Art. 422.

Property of public dominion, when

no longer intended for public use or for public service, shall form part of
the patrimonial property of the State. (341a)
Municipality of Cavite v. Rojas
FACTS: A parcel of land forming a part of the public plaza was leased to the
defendants on which their house has been constructed and had been occupying the
same. The plaintiff ordered the defendants to vacate the said land as it formed
integral part of the public plaza. The defendants refused to vacate the said land
because they had acquired the right of possession to it and further alleged that the
lease agreement provided that they can only be ordered to vacate the said property
if the municipality needed it for decoration or public use.
The trial court held that the municipality had no legal claim to the property. This case
was appealed through bill of exceptions.
ISSUE: WON the lease agreement between the parties was valid
Ruling: The lease was null and void.
Ratio Decidendi: The defendant has no right to continue to occupy the land for it is
an integral part of the plaza which is for public use and is reserved for the common
benefit. Property for public use in provinces and in towns comprises the provincial
and town roads, the squares, streets, fountains, and public waters, the promenades,
and public works of general service supported by said towns or provinces.
The said Plaza being a promenade for public use, the municipal council of
Cavite could not in 1907 withdraw or exclude from public use a portion thereof in
order to lease it for the sole benefit of the defendant Hilaria Rojas. The plaintiff
municipality exceeded its authority in the exercise of its powers by executing a
contract over a thing of which it could not dispose, nor is it empowered so to do. The
Civil Code, articles 1271, prescribes that everything which is not outside the
commerce of man may be the object of a contract, and plazas and streets
are outside of this commerce. Therefore, it must be concluded that the said
lease is null and void.
Public plazas and streets are of public character and may not be leased out
by the municipality.
Maneclang v. Intermediate Appellate Court
Facts:
Adriano Maneclang in this case filed a complaint for quieting of title over a certain
fishpond located within the 4 parcels of land belonging to them situated in
Pangasinan but the trial court dismissed it by saying that the body of water is a
creek constituting a tributary to Agno River therefore public in nature and not
subject to private appropriation. They appealed it to the IAC, which affirmed the
aforementioned decision. Hence, this is a review on certiorari. However, after having
been asked to comment to the case thereon, they manifested their lack of interest
and the parties to the case (the complainant and the awardee in the public bidding
Maza) decided to amicably settle the case saying that judgment be rendered and
that the court recognize the ownership of the petitioners over the land the body of
water found within their titled properties. They say that there would be no benefit
since the NIA already constructed a dike and no water now gets in and out of the
land.
Issue: Whether or not the fishpond is public in nature.

Held: Yes. A creek is defined as a recess or arm extending from a river and
participating in the ebb and flow of the sea. It is a property belonging to the
public domain and is not susceptible to private appropriation and acquisitive
prescription.
The mere construction of the dikes by NIA nor its conversion to a fishpond altered or
changed the nature of the creek as property of the public domain. The compromise
agreement is null and void and of no legal effect because it is contrary to law and
public policy.
Faustino Ignacio vs Director of Lands
Facts:
Ignacio applied for the registration of a parcel of a mangrove land in Rizal. It was
stated in the application that he owned the parcelby right of accretion. The director
of land opposed the registration for the reason that the land to be registered is an
area of public domain and that the applicant nor his predecessor-in-interes
possessed sufficient title for the land. The parcel of land
appliedwas acquired from the government by the virtue of a free patent title.
However, the land
in question was formed by accretion and alluvial deposists caused by the action of
the Manila bay. The petition was denied by the lower court and decided that the land
to be registered are part of the public domain. Faustino, however, contended that
the court could have declared the
land not to be part of the public domain.
Issue: Whether or not the courts have the power to reclassify a land
Ruling:
No, the courts do not have the power to reclassify a land. The courts are primarily
called
upon to determine whether a land is to be used for public purpose. However, it is
only limited
there. A formal declaration of reclassification of land should come from the
government,
specifically from the executive department or the legislature. These bodies should
declare that a
land in question is no longer needed for public use, some public use or for the
improvement of
national wealth.
IGNACIO VS. DIRECTOR OF LANDS AND VALERIANO:
Case Doctrine: Article 457 of the New Civil Code (Article 366, Old Civil Code), which
provides that: To the owners of lands adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the current of the waters.
The article cited is clearly inapplicable because it refers to accretion or deposits on
the banks of rivers, while the accretion in the present case was caused by action of
the Manila Bay.
FACTS:
Ignacio applied for registration of a parcel of land adjacent to his land, claiming that
he has acquired the land by right of accretion. Director of Lands, Valeriano opposed,
instead it avers that portion sought to be registered is property of public domain.
ARGUMENTS:
1.Appellant contends that the parcel belongs to him by the law of accretion, having
been formed by gradual deposit by action of the Manila Bay, and he cites Article 457
of the New Civil Code

