virtual 1aw library
[G.R. No. 156295. September 23,
2003.]
MARCELO R. SORIANO, Petitioner, v.
SPOUSES RICARDO and ROSALINA
GALIT, Respondents.
DECISION
YNARES-SANTIAGO, J.:
Petitioner was issued a writ of
possession in Civil Case No. 6643 1 for
Sum of Money by the Regional Trial
Court of Balanga, Bataan, Branch 1.
The writ of possession was, however,
nullified by the Court of Appeals in CA-
G.R. SP No. 65891 2 because it
included a parcel of land which was
not among those explicitly enumerated
in the Certificate of Sale issued by the
Deputy Sheriff, but on which stand the
immovables covered by the said
Certificate. Petitioner contends that
the sale of these immovables
necessarily encompasses the land on
which they stand.chanrob1es virtua1
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Dissatisfied, petitioner filed the instant
petition for review on certiorari.
Respondent Ricardo Galit contracted a
loan from petitioner Marcelo Soriano,
in the total sum of P480,000.00,
evidenced by four promissory notes in
the amount of P120,000.00 each dated
August 2, 1996; 3 August 15, 1996; 4
September 4, 1996 5 and September
14, 1996. 6 This loan was secured by a
real estate mortgage over a parcel of
land covered by Original Certificate of
Title No. 569. 7 After he failed to pay
his obligation, Soriano filed a
complaint for sum of money against
him with the Regional Trial Court of
Balanga City, Branch 1, which was
docketed as Civil Case No. 6643. 8
Respondents, the Spouses Ricardo and
Rosalina Galit, failed to file their
answer. Hence, upon motion of
Marcelo Soriano, the trial court
declared the spouses in default and
proceeded to receive evidence for
petitioner Soriano ex parte.
On July 7, 1997, the Regional Trial
Court of Balanga City, Branch 1
rendered judgment 9 in favor of
petitioner Soriano, the dispositive
portion of which reads:chanrob1es
WHEREFORE, judgment is hereby
rendered in favor of the plaintiff and
against the defendant ordering the
latter to pay:chanrob1es virtual 1aw
library
1. the plaintiff the amount of
P350,000.00 plus 12% interest to be
computed from the dates of maturity
of the promissory notes until the same
are fully paid;
2. the plaintiff P20,000.00, as
attorney’s fees; and
3. the costs of suit.
SO ORDERED. 10
The judgment became final and
executory. Accordingly, the trial court
issued a writ of execution in due
course, by virtue of which, Deputy
Sheriff Renato E. Robles levied on the
following real properties of the Galit
spouses:chanrob1es virtual 1aw library
1. A parcel of land covered by Original
Certificate of Title No. T-569
(Homestead Patent No. 14692)
situated in the Bo. of Tapulac, Orani,
Bataan. Bounded on the SW, along line
1-2 by Lot No. 3, Cad. 145; containing
an area of THIRTY FIVE THOUSAND
SEVEN HUNDRED FIFTY NINE (35,759)
SQUARE METERS, more or less . . .;
2. STORE/HOUSE — CONSTRUCTED on
Lot No. 1103 made of strong materials
G.I. roofing situated at Centro I, Orani,
Bataan, . . . containing an area of 30 sq.
meters, more or less . . . (constructed
on TCT No. T40785);
3. BODEGA — constructed on Lot
1103, made of strong materials, G.I.
roofing, situated in Centro I, Orani,
Bataan, . . . with a floor area of 42.75
sq. m. more or less . . . . 11
At the sale of the above-enumerated
properties at public auction held on
December 23, 1998, petitioner was the
highest and only bidder with a bid
price of P483,000.00. Accordingly, on
February 4, 1999, Deputy Sheriff
Robles issued a Certificate of Sale of
Execution of Real Property, 12 which
reads:chanrob1es virtual 1aw library
CERTIFICATE OF SALE ON EXECUTION
OF REAL PROPERTY
TO ALL WHO MAY SEE THESE
PRESENTS:chanrob1es virtual 1aw
library
GREETINGS:chanrob1es virtual 1aw
library
I HEREBY that (sic) by virtue of the writ
of execution dated October 16, 1998,
issued in the above-entitled case by
the HON. BENJAMIN T. VIANZON,
ordering the Provincial Sheriff of
Bataan or her authorized Deputy
Sheriff to cause to be made (sic) the
sum of P350,000.00 plus 12% interest
to be computed from the date of
maturity of the promissory notes until
the same are fully paid; P20,000.00 as
attorney’s fees plus legal expenses in
the implementation of the writ of
execution, the undersigned Deputy
Sheriff sold at public auction on
December 23, 1998 the rights and
interests of defendants Sps. Ricardo
and Rosalina Galit, to the plaintiff
Marcelo Soriano, the highest and only
bidder for the amount of FOUR
HUNDRED EIGHTY THREE THOUSAND
PESOS (P483,000.00, Philippine
Currency), the following real estate
properties more particularly described
as follows:chanrob1es virtual 1aw
library
ORIGINAL CERTIFICATE OF TITLE NO. T-
569
A parcel of land (Homestead Patent
No. 14692) situated in the Bo. of
Tapulac, Orani, Bataan, . . . . Bounded
on the SW., along line 1-2 by Lot No. 3,
Cad. 145, containing an area of THIRTY
FIVE THOUSAND SEVEN HUNDRED
FIFTY NINE (35,759) SQUARE METERS,
more or less . . .
TAX DEC. NO. — PROPERTY INDEX NO.
018-09-001-02
STOREHOUSE — constructed on Lot
1103, made of strong materials G.I.
roofing situated at Centro I, Orani,
Bataan . . . containing an area of 30 sq.
meters, more or less . . . (constructed
on TCT No. 40785)
TAX DEC. NO. 86 — PROPERTY INDEX
No. 018-09-001-02
BODEGA — constructed on Lot 1103,
made of strong materials G.I. roofing
situated in Centro I, Orani, Bataan, . . .
with a floor area of 42.75 sq. m. more
or less . .
IT IS FURTHER CERTIFIED, that the
aforesaid highest and lone bidder,
Marcelo Soriano, being the plaintiff did
not pay to the Provincial Sheriff of
Bataan the amount of P483,000.00,
the sale price of the above described
property which amount was credited
to partial/full satisfaction of the
judgment embodied in the writ of
execution.
The period of redemption of the above
described real properties together with
all the improvements thereon will
expire One (1) year from and after the
registration of this Certificate of Sale
with the Register of Deeds.
This Certificate of Sheriff’s Sale is
issued to the highest and lone bidder,
Marcelo Soriano, under guarantees
prescribed by law.
Balanga, Bataan, February 4, 1999.
On April 23, 1999, petitioner caused
the registration of the "Certificate of
Sale on Execution of Real Property"
with the Registry of Deeds.chanrob1es
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The said Certificate of Sale registered
with the Register of Deeds includes at
the dorsal portion thereof the
following entry, not found in the
Certificate of Sale on file with Deputy
Sheriff Renato E. Robles: 13
ORIGINAL CERTIFICATE OF TITLE NO. T-
40785
A parcel of land (Lot No. 1103 of the
Cadastral Survey of Orani), with the
improvements thereon, situated in the
Municipality of Orani, Bounded on the
NE; by Calle P. Gomez; on the E. by Lot
No. 1104; on the SE by Calle
Washington; and on the W. by Lot
4102, containing an area of ONE
HUNDRED THIRTY NINE (139) SQUARE
METERS, more or less. All points
referred to are indicated on the plan;
bearing true; declination 0 deg. 40’E.,
date of survey, February 191-March
1920.
On February 23, 2001, ten months
from the time the Certificate of Sale on
Execution was registered with the
Registry of Deeds, petitioner moved 14
for the issuance of a writ of
possession. He averred that the one-
year period of redemption had elapsed
without the respondents having
redeemed the properties sold at public
auction; thus, the sale of said
properties had already become final.
He also argued that after the lapse of
the redemption period, the titles to
the properties should be considered,
for all legal intents and purposes, in his
name and favor. 15
On June 4, 2001, the Regional Trial
Court of Balanga City, Branch 1
granted the motion for issuance of writ
of possession. 16 Subsequently, on July
18, 2001, a writ of possession 17 was
issued in petitioner’s favor which
reads:chanrob1es virtual 1aw library
WRIT OF POSSESSION
Mr. Renato E. Robles
Deputy Sheriff
RTC, Br. 1, Balanga City 40785 with an area of 134 square
meters known as Lot No. 1103 of the
Greetings:chanrob1es virtual 1aw Cadastral Survey of Orani. . .
library
against the mortgagor/former owners
WHEREAS on February 3, 2001, the Sps. Ricardo and Rosalinda (sic) Galit,
counsel for plaintiff filed Motion for her (sic) heirs, successors, assigns and
the Issuance of Writ of Possession; all persons claiming rights and
interests adverse to the petitioner and
WHEREAS on June 4, 2001, this court make a return of this writ every thirty
issued an order granting the issuance (30) days from receipt hereof together
of the Writ of Possession; with all the proceedings thereon until
the same has been fully satisfied.
WHEREFORE, you are hereby
commanded to place the herein WITNESS THE HONORABLE BENJAMIN
plaintiff Marcelo Soriano in possession T. VIANZON, Presiding Judge, this 18th
of the property involved in this case day of July 2001, at Balanga City.
situated (sic) more particularly
described as:chanrob1es virtual 1aw (Sgd) GILBERT S. ARGONZA
library
OIC
1. STORE HOUSE constructed on Lot
No. 1103 situated at Centro 1, Orani, Respondents filed a petition
Bataan covered by TCT No. 40785; for certiorari with the Court of
Appeals, which was docketed as CA-
2. BODEGA constructed on Lot No. G.R. SP No. 65891, assailing the
1103 with an area of 42.75 square inclusion of the parcel of land covered
meters under Tax Declaration No. 86 by Transfer Certificate of Title No. T-
situated at Centro 1, Orani, Bataan; 40785 among the list of real properties
in the writ of possession. 18
3. Original Certificate of Title No. Respondents argued that said property
was not among those sold on
execution by Deputy Sheriff Renato E.
Robles as reflected in the Certificate of
Sale on Execution of Real Property.
In opposition, petitioner prayed for the
dismissal of the petition because
respondent spouses failed to move for
the reconsideration of the assailed
order prior to the filing of the petition.
Moreover, the proper remedy against
the assailed order of the trial court is
an appeal, or a motion to quash the
writ of possession.
On May 13, 2002, the Court of Appeals
rendered judgment as
follows:chanrob1es virtual 1aw library
WHEREFORE, the instant petition is
hereby GRANTED. Accordingly, the writ
of possession issued by the Regional
Trial Court of Balanga City, Branch 1,
on 18 July 2001 is declared NULL and
VOID.
In the event that the questioned writ
of possession has already been
implemented, the Deputy Sheriff of the
Regional Trial Court of Balanga City,
Branch 1, and private respondent
Marcelo Soriano are hereby ordered to
cause the redelivery of Transfer
Certificate of Title No. T-40785 to the
petitioners.
