
homestead patent and the series of transfers involving the same property were null and void. CERTIFICATES OF TITLES SUBSEQUENTLY ISSUED IN FAVOR OF S[Y]LVIA L. FLORES AND
They further alleged that they applied for lease of the foreshore land and the government MILDRED CHRISTINE FLORES-TANTOCO.18
had approved in their favor Foreshore, Reclaimed Land or Miscellaneous Lease Application. Stated simply, the sole issue in this case is whether or not petitioners are real parties in
Petitioners claimed that they were in open, continuous, exclusive and notorious possession interest with authority to file a complaint for annulment of title of foreshore land.
and use of said foreshore land since 1961. They stated that they had introduced Petitioners concede that under Section 101 of Commonwealth Act No. 141,19 only the
improvements thereon and planted coconut seedlings (which had grown up into coconut Solicitor General or the officer acting in his stead may institute all actions for reversion in the
trees) as well as other fruit-bearing trees and plants. They added that they had subleased the proper courts. However, they invoke the principle of equity, arguing that equity and social
land to several tenants. justice demand that they be deemed real parties in interest and given a right to present
Petitioners averred that Dioscoro Velasco was not qualified to become a grantee of a evidence showing that the land titles of respondents are void. 20 Respondents, on the other
homestead patent since he never occupied any portion nor introduced any improvements on hand, reiterate that petitioners are not real parties in interest because they do not represent
the land. They claimed that Velasco was issued a homestead patent because he committed the State.21
fraud, misrepresentation, and falsification in connivance with employees of the Bureau of After due consideration of the submissions and arguments of the parties, we are in
Lands. They argued that the sale between Velasco and Flores was invalid because it was not agreement that the instant petition lacks merit.
approved by the Secretary of Agriculture and Natural Resources as required under Section 2, Rule 3 of the 1997 Rules of Civil Procedure provides:
Commonwealth Act No. 141, otherwise known as "The Public Land Act."13 Hence, they SEC. 2. Parties in interest. - A real party in interest is the party who stands to be benefited or
claimed that the sale by Flores to Tantoco was likewise invalid. injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless
On December 2, 1999, respondents moved to dismiss14 the complaint on the following otherwise authorized by law or these Rules, every action must be prosecuted or defended
grounds: (1) petitioners do not have the legal personality to file the complaint since the in the name of the real party in interest. (Emphasis supplied.)
property forms part of the public domain and only the Solicitor General could bring an action

48 clioocampo
It is admitted by both parties that the subject matter of controversy is foreshore land, which
is defined as that strip of land that lies between the high and low water marks and is
alternatively wet and dry according to the flow of the tides. It is that part of the land adjacent
to the sea, which is alternately covered and left dry by the ordinary flow of tides. It is part of
the alienable land of the public domain and may be disposed of only by lease and not
otherwise. Foreshore land remains part of the public domain and is outside the commerce of
man. It is not capable of private appropriation.22
Section 101 of Commonwealth Act No. 141 provides:
All actions for the reversion to the Government of lands of the public domain or
improvements thereon shall be instituted by the Solicitor General or the officer acting in his
stead, in the proper courts, in the name of the Republic of the Philippines.
In all actions for the reversion to the Government of lands of the public domain or
improvements thereon, the Republic of the Philippines is the real party in interest. The action
shall be instituted by the Solicitor General or the officer acting in his stead, in behalf of the
Republic of the Philippines.23Moreover, such action does not prescribe. Prescription and
laches will not bar actions filed by the State to recover its property acquired through fraud by
private individuals.24
Based on the foregoing, we rule that petitioners are not the real parties in interest in this
case. We therefore affirm the dismissal by the trial court of the complaint and the ruling of
the Court of Appeals that petitioners must first lodge their complaint with the Bureau of
Lands in order that an administrative investigation may be conducted under Section 91 25 of
The Public Land Act.
As to petitioners' contention that they should be deemed real parties in interest based on the
principle of equity, we rule otherwise. 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.26
WHEREFORE, the petition is DENIED. The assailed Decision dated April 28, 2004 and the
Resolution dated June 22, 2004 of the Court of Appeals in CA-G.R. CV No. 68934
are AFFIRMED.
Costs against petitioners.
SO ORDERED.

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13. ALMAGRO vs. KWAN A. That a big portion of the lot is submerged under the sea and only a small portion remain as
SECOND DIVISION dry land.
G.R. Nos. 175806 and 175810: October 20, 2010 B. That some of the defendants have constructed their buildings or houses inside the dry land
MANUEL ALMAGRO joined by his spouse, ELIZABETH ALMAGRO, Petitioners, v. SALVACION while others have constructed outside or only a small portion of their buildings or houses are
C. KWAN, WILLIAM C. KWAN, VICTORIA C. KWAN, assisted by her husband, JOSE A. ARBAS, on the said dry land.
and CECILIA C. KWAN, Respondents. The defendants and their buildings or houses are as follows:chanroblesvirtualawlibrary
G.R. No. 175849 : October 20, 2010 1. Sps. Rogelio Duran . . . . . . . . . . . . . . . . . . . . . . . . . inside
MARGARITA PACHORO, DRONICA ORLINA, PIO TUBAT, JR., ANDRES TUBAT, EDUVIGIS 2. Sps. Romulo Vinalver. . . . . . . . . . . . . . . . . . . . . . . inside
KISKIS, ELSA BIÑALBER, NOELA TUBAT, ELSA TUBAT, and ROGELIO 3. Sps. Marto Bati-on . . . . . . . . . . . . . . . . . . . . . . . . . inside
DURAN, Petitioners, v. WILLIAM C. KWAN, SALVACION C. KWAN, VICTORIA C. KWAN, 4. Sps. Salvador Palongpalong . . . . . . . . . . . . . . . . . . inside
assisted by her husband, JOSE A. ARBAS, and CECILIA C. KWAN, Respondents. 5. Sps. Pablo Deciar . . . . . . . . . . . . . . . . . . . . . . . . . . inside
DECISION 6. Sps. Sabas Kiskis . . . . . . . . . . . . . . . . . . . . . . . . . . .inside
CARPIO, J.: 7. Sps. Pio Tubat, Jr. . . . . . . . . . . . . . . . . . . . . .2 houses, the firsthouse a portion, and the
This is a consolidation of two separate petitions for review,1cra1aw assailing the 4 April 2006 second one- inside
Decision2cra1aw and the 31 October 2006 Resolution3cra1aw of the Court of Appeals in CA- 8. Sps. Andres Tubat . . . . . . . . . . . . . . . . . . . . . . . . . . inside
G.R. SP Nos. 71237 and 71437. 9. Sps. George Tubat . . . . . . . . . . . . . . . . . . . . . . . . . . portion
This case involves Lot No. 6278-M, a 17,181 square meter parcel of land covered by TCT No. 10. Sps. Dodong Go . . . . . . . . . . . . . . . . . . . . . . . . . . inside
T-11397. Lot No. 6278-M is located at Maslog, Sibulan, Negros Oriental and is registered in 11. Sps. Delano Bangay-Almagro . . . . . . . . . . . . . . . . portion
the name of spouses Kwan Chin and Zosima Sarana. Respondents are the legitimate children 12. Sps. Simeon Pachoro . . . . . . . . . . . . . . . . . . . . . . . inside
of spouses Kwan Chin and Zosima Sarana, who both died intestate on 2 November 1986 and 13. Sps. Cipriano Tubat . . . . . . . . . . . . . . . . . . . . . . . . inside
23 January 1976, respectively, in Dumaguete City. Upon the death of their parents, 14. Sps. Jovito Remolano . .. . . . . . . . . . . . . . . . . . . . . inside
respondents inherited Lot No. 6278-M through hereditary succession. 15. Sps. Nelson Miravalles . . . . . . . . . . . . . . . . . . . . . cottage and house - outside
On 18 September 1996, respondents filed with the Municipal Trial Court (MTC) an action for 16. Monica Orlina . . . . . . . . . . . . . . . . . . . . . . . . . . . . cottage inside and house portion
recovery of possession and damages against spouses Rogelio and Lourdes Duran, spouses 17. Clarita Barot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . outside
Romulo Vinalver and Elsa Vinalver,4cra1aw spouses Marte5cra1aw Bati-on and Liz E. Bati-on, 18. Conchita Orlina . . . . . . . . . . . . . . . . . . . . . . . . . . . outside
spouses Pablo Deciar and Marlyn Deciar, spouses Salvador Palongpalong and Bienvenida 19. Antonia Malahay . . . . . . . . . . . . . . . . . . . . . . . . . . outside
Palongpalong, spouses Sabas Kiskis and Eduvigis Kiskis, spouses Pio Tubat, Jr. and Encarnita The verification and relocation survey was executed last September 12-13, 2000 with the
Tubat, spouses Andres Tubat and Leonides Tubat, spouses George Tubat and Noela Tubat, presence of both parties and of the Clerk of Court. The cost of the survey was FIFTEEN
spouses Dodong Go and Alice Go, spouses Delano Bangay and Maria Bangay,6cra1aw spouses THOUSAND PESOS (P15,000) shouldered by the plaintiffs and the defendants equally.
Simeon Pachoro and Margarita Pachoro, spouses Cepriano7cra1aw Tubat and Elsa Tubat, Enclosed are a blue print of the sketch plan and a xerox copy of the land title of the said lot.
spouses Jovito Remolano and Editha Orlina Remolano, spouses Nelson Miravalles and Erlene Respectfully submitted by:chanroblesvirtualawlibrary
Miravalles, Dronica Orlina,8cra1aw Clarita Barot Lara, Conchita Orlina, Antonia Malahay and (Sgd) JORGE SUASIN, SR.
the Philippine National Police (PNP),9cra1aw Agan-an, Sibulan, Negros Oriental. Geodetic Engineer10chanroblesvirtuallawlibrary
Subsequently, spouses Manuel Almagro and Elizabeth Almagro intervened as successors-in- After the court admitted Engr. Suasin's report and the pleadings of the parties, respondents
interest of spouses Delano Bangay and Maria Bangay. filed a motion for judgment on the pleadings, which the MTC granted.
During pre-trial, the parties agreed to refer the case to the Chief of the Land Management In its Judgment dated 11 May 2001, the MTC dismissed the complaint on the ground that the
Services Division, PENRO-DENR, Dumaguete City, to conduct a verification survey of Lot No. remaining dry portion of Lot No. 6278-M has become foreshore land and should be returned
6278-M. When the PENRO personnel failed to conduct the verification survey, the court and to the public domain. The MTC explained:chanroblesvirtualawlibrary
the parties designated Geodetic Engineer Jorge Suasin, Sr. (Engr. Suasin) as joint The term “foreshore” refers to that part of the land adjacent to the sea which is alternately
commissioner to do the task. Engr. Suasin conducted the verification and relocation survey of covered and left dry by the ordinary flow of the tides. “Foreshore lands” refers to the strip of
Lot No. 6278-M on 12-13 September 2000 in the presence of the parties, some of their land that lies between the high and low water marks and that is alternately wet and dry
lawyers, and the MTC Clerk of Court. Thereafter, Engr. Suasin submitted a written report with according to the flow of the tide. The term “foreshore land” clearly does not include
the following findings:chanroblesvirtualawlibrary submerged lands.
WRITTEN REPORT From these definitions, it is safe to conclude that the remaining dry portion of Lot No. 6278-
Comes now, the undersigned Geodetic Engineer Jorge S. Suasin, Sr., to this Honorable Court, M is now “foreshore land.” A big portion of the said lot is presently underwater or
most respectfully submit the following written report of the verification and relocation submerged under the sea. When the sea moves towards the estate and the tide invades it,
survey of the lot 6278-M located at Maslog, Sibulan, Negros Oriental with T.C.T. No. T-11397 the invaded property becomes foreshore land and passes to the realm of public domain. The
owned by Salvacion G. Kwan, et al.

50 clioocampo
subject land, being foreshore land, should therefore be returned to the public domain. SO ORDERED.15chanroblesvirtuallawlibrary
Besides, Article 420 of the Civil Code provides:chanroblesvirtualawlibrary Petitioners moved for reconsideration, which the RTC denied in its Order16cra1aw dated 6
“Art. 420. The following thin[g] s are property of public dominion:chanroblesvirtualawlibrary May 2002.
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges Petitioners filed separate petitions for review with the Court of Appeals, alleging that the
constructed by the State, banks, shores, roadsteads, and others of similar character; disputed portion of Lot No. 6278-M is no longer private land but has become foreshore land
Plaintiff cannot use the doctrine of indefeasibility of their Torrens title, as property in and is now part of the public domain.
question is clearly foreshore land. At the time of its registration, property was along the The Ruling of the Court of Appeals
shores. In fact, it is bounded by the Tañon Strait on the NW along lines 2-3-4. The property On 4 April 2006, the Court of Appeals promulgated its decision, affirming with modification
was of public dominion and should not have been subject of registration. The survey showed the RTC Decision. The dispositive portion of the Court of Appeals
that the sea had advanced and the waves permanently invaded a big portion of the property Decision17cra1aw reads:chanroblesvirtualawlibrary
making the land part of the shore or the beach. The remaining dry land is foreshore and WHEREFORE, the instant petitions for review are DENIED. And the Decision dated January 8,
therefore should be returned to the public domain.11chanroblesvirtuallawlibrary 2002 of Branch 38 of the Regional Trial Court of Dumaguete City is hereby AFFIRMED with
Respondents appealed to the Regional Trial Court (RTC). The RTC conducted ocular MODIFICATION as regards the dispositive portion only. Based on the written report of
inspections of Lot No. 6278-M on two separate dates: on 5 October 2001 during low tide and Geodetic Engr. Suasin categorically indentifying who among herein petitioners are illegally
on 15 October 2001 when the high tide registered 1.5 meters. All the parties and their occupying a portion of Lot No. 6278-M, the following petitioners are ordered to vacate the
lawyers were notified before the two ocular inspections were conducted. During the ocular premises and/or remove the houses and/or cottages constructed on Lot No. 6278-M within
inspections, in which some parties and their lawyers were present, the RTC observed that the thirty (30) days from finality of judgment, namely: 1)Sps. Rogelio Duran, 2) Sps. Romulo
small portion referred to by Engr. Suasin as dry land in his report actually remained dry even Vinalver, 3) Sps. Marto Bati-on, 4) Sps. Salvador Palongpalong, 5) Sps. Pablo Deciar, 6) Sps.
during high tide.12cra1aw Thus, the RTC concluded that the disputed remaining portion of Lot Sabas Kiskis, 7) Sps. Pio Tubat, Jr. (first house – portion, second house– inside), 8) Sps. Andres
No. 6278-M is not foreshore land. The RTC stated:chanroblesvirtualawlibrary Tubat, 9) George Tubat (portion), 10) Sps. Dodong Go, 11) Sps. Delano Bangay-Almagro
It is the Court's considered view that the small portion of plaintiff's property which remains (portion), 12) Sps. Simeon Pachoro, 13) Sps. Cipriano Tubat, 14) Sps. Jovito Remolano and 15)
as dry land is not within the scope of the well-settled definition of foreshore and foreshore Monica Orlina (cottage–inside and house– portion).
land as mentioned above. For one thing, the small dry portion is not adjacent to the sea as Costs against petitioners.
the term adjacent as defined in Webster's Dictionary means “contiguous or touching one SO ORDERED.18chanroblesvirtuallawlibrary
another or lying next to.” Secondly, the small dry portion is not alternately wet and dry by In modifying the RTC Decision, the Court of Appeals explained:chanroblesvirtualawlibrary
the ordinary flow of the tides as it is dry land. Granting, as posited by defendants, that at Lastly, the argument that the RTC decision was “vague and indefinite” is utterly bereft of
certain times of the year, said dry portion is reached by the waves, then that is not anymore merit. We have found no reversible error in the appreciation of the facts and in the
caused by the ordinary flow of the tide as contemplated in the above definition. The Court application of the law by the RTC which will warrant the reversal of the questioned decision.
then finds that the testimony of Engr. Suasin dovetails with the import and meaning of However, litigation must end and terminate sometime and somewhere, and it is essential to
foreshore and foreshore land as defined above. the administration of justice that the issues or causes therein should be laid to rest. Hence, in
Anent the case of Republic vs. Court of Appeals, 281 SCRA 639, also cited in the appealed keeping with this principle, We modify the assailed decision insofar as the dispositive portion
judgment, the same has a different factual milieu. Said case involves a holder of a free patent is concerned. It is our considered view that there is no longer a need to determine who
on a parcel of land situated at Pinagtalleran, Caluag, Quezon who mortgaged and leased among the petitioners are builders in good faith or not considering that it has been
portions thereof within the prescribed five-year period from the date of issuance of the established in the MTC that they knew all along that the subject lot is a titled property. As
patent. It was established in said case that the land subject of the free patent is five (5) to six such, petitioners should vacate and/or demolish the houses and/or cottages they
(6) feet deep under water during high tide and two (2) feet deep at low tide. Such is not the constructed on Lot No. 6278-M as stated in the written report of Geodetic Engineer Jorge S.
situation of the “remaining small dry portion” which plaintiffs seek to recover in the case at Suasin, Sr. Remanding this case to the court of origin would not only unduly prolong the
bar.13chanroblesvirtuallawlibrary resolution of the issues of this case, but would also subject the parties to unnecessary
On 8 January 2002, the RTC rendered its Decision,14cra1aw the dispositive portion of which expenses.19chanroblesvirtuallawlibrary
reads:chanroblesvirtualawlibrary Hence, these consolidated petitions.
WHEREFORE, all told and circumspectly considered, the appealed judgment is hereby The Issue
reversed and set aside insofar as it states that plaintiffs are not entitled to recover possession The primary issue in this case is whether the disputed portion of Lot No. 6278-M is still
of the property in question. private land or has become foreshore land which forms part of the public domain.
Plaintiffs-appellants have the right to recover possession of the remaining small dry portion The Ruling of the Court
of the subject property in question. It is further ordered to remand this case to the court of We find the petitions without merit.
origin for the reception of further evidence to determine who among the defendants- Petitioners contend that the disputed portion of Lot No. 6278-M is already foreshore land. In
appellees are builders or possessors in good faith and who are not and once determined, to fact, most of them allegedly have foreshore lease permits from the Department of
apply accordingly the pertinent laws and jurisprudence on the matter. Environment and Natural Resources (DENR) on the said foreshore land.

51 clioocampo
However, petitioners failed to present evidence to prove their claim that they are holders of
foreshore lease permits from the DENR. Thus, the RTC Order dated 6 May 2002
stated:chanroblesvirtualawlibrary
Defendants-appellees have been harping that they have been granted foreshore leases by
DENR. However, this is merely lip service and not supported at all by concrete evidence. Not
even an iota of evidence was submitted to the lower court to show that defendants-
appellees herein have been granted foreshore leases.20chanroblesvirtuallawlibrary
Although the MTC concluded that the subject land is foreshore land, we find such conclusion
contrary to the evidence on record.
It is undisputed that the subject land is part of Lot No. 6278-M, which is covered by TCT No.
T-11397, registered in the name of respondents' parents, Kwan Chin and Zosimo Sarana. In
fact, as found by the Court of Appeals, even the Provincial Environment and Natural
Resources Officer (PENRO) declared in May 1996 that Lot No. 6278-M is a private property
covered by a Torrens Title and that petitioners should vacate the disputed property or make
other arrangements with respondents.21chanroblesvirtuallawlibrary
Furthermore, from the report of Engr. Suasin, the geodetic engineer designated by the court
and the parties as joint commissioner to conduct the survey, it can be clearly gleaned that
the contested land is the small portion of dry land of Lot No. 6278-M. Even in his testimony,
Engr. Suasin was adamant in stating that the remaining portion of Lot No. 6278-M is not
foreshore because “it is already dry land” and is “away from the shoreline.”22cra1aw Because
of this apparent contradiction between the evidence and the conclusion of the MTC, the RTC
conducted ocular inspection twice, during low tide and high tide, and observed that the
disputed portion of Lot No. 6278-M actually remained dry land even during high tide. Thus,
the RTC concluded that the said land is not foreshore land. On appeal, the Court of Appeals
adopted the findings and conclusion of the RTC that the disputed land is not foreshore land
and that it remains as private land owned by respondents.
We are in accord with the conclusion of the Court of Appeals and the RTC that the disputed
land is not foreshore land. To qualify as foreshore land, it must be shown that the land lies
between the high and low water marks and is alternately wet and dry according to the flow
of the tide.23cra1aw The land's proximity to the waters alone does not automatically make it
a foreshore land.24chanroblesvirtuallawlibrary
Thus, in Republic of the Philippines v. Lensico,25cra1aw the Court held that although the two
corners of the subject lot adjoins the sea, the lot cannot be considered as foreshore land
since it has not been proven that the lot was covered by water during high tide.
Similarly in this case, it was clearly proven that the disputed land remained dry even during
high tide. Indeed, all the evidence supports the conclusion that the disputed portion of Lot
No. 6278-M is not foreshore land but remains private land owned by respondents.
WHEREFORE, we DENY the petitions. We AFFIRM the 4 April 2006 Decision and the 31
October 2006 Resolution of the Court of Appeals in CA-G.R. SP Nos. 71237 and 71437.
SO ORDERED

52 clioocampo
14. MLA. INTERNATIONAL AIRPORT AUTHORITY vs. CA 1992-1997 RPT was paid on Dec. 24, 1997 as per O.R.#9476102 for P4,207,028.75
G.R. No. 155650 July 20, 2006 #9476101 for P28,676,480.00
MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner, #9476103 for P49,115.006
vs. On 17 July 2001, the City of Parañaque, through its City Treasurer, issued notices of levy and
COURT OF APPEALS, CITY OF PARAÑAQUE, CITY MAYOR OF PARAÑAQUE, SANGGUNIANG warrants of levy on the Airport Lands and Buildings. The Mayor of the City of Parañaque
PANGLUNGSOD NG PARAÑAQUE, CITY ASSESSOR OF PARAÑAQUE, and CITY TREASURER OF threatened to sell at public auction the Airport Lands and Buildings should MIAA fail to pay
PARAÑAQUE, respondents. the real estate tax delinquency. MIAA thus sought a clarification of OGCC Opinion No. 061.
DECISION On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC Opinion No. 061. The
CARPIO, J.: OGCC pointed out that Section 206 of the Local Government Code requires persons exempt
The Antecedents from real estate tax to show proof of exemption. The OGCC opined that Section 21 of the
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino MIAA Charter is the proof that MIAA is exempt from real estate tax.
International Airport (NAIA) Complex in Parañaque City under Executive Order No. 903, On 1 October 2001, MIAA filed with the Court of Appeals an original petition for prohibition
otherwise known as the Revised Charter of the Manila International Airport Authority ("MIAA and injunction, with prayer for preliminary injunction or temporary restraining order. The
Charter"). Executive Order No. 903 was issued on 21 July 1983 by then President Ferdinand E. petition sought to restrain the City of Parañaque from imposing real estate tax on, levying
Marcos. Subsequently, Executive Order Nos. 9091 and 2982 amended the MIAA Charter. against, and auctioning for public sale the Airport Lands and Buildings. The petition was
As operator of the international airport, MIAA administers the land, improvements and docketed as CA-G.R. SP No. 66878.
equipment within the NAIA Complex. The MIAA Charter transferred to MIAA approximately On 5 October 2001, the Court of Appeals dismissed the petition because MIAA filed it beyond
600 hectares of land,3 including the runways and buildings ("Airport Lands and Buildings") the 60-day reglementary period. The Court of Appeals also denied on 27 September 2002
then under the Bureau of Air Transportation.4 The MIAA Charter further provides that no MIAA's motion for reconsideration and supplemental motion for reconsideration. Hence,
portion of the land transferred to MIAA shall be disposed of through sale or any other mode MIAA filed on 5 December 2002 the present petition for review.7
unless specifically approved by the President of the Philippines. 5 Meanwhile, in January 2003, the City of Parañaque posted notices of auction sale at the
On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion Barangay Halls of Barangays Vitalez, Sto. Niño, and Tambo, Parañaque City; in the public
No. 061. The OGCC opined that the Local Government Code of 1991 withdrew the exemption market of Barangay La Huerta; and in the main lobby of the Parañaque City Hall. The City of
from real estate tax granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA Parañaque published the notices in the 3 and 10 January 2003 issues of the Philippine Daily
negotiated with respondent City of Parañaque to pay the real estate tax imposed by the City. Inquirer, a newspaper of general circulation in the Philippines. The notices announced the
MIAA then paid some of the real estate tax already due. public auction sale of the Airport Lands and Buildings to the highest bidder on 7 February
On 28 June 2001, MIAA received Final Notices of Real Estate Tax Delinquency from the City of 2003, 10:00 a.m., at the Legislative Session Hall Building of Parañaque City.
Parañaque for the taxable years 1992 to 2001. MIAA's real estate tax delinquency is broken A day before the public auction, or on 6 February 2003, at 5:10 p.m., MIAA filed before this
down as follows: Court an Urgent Ex-Parte and Reiteratory Motion for the Issuance of a Temporary Restraining
TAX DECLARATION TAXABLE YEAR TAX DUE PENALTY Order.
TOTALThe motion sought to restrain respondents — the City of Parañaque, City Mayor of
Parañaque, Sangguniang Panglungsod ng Parañaque, City Treasurer of Parañaque, and the
E-016-01370 1992-2001 19,558,160.00 11,201,083.20 30,789,243.20
City Assessor of Parañaque ("respondents") — from auctioning the Airport Lands and
E-016-01374 1992-2001 111,689,424.90 68,149,479.59 Buildings.
179,838,904.49
On 7 February 2003, this Court issued a temporary restraining order (TRO) effective
E-016-01375 1992-2001 20,276,058.00 12,371,832.00 32,647,890.00
immediately. The Court ordered respondents to cease and desist from selling at public
E-016-01376 1992-2001 58,144,028.00 35,477,712.00 auction the Airport Lands and Buildings. Respondents received the TRO on the same day that
93,621,740.00
the Court issued it. However, respondents received the TRO only at 1:25 p.m. or three hours
E-016-01377 1992-2001 18,134,614.65 11,065,188.59 29,199,803.24
after the conclusion of the public auction.
E-016-01378 1992-2001 111,107,950.40 67,794,681.59 On 10 February 2003, this Court issued a Resolution confirming nunc pro tunc the TRO.
178,902,631.99
On 29 March 2005, the Court heard the parties in oral arguments. In compliance with the
E-016-01379 1992-2001 4,322,340.00 2,637,360.00 6,959,700.00
directive issued during the hearing, MIAA, respondent City of Parañaque, and the Solicitor
E-016-01380 1992-2001 7,776,436.00 4,744,944.00 General subsequently submitted their respective Memoranda.
12,521,380.00
MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in
*E-016-013-85 1998-2001 6,444,810.00 2,900,164.50 9,344,974.50
the name of MIAA. However, MIAA points out that it cannot claim ownership over these
*E-016-01387 1998-2001 34,876,800.00 5,694,560.00 50,571,360.00
properties since the real owner of the Airport Lands and Buildings is the Republic of the
*E-016-01396 1998-2001 75,240.00 33,858.00 Philippines.
109,098.00The MIAA Charter mandates MIAA to devote the Airport Lands and Buildings for
the benefit of the general public. Since the Airport Lands and Buildings are devoted to public
GRAND TOTAL P392,435,861.95 P232,070,863.47 P 624,506,725.42
use and public service, the ownership of these properties remains with the State. The Airport