2. Appellant next contends that Articles 1, 4 and 5 of the Law of Waters are not
applicable because they refer to accretions formed by the sea, and that Manila Bay
cannot be considered as a sea.
ISSUE/S:
WON the land subject of the dispute can be acquired by right of accretion of Ignacio.
HELD:
NO. The land cannot be acquired by right of accretion.
Article 457 is not applicable.
The article cited is clearly inapplicable because it refers to accretion or deposits on
the banks of rivers, while the accretion in the present case was caused by action of
the Manila Bay.
Manila bay is not a river. A bay is a part of the sea, being a mere indentation of the
same:
Bay. - An opening into the land where the water is shut in on all sides except at the
entrance; an inlet of the sea; an arm of the sea, distinct from a river, a bending or
curbing of the shore of the sea or of a lake.
MACASIANO vs. DIOKNO
Facts:
Respondent Municipality passed Ordinance No. 86 which authorized the closure of
J.Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets and the
establishment of a flea market thereon. This was passed pursuant to MMC Ordinance
No.2 and was approved by the Metropolitan Manila Authority on July 20, 1990.
On August 8, 1990, respondent municipality and Palanyag entered into a contract
agreement whereby the latter shall operate, maintain & manage the flea markets
and/or vending areas in the aforementioned streets with the obligation to remit dues
to the treasury of the municipal government of Paraaque.
On September 13, 1990 Brig. Gen. Macasiano ordered the destruction and
confiscation of stalls along G.G. Cruz & Gabriel Street in Baclaran. He also wrote a
letter to Palanyag ordering the destruction of the flea market.
Hence, respondent filed a joint petition praying for preliminary injunction. The trial
court upheld the assailed Ordinance and enjoined petitioner from enforcing his
letter-order against Palanyag.
Issues:
WON an ordinance/resolution issued by the municipal council of Paraaque
authorizing the lease & use of public streets/thoroughfares as sites for the flea
market is valid.
Held:
No.
J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets are local
roads used for public service and are therefore considered public properties of
respondent municipality. Properties of the local government devoted to public
service are deemed public and are under the absolute control of Congress. Hence,
local governments have no authority to control/regulate the use of public properties
unless specific authority is vested upon them by Congress.
Sec. 10, Chapter II of the LGC should be read and interpreted in accordance with
basic principles already established by law.
The closure should be for the sole purpose of withdrawing the road or other public
property from public use when circumstances show that such property is no longer
intended/necessary for public use/service. Once withdrawn, the property then
becomes patrimonial property of the LGU concerned and only then can said LGU use
the property as an object of an ordinary contract. Roads and streets available to the
public and ordinarily used for vehicular traffic are still considered public property
devoted to public use. The LGU has no power to use it for another purpose or to
dispose of or lease it to private persons.

Also, the disputed ordinance cannot be validly implemented because it cant be

considered approved by the Metropolitan Manila Authority due to non-compliance
with the conditions it imposed for the approval of said ordinance.
The powers of an LGU are not absolute, but subject to the limitations laid down by
the Constitution and laws such as the Civil Code. Every LGU has the sworn obligation
to enact measures that will enhance the public health, safety & convenience,
maintain peace & order and promiote the general prosperity of the inhanbitants pf
the local units.
As in the Dacanay case, the general public have the right to demand the demolition
of the illegally constructed stalls in public roads & streets. The officials of the
respondent municipality have the corresponding duty arising from public office to
clear the city streets and restore them to their specific public purpose.
The ordinance is void and illegal for lack of basis in authority in laws applicable
during its time.
Cebu Oxygen and Acetylene Co., Inc. v. Bercilles
L-40474, August 29, 1975
FACTS: The City Council of Cebu, in 1968, considered as an abandoned road, the
terminal portion of one of its streets. Later it authorized the sale through public
bidding of the property. The Cebu Oxygen and Acetylene Co. was able to purchase
the same. It then petitioned the RTC of Cebu for the registration of the land. The
petition was opposed by the Provincial Fiscal (Prosecutor) who argued that the lot is
still part of the public domain, and cannot therefore be registered.
ISSUE: May the lot be registered in the name of the buyer?
HELD: Yes, the land can be registered in the name of the buyer, because the street
in question has already been withdrawn from public use, and accordingly has
become patrimonial property. The sale of the lot was therefore valid.
LAUREL VS GARCIA
Facts:
Petitioners seek to stop the Philippine Government to sell the Roppongi Property,
which is located in Japan. It is one of the properties given by the Japanese
Government as reparations for damage done by the latter to the former during the
war.
Petitioner argues that under Philippine Law, the subject property is property of public
dominion. As such, it is outside the commerce of men. Therefore, it cannot be
alienated.
Respondents aver that Japanese Law, and not Philippine Law, shall apply to the case
because the property is located in Japan. They posit that the principle of lex situs
applies.
Issues and Held:
1. WON the subject property cannot be alienated.
The answer is in the affirmative.
Under Philippine Law, there can be no doubt that it is of public dominion unless it is
convincingly shown that the property has become patrimonial. This, the respondents
have failed to do. As property of public dominion, the Roppongi lot is outside the
commerce of man. It cannot be alienated.
2. WON Philippine Law applies to the case at bar.
The answer is in the affirmative.
We see no reason why a conflict of law rule should apply when no conflict of law
situation exists. A conflict of law situation arises only when: (1) There is a dispute
over the title or ownership of an immovable, such that the capacity to take and