SO ORDERED. 19
Aggrieved, petitioner now comes to
this Court maintaining that —
1.) THE SPECIAL CIVIL ACTION OF
CERTIORARI UNDER RULE 65 IS NOT
THE PLAIN, SPEEDY AND ADEQUATE
REMEDY OF THE RESPONDENTS IN
ASSAILING THE WRIT OF POSSESSION
ISSUED BY THE LOWER COURT BUT
THERE WERE STILL OTHER REMEDIES
AVAILABLE TO THEM AND WHICH
WERE NOT RESORTED TO LIKE THE
FILING OF A MOTION FOR
RECONSIDERATION OR MOTION TO
QUASH OR EVEN APPEAL.
2.) THE HONORABLE COURT OF
APPEALS GRAVELY ERRED IN
DECLARING THE CERTIFICATE OF SALE
ON EXECUTION OF REAL PROPERTY AS
NULL AND VOID AND SUBSEQUENTLY
THE WRIT OF POSSESSION BECAUSE
THE SAME IS A PUBLIC DOCUMENT
WHICH ENJOYS THE PRESUMPTION OF
REGULARITY AND IT CANNOT BE
OVERCOME BY A MERE STRANGE
FEELING THAT SOMETHING IS AMISS
ON ITS SURFACE SIMPLY BECAUSE THE
TYPEWRITTEN WORDS ON THE FRONT
PAGE AND AT THE DORSAL PORTION
THEREOF IS DIFFERENT OR THAT IT IS
UNLIKELY FOR THE SHERIFF TO USE
THE DORSAL PORTION OF THE FIRST
PAGE BECAUSE THE SECOND PAGE IS
MERELY HALF FILLED AND THE
NOTATION ON THE DORSAL PORTION
COULD STILL BE MADE AT THE SECOND
PAGE.
On the first ground, petitioner
contends that respondents were not
without remedy before the trial court.
He points out that respondents could
have filed a motion for reconsideration
of the Order dated June 4, 1999, but
they did not do so. Respondents could
also have filed an appeal but they,
likewise, did not do so. When the writ
of possession was issued, respondents
could have filed a motion to quash the
writ. Again they did not. Respondents
cannot now avail of the special civil
action for certiorari as a substitute for
these remedies. They should suffer the
consequences for sleeping on their
rights.chanrob1es virtua1 1aw 1ibrary
We disagree.
Concededly, those who seek to avail of
the procedural remedies provided by
the rules must adhere to the
requirements thereof, failing which the
right to do so is lost. It is, however,
equally settled that the Rules of Court
seek to eliminate undue reliance on
technical rules and to make litigation
as inexpensive as practicable and as
convenient as can be done. 20 This is
in accordance with the primary
purpose of the 1997 Rules of Civil
Procedure as provided in Rule 1,
Section 6, which reads:chanrob1es
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Section 6. Construction. — These rules
shall be liberally construed in order to
promote their objective of securing a
just, speedy and inexpensive
determination of every action and
proceeding. 21
The rules of procedure are not to be
applied in a very rigid, technical sense
and are used only to help secure
substantial justice. If a technical and
rigid enforcement of the rules is made,
their aim would be defeated. 22 They
should be liberally construed so that
litigants can have ample opportunity to
prove their claims and thus prevent a
denial of justice due to technicalities.
23 Thus, in China Banking Corporation
v. Members of the Board of Trustees of
Home Development Mutual Fund, 24 it
was held:chanrob1es virtual 1aw
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. . .while certiorari as a remedy may
not be used as a substitute for an
appeal, especially for a lost appeal, this
rule should not be strictly enforced if
the petition is genuinely meritorious.
25 It has been said that where the rigid
application of the rules would frustrate
substantial justice, or bar the
vindication of a legitimate grievance,
the courts are justified in exempting a
particular case from the operation of
the rules. 26 (Emphasis ours)
Indeed, well-known is the rule that
departures from procedure may be
forgiven where they do not appear to
have impaired the substantial rights of
the parties. 27 Apropos in this regard is
Cometa v. CA, 28 where we said that
— rather than promote substantial justice
There is no question that petitioners
were remiss in attending with dispatch
to the protection of their interests as
regards the subject lots, and for that
reason the case in the lower court was
dismissed on a technicality and no
definitive pronouncement on the
inadequacy of the price paid for the
levied properties was ever made. In
this regard, it bears stressing that
procedural rules are not to be belittled
or dismissed simply because their non-
observance may have resulted in
prejudice to a party’s substantive
rights as in this case. Like all rules, they
are required to be followed except
when only for the most persuasive of
reasons they may be relaxed to relieve
a litigant of an injustice not
commensurate with the degree of his
thoughtlessness in not complying with
the procedure prescribed. 29
(emphasis and Italics supplied.)
In short, since rules of procedure are
mere tools designed to facilitate the
attainment of justice, their strict and
rigid application which would result in
technicalities that tend to frustrate
must always be avoided. 30
Technicality should not be allowed to
stand in the way of equitably and
completely resolving the rights and
obligations of the parties. 31
Eschewing, therefore, the procedural
objections raised by petitioner, it
behooves us to address the issue of
whether or not the questioned writ of
possession is in fact a nullity
considering that it includes real
property not expressly mentioned in
the Certificate of Sale of Real Property.
Petitioner, in sum, dwells on the
general proposition that since the
certificate of sale is a public document,
it enjoys the presumption of regularity
and all entries therein are presumed to
be done in the performance of regular
functions.
The argument is not persuasive.
There are actually two (2) copies of the
Certificate of Sale on Execution of Real
Properties issued on February 4, 1999
involved, namely: (a) copy which is on
file with the deputy sheriff; and (b)
copy registered with the Registry of
Deeds. The object of scrutiny,
however, is not the copy of the
Certificate of Sale on Execution of Real
Properties issued by the deputy sheriff
on February 4, 1999, 32 but the copy
thereof subsequently registered by
petitioner with the Registry of Deeds
on April 23, 1999, 33 which included
an entry on the dorsal portion of the
first page thereof describing a parcel of
land covered by OCT No. T-40785 not
found in the Certificate of Sale of Real
Properties on file with the sheriff.
True, public documents by themselves
may be adequate to establish the
presumption of their validity. However,
their probative weight must be
evaluated not in isolation but in
conjunction with other evidence
adduced by the parties in the
controversy, much more so in this case
where the contents of a copy thereof
subsequently registered for
documentation purposes is being
contested. No reason has been offered
how and why the questioned entry
was subsequently intercalated in the
copy of the certificate of sale
subsequently registered with the
Registry of Deeds. Absent any
satisfactory explanation as to why said
entry was belatedly inserted, the
surreptitiousness of its inclusion
coupled with the furtive manner of its
intercalation casts serious doubt on
the authenticity of petitioner’s copy of
the Certificate of Sale. Thus, it has
been held that while a public
document like a notarized deed of sale
is vested with the presumption of
regularity, this is not a guarantee of
the validity of its contents. 34
It must be pointed out in this regard
that the issuance of a Certificate of
Sale is an end result of judicial
foreclosure where statutory
requirements are strictly adhered to;
where even the slightest deviations
therefrom will invalidate the
proceeding 35 and the sale. 36 Among
these requirements is an explicit
enumeration and correct description
of what properties are to be sold
stated in the notice. The stringence in
the observance of these requirements
is such that an incorrect title number
together with a correct technical
description of the property to be sold
and vice versa is deemed a substantial
and fatal error which results in the
invalidation of the sale. 37
The certificate of sale is an accurate
record of what properties were
actually sold to satisfy the debt. The
strictness in the observance of
accuracy and correctness in the
description of the properties renders
the enumeration in the certificate
exclusive. Thus, subsequently including
properties which have not been
explicitly mentioned therein for
registration purposes under suspicious
circumstances smacks of fraud. The
explanation that the land on which the
properties sold is necessarily included
and, hence, was belatedly typed on the
dorsal portion of the copy of the
certificate subsequently registered is at
best a lame excuse unworthy of
belief.chanrob1es virtua1 1aw 1ibrary
The appellate court correctly observed
that there was a marked difference in
the appearance of the typewritten
words appearing on the first page of
the copy of the Certificate of Sale
registered with the Registry of Deeds
38 and those appearing at the dorsal
portion thereof. Underscoring the
irregularity of the intercalation is the
clearly devious attempt to let such an
insertion pass unnoticed by typing the
same at the back of the first page
instead of on the second page which
was merely half-filled and could
accommodate the entry with room to
spare.
The argument that the land on which
the buildings levied upon in execution
is necessarily included is, likewise,
tenuous. Article 415 of the Civil Code
provides:chanrob1es virtual 1aw
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ART. 415. The following are immovable
property:chanrob1es virtual 1aw
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(1) Land, buildings, roads and
constructions of all kinds adhered to
the soil:chanrob1es virtual 1aw library
x       x       x
(3) Everything attached to an
immovable in a fixed manner, in such a
way that it cannot be separated
therefrom without breaking the
material or deterioration of the object;
(4) Statues, reliefs, paintings or other
objects for use or ornamentation,
placed in buildings or on lands by the
owner of the immovable in such a
manner that it reveals the intention to
attach them permanently to the
tenements;
(5) Machinery, receptacles,
instruments or implements intended
by the owner of the tenement for an
industry or works which may be
carried on in a building or on a piece of
land, and which tend directly to meet
the needs of the said industry or
works;
(6) Animal houses, pigeon houses,
beehives, fish ponds or breeding places
of similar nature, in case their owner
has placed them or preserves them
with the intention to have them
permanently attached to the land, and
forming a permanent part of it; the
animals in these places are also
included;
x       x       x
(9) Docks and structures which, though
floating, are intended by their nature
and object to remain at a fixed place
on a river, lake or coast;
x       x       x.
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.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.
G.R. No. 189061               August 6, The two parcels of land, on a portion
2014 of which the residential building stand,
were originally owned by the
MIDWAY MARITIME AND respondents’ father Louis Castro, Sr.
TECHNOLOGICAL FOUNDATION, The elder Castro was also the
represented by its president of Cabanatuan City Colleges
Chairman/President PhD in Education (CCC). On August 15, 1974, Castro
DR. SABINO M. mortgaged the property to Bancom
MANGLICMOT, Petitioner, Development Corporation (Bancom) to
vs. secure a loan. During the subsistence
MARISSA E. CASTRO, ET of the mortgage, CCC’s board of
AL., Respondents. directors agreed to a 15-year lease of a
portion of the property to the
DECISION Castrochildren, herein respondents,
who subsequently built the residential
REYES, J.: house nowin dispute. The lease was to
expire in 1992.
The petitioner Midway Maritime and
Technological Foundation (petitioner) When CCC failed to pay its obligation,
is the lessee of two parcels of land in Bancom foreclosed the mortgage and
Cabanatuan City. Its president, Dr. the property was sold at public auction
Sabino Manglicmot (Manglicmot), is in 1979, with Bancom as the highest
married to Adoracion Cloma bidder. Bancom thereafter assigned
(Adoracion), who is the registered the credit to Union Bank of the
owner of the property under Transfer Philippines (Union Bank), and later on,
Certificate of Title (TCT) Nos. T-71321 Union Bank consolidated its ownership
and T-71322. Inside said property over the properties in 1984 due to
stands a residential building, which is CCC’s failure to redeem the property.
now the subject matter of the dispute, When Union Bank sought the issuance
owned by the respondents. of a writ of possession over the
properties, which included the
residential building, respondents
opposed the same. The case reached
the Court in G.R. No. 97401 entitled,
Castro, Jr. v. CA,1 and in a Decision
dated December 6, 1995, the Court
ruled that the residential house owned
by the respondents should not have
been included in the writ of possession
issued by the trial court as CCC has no
title over it.