53 clioocampo
Lands and Buildings are thus inalienable and are not subject to real estate tax by local case of stock corporations, to the extent of at least fifty-one (51) percent of its
governments. capital stock: x x x. (Emphasis supplied)
MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from the A government-owned or controlled corporation must be "organized as a stock or non-stock
payment of real estate tax. MIAA insists that it is also exempt from real estate tax under corporation." MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock
Section 234 of the Local Government Code because the Airport Lands and Buildings are corporation because it has no capital stock divided into shares. MIAA has no stockholders or
owned by the Republic. To justify the exemption, MIAA invokes the principle that the voting shares. Section 10 of the MIAA Charter9 provides:
government cannot tax itself. MIAA points out that the reason for tax exemption of public SECTION 10. Capital. — The capital of the Authority to be contributed by the
property is that its taxation would not inure to any public advantage, since in such a case the National Government shall be increased from Two and One-half Billion
tax debtor is also the tax creditor. (P2,500,000,000.00) Pesos to Ten Billion (P10,000,000,000.00) Pesos to consist of:
Respondents invoke Section 193 of the Local Government Code, which expressly (a) The value of fixed assets including airport facilities, runways and equipment and
withdrew the tax exemption privileges of "government-owned and-controlled corporations" such other properties, movable and immovable[,] which may be contributed by the
upon the effectivity of the Local Government Code. Respondents also argue that a basic rule National Government or transferred by it from any of its agencies, the valuation of
of statutory construction is that the express mention of one person, thing, or act excludes all which shall be determined jointly with the Department of Budget and Management
others. An international airport is not among the exceptions mentioned in Section 193 of the and the Commission on Audit on the date of such contribution or transfer after
Local Government Code. Thus, respondents assert that MIAA cannot claim that the Airport making due allowances for depreciation and other deductions taking into account
Lands and Buildings are exempt from real estate tax. the loans and other liabilities of the Authority at the time of the takeover of the
Respondents also cite the ruling of this Court in Mactan International Airport v. assets and other properties;
Marcos8 where we held that the Local Government Code has withdrawn the exemption from (b) That the amount of P605 million as of December 31, 1986 representing about
real estate tax granted to international airports. Respondents further argue that since MIAA seventy percentum (70%) of the unremitted share of the National Government
has already paid some of the real estate tax assessments, it is now estopped from claiming from 1983 to 1986 to be remitted to the National Treasury as provided for in
that the Airport Lands and Buildings are exempt from real estate tax. Section 11 of E. O. No. 903 as amended, shall be converted into the equity of the
The Issue National Government in the Authority. Thereafter, the Government contribution to
This petition raises the threshold issue of whether the Airport Lands and Buildings of MIAA the capital of the Authority shall be provided in the General Appropriations Act.
are exempt from real estate tax under existing laws. If so exempt, then the real estate tax Clearly, under its Charter, MIAA does not have capital stock that is divided into shares.
assessments issued by the City of Parañaque, and all proceedings taken pursuant to such Section 3 of the Corporation Code10 defines a stock corporation as one whose "capital stock
assessments, are void. In such event, the other issues raised in this petition become moot. is divided into shares and x x x authorized to distribute to the holders of such shares
The Court's Ruling dividends x x x." MIAA has capital but it is not divided into shares of stock. MIAA has no
We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by stockholders or voting shares. Hence, MIAA is not a stock corporation.
local governments. MIAA is also not a non-stock corporation because it has no members. Section 87 of the
First, MIAA is not a government-owned or controlled corporation but an instrumentality of Corporation Code defines a non-stock corporation as "one where no part of its income is
the National Government and thus exempt from local taxation. Second, the real properties of distributable as dividends to its members, trustees or officers." A non-stock corporation must
MIAA are owned by the Republic of the Philippines and thus exempt from real estate tax. have members. Even if we assume that the Government is considered as the sole member of
1. MIAA is Not a Government-Owned or Controlled Corporation MIAA, this will not make MIAA a non-stock corporation. Non-stock corporations cannot
Respondents argue that MIAA, being a government-owned or controlled corporation, is not distribute any part of their income to their members. Section 11 of the MIAA Charter
exempt from real estate tax. Respondents claim that the deletion of the phrase "any mandates MIAA to remit 20% of its annual gross operating income to the National
government-owned or controlled so exempt by its charter" in Section 234(e) of the Local Treasury.11 This prevents MIAA from qualifying as a non-stock corporation.
Government Code withdrew the real estate tax exemption of government-owned or Section 88 of the Corporation Code provides that non-stock corporations are "organized for
controlled corporations. The deleted phrase appeared in Section 40(a) of the 1974 Real charitable, religious, educational, professional, cultural, recreational, fraternal, literary,
Property Tax Code enumerating the entities exempt from real estate tax. scientific, social, civil service, or similar purposes, like trade, industry, agriculture and like
There is no dispute that a government-owned or controlled corporation is not exempt from chambers." MIAA is not organized for any of these purposes. MIAA, a public utility, is
real estate tax. However, MIAA is not a government-owned or controlled corporation. organized to operate an international and domestic airport for public use.
Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines a Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a
government-owned or controlled corporation as follows: government-owned or controlled corporation. What then is the legal status of MIAA within
SEC. 2. General Terms Defined. – x x x x the National Government?
(13) Government-owned or controlled corporation refers to any agency organized MIAA is a government instrumentality vested with corporate powers to perform efficiently
as a stock or non-stock corporation, vested with functions relating to public needs its governmental functions. MIAA is like any other government instrumentality, the only
whether governmental or proprietary in nature, and owned by the Government difference is that MIAA is vested with corporate powers. Section 2(10) of the Introductory
directly or through its instrumentalities either wholly, or, where applicable as in the Provisions of the Administrative Code defines a government "instrumentality" as follows:

54 clioocampo
 SEC. 2. General Terms Defined. –– x x x x Another rule is that a tax exemption is strictly construed against the taxpayer claiming the
(10) Instrumentality refers to any agency of the National Government, not exemption. However, when Congress grants an exemption to a national government
integrated within the department framework, vested with special functions or instrumentality from local taxation, such exemption is construed liberally in favor of the
jurisdiction by law, endowed with some if not all corporate powers, administering national government instrumentality. As this Court declared in Maceda v. Macaraig, Jr.:
special funds, and enjoying operational autonomy, usually through a charter. x x x The reason for the rule does not apply in the case of exemptions running to the
(Emphasis supplied) benefit of the government itself or its agencies. In such case the practical effect of
When the law vests in a government instrumentality corporate powers, the instrumentality an exemption is merely to reduce the amount of money that has to be handled by
does not become a corporation. Unless the government instrumentality is organized as a government in the course of its operations. For these reasons, provisions granting
stock or non-stock corporation, it remains a government instrumentality exercising not only exemptions to government agencies may be construed liberally, in favor of non tax-
governmental but also corporate powers. Thus, MIAA exercises the governmental powers of liability of such agencies.19
eminent domain,12 police authority13 and the levying of fees and charges.14 At the same time, There is, moreover, no point in national and local governments taxing each other, unless a
MIAA exercises "all the powers of a corporation under the Corporation Law, insofar as these sound and compelling policy requires such transfer of public funds from one government
powers are not inconsistent with the provisions of this Executive Order."15 pocket to another.
Likewise, when the law makes a government instrumentality operationally autonomous, the There is also no reason for local governments to tax national government instrumentalities
instrumentality remains part of the National Government machinery although not integrated for rendering essential public services to inhabitants of local governments. The only
with the department framework. The MIAA Charter expressly states that transforming MIAA exception is when the legislature clearly intended to tax government instrumentalities for
into a "separate and autonomous body"16 will make its operation more "financially viable."17 the delivery of essential public services for sound and compelling policy considerations.
Many government instrumentalities are vested with corporate powers but they do not There must be express language in the law empowering local governments to tax national
become stock or non-stock corporations, which is a necessary condition before an agency or government instrumentalities. Any doubt whether such power exists is resolved against local
instrumentality is deemed a government-owned or controlled corporation. Examples are the governments.
Mactan International Airport Authority, the Philippine Ports Authority, the University of the Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in
Philippines and Bangko Sentral ng Pilipinas. All these government instrumentalities exercise the Code, local governments cannot tax national government instrumentalities. As this Court
corporate powers but they are not organized as stock or non-stock corporations as required held in Basco v. Philippine Amusements and Gaming Corporation:
by Section 2(13) of the Introductory Provisions of the Administrative Code. These The states have no power by taxation or otherwise, to retard, impede,
government instrumentalities are sometimes loosely called government corporate entities. burden or in any manner control the operation of constitutional laws
However, they are not government-owned or controlled corporations in the strict sense as enacted by Congress to carry into execution the powers vested in the
understood under the Administrative Code, which is the governing law defining the legal federal government. (MC Culloch v. Maryland, 4 Wheat 316, 4 L Ed. 579)
relationship and status of government entities. This doctrine emanates from the "supremacy" of the National Government over
A government instrumentality like MIAA falls under Section 133(o) of the Local Government local governments.
Code, which states: "Justice Holmes, speaking for the Supreme Court, made reference to the
SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. entire absence of power on the part of the States to touch, in that way
– Unless otherwise provided herein, the exercise of the taxing powers of (taxation) at least, the instrumentalities of the United States (Johnson v.
provinces, cities, municipalities, and barangays shall not extend to the levy of the Maryland, 254 US 51) and it can be agreed that no state or political
following: subdivision can regulate a federal instrumentality in such a way as to
xxxx prevent it from consummating its federal responsibilities, or even to
(o) Taxes, fees or charges of any kind on the National Government, its agencies seriously burden it in the accomplishment of them." (Antieau, Modern
and instrumentalitiesand local government units.(Emphasis and underscoring Constitutional Law, Vol. 2, p. 140, emphasis supplied)
supplied) Otherwise, mere creatures of the State can defeat National policies thru
Section 133(o) recognizes the basic principle that local governments cannot tax the national extermination of what local authorities may perceive to be undesirable activities or
government, which historically merely delegated to local governments the power to tax. enterprise using the power to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US
While the 1987 Constitution now includes taxation as one of the powers of local 42).
governments, local governments may only exercise such power "subject to such guidelines The power to tax which was called by Justice Marshall as the "power to destroy"
and limitations as the Congress may provide."18 (Mc Culloch v. Maryland, supra) cannot be allowed to defeat an instrumentality or
When local governments invoke the power to tax on national government instrumentalities, creation of the very entity which has the inherent power to wield it. 20
such power is construed strictly against local governments. The rule is that a tax is never 2. Airport Lands and Buildings of MIAA are Owned by the Republic
presumed and there must be clear language in the law imposing the tax. Any doubt whether a. Airport Lands and Buildings are of Public Dominion
a person, article or activity is taxable is resolved against taxation. This rule applies with The Airport Lands and Buildings of MIAA are property of public dominion and therefore
greater force when local governments seek to tax national government instrumentalities. owned by the State or the Republic of the Philippines. The Civil Code provides:

55 clioocampo
 ARTICLE 419. Property is either of public dominion or of private ownership. outside the commerce of man. The Court has ruled repeatedly that properties of public
ARTICLE 420. The following things are property of public dominion: dominion are outside the commerce of man. As early as 1915, this Court already ruled
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and in Municipality of Cavite v. Rojas that properties devoted to public use are outside the
bridges constructed by the State, banks, shores, roadsteads, and others of similar commerce of man, thus:
character; According to article 344 of the Civil Code: "Property for public use in provinces and
(2) Those which belong to the State, without being for public use, and are intended in towns comprises the provincial and town roads, the squares, streets, fountains,
for some public service or for the development of the national wealth. (Emphasis and public waters, the promenades, and public works of general service supported
supplied) by said towns or provinces."
ARTICLE 421. All other property of the State, which is not of the character stated in The said Plaza Soledad being a promenade for public use, the municipal council of
the preceding article, is patrimonial property. Cavite could not in 1907 withdraw or exclude from public use a portion thereof in
ARTICLE 422. Property of public dominion, when no longer intended for public use order to lease it for the sole benefit of the defendant Hilaria Rojas. In leasing a
or for public service, shall form part of the patrimonial property of the State. portion of said plaza or public place to the defendant for private use the plaintiff
No one can dispute that properties of public dominion mentioned in Article 420 of the Civil municipality exceeded its authority in the exercise of its powers by executing a
Code, like "roads, canals, rivers, torrents, ports and bridges constructed by the State," are contract over a thing of which it could not dispose, nor is it empowered so to do.
owned by the State. The term "ports" includes seaports and airports. The MIAA Airport The Civil Code, article 1271, prescribes that everything which is not outside the
Lands and Buildings constitute a "port" constructed by the State. Under Article 420 of the commerce of man may be the object of a contract, and plazas and streets
Civil Code, the MIAA Airport Lands and Buildings are properties of public dominion and thus are outside of this commerce, as was decided by the supreme court of Spain in its
owned by the State or the Republic of the Philippines. decision of February 12, 1895, which says: "Communal things that cannot be sold
The Airport Lands and Buildings are devoted to public use because they are used by the because they are by their very nature outside of commerce are those for public
public for international and domestic travel and transportation. The fact that the MIAA use, such as the plazas, streets, common lands, rivers, fountains, etc." (Emphasis
collects terminal fees and other charges from the public does not remove the character of supplied) 23
the Airport Lands and Buildings as properties for public use. The operation by the Again in Espiritu v. Municipal Council, the Court declared that properties of public dominion
government of a tollway does not change the character of the road as one for public use. are outside the commerce of man:
Someone must pay for the maintenance of the road, either the public indirectly through the xxx Town plazas are properties of public dominion, to be devoted to public use and
taxes they pay the government, or only those among the public who actually use the road to be made available to the public in general. They are outside the commerce of
through the toll fees they pay upon using the road. The tollway system is even a more man and cannot be disposed of or even leased by the municipality to private
efficient and equitable manner of taxing the public for the maintenance of public roads. parties. While in case of war or during an emergency, town plazas may be occupied
The charging of fees to the public does not determine the character of the property whether temporarily by private individuals, as was done and as was tolerated by the
it is of public dominion or not. Article 420 of the Civil Code defines property of public Municipality of Pozorrubio, when the emergency has ceased, said temporary
dominion as one "intended for public use." Even if the government collects toll fees, the road occupation or use must also cease, and the town officials should see to it that the
is still "intended for public use" if anyone can use the road under the same terms and town plazas should ever be kept open to the public and free from encumbrances or
conditions as the rest of the public. The charging of fees, the limitation on the kind of illegal private constructions.24 (Emphasis supplied)
vehicles that can use the road, the speed restrictions and other conditions for the use of the The Court has also ruled that property of public dominion, being outside the commerce of
road do not affect the public character of the road. man, cannot be the subject of an auction sale.25
The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to Properties of public dominion, being for public use, are not subject to levy, encumbrance or
airlines, constitute the bulk of the income that maintains the operations of MIAA. The disposition through public or private sale. Any encumbrance, levy on execution or auction
collection of such fees does not change the character of MIAA as an airport for public use. sale of any property of public dominion is void for being contrary to public policy. Essential
Such fees are often termed user's tax. This means taxing those among the public who actually public services will stop if properties of public dominion are subject to encumbrances,
use a public facility instead of taxing all the public including those who never use the foreclosures and auction sale. This will happen if the City of Parañaque can foreclose and
particular public facility. A user's tax is more equitable — a principle of taxation mandated in compel the auction sale of the 600-hectare runway of the MIAA for non-payment of real
the 1987 Constitution.21 estate tax.
The Airport Lands and Buildings of MIAA, which its Charter calls the "principal airport of the Before MIAA can encumber26 the Airport Lands and Buildings, the President must
Philippines for both international and domestic air traffic,"22 are properties of public first withdraw from public usethe Airport Lands and Buildings. Sections 83 and 88 of the
dominion because they are intended for public use. As properties of public dominion, they Public Land Law or Commonwealth Act No. 141, which "remains to this day the existing
indisputably belong to the State or the Republic of the Philippines. general law governing the classification and disposition of lands of the public domain other
b. Airport Lands and Buildings are Outside the Commerce of Man than timber and mineral lands,"27 provide:
The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of SECTION 83. Upon the recommendation of the Secretary of Agriculture and Natural
public dominion. As properties of public dominion, the Airport Lands and Buildings are Resources, the President may designate by proclamation any tract or tracts of land

56 clioocampo
 of the public domain as reservations for the use of the Republic of the Philippines The MIAA Charter, which is a law, transferred to MIAA the title to the Airport Lands and
or of any of its branches, or of the inhabitants thereof, in accordance with Buildings from the Bureau of Air Transportation of the Department of Transportation and
regulations prescribed for this purposes, or for quasi-public uses or purposes when Communications. The MIAA Charter provides:
the public interest requires it, including reservations for highways, rights of way for SECTION 3. Creation of the Manila International Airport Authority. — x x x x
railroads, hydraulic power sites, irrigation systems, communal pastures or lequas The land where the Airport is presently located as well as the surrounding land
communales, public parks, public quarries, public fishponds, working men's village area of approximately six hundred hectares, are hereby transferred, conveyed
and other improvements for the public benefit. and assigned to the ownership and administration of the Authority, subject to
SECTION 88. The tract or tracts of land reserved under the provisions of Section existing rights, if any. The Bureau of Lands and other appropriate government
eighty-three shall be non-alienable and shall not be subject to occupation, entry, agencies shall undertake an actual survey of the area transferred within one year
sale, lease, or other disposition until again declared alienable under the from the promulgation of this Executive Order and the corresponding title to be
provisions of this Act or by proclamation of the President. (Emphasis and issued in the name of the Authority. Any portion thereof shall not be disposed
underscoring supplied) through sale or through any other mode unless specifically approved by the
Thus, unless the President issues a proclamation withdrawing the Airport Lands and Buildings President of the Philippines. (Emphasis supplied)
from public use, these properties remain properties of public dominion and are inalienable. SECTION 22. Transfer of Existing Facilities and Intangible Assets. — All
Since the Airport Lands and Buildings are inalienable in their present status as properties of existing public airport facilities, runways, lands, buildings and other property,
public dominion, they are not subject to levy on execution or foreclosure sale. As long as the movable or immovable, belonging to the Airport, and all assets, powers, rights,
Airport Lands and Buildings are reserved for public use, their ownership remains with the interests and privileges belonging to the Bureau of Air Transportation relating to
State or the Republic of the Philippines. airport works or air operations, including all equipment which are necessary for the
The authority of the President to reserve lands of the public domain for public use, and to operation of crash fire and rescue facilities, are hereby transferred to the Authority.
withdraw such public use, is reiterated in Section 14, Chapter 4, Title I, Book III of the (Emphasis supplied)
Administrative Code of 1987, which states: SECTION 25. Abolition of the Manila International Airport as a Division in the
SEC. 14. Power to Reserve Lands of the Public and Private Domain of the Bureau of Air Transportation and Transitory Provisions. — The Manila International
Government. — (1) The President shall have the power to reserve for settlement Airport including the Manila Domestic Airport as a division under the Bureau of Air
or public use, and for specific public purposes, any of the lands of the public Transportation is hereby abolished.
domain, the use of which is not otherwise directed by law. The reserved land x x x x.
shall thereafter remain subject to the specific public purpose indicated until The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the Republic
otherwise provided by law or proclamation; receiving cash, promissory notes or even stock since MIAA is not a stock corporation.
x x x x. (Emphasis supplied) The whereas clauses of the MIAA Charter explain the rationale for the transfer of the Airport
There is no question, therefore, that unless the Airport Lands and Buildings are withdrawn by Lands and Buildings to MIAA, thus:
law or presidential proclamation from public use, they are properties of public dominion, WHEREAS, the Manila International Airport as the principal airport of the
owned by the Republic and outside the commerce of man. Philippines for both international and domestic air traffic, is required to provide
c. MIAA is a Mere Trustee of the Republic standards of airport accommodation and service comparable with the best airports
MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. in the world;
Section 48, Chapter 12, Book I of the Administrative Code allows instrumentalities like WHEREAS, domestic and other terminals, general aviation and other facilities, have
MIAA to hold title to real properties owned by the Republic, thus: to be upgraded to meet the current and future air traffic and other demands of
SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of aviation in Metro Manila;
the Government is authorized by law to be conveyed, the deed of conveyance shall WHEREAS, a management and organization study has indicated that the objectives
be executed in behalf of the government by the following: of providing high standards of accommodation and service within the context of a
(1) For property belonging to and titled in the name of the Republic of the financially viable operation, will best be achieved by a separate and autonomous
Philippines, by the President, unless the authority therefor is expressly vested by body; and
law in another officer. WHEREAS, under Presidential Decree No. 1416, as amended by Presidential Decree
(2) For property belonging to the Republic of the Philippines but titled in the No. 1772, the President of the Philippines is given continuing authority to
name of any political subdivision or of any corporate agency or instrumentality, reorganize the National Government, which authority includes the creation of
by the executive head of the agency or instrumentality. (Emphasis supplied) new entities, agencies and instrumentalities of the Government[.] (Emphasis
In MIAA's case, its status as a mere trustee of the Airport Lands and Buildings is clearer supplied)
because even its executive head cannot sign the deed of conveyance on behalf of the The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to
Republic. Only the President of the Republic can sign such deed of conveyance.28 MIAA was not meant to transfer beneficial ownership of these assets from the Republic to
d. Transfer to MIAA was Meant to Implement a Reorganization MIAA. The purpose was merely to reorganize a division in the Bureau of Air Transportation

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into a separate and autonomous body. The Republic remains the beneficial owner of the Accordingly, we hold that the portions of the land leased to private entities as well
Airport Lands and Buildings. MIAA itself is owned solely by the Republic. No party claims any as those parts of the hospital leased to private individuals are not exempt from
ownership rights over MIAA's assets adverse to the Republic. such taxes. On the other hand, the portions of the land occupied by the hospital
The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be and portions of the hospital used for its patients, whether paying or non-paying,
disposed through sale or through any other mode unless specifically approved by the are exempt from real property taxes.29
President of the Philippines." This only means that the Republic retained the beneficial 3. Refutation of Arguments of Minority
ownership of the Airport Lands and Buildings because under Article 428 of the Civil Code, The minority asserts that the MIAA is not exempt from real estate tax because Section 193 of
only the "owner has the right to x x x dispose of a thing." Since MIAA cannot dispose of the the Local Government Code of 1991 withdrew the tax exemption of "all persons, whether
Airport Lands and Buildings, MIAA does not own the Airport Lands and Buildings. natural or juridical" upon the effectivity of the Code. Section 193 provides:
At any time, the President can transfer back to the Republic title to the Airport Lands and SEC. 193. Withdrawal of Tax Exemption Privileges – Unless otherwise provided in
Buildings without the Republic paying MIAA any consideration. Under Section 3 of the MIAA this Code, tax exemptions or incentives granted to, or presently enjoyed by all
Charter, the President is the only one who can authorize the sale or disposition of the Airport persons, whether natural or juridical, including government-owned or controlled
Lands and Buildings. This only confirms that the Airport Lands and Buildings belong to the corporations, except local water districts, cooperatives duly registered under R.A.
Republic. No. 6938, non-stock and non-profit hospitals and educational institutions are
e. Real Property Owned by the Republic is Not Taxable hereby withdrawn upon effectivity of this Code. (Emphasis supplied)
Section 234(a) of the Local Government Code exempts from real estate tax any "[r]eal The minority states that MIAA is indisputably a juridical person. The minority argues that
property owned by the Republic of the Philippines." Section 234(a) provides: since the Local Government Code withdrew the tax exemption of all juridical persons, then
SEC. 234. Exemptions from Real Property Tax. — The following are exempted from MIAA is not exempt from real estate tax. Thus, the minority declares:
payment of the real property tax: It is evident from the quoted provisions of the Local Government Code that the
(a) Real property owned by the Republic of the Philippines or any of its political withdrawn exemptions from realty tax cover not just GOCCs, but all persons. To
subdivisions except when the beneficial use thereof has been granted, for repeat, the provisions lay down the explicit proposition that the withdrawal of
consideration or otherwise, to a taxable person; realty tax exemption applies to all persons. The reference to or the inclusion of
x x x. (Emphasis supplied) GOCCs is only clarificatory or illustrative of the explicit provision.
This exemption should be read in relation with Section 133(o) of the same Code, which The term "All persons" encompasses the two classes of persons recognized under
prohibits local governments from imposing "[t]axes, fees or charges of any kind on the our laws, natural and juridical persons. Obviously, MIAA is not a natural person.
National Government, its agencies and instrumentalitiesx x x." The real properties owned by Thus, the determinative test is not just whether MIAA is a GOCC, but whether
the Republic are titled either in the name of the Republic itself or in the name of agencies or MIAA is a juridical person at all. (Emphasis and underscoring in the original)
instrumentalities of the National Government. The Administrative Code allows real property The minority posits that the "determinative test" whether MIAA is exempt from local
owned by the Republic to be titled in the name of agencies or instrumentalities of the taxation is its status — whether MIAA is a juridical person or not. The minority also insists
national government. Such real properties remain owned by the Republic and continue to be that "Sections 193 and 234 may be examined in isolation from Section 133(o) to ascertain
exempt from real estate tax. MIAA's claim of exemption."
The Republic may grant the beneficial use of its real property to an agency or instrumentality The argument of the minority is fatally flawed. Section 193 of the Local Government Code
of the national government. This happens when title of the real property is transferred to an expressly withdrew the tax exemption of all juridical persons "[u]nless otherwise provided in
agency or instrumentality even as the Republic remains the owner of the real property. Such this Code." Now, Section 133(o) of the Local Government Code expressly provides
arrangement does not result in the loss of the tax exemption. Section 234(a) of the Local otherwise, specifically prohibiting local governments from imposing any kind of tax on
Government Code states that real property owned by the Republic loses its tax exemption national government instrumentalities. Section 133(o) states:
only if the "beneficial use thereof has been granted, for consideration or otherwise, to SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. –
a taxable person." MIAA, as a government instrumentality, is not a taxable person under Unless otherwise provided herein, the exercise of the taxing powers of provinces,
Section 133(o) of the Local Government Code. Thus, even if we assume that the Republic has cities, municipalities, and barangays shall not extend to the levy of the following:
granted to MIAA the beneficial use of the Airport Lands and Buildings, such fact does not xxxx
make these real properties subject to real estate tax. (o) Taxes, fees or charges of any kinds on the National Government, its agencies
However, portions of the Airport Lands and Buildings that MIAA leases to private entities are and instrumentalities, and local government units. (Emphasis and underscoring
not exempt from real estate tax. For example, the land area occupied by hangars that MIAA supplied)
leases to private corporations is subject to real estate tax. In such a case, MIAA has granted By express mandate of the Local Government Code, local governments cannot impose any
the beneficial use of such land area for a consideration to a taxable person and therefore kind of tax on national government instrumentalities like the MIAA. Local governments are
such land area is subject to real estate tax. In Lung Center of the Philippines v. Quezon City, devoid of power to tax the national government, its agencies and instrumentalities. The
the Court ruled: 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