transfer immovables, the formalities of conveyance, the essential validity and effect
of the transfer, or the interpretation and effect of a conveyance, are to be
determined; and (2) A foreign law on land ownership and its conveyance is asserted
to conflict with a domestic law on the same matters. Hence, the need to determine
which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is no question
that the property belongs to the Philippines. The issue is the authority of the
respondent officials to validly dispose of property belonging to the State. And the
validity of the procedures adopted to effect its sale. This is governed by Philippine
Law. The rule of lex situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the relevance
of the lex situs rule is misplaced. The opinion does not tackle the alienability of the
real properties procured through reparations nor the existence in what body of the
authority to sell them. In discussing who are capable of acquiring the lots, the
Secretary merely explains that it is the foreign law which should determine who can
acquire the properties so that the constitutional limitation on acquisition of lands of
the public domain to Filipino citizens and entities wholly owned by Filipinos is
inapplicable.

PHILIPPINE PORTS AUTHORITY v. CITY OF ILOILO

The exemption of public property from taxation does not extend to
improvements made thereon by homesteaders or occupants at their own
expense, it also held the taxability of the warehouse in this case, it being a
mere improvement built on an alleged property of public dominion.
FACTS:
Petitioner Philippine Ports Authority (PPA) is asking the court on Petition for Review
on Certiorari to set aside the ruling ordering it to pay real property and business
taxes to respondent City of Iloilo.
The City of Iloilo filed an action for recovery of sum of money against PPA, seeking to
collect real property taxes as well as business taxes, computed from the last quarter
of 1984 to the fourth quarter of 1988.
It was alleged that the PPA is engaged in the business of arrastre services,
stevedoring services, leasing of real estate, and a registered owner of a wharehouse
which is used in the operation of its business. From these, PPA was alleged to be
obligated to pay business taxes and real property taxes.
The Regional Trial Court (RTC) of Iloilo held PPA liable for the payment of real
property taxes and for business taxes. However, it held that the City of Iloilo may not
collect business taxes on PPAs arrastre and stevedoring services, as these form part
of PPAs governmental functions.
The following issues were raised on appeal:
Whether or not the RTC erred in decreeing a property of public dominion (port
facility) as subject to realty taxes just because the mentioned property is being
administered by what it perceives to be a taxable government corporation.
Whether or not the petitioner is subject to business taxes for leasing to private
entities real estate without considering that the petitioner is not engaged in
business.
The City countered by stating in its Comment that PPA changed its theory of the
case on appeal citing that the allegation regarding the subject property as public