In the meantime, Adoracion’s father,
Tomas Cloma (Tomas), bought the two
parcels of land from Union Bank in an
auction sale conducted on July 13,
1993. Tomas subsequently leased the
property to the petitioner and
thereafter, sold the same to
Adoracion.Several suits were brought
by the respondents against the
petitioner, including the case at bench,
which is an action for Ownership,
Recovery of Possession and Damages,
docketed as Civil Case No. 3700 (AF).
In their Amended Complaint2 dated
April 19, 2000, the respondents alleged
that: (1) they are the owners ofthe
residential building subject of the
dispute, which they used from 1977 to
1985 when they left for the United
States of America and instituted their
uncle, Josefino C. Castro (Josefino), as
the caretaker; (2) Manglicmot, who
was the President of the petitioner
Midway Maritime and Technological
Foundation, leased the building
(except for the portion occupied by
Josefino) from Lourdes Castro, mother
of the respondents, in June 1993
withmonthly rent of ₱6,000.00, which
was later to be increased to
₱10,000.00 in October 1995 after
Josefino vacates his occupied portion;
(3) the petitioner failed to pay rent
starting August 1995, thus prompting
the respondents to file the action. The
respondents prayed that they be
declared as the owners of the
residential building, and that the
petitioner be ordered to vacate the
same and pay rent arrearages and
damages.3
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 which it stands.4
In a Decision5 dated July 2, 2001, the
Regional Trial Court (RTC) of
Cabanatuan City, Branch 28, rendered
judgment in favor of the respondents,
declared them as the absolute owners
of the residential building and ordered
petitioner to pay the respondents
unpaidrentals from August 1995 until
fully paid. The dispositive portion of
the RTC decision reads:
WHEREFORE, judgment is hereby
rendered:
1. Declaring the [respondents]
asthe absolute owners of the
building in question described
as follows:
xxxx
2. Ordering the [petitioner]
topay the [respondents] the
sum of [P]672,000.00 by way of
unpaid rentals from August
1995 at [P]6,000.00 and from
October 1995 at [P]10,000.00
until fully paid.
3. The claim for moral
damages,other litigation
expenses and attorney’s fees
are dismissed for lack of merit.
SO ORDERED.6
The Court of Appeals (CA) dismissed
the petitioner’s appeal and affirmed
the RTC decision in the assailed
Decision7 dated October 29, 2008 and
Resolution8 dated August 3, 2009.
Hence, this petition.
The petitioner contests the award
ofrentals made by the RTC, which was
affirmed by the CA, contending that
when Tomas bought the two parcels of
land from Union Bank in 1993, the sale
included the improvements thereon,
one of which was the residential house
in dispute. The petitioner also argues
that the lease between CCC and the
respondents already expired at the
time of the sale and they are now the
current lessees of the property, albeit
the residential house is still standing
inside the school compound.9 The
petitioner relies on a decision
rendered by the RTC of Cabanatuan
City, Branch 26, in Civil Case No. 2939
(AF),which was an appeal from the trial
court’s dismissal of the complaint for
Ejectment with Damages filed by the
respondents against the petitioner. In
said decision, the RTC stated that "in
the advertised sale of the lots covered
by TCT Nos. T-45816 and [T-45817] of
the land records of Cabanatuan City, all
improvements were included, hence,
the instant case has no factual and
legal basis."10 Ruling of the Court
The first issue to be resolved iswhether
there was a lease agreement between
the petitioner and the respondents as
regards the residential building. Such
issue, it must beemphasized, is a
question of fact11 that has been
resolved by the RTC in the affirmative,
towit: "from June 1993 to July 25, 1995
or for a period of 26 months, the
[petitioner] has been paying rentals for
the building in question and paid a
rental of [P]156,000.00 which rental
was increasedto ₱10,000.00 beginning
October 1995 when the caretaker of
the [respondents] Mr. Josefino Castro
was ejected therefrom and the entire
building was leased to the [petitioner],
represented by Dr. Sabino
Manglicmot."12 Such finding is borne
by the records of this case. Exhibit
"J"13 for the respondents is a cash
disbursement voucher issued by the
petitioner to Mrs. Lourdes Castro. The
voucher contained the statement
"payment of building rentals x x x from
June 01 to December 01, 1993" in the
total amount of ₱36,000.00. The
petitioner’s payment of the foregoing
rentals confirms the existence of its
agreement to lease the residential
building from the respondents.
Given the existence of the lease,the
petitioner’s claim denying the
respondents’ ownership of the
residential house must be
rejected.1âwphi1 According to the
petitioner, it is Adoracion who actually
owns the residential building having
bought the same, together withthe
two parcels of land, from her father
Tomas, who, in turn, bought it in an
auction sale.
It is settled that "[o]nce a contact of
lease is shown to exist between the
parties, the lessee cannot by any
proof, however strong, overturn the
conclusive presumption that the lessor
has a valid title to or a better right of
possession to the subject premises
than the lessee."14 Section 2(b), Rule
131 of the Rules of Court prohibits a
tenant from denying the title of his
landlord at the time of the
commencement of the relation of
landlord and tenant between
them.15 In Santos v. National Statistics
Office,16 the Court expounded on the
rule on estoppel against a tenant and
further clarified that what a tenant is
estopped from denying is the title of
his landlord at the time of the
commencement of the landlord-tenant
relation. If the title asserted is one that
is alleged to have been acquired
subsequent to the commencement of
that relation, the presumption will not
apply.17
In this case, the petitioner’s basis for
insisting on Adoracion’s ownership
dates back to the latter’s purchase of
the two parcels of land from her
father, Tomas. It was Tomas who
bought the property in an auction sale
by Union Bank in 1993 and leased the
same to the petitioner in the same
year. Note must be madethat the
petitioner’s president, Manglicmot, is
the husband of Adoracion and son-in-
law of Tomas. It is not improbable that
at the time the petitioner leased the
residential building from the
respondents’ mother in 1993, it was
aware of the circumstances
surrounding the sale of the two parcels
of land and the natureof the
respondents’ claim over the residential
house. Yet, the petitioner still chose to
lease the building. Consequently, the
petitioner is now estopped from
denying the respondents’ title over the
residential building.
More importantly, the
respondents’ownership of the
residential building is already an
established fact.
"Nemo dat quod non habet. One can
sell only what one owns or is
authorized to sell, and the buyer can
acquire no more right than what the
seller can transfer legally." 18 It must be
pointed out that what Tomas bought
from Union Bank in the auction sale
werethe two parcels of land originally
owned and mortgaged by CCC to
Bancom, and which mortgage was
later assigned by Bancom to Union
Bank. Contrary to the petitioner’s
assertion, the property subject of the
mortgage and consequently the
auction sale pertains only to these two
parcels of land and did not include the
residential house. This was precisely
the tenor of Castro, Jr. v. CA19 where
the Court nullified the writ of
possession issued by the trial court
insofar as it affected the residential
house constructed by the respondents
on the mortgaged property as it was
not owned by CCC, which was the
mortgagor. The Court ruled:
[Article 2127 of the Civil Code] extends
the effects of the real estate mortgage
to accessions and accessories found on
the hypothecated property when the
secured obligation becomes due. The
law is predicated on an assumption
that the ownership of such accessions
and accessories also belongs to the
mortgagor as the owner of the
principal. The provision has thus been
seen by the Court, x x x, to mean that
all improvements subsequently
introduced or owned by the mortgagor
on the encumbered property are
deemed to form part of the mortgage.
That the improvements are to be
considered so incorporated only if so
owned by the mortgagor is a rule that
can hardly be debated since a contract
of security, whether real or personal,
needs as an indispensable element
thereof the ownership by the pledgor
ormortgagor of the property pledged
or mortgaged. The rationale shouldbe
clear enough — in the event of default
on the secured obligation, the
foreclosure sale of the property would
naturally be the next step that can
expectedly follow. A sale would result
in the transmission of title to the buyer
which is feasible only if the seller can
be in a position to convey ownership of
the thing sold (Article 1458, Civil
Code). It is to say, in the instant case,
that a foreclosure would be ineffective
unless the mortgagor has title to the
property to be foreclosed.20 (Citations
omitted and emphasis ours) The rule is
that "when a decision becomes final
and executory, it becomes valid and
binding upon the parties and their
successors in interest."21 Such being
the case, Castro, which already
determined with finality the
respondents’ ownership of the
residential house in question, is
applicable and binding in this case and
the petitioner cannotbe allowed to
challenge the same. Thus, as
correctlyruled by the CA, "[t]o our
mind, the pronouncement resolving
the said issue necessarily touches also
the issue on the ownership of the
building. x x x The finding of the Court
[in Castro], now being final and
executory, is no longer open for
inquiry and therefore, has attained its
immutability."22
As regards the ruling of the RTC of
Cabanatuan City, Branch 26, in Civil
Case No. 2939 (AF) that the advertised
sale of the property included allthe
improvements thereon,23 suffice it to
say that said case involved an action
for ejectment and any resolution by
the RTC on the matter of the
ownership of the improvements of the
property is merely provisional and
cannot surpass the Court’s
pronouncement in Castro and in the
present case. The petitioner should be
reminded that "in ejectment suits, the
only issue for resolution is the physical
or materialpossession of the property
involved, independent of any claim of
ownership by any of the party litigants.
However, the issue of ownership may
be provisionally ruled upon for the sole
purpose of determining who is entitled
to possession de facto."24 The MTC and
RTC’s adjudication of ownership is
merely provisionaland would not bar
or prejudice an action between the
same parties involving title to the
property.25
Also, Adoracion’s subsequent
acquisition of the two parcels of land
from her father does not necessarily
entail the acquisition of the residential
building. "A building by itself is a realor
immovable property distinct from the
land on which it is constructed and
therefore can be a separate subject of
contracts."26 Whatever Adoracion
acquired from her father is still subject
to the limitation pronounced by the
Court in Castro, and the sale between
Adoracion and Tomas is confined only
to the two parcels of land and
excluded the residential building
owned by the respondents. It is
beyond question that Tomas, and
subsequently, Adoracion, could
nothave acquired a right greater than
what their predecessors-in-interest –
CCC and later, Union Bank – had.27
The petitioner also insists thatthe lease
between CCC and the respondents
already expired whenAdoracion
bought the property from Tomas. The
foregoing issue, however, cannot be
considered in the present action. As
established from the facts ofthis case,
the residential house is located on a
portion of the property that was leased
by CCC to the respondents. Disputing
the lease between CCC and the
respondents, in effect, goes into the
right of the respondents to maintain
the residential house in question and
eventually, their right to have the
same leased to the petitioner. Such
argument, obviously, is a disguised
effort to contest the title of the
respondents over the residential house
leased to the petitioner, which, as the
Court previously discussed, cannot be
allowed since they are estopped from
denying the same.