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clause of Section 133. The saving clause refers to Section 234(a) on the exception to the (a) Real property owned by the Republic of the Philippines or any of its political
exemption from real estate tax of real property owned by the Republic. subdivisions except when the beneficial use thereof has been granted, for
The minority, however, theorizes that unless exempted in Section 193 itself, all juridical consideration or otherwise, to a taxable person.
persons are subject to tax by local governments. The minority insists that the juridical x x x. (Emphasis supplied)
persons exempt from local taxation are limited to the three classes of entities specifically Under Section 234(a), real property owned by the Republic is exempt from real estate tax.
enumerated as exempt in Section 193. Thus, the minority states: The exception to this exemption is when the government gives the beneficial use of the real
x x x Under Section 193, the exemption is limited to (a) local water districts; (b) property to a taxable entity.
cooperatives duly registered under Republic Act No. 6938; and (c) non-stock and The exception to the exemption in Section 234(a) is the only instance when the national
non-profit hospitals and educational institutions. It would be belaboring the government, its agencies and instrumentalities are subject to any kind of tax by local
obvious why the MIAA does not fall within any of the exempt entities under Section governments. The exception to the exemption applies only to real estate tax and not to any
193. (Emphasis supplied) other tax. The justification for the exception to the exemption is that the real property,
The minority's theory directly contradicts and completely negates Section 133(o) of the Local although owned by the Republic, is not devoted to public use or public service but devoted to
Government Code. This theory will result in gross absurdities. It will make the national the private gain of a taxable person.
government, which itself is a juridical person, subject to tax by local governments since the The minority also argues that since Section 133 precedes Section 193 and 234 of the Local
national government is not included in the enumeration of exempt entities in Section 193. Government Code, the later provisions prevail over Section 133. Thus, the minority asserts:
Under this theory, local governments can impose any kind of local tax, and not only real x x x Moreover, sequentially Section 133 antecedes Section 193 and 234. Following
estate tax, on the national government. an accepted rule of construction, in case of conflict the subsequent provisions
Under the minority's theory, many national government instrumentalities with juridical should prevail. Therefore, MIAA, as a juridical person, is subject to real property
personalities will also be subject to any kind of local tax, and not only real estate tax. Some of taxes, the general exemptions attaching to instrumentalities under Section 133(o)
the national government instrumentalities vested by law with juridical personalities are: of the Local Government Code being qualified by Sections 193 and 234 of the same
Bangko Sentral ng Pilipinas,30 Philippine Rice Research Institute,31Laguna Lake law. (Emphasis supplied)
Development Authority,32 Fisheries Development Authority,33 Bases Conversion The minority assumes that there is an irreconcilable conflict between Section 133 on one
Development Authority,34Philippine Ports Authority,35 Cagayan de Oro Port Authority,36 San hand, and Sections 193 and 234 on the other. No one has urged that there is such a conflict,
Fernando Port Authority,37 Cebu Port Authority,38 and Philippine National Railways.39 much less has any one presenteda persuasive argument that there is such a conflict. The
The minority's theory violates Section 133(o) of the Local Government Code which expressly minority's assumption of an irreconcilable conflict in the statutory provisions is an egregious
prohibits local governments from imposing any kind of tax on national government error for two reasons.
instrumentalities. Section 133(o) does not distinguish between national government First, there is no conflict whatsoever between Sections 133 and 193 because Section 193
instrumentalities with or without juridical personalities. Where the law does not distinguish, expressly admits its subordination to other provisions of the Code when Section 193 states
courts should not distinguish. Thus, Section 133(o) applies to all national government "[u]nless otherwise provided in this Code." By its own words, Section 193 admits the
instrumentalities, with or without juridical personalities. The determinative test whether superiority of other provisions of the Local Government Code that limit the exercise of the
MIAA is exempt from local taxation is not whether MIAA is a juridical person, but whether it taxing power in Section 193. When a provision of law grants a power but withholds such
is a national government instrumentality under Section 133(o) of the Local Government power on certain matters, there is no conflict between the grant of power and the
Code. Section 133(o) is the specific provision of law prohibiting local governments from withholding of power. The grantee of the power simply cannot exercise the power on
imposing any kind of tax on the national government, its agencies and instrumentalities. matters withheld from its power.
Section 133 of the Local Government Code starts with the saving clause "[u]nless otherwise Second, Section 133 is entitled "Common Limitations on the Taxing Powers of Local
provided in this Code." This means that unless the Local Government Code grants an express Government Units." Section 133 limits the grant to local governments of the power to tax,
authorization, local governments have no power to tax the national government, its agencies and not merely the exercise of a delegated power to tax. Section 133 states that the taxing
and instrumentalities. Clearly, the rule is local governments have no power to tax the powers of local governments "shall not extend to the levy" of any kind of tax on the national
national government, its agencies and instrumentalities. As an exception to this rule, local government, its agencies and instrumentalities. There is no clearer limitation on the taxing
governments may tax the national government, its agencies and instrumentalities only if the power than this.
Local Government Code expressly so provides. Since Section 133 prescribes the "common limitations" on the taxing powers of local
The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) of governments, Section 133 logically prevails over Section 193 which grants local governments
the Code, which makes the national government subject to real estate tax when it gives the such taxing powers. By their very meaning and purpose, the "common limitations" on the
beneficial use of its real properties to a taxable entity. Section 234(a) of the Local taxing power prevail over the grant or exercise of the taxing power. If the taxing power of
Government Code provides: local governments in Section 193 prevails over the limitations on such taxing power in
SEC. 234. Exemptions from Real Property Tax – The following are exempted from Section 133, then local governments can impose any kind of tax on the national government,
payment of the real property tax: its agencies and instrumentalities — a gross absurdity.

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Local governments have no power to tax the national government, its agencies and the Securities and Exchange Commission. In short, these are GOCCs without
instrumentalities, except as otherwise provided in the Local Government Code pursuant to original charters.
the saving clause in Section 133 stating "[u]nless otherwise provided in this Code." This xxxx
exception — which is an exception to the exemption of the Republic from real estate tax It might as well be worth pointing out that there is no point in requiring a capital
imposed by local governments — refers to Section 234(a) of the Code. The exception to the structure for GOCCs whose full ownership is limited by its charter to the State or
exemption in Section 234(a) subjects real property owned by the Republic, whether titled in Republic. Such GOCCs are not empowered to declare dividends or alienate their
the name of the national government, its agencies or instrumentalities, to real estate tax if capital shares.
the beneficial use of such property is given to a taxable entity. The contention of the minority is seriously flawed. It is not in accord with the Constitution
The minority also claims that the definition in the Administrative Code of the phrase and existing legislations. It will also result in gross absurdities.
"government-owned or controlled corporation" is not controlling. The minority points out First, the Administrative Code definition of the phrase "government-owned or controlled
that Section 2 of the Introductory Provisions of the Administrative Code admits that its corporation" does not distinguish between one incorporated under the Corporation Code or
definitions are not controlling when it provides: under a special charter. Where the law does not distinguish, courts should not distinguish.
SEC. 2. General Terms Defined. — Unless the specific words of the text, or the Second, Congress has created through special charters several government-owned
context as a whole, or a particular statute, shall require a different meaning: corporations organized as stock corporations. Prime examples are the Land Bank of the
xxxx Philippines and the Development Bank of the Philippines. The special charter40 of the Land
The minority then concludes that reliance on the Administrative Code definition is "flawed." Bank of the Philippines provides:
The minority's argument is a non sequitur. True, Section 2 of the Administrative Code SECTION 81. Capital. — The authorized capital stock of the Bank shall be nine billion
recognizes that a statute may require a different meaning than that defined in the pesos, divided into seven hundred and eighty million common shares with a par
Administrative Code. However, this does not automatically mean that the definition in the value of ten pesos each, which shall be fully subscribed by the Government, and
Administrative Code does not apply to the Local Government Code. Section 2 of the one hundred and twenty million preferred shares with a par value of ten pesos
Administrative Code clearly states that "unless the specific words x x x of a particular statute each, which shall be issued in accordance with the provisions of Sections seventy-
shall require a different meaning," the definition in Section 2 of the Administrative Code shall seven and eighty-three of this Code. (Emphasis supplied)
apply. Thus, unless there is specific language in the Local Government Code defining the Likewise, the special charter41 of the Development Bank of the Philippines provides:
phrase "government-owned or controlled corporation" differently from the definition in the SECTION 7. Authorized Capital Stock – Par value. — The capital stock of the Bank
Administrative Code, the definition in the Administrative Code prevails. shall be Five Billion Pesos to be divided into Fifty Million common shares with par
The minority does not point to any provision in the Local Government Code defining the value of P100 per share. These shares are available for subscription by the National
phrase "government-owned or controlled corporation" differently from the definition in the Government. Upon the effectivity of this Charter, the National Government shall
Administrative Code. Indeed, there is none. The Local Government Code is silent on the subscribe to Twenty-Five Million common shares of stock worth Two Billion Five
definition of the phrase "government-owned or controlled corporation." The Administrative Hundred Million which shall be deemed paid for by the Government with the net
Code, however, expressly defines the phrase "government-owned or controlled corporation." asset values of the Bank remaining after the transfer of assets and liabilities as
The inescapable conclusion is that the Administrative Code definition of the phrase provided in Section 30 hereof. (Emphasis supplied)
"government-owned or controlled corporation" applies to the Local Government Code. Other government-owned corporations organized as stock corporations under their special
The third whereas clause of the Administrative Code states that the Code "incorporates in a charters are the Philippine Crop Insurance Corporation,42 Philippine International Trading
unified document the major structural, functional and procedural principles and rules of Corporation,43 and the Philippine National Bank44 before it was reorganized as a stock
governance." Thus, the Administrative Code is the governing law defining the status and corporation under the Corporation Code. All these government-owned corporations
relationship of government departments, bureaus, offices, agencies and instrumentalities. organized under special charters as stock corporations are subject to real estate tax on real
Unless a statute expressly provides for a different status and relationship for a specific properties owned by them. To rule that they are not government-owned or controlled
government unit or entity, the provisions of the Administrative Code prevail. corporations because they are not registered with the Securities and Exchange Commission
The minority also contends that the phrase "government-owned or controlled corporation" would remove them from the reach of Section 234 of the Local Government Code, thus
should apply only to corporations organized under the Corporation Code, the general exempting them from real estate tax.
incorporation law, and not to corporations created by special charters. The minority sees no Third, the government-owned or controlled corporations created through special charters
reason why government corporations with special charters should have a capital stock. Thus, are those that meet the two conditions prescribed in Section 16, Article XII of the
the minority declares: Constitution. The first condition is that the government-owned or controlled corporation
I submit that the definition of "government-owned or controlled corporations" must be established for the common good. The second condition is that the government-
under the Administrative Code refer to those corporations owned by the owned or controlled corporation must meet the test of economic viability. Section 16, Article
government or its instrumentalities which are created not by legislative enactment, XII of the 1987 Constitution provides:
but formed and organized under the Corporation Code through registration with SEC. 16. The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned or

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 controlled corporations may be created or established by special charters in the Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the
interest of the common good and subject to the test of economic viability. "common good," this becomes a restraint on future enthusiasts for state capitalism
(Emphasis and underscoring supplied) to excuse themselves from the responsibility of meeting the market test so that
The Constitution expressly authorizes the legislature to create "government-owned or they become viable. And so, Madam President, I reiterate, for the committee's
controlled corporations" through special charters only if these entities are required to meet consideration and I am glad that I am joined in this proposal by Commissioner Foz,
the twin conditions of common good and economic viability. In other words, Congress has no the insertion of the standard of "ECONOMIC VIABILITY OR THE ECONOMIC TEST,"
power to create government-owned or controlled corporations with special charters unless together with the common good.45
they are made to comply with the two conditions of common good and economic viability. Father Joaquin G. Bernas, a leading member of the Constitutional Commission, explains in his
The test of economic viability applies only to government-owned or controlled corporations textbook The 1987 Constitution of the Republic of the Philippines: A Commentary:
that perform economic or commercial activities and need to compete in the market place. The second sentence was added by the 1986 Constitutional Commission. The
Being essentially economic vehicles of the State for the common good — meaning for significant addition, however, is the phrase "in the interest of the common good
economic development purposes — these government-owned or controlled corporations and subject to the test of economic viability." The addition includes the ideas that
with special charters are usually organized as stock corporations just like ordinary private they must show capacity to function efficiently in business and that they should not
corporations. go into activities which the private sector can do better. Moreover, economic
In contrast, government instrumentalities vested with corporate powers and performing viability is more than financial viability but also includes capability to make profit
governmental or public functions need not meet the test of economic viability. These and generate benefits not quantifiable in financial terms.46(Emphasis supplied)
instrumentalities perform essential public services for the common good, services that every Clearly, the test of economic viability does not apply to government entities vested with
modern State must provide its citizens. These instrumentalities need not be economically corporate powers and performing essential public services. The State is obligated to render
viable since the government may even subsidize their entire operations. These essential public services regardless of the economic viability of providing such service. The
instrumentalities are not the "government-owned or controlled corporations" referred to in non-economic viability of rendering such essential public service does not excuse the State
Section 16, Article XII of the 1987 Constitution. from withholding such essential services from the public.
Thus, the Constitution imposes no limitation when the legislature creates government However, government-owned or controlled corporations with special charters, organized
instrumentalities vested with corporate powers but performing essential governmental or essentially for economic or commercial objectives, must meet the test of economic viability.
public functions. Congress has plenary authority to create government instrumentalities These are the government-owned or controlled corporations that are usually organized
vested with corporate powers provided these instrumentalities perform essential under their special charters as stock corporations, like the Land Bank of the Philippines and
government functions or public services. However, when the legislature creates through the Development Bank of the Philippines. These are the government-owned or controlled
special charters corporations that perform economic or commercial activities, such entities corporations, along with government-owned or controlled corporations organized under the
— known as "government-owned or controlled corporations" — must meet the test of Corporation Code, that fall under the definition of "government-owned or controlled
economic viability because they compete in the market place. corporations" in Section 2(10) of the Administrative Code.
This is the situation of the Land Bank of the Philippines and the Development Bank of the The MIAA need not meet the test of economic viability because the legislature did not create
Philippines and similar government-owned or controlled corporations, which derive their MIAA to compete in the market place. MIAA does not compete in the market place because
income to meet operating expenses solely from commercial transactions in competition with there is no competing international airport operated by the private sector. MIAA performs an
the private sector. The intent of the Constitution is to prevent the creation of government- essential public service as the primary domestic and international airport of the Philippines.
owned or controlled corporations that cannot survive on their own in the market place and The operation of an international airport requires the presence of personnel from the
thus merely drain the public coffers. following government agencies:
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the 1. The Bureau of Immigration and Deportation, to document the arrival and
Constitutional Commission the purpose of this test, as follows: departure of passengers, screening out those without visas or travel documents, or
MR. OPLE: Madam President, the reason for this concern is really that when the those with hold departure orders;
government creates a corporation, there is a sense in which this corporation 2. The Bureau of Customs, to collect import duties or enforce the ban on prohibited
becomes exempt from the test of economic performance. We know what importations;
happened in the past. If a government corporation loses, then it makes its claim 3. The quarantine office of the Department of Health, to enforce health measures
upon the taxpayers' money through new equity infusions from the government and against the spread of infectious diseases into the country;
what is always invoked is the common good. That is the reason why this year, out 4. The Department of Agriculture, to enforce measures against the spread of plant
of a budget of P115 billion for the entire government, about P28 billion of this will and animal diseases into the country;
go into equity infusions to support a few government financial institutions. And this 5. The Aviation Security Command of the Philippine National Police, to prevent the
is all taxpayers' money which could have been relocated to agrarian reform, to entry of terrorists and the escape of criminals, as well as to secure the airport
social services like health and education, to augment the salaries of grossly premises from terrorist attack or seizure;
underpaid public employees. And yet this is all going down the drain.

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 6. The Air Traffic Office of the Department of Transportation and Communications, Art. 420. The following things are property of public dominion:
to authorize aircraft to enter or leave Philippine airspace, as well as to land on, or (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
take off from, the airport; and bridges constructed by the State, banks, shores, roadsteads, and others of similar
7. The MIAA, to provide the proper premises — such as runway and buildings — for character;
the government personnel, passengers, and airlines, and to manage the airport (2) Those which belong to the State, without being for public use, and are intended
operations. for some public service or for the development of the national wealth. (Emphasis
All these agencies of government perform government functions essential to the operation supplied)
of an international airport. The term "ports x x x constructed by the State" includes airports and seaports. The Airport
MIAA performs an essential public service that every modern State must provide its citizens. Lands and Buildings of MIAA are intended for public use, and at the very least intended for
MIAA derives its revenues principally from the mandatory fees and charges MIAA imposes on public service. Whether intended for public use or public service, the Airport Lands and
passengers and airlines. The terminal fees that MIAA charges every passenger are regulatory Buildings are properties of public dominion. As properties of public dominion, the Airport
or administrative fees47 and not income from commercial transactions. Lands and Buildings are owned by the Republic and thus exempt from real estate tax under
MIAA falls under the definition of a government instrumentality under Section 2(10) of the Section 234(a) of the Local Government Code.
Introductory Provisions of the Administrative Code, which provides: 4. Conclusion
SEC. 2. General Terms Defined. – x x x x Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code,
(10) Instrumentality refers to any agency of the National Government, not which governs the legal relation and status of government units, agencies and offices within
integrated within the department framework, vested with special functions or the entire government machinery, MIAA is a government instrumentality and not a
jurisdiction by law, endowed with some if not all corporate powers, administering government-owned or controlled corporation. Under Section 133(o) of the Local Government
special funds, and enjoying operational autonomy, usually through a charter. x x x Code, MIAA as a government instrumentality is not a taxable person because it is not subject
(Emphasis supplied) to "[t]axes, fees or charges of any kind" by local governments. The only exception is when
The fact alone that MIAA is endowed with corporate powers does not make MIAA a MIAA leases its real property to a "taxable person" as provided in Section 234(a) of the Local
government-owned or controlled corporation. Without a change in its capital structure, Government Code, in which case the specific real property leased becomes subject to real
MIAA remains a government instrumentality under Section 2(10) of the Introductory estate tax. Thus, only portions of the Airport Lands and Buildings leased to taxable persons
Provisions of the Administrative Code. More importantly, as long as MIAA renders essential like private parties are subject to real estate tax by the City of Parañaque.
public services, it need not comply with the test of economic viability. Thus, MIAA is outside Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted
the scope of the phrase "government-owned or controlled corporations" under Section 16, to public use, are properties of public dominion and thus owned by the State or the Republic
Article XII of the 1987 Constitution. of the Philippines. Article 420 specifically mentions "ports x x x constructed by the State,"
The minority belittles the use in the Local Government Code of the phrase "government- which includes public airports and seaports, as properties of public dominion and owned by
owned or controlled corporation" as merely "clarificatory or illustrative." This is fatal. The the Republic. As properties of public dominion owned by the Republic, there is no doubt
1987 Constitution prescribes explicit conditions for the creation of "government-owned or whatsoever that the Airport Lands and Buildings are expressly exempt from real estate tax
controlled corporations." The Administrative Code defines what constitutes a "government- under Section 234(a) of the Local Government Code. This Court has also repeatedly ruled
owned or controlled corporation." To belittle this phrase as "clarificatory or illustrative" is that properties of public dominion are not subject to execution or foreclosure sale.
grave error. WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the Court of
To summarize, MIAA is not a government-owned or controlled corporation under Section Appeals of 5 October 2001 and 27 September 2002 in CA-G.R. SP No. 66878.
2(13) of the Introductory Provisions of the Administrative Code because it is not organized as We DECLARE the Airport Lands and Buildings of the Manila International Airport
a stock or non-stock corporation. Neither is MIAA a government-owned or controlled Authority EXEMPT from the real estate tax imposed by the City of Parañaque. We
corporation under Section 16, Article XII of the 1987 Constitution because MIAA is not declare VOID all the real estate tax assessments, including the final notices of real estate tax
required to meet the test of economic viability. MIAA is a government instrumentality vested delinquencies, issued by the City of Parañaque on the Airport Lands and Buildings of the
with corporate powers and performing essential public services pursuant to Section 2(10) of Manila International Airport Authority, except for the portions that the Manila International
the Introductory Provisions of the Administrative Code. As a government instrumentality, Airport Authority has leased to private parties. We also declare VOID the assailed auction
MIAA is not subject to any kind of tax by local governments under Section 133(o) of the Local sale, and all its effects, of the Airport Lands and Buildings of the Manila International Airport
Government Code. The exception to the exemption in Section 234(a) does not apply to MIAA Authority.
because MIAA is not a taxable entity under the Local Government Code. Such exception No costs.
applies only if the beneficial use of real property owned by the Republic is given to a taxable SO ORDERED.
entity. Panganiban, C.J., Puno, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez,
Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and Corona, Carpio Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, Garcia, Velasco, Jr.,
thus are properties of public dominion. Properties of public dominion are owned by the State J.J., concur.
or the Republic. Article 420 of the Civil Code provides:

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 the reach of any form of taxation by LGUs, stating "[l]ocal governments are devoid of power
to tax the national government, its agencies and instrumentalities."8 Unfortunately, using the
definition employed by the majority, as provided by Section 2(d) of the Administrative Code,
x-------------------------------------------------------------------------------x GOCCs are also considered as instrumentalities, thus leading to the astounding conclusion
DISSENTING OPINION that GOCCs may not be taxed by LGUs under the Local Government Code.
TINGA, J. : 3) Lung Center of the Philippines v. Quezon City,9 wherein a unanimous en banc Court held
The legally correct resolution of this petition would have had the added benefit of an utterly that the Lung Center of the Philippines may be liable for real property taxes. Using the
fair and equitable result – a recognition of the constitutional and statutory power of the City majority's reasoning, the Lung Center would be properly classified as an instrumentality
of Parañaque to impose real property taxes on the Manila International Airport Authority which the majority now holds as exempt from all forms of local taxation.10
(MIAA), but at the same time, upholding a statutory limitation that prevents the City of 4) City of Davao v. RTC,11 where the Court held that the Government Service Insurance
Parañaque from seizing and conducting an execution sale over the real properties of MIAA. In System (GSIS) was liable for real property taxes for the years 1992 to 1994, its previous
the end, all that the City of Parañaque would hold over the MIAA is a limited lien, exemption having been withdrawn by the enactment of the Local Government Code.12 This
unenforceable as it is through the sale or disposition of MIAA properties. Not only is this the decision, which expressly relied on Mactan, would be directly though silently overruled by
legal effect of all the relevant constitutional and statutory provisions applied to this case, it the majority.
also leaves the room for negotiation for a mutually acceptable resolution between the City of 5) The common essence of the Court's rulings in the two Philippine Ports Authority v. City of
Parañaque and MIAA. Iloilo,13 cases penned by Justices Callejo and Azcuna respectively, which relied in part on
Instead, with blind but measured rage, the majority today veers wildly off-course, shattering Mactan in holding the Philippine Ports Authority (PPA) liable for realty taxes, notwithstanding
statutes and judicial precedents left and right in order to protect the precious Ming vase that the fact that it is a GOCC. Based on the reasoning of the majority, the PPA cannot be
is the Manila International Airport Authority (MIAA). While the MIAA is left unscathed, it is considered a GOCC. The reliance of these cases on Mactan, and its rationale for holding
surrounded by the wreckage that once was the constitutional policy, duly enacted into law, governmental entities like the PPA liable for local government taxation is mooted by the
that was local autonomy. Make no mistake, the majority has virtually declared war on the majority.
seventy nine (79) provinces, one hundred seventeen (117) cities, and one thousand five 6) The 1963 precedent of Social Security System Employees Association v. Soriano,14 which
hundred (1,500) municipalities of the Philippines.1 declared the Social Security Commission (SSC) as a GOCC performing proprietary functions.
The icing on this inedible cake is the strained and purposely vague rationale used to justify Based on the rationale employed by the majority, the Social Security System is not a GOCC.
the majority opinion. Decisions of the Supreme Court are expected to provide clarity to the Or perhaps more accurately, "no longer" a GOCC.
parties and to students of jurisprudence, as to what the law of the case is, especially when 7) The decision penned by Justice (now Chief Justice) Panganiban, Light Rail Transit Authority
the doctrines of long standing are modified or clarified. With all due respect, the decision in v. Central Board of Assessment.15 The characterization therein of the Light Rail Transit
this case is plainly so, so wrong on many levels. More egregious, in the majority's resolve to Authority (LRTA) as a "service-oriented commercial endeavor" whose patrimonial property is
spare the Manila International Airport Authority (MIAA) from liability for real estate taxes, no subject to local taxation is now rendered inconsequential, owing to the majority's thinking
clear-cut rule emerges on the important question of the power of local government units that an entity such as the LRTA is itself exempt from local government taxation16, irrespective
(LGUs) to tax government corporations, instrumentalities or agencies. of the functions it performs. Moreover, based on the majority's criteria, LRTA is not a GOCC.
The majority would overturn sub silencio, among others, at least one dozen precedents 8) The cases of Teodoro v. National Airports Corporation17 and Civil Aeronautics
enumerated below: Administration v. Court of Appeals.18 wherein the Court held that the predecessor agency of
1) Mactan-Cebu International Airport Authority v. Hon. Marcos,2 the leading case penned in the MIAA, which was similarly engaged in the operation, administration and management of
1997 by recently retired Chief Justice Davide, which held that the express withdrawal by the the Manila International Agency, was engaged in the exercise of proprietary, as opposed to
Local Government Code of previously granted exemptions from realty taxes applied to sovereign functions. The majority would hold otherwise that the property maintained by
instrumentalities and government-owned or controlled corporations (GOCCs) such as the MIAA is actually patrimonial, thus implying that MIAA is actually engaged in sovereign
Mactan-Cebu International Airport Authority (MCIAA). The majority invokes the ruling in functions.
Basco v. Pagcor,3 a precedent discredited in Mactan, and a vanguard of a doctrine so noxious 9) My own majority in Phividec Industrial Authority v. Capitol Steel,19 wherein the Court held
to the concept of local government rule that the Local Government Code was drafted that the Phividec Industrial Authority, a GOCC, was required to secure the services of the
precisely to counter such philosophy. The efficacy of several rulings that expressly rely on Office of the Government Corporate Counsel for legal representation.20 Based on the
Mactan, such as PHILRECA v. DILG Secretary,4 City Government of San Pablo v. Hon. Reyes5 is reasoning of the majority, Phividec would not be a GOCC, and the mandate of the Office of
now put in question. the Government Corporate Counsel extends only to GOCCs.
2) The rulings in National Power Corporation v. City of Cabanatuan,6 wherein the Court, 10) Two decisions promulgated by the Court just last month (June 2006), National Power
through Justice Puno, declared that the National Power Corporation, a GOCC, is liable for Corporation v. Province of Isabela21 and GSIS v. City Assessor of Iloilo City.22 In the former,
franchise taxes under the Local Government Code, and succeeding cases that have relied on the Court pronounced that "[a]lthough as a general rule, LGUs cannot impose taxes, fees, or
it such as Batangas Power Corp. v. Batangas City7 The majority now states that deems charges of any kind on the National Government, its agencies and instrumentalities, this rule
instrumentalities as defined under the Administrative Code of 1987 as purportedly beyond admits of an exception, i.e., when specific provisions of the LGC authorize the LGUs to

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impose taxes, fees or charges on the aforementioned entities." Yet the majority now rules (a) Real property owned by the Republic of the Philippines or any of its political subdivisions
that the exceptions in the LGC no longer hold, since "local governments are devoid of power except when the beneficial use thereof has been granted, for consideration or otherwise, to
to tax the national government, its agencies and instrumentalities."23 The ruling in the latter a taxable person:
case, which held the GSIS as liable for real property taxes, is now put in jeopardy by the (b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,
majority's ruling. non-profit or religious cemeteries and all lands, buildings, and improvements actually,
There are certainly many other precedents affected, perhaps all previous jurisprudence directly, and exclusively used for religious charitable or educational purposes;
regarding local government taxation vis-a-vis government entities, as well as any previous (c) All machineries and equipment that are actually, directly and exclusively used by local
definitions of GOCCs, and previous distinctions between the exercise of governmental and water districts and government-owned and controlled corporations engaged in the
proprietary functions (a distinction laid down by this Court as far back as 191624). What is the distribution of water and/or generation and transmission of electric power;
reason offered by the majority for overturning or modifying all these precedents and (d) All real property owned by duly registered cooperatives as provided for under R.A. No.
doctrines? None is given, for the majority takes comfort instead in the pretense that these 6938; and
precedents never existed. Only children should be permitted to subscribe to the theory that (e) Machinery and equipment used for pollution control and environmental protection.
something bad will go away if you pretend hard enough that it does not exist. Except as provided herein, any exemption from payment of real property tax previously
I. granted to, or presently enjoyed by, all persons, whether natural or juridical, including all
Case Should Have Been Decided government-owned or controlled corporations are hereby withdrawn upon the effectivity of
Following Mactan Precedent this Code.28
The core issue in this case, whether the MIAA is liable to the City of Parañaque for real Clearly, Section 133 was not intended to be so absolute a prohibition on the power of LGUs
property taxes under the Local Government Code, has already been decided by this Court in to tax the National Government, its agencies and instrumentalities, as evidenced by these
the Mactan case, and should have been resolved by simply applying precedent. cited provisions which "otherwise provided." But what was the extent of the limitation under
Mactan Explained Section 133? This is how the Court, correctly to my mind, defined the parameters in Mactan:
A brief recall of the Mactan case is in order. The Mactan-Cebu International Airport Authority The foregoing sections of the LGC speak of: (a) the limitations on the taxing powers of local
(MCIAA) claimed that it was exempt from payment of real property taxes to the City of Cebu, government units and the exceptions to such limitations; and (b) the rule on tax exemptions
invoking the specific exemption granted in Section 14 of its charter, Republic Act No. 6958, and the exceptions thereto. The use of exceptions or provisos in these sections, as shown by
and its status as an instrumentality of the government performing governmental the following clauses:
functions.25 Particularly, MCIAA invoked Section 133 of the Local Government Code, precisely (1) "unless otherwise provided herein" in the opening paragraph of Section 133;
the same provision utilized by the majority as the basis for MIAA's exemption. Section 133 (2) "Unless otherwise provided in this Code" in Section 193;
reads: (3) "not hereafter specifically exempted" in Section 232; and
Sec. 133. Common Limitations on the Taxing Powers of Local Government Units.— Unless (4) "Except as provided herein" in the last paragraph of Section 234
otherwise provided herein, the exercise of the taxing powers of provinces, cities, initially hampers a ready understanding of the sections. Note, too, that the aforementioned
municipalities, and barangays shall not extend to the levy of the following: clause in Section 133 seems to be inaccurately worded. Instead of the clause "unless
xxx otherwise provided herein," with the "herein" to mean, of course, the section, it should have
(o) Taxes, fees or charges of any kind on the National Government, its agencies and used the clause "unless otherwise provided in this Code." The former results in absurdity
instrumentalities and local government units. (emphasis and underscoring supplied). since the section itself enumerates what are beyond the taxing powers of local government
However, the Court in Mactan noted that Section 133 qualified the exemption of the units and, where exceptions were intended, the exceptions are explicitly indicated in the
National Government, its agencies and instrumentalities from local taxation with the phrase next. For instance, in item (a) which excepts income taxes "when levied on banks and other
"unless otherwise provided herein." It then considered the other relevant provisions of the financial institutions"; item (d) which excepts "wharfage on wharves constructed and
Local Government Code, particularly the following: maintained by the local government unit concerned"; and item (1) which excepts taxes, fees
SEC. 193. Withdrawal of Tax Exemption Privileges. – Unless otherwise provided in this Code, and charges for the registration and issuance of licenses or permits for the driving of
tax exemption or incentives granted to, or enjoyed by all persons, whether natural or "tricycles." It may also be observed that within the body itself of the section, there are
juridical, including government-owned and controlled corporations, except local water exceptions which can be found only in other parts of the LGC, but the section
districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit interchangeably uses therein the clause, "except as otherwise provided herein" as in items (c)
hospitals and educational institutions, are hereby withdrawn upon the effectivity of this and (i), or the clause "except as provided in this Code" in item (j). These clauses would be
Code.26 obviously unnecessary or mere surplusages if the opening clause of the section were "Unless
SECTION 232. Power to Levy Real Property Tax. – A province or city or a municipality within otherwise provided in this Code" instead of "Unless otherwise provided herein." In any event,
the Metropolitan Manila area may levy an annual ad valorem tax on real property such as even if the latter is used, since under Section 232 local government units have the power to
land, building, machinery, and other improvements not hereafter specifically exempted. 27 levy real property tax, except those exempted therefrom under Section 234, then Section
SECTION 234. Exemptions from Real Property Tax. -- The following are exempted from 232 must be deemed to qualify Section 133.
payment of the real property tax:

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Thus, reading together Sections 133, 232, and 234 of the LGC, we conclude that as a general All of its shares of stocks are owned by the National Government. In addition to its corporate
rule, as laid down in Section 133, the taxing powers of local government units cannot extend powers (Sec. 3, Title II, PD 1869) it also exercises regulatory powers xxx
to the levy of, inter alia, "taxes, fees and charges of any kind on the National Government, its PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is
agencies and instrumentalities, and local government units"; however, pursuant to Section governmental, which places it in the category of an agency or instrumentality of the
232, provinces, cities, and municipalities in the Metropolitan Manila Area may impose the Government. Being an instrumentality of the Government, PAGCOR should be and actually is
real property tax except on, inter alia, "real property owned by the Republic of the exempt from local taxes. Otherwise, its operation might be burdened, impeded or subjected
Philippines or any of its political subdivisions except when the beneficial use thereof has been to control by a mere Local government.
granted, for consideration or otherwise, to a taxable person," as provided in item (a) of the "The states have no power by taxation or otherwise, to retard impede, burden or in any
first paragraph of Section 234. manner control the operation of constitutional laws enacted by Congress to carry into
As to tax exemptions or incentives granted to or presently enjoyed by natural or judicial execution the powers vested in the federal government." (McCulloch v. Marland, 4 Wheat
persons, including government-owned and controlled corporations, Section 193 of the LGC 316, 4 L Ed. 579)
prescribes the general rule, viz., they are withdrawn upon the effectivity of the LGC, except This doctrine emanates from the "supremacy" of the National Government over local
those granted to local water districts, cooperatives duly registered under R.A. No. 6938, non- governments.
stock and non-profit hospitals and educational institutions, and unless otherwise provided in "Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of
the LGC. The latter proviso could refer to Section 234 which enumerates the properties power on the part of the States to touch, in that way (taxation) at least, the instrumentalities
exempt from real property tax. But the last paragraph of Section 234 further qualifies the of the United States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or
retention of the exemption insofar as real property taxes are concerned by limiting the political subdivision can regulate a federal instrumentality in such a way as to prevent it from
retention only to those enumerated therein; all others not included in the enumeration lost consummating its federal responsibilities, or even to seriously burden it in the
the privilege upon the effectivity of the LGC. Moreover, even as to real property owned by accomplishment of them." (Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis
the Republic of the Philippines or any of its political subdivisions covered by item (a) of the supplied)
first paragraph of Section 234, the exemption is withdrawn if the beneficial use of such Otherwise, mere creatures of the State can defeat National policies thru extermination of
property has been granted to a taxable person for consideration or otherwise. what local authorities may perceive to be undesirable activates or enterprise using the power
Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US 42).
LGC, exemptions from payment of real property taxes granted to natural or juridical persons, The power to tax which was called by Justice Marshall as the "power to destroy" (McCulloch
including government-owned or controlled corporations, except as provided in the said v. Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very
section, and the petitioner is, undoubtedly, a government-owned corporation, it necessarily entity which has the inherent power to wield it.32
follows that its exemption from such tax granted it in Section 14 of its Charter, R.A. No. 6958, Basco is as strident a reiteration of the old guard view that frowned on the principle of local
has been withdrawn. Any claim to the contrary can only be justified if the petitioner can seek autonomy, especially as it interfered with the prerogatives and privileges of the national
refuge under any of the exceptions provided in Section 234, but not under Section 133, as it government. Also consider the following citation from Maceda v. Macaraig,33 decided the
now asserts, since, as shown above, the said section is qualified by Sections 232 and 234.29 same year as Basco. Discussing the rule of construction of tax exemptions on government
The Court in Mactan acknowledged that under Section 133, instrumentalities were generally instrumentalities, the sentiments are of a similar vein.
exempt from all forms of local government taxation, unless otherwise provided in the Code. Moreover, it is a recognized principle that the rule on strict interpretation does not apply in
On the other hand, Section 232 "otherwise provided" insofar as it allowed LGUs to levy an ad the case of exemptions in favor of a government political subdivision or instrumentality.
valorem real property tax, irrespective of who owned the property. At the same time, the The basis for applying the rule of strict construction to statutory provisions granting tax
imposition of real property taxes under Section 232 is in turn qualified by the phrase "not exemptions or deductions, even more obvious than with reference to the affirmative or
hereinafter specifically exempted." The exemptions from real property taxes are enumerated levying provisions of tax statutes, is to minimize differential treatment and foster
in Section 234, which specifically states that only real properties owned "by the Republic of impartiality, fairness, and equality of treatment among tax payers.
the Philippines or any of its political subdivisions" are exempted from the payment of the tax. The reason for the rule does not apply in the case of exemptions running to the benefit of the
Clearly, instrumentalities or GOCCs do not fall within the exceptions under Section 234.30 government itself or its agencies. In such case the practical effect of an exemption is merely
Mactan Overturned the to reduce the amount of money that has to be handled by government in the course of its
Precedents Now Relied operations. For these reasons, provisions granting exemptions to government agencies may
Upon by the Majority be construed liberally, in favor of non tax-liability of such agencies.
But the petitioners in Mactan also raised the Court's ruling in Basco v. PAGCOR,31 decided In the case of property owned by the state or a city or other public corporations, the express
before the enactment of the Local Government Code. The Court in Basco declared the exemption should not be construed with the same degree of strictness that applies to
PAGCOR as exempt from local taxes, justifying the exemption in this wise: exemptions contrary to the policy of the state, since as to such property "exemption is the
Local governments have no power to tax instrumentalities of the National Government. rule and taxation the exception."34
PAGCOR is a government owned or controlled corporation with an original charter, PD 1869. Strikingly, the majority cites these two very cases and the stodgy rationale provided therein.
This evinces the perspective from which the majority is coming from. It is admittedly a

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viewpoint once shared by this Court, and en vogue prior to the enactment of the Local which could not be taxed by a city government. To that end, Basco was cited by NPC. The
Government Code of 1991. Court had this to say about Basco.
However, the Local Government Code of 1991 ushered in a new ethos on how the art of xxx[T]he doctrine in Basco vs. Philippine Amusement and Gaming Corporation relied upon by
governance should be practiced in the Philippines, conceding greater powers once held in the the petitioner to support its claim no longer applies. To emphasize, the Basco case was
private reserve of the national government to LGUs. The majority might have private qualms decided prior to the effectivity of the LGC, when no law empowering the local government
about the wisdom of the policy of local autonomy, but the members of the Court are not units to tax instrumentalities of the National Government was in effect. However, as this
expected to substitute their personal biases for the legislative will, especially when the 1987 Court ruled in the case of Mactan Cebu International Airport Authority (MCIAA) vs. Marcos,
Constitution itself promotes the principle of local autonomy. nothing prevents Congress from decreeing that even instrumentalities or agencies of the
Article II. Declaration of Principles and State Policies government performing governmental functions may be subject to tax. In enacting the LGC,
xxx Congress exercised its prerogative to tax instrumentalities and agencies of government as it
Sec. 25. The State shall ensure the autonomy of local governments. sees fit. Thus, after reviewing the specific provisions of the LGC, this Court held that MCIAA,
Article X. Local Government although an instrumentality of the national government, was subject to real property tax.37
xxx In the 2003 case of Philippine Ports Authority v. City of Iloilo,38 the Court, in the able
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy. ponencia of Justice Azcuna, affirmed the levy of realty taxes on the PPA. Although the taxes
Section 3. The Congress shall enact a local government code which shall provide for a more were assessed under the old Real Property Tax Code and not the Local Government Code,
responsive and accountable local government structure instituted through a system of the Court again cited Mactan to refute PPA's invocation of Basco as the basis of its
decentralization with effective mechanisms of recall, initiative, and referendum, allocate exemption.
among the different local government units their powers, responsibilities, and resources, and [Basco] did not absolutely prohibit local governments from taxing government
provide for the qualifications, election, appointment and removal, term, salaries, powers and instrumentalities. In fact we stated therein:
functions and duties of local officials, and all other matters relating to the organization and The power of local government to "impose taxes and fees" is always subject to "limitations"
operation of the local units. which Congress may provide by law. Since P.D. 1869 remains an "operative" law until
xxx "amended, repealed or revoked". . . its "exemption clause" remains an exemption to the
Section 5. Each local government unit shall have the power to create its own sources of exercise of the power of local governments to impose taxes and fees.
revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Furthermore, in the more recent case of Mactan Cebu International Airport Authority v.
Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, Marcos, where the Basco case was similarly invoked for tax exemption, we stated: "[N]othing
and charges shall accrue exclusively to the local governments. can prevent Congress from decreeing that even instrumentalities or agencies of the
xxx Government performing governmental functions may be subject to tax. Where it is done
The Court in Mactan recognized that a new day had dawned with the enactment of the 1987 precisely to fulfill a constitutional mandate and national policy, no one can doubt its
Constitution and the Local Government Code of 1991. Thus, it expressly rejected the wisdom." The fact that tax exemptions of government-owned or controlled corporations
contention of the MCIAA that Basco was applicable to them. In doing so, the language of the have been expressly withdrawn by the present Local Government Code clearly attests against
Court was dramatic, if only to emphasize how monumental the shift in philosophy was with petitioner's claim of absolute exemption of government instrumentalities from local
the enactment of the Local Government Code: taxation.39
Accordingly, the position taken by the [MCIAA] is untenable. Reliance on Basco v. Philippine Just last month, the Court in National Power Corporation v. Province of Isabela40 again
Amusement and Gaming Corporation is unavailing since it was decided before the effectivity rejected Basco in emphatic terms. Held the Court, through Justice Callejo, Sr.:
of the [Local Government Code]. Besides, nothing can prevent Congress from decreeing that Thus, the doctrine laid down in the Basco case is no longer true. In the Cabanatuan case, the
even instrumentalities or agencies of the Government performing governmental functions Court noted primarily that the Basco case was decided prior to the effectivity of the LGC,
may be subject to tax. Where it is done precisely to fulfill a constitutional mandate and when no law empowering the local government units to tax instrumentalities of the National
national policy, no one can doubt its wisdom.35 (emphasis supplied) Government was in effect. It further explained that in enacting the LGC, Congress
The Court Has Repeatedly empowered the LGUs to impose certain taxes even on instrumentalities of the National
Reaffirmed Mactan Over the Government.41
Precedents Now Relied Upon The taxability of the PPA recently came to fore in Philippine Ports Authority v. City of
By the Majority Iloilo42 case, a decision also penned by Justice Callejo, Sr., wherein the Court affirmed the
Since then and until today, the Court has been emphatic in declaring the Basco doctrine as sale of PPA's properties at public auction for failure to pay realty taxes. The Court again
dead. The notion that instrumentalities may be subjected to local taxation by LGUs was again reiterated that "it was the intention of Congress to withdraw the tax exemptions granted to
affirmed in National Power Corporation v. City of Cabanatuan,36 which was penned by Justice or presently enjoyed by all persons, including government-owned or controlled corporations,
Puno. NPC or Napocor, invoking its continued exemption from payment of franchise taxes to upon the effectivity" of the Code.43 The Court in the second Public Ports Authority case
the City of Cabanatuan, alleged that it was an instrumentality of the National Government likewise cited Mactan as providing the "raison d'etre for the withdrawal of the exemption,"
namely, "the State policy to ensure autonomy to local governments and the objective of the

66 clioocampo
[Local Government Code] that they enjoy genuine and meaningful local autonomy to enable have devoted its discussion in explaining why it thinks Mactan is wrong, instead of
them to attain their fullest development as self-reliant communities. . . . "44 pretending that Mactan never existed at all. Such an approach might not have won the votes
Last year, the Court, in City of Davao v. RTC,45 affirmed that the legislated exemption from of the minority, but at least it would provide some degree of intellectual clarity for the
real property taxes of the Government Service Insurance System (GSIS) was removed under parties, LGUs and the national government, students of jurisprudence and practitioners. A
the Local Government Code. Again, Mactan was relied upon as the governing precedent. The more meaningful debate on the matter would have been possible, enriching the study of law
removal of the tax exemption stood even though the then GSIS law46 prohibited the removal and the intellectual dynamic of this Court.
of GSIS' tax exemptions unless the exemption was specifically repealed, "and a provision is There is no way the majority can be justified unless Mactan is overturned. The MCIAA and
enacted to substitute the declared policy of exemption from any and all taxes as an essential the MIAA are similarly situated. They are both, as will be demonstrated, GOCCs, commonly
factor for the solvency of the fund."47 The Court, citing established doctrines in statutory engaged in the business of operating an airport. They are the owners of airport properties
construction and Duarte v. Dade48ruled that such proscription on future legislation was itself they respectively maintain and hold title over these properties in their name.53 These entities
prohibited, as "the legislature cannot bind a future legislature to a particular mode of are both owned by the State, and denied by their respective charters the absolute right to
repeal."49 dispose of their properties without prior approval elsewhere. 54 Both of them are
And most recently, just less than one month ago, the Court, through Justice Corona in not empowered to obtain loans or encumber their properties without prior approval the
Government Service Insurance System v. City Assessor of Iloilo50 again affirmed that the Local prior approval of the President.55
Government Code removed the previous exemption from real property taxes of the GSIS. III.
Again Mactan was cited as having "expressly withdrawn the [tax] exemption of the [GOCC].51 Instrumentalities, Agencies
Clearly then, Mactan is not a stray or unique precedent, but the basis of a jurisprudential rule And GOCCs Generally
employed by the Court since its adoption, the doctrine therein consistent with the Local Liable for Real Property Tax
Government Code. Corollarily, Basco, the polar opposite of Mactan has been emphatically I shall now proceed to demonstrate the errors in reasoning of the majority. A bulwark of my
rejected and declared inconsistent with the Local Government Code. position lies with Mactan, which will further demonstrate why the majority has found it
II. inconvenient to even grapple with the precedent that is Mactan in the first place.
Majority, in Effectively Overturning Mactan, Mactan held that the prohibition on taxing the national government, its agencies and
Refuses to Say Why Mactan Is Wrong instrumentalities under Section 133 is qualified by Section 232 and Section 234, and
The majority cites Basco in support. It does not cite Mactan, other than an incidental accordingly, the only relevant exemption now applicable to these bodies is as provided under
reference that it is relied upon by the respondents.52 However, the ineluctable conclusion is Section 234(o), or on "real property owned by the Republic of the Philippines or any of its
that the majority rejects the rationale and ruling in Mactan. The majority provides for a wildly political subdivisions except when the beneficial use thereof has been granted, for
different interpretation of Section 133, 193 and 234 of the Local Government Code than that consideration or otherwise, to a taxable person."
employed by the Court in Mactan. Moreover, the parties in Mactan and in this case are It should be noted that the express withdrawal of previously granted exemptions by the Local
similarly situated, as can be obviously deducted from the fact that both petitioners are Government Code do not even make any distinction as to whether the exempt person is a
airport authorities operating under similarly worded charters. And the fact that the majority governmental entity or not. As Sections 193 and 234 both state, the withdrawal applies to
cites doctrines contrapuntal to the Local Government Code as in Basco and Maceda evinces "all persons, including [GOCCs]", thus encompassing the two classes of persons recognized
an intent to go against the Court's jurisprudential trend adopting the philosophy of expanded under our laws, natural persons56 and juridical persons.57
local government rule under the Local Government Code. The fact that the Local Government Code mandates the withdrawal of previously granted
Before I dwell upon the numerous flaws of the majority, a brief comment is necessitated on exemptions evinces certain key points. If an entity was previously granted an express
the majority's studied murkiness vis-à-vis the Mactan precedent. The majority is obviously exemption from real property taxes in the first place, the obvious conclusion would be that
inconsistent with Mactan and there is no way these two rulings can stand together. Following such entity would ordinarily be liable for such taxes without the exemption. If such entities
basic principles in statutory construction, Mactan will be deemed as giving way to this new were already deemed exempt due to some overarching principle of law, then it would be a
ruling. redundancy or surplusage to grant an exemption to an already exempt entity. This fact
However, the majority does not bother to explain why Mactan is wrong. The interpretation in militates against the claim that MIAA is preternaturally exempt from realty taxes, since it
Mactan of the relevant provisions of the Local Government Code is elegant and rational, yet required the enactment of an express exemption from such taxes in its charter.
the majority refuses to explain why this reasoning of the Court in Mactan is erroneous. In Amazingly, the majority all but ignores the disquisition in Mactan and asserts that
fact, the majority does not even engage Mactan in any meaningful way. If the majority government instrumentalities are not taxable persons unless they lease their properties to a
believes that Mactan may still stand despite this ruling, it remains silent as to the viable taxable person. The general rule laid down in Section 232 is given short shrift. In arriving at
distinctions between these two cases. this conclusion, several leaps in reasoning are committed.
The majority's silence on Mactan is baffling, considering how different this new ruling is with Majority's Flawed Definition
the ostensible precedent. Perhaps the majority does not simply know how to dispense with of GOCCs.
the ruling in Mactan. If Mactan truly deserves to be discarded as precedent, it deserves a The majority takes pains to assert that the MIAA is not a GOCC, but rather an instrumentality.
more honorable end than death by amnesia or ignonominous disregard. The majority could However, and quite grievously, the supposed foundation of this assertion is an adulteration.