dominion which was never raised during trial nor in its memorandum filed with the
lower court.
ISSUES:
1. Whether or not a party can change its theory of the case on appeal.
2. Whether or noti mprovements introduced by PPA on publicproperties are
exempted from tax.
HELD:
As a rule, a party who deliberately adopts a certain theory upon which the case is
tried and decided by the lower court will not be permitted to change theory on
appeal. Points of law, theories, issues and arguments not brought to the attention of
the lower court need not be, and ordinarily will not be, considered by a reviewing
court, as these cannot be raised for the first time at such late stage. However, there
is an exception to the rule as enunciated in Lianga Lumber Co. vs. Lianga Timber Co.
Inc., 76 SCRA 197, where the court said;
In the interest of justice and within the sound discretion of the appellate court, a
party may change theory on appeal only when the factual bases thereof would not
require presentation of any further evidence by the adverse party in order to enable
it to properly meet the issue raised in the new theory.
But this exception is not applicable in this case. It must be emphasized that the
enumeration of properties of public dominion under Article 420 of the New Civil Code
specifically states ports constructed by the State. Thus, in order to consider the
port in this case as falling under the said classification, the fact that the port was
constructed by the State must first be established by sufficient evidence. Here, there
was no proof adduced to establish that the port was constructed by the State, hence,
the court cannot just automatically conclude that the property is of public dominion.
It is also noted that the PPA failed to raise the issue of ownership during the pre-trial.
The pre- trial is primarily intended to make certain that all issues necessary to the
disposition of the case are properly raised. Consequently, the determination of
issues at a pre-trial conference bars the consideration of other questions on appeal.
In the case at bar, the fact that the issue of ownership is outside of what has been
delimited during the pre-trial further justifies the disallowance of PPAs new theory.
Hence, PPA may not be permitted to change its theory on appeal.
Granting that the petitioners present theory is allowed, the court still found its
contentions untenable. It must be stressed that what is being taxed in the
present case is PPAs warehouse, which, although located within the port is
distinct from the port itself.
Considering the warehouses separable nature as an improvement upon
the port, and the fact that it is not open for use by everyone and freely
accessible to the public, it is not part of the port as stated in Article 420 of
the Civil Code. In the same way that it was ruled that the exemption of
public property from taxation does not extend to improvements made
thereon by homesteaders or occupants at their own expense. Also, it was
held that the taxability of the warehouse in this case, it being a mere
improvement built on an alleged property of public dominion.
As regards the second issue raised by PPA regarding the lease of its property to
private persons, the Court ruled that its own admission that it leases out to private
persons for convenience and not necessarily as part of its governmental function of
administering port operations is an admission that the act was a corporate power,
which, is actually expressly stated as so in its charter. Any income or profit
generated by an entity, even of a corporation organized without any intention of
realizing profit in the conduct of its activities, is subject to tax (CIR vs. CA, 329 SCRA
237). What matters is the established fact that it leased out its building to private
entities from which it regularly earned substantial income. Thus, in the absence of
any proof of exemption therefrom, PPA is declared liable for the assessed business
taxes.
The petition is denied.

PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs. CENTRAL BOARD OF

ASSESSMENT APPEALS- Real Property Tax
FACTS:
Petitioner owned the Iloilo Fishing Port Complex which was on reclaimed land and
consisted of a breakwater, landing quay, water and fuel oil supply system,
refrigeration building, market hall and a municipal shed. Petitioner then leased
portions of the IFPC to private firms engaged in the fishing business. Iloilo city then
assessed the entire IFPC for Real Property Tax.
ISSUE:
Is the entirety of the IFPC subject to the Real Property Tax?
HELD:
NO. The Real Property Tax liability of the IFPC is only on portions leased out to
private entities. PFDA is not a GOCC but is actually an instrumentality of the national
government exempt from Real Property Tax. Given this, it will only be subject to Real
Property Tax on the portions of the IFPC which is leased to private entities. It is not a
GOCC since a GOCC must satisfy two requirements: (i) capital stock divided into
shares and (ii) authorized to distribute dividends/profits. PFDA does have capital
stock but the same is not divided into shares and neither is it a non-stock
corporation because it does not have members.
(Note: This was the same decision reached in MIAA vs. Paranaque (July 20, 2006)
and again in MIAA vs. Pasay (April 2, 2009) where the property in question was the
airport premises. In those cases, the Court additionally provided that other examples
of government instrumentalities vested with corporate powers or what are know as
government corporate entities are Philippine Ports Authority, BSP and University of
the Philippines.)
Republic vs. City of Paranaque
FACTS: This is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, on pure questions of law, assailing the January 8, 2010 Order of the
Regional Trial Court, Branch 195, Parafiaque City (RTC), which ruled that petitioner
Philippine Reclamation Authority (PRA) is a government-owned and controlled
corporation (GOCC), a taxable entity, and, therefore,. not exempt from payment of
real property taxes. The pertinent portion of the said order reads: In view of the
finding of this court that petitioner is not exempt from payment of real property
taxes, respondent Paraaque City Treasurer Liberato M. Carabeo did not act xxx
without or in excess of jurisdiction, or with grave abuse of discretion amounting to
lack or in excess of jurisdiction in issuing the warrants of levy on the subject
properties. On August 3, 2009, after an exchange of several pleadings and the
failure of both parties to arrive at a compromise agreement, PRA filed a Motion for
Leave to File and Admit Attached Supplemental Petition which sought to declare as
null and void the assessment for real property taxes, the levy based on the said
assessment, the public auction sale conducted on April 7, 2003, and the Certificates
of Sale issued pursuant to the auction sale. On January 8, 2010, the RTC rendered its
decision dismissing PRAs petition. In ruling that PRA was not exempt from payment
of real property taxes, the RTC reasoned out that it was a GOCC under Section 3 of
P.D. No. 1084. It was organized as a stock corporation because it had an authorized
capital stock divided into no par value shares. Not in conformity, PRA filed this
petition for certiorari assailing the January 8, 2010 RTC Order based on the following
GROUNDS
Issue: Is the Philippine Reclamation Authority a government-owned and controlled
corporation (GOCC) under Sec. 16, Article XII?