There is also nothing on record that
will prove the petitioner’s claim that
the lease between CCC and the
respondents already expired. The fact
that Adoracion subsequently bought
the property did not ipso facto
terminate the lease. While the lease
between CCC and the respondents
contained a 15-year period, to end in
1992, the petitioner failed to show that
the subsequent transferors/purchasers
of the two parcels of land opted to
terminate the lease or instituted any
action for its termination. Bancom
bought the property at an auction sale
in 1979; Union Bank, in 1984; Tomas,
and later, Adoracion, acquired the
property in 1993.
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 between CCC and the respondents, at
of the Civil Code says: this point, must fail.
xxxx WHEREFORE, the petition is DENIED
for lack of merit.
In the present case, the lease is not
recorded, and although petitioner SO ORDERED.
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
G.R. No. L-50008 August 31, 1987 ... on November 19, FERNANDO MAGCALE
1971, plaintiffs-spouses under Tax Declaration
PRUDENTIAL BANK, petitioner, Fernando A. Magcale No. 21109, issued by
vs. and Teodula Baluyut the Assessor of
HONORABLE DOMINGO D. PANIS, Magcale secured a loan Olongapo City with an
Presiding Judge of Branch III, Court of in the sum of assessed value of
First Instance of Zambales and P70,000.00 from the P35,290.00. This
Olongapo City; FERNANDO MAGCALE defendant Prudential building is the only
& TEODULA BALUYUT- Bank. To secure improvement of the lot.
MAGCALE, respondents. payment of this loan,
plaintiffs executed in 2. THE PROPERTY
favor of defendant on hereby conveyed by
the aforesaid date a way of MORTGAGE
PARAS, J.: deed of Real Estate includes the right of
Mortgage over the occupancy on the lot
This is a petition for review on following described where the above
certiorari of the November 13, 1978 properties: property is erected, and
Decision * of the then Court of First more particularly
Instance of Zambales and Olongapo l. A 2-STOREY, SEMI- described and bounded,
City in Civil Case No. 2443-0 entitled CONCRETE, residential as follows:
"Spouses Fernando A. Magcale and building with
Teodula Baluyut-Magcale vs. Hon. warehouse spaces A first
Ramon Y. Pardo and Prudential Bank" containing a total floor class
declaring that the deeds of real estate area of 263 sq. meters, residenti
mortgage executed by respondent more or less, generally al land
spouses in favor of petitioner bank are constructed of mixed Identffied
null and void. hard wood and concrete as Lot
materials, under a No. 720,
The undisputed facts of this case by roofing of cor. g. i. (Ts-308,
stipulation of the parties are as sheets; declared and Olongapo
follows: assessed in the name of Townsite
Subdivisi Olongapo cylin
on) City with drica
Ardoin an l
Street, assessed mon
East value of ume
Bajac- P1,860.0 nts
Bajac, 0; of
Olongapo bounded the
City, on the Bure
containin au of
g an area NORTH: By No. 6, Land
of 465 sq. Ardoin Street s as
m. more visibl
or less, SOUTH: By No. 2, e
declared Ardoin Street limit
and s.
assessed EAST: By 37 Canda ( Exh
in the Street, and ibit
name of "A, "
FERNAND WEST: By Ardoin also
O Street. Exhi
MAGCAL bit
E under All "1"
Tax corn for
Duration ers defe
No. of ndan
19595 the t).
issued by lot
the mark Apart
Assessor ed from the
of by stipulatio
conc.
ns in the FURT the
printed HER Bure
portion AGR au of
of the EED Land
aforestat that s,
ed deed in the
of the Mort
mortgage even gago
, there t the rs
appears a Sales here
rider Pate by
typed at nt on auth
the the orize
bottom lot the
of the appli Regis
reverse ed ter
side of for of
the by Deed
documen the s to
t under Mort hold
the lists gago the
of the rs as Regis
propertie herei trati
s n on of
mortgage state same
d which d is until
reads, as relea this
follows: sed Mort
or gage
AND issue is
IT IS d by canc
elled title was at
, or with the
to anno outset
anno tatio aware of
tate n, the fact
this shall that the
encu be mortgago
mbra relea rs
nce sed (plaintiffs
on in ) have
the favor already
Title of filed a
upon the Miscellan
auth herei eous
ority n Sales
from Mort Applicati
the gage. on over
Secr the lot,
etary From the possessor
of aforequo y rights
Agric ted over
ultur stipulatio which,
e n, it is were
and obvious mortgage
Natu that the d to it.
ral mortgage
Reso e Exhibit
urces (defenda "A" (Real
, nt Estate
whic Prudentia Mortgage
h l Bank) ) was
registere 00. To defendan
d under secure t). This
the payment second
Provision of this deed of
s of Act additiona Real
3344 l loan, Estate
with the plaintiffs Mortgage
Registry executed was
of Deeds in favor likewise
of of the registere
Zambales said d with
on defendan the
Novembe t another Registry
r 23, deed of of Deeds,
1971. Real this time
Estate in
On May Mortgage Olongapo
2, 1973, over the City, on
plaintiffs same May
secured propertie 2,1973.
an s
additiona previousl On April 24, 1973, the
l loan y Secretary of Agriculture
from mortgage issued Miscellaneous
defendan d in Sales Patent No. 4776
t Exhibit over the parcel of land,
Prudentia "A." possessory rights over
l Bank in (Exhibit which were mortgaged
the sum "B;" also to defendant Prudential
of Exhibit Bank, in favor of
P20,000. "2" for plaintiffs. On the basis
of the aforesaid Patent,
and upon its
transcription in the
Registration Book of the
Province of Zambales,
Original Certificate of
Title No. P-2554 was
issued in the name of
Plaintiff Fernando
Magcale, by the Ex-
Oficio Register of Deeds
of Zambales, on May 15,
1972.
For failure of plaintiffs
to pay their obligation
to defendant Bank after
it became due, and
upon application of said
defendant, the deeds of
Real Estate Mortgage
(Exhibits "A" and "B")
were extrajudicially
foreclosed. Consequent
to the foreclosure was
the sale of the
properties therein
mortgaged to defendant
as the highest bidder in
a public auction sale
conducted by the
defendant City Sheriff The first Division of this Court, in a
on April 12, 1978 Resolution dated March 9, 1979,
(Exhibit "E"). The resolved to require the respondents to
auction sale aforesaid comment (Ibid., p. 65), which order
was held despite written was complied with the Resolution
request from plaintiffs dated May 18,1979, (Ibid., p. 100),
through counsel dated petitioner filed its Reply on June
March 29, 1978, for the 2,1979 (Ibid., pp. 101-112).
defendant City Sheriff to
desist from going with Thereafter, in the Resolution dated
the scheduled public June 13, 1979, the petition was given
auction sale (Exhibit due course and the parties were
"D")." (Decision, Civil required to submit simultaneously
Case No. 2443-0, Rollo, their respective memoranda. (Ibid., p.
pp. 29-31). 114).
Respondent Court, in a Decision dated On July 18, 1979, petitioner filed its
November 3, 1978 declared the deeds Memorandum (Ibid., pp. 116-144),
of Real Estate Mortgage as null and while private respondents filed their
void (Ibid., p. 35). Memorandum on August 1, 1979 (Ibid.,
pp. 146-155).
On December 14, 1978, petitioner filed
a Motion for Reconsideration (Ibid., In a Resolution dated August 10, 1979,
pp. 41-53), opposed by private this case was considered submitted for
respondents on January 5, 1979 (Ibid., decision (Ibid., P. 158).
pp. 54-62), and in an Order dated
January 10, 1979 (Ibid., p. 63), the In its Memorandum, petitioner raised
Motion for Reconsideration was the following issues:
denied for lack of merit. Hence, the
instant petition (Ibid., pp. 5-28). 1. WHETHER OR NOT THE DEEDS OF
REAL ESTATE MORTGAGE ARE VALID;
AND
2. WHETHER OR NOT THE
SUPERVENING ISSUANCE IN FAVOR OF
PRIVATE RESPONDENTS OF
MISCELLANEOUS SALES PATENT NO.
4776 ON APRIL 24, 1972 UNDER ACT
NO. 730 AND THE COVERING ORIGINAL
CERTIFICATE OF TITLE NO. P-2554 ON
MAY 15,1972 HAVE THE EFFECT OF
INVALIDATING THE DEEDS OF REAL
ESTATE MORTGAGE. (Memorandum
for Petitioner, Rollo, p. 122).
This petition is impressed with merit.
The pivotal issue in this case is whether
or not a valid real estate mortgage can
be constituted on the building erected
on the land belonging to another.
The answer is in the affirmative.
In the enumeration of properties
under Article 415 of the Civil Code of
the Philippines, this Court ruled that,
"it is obvious that the inclusion of
"building" separate and distinct from
the land, in said provision of law can
only mean that a building is by itself an
immovable property." (Lopez vs.
Orosa, Jr., et al., L-10817-18, Feb. 28,
1958; Associated Inc. and Surety Co.,
Inc. vs. Iya, et al., L-10837-38, May
30,1958).
Thus, 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 a 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
(Leung Yee vs. Strong Machinery Co.,
37 Phil. 644). In the same manner, this
Court has also established that
possessory rights over said properties
before title is vested on the grantee,
may be validly transferred or conveyed
as in a deed of mortgage (Vda. de
Bautista vs. Marcos, 3 SCRA 438
[1961]).
Coming back to the case at bar, the
records show, as aforestated that the
original mortgage deed on the 2-storey
semi-concrete residential building with
warehouse and on the right of
occupancy on the lot where the
building was erected, was executed on
November 19, 1971 and registered
under the provisions of Act 3344 with
the Register of Deeds of Zambales on
November 23, 1971. Miscellaneous
Sales Patent No. 4776 on the land was
issued on April 24, 1972, on the basis
of which OCT No. 2554 was issued in
the name of private respondent
Fernando Magcale on May 15, 1972. It
is therefore without question that the
original mortgage was executed before
the issuance of the final patent and
before the government was divested
of its title to the land, an event which
takes effect only on the issuance of the
sales patent and its subsequent
registration in the Office of the
Register of Deeds (Visayan Realty Inc.
vs. Meer, 96 Phil. 515; Director of
Lands vs. De Leon, 110 Phil. 28;
Director of Lands vs. Jurado, L-14702,
May 23, 1961; Pena "Law on Natural
Resources", p. 49). Under the
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.
As to restrictions expressly mentioned
on the face of respondents' OCT No. P-
2554, it will be noted that Sections
121, 122 and 124 of the Public Land
Act, refer to land already acquired
under the Public Land Act, or any
improvement thereon and therefore
have no application to the assailed
mortgage in the case at bar which was
executed before such eventuality.
Likewise, Section 2 of Republic Act No.
730, also a restriction appearing on the
face of private respondent's title has
likewise no application in the instant
case, despite its reference to
encumbrance or alienation before the
patent is issued because it refers
specifically to encumbrance or
alienation on the land itself and does
not mention anything regarding the
improvements existing thereon.