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The majority gives the impression that a government instrumentality is a distinct concept Administrative Code, these laws are by no means sacrosanct. It should be remembered that
from a government corporation.58 Most tellingly, the majority selectively cites a portion of these two statutes fall within the same level of hierarchy as a congressional charter, since
Section 2(10) of the Administrative Code of 1987, as follows: they all are legislative enactments. Certainly, Congress can choose to disregard either the
Instrumentality refers to any agency of the National Government not integrated within the Corporation Code or the Administrative Code in defining the corporate structure of a GOCC,
department framework, vested with special functions or jurisdiction by law, endowed with utilizing the same extent of legislative powers similarly vesting it the putative ability to
some if not all corporate powers, administering special funds, and enjoying operational amend or abolish the Corporation Code or the Administrative Code.
autonomy, usually through a charter. xxx59 (emphasis omitted) These principles are actually recognized by both the Administrative Code and the
However, Section 2(10) of the Administrative Code, when read in full, makes an important Corporation Code. The definition of GOCCs, agencies and instrumentalities under the
clarification which the majority does not show. The portions omitted by the majority are Administrative Code are laid down in the section entitled "General Terms Defined," which
highlighted below: qualifies:
(10)Instrumentality refers to any agency of the National Government not integrated within Sec. 2. General Terms Defined. – Unless the specific words of the text, or the context as a
the department framework, vested with special functions or jurisdiction by law, endowed whole, or a particular statute, shall require a different meaning: (emphasis supplied)
with some if not all corporate powers, administering special funds, and enjoying operational xxx
autonomy, usually through a charter. This term includes regulatory agencies, chartered Similar in vein is Section 6 of the Corporation Code which provides:
institutions and government—owned or controlled corporations.60 SEC. 4. Corporations created by special laws or charters.— Corporations created by special
Since Section 2(10) makes reference to "agency of the National Government," Section 2(4) is laws or charters shall be governed primarily by the provisions of the special law or charter
also worth citing in full: creating them or applicable to them, supplemented by the provisions of this Code, insofar as
(4) Agency of the Government refers to any of the various units of the Government, including they are applicable. (emphasis supplied)
a department, bureau, office, instrumentality, or government-owned or controlled Thus, the clear doctrine emerges – the law that governs the definition of a corporation or
corporation, or a local government or a distinct unit therein. (emphasis supplied)61 entity created by Congress is its legislative charter. If the legislative enactment defines an
Clearly then, based on the Administrative Code, a GOCC may be an instrumentality or an entity as a corporation, then it is a corporation, no matter if the Corporation Code or the
agency of the National Government. Thus, there actually is no point in the majority's Administrative Code seemingly provides otherwise. In case of conflict between the legislative
assertion that MIAA is not a GOCC, since based on the majority's premise of Section 133 as charter of a government corporation, on one hand, and the Corporate Code and the
the key provision, the material question is whether MIAA is either an instrumentality, an Administrative Code, on the other, the former always prevails.
agency, or the National Government itself. The very provisions of the Administrative Code Majority, in Ignoring the
provide that a GOCC can be either an instrumentality or an agency, so why even bother to Legislative Charters, Effectively
extensively discuss whether or not MIAA is a GOCC? Classifies Duly Established GOCCs,
Indeed as far back as the 1927 case of Government of the Philippine Islands v. Springer,62 the With Disastrous and Far Reaching
Supreme Court already noted that a corporation of which the government is the majority Legal Consequences
stockholder "remains an agency or instrumentality of government."63 Second, the majority claims that MIAA does not qualify either as a stock or non-stock
Ordinarily, the inconsequential verbiage stewing in judicial opinions deserve little rebuttal. corporation, as defined under the Corporation Code. It explains that the MIAA is not a stock
However, the entire discussion of the majority on the definition of a GOCC, obiter as it may corporation because it does not have any capital stock divided into shares. Neither can it be
ultimately be, deserves emphatic refutation. The views of the majority on this matter are considered as a non-stock corporation because it has no members, and under Section 87, a
very dangerous, and would lead to absurdities, perhaps unforeseen by the majority. For in non-stock corporation is one where no part of its income is distributable as dividends to its
fact, the majority effectively declassifies many entities created and recognized as GOCCs and members, trustees or officers.
would give primacy to the Administrative Code of 1987 rather than their respective charters This formulation of course ignores Section 4 of the Corporation Code, which again provides
as to the definition of these entities. that corporations created by special laws or charters shall be governed primarily by the
Majority Ignores the Power provisions of the special law or charter, and not the Corporation Code.
Of Congress to Legislate and That the MIAA cannot be considered a stock corporation if only because it does not have a
Define Chartered Corporations stock structure is hardly a plausible proposition. Indeed, there is no point in requiring a
First, the majority declares that, citing Section 2(13) of the Administrative Code, a GOCC must capital stock structure for GOCCs whose full ownership is limited by its charter to the State or
be "organized as a stock or non-stock corporation," as defined under the Corporation Code. Republic. Such GOCCs are not empowered to declare dividends or alienate their capital
To insist on this as an absolute rule fails on bare theory. Congress has the undeniable power shares.
to create a corporation by legislative charter, and has been doing so throughout legislative Admittedly, there are GOCCs established in such a manner, such as the National Power
history. There is no constitutional prohibition on Congress as to what structure these Corporation (NPC), which is provided with authorized capital stock wholly subscribed and
chartered corporations should take on. Clearly, Congress has the prerogative to create a paid for by the Government of the Philippines, divided into shares but at the same time, is
corporation in whatever form it chooses, and it is not bound by any traditional format. Even prohibited from transferring, negotiating, pledging, mortgaging or otherwise giving these
if there is a definition of what a corporation is under the Corporation Code or the shares as security for payment of any obligation.64 However, based on the Corporation Code

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definition relied upon by the majority, even the NPC cannot be considered as a stock 5) Bangko Sentral ng Pilipinas82 - no capital stock,83 no members, required to remit fifty
corporation. Under Section 3 of the Corporation Code, stock corporations are defined as percent (50%) of its net profits to the National Treasury.84
being "authorized to distribute to the holders of its shares dividends or allotments of the 6) National Power Corporation85 - has capital stock but is prohibited from "distributing to the
surplus profits on the basis of the shares held."65 On the other hand, Section 13 of the NPC's holders of its shares dividends or allotments of the surplus profits on the basis of the shares
charter states that "the Corporation shall be non-profit and shall devote all its returns from held;"86 no members.
its capital investment, as well as excess revenues from its operation, for expansion." 66 Can 7) Manila International Airport Authority – no capital stock87, no members88, mandated to
the holder of the shares of NPC, the National Government, receive its surplus profits on the remit twenty percent (20%) of its annual gross operating income to the National Treasury.89
basis of its shares held? It cannot, according to the NPC charter, and hence, following Section Thus, for the majority, the MIAA, among many others, cannot be considered as within the
3 of the Corporation Code, the NPC is not a stock corporation, if the majority is to be coverage of Republic Act No. 7656. Apparently, President Fidel V. Ramos disagreed. How else
believed. then could Executive Order No. 483, signed in 1998 by President Ramos, be explained? The
The majority likewise claims that corporations without members cannot be deemed non- issuance provides:
stock corporations. This would seemingly exclude entities such as the NPC, which like MIAA, WHEREAS, Section 1 of Republic Act No. 7656 provides that:
has no ostensible members. Moreover, non-stock corporations cannot distribute any part of "Section 1. Declaration of Policy. - It is hereby declared the policy of the State that in order
its income as dividends to its members, trustees or officers. The majority faults MIAA for for the National Government to realize additional revenues, government-owned and/or
remitting 20% of its gross operating income to the national government. How about the controlled corporations, without impairing their viability and the purposes for which they
Philippine Health Insurance Corporation, created with the "status of a tax-exempt have been established, shall share a substantial amount of their net earnings to the National
government corporation attached to the Department of Health" under Rep. Act No. 7875.67 It Government."
too cannot be considered as a stock corporation because it has no capital stock structure. But WHEREAS, to support the viability and mandate of government-owned and/or controlled
using the criteria of the majority, it is doubtful if it would pass muster as a non-stock corporations [GOCCs], the liquidity, retained earnings position and medium-term plans and
corporation, since the PHIC or Philhealth, as it is commonly known, is expressly empowered programs of these GOCCs were considered in the determination of the reasonable dividend
"to collect, deposit, invest, administer and disburse" the National Health Insurance Fund.68 Or rates of such corporations on their 1997 net earnings.
how about the Social Security System, which under its revised charter, Republic Act No. 8282, WHEREAS, pursuant to Section 5 of RA 7656, the Secretary of Finance recommended the
is denominated as a "corporate body."69 The SSS has no capital stock structure, but has adjustment on the percentage of annual net earnings that shall be declared by the Manila
capital comprised of contributions by its members, which are eventually remitted back to its International Airport Authority [MIAA] and Phividec Industrial Authority [PIA] in the interest
members. Does this disqualify the SSS from classification as a GOCC, notwithstanding this of national economy and general welfare.
Court's previous pronouncement in Social Security System Employees Association v. NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Philippines, by virtue of the powers
Soriano?70 vested in me by law, do hereby order:
In fact, Republic Act No. 7656, enacted in 1993, requires that all GOCCs, whether stock or SECTION 1. The percentage of net earnings to be declared and remitted by the MIAA and PIA
non-stock,71 declare and remit at least fifty percent (50%) of their annual net earnings as as dividends to the National Government as provided for under Section 3 of Republic Act No.
cash, stock or property dividends to the National Government.72 But according to the 7656 is adjusted from at least fifty percent [50%] to the rates specified hereunder:
majority, non-stock corporations are prohibited from declaring any part of its income as 1. Manila International Airport Authority - 35% [cash]
dividends. But if Republic Act No. 7656 requires even non-stock corporations to declare 2. Phividec Industrial Authority - 25% [cash]
dividends from income, should it not follow that the prohibition against declaration of SECTION 2. The adjusted dividend rates provided for under Section 1 are only applicable on
dividends by non-stock corporations under the Corporation Code does not apply to 1997 net earnings of the concerned government-owned and/or controlled corporations.
government-owned or controlled corporations? For if not, and the majority's illogic is Obviously, it was the opinion of President Ramos and the Secretary of Finance that MIAA is a
pursued, Republic Act No. 7656, passed in 1993, would be fatally flawed, as it would GOCC, for how else could it have come under the coverage of Republic Act No. 7656, a law
contravene the Administrative Code of 1987 and the Corporation Code. applicable only to GOCCs? But, the majority apparently disagrees, and resultantly holds that
In fact, the ruinous effects of the majority's hypothesis on the nature of GOCCs can be MIAA is not obliged to remit even the reduced rate of thirty five percent (35%) of its net
illustrated by Republic Act No. 7656. Following the majority's definition of a GOCC and in earnings to the national government, since it cannot be covered by Republic Act No. 7656.
accordance with Republic Act No. 7656, here are but a few entities which are not obliged to All this mischief because the majority would declare the Administrative Code of 1987 and the
remit fifty (50%) of its annual net earnings to the National Government as they are excluded Corporation Code as the sole sources of law defining what a government corporation is. As I
from the scope of Republic Act No. 7656: stated earlier, I find it illogical that chartered corporations are compelled to comply with the
1) Philippine Ports Authority73 – has no capital stock74, no members, and obliged to apply the templates of the Corporation Code, especially when the Corporation Code itself states that
balance of its income or revenue at the end of each year in a general reserve.75 these corporations are to be governed by their own charters. This is especially true
2) Bases Conversion Development Authority76 - has no capital stock,77 no members. considering that the very provision cited by the majority, Section 87 of the Corporation Code,
3) Philippine Economic Zone Authority78 - no capital stock,79 no members. expressly says that the definition provided therein is laid down "for the purposes of this
4) Light Rail Transit Authority80 - no capital stock,81 no members. [Corporation] Code." Read in conjunction with Section 4 of the Corporation Code which
mandates that corporations created by charter be governed by the law creating them, it is

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clear that contrary to the majority, MIAA is not disqualified from classification as a non-stock ownership and administration of the Authority, subject to existing rights, if any. The Bureau
corporation by reason of Section 87, the provision not being applicable to corporations of Lands and other appropriate government agencies shall undertake an actual survey of the
created by special laws or charters. In fact, I see no real impediment why the MIAA and area transferred within one year from the promulgation of this Executive Order and the
similarly situated corporations such as the PHIC, the SSS, the Philippine Deposit Insurance corresponding title to be issued in the name of the Authority. Any portion thereof shall not
Commission, or maybe even the NPC could at the very least, be deemed as no stock be disposed through sale or through any other mode unless specifically approved by the
corporations (as differentiated from non-stock corporations). President of the Philippines.
The point, stripped to bare simplicity, is that entity created by legislative enactment is a xxx
corporation if the legislature says so. After all, it is the legislature that dictates what a SECTION 5. Functions, Powers, and Duties. — The Authority shall have the following
corporation is in the first place. This is better illustrated by another set of entities created functions, powers and duties:
before martial law. These include the Mindanao Development Authority,90 the Northern xxx
Samar Development Authority,91 the Ilocos Sur Development Authority,92 the Southeastern (d) To sue and be sued in its corporate name;
Samar Development Authority93 and the Mountain Province Development Authority.94 An (e) To adopt and use a corporate seal;
examination of the first section of the statutes creating these entities reveal that they were (f) To succeed by its corporate name;
established "to foster accelerated and balanced growth" of their respective regions, and (g) To adopt its by-laws, and to amend or repeal the same from time to time;
towards such end, the charters commonly provide that "it is recognized that a government (h) To execute or enter into contracts of any kind or nature;
corporation should be created for the purpose," and accordingly, these charters "hereby (i) To acquire, purchase, own, administer, lease, mortgage, sell or otherwise dispose of any
created a body corporate."95 However, these corporations do not have capital stock nor land, building, airport facility, or property of whatever kind and nature, whether movable or
members, and are obliged to return the unexpended balances of their appropriations and immovable, or any interest therein;
earnings to a revolving fund in the National Treasury. The majority effectively declassifies (j) To exercise the power of eminent domain in the pursuit of its purposes and objectives;
these entities as GOCCs, never mind the fact that their very charters declare them to be xxx
GOCCs. (o) To exercise all the powers of a corporation under the Corporation Law, insofar as these
I mention these entities not to bring an element of obscurantism into the fray. I cite them as powers are not inconsistent with the provisions of this Executive Order.
examples to emphasize my fundamental point—that it is the legislative charters of these xxx
entities, and not the Administrative Code, which define the class of personality of these SECTION 16. Borrowing Power. — The Authority may, after consultation with the Minister of
entities created by Congress. To adopt the view of the majority would be, in effect, to Finance and with the approval of the President of the Philippines, as recommended by the
sanction an implied repeal of numerous congressional charters for the purpose of Minister of Transportation and Communications, raise funds, either from local or
declassifying GOCCs. Certainly, this could not have been the intent of the crafters of the international sources, by way of loans, credits or securities, and other borrowing
Administrative Code when they drafted the "Definition of Terms" incorporated therein. instruments, with the power to create pledges, mortgages and other voluntary liens or
MIAA Is Without encumbrances on any of its assets or properties.
Doubt, A GOCC All loans contracted by the Authority under this Section, together with all interests and other
Following the charters of government corporations, there are two kinds of GOCCs, namely: sums payable in respect thereof, shall constitute a charge upon all the revenues and assets of
GOCCs which are stock corporations and GOCCs which are no stock corporations (as the Authority and shall rank equally with one another, but shall have priority over any other
distinguished from non-stock corporation). Stock GOCCs are simply those which have capital claim or charge on the revenue and assets of the Authority: Provided, That this provision
stock while no stock GOCCs are those which have no capital stock. Obviously these shall not be construed as a prohibition or restriction on the power of the Authority to create
definitions are different from the definitions of the terms in the Corporation Code. Verily, pledges, mortgages, and other voluntary liens or encumbrances on any assets or property of
GOCCs which are not incorporated with the Securities and Exchange Commission are not the Authority.
governed by the Corporation Code but by their respective charters. Except as expressly authorized by the President of the Philippines the total outstanding
For the MIAA's part, its charter is replete with provisions that indubitably classify it as a indebtedness of the Authority in the principal amount, in local and foreign currency, shall not
GOCC. Observe the following provisions from MIAA's charter: at any time exceed the net worth of the Authority at any given time.
SECTION 3. Creation of the Manila International Airport Authority.—There is hereby xxx
established a body corporate to be known as the Manila International Airport Authority The President or his duly authorized representative after consultation with the Minister of
which shall be attached to the Ministry of Transportation and Communications. The principal Finance may guarantee, in the name and on behalf of the Republic of the Philippines, the
office of the Authority shall be located at the New Manila International Airport. The Authority payment of the loans or other indebtedness of the Authority up to the amount herein
may establish such offices, branches, agencies or subsidiaries as it may deem proper and authorized.
necessary; Provided, That any subsidiary that may be organized shall have the prior approval These cited provisions establish the fitness of MIAA to be the subject of legal
of the President. relations.96 MIAA under its charter may acquire and possess property, incur obligations, and
The land where the Airport is presently located as well as the surrounding land area of bring civil or criminal actions. It has the power to contract in its own name, and to acquire
approximately six hundred hectares, are hereby transferred, conveyed and assigned to the title to real or personal property. It likewise may exercise a panoply of corporate powers and

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possesses all the trappings of corporate personality, such as a corporate name, a corporate Still, that distinction is ultimately irrelevant. Of course, as stated earlier, the Administrative
seal and by-laws. All these are contained in MIAA's charter which, as conceded by the Code considers GOCCs as agencies,101 so the fact that MIAA is an agency does not exclude it
Corporation Code and even the Administrative Code, is the primary law that governs the from classification as a GOCC. On the other hand, the majority justifies MIAA's purported
definition and organization of the MIAA. exemption on Section 133 of the Local Government Code, which similarly situates "agencies
In fact, MIAA itself believes that it is a GOCC represents itself as such. It said so itself in the and instrumentalities" as generally exempt from the taxation powers of LGUs. And on this
very first paragraph of the present petition before this Court.97 So does, apparently, the point, the majority again evades Mactan and somehow concludes that Section 133 is the
Department of Budget and Management, which classifies MIAA as a "government owned & general rule, notwithstanding Sections 232 and 234(a) of the Local Government Code. And
controlled corporation" on its internet website.98 There is also the matter of Executive Order the majority's ultimate conclusion? "By express mandate of the Local Government Code,
No. 483, which evinces the belief of the then-president of the Philippines that MIAA is a local governments cannot impose any kind of tax on national government instrumentalities
GOCC. And the Court before had similarly characterized MIAA as a government-owned and like the MIAA. Local governments are devoid of power to tax the national government, its
controlled corporation in the earlier MIAA case, Manila International Airport Authority v. agencies and instrumentalities."102
Commission on Audit.99 The Court's interpretation of the Local Government Code in Mactan renders the law
Why then the hesitance to declare MIAA a GOCC? As the majority repeatedly asserts, it is integrally harmonious and gives due accord to the respective prerogatives of the national
because MIAA is actually an instrumentality. But the very definition relied upon by the government and LGUs. Sections 133 and 234(a) ensure that the Republic of the Philippines or
majority of an instrumentality under the Administrative Code clearly states that a GOCC is its political subdivisions shall not be subjected to any form of local government taxation,
likewise an instrumentality or an agency. The question of whether MIAA is a GOCC might not except realty taxes if the beneficial use of the property owned has been granted for
even be determinative of this Petition, but the effect of the majority's disquisition on that consideration to a taxable entity or person. On the other hand, Section 133 likewise assures
matter may even be more destructive than the ruling that MIAA is exempt from realty taxes. that government instrumentalities such as GOCCs may not be arbitrarily taxed by LGUs, since
Is the majority ready to live up to the momentous consequences of its flawed reasoning? they could be subjected to local taxation if there is a specific proviso thereon in the Code.
Novel Proviso in 1987 Constitution One such proviso is Section 137, which as the Court found in National Power
Prescribing Standards in the Corporation,103 permits the imposition of a franchise tax on businesses enjoying a franchise,
Creation of GOCCs Necessarily even if it be a GOCC such as NPC. And, as the Court acknowledged in Mactan, Section 232
Applies only to GOCCs Created provides another exception on the taxability of instrumentalities.
After 1987. The majority abjectly refuses to engage Section 232 of the Local Government Code although
One last point on this matter on whether MIAA is a GOCC. The majority triumphantly points it provides the indubitable general rule that LGUs "may levy an annual ad valorem tax on real
to Section 16, Article XII of the 1987 Constitution, which mandates that the creation of property such as land, building, machinery, and other improvements not hereafter
GOCCs through special charters be "in the interest of the common good and subject to the specifically exempted." The specific exemptions are provided by Section 234. Section 232
test of economic viability." For the majority, the test of economic viability does not apply to comes sequentially after Section 133(o),104 and even if the sequencing is irrelevant, Section
government entities vested with corporate powers and performing essential public services. 232 would fall under the qualifying phrase of Section 133, "Unless otherwise provided
But this test of "economic viability" is new to the constitutional framework. No such test was herein." It is sad, but not surprising that the majority is not willing to consider or even discuss
imposed in previous Constitutions, including the 1973 Constitution which was the the general rule, but only the exemptions under Section 133 and Section 234. After all, if the
fundamental law in force when the MIAA was created. How then could the MIAA, or any majority is dead set in ruling for MIAA no matter what the law says, why bother citing what
GOCC created before 1987 be expected to meet this new precondition to the creation of a the law does say.
GOCC? Does the dissent seriously suggest that GOCCs created before 1987 may be Constitution, Laws and
declassified on account of their failure to meet this "economic viability test"? Jurisprudence Have Long
Instrumentalities and Agencies Explained the Rationale
Also Generally Liable For Behind the Local Taxation
Real Property Taxes Of GOCCs.
Next, the majority, having bludgeoned its way into asserting that MIAA is not a GOCC, then This blithe disregard of precedents, almost all of them unanimously decided, is nowhere
argues that MIAA is an instrumentality. It cites incompletely, as earlier stated, the provision more evident than in the succeeding discussion of the majority, which asserts that the power
of Section 2(10) of the Administrative Code. A more convincing view offered during of local governments to tax national government instrumentalities be construed strictly
deliberations, but which was not adopted by the ponencia, argued that MIAA is not an against local governments. The Maceda case, decided before the Local Government Code, is
instrumentality but an agency, considering the fact that under the Administrative Code, the cited, as is Basco. This section of the majority employs deliberate pretense that the Code
MIAA is attached within the department framework of the Department of Transportation and never existed, or that the fundamentals of local autonomy are of limited effect in our
Communications.100 Interestingly, Executive Order No. 341, enacted by President Arroyo in country. Why is it that the Local Government Code is barely mentioned in this section of the
2004, similarly calls MIAA an agency. Since instrumentalities are expressly defined as "an majority? Because Section 5 of the Code, purposely omitted by the majority provides for a
agency not integrated within the department framework," that view concluded that MIAA different rule of interpretation than that asserted:
cannot be deemed an instrumentality.