Ruling: A GOCC must have been organized as a stock or non-stock corporation. The
Philippine Reclamation Authority is neither. It is not a GOCC. When the law vests in
government instrumentality corporate powers, the instrumentality does not
necessarily become a corporation. Unless the government instrumentality is
organized as a stock or non-stock corporation, it remains a government
instrumentality exercising not only governmental but also corporate powers. In the
case at bench, PRA is not a GOCC because it is neither a stock nor a non-stock
corporation. Furthermore, there is another reason why the PRA cannot be classified
as a GOCC.Section 16, Article XII of the 1987 Constitution provides as follows:
Section 16. The Congress shall not, except by general law, provide for the
formation, organization, or regulation of private corporations. Government-owned or
controlled corporations may be created or established by special charters in the
interest of the common good and subject to the test of economic viability.**The
fundamental provision above authorizes Congress to create GOCCs through special
charters on two conditions: 1) the GOCC must be established for the common good;
and 2) the GOCC must meet the test of economic viability. In this case, PRA may
have passed the first condition of common good but failed the second one
economic viability. Undoubtedly, the purpose behind the creation of PRA was not for
economic or commercial activities. Neither was it created to compete in the market
place considering that there were no other competing reclamation companies being
operated by the private sector. As mentioned earlier, PRA was created essentially to
perform a public service considering that it was primarily responsible for a
coordinated, economical and efficient reclamation, administration and operation of
lands belonging to the government with the object of maximizing their utilization
and hastening their development consistent with the public interest.
JEAN TAN, ROSELLER C. ANACINTO, CARLO LOILO ESPINEDA and DAISY ALIADO
MANAOIS, represented in this act by their Attorney-in-Fact, MA. WILHELMINA E.
TOBIAS Petitioners - versus REPUBLIC OF THE PHILIPPINES, Respondent.
Facts:
On June 14, 2001, the petitioners filed with the Regional Trial Court (RTC) of Naic,
Cavite , an application for land registration covering a parcel of land identified as Lot
9972, Cad-459-D of Indang Cadastre, situated in Barangay Bancod, Indang, Cavite
and with an area of 6,920 square meters. The petitioners alleged that they
acquired the subject property from Gregonio Gatdula pursuant to a Deed of Absolute
Sale dated April 25, 1996; and they and their predecessors-in-interest have been in
open, continuous and exclusive possession of the subject property in the concept of
an owner for more than 30 years. RTC issued a decision granting petitioners
application. CA ruled that the petitioners failed to prove that they and their
predecessors-in-interest have been in possession of the subject property for the
requisite period of 30 years.
Issue:
Whether the petitioners have proven themselves qualified to the benefits under the
relevant laws on the confirmation of imperfect or incomplete titles.
Property; acquisition by prescription; confirmation of incomplete or imperfect titles;
requirements
Held: There must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the national
wealth or that the property has been converted into patrimonial. Without such
express declaration, the property, even if classified as alienable or disposable,
remains property of the public dominion, pursuant to Article 420(2), and thus
incapable of acquisition by prescription. It is only when such alienable and
disposable lands are expressly declared by the State to be no longer intended for
public service or for the development of the national wealth that the period of

acquisitive prescription can begin to run. Such declaration shall be in the form of a
law duly enacted by Congress or a Presidential Proclamation in cases where the
President is duly authorized by law. For one to invoke the provisions of Section 14(2)
and set up acquisitive prescription against the State, it is primordial that the status
of the property as patrimonial be first established. Furthermore, the period of
possession preceding the classification of the property as patrimonial cannot be
considered in determining the completion of the prescriptive period. Adverse,
continuous, open, public possession in the concept of an owner is a conclusion of law
and the burden to prove it by clear, positive and convincing evidence is on the
applicant. A claim of ownership will not proper on the basis of tax declarations if
unaccompanied by proof of actual possession. The counting of the thirty (30) -year
prescriptive periods for purposes of acquiring ownership of a public land under
Section 14(2) can only start from the issuance of DARCO Conversion Order. Before
the property was declared patrimonial by virtue of such conversion order, it cannot
be acquired by prescription.