But it is a different matter, as regards
the second mortgage executed over
the same properties on May 2, 1973
for an additional loan of P20,000.00
which was registered with the Registry
of Deeds of Olongapo City on the same
date. Relative thereto, it is evident that
such mortgage executed after the
issuance of the sales patent and of the
Original Certificate of Title, falls
squarely under the prohibitions stated
in Sections 121, 122 and 124 of the
Public Land Act and Section 2 of
Republic Act 730, and is therefore null
and void.
Petitioner points out that private
respondents, after physically
possessing the title for five years,
voluntarily surrendered the same to
the bank in 1977 in order that the
mortgaged may be annotated, without
requiring the bank to get the prior
approval of the Ministry of Natural
Resources beforehand, thereby
implicitly authorizing Prudential Bank
to cause the annotation of said
mortgage on their title.
However, the Court, in recently ruling
on violations of Section 124 which
refers to Sections 118, 120, 122 and
123 of Commonwealth Act 141, has
held:
... Nonetheless, we
apply our earlier rulings
because we believe that
as in pari delicto may
not be invoked to
defeat the policy of the
State neither may the
doctrine of estoppel
give a validating effect
to a void contract.
Indeed, it is generally
considered that as
between parties to a
contract, validity cannot
be given to it by
estoppel if it is
prohibited by law or is
against public policy (19
Am. Jur. 802). It is not
within the competence
of any citizen to barter
away what public policy
by law was to preserve
(Gonzalo Puyat & Sons,
Inc. vs. De los Amas and
Alino supra). ... (Arsenal
vs. IAC, 143 SCRA 54
[1986]).
This pronouncement covers only the
previous transaction already alluded to
and does not pass upon any new
contract between the parties (Ibid), as
in the case at bar. It should not
preclude new contracts that may be
entered into between petitioner bank
and private respondents that are in
accordance with the requirements of
the law. After all, private respondents
themselves declare that they are not
denying the legitimacy of their debts
and appear to be open to new
negotiations under the law (Comment;
Rollo, pp. 95-96). Any new transaction,
however, would be subject to
whatever steps the Government may
take for the reversion of the land in its
favor.

PREMISES CONSIDERED, the decision

of the Court of First Instance of
Zambales & Olongapo City is hereby
MODIFIED, declaring that the Deed of
Real Estate Mortgage for P70,000.00 is
valid but ruling that the Deed of Real
Estate Mortgage for an additional loan
of P20,000.00 is null and void, without
prejudice to any appropriate action the
Government may take against private
respondents.

SO ORDERED.
G.R. No. L-64261 December 26, 1984
JOSE BURGOS, SR., JOSE BURGOS, JR.,
BAYANI SORIANO and J. BURGOS
MEDIA SERVICES, INC., petitioners,
vs.
THE CHIEF OF STAFF, ARMED FORCES
OF THE PHILIPPINES, THE CHIEF,
PHILIPPINE CONSTABULARY, THE
CHIEF LEGAL OFFICER, PRESIDENTIAL
SECURITY COMMAND, THE JUDGE
ADVOCATE GENERAL, ET
AL., respondents.
Lorenzo M. Tañada, Wigberto E.
Tañada, Martiniano Vivo, Augusto
Sanchez, Joker P. Arroyo, Jejomar
Binay and Rene Saguisag for
petitioners.
The Solicitor General for respondents.
ESCOLIN, J.:
Assailed in this petition for certiorari
prohibition and mandamus with
preliminary mandatory and prohibitory
injunction is the validity of two [2]
search warrants issued on December 7,
1982 by respondent Judge Ernani Cruz-
Pano, Executive Judge of the then
Court of First Instance of Rizal [Quezon
City], under which the premises known
as No. 19, Road 3, Project 6, Quezon
City, and 784 Units C & D, RMS
Building, Quezon Avenue, Quezon City,
business addresses of the
"Metropolitan Mail" and "We Forum"
newspapers, respectively, were
searched, and office and printing
machines, equipment, paraphernalia,
motor vehicles and other articles used
in the printing, publication and
distribution of the said newspapers, as
well as numerous papers, documents,
books and other written literature
alleged to be in the possession and
control of petitioner Jose Burgos, Jr.
publisher-editor of the "We Forum"
newspaper, were seized.
Petitioners further pray that a writ of
preliminary mandatory and prohibitory
injunction be issued for the return of
the seized articles, and that
respondents, "particularly the Chief
Legal Officer, Presidential Security
Command, the Judge Advocate
General, AFP, the City Fiscal of Quezon
City, their representatives, assistants,
subalterns, subordinates, substitute or
successors" be enjoined from using the
articles thus seized as evidence against
petitioner Jose Burgos, Jr. and the
other accused in Criminal Case No. Q-
022782 of the Regional Trial Court of
Quezon City, entitled People v. Jose
Burgos, Jr. et al. 1
In our Resolution dated June 21, 1983,
respondents were required to answer
the petition. The plea for preliminary
mandatory and prohibitory injunction
was set for hearing on June 28, 1983,
later reset to July 7, 1983, on motion
of the Solicitor General in behalf of
respondents.
At the hearing on July 7, 1983, the
Solicitor General, while opposing
petitioners' prayer for a writ of
preliminary mandatory injunction,
manifested that respondents "will not
use the aforementioned articles as
evidence in the aforementioned case
until final resolution of the legality of
the seizure of the aforementioned
articles. ..." 2 With this manifestation,
the prayer for preliminary prohibitory
injunction was rendered moot and
academic.
Respondents would have this Court
dismiss the petition on the ground that
petitioners had come to this Court
without having previously sought the
quashal of the search warrants before
respondent judge. Indeed, petitioners,
before impugning the validity of the
warrants before this Court, should
have filed a motion to quash said
warrants in the court that issued
them. 3 But this procedural flaw
notwithstanding, we take cognizance
of this petition in view of the
seriousness and urgency of the
constitutional issues raised not to
mention the public interest generated
by the search of the "We Forum"
offices, which was televised in Channel
7 and widely publicized in all
metropolitan dailies. The existence of
this special circumstance justifies this
Court to exercise its inherent power to
suspend its rules. In the words of the
revered Mr. Justice Abad Santos in the
case of C. Vda. de Ordoveza v.
Raymundo, 4 "it is always in the power
of the court [Supreme Court] to
suspend its rules or to except a
particular case from its operation,
whenever the purposes of justice
require it...".
Respondents likewise urge dismissal of year after the
the petition on ground of laches. petitioners' premises
Considerable stress is laid on the fact had been raided.
that while said search warrants were
issued on December 7, 1982, the The climate of the times
instant petition impugning the same has given petitioners no
was filed only on June 16, 1983 or after other choice. If they had
the lapse of a period of more than six waited this long to bring
[6] months. their case to court, it
was because they tried
Laches is failure or negligence for an at first to exhaust other
unreasonable and unexplained length remedies. The events of
of time to do that which, by exercising the past eleven fill years
due diligence, could or should have had taught them that
been done earlier. It is negligence or everything in this
omission to assert a right within a country, from release of
reasonable time, warranting a public funds to release
presumption that the party entitled to of detained persons
assert it either has abandoned it or from custody, has
declined to assert it. 5 become a matter of
executive benevolence
Petitioners, in their Consolidated or largesse
Reply, explained the reason for the
delay in the filing of the petition thus: Hence, as soon as they
could, petitioners, upon
Respondents should not suggestion of persons
find fault, as they now close to the President,
do [p. 1, Answer, p. 3, like Fiscal Flaminiano,
Manifestation] with the sent a letter to
fact that the Petition President Marcos,
was filed on June 16, through counsel
1983, more than half a Antonio Coronet asking
 the return at least of seized property, thereby refuting the
the printing equipment charge of laches against them.
and vehicles. And after
such a letter had been Respondents also submit the theory
sent, through Col. that since petitioner Jose Burgos, Jr.
Balbino V. Diego, Chief had used and marked as evidence
Intelligence and Legal some of the seized documents in
Officer of the Criminal Case No. Q- 022872, he is now
Presidential Security estopped from challenging the validity
Command, they were of the search warrants. We do not
further encouraged to follow the logic of respondents. These
hope that the latter documents lawfully belong to
would yield the desired petitioner Jose Burgos, Jr. and he can
results. do whatever he pleases with them,
within legal bounds. The fact that he
After waiting in vain for has used them as evidence does not
five [5] months, and cannot in any way affect the
petitioners finally validity or invalidity of the search
decided to come to warrants assailed in this petition.
Court. [pp. 123-124,
Rollo] Several and diverse reasons have been
advanced by petitioners to nullify the
Although the reason given by search warrants in question.
petitioners may not be flattering to our
judicial system, We find no ground to 1. Petitioners fault respondent judge
punish or chastise them for an error in for his alleged failure to conduct an
judgment. On the contrary, the examination under oath or affirmation
extrajudicial efforts exerted by of the applicant and his witnesses, as
petitioners quite evidently negate the mandated by the above-quoted
presumption that they had abandoned constitutional provision as wen as Sec.
their right to the possession of the 4, Rule 126 of the Rules of Court .6 This
objection, however, may properly be
considered moot and academic, as
petitioners themselves conceded
during the hearing on August 9, 1983,
that an examination had indeed been
conducted by respondent judge of Col.
Abadilla and his witnesses.
2. Search Warrants No. 20-82[a] and
No. 20- 82[b] were used to search two
distinct places: No. 19, Road 3, Project
6, Quezon City and 784 Units C & D,
RMS Building, Quezon Avenue, Quezon
City, respectively. Objection is
interposed to the execution of Search
Warrant No. 20-82[b] at the latter
address on the ground that the two
search warrants pinpointed only one
place where petitioner Jose Burgos, Jr.
was allegedly keeping and concealing
the articles listed therein, i.e., No. 19,
Road 3, Project 6, Quezon City. This
assertion is based on that portion of
Search Warrant No. 20- 82[b] which
states:
Which have been used,
and are being used as
instruments and means
of committing the crime
of subversion penalized
under P.D. 885 as
amended and he is
 keeping and concealing In the determination of whether a Sec. 2. Personal
the same at 19 Road 3, search warrant describes the premises Property to be seized.