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Section 5. Rules of Interpretation. – In the interpretation of the provisions of this Code, the In recent years, the increasing social challenges of the times expanded the scope of state
following rules shall apply: activity, and taxation has become a tool to realize social justice and the equitable distribution
(a) Any provision on a power of a local government unit shall be liberally interpreted in its of wealth, economic progress and the protection of local industries as well as public welfare
favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of and similar objectives. Taxation assumes even greater significance with the ratification of the
powers and of the lower local government unit. Any fair and reasonable doubt as to the 1987 Constitution. Thenceforth, the power to tax is no longer vested exclusively on Congress;
existence of the power shall be interpreted in favor of the local government unit concerned; local legislative bodies are now given direct authority to levy taxes, fees and other charges
(b) In case of doubt, any tax ordinance or revenue measure shall be construed strictly against pursuant to Article X, section 5 of the 1987 Constitution, viz:
the local government unit enacting it, and liberally in favor of the taxpayer. Any tax "Section 5. Each Local Government unit shall have the power to create its own sources of
exemption, incentive or relief granted by any local government unit pursuant to the revenue, to levy taxes, fees and charges subject to such guidelines and limitations as the
provisions of this Code shall be construed strictly against the person claiming it; xxx Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees
Yet the majority insists that "there is no point in national and local governments taxing each and charges shall accrue exclusively to the Local Governments."
other, unless a sound and compelling policy requires such transfer of public funds from one This paradigm shift results from the realization that genuine development can be achieved
government pocket to another."105 I wonder whether the Constitution satisfies the majority's only by strengthening local autonomy and promoting decentralization of governance. For a
desire for "a sound and compelling policy." To repeat: long time, the country's highly centralized government structure has bred a culture of
Article II. Declaration of Principles and State Policies dependence among local government leaders upon the national leadership. It has also
xxx "dampened the spirit of initiative, innovation and imaginative resilience in matters of local
Sec. 25. The State shall ensure the autonomy of local governments. development on the part of local government leaders." 35 The only way to shatter this
Article X. Local Government culture of dependence is to give the LGUs a wider role in the delivery of basic services, and
xxx confer them sufficient powers to generate their own sources for the purpose. To achieve this
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy. goal, section 3 of Article X of the 1987 Constitution mandates Congress to enact a local
xxx government code that will, consistent with the basic policy of local autonomy, set the
Section 5. Each local government unit shall have the power to create its own sources of guidelines and limitations to this grant of taxing powers, viz:
revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the "Section 3. The Congress shall enact a local government code which shall provide for a more
Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, responsive and accountable local government structure instituted through a system of
and charges shall accrue exclusively to the local governments. decentralization with effective mechanisms of recall, initiative, and referendum, allocate
Or how about the Local Government Code, presumably an expression of sound and among the different local government units their powers, responsibilities, and resources, and
compelling policy considering that it was enacted by the legislature, that veritable source of provide for the qualifications, election, appointment and removal, term, salaries, powers and
all statutes: functions and duties of local officials, and all other matters relating to the organization and
SEC. 129. Power to Create Sources of Revenue. - Each local government unit shall exercise its operation of the local units."
power to create its own sources of revenue and to levy taxes, fees, and charges subject to To recall, prior to the enactment of the Rep. Act No. 7160, also known as the Local
the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, Government Code of 1991 (LGC), various measures have been enacted to promote local
and charges shall accrue exclusively to the local government units. autonomy. These include the Barrio Charter of 1959, the Local Autonomy Act of 1959, the
Justice Puno, in National Power Corporation v. City of Cabanatuan, 106 provides a more "sound Decentralization Act of 1967 and the Local Government Code of 1983. Despite these
and compelling policy considerations" that would warrant sustaining the taxability of initiatives, however, the shackles of dependence on the national government remained.
government-owned entities by local government units under the Local Government Code. Local government units were faced with the same problems that hamper their capabilities to
Doubtless, the power to tax is the most effective instrument to raise needed revenues to participate effectively in the national development efforts, among which are: (a) inadequate
finance and support myriad activities of the local government units for the delivery of basic tax base, (b) lack of fiscal control over external sources of income, (c) limited authority to
services essential to the promotion of the general welfare and the enhancement of peace, prioritize and approve development projects, (d) heavy dependence on external sources of
progress, and prosperity of the people. As this Court observed in the Mactan case, "the income, and (e) limited supervisory control over personnel of national line agencies.
original reasons for the withdrawal of tax exemption privileges granted to government- Considered as the most revolutionary piece of legislation on local autonomy, the LGC
owned or controlled corporations and all other units of government were that such privilege effectively deals with the fiscal constraints faced by LGUs. It widens the tax base of LGUs to
resulted in serious tax base erosion and distortions in the tax treatment of similarly situated include taxes which were prohibited by previous laws such as the imposition of taxes on
enterprises." With the added burden of devolution, it is even more imperative for forest products, forest concessionaires, mineral products, mining operations, and the like.
government entities to share in the requirements of development, fiscal or otherwise, by The LGC likewise provides enough flexibility to impose tax rates in accordance with their
paying taxes or other charges due from them.107 needs and capabilities. It does not prescribe graduated fixed rates but merely specifies the
I dare not improve on Justice Puno's exhaustive disquisition on the statutory and minimum and maximum tax rates and leaves the determination of the actual rates to the
jurisprudential shift brought about the acceptance of the principles of local autonomy: respective sanggunian.108

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And the Court's ruling through Justice Azcuna in Philippine Ports Authority v. City of Iloilo 109, need tax exemptions. And Section 193 which ordains the withdrawal of tax exemptions is
provides especially clear and emphatic rationale: obviously irrelevant to them.
In closing, we reiterate that in taxing government-owned or controlled corporations, the Section 193 is in point for the disposition of this case as it forecloses dependence for the
State ultimately suffers no loss. In National Power Corp. v. Presiding Judge, RTC, Br. XXV, 38 grant of tax exemption to MIAA on Section 21 of its charter. Even the majority should
we elucidated: concede that the charter section is now ineffectual, as Section 193 withdraws the tax
Actually, the State has no reason to decry the taxation of NPC's properties, as and by way of exemptions previously enjoyed by all juridical persons.
real property taxes. Real property taxes, after all, form part and parcel of the financing With Section 193 mandating the withdrawal of tax exemptions granted to all persons upon
apparatus of the Government in development and nation-building, particularly in the local the effectivity of the LGC, for MIAA to continue enjoying exemption from realty tax, it will
government level. have to rely on a basis other than Section 21 of its charter.
xxxxxxxxx Lung Center of the Philippines v. Quezon City113 provides another illustrative example of the
To all intents and purposes, real property taxes are funds taken by the State with one hand jurisprudential havoc wrought about by the majority. Pursuant to its charter, the Lung Center
and given to the other. In no measure can the government be said to have lost anything. was organized as a trust administered by an eponymous GOCC organized with the
Finally, we find it appropriate to restate that the primary reason for the withdrawal of tax SEC.114 There is no doubt it is a GOCC, even by the majority's reckoning. Applying the
exemption privileges granted to government-owned and controlled corporations and all Administrative Code, it is also considered as an agency, the term encompassing even GOCCs.
other units of government was that such privilege resulted in serious tax base erosion and Yet since the Administrative Code definition of "instrumentalities" encompasses agencies,
distortions in the tax treatment of similarly situated enterprises, hence resulting in the need especially those not attached to a line department such as the Lung Center, it also follows
for these entities to share in the requirements of development, fiscal or otherwise, by paying that the Lung Center is an instrumentality, which for the majority is exempt from all local
the taxes and other charges due from them.110 government taxes, especially real estate taxes. Yet just in 2004, the Court unanimously held
How does the majority counter these seemingly valid rationales which establish the that the Lung Center was not exempt from real property taxes. Can the majority and Lung
soundness of a policy consideration subjecting national instrumentalities to local taxation? Center be reconciled? I do not see how, and no attempt is made to demonstrate otherwise.
Again, by simply ignoring that these doctrines exist. It is unfortunate if the majority deems Another key point. The last paragraph of Section 234 specifically asserts that any previous
these cases or the principles of devolution and local autonomy as simply too inconvenient, exemptions from realty taxes granted to or enjoyed by all persons, including all GOCCs, are
and relies instead on discredited precedents. Of course, if the majority faces the issues thereby withdrawn. The majority's interpretation of Sections 133 and 234(a) however
squarely, and expressly discusses why Basco was right and Mactan was wrong, then this necessarily implies that all instrumentalities, including GOCCs, can never be subjected to real
entire endeavor of the Court would be more intellectually satisfying. But, this is not a game property taxation under the Code. If that is so, what then is the sense of the last paragraph
the majority wants to play. specifically withdrawing previous tax exemptions to all persons, including GOCCs when
Mischaracterization of My juridical persons such as MIAA are anyway, to his view, already exempt from such taxes
Views on the Tax Exemption under Section 133? The majority's interpretation would effectively render the express and
Enjoyed by the National Government emphatic withdrawal of previous exemptions to GOCCs inutile. Ut magis valeat quam pereat.
Instead, the majority engages in an extended attack pertaining to Section 193, Hence, where a statute is susceptible of more than one interpretation, the court should
mischaracterizing my views on that provision as if I had been interpreting the provision as adopt such reasonable and beneficial construction which will render the provision thereof
making "the national government, which itself is a juridical person, subject to tax by local operative and effective, as well as harmonious with each other.115
governments since the national government is not included in the enumeration of exempt But, the majority seems content rendering as absurd the Local Government Code, since it
entities in Section 193."111 does not have much use anyway for the Code's general philosophy of fiscal autonomy, as
Nothing is farther from the truth. I have never advanced any theory of the sort imputed in evidently seen by the continued reliance on Basco or Maceda. Local government rule has
the majority. My main thesis on the matter merely echoes the explicit provision of Section never been a grant of emancipation from the national government. This is the favorite
193 that unless otherwise provided in the Local Government Code (LGC) all tax exemptions bugaboo of the opponents of local autonomy—the fallacy that autonomy equates to
enjoyed by all persons, whether natural or juridical, including GOCCs, were withdrawn upon independence.
the effectivity of the Code. Since the provision speaks of withdrawal of tax exemptions of Thus, the conclusion of the majority is that under Section 133(o), MIAA as a government
persons, it follows that the exemptions theretofore enjoyed by MIAA which is definitely a instrumentality is beyond the reach of local taxation because it is not subject to taxes, fees or
person are deemed withdrawn upon the advent of the Code. charges of any kind. Moreover, the taxation of national instrumentalities and agencies by
On the other hand, the provision does not address the question of who are beyond the reach LGUs should be strictly construed against the LGUs, citing Maceda and Basco. No mention is
of the taxing power of LGUs. In fine, the grant of tax exemption or the withdrawal thereof made of the subsequent rejection of these cases in jurisprudence following the Local
assumes that the person or entity involved is subject to tax. Thus, Section 193 does not apply Government Code, including Mactan. The majority is similarly silent on the general rule
to entities which were never given any tax exemption. This would include the national under Section 232 on real property taxation or Section 5 on the rules of construction of the
government and its political subdivisions which, as a general rule, are not subjected to tax in Local Government Code.
the first place.112 Corollarily, the national government and its political subdivisions do not V.
MIAA, and not the National Government

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Is the Owner of the Subject Taxable Properties The second Public Ports Authority case, penned by Justice Callejo, likewise lays down useful
Section 232 of the Local Government Code explicitly provides that there are exceptions to doctrines in this regard. The Court refuted the claim that the properties of the PPA were
the general rule on rule property taxation, as "hereafter specifically exempted." Section 234, owned by the Republic of the Philippines, noting that PPA's charter expressly transferred
certainly "hereafter," provides indubitable basis for exempting entities from real property ownership over these properties to the PPA, a situation which similarly obtains with MIAA.
taxation. It provides the most viable legal support for any claim that an governmental entity The Court even went as far as saying that the fact that the PPA "had not been issued any
such as the MIAA is exempt from real property taxes. To repeat: torrens title over the port and port facilities and appurtenances is of no legal consequence. A
SECTION 234. Exemptions from Real Property Tax. -- The following are exempted from torrens title does not, by itself, vest ownership; it is merely an evidence of title over
payment of the real property tax: properties. xxx It has never been recognized as a mode of acquiring ownership over real
xxx properties."116
(f) Real property owned by the Republic of the Philippines or any of its political subdivisions The Court further added:
except when the beneficial use thereof has been granted, for consideration or otherwise, to xxx The bare fact that the port and its facilities and appurtenances are accessible to the
a taxable person: general public does not exempt it from the payment of real property taxes. It must be
The majority asserts that the properties owned by MIAA are owned by the Republic of the stressed that the said port facilities and appurtenances are the petitioner's corporate
Philippines, thus placing them under the exemption under Section 234. To arrive at this patrimonial properties, not for public use, and that the operation of the port and its facilities
conclusion, the majority employs four main arguments. and the administration of its buildings are in the nature of ordinary business. The petitioner is
MIAA Property Is Patrimonial clothed, under P.D. No. 857, with corporate status and corporate powers in the furtherance
And Not Part of Public Dominion of its proprietary interests xxx The petitioner is even empowered to invest its funds in such
The majority claims that the Airport Lands and Buildings are property of public dominion as government securities approved by the Board of Directors, and derives its income from rates,
defined by the Civil Code, and therefore owned by the State or the Republic of the charges or fees for the use by vessels of the port premises, appliances or equipment. xxx
Philippines. But as pointed out by Justice Azcuna in the first PPA case, if indeed a property is Clearly then, the petitioner is a profit-earning corporation; hence, its patrimonial properties
considered part of the public dominion, such property is "owned by the general public and are subject to tax.117
cannot be declared to be owned by a public corporation, such as [the PPA]." There is no doubt that the properties of the MIAA, as with the PPA, are in a sense, for public
Relevant on this point are the following provisions of the MIAA charter: use. A similar argument was propounded by the Light Rail Transit Authority in Light Rail
Section 3. Creation of the Manila International Airport Authority. – xxx Transit Authority v. Central Board of Assessment,118which was cited in Philippine Ports
The land where the Airport is presently located as well as the surrounding land area of Authority and deserves renewed emphasis. The Light Rail Transit Authority (LRTA), a body
approximately six hundred hectares, are hereby transferred, conveyed and assigned to the corporate, "provides valuable transportation facilities to the paying public."119 It claimed that
ownership and administration of the Authority, subject to existing rights, if any. xxx Any its carriage-ways and terminal stations are immovably attached to government-owned
portion thereof shall not be disposed through sale or through any other mode unless national roads, and to impose real property taxes thereupon would be to impose taxes on
specifically approved by the President of the Philippines. public roads. This view did not persuade the Court, whose decision was penned by Justice
Section 22. Transfer of Existing Facilities and Intangible Assets. – All existing public airport (now Chief Justice) Panganiban. It was noted:
facilities, runways, lands, buildings and other property, movable or immovable, belonging to Though the creation of the LRTA was impelled by public service — to provide mass
the Airport, and all assets, powers rights, interests and privileges belonging to the Bureau of transportation to alleviate the traffic and transportation situation in Metro Manila — its
Air Transportation relating to airport works or air operations, including all equipment which operation undeniably partakes of ordinary business. Petitioner is clothed with corporate
are necessary for the operation of crash fire and rescue facilities, are hereby transferred to status and corporate powers in the furtherance of its proprietary objectives. Indeed, it
the Authority. operates much like any private corporation engaged in the mass transport industry. Given
Clearly, it is the MIAA, and not either the State, the Republic of the Philippines or the national that it is engaged in a service-oriented commercial endeavor, its carriageways and terminal
government that asserts legal title over the Airport Lands and Buildings. There was an stations are patrimonial property subject to tax, notwithstanding its claim of being a
express transfer of ownership between the MIAA and the national government. If the government-owned or controlled corporation.
distinction is to be blurred, as the majority does, between the State/Republic/Government xxx
and a body corporate such as the MIAA, then the MIAA charter showcases the remarkable Petitioner argues that it merely operates and maintains the LRT system, and that the actual
absurdity of an entity transferring property to itself. users of the carriageways and terminal stations are the commuting public. It adds that the
Nothing in the Civil Code or the Constitution prohibits the State from transferring ownership public use character of the LRT is not negated by the fact that revenue is obtained from the
over property of public dominion to an entity that it similarly owns. It is just like a family latter's operations.
transferring ownership over the properties its members own into a family corporation. The We do not agree. Unlike public roads which are open for use by everyone, the LRT is
family exercises effective control over the administration and disposition of these properties. accessible only to those who pay the required fare. It is thus apparent that petitioner does
Yet for several purposes under the law, such as taxation, it is the corporation that is deemed not exist solely for public service, and that the LRT carriageways and terminal stations are not
to own those properties. A similar situation obtains with MIAA, the State, and the Airport exclusively for public use. Although petitioner is a public utility, it is nonetheless profit-
Lands and Buildings.

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earning. It actually uses those carriageways and terminal stations in its public utility business for debts of the corporation either at law or equity. The reason is that the corporation is a
and earns money therefrom.120 legal entity or artificial person, distinct from the members who compose it, in their individual
xxx capacity; and when it contracts a debt, it is the debt of the legal entity or artificial person –
Even granting that the national government indeed owns the carriageways and terminal the corporation – and not the debt of the individual members. (13A Fletcher Cyc. Corp. Sec.
stations, the exemption would not apply because their beneficial use has been granted to 6213)
petitioner, a taxable entity.121 The entirely separate identity of the rights and remedies of a corporation itself and its
There is no substantial distinction between the properties held by the PPA, the LRTA, and the individual stockholders have been given definite recognition for a long time. Applying said
MIAA. These three entities are in the business of operating facilities that promote public principle, the Supreme Court declared that a corporation may not be made to answer for acts
transportation. or liabilities of its stockholders or those of legal entities to which it may be connected, or vice
The majority further asserts that MIAA's properties, being part of the public dominion, are versa. (Palay Inc. v. Clave et. al. 124 SCRA 638) It was likewise declared in a similar case that a
outside the commerce of man. But if this is so, then why does Section 3 of MIAA's charter bonafide corporation should alone be liable for corporate acts duly authorized by its officers
authorize the President of the Philippines to approve the sale of any of these properties? In and directors. (Caram Jr. v. Court of Appeals et.al. 151 SCRA, p. 372)123
fact, why does MIAA's charter in the first place authorize the transfer of these airport It bears repeating that MIAA under its charter, is expressly conferred the right to exercise all
properties, assuming that indeed these are beyond the commerce of man? the powers of a corporation under the Corporation Law, including the right to corporate
No Trust Has Been Created succession, and the right to sue and be sued in its corporate name.124 The national
Over MIAA Properties For government made a particular choice to divest ownership and operation of the Manila
The Benefit of the Republic International Airport and transfer the same to such an empowered entity due to perceived
The majority posits that while MIAA might be holding title over the Airport Lands and advantages. Yet such transfer cannot be deemed consequence free merely because it was
Buildings, it is holding it in trust for the Republic. A provision of the Administrative Code is the State which contributed the operating capital of this body corporate.
cited, but said provision does not expressly provide that the property is held in trust. Trusts The majority claims that the transfer the assets of MIAA was meant merely to effect a
are either express or implied, and only those situations enumerated under the Civil Code reorganization. The imputed rationale for such transfer does not serve to militate against the
would constitute an implied trust. MIAA does not fall within this enumeration, and neither is legal consequences of such assignment. Certainly, if it was intended that the transfer should
there a provision in MIAA's charter expressly stating that these properties are being held in be free of consequence, then why was it effected to a body corporate, with a distinct legal
trust. In fact, under its charter, MIAA is obligated to retain up to eighty percent (80%) of its personality from that of the State or Republic? The stated aims of the MIAA could have very
gross operating income, not an inconsequential sum assuming that the beneficial owner of well been accomplished by creating an agency without independent juridical personality.
MIAA's properties is actually the Republic, and not the MIAA. VI.
Also, the claim that beneficial ownership over the MIAA remains with the government and MIAA Performs Proprietary Functions
not MIAA is ultimately irrelevant. Section 234(a) of the Local Government Code provides Nonetheless, Section 234(f) exempts properties owned by the Republic of the Philippines or
among those exempted from paying real property taxes are "[r]eal property owned by the its political subdivisions from realty taxation. The obvious question is what comprises "the
[Republic]… except when the beneficial use thereof has been granted, for consideration or Republic of the Philippines." I think the key to understanding the scope of "the Republic" is
otherwise, to a taxable person." In the context of Section 234(a), the identity of the beneficial the phrase "political subdivisions." Under the Constitution, political subdivisions are defined
owner over the properties is not determinative as to whether the exemption avails. It is the as "the provinces, cities, municipalities and barangays."125 In correlation, the Administrative
identity of the beneficial user of the property owned by the Republic or its political Code of 1987 defines "local government" as referring to "the political subdivisions
subdivisions that is crucial, for if said beneficial user is a taxable person, then the exemption established by or in accordance with the Constitution."
does not lie. Clearly then, these political subdivisions are engaged in the exercise of sovereign functions
I fear the majority confuses the notion of what might be construed as "beneficial ownership" and are accordingly exempt. The same could be said generally of the national government,
of the Republic over the properties of MIAA as nothing more than what arises as a which would be similarly exempt. After all, even with the principle of local autonomy, it is
consequence of the fact that the capital of MIAA is contributed by the National inherently noxious and self-defeatist for local taxation to interfere with the sovereign
Government.122 If so, then there is no difference between the State's ownership rights over exercise of functions. However, the exercise of proprietary functions is a different matter
MIAA properties than those of a majority stockholder over the properties of a corporation. altogether.
Even if such shareholder effectively owns the corporation and controls the disposition of its Sovereign and Proprietary
assets, the personality of the stockholder remains separately distinct from that of the Functions Distinguished
corporation. A brief recall of the entrenched rule in corporate law is in order: Sovereign or constituent functions are those which constitute the very bonds of society and
The first consequence of the doctrine of legal entity regarding the separate identity of the are compulsory in nature, while ministrant or proprietary functions are those undertaken by
corporation and its stockholders insofar as their obligations and liabilities are concerned, is way of advancing the general interests of society and are merely optional.126 An exhaustive
spelled out in this general rule deeply entrenched in American jurisprudence: discussion on the matter was provided by the Court in Bacani v. NACOCO:127
Unless the liability is expressly imposed by constitutional or statutory provisions, or by the xxx This institution, when referring to the national government, has reference to what our
charter, or by special agreement of the stockholders, stockholders are not personally liable Constitution has established composed of three great departments, the legislative, executive,

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and the judicial, through which the powers and functions of government are exercised. These Commonwealth Act No. 518). It may sue and be sued in the same manner as any other
functions are twofold: constituent and ministrant. The former are those which constitute the private corporations, and in this sense it is an entity different from our government. As this
very bonds of society and are compulsory in nature; the latter are those that are undertaken Court has aptly said, "The mere fact that the Government happens to be a majority
only by way of advancing the general interests of society, and are merely optional. President stockholder does not make it a public corporation" (National Coal Co. vs. Collector of Internal
Wilson enumerates the constituent functions as follows: Revenue, 46 Phil., 586-587). "By becoming a stockholder in the National Coal Company, the
"'(1) The keeping of order and providing for the protection of persons and property from Government divested itself of its sovereign character so far as respects the transactions of
violence and robbery. the corporation. . . . Unlike the Government, the corporation may be sued without its
'(2) The fixing of the legal relations between man and wife and between parents and consent, and is subject to taxation. Yet the National Coal Company remains an agency or
children. instrumentality of government." (Government of the Philippine Islands vs. Springer, 50 Phil.,
'(3) The regulation of the holding, transmission, and interchange of property, and the 288.)
determination of its liabilities for debt or for crime. The following restatement of the entrenched rule by former SEC Chairperson Rosario Lopez
'(4) The determination of contract rights between individuals. bears noting:
'(5) The definition and punishment of crime. The fact that government corporations are instrumentalities of the State does not divest
'(6) The administration of justice in civil cases. them with immunity from suit. (Malong v. PNR, 138 SCRA p. 63) It is settled that when the
'(7) The determination of the political duties, privileges, and relations of citizens. government engages in a particular business through the instrumentality of a corporation, it
'(8) Dealings of the state with foreign powers: the preservation of the state from external divests itself pro hoc vice of its sovereign character so as to subject itself to the rules
danger or encroachment and the advancement of its international interests.'" (Malcolm, The governing private corporations, (PNB v. Pabolan 82 SCRA 595) and is to be treated like any
Government of the Philippine Islands, p. 19.) other corporation. (PNR v. Union de Maquinistas Fogonero y Motormen, 84 SCRA 223)
The most important of the ministrant functions are: public works, public education, public In the same vein, when the government becomes a stockholder in a corporation, it does not
charity, health and safety regulations, and regulations of trade and industry. The principles exercise sovereignty as such. It acts merely as a corporator and exercises no other power in
determining whether or not a government shall exercise certain of these optional functions the management of the affairs of the corporation than are expressly given by the
are: (1) that a government should do for the public welfare those things which private capital incorporating act. Nor does the fact that the government may own all or a majority of the
would not naturally undertake and (2) that a government should do these things which by its capital stock take from the corporation its character as such, or make the government the
very nature it is better equipped to administer for the public welfare than is any private real party in interest. (Amtorg Trading Corp. v. US 71 F2d 524, 528)129
individual or group of individuals. (Malcolm, The Government of the Philippine Islands, pp. MIAA Performs Proprietary
19-20.) Functions No Matter How
From the above we may infer that, strictly speaking, there are functions which our Vital to the Public Interest
government is required to exercise to promote its objectives as expressed in our Constitution The simple truth is that, based on these accepted doctrinal tests, MIAA performs proprietary
and which are exercised by it as an attribute of sovereignty, and those which it may exercise functions. The operation of an airport facility by the State may be imbued with public
to promote merely the welfare, progress and prosperity of the people. To this latter class interest, but it is by no means indispensable or obligatory on the national government. In
belongs the organization of those corporations owned or controlled by the government to fact, as demonstrated in other countries, it makes a lot of economic sense to leave the
promote certain aspects of the economic life of our people such as the National Coconut operation of airports to the private sector.
Corporation. These are what we call government-owned or controlled corporations which The majority tries to becloud this issue by pointing out that the MIAA does not compete in
may take on the form of a private enterprise or one organized with powers and formal the marketplace as there is no competing international airport operated by the private
characteristics of a private corporations under the Corporation Law.128 sector; and that MIAA performs an essential public service as the primary domestic and
The Court in Bacani rejected the proposition that the National Coconut Corporation exercised international airport of the Philippines. This premise is false, for one. On a local scale, MIAA
sovereign functions: competes with other international airports situated in the Philippines, such as Davao
Does the fact that these corporations perform certain functions of government make them a International Airport and MCIAA. More pertinently, MIAA also competes with other
part of the Government of the Philippines? international airports in Asia, at least. International airlines take into account the quality and
The answer is simple: they do not acquire that status for the simple reason that they do not conditions of various international airports in determining the number of flights it would
come under the classification of municipal or public corporation. Take for instance the assign to a particular airport, or even in choosing a hub through which destinations
National Coconut Corporation. While it was organized with the purpose of "adjusting the necessitating connecting flights would pass through.
coconut industry to a position independent of trade preferences in the United States" and of Even if it could be conceded that MIAA does not compete in the market place, the example
providing "Facilities for the better curing of copra products and the proper utilization of of the Philippine National Railways should be taken into account. The PNR does not compete
coconut by-products," a function which our government has chosen to exercise to promote in the marketplace, and performs an essential public service as the operator of the railway
the coconut industry, however, it was given a corporate power separate and distinct from system in the Philippines. Is the PNR engaged in sovereign functions? The Court, in Malong v.
our government, for it was made subject to the provisions of our Corporation Law in so far as Philippine National Railways,130 held that it was not.131
its corporate existence and the powers that it may exercise are concerned (sections 2 and 4,