Project 6, Quezon City. to be searched with sufficient — A search warrant
particularity, it has been held "that the may be issued for the
The defect pointed out is obviously a executing officer's prior knowledge as search and seizure of
typographical error. Precisely, two to the place intended in the warrant is the following personal
search warrants were applied for and relevant. This would seem to be property:
issued because the purpose and intent especially true where the executing
were to search two distinct premises. officer is the affiant on whose affidavit [a]
It would be quite absurd and illogical the warrant had issued, and when he Property
for respondent judge to have issued knows that the judge who issued the subject of
two warrants intended for one and the warrant intended the building the
same place. Besides, the addresses of described in the affidavit, And it has offense;
the places sought to be searched were also been said that the executing
specifically set forth in the application, officer may look to the affidavit in the [b]
and since it was Col. Abadilla himself official court file to resolve an Property
who headed the team which executed ambiguity in the warrant as to the stolen or
the search warrants, the ambiguity place to be searched." 8 embezzle
that might have arisen by reason of the d and
typographical error is more apparent 3. Another ground relied upon to annul other
than real. The fact is that the place for the search warrants is the fact that proceeds
which Search Warrant No. 20- 82[b] although the warrants were directed or fruits
was applied for was 728 Units C & D, against Jose Burgos, Jr. alone, articles b of the
RMS Building, Quezon Avenue, Quezon belonging to his co-petitioners Jose offense;
City, which address appeared in the Burgos, Sr., Bayani Soriano and the J. and
opening paragraph of the said Burgos Media Services, Inc. were
warrant. 7 Obviously this is the same seized. [c]
place that respondent judge had in Property
mind when he issued Warrant No. 20- Section 2, Rule 126 of the Rules of used or
82 [b]. Court, enumerates the personal intended
properties that may be seized under a to be
search warrant, to wit: used as
 the
means of
committi
ng an
offense.
The above rule does not require that
the property to be seized should be
owned by the person against whom
the search warrant is directed. It may
or may not be owned by him. In fact,
under subsection [b] of the above-
quoted Section 2, one of the properties
that may be seized is stolen property.
Necessarily, stolen property must be
owned by one other than the person in
whose possession it may be at the time
of the search and seizure. Ownership,
therefore, is of no consequence, and it
is sufficient that the person against
whom the warrant is directed has
control or possession of the property
sought to be seized, as petitioner Jose
Burgos, Jr. was alleged to have in
relation to the articles and property
seized under the warrants.
4. Neither is there merit in petitioners'
assertion that real properties were
seized under the disputed warrants.
Under Article 415[5] of the Civil Code
of the Philippines, "machinery,
receptables, instruments or
implements intended by the owner of
the tenement for an industry or works
which may be carried on in a building
or on a piece of land and which tend
directly to meet the needs of the said
industry or works" are considered
immovable property. In Davao Sawmill
Co. v. Castillo9 where this legal
provision was invoked, this Court ruled
that machinery which is movable by
nature becomes immobilized when
placed by the owner of the tenement,
property or plant, but not so when
placed by a tenant, usufructuary, or
any other person having only a
temporary right, unless such person
acted as the agent of the owner.
In the case at bar, petitioners do not
claim to be the owners of the land
and/or building on which the
machineries were placed. This being
the case, the machineries in question,
while in fact bolted to the ground
remain movable property susceptible
to seizure under a search warrant.
5. The questioned search warrants
were issued by respondent judge upon
application of Col. Rolando N. Abadilla
Intelligence Officer of the P.C.
Metrocom.10 The application was
accompanied by the Joint Affidavit of
Alejandro M. Gutierrez and Pedro U.
Tango, 11 members of the Metrocom
Intelligence and Security Group under
Col. Abadilla which conducted a
surveillance of the premises prior to
the filing of the application for the
search warrants on December 7, 1982.
It is contended by petitioners,
however, that the abovementioned
documents could not have provided
sufficient basis for the finding of a
probable cause upon which a warrant
may validly issue in accordance with
Section 3, Article IV of the 1973
Constitution which provides:
SEC. 3. ... and no search
warrant or warrant of
arrest shall issue except
upon probable cause to
be determined by the
judge, or such other
responsible officer as
may be authorized by
law, after examination
under oath or
affirmation of the
complainant and the
witnesses he may
 produce, and
particularly describing
the place to be searched
and the persons or
things to be seized.
We find petitioners' thesis impressed
with merit. Probable cause for a search
is defined as such facts and
circumstances which would lead a
reasonably discreet and prudent man
to believe that an offense has been
committed and that the objects sought
in connection with the offense are in
the place sought to be searched. And
when the search warrant applied for is
directed against a newspaper publisher
or editor in connection with the
publication of subversive materials, as
in the case at bar, the application
and/or its supporting affidavits must
contain a specification, stating with
particularity the alleged subversive
material he has published or is
intending to publish. Mere
generalization will not suffice. Thus,
the broad statement in Col. Abadilla's
application that petitioner "is in
possession or has in his control
printing equipment and other
paraphernalia, news publications and
other documents which were used and
are all continuously being used as a
means of committing the offense of
subversion punishable under
Presidential Decree 885, as
amended ..." 12 is a mere conclusion
of law and does not satisfy the
requirements of probable cause. Bereft
of such particulars as would justify a
finding of the existence of probable
cause, said allegation cannot serve as
basis for the issuance of a search
warrant and it was a grave error for
respondent judge to have done so.
Equally insufficient as basis for the
determination of probable cause is the
statement contained in the joint
affidavit of Alejandro M. Gutierrez and
Pedro U. Tango, "that the evidence
gathered and collated by our unit
clearly shows that the premises above-
mentioned and the articles and things
above-described were used and are
continuously being used for subversive
activities in conspiracy with, and to
promote the objective of, illegal
organizations such as the Light-a-Fire
Movement, Movement for Free
Philippines, and April 6 Movement." 13
In mandating that "no warrant shall
issue except upon probable cause to
be determined by the judge, ... after
examination under oath or affirmation
of the complainant and the witnesses
he may produce; 14 the Constitution
requires no less than personal
knowledge by the complainant or his
witnesses of the facts upon which the
issuance of a search warrant may be
justified. In Alvarez v. Court of First
Instance, 15 this Court ruled that "the
oath required must refer to the truth
of the facts within the personal
knowledge of the petitioner or his
witnesses, because the purpose
thereof is to convince the committing
magistrate, not the individual making
the affidavit and seeking the issuance
of the warrant, of the existence of
probable cause." As couched, the
quoted averment in said joint affidavit
filed before respondent judge hardly
meets the test of sufficiency
established by this Court in Alvarez
case.
Another factor which makes the search
warrants under consideration
constitutionally objectionable is that
they are in the nature of general
warrants. The search warrants Free Philippines, Light- 3] A
describe the articles sought to be a-Fire Movement and delivery
seized in this wise: April 6 Movement; and, truck
with
1] All printing 3] Motor vehicles used Plate No.
equipment, in the NBS 524;
paraphernalia, paper, distribution/circulation
ink, photo (equipment, of the "WE FORUM" and 4]
typewriters, cabinets, other subversive TOYOTA-
tables, materials and TAMARA
communications/record propaganda, more W,
ing equipment, tape particularly, colored
recorders, dictaphone white
and the like used and/or 1] with
connected in the Toyota- Plate No.
printing of the "WE Corolla, PBP 665;
FORUM" newspaper colored and,
and any and all yellow
documents with 5]
communication, letters Plate No. TOYOTA
and facsimile of prints NKA 892; Hi-Lux,
related to the "WE pick-up
FORUM" newspaper. 2] truck
DATSUN with
2] Subversive pick-up Plate No.
documents, pamphlets, colored NGV 427
leaflets, books, and white with
other publication to with marking
promote the objectives Plate No. "Bagong
and piurposes of the NKV 969 Silang."
subversive organization
known as Movement for
In Stanford v. State of Texas 16 the
search warrant which authorized the
search for "books, records, pamphlets,
cards, receipts, lists, memoranda,
pictures, recordings and other written
instruments concerning the
Communist Party in Texas," was
declared void by the U.S. Supreme
Court for being too general. In like
manner, directions to "seize any
evidence in connectionwith the
violation of SDC 13-3703 or otherwise"
have been held too general, and that
portion of a search warrant which
authorized the seizure of any
"paraphernalia which could be used to
violate Sec. 54-197 of the Connecticut
General Statutes [the statute dealing
with the crime of conspiracy]" was
held to be a general warrant, and
therefore invalid. 17 The description of
the articles sought to be seized under
the search warrants in question cannot
be characterized differently.
In the Stanford case, the U.S. Supreme
Courts calls to mind a notable chapter
in English history: the era of disaccord
between the Tudor Government and
the English Press, when "Officers of the
Crown were given roving commissions
to search where they pleased in order
to suppress and destroy the literature
of dissent both Catholic and Puritan
Reference herein to such historical
episode would not be relevant for it is
not the policy of our government to
suppress any newspaper or publication
that speaks with "the voice of non-
conformity" but poses no clear and
imminent danger to state security.
As heretofore stated, the premises
searched were the business and
printing offices of the "Metropolitan
Mail" and the "We Forum newspapers.
As a consequence of the search and
seizure, these premises were
padlocked and sealed, with the further
result that the printing and publication
of said newspapers were discontinued.
Such closure is in the nature of
previous restraint or censorship
abhorrent to the freedom of the press
guaranteed under the fundamental
law, 18 and constitutes a virtual denial
of petitioners' freedom to express
themselves in print. This state of being
is patently anathematic to a
democratic framework where a free,
alert and even militant press is
essential for the political
enlightenment and growth of the
citizenry.
Respondents would justify the
continued sealing of the printing
machines on the ground that they have
been sequestered under Section 8 of
Presidential Decree No. 885, as
amended, which authorizes "the
sequestration of the property of any
person, natural or artificial, engaged in
subversive activities against the
government and its duly constituted
authorities ... in accordance with
implementing rules and regulations as
may be issued by the Secretary of
National Defense." It is doubtful
however, if sequestration could validly
be effected in view of the absence of
any implementing rules and
regulations promulgated by the
Minister of National Defense.
Besides, in the December 10, 1982
issue of the Daily Express, it was
reported that no less than President
Marcos himself denied the request of
the military authorities to sequester
the property seized from petitioners
on December 7, 1982. Thus:
 The President denied a further confirmed by the reply of then
request flied by Foreign Minister Carlos P. Romulo to
government the letter dated February 10, 1983 of
prosecutors for U.S. Congressman Tony P. Hall
sequestration of the WE addressed to President Marcos,
FORUM newspaper and expressing alarm over the "WE FORUM
its printing presses, " case. 20 In this reply dated February
according to 11, 1983, Minister Romulo stated:
Information Minister
Gregorio S. Cendana. 2. Contrary to reports,
President Marcos
On the basis of court turned down the
orders, government recommendation of our
agents went to the We authorities to close the
Forum offices in Quezon paper's printing facilities
City and took a detailed and confiscate the
inventory of the equipment and
21
equipment and all materials it uses. 
materials in the
premises. IN VIEW OF THE FOREGOING, Search
Warrants Nos. 20-82[a] and 20-82[b]
Cendaña said that issued by respondent judge on
because of the denial December 7, 1982 are hereby declared
the newspaper and its null and void and are accordingly set
equipment remain at aside. The prayer for a writ of
the disposal of the mandatory injunction for the return of
owners, subject to the the seized articles is hereby granted
discretion of the and all articles seized thereunder are
court. 19 hereby ordered released to
petitioners. No costs.
That the property seized on December
7, 1982 had not been sequestered is SO ORDERED.
.R. No. 168557             February 16, Before us are two consolidated cases all taxes, import duties, fees, charges
2007 docketed as G.R. No. 168557 and G.R. and other levies imposed by the
No. 170628, which were filed by National Government of the Republic
FELS ENERGY, INC., Petitioner, petitioners FELS Energy, Inc. (FELS) and of the Philippines or any agency or
vs. National Power Corporation (NPC), instrumentality thereof to which
THE PROVINCE OF BATANGAS and respectively. The first is a petition for POLAR may be or become subject to or
review on certiorari assailing the in relation to the performance of their
THE OFFICE OF THE PROVINCIAL August 25, 2004 Decision1 of the Court obligations under this agreement
ASSESSOR OF of Appeals (CA) in CA-G.R. SP No. (other than (i) taxes imposed or
BATANGAS, Respondents. 67490 and its Resolution2 dated June calculated on the basis of the net
20, 2005; the second, also a petition income of POLAR and Personal Income
x-------------------------------------------------- for review on certiorari, challenges the Taxes of its employees and (ii)
--x February 9, 2005 Decision3 and construction permit fees,
November 23, 2005 Resolution4 of the environmental permit fees and other
G.R. No. 170628            February 16, CA in CA-G.R. SP No. 67491. Both similar fees and charges) and (b) all
2007 petitions were dismissed on the real estate taxes and assessments,
ground of prescription. rates and other charges in respect of
NATIONAL POWER the Power Barges.6
CORPORATION, Petitioner, The pertinent facts are as follows:
vs. Subsequently, Polar Energy, Inc.
LOCAL BOARD OF ASSESSMENT On January 18, 1993, NPC entered into assigned its rights under the
APPEALS OF BATANGAS, LAURO C. a lease contract with Polar Energy, Inc. Agreement to FELS. The NPC initially
ANDAYA, in his capacity as the over 3x30 MW diesel engine power opposed the assignment of rights,
Assessor of the Province of Batangas, barges moored at Balayan Bay in citing paragraph 17.2 of Article 17 of
and the PROVINCE OF BATANGAS Calaca, Batangas. The contract, the Agreement.
represented by its Provincial denominated as an Energy Conversion
Assessor, Respondents. Agreement5 (Agreement), was for a On August 7, 1995, FELS received an
period of five years. Article 10 reads: assessment of real property taxes on
DECISION the power barges from Provincial
10.1 RESPONSIBILITY. NAPOCOR shall Assessor Lauro C. Andaya of Batangas
CALLEJO, SR., J.: be responsible for the payment of (a) City. The assessed tax, which likewise
covered those due for 1994, amounted
to ₱56,184,088.40 per annum. FELS
referred the matter to NPC, reminding
it of its obligation under the
Agreement to pay all real estate taxes.
It then gave NPC the full power and
authority to represent it in any
conference regarding the real property
assessment of the Provincial Assessor.
In a letter7 dated September 7, 1995,
NPC sought reconsideration of the
Provincial Assessor’s decision to assess
real property taxes on the power
barges. However, the motion was
denied on September 22, 1995, and
the Provincial Assessor advised NPC to
pay the assessment.8 This prompted
NPC to file a petition with the Local
Board of Assessment Appeals (LBAA)
for the setting aside of the assessment
and the declaration of the barges as
non-taxable items; it also prayed that
should LBAA find the barges to be
taxable, the Provincial Assessor be
directed to make the necessary
corrections.9
In its Answer to the petition, the
Provincial Assessor averred that the
barges were real property for purposes
of taxation under Section 199(c) of
Republic Act (R.A.) No. 7160.
Before the case was decided by the
LBAA, NPC filed a Manifestation,
informing the LBAA that the
Department of Finance (DOF) had
rendered an opinion10 dated May 20,
1996, where it is clearly stated that
power barges are not real property
subject to real property assessment.
On August 26, 1996, the LBAA
rendered a Resolution11 denying the
petition. The fallo reads:
WHEREFORE, the Petition is DENIED.
FELS is hereby ordered to pay the real
estate tax in the amount of
₱56,184,088.40, for the year 1994.
SO ORDERED.12
The LBAA ruled that the power plant
facilities, while they may be classified
as movable or personal property, are
nevertheless considered real property
for taxation purposes because they are
installed at a specific location with a
character of permanency. The LBAA
also pointed out that the owner of the
barges–FELS, a private corporation–is
the one being taxed, not NPC. A mere
agreement making NPC responsible for
the payment of all real estate taxes
and assessments will not justify the
exemption of FELS; such a privilege can
only be granted to NPC and cannot be
extended to FELS. Finally, the LBAA
also ruled that the petition was filed
out of time.
Aggrieved, FELS appealed the LBAA’s
ruling to the Central Board of
Assessment Appeals (CBAA).
On August 28, 1996, the Provincial
Treasurer of Batangas City issued a
Notice of Levy and Warrant by
Distraint13 over the power barges,
seeking to collect real property taxes
amounting to ₱232,602,125.91 as of
July 31, 1996. The notice and warrant
was officially served to FELS on
November 8, 1996. It then filed a
Motion to Lift Levy dated November
14, 1996, praying that the Provincial
Assessor be further restrained by the
CBAA from enforcing the disputed
assessment during the pendency of the
appeal.
On November 15, 1996, the CBAA
issued an Order14 lifting the levy and
distraint on the properties of FELS in
order not to preempt and render
ineffectual, nugatory and illusory any
resolution or judgment which the
Board would issue.
Meantime, the NPC filed a Motion for
Intervention15 dated August 7, 1998 in
the proceedings before the CBAA. This
was approved by the CBAA in an
Order16 dated September 22, 1998.
During the pendency of the case, both
FELS and NPC filed several motions to
admit bond to guarantee the payment
of real property taxes assessed by the
Provincial Assessor (in the event that
the judgment be unfavorable to them).
The bonds were duly approved by the
CBAA.
On April 6, 2000, the CBAA rendered a
Decision17 finding the power barges
exempt from real property tax. The
dispositive portion reads:
WHEREFORE, the Resolution of the
Local Board of Assessment Appeals of
the Province of Batangas is hereby
reversed. Respondent-appellee
Provincial Assessor of the Province of
Batangas is hereby ordered to drop
subject property under ARP/Tax
Declaration No. 018-00958 from the
List of Taxable Properties in the
Assessment Roll. The Provincial
Treasurer of Batangas is hereby
directed to act accordingly.
SO ORDERED.18
Ruling in favor of FELS and NPC, the
CBAA reasoned that the power barges
belong to NPC; since they are actually,
directly and exclusively used by it, the
power barges are covered by the
exemptions under Section 234(c) of
R.A. No. 7160.19 As to the other
jurisdictional issue, the CBAA ruled
that prescription did not preclude the
NPC from pursuing its claim for tax
exemption in accordance with Section
206 of R.A. No. 7160. The Provincial
Assessor filed a motion for
reconsideration, which was opposed
by FELS and NPC.
In a complete volte face, the CBAA
issued a Resolution20 on July 31, 2001
reversing its earlier decision. The fallo
of the resolution reads:
WHEREFORE, premises considered, it is
the resolution of this Board that:
(a) The decision of the Board
dated 6 April 2000 is hereby
reversed.
(b) The petition of FELS, as well
as the intervention of NPC, is
dismissed.
(c) The resolution of the Local
Board of Assessment Appeals
of Batangas is hereby affirmed,
(d) The real property tax
assessment on FELS by the
Provincial Assessor of Batangas
is likewise hereby affirmed.
SO ORDERED.21
FELS and NPC filed separate motions
for reconsideration, which were timely
opposed by the Provincial Assessor.
The CBAA denied the said motions in a
Resolution22 dated October 19, 2001.
Dissatisfied, FELS filed a petition for
review before the CA docketed as CA-
G.R. SP No. 67490. Meanwhile, NPC
filed a separate petition, docketed as
CA-G.R. SP No. 67491.
On January 17, 2002, NPC filed a
Manifestation/Motion for
Consolidation in CA-G.R. SP No. 67490
praying for the consolidation of its
petition with CA-G.R. SP No. 67491. In
a Resolution23 dated February 12,
2002, the appellate court directed NPC
to re-file its motion for consolidation
with CA-G.R. SP No. 67491, since it is
the ponente of the latter petition who
should resolve the request for
reconsideration.
NPC failed to comply with the
aforesaid resolution. On August 25,
2004, the Twelfth Division of the
appellate court rendered judgment in
CA-G.R. SP No. 67490 denying the
petition on the ground of prescription.
The decretal portion of the decision
reads:
WHEREFORE, the petition for review is
DENIED for lack of merit and the
assailed Resolutions dated July 31,
2001 and October 19, 2001 of the
Central Board of Assessment Appeals
are AFFIRMED.
24
SO ORDERED.
On September 20, 2004, FELS timely
filed a motion for reconsideration
seeking the reversal of the appellate
court’s decision in CA-G.R. SP No.
67490.
Thereafter, NPC filed a petition for
review dated October 19, 2004 before
this Court, docketed as G.R. No.
165113, assailing the appellate court’s
decision in CA-G.R. SP No. 67490. The
petition was, however, denied in this
Court’s Resolution25 of November 8,
2004, for NPC’s failure to sufficiently
show that the CA committed any
reversible error in the challenged
decision. NPC filed a motion for
reconsideration, which the Court
denied with finality in a before this Court, raising the following
26
Resolution  dated January 19, 2005.
Meantime, the appellate court
dismissed the petition in CA-G.R. SP
No. 67491. It held that the right to
question the assessment of the
Provincial Assessor had already
prescribed upon the failure of FELS to
appeal the disputed assessment to the
LBAA within the period prescribed by
law. Since FELS had lost the right to
question the assessment, the right of
the Provincial Government to collect
the tax was already absolute.
NPC filed a motion for reconsideration
dated March 8, 2005, seeking
reconsideration of the February 5,
2005 ruling of the CA in CA-G.R. SP No.
67491. The motion was denied in a
Resolution27 dated November 23,
2005.
The motion for reconsideration filed by
FELS in CA-G.R. SP No. 67490 had been
earlier denied for lack of merit in a
Resolution28 dated June 20, 2005.
On August 3, 2005, FELS filed the
petition docketed as G.R. No. 168557
issues:
A.
Whether power barges, which are
floating and movable, are personal
properties and therefore, not subject
to real property tax.
B.
Assuming that the subject power
barges are real properties, whether
they are exempt from real estate tax
under Section 234 of the Local
Government Code ("LGC").
C.
Assuming arguendo that the subject
power barges are subject to real estate
tax, whether or not it should be NPC
which should be made to pay the same
under the law.
D.
Assuming arguendo that the subject
power barges are real properties,
whether or not the same is subject to
depreciation just like any other
personal properties.
E.
Whether the right of the petitioner to
question the patently null and void real
property tax assessment on the
petitioner’s personal properties is
imprescriptible.29
On January 13, 2006, NPC filed its own
petition for review before this Court
(G.R. No. 170628), indicating the
following errors committed by the CA:
I parties had not submitted their
THE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT THE APPEAL
TO THE LBAA WAS FILED OUT OF TIME.
II
THE COURT OF APPEALS GRAVELY
ERRED IN NOT HOLDING THAT THE
POWER BARGES ARE NOT SUBJECT TO
REAL PROPERTY TAXES.