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Even more relevant to this particular case is Teodoro v. National Airports VII.
Corporation,132 concerning the proper appreciation of the functions performed by the Civil MIAA Property Not Subject to
Aeronautics Administration (CAA), which had succeeded the defunction National Airports Execution Sale Without Consent
Corporation. The CAA claimed that as an unincorporated agency of the Republic of the Of the President.
Philippines, it was incapable of suing and being sued. The Court noted: Despite the fact that the City of Parañaque ineluctably has the power to impose real property
Among the general powers of the Civil Aeronautics Administration are, under Section 3, to taxes over the MIAA, there is an equally relevant statutory limitation on this power that must
execute contracts of any kind, to purchase property, and to grant concession rights, and be fully upheld. Section 3 of the MIAA charter states that "[a]ny portion [of the [lands
under Section 4, to charge landing fees, royalties on sales to aircraft of aviation gasoline, transferred, conveyed and assigned to the ownership and administration of the MIAA] shall
accessories and supplies, and rentals for the use of any property under its management. not be disposed through sale or through any other mode unless specifically approved by the
These provisions confer upon the Civil Aeronautics Administration, in our opinion, the power President of the Philippines."140
to sue and be sued. The power to sue and be sued is implied from the power to transact Nothing in the Local Government Code, even with its wide grant of powers to LGUs, can be
private business. And if it has the power to sue and be sued on its behalf, the Civil deemed as repealing this prohibition under Section 3, even if it effectively forecloses one
Aeronautics Administration with greater reason should have the power to prosecute and possible remedy of the LGU in the collection of delinquent real property taxes. While the
defend suits for and against the National Airports Corporation, having acquired all the Local Government Code withdrew all previous local tax exemptions of the MIAA and other
properties, funds and choses in action and assumed all the liabilities of the latter. To deny the natural and juridical persons, it did not similarly withdraw any previously enacted
National Airports Corporation's creditors access to the courts of justice against the Civil prohibitions on properties owned by GOCCs, agencies or instrumentalities. Moreover, the
Aeronautics Administration is to say that the government could impair the obligation of its resulting legal effect, subjecting on one hand the MIAA to local taxes but on the other hand
corporations by the simple expedient of converting them into unincorporated agencies. 133 shielding its properties from any form of sale or disposition, is not contradictory or
xxx paradoxical, onerous as its effect may be on the LGU. It simply means that the LGU has to
Eventually, the charter of the CAA was revised, and it among its expanded functions was "[t]o find another way to collect the taxes due from MIAA, thus paving the way for a mutually
administer, operate, manage, control, maintain and develop the Manila International acceptable negotiated solution.141
Airport."134 Notwithstanding this expansion, in the 1988 case of CAA v. Court of There are several other reasons this statutory limitation should be upheld and applied to this
Appeals135 the Court reaffirmed the ruling that the CAA was engaged in "private or non- case. It is at this juncture that the importance of the Manila Airport to our national life and
governmental functions."136 Thus, the Court had already ruled that the predecessor agency of commerce may be accorded proper consideration. The closure of the airport, even by reason
MIAA, the CAA was engaged in private or non-governmental functions. These are more of MIAA's legal omission to pay its taxes, will have an injurious effect to our national
precedents ignored by the majority. The following observation from the Teodoro case very economy, which is ever reliant on air travel and traffic. The same effect would obtain if
well applies to MIAA. ownership and administration of the airport were to be transferred to an LGU or some other
The Civil Aeronautics Administration comes under the category of a private entity. Although entity which were not specifically chartered or tasked to perform such vital function. It is for
not a body corporate it was created, like the National Airports Corporation, not to maintain a this reason that the MIAA charter specifically forbids the sale or disposition of MIAA
necessary function of government, but to run what is essentially a business, even if revenues properties without the consent of the President. The prohibition prevents the peremptory
be not its prime objective but rather the promotion of travel and the convenience of the closure of the MIAA or the hampering of its operations on account of the demands of its
traveling public. It is engaged in an enterprise which, far from being the exclusive prerogative creditors. The airport is important enough to be sheltered by legislation from ordinary legal
of state, may, more than the construction of public roads, be undertaken by private processes.
concerns.137 Section 3 of the MIAA charter may also be appreciated as within the proper exercise of
If the determinative point in distinguishing between sovereign functions and proprietary executive control by the President over the MIAA, a GOCC which despite its separate legal
functions is the vitality of the public service being performed, then it should be noted that personality, is still subsumed within the executive branch of government. The power of
there is no more important public service performed than that engaged in by public utilities. executive control by the President should be upheld so long as such exercise does not
But notably, the Constitution itself authorizes private persons to exercise these functions as it contravene the Constitution or the law, the President having the corollary duty to faithfully
allows them to operate public utilities in this country138 If indeed such functions are actually execute the Constitution and the laws of the land.142 In this case, the exercise of executive
sovereign and belonging properly to the government, shouldn't it follow that the exercise of control is precisely recognized and authorized by the legislature, and it should be upheld
these tasks remain within the exclusive preserve of the State? even if it comes at the expense of limiting the power of local government units to collect real
There really is no prohibition against the government taxing itself,139 and nothing obscene property taxes.
with allowing government entities exercising proprietary functions to be taxed for the Had this petition been denied instead with Mactan as basis, but with the caveat that the
purpose of raising the coffers of LGUs. On the other hand, it would be an even more noxious MIAA properties could not be subject of execution sale without the consent of the President,
proposition that the government or the instrumentalities that it owns are above the law and I suspect that the parties would feel little distress. Through such action, both the Local
may refuse to pay a validly imposed tax. MIAA, or any similar entity engaged in the exercise Government Code and the MIAA charter would have been upheld. The prerogatives of LGUs
of proprietary, and not sovereign functions, cannot avoid the adverse-effects of tax evasion in real property taxation, as guaranteed by the Local Government Code, would have been
simply on the claim that it is imbued with some of the attributes of government. preserved, yet the concerns about the ruinous effects of having to close the Manila

77 clioocampo
International Airport would have been averted. The parties would then be compelled to try sovereign and proprietary functions, as affirmed by jurisprudence, likewise preclude the
harder at working out a compromise, a task, if I might add, they are all too willing to engage classification of MIAA properties as patrimonial.
in.143 Unfortunately, the majority will cause precisely the opposite result of unremitting IX.
hostility, not only to the City of Parañaque, but to the thousands of LGUs in the country. Epilogue
VIII. If my previous discussion still fails to convince on how wrong the majority is, then the
Summary of Points following points are well-worth considering. The majority cites the Bangko Sentral ng
My points may be summarized as follows: Pilipinas (Bangko Sentral) as a government instrumentality that exercises corporate powers
1) Mactan and a long line of succeeding cases have already settled the rule that under the but not organized as a stock or non-stock corporation. Correspondingly for the majority, the
Local Government Code, enacted pursuant to the constitutional mandate of local autonomy, Bangko ng Sentral is exempt from all forms of local taxation by LGUs by virtue of the Local
all natural and juridical persons, even those GOCCs, instrumentalities and agencies, are no Government Code.
longer exempt from local taxes even if previously granted an exemption. The only Section 125 of Rep. Act No. 7653, The New Central Bank Act, states:
exemptions from local taxes are those specifically provided under the Local Government SECTION 125. Tax Exemptions. — The Bangko Sentral shall be exempt for a period of five (5)
Code itself, or those enacted through subsequent legislation. years from the approval of this Act from all national, provincial, municipal and city taxes,
2) Under the Local Government Code, particularly Section 232, instrumentalities, agencies fees, charges and assessments.
and GOCCs are generally liable for real property taxes. The only exemptions therefrom under The New Central Bank Act was promulgated after the Local Government Code if the BSP is
the same Code are provided in Section 234, which include real property owned by the already preternaturally exempt from local taxation owing to its personality as an
Republic of the Philippines or any of its political subdivisions. "government instrumentality," why then the need to make a new grant of exemption, which
3) The subject properties are owned by MIAA, a GOCC, holding title in its own name. MIAA, a if the majority is to be believed, is actually a redundancy. But even more tellingly, does not
separate legal entity from the Republic of the Philippines, is the legal owner of the this provision evince a clear intent that after the lapse of five (5) years, that the Bangko
properties, and is thus liable for real property taxes, as it does not fall within the exemptions Sentral will be liable for provincial, municipal and city taxes? This is the clear congressional
under Section 234 of the Local Government Code. intent, and it is Congress, not this Court which dictates which entities are subject to taxation
4) The MIAA charter expressly bars the sale or disposition of MIAA properties. As a result, the and which are exempt.
City of Parañaque is prohibited from seizing or selling these properties by public auction in Perhaps this notion will offend the majority, because the Bangko Sentral is not even a
order to satisfy MIAA's tax liability. In the end, MIAA is encumbered only by a limited lien government owned corporation, but a government instrumentality, or perhaps "loosely", a
possessed by the City of Parañaque. "government corporate entity." How could such an entity like the Bangko Sentral , which is
On the other hand, the majority's flaws are summarized as follows: not even a government owned corporation, be subjected to local taxation like any mere
1) The majority deliberately ignores all precedents which run counter to its hypothesis, mortal? But then, see Section 1 of the New Central Bank Act:
including Mactan. Instead, it relies and directly cites those doctrines and precedents which SECTION 1. Declaration of Policy. — The State shall maintain a central monetary authority
were overturned by Mactan. By imposing a different result than that warranted by the that shall function and operate as an independent and accountable body corporate in the
precedents without explaining why Mactan or the other precedents are wrong, the majority discharge of its mandated responsibilities concerning money, banking and credit. In line with
attempts to overturn all these ruling sub silencio and without legal justification, in a manner this policy, and considering its unique functions and responsibilities, the central monetary
that is not sanctioned by the practices and traditions of this Court. authority established under this Act, while being a government-owned corporation, shall
2) The majority deliberately ignores the policy and philosophy of local fiscal autonomy, as enjoy fiscal and administrative autonomy.
mandated by the Constitution, enacted under the Local Government Code, and affirmed by Apparently, the clear legislative intent was to create a government corporation known as the
precedents. Instead, the majority asserts that there is no sound rationale for local Bangko Sentral ng Pilipinas. But this legislative intent, the sort that is evident from the text of
governments to tax national government instrumentalities, despite the blunt existence of the provision and not the one that needs to be unearthed from the bowels of the archival
such rationales in the Constitution, the Local Government Code, and precedents. offices of the House and the Senate, is for naught to the majority, as it contravenes the
3) The majority, in a needless effort to justify itself, adopts an extremely strained exaltation Administrative Code of 1987, which after all, is "the governing law defining the status and
of the Administrative Code above and beyond the Corporation Code and the various relationship of government agencies and instrumentalities" and thus superior to the
legislative charters, in order to impose a wholly absurd definition of GOCCs that effectively legislative charter in determining the personality of a chartered entity. Its like saying that the
declassifies innumerable existing GOCCs, to catastrophic legal consequences. architect who designed a school building is better equipped to teach than the professor
4) The majority asserts that by virtue of Section 133(o) of the Local Government Code, all because at least the architect is familiar with the geometry of the classroom.
national government agencies and instrumentalities are exempt from any form of local Consider further the example of the Philippine Institute of Traditional and Alternative Health
taxation, in contravention of several precedents to the contrary and the proviso under Care (PITAHC), created by Republic Act No. 8243 in 1997. It has similar characteristics as
Section 133, "unless otherwise provided herein [the Local Government Code]." MIAA in that it is established as a body corporate,144 and empowered with the attributes of a
5) The majority erroneously argues that MIAA holds its properties in trust for the Republic of corporation,145 including the power to purchase or acquire real properties.146 However the
the Philippines, and that such properties are patrimonial in character. No express or implied PITAHC has no capital stock and no members, thus following the majority, it is not a GOCC.
trust has been created to benefit the national government. The legal distinction between

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The state policy that guides PITAHC is the development of traditional and alternative health
care,147 and its objectives include the promotion and advocacy of alternative, preventive and
curative health care modalities that have been proven safe, effective and cost
effective.148 "Alternative health care modalities" include "other forms of non-allophatic,
occasionally non-indigenous or imported healing methods" which include, among others
"reflexology, acupuncture, massage, acupressure" and chiropractics.149
Given these premises, there is no impediment for the PITAHC to purchase land and construct
thereupon a massage parlor that would provide a cheaper alternative to the opulent spas
that have proliferated around the metropolis. Such activity is in line with the purpose of the
PITAHC and with state policy. Is such massage parlor exempt from realty taxes? For the
majority, it is, for PITAHC is an instrumentality or agency exempt from local government
taxation, which does not fall under the exceptions under Section 234 of the Local
Government Code. Hence, this massage parlor would not just be a shelter for frazzled nerves,
but for taxes as well.
Ridiculous? One might say, certainly a decision of the Supreme Court cannot be construed to
promote an absurdity. But precisely the majority, and the faulty reasoning it utilizes, opens
itself up to all sorts of mischief, and certainly, a tax-exempt massage parlor is one of the
lesser evils that could arise from the majority ruling. This is indeed a very strange and very
wrong decision.
I dissent.
DANTE O. TINGA
Associate Justice

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16. HEIRS OF MALABANAN vs. REPUBLIC the property in the manner and for the length of time required by law for confirmation of
G.R. No. 179987 September 3, 2013 imperfect title.
HEIRS OF MARIO MALABANAN, (Represented by Sally A. Malabanan), Petitioners, On February 23, 2007, the CA promulgated its decision reversing the RTC and dismissing the
vs. application for registration of Malabanan. Citing the ruling in Republic v. Herbieto
REPUBLIC OF THE PHILIPPINES, Respondent. (Herbieto),4 the CA declared that under Section 14(1) of the Property Registration Decree,
RESOLUTION any period of possession prior to the classification of the land as alienable and disposable
BERSAMIN, J.: was inconsequential and should be excluded from the computation of the period of
For our consideration and resolution are the motions for reconsideration of the parties who possession. Noting that the CENRO-DENR certification stated that the property had been
both assail the decision promulgated on April 29, 2009, whereby we upheld the ruling of the declared alienable and disposable only on March 15, 1982, Velazco’s possession prior to
Court of Appeals (CA) denying the application of the petitioners for the registration of a March 15, 1982 could not be tacked for purposes of computing Malabanan’s period of
parcel of land situated in Barangay Tibig, Silang, Cavite on the ground that they had not possession.
established by sufficient evidence their right to the registration in accordance with either Due to Malabanan’s intervening demise during the appeal in the CA, his heirs elevated the
Section 14(1) or Section 14(2) of Presidential Decree No. 1529 (Property Registration Decree). CA’s decision of February 23, 2007 to this Court through a petition for review on certiorari.
Antecedents The petitioners assert that the ruling in Republic v. Court of Appeals and Corazon
The property subject of the application for registration is a parcel of land situated in Naguit5 (Naguit) remains the controlling doctrine especially if the property involved is
Barangay Tibig, Silang Cavite, more particularly identified as Lot 9864-A, Cad-452-D, with an agricultural land. In this regard, Naguit ruled that any possession of agricultural land prior to
area of 71,324-square meters. On February 20, 1998, applicant Mario Malabanan, who had its declaration as alienable and disposable could be counted in the reckoning of the period of
purchased the property from Eduardo Velazco, filed an application for land registration possession to perfect title under the Public Land Act (Commonwealth Act No. 141) and the
covering the property in the Regional Trial Court (RTC) in Tagaytay City, Cavite, claiming that Property Registration Decree. They point out that the ruling in Herbieto, to the effect that
the property formed part of the alienable and disposable land of the public domain, and that the declaration of the land subject of the application for registration as alienable and
he and his predecessors-in-interest had been in open, continuous, uninterrupted, public and disposable should also date back to June 12, 1945 or earlier, was a mere obiter dictum
adverse possession and occupation of the land for more than 30 years, thereby entitling him considering that the land registration proceedings therein were in fact found and declared
to the judicial confirmation of his title.1 void ab initio for lack of publication of the notice of initial hearing.
To prove that the property was an alienable and disposable land of the public domain, The petitioners also rely on the ruling in Republic v. T.A.N. Properties, Inc.6 to support their
Malabanan presented during trial a certification dated June 11, 2001 issued by the argument that the property had been ipso jure converted into private property by reason of
Community Environment and Natural Resources Office (CENRO) of the Department of the open, continuous, exclusive and notorious possession by their predecessors-in-interest of
Environment and Natural Resources (DENR), which reads: an alienable land of the public domain for more than 30 years. According to them, what was
This is to certify that the parcel of land designated as Lot No. 9864 Cad 452-D, Silang Cadastre essential was that the property had been "converted" into private property through
as surveyed for Mr. Virgilio Velasco located at Barangay Tibig, Silang, Cavite containing an prescription at the time of the application without regard to whether the property sought to
area of 249,734 sq. meters as shown and described on the Plan Ap-04-00952 is verified to be be registered was previously classified as agricultural land of the public domain.
within the Alienable or Disposable land per Land Classification Map No. 3013 established As earlier stated, we denied the petition for review on certiorari because Malabanan failed to
under Project No. 20-A and approved as such under FAO 4-1656 on March 15, 1982.2 establish by sufficient evidence possession and occupation of the property on his part and on
After trial, on December 3, 2002, the RTC rendered judgment granting Malabanan’s the part of his predecessors-in interest since June 12, 1945, or earlier.
application for land registration, disposing thusly: Petitioners’ Motion for Reconsideration
WHEREFORE, this Court hereby approves this application for registration and thus places In their motion for reconsideration, the petitioners submit that the mere classification of the
under the operation of Act 141, Act 496 and/or P.D. 1529, otherwise known as Property land as alienable or disposable should be deemed sufficient to convert it into patrimonial
Registration Law, the lands described in Plan Csd-04-0173123-D, Lot 9864-A and containing property of the State. Relying on the rulings in Spouses De Ocampo v. Arlos,7 Menguito v.
an area of Seventy One Thousand Three Hundred Twenty Four (71,324) Square Meters, as Republic8 and Republic v. T.A.N. Properties, Inc.,9 they argue that the reclassification of the
supported by its technical description now forming part of the record of this case, in addition land as alienable or disposable opened it to acquisitive prescription under the Civil Code; that
to other proofs adduced in the name of MARIO MALABANAN, who is of legal age, Filipino, Malabanan had purchased the property from Eduardo Velazco believing in good faith that
widower, and with residence at Munting Ilog, Silang, Cavite. Velazco and his predecessors-in-interest had been the real owners of the land with the right
Once this Decision becomes final and executory, the corresponding decree of registration to validly transmit title and ownership thereof; that consequently, the ten-year period
shall forthwith issue. prescribed by Article 1134 of the Civil Code, in relation to Section 14(2) of the Property
SO ORDERED.3 Registration Decree, applied in their favor; and that when Malabanan filed the application for
The Office of the Solicitor General (OSG) appealed the judgment to the CA, arguing that registration on February 20, 1998, he had already been in possession of the land for almost
Malabanan had failed to prove that the property belonged to the alienable and disposable 16 years reckoned from 1982, the time when the land was declared alienable and disposable
land of the public domain, and that the RTC erred in finding that he had been in possession of by the State.
The Republic’s Motion for Partial Reconsideration

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The Republic seeks the partial reconsideration in order to obtain a clarification with provided by the Constitution, but with the limitation that the lands must only be agricultural.
reference to the application of the rulings in Naguit and Herbieto. Consequently, lands classified as forest or timber, mineral, or national parks are not
Chiefly citing the dissents, the Republic contends that the decision has enlarged, by susceptible of alienation or disposition unless they are reclassified as agricultural.24 A positive
implication, the interpretation of Section 14(1) of the Property Registration Decree through act of the Government is necessary to enable such reclassification, 25 and the exclusive
judicial legislation. It reiterates its view that an applicant is entitled to registration only when prerogative to classify public lands under existing laws is vested in the Executive Department,
the land subject of the application had been declared alienable and disposable since June 12, not in the courts.26 If, however, public land will be classified as neither agricultural, forest or
1945 or earlier. timber, mineral or national park, or when public land is no longer intended for public service
Ruling or for the development of the national wealth, thereby effectively removing the land from
We deny the motions for reconsideration. the ambit of public dominion, a declaration of such conversion must be made in the form of a
In reviewing the assailed decision, we consider to be imperative to discuss the different law duly enacted by Congress or by a Presidential proclamation in cases where the President
classifications of land in relation to the existing applicable land registration laws of the is duly authorized by law to that effect.27 Thus, until the Executive Department exercises its
Philippines. prerogative to classify or reclassify lands, or until Congress or the President declares that the
Classifications of land according to ownership State no longer intends the land to be used for public service or for the development of
Land, which is an immovable property,10 may be classified as either of public dominion or of national wealth, the Regalian Doctrine is applicable.
private ownership.11Land is considered of public dominion if it either: (a) is intended for Disposition of alienable public lands
public use; or (b) belongs to the State, without being for public use, and is intended for some Section 11 of the Public Land Act (CA No. 141) provides the manner by which alienable and
public service or for the development of the national wealth. 12 Land belonging to the State disposable lands of the public domain, i.e., agricultural lands, can be disposed of, to wit:
that is not of such character, or although of such character but no longer intended for public Section 11. Public lands suitable for agricultural purposes can be disposed of only as follows,
use or for public service forms part of the patrimonial property of the State.13 Land that is and not otherwise:
other than part of the patrimonial property of the State, provinces, cities and municipalities is (1) For homestead settlement;
of private ownership if it belongs to a private individual. (2) By sale;
Pursuant to the Regalian Doctrine (Jura Regalia), a legal concept first introduced into the (3) By lease; and
country from the West by Spain through the Laws of the Indies and the Royal Cedulas,14 all (4) By confirmation of imperfect or incomplete titles;
lands of the public domain belong to the State.15This means that the State is the source of (a) By judicial legalization; or
any asserted right to ownership of land, and is charged with the conservation of such (b) By administrative legalization (free patent).
patrimony.16 The core of the controversy herein lies in the proper interpretation of Section 11(4), in
All lands not appearing to be clearly under private ownership are presumed to belong to the relation to Section 48(b) of the Public Land Act, which expressly requires possession by a
State. Also, public lands remain part of the inalienable land of the public domain unless the Filipino citizen of the land since June 12, 1945, or earlier, viz:
State is shown to have reclassified or alienated them to private persons.17 Section 48. The following-described citizens of the Philippines, occupying lands of the public
Classifications of public lands domain or claiming to own any such lands or an interest therein, but whose titles have not
according to alienability been perfected or completed, may apply to the Court of First Instance of the province where
Whether or not land of the public domain is alienable and disposable primarily rests on the the land is located for confirmation of their claims and the issuance of a certificate of title
classification of public lands made under the Constitution. Under the 1935 thereafter, under the Land Registration Act, to wit:
Constitution,18 lands of the public domain were classified into three, namely, agricultural, xxxx
timber and mineral.19 Section 10, Article XIV of the 1973 Constitution classified lands of the (b) Those who by themselves or through their predecessors-in-interest have been in open,
public domain into seven, specifically, agricultural, industrial or commercial, residential, continuous, exclusive, and notorious possession and occupation of alienable and disposable
resettlement, mineral, timber or forest, and grazing land, with the reservation that the law lands of the public domain, under a bona fide claim of acquisition of ownership, since June
might provide other classifications. The 1987 Constitution adopted the classification under 12, 1945, or earlier, immediately preceding the filing of the applications for confirmation of
the 1935 Constitution into agricultural, forest or timber, and mineral, but added national title, except when prevented by war or force majeure. These shall be conclusively presumed
parks.20 Agricultural lands may be further classified by law according to the uses to which to have performed all the conditions essential to a Government grant and shall be entitled to
they may be devoted.21 The identification of lands according to their legal classification is a certificate of title under the provisions of this chapter. (Bold emphasis supplied)
done exclusively by and through a positive act of the Executive Department.22 Note that Section 48(b) of the Public Land Act used the words "lands of the public domain" or
Based on the foregoing, the Constitution places a limit on the type of public land that may be "alienable and disposable lands of the public domain" to clearly signify that lands otherwise
alienated. Under Section 2, Article XII of the 1987 Constitution, only agricultural lands of the classified, i.e., mineral, forest or timber, or national parks, and lands of patrimonial or private
public domain may be alienated; all other natural resources may not be. ownership, are outside the coverage of the Public Land Act. What the law does not include, it
Alienable and disposable lands of the State fall into two categories, to wit: (a) patrimonial excludes. The use of the descriptive phrase "alienable and disposable" further limits the
lands of the State, or those classified as lands of private ownership under Article 425 of the coverage of Section 48(b) to only the agricultural lands of the public domain as set forth in
Civil Code,23 without limitation; and (b) lands of the public domain, or the public lands as Article XII, Section 2 of the 1987 Constitution. Bearing in mind such limitations under the

81 clioocampo
Public Land Act, the applicant must satisfy the following requirements in order for his alienable and disposable agricultural land of the public domain for the entire duration of the
application to come under Section 14(1) of the Property Registration Decree,28 to wit: requisite period of possession.
1. The applicant, by himself or through his predecessor-in-interest, has been in To be clear, then, the requirement that the land should have been classified as alienable and
possession and occupation of the property subject of the application; disposable agricultural land at the time of the application for registration is necessary only to
2. The possession and occupation must be open, continuous, exclusive, and dispute the presumption that the land is inalienable.
notorious; The declaration that land is alienable and disposable also serves to determine the point at
3. The possession and occupation must be under a bona fide claim of acquisition of which prescription may run against the State. The imperfect or incomplete title being
ownership; confirmed under Section 48(b) of the Public Land Act is title that is acquired by reason of the
4. The possession and occupation must have taken place since June 12, 1945, or applicant’s possession and occupation of the alienable and disposable agricultural land of the
earlier; and public domain. Where all the necessary requirements for a grant by the Government are
5. The property subject of the application must be an agricultural land of the public complied with through actual physical, open, continuous, exclusive and public possession of
domain. an alienable and disposable land of the public domain, the possessor is deemed to have
Taking into consideration that the Executive Department is vested with the authority to acquired by operation of law not only a right to a grant, but a grant by the Government,
classify lands of the public domain, Section 48(b) of the Public Land Act, in relation to Section because it is not necessary that a certificate of title be issued in order that such a grant be
14(1) of the Property Registration Decree, presupposes that the land subject of the sanctioned by the courts.31
application for registration must have been already classified as agricultural land of the public If one follows the dissent, the clear objective of the Public Land Act to adjudicate and quiet
domain in order for the provision to apply. Thus, absent proof that the land is already titles to unregistered lands in favor of qualified Filipino citizens by reason of their occupation
classified as agricultural land of the public domain, the Regalian Doctrine applies, and and cultivation thereof for the number of years prescribed by law32 will be defeated. Indeed,
overcomes the presumption that the land is alienable and disposable as laid down in Section we should always bear in mind that such objective still prevails, as a fairly recent legislative
48(b) of the Public Land Act. However, emphasis is placed on the requirement that the development bears out, when Congress enacted legislation (Republic Act No. 10023)33in
classification required by Section 48(b) of the Public Land Act is classification or order to liberalize stringent requirements and procedures in the adjudication of alienable
reclassification of a public land as agricultural. public land to qualified applicants, particularly residential lands, subject to area limitations.34
The dissent stresses that the classification or reclassification of the land as alienable and On the other hand, if a public land is classified as no longer intended for public use or for the
disposable agricultural land should likewise have been made on June 12, 1945 or earlier, development of national wealth by declaration of Congress or the President, thereby
because any possession of the land prior to such classification or reclassification produced no converting such land into patrimonial or private land of the State, the applicable provision
legal effects. It observes that the fixed date of June 12, 1945 could not be minimized or concerning disposition and registration is no longer Section 48(b) of the Public Land Act but
glossed over by mere judicial interpretation or by judicial social policy concerns, and insisted the Civil Code, in conjunction with Section 14(2) of the Property Registration Decree.35 As
that the full legislative intent be respected. such, prescription can now run against the State.
We find, however, that the choice of June 12, 1945 as the reckoning point of the requisite To sum up, we now observe the following rules relative to the disposition of public land or
possession and occupation was the sole prerogative of Congress, the determination of which lands of the public domain, namely:
should best be left to the wisdom of the lawmakers. Except that said date qualified the (1) As a general rule and pursuant to the Regalian Doctrine, all lands of the public
period of possession and occupation, no other legislative intent appears to be associated domain belong to the State and are inalienable. Lands that are not clearly under
with the fixing of the date of June 12, 1945. Accordingly, the Court should interpret only the private ownership are also presumed to belong to the State and, therefore, may
plain and literal meaning of the law as written by the legislators. not be alienated or disposed;
Moreover, an examination of Section 48(b) of the Public Land Act indicates that Congress (2) The following are excepted from the general rule, to wit:
prescribed no requirement that the land subject of the registration should have been (a) Agricultural lands of the public domain are rendered alienable and
classified as agricultural since June 12, 1945, or earlier. As such, the applicant’s imperfect or disposable through any of the exclusive modes enumerated under
incomplete title is derived only from possession and occupation since June 12, 1945, or Section 11 of the Public Land Act. If the mode is judicial confirmation of
earlier. This means that the character of the property subject of the application as alienable imperfect title under Section 48(b) of the Public Land Act, the agricultural
and disposable agricultural land of the public domain determines its eligibility for land land subject of the application needs only to be classified as alienable and
registration, not the ownership or title over it. disposable as of the time of the application, provided the applicant’s
Alienable public land held by a possessor, either personally or through his predecessors-in- possession and occupation of the land dated back to June 12, 1945, or
interest, openly, continuously and exclusively during the prescribed statutory period is earlier. Thereby, a conclusive presumption that the applicant has
converted to private property by the mere lapse or completion of the period.29 In fact, by performed all the conditions essential to a government grant arises,36 and
virtue of this doctrine, corporations may now acquire lands of the public domain for as long the applicant becomes the owner of the land by virtue of an imperfect or
as the lands were already converted to private ownership, by operation of law, as a result of incomplete title. By legal fiction, the land has already ceased to be part of
satisfying the requisite period of possession prescribed by the Public Land Act.30 It is for this the public domain and has become private property.37
reason that the property subject of the application of Malabanan need not be classified as

82 clioocampo
 (b) Lands of the public domain subsequently classified or declared as no
longer intended for public use or for the development of national wealth
are removed from the sphere of public dominion and are considered
converted into patrimonial lands or lands of private ownership that may
be alienated or disposed through any of the modes of acquiring
ownership under the Civil Code. If the mode of acquisition is prescription,
whether ordinary or extraordinary, proof that the land has been already
converted to private ownership prior to the requisite acquisitive
prescriptive period is a condition sine qua non in observance of the law
(Article 1113, Civil Code) that property of the State not patrimonial in
character shall not be the object of prescription.
To reiterate, then, the petitioners failed to present sufficient evidence to establish that they
and their predecessors-in-interest had been in possession of the land since June 12, 1945.
Without satisfying the requisite character and period of possession - possession and
occupation that is open, continuous, exclusive, and notorious since June 12, 1945, or earlier -
the land cannot be considered ipso jure converted to private property even upon the
subsequent declaration of it as alienable and disposable. Prescription never began to run
against the State, such that the land has remained ineligible for registration under Section
14(1) of the Property Registration Decree. Likewise, the land continues to be ineligible for
land registration under Section 14(2) of the Property Registration Decree unless Congress
enacts a law or the President issues a proclamation declaring the land as no longer intended
for public service or for the development of the national wealth.1âwphi1
WHEREFORE, the Court DENIES the petitioners' Motion for Reconsideration and the
respondent's Partial Motion for Reconsideration for their lack of merit.
SO ORDERED.

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17. ALONSO vs. CEBU COUNTRY CLUB Both parties appealed to the Court of Appeals (CA), which ultimately affirmed the RTC on
G.R. No. 188471 April 20, 2010 March 31, 1997. Thus, Francisco filed a motion for reconsideration, which was denied on
FRANCISCO ALONSO, substituted by MERCEDES V. ALONSO, TOMAS V. ALONSO and October 2, 1997.8
ASUNCION V. ALONSO, Petitioners, Nothing daunted, Francisco appealed to this Court (G.R. No. 130876).
vs. On January 31, 2002, this Court decided G.R. No. 130876, decreeing:
CEBU COUNTRY CLUB, INC., Respondent, WHEREFORE, we DENY the petition for review. However, we SET ASIDE the decision of the
REPUBLIC OF THE PHILIPPINES, represented by the OFFICE OF THE SOLICITOR Court of Appeals and that of the Regional Trial Court, Cebu City, Branch 08.
GENERAL, Public Respondent. IN LIEU THEREOF, we DISMISS the complaint and counterclaim of the parties in Civil Cases
DECISION No. CEB 12926 of the trial court. We declare that Lot No. 727 D-2 of the Banilad Friar Lands
BERSAMIN, J.: Estate covered by Original Certificate of Title Nos. 251, 232, and 253 legally belongs to the
By petition for review on certiorari, the petitioners appeal the order dated December 28, Government of the Philippines. 9
2007 of the Regional Trial Court (RTC), Branch 20, in Cebu City, denying the motion for The petitioners sought a reconsideration. On December 5, 2003, however, the Court denied
issuance of writ of execution of the Office of the Solicitor General (OSG) in behalf of the their motion for reconsideration.10 Hence, the decision in G.R. No. 130876 became final and
Government, and the order dated April 24, 2009, denying their motion for reconsideration executory.
filed against the first order. In late 2004, the Government, through the OSG, filed in the RTC a motion for the issuance of
Antecedents a writ of execution.11Cebu Country Club opposed the motion for the issuance of a writ of
The antecedent facts are those established in Alonso v. Cebu Country Club,1 which follow. execution in due course.
Petitioner Francisco M. Alonso (Francisco) was the only son and sole heir of the late spouses Later on, the proceedings on the OSG’s motion for the issuance of a writ of execution at the
Tomas N. Alonso and Asuncion Medalle. Francisco died during the pendency of this case, and instance of Cebu Country Club in deference to the on-going hearings being conducted by the
was substituted by his legal heirs, namely: his surviving spouse, Mercedes V. Alonso, his son Committee on Natural Resources of the House of Representatives on a proposed bill to
Tomas V. Alonso (Tomas) and his daughter Asuncion V. Alonso.2 confirm the TCTs and reconstituted titles covering the Banilad Friar Lands Estate in Cebu
In 1992, Francisco discovered documents showing that his father Tomas N. Alonso had City.12 The Congress ultimately enacted a law to validate the TCTs and reconstituted titles
acquired Lot No. 727 of the Banilad Friar Lands Estate from the Government in or about the covering the Banilad Friar Lands Estate in Cebu City. This was Republic Act No.
year 1911; that the original vendee of Lot No. 727 had assigned his sales certificate to Tomas 9443,13 effective on July 27, 2007.
N. Alonso, who had been consequently issued Patent No. 14353; and that on March 27, 1926, Thereafter, both Cebu Country Club and the OSG brought the passage of R.A. No. 9443 to the
the Director of Lands had executed a final deed of sale in favor of Tomas N. Alonso, but the attention of the RTC for its consideration in resolving the OSG’s motion for the issuance of a
final deed of sale had not been registered with the Register of Deeds because of lack of writ of execution.14 On December 28, 2007, therefore, the RTC denied the OSG’s motion for
requirements, like the approval of the final deed of sale by the Secretary of Agriculture and the issuance of a writ of execution through the first appealed order.15
Natural Resources, as required by law.3 The petitioners filed a motion for reconsideration dated February 1, 2008, questioning the
Francisco subsequently found that the certificate of title covering Lot No. 727-D-2 of the denial of the OSG’s motion for the issuance of a writ of execution. 16
Banilad Friar Lands Estate had been "administratively reconstituted from the owner’s Upon being directed by the RTC to comment on the petitioners’ motion for reconsideration,
duplicate" of Transfer Certificate of Title (TCT) No. RT-1310 in the name of United Service the OSG manifested in writing that the Government was no longer seeking the execution of
Country Club, Inc., the predecessor of respondent Cebu Country Club, Inc (Cebu Country the decision in G.R. No. 130876, subject to its reservation to contest any other titles within
Club); and that upon the order of the court that had heard the petition for reconstitution of the Banilad Friar Lands Estate should clear evidence show such titles as having been obtained
the TCT, the name of the registered owner in TCT No. RT-1310 had been changed to that of through fraud.17
Cebu Country Club; and that the TCT stated that the reconstituted title was a transfer from After the filing of the OSG’s comment, the RTC issued the second appealed order, denying
TCT No. 1021.4 the petitioners’ motion for reconsideration, giving the following reasons:
It is relevant to mention at this point that the current TCT covering Lot 727-D-2 in the name 1. The party who had a direct interest in the execution of the decision and the
of Cebu Country Club is TCT No. 94905, which was entered in the land records of Cebu City reconsideration of the denial of the motion for execution was the Government,
on August 8, 1985.5 represented only by the OSG; hence, the petitioners had no legal standing to file
With his discoveries, Francisco formally demanded upon Cebu Country Club to restore the the motion for reconsideration, especially that they were not authorized by the
ownership and possession of Lot 727-D-2 to him. However, Cebu Country Club denied OSG for that purpose;
Francisco’s demand and claim of ownership, and refused to deliver the possession to him.6 2. R.A. No. 9443 "confirms and declares as valid" all "existing" TCTs and
On September 25, 1992, Francisco commenced against Cebu Country Club in the RTC in Cebu reconstituted titles; thereby, the State in effect waived and divested itself of
City an action for the declaration of nullity and non-existence of deed/title, the cancellation whatever title or ownership over the Banilad Friar Lands Estate in favor of the
of certificates of title, and the recovery of property. On November 5, 1992, Cebu Country registered owners thereof, including Lot 727 D-2; and
Club filed its answer with counterclaim.7 3. The situation of the parties had materially changed, rendering the enforcement
On May 7, 1993, the RTC decided in favor of Cebu Country Club. of the final and executory judgment unjust, inequitable, and impossible, because

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 Cebu Country Club was now recognized by the State itself as the absolute owner of effort in poring over the papers submitted herein, only to discover in the end that a review
Lot 727 D-2.18 should have first been made by the CA. The time and effort could have been dedicated to
Hence, the petitioners appeal by petition for review on certiorari. other cases of importance and impact on the lives and rights of others.
Contentions of the Petitioners The hierarchy of courts is not to be lightly regarded by litigants. The CA stands between the
The petitioners challenge the orders dated December 28, 2007 and April 29, 2009, because: RTC and the Court, and its establishment has been precisely to take over much of the work
1. R.A. No. 9443 did not improve Cebu Country Club’s plight, inasmuch as R.A. No. that used to be done by the Court. Historically, the CA has been of the greatest help to the
9443 presupposed first a sales certificate that lacked the required signature, but Court in synthesizing the facts, issues, and rulings in an orderly and intelligible manner and in
Cebu Country Club did not have such sales certificate. Moreover, the titleholders identifying errors that ordinarily might escape detection. The Court has thus been freed to
were in fact the owners of the lands covered by their respective titles, which was better discharge its constitutional duties and perform its most important work, which, in the
not true with Cebu Country Club due to its being already adjudged with finality to words of Dean Vicente G. Sinco,20 "is less concerned with the decision of cases that begin and
be not the owner of Lot 727-D-2. Lastly, Cebu Country Club’s title was hopelessly end with the transient rights and obligations of particular individuals but is more intertwined
defective, as found by the Supreme Court itself; with the direction of national policies, momentous economic and social problems, the
2. The doctrine of law of the case barred the application of R.A. No. 9443 to Cebu delimitation of governmental authority and its impact upon fundamental rights." 21
Country Club; The need to elevate the matter first to the CA is also underscored by the reality that
3. The RTC’s declaration that R.A. No. 9443 confirmed Cebu Country Club as the determining whether the petitioners were real parties in interest entitled to bring this appeal
absolute owner of Lot 727-D-2 despite the prior and final judgment of the Supreme against the denial by the RTC of the OSG’s motion for the issuance of a writ of execution was
Court that Cebu Country Club was not the owner was unconstitutional, because it a mixed question of fact and law. As such, the CA was in the better position to review and to
virtually allowed the legislative review of the Supreme Court’s decision rendered determine. In that regard, the petitioners violate Section 1, Rule 45 of the 1997 Rules of Civil
against Cebu Country Club; Procedure, which demands that an appeal by petition for review on certiorari be limited to
4. The use of R.A. No. 9443 as a waiver on the part of the Government vis-à-vis questions of law.22
Cebu Country Club was not only misplaced but downrightly repugnant to Act 1120, The second violation concerns the omission of a sworn certification against forum shopping
the law governing the legal disposition and alienation of Friar Lands; and from the petition for review on certiorari. Section 4, Rule 45 of the 1997 Rules of Civil
5. The petitioners had the requisite standing to question the patent errors of the Procedure requires that the petition for review should contain, among others, the sworn
RTC, especially in the face of the unholy conspiracy between the OSG and Cebu certification on the undertakings provided in the last paragraph of Section 2, Rule 42 of the
Country Club, on the one hand, and, on the other hand, the passage of R.A. No. 1997 Rules of Civil Procedure, viz:
9443 and DENR Memorandum No. 16, both of which in fact made their predecessor Section 2. xxx
Tomas N. Alonso’s sales certificate and patent valid.19 The petitioner shall also submit together with the petition a certification under oath that he
Issues has not theretofore commenced any other action involving the same issues in the Supreme
The Court confronts and resolves the following issues, to wit: Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if
1. Whether or not the petitioners were the real parties-in-interest to question the there is such other action or proceeding, he must state the status of the same; and if he
denial by the RTC of the OSG’s motion for the issuance of a writ of execution; should thereafter learn that a similar action or proceeding has been filed or is pending before
2. Whether or not R.A. No. 9443 gave the petitioners a legal interest to assail the the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal
RTC’s orders; and or agency, he undertakes to promptly inform the aforesaid courts and other tribunal or
3. Whether or not the petitioners can appeal by petition for review on certiorari in agency thereof within five (5) days therefrom. (n)
behalf of the OSG. Only petitioner Tomas V. Alonso has executed and signed the sworn certification against
Ruling forum shopping attached to the petition. Although neither of his co-petitioners – Mercedes
The petition for review is denied due course. V. Alonso and Asuncion V. Alonso – has joined the certification, Tomas did not present any
A. Preliminary Considerations: written express authorization in his favor authorizing him to sign the certification in their
Petitioners contravene the hierarchy of courts, and the petition is fatally defective behalf. The signing of the certification by only one of the petitioners could not be presumed
Before delving on the stated issues, the Court notes that the petitioners are guilty of two to reflect the personal knowledge by his co-petitioners of the filing or non-filing of any similar
violations that warrant the immediate dismissal of the petition for review on certiorari. action or claim.23 Hence, the failure of Mercedes and Asuncion to sign and execute the
The first refers to the petitioners’ breach of the hierarchy of courts by coming directly to the certification along with Tomas warranted the dismissal of their petition.24
Court to appeal the assailed issuances of the RTC via petition for review on certiorari. They B. Petitioners are not proper parties to appeal and assail the order of the RTC
should not have done so, bypassing a review by the Court of Appeals (CA), because the The petitioners are relentless in insisting that their claim to Lot No. 727-D-2 of the Banilad
hierarchy of courts is essential to the efficient functioning of the courts and to the orderly Friar Lands Estate should be preferred to that of Cebu Country Club, despite the final
administration of justice. Their non-observance of the hierarchy of courts has forthwith judgment in G.R. No. 130876 being adverse to their claim. Their insistence raises the need to
enlarged the docket of the Court by one more case, which, though it may not seem resolve once and for all whether or not the petitioners retained any legal right to assert over
burdensome to the layman, is one case too much to the Court, which has to devote time and

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Lot No. 727-D-2 following the Government’s manifest desistance from the execution of the In a vain attempt at showing that he had succeeded to the estate of his father, on May 4,
judgment in G.R. No. 130876 against Cebu Country Club. 1991, petitioner Francisco Alonso executed an affidavit adjudicating the entire estate to
The above-noted defects of the petition for review notwithstanding, therefore, the Court has himself (Exh. "Q"), duly published in a newspaper of general circulation in the province and
now to address and resolve the stated issues on the sole basis of the results the Court earlier city of Cebu (Exh. "Q-1"). Such affidavit of self-adjudication is inoperative, if not void, not only
reached in G.R. No. 130876. In this regard, whether or not the petitioners are the proper because there was nothing to adjudicate, but equally important because petitioner Francisco
parties to bring this appeal is decisive. did not show proof of payment of the estate tax and submit a certificate of clearance from
After careful consideration, the Court finds that the cause of the petitioners instantly fails. the Commissioner of Internal Revenue. Obviously, petitioner Francisco has not paid the
In G.R. No. 130876, the Court found that the petitioners did not validly acquire ownership of estate taxes.
Lot No. 727-D-2, and declared that Lot No. 727 D-2 legally belonged to the Government, thus: Consequently, we rule that neither Tomas N. Alonso nor his son Francisco M. Alonso or the
The second issue is whether the Court of Appeals erred in ruling that the Cebu Country Club, latter’s heirs are the lawful owners of Lot No. 727 in dispute. xxx.25
Inc. is owner of Lot No. 727. The pronouncement in G.R. No. 130876 renders beyond dispute that the non-execution of
Admittedly, neither petitioners nor their predecessor had any title to the land in the judgment would not adversely affect the petitioners, who now hold no right whatsoever
question. The most that petitioners could claim was that the Director of Lands issued a sales in Lot No. 727-D-2. Otherwise put, they are not the proper parties to assail the questioned
patent in the name of Tomas N. Alonso. The sales patent, however, and even the orders of the RTC, because they stand to derive nothing from the execution of the judgment
corresponding deed of sale were not registered with the Register of Deeds and no title was against Cebu Country Club.
ever issued in the name of the latter. This is because there were basic requirements not Every action must be prosecuted or defended in the name of the real party in interest, unless
complied with, the most important of which was that the deed of sale executed by the otherwise authorized by law or the rules.26 A real party in interest is one who stands to be
Director of Lands was not approved by the Secretary of Agriculture and Natural benefited or injured by the judgment in the suit, or the party entitled to the avails of the
Resources. Hence, the deed of sale was void. "Approval by the Secretary of Agriculture and suit.27 "Interest" within the meaning of the rule means material interest, an interest in issue
Commerce is indispensable for the validity of the sale." Moreover, Cebu Country Club, Inc. and to be affected by the decree, as distinguished from mere interest in the question
was in possession of the land since 1931, and had been paying the real estate taxes thereon involved, or a mere incidental interest. The rule refers to a real or present substantial
based on tax declarations in its name with the title number indicated thereon. Tax receipts interest, as distinguished from a mere expectancy; or from a future, contingent, subordinate,
and declarations of ownership for taxation purposes are strong evidence of ownership. This or consequential interest.28 One having no right or interest to protect cannot invoke the
Court has ruled that although tax declarations or realty tax payments are not conclusive jurisdiction of the court as a party-plaintiff in an action.29
evidence of ownership, nevertheless, they are good indicia of possession in the concept of Thus, an appeal, like this one, is an action to be prosecuted by a party in interest before a
owner for no one in his right mind will be paying taxes for a property that is not in his actual higher court. In order for the appeal to prosper, the litigant must of necessity continue to
or constructive possession. hold a real or present substantial interest that entitles him to the avails of the suit on appeal.
Notwithstanding this fatal defect, the Court of Appeals ruled that "there was substantial If he does not, the appeal, as to him, is an exercise in futility. So it is with the petitioners!
compliance with the requirement of Act No. 1120 to validly convey title to said lot to Tomas In contrast, the Government, being the legal owner of Lot No. 727-D-2, is the only party
N. Alonso." adversely affected by the denial, and is the proper party entitled to assail the
On this point, the Court of Appeals erred. denial.30 However, its manifest desistance from the execution of the decision effectively
Under Act No. 1120, which governs the administration and disposition of friar lands, the barred any challenge against the denial, for its non-appeal rendered the denial final and
purchase by an actual and bona fide settler or occupant of any portion of friar land shall be immutable.
"agreed upon between the purchaser and the Director of Lands, subject to the approval of C. R.A. No. 9443 gives petitioners no legal interest to assail the denial of the motion for
the Secretary of Agriculture and Natural Resources (mutatis mutandis)." execution
In his Memorandum filed on May 25, 2001, the Solicitor General submitted to this Court Section 1 of R.A. No. 9443 provides:
certified copies of Sale Certificate No. 734, in favor of Leoncio Alburo, and Assignment of Sale Section 1. All existing Transfer Certificates of Title and Reconstituted Certificates of Title
Certificate No. 734, in favor of Tomas N. Alonso. Conspicuously, both instruments do not duly issued by the Register of Deeds of Cebu Province and/or Cebu City covering any
bear the signature of the Director of Lands and the Secretary of the Interior. They also do not portion of the Banilad Friar Lands Estate, notwithstanding the lack of signatures and/or
bear the approval of the Secretary of Agriculture and Natural Resources. approval of the then Secretary of Interior (later Secretary of Agriculture and Natural
Only recently, in Jesus P. Liao v. Court of Appeals, the Court has ruled categorically Resources) and/or the then Chief of the Bureau of Public Lands (later Director of Public
that approval by the Secretary of Agriculture and Commerce of the sale of friar lands is Lands) in the copies of the duly executed Sale Certificates and Assignments of Sale
indispensable for its validity, hence, the absence of such approval made the sale null and Certificates, as the case may be, now on file with the Community Environment and Natural
void ab-initio. Necessarily, there can be no valid titles issued on the basis of such sale or Resources Office (CENRO), Cebu City, are hereby declared as valid titles and the registered
assignment. Consequently, petitioner Francisco’s father did not have any registerable title owners recognized as absolute owners thereof.
to the land in question. Having none, he could not transmit anything to his sole heir, The law expressly declares as valid "(a)ll existing Transfer Certificates of Title and
petitioner Francisco Alonso or the latter’s heirs. 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," and recognizes the

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registered owners as absolute owners. To benefit from R.A. No. 9443, therefore, a person executed on March 27, 1926 by the Director of Lands was not approved by the Secretary of
must hold as a condition precedent a duly issued Transfer Certificate of Title or a Agriculture and Natural Resources and could not be registered. "Under the law, it is the act of
Reconstituted Certificate of Title. registration of the deed of conveyance that serves as the operative act to convey the land
Although Lot 727-D-2 was earlier declared to be owned by the Government in G.R. No. registered under the Torrens system. The act of registration creates constructive notice to
130876, R.A. No. 9443 later validated Cebu Country Club’s registered ownership due to its the whole world of the fact of such conveyance." On this point, petitioner alleges that Cebu
holding of TCT No. RT-1310 (T-11351) in its own name. As the OSG explained in its Country Club, Inc. obtained its title by fraud in connivance with personnel of the Register of
manifestation in lieu of comment31 (filed in the RTC vis-à-vis the petitioners’ motion for Deeds in 1941 or in 1948, when the title was administratively reconstituted. Imputations of
reconsideration against the RTC’s denial of the OSG’s motion for issuance of a writ of fraud must be proved by clear and convincing evidence. Petitioner failed to adduce
execution), the enactment of R.A. No. 9443 had "mooted the final and executory Decision of evidence of fraud. In an action for re-conveyance based on fraud, he who charges fraud must
the Supreme Court in "Alonso v. Cebu Country Club, Inc.," docketed as G.R. No. 130876, prove such fraud in obtaining a title. "In this jurisdiction, fraud is never presumed." The
which declared the Government as the owner of Lot 727-D-2 based on the absence of strongest suspicion cannot sway judgment or overcome the presumption of
signature and approval of the then Secretary of Interior;" and that the decision in G.R. No. regularity. "The sea of suspicion has no shore, and the court that embarks upon it is without
130876 had "ceased to have any practical effect" as the result of the enactment of R.A. No. rudder or compass." Worse, the imputation of fraud was so tardily brought, some forty-
9443, and had thereby become "academic."32 four (44) years or sixty-one (61) years after its supposed occurrence, that is, from the
On the other hand, the petitioners could not benefit from R.A. No. 9443 because of their administrative reconstitution of title on July 26, 1948, or from the issuance of the original
non-compliance with the express condition of holding any Transfer Certificate of Title or title on November 19, 1931, that verification is rendered extremely difficult, if not
Reconstituted Certificate of Title respecting Lot 727-D-2 or any portion thereof.1awph!1 impossible, especially due to the supervening event of the second world war during which
The appropriate recourse for the petitioners, if they persist in the belief that the TCT of Cebu practically all public records were lost or destroyed, or no longer available.33
Country Club should be nullified, is to compel the OSG through the special civil action for IN VIEW OF THE FOREGOING, the petition for review on certiorari is denied for lack of merit.
mandamus to commence the action to annul on the ground that Cebu Country Club had The Court declares that Cebu Country Club, Inc. is the exclusive owner of Lot No.727-D-2 of
obtained its title to Lot 7217-D-2 through fraud. Yet, that recourse is no longer availing, for the Banilad Friar Lands Estate, as confirmed by Republic Act No. 9443.
the decision in G.R. No. 130876 explicitly found and declared that the reconstituted title of Costs of suit to be paid by the petitioners.
Cebu Country Club had not been obtained through fraud. Said the Court: SO ORDERED.
On the question that TCT No. RT-1310 (T-11351) bears the same number as another title to LUCAS P. BERSAMIN
another land, we agree with the Court of Appeals that there is nothing fraudulent with the Associate Justice
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. xxx.
xxx
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
owner’s 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. 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. 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 [T]orrens title ever issued to Tomas N. Alonso, because, as said, the deed of sale

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