III
THE COURT OF APPEALS GRAVELY
ERRED IN NOT HOLDING THAT THE
ASSESSMENT ON THE POWER BARGES
WAS NOT MADE IN ACCORDANCE
WITH LAW.30
Considering that the factual
antecedents of both cases are similar,
the Court ordered the consolidation of
the two cases in a Resolution31 dated
March 8, 2006.1awphi1.net
In an earlier Resolution dated February
1, 2006, the Court had required the
parties to submit their respective
Memoranda within 30 days from
notice. Almost a year passed but the
respective memoranda. Considering
that taxes—the lifeblood of our
economy—are involved in the present
controversy, the Court was prompted
to dispense with the said pleadings,
with the end view of advancing the
interests of justice and avoiding
further delay.
In both petitions, FELS and NPC
maintain that the appeal before the
LBAA was not time-barred. FELS argues
that when NPC moved to have the
assessment reconsidered on
September 7, 1995, the running of the
period to file an appeal with the LBAA
was tolled. For its part, NPC posits that
the 60-day period for appealing to the
LBAA should be reckoned from its
receipt of the denial of its motion for
reconsideration.
Petitioners’ contentions are bereft of
merit.
Section 226 of R.A. No. 7160,
otherwise known as the Local
Government Code of 1991, provides:
SECTION 226. Local Board of
Assessment Appeals. – Any owner or
person having legal interest in the
property who is not satisfied with the
action of the provincial, city or
municipal assessor in the assessment
of his property may, within sixty (60)
days from the date of receipt of the
written notice of assessment, appeal to
the Board of Assessment Appeals of
the province or city by filing a petition
under oath in the form prescribed for
the purpose, together with copies of
the tax declarations and such affidavits
or documents submitted in support of
the appeal.
We note that the notice of assessment
which the Provincial Assessor sent to
FELS on August 7, 1995, contained the
following statement:
If you are not satisfied with this
assessment, you may, within sixty (60)
days from the date of receipt hereof,
appeal to the Board of Assessment
Appeals of the province by filing a
petition under oath on the form
prescribed for the purpose, together
with copies of ARP/Tax Declaration and
such affidavits or documents
submitted in support of the appeal.32
Instead of appealing to the Board of
Assessment Appeals (as stated in the
notice), NPC opted to file a motion for
reconsideration of the Provincial
Assessor’s decision, a remedy not
sanctioned by law.
The remedy of appeal to the LBAA is
available from an adverse ruling or
action of the provincial, city or
municipal assessor in the assessment
of the property. It follows then that
the determination made by the
respondent Provincial Assessor with
regard to the taxability of the subject
real properties falls within its power to
assess properties for taxation purposes
subject to appeal before the LBAA.33
We fully agree with the rationalization
of the CA in both CA-G.R. SP No. 67490
and CA-G.R. SP No. 67491. The two
divisions of the appellate court cited
the case of Callanta v. Office of the
Ombudsman,34 where we ruled that
under Section 226 of R.A. No
7160,35 the last action of the local
assessor on a particular assessment
shall be the notice of assessment; it is
this last action which gives the owner
of the property the right to appeal to
the LBAA. The procedure likewise does
not permit the property owner the
remedy of filing a motion for
reconsideration before the local
assessor. The pertinent holding of the
Court in Callanta is as follows:
x x x [T]he same Code is equally clear
that the aggrieved owners should have
brought their appeals before the LBAA.
Unfortunately, despite the advice to
this effect contained in their respective
notices of assessment, the owners
chose to bring their requests for a
review/readjustment before the city
assessor, a remedy not sanctioned by
the law. To allow this procedure would
indeed invite corruption in the system
of appraisal and assessment. It
conveniently courts a graft-prone
situation where values of real property
may be initially set unreasonably high,
and then subsequently reduced upon
the request of a property owner. In the
latter instance, allusions of a possible
covert, illicit trade-off cannot be
avoided, and in fact can conveniently
take place. Such occasion for mischief
must be prevented and excised from
our system.36
For its part, the appellate court
declared in CA-G.R. SP No. 67491:
x x x. The Court announces:
Henceforth, whenever the local
assessor sends a notice to the owner
or lawful possessor of real property of
its revised assessed value, the former
shall no longer have any jurisdiction to
entertain any request for a review or
readjustment. The appropriate forum
where the aggrieved party may bring
his appeal is the LBAA as provided by
law. It follows ineluctably that the 60-
day period for making the appeal to
the LBAA runs without interruption.
This is what We held in SP 67490 and
reaffirm today in SP 67491.37
To reiterate, if the taxpayer fails to
appeal in due course, the right of the
local government to collect the taxes
due with respect to the taxpayer’s
property becomes absolute upon the
expiration of the period to appeal. 38 It
also bears stressing that the taxpayer’s
failure to question the assessment in
the LBAA renders the assessment of
the local assessor final, executory and
demandable, thus, precluding the
taxpayer from questioning the
correctness of the assessment, or from
invoking any defense that would
reopen the question of its liability on
the merits.39
In fine, the LBAA acted correctly when
it dismissed the petitioners’ appeal for
having been filed out of time; the
CBAA and the appellate court were
likewise correct in affirming the
dismissal. Elementary is the rule that
the perfection of an appeal within the
period therefor is both mandatory and
jurisdictional, and failure in this regard
renders the decision final and
executory.40
In the Comment filed by the Provincial
Assessor, it is asserted that the instant
petition is barred by res judicata; that
the final and executory judgment in
G.R. No. 165113 (where there was a
final determination on the issue of
prescription), effectively precludes the
claims herein; and that the filing of the
instant petition after an adverse
judgment in G.R. No. 165113
constitutes forum shopping.
FELS maintains that the argument of
the Provincial Assessor is completely
misplaced since it was not a party to
the erroneous petition which the NPC
filed in G.R. No. 165113. It avers that it
did not participate in the aforesaid
proceeding, and the Supreme Court
never acquired jurisdiction over it. As
to the issue of forum shopping,
petitioner claims that no forum
shopping could have been committed
since the elements of litis pendentia or
res judicata are not present.
We do not agree.
Res judicata pervades every organized
system of jurisprudence and is
founded upon two grounds embodied
in various maxims of common law,
namely: (1) public policy and necessity,
which makes it to the interest of the
State that there should be an end to
litigation – republicae ut sit litium; and
(2) the hardship on the individual of
being vexed twice for the same cause –
nemo debet bis vexari et eadem causa.
A conflicting doctrine would subject
the public peace and quiet to the will
and dereliction of individuals and
prefer the regalement of the litigious
disposition on the part of suitors to the
preservation of the public tranquility
and happiness.41 As we ruled in Heirs
of Trinidad De Leon Vda. de Roxas v.
Court of Appeals:42
x x x An existing final judgment or
decree – rendered upon the merits,
without fraud or collusion, by a court
of competent jurisdiction acting upon a
matter within its authority – is
conclusive on the rights of the parties
and their privies. This ruling holds in all
other actions or suits, in the same or
any other judicial tribunal of
concurrent jurisdiction, touching on
the points or matters in issue in the
first suit.
xxx
Courts will simply refuse to reopen
what has been decided. They will not
allow the same parties or their privies
to litigate anew a question once it has
been considered and decided with
finality. Litigations must end and
terminate sometime and somewhere.
The effective and efficient
administration of justice requires that
once a judgment has become final, the
prevailing party should not be deprived
of the fruits of the verdict by
subsequent suits on the same issues
filed by the same parties.
This is in accordance with the doctrine
of res judicata which has the following
elements: (1) the former judgment
must be final; (2) the court which
rendered it had jurisdiction over the
subject matter and the parties; (3) the
judgment must be on the merits; and
(4) there must be between the first
and the second actions, identity of
parties, subject matter and causes of
action. The application of the doctrine
of res judicata does not require
absolute identity of parties but merely
substantial identity of parties. There is
substantial identity of parties when
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
To recall, FELS gave NPC the full power
and authority to represent it in any
proceeding regarding real property
assessment. Therefore, when
petitioner NPC filed its petition for
review docketed as G.R. No. 165113, it
did so not only on its behalf but also on
behalf of FELS. Moreover, the assailed
decision in the earlier petition for
review filed in this Court was the
decision of the appellate court in CA-
G.R. SP No. 67490, in which FELS was
the petitioner. Thus, the decision in
G.R. No. 165116 is binding on
petitioner FELS under the principle of
privity of interest. In fine, FELS and
NPC are substantially "identical
parties" as to warrant the application
of res judicata. FELS’s argument that it
is not bound by the erroneous petition
filed by NPC is thus unavailing.
On the issue of forum shopping, we
rule for the Provincial Assessor. Forum
shopping exists when, as a result of an
adverse judgment in one forum, a
party seeks another and possibly
favorable judgment in another forum
other than by appeal or special civil
action or certiorari. There is also forum
shopping when a party institutes two
or more actions or proceedings
grounded on the same cause, on the
gamble that one or the other court
would make a favorable disposition.44
Petitioner FELS alleges that there is no
forum shopping since the elements of
res judicata are not present in the
cases at bar; however, as already
discussed, res judicata may be properly
applied herein. Petitioners engaged in
forum shopping when they filed G.R.
Nos. 168557 and 170628 after the
petition for review in G.R. No. 165116.
Indeed, petitioners went from one
court to another trying to get a
favorable decision from one of the
tribunals which allowed them to
pursue their cases.
It must be stressed that an important
factor in determining the existence of
forum shopping is the vexation caused
to the courts and the parties-litigants
by the filing of similar cases to claim
substantially the same reliefs.45 The
rationale against forum shopping is
that a party should not be allowed to
pursue simultaneous remedies in two
different fora. Filing multiple petitions
or complaints constitutes abuse of
court processes, which tends to
degrade the administration of justice,
wreaks havoc upon orderly judicial
procedure, and adds to the congestion
of the heavily burdened dockets of the
courts.46
Thus, there is forum shopping when
there exist: (a) identity of parties, or at
least such parties as represent the
same interests in both actions, (b)
identity of rights asserted and relief
prayed for, the relief being founded on
the same facts, and (c) the identity of
the two preceding particulars is such
that any judgment rendered in the
pending case, regardless of which
party is successful, would amount to
res judicata in the other.47
Having found that the elements of res
judicata and forum shopping are
present in the consolidated cases, a
discussion of the other issues is no
longer necessary. Nevertheless, for the
peace and contentment of petitioners,
we shall shed light on the merits of the
case.
As found by the appellate court, the
CBAA and LBAA power barges are real
property and are thus subject to real
property tax. This is also the inevitable
conclusion, considering that G.R. No.
165113 was dismissed for failure to
sufficiently show any reversible error.
Tax assessments by tax examiners are
presumed correct and made in good
faith, with the taxpayer having the
burden of proving otherwise.48 Besides,
factual findings of administrative
bodies, which have acquired expertise
in their field, are generally binding and
conclusive upon the Court; we will not
assume to interfere with the sensible
exercise of the judgment of men
especially trained in appraising
property. Where the judicial mind is
left in doubt, it is a sound policy to
leave the assessment
49
undisturbed.  We find no reason to
depart from this rule in this case.
In Consolidated Edison Company of
New York, Inc., et al. v. The City of New
York, et al.,50 a power company
brought an action to review property
tax assessment. On the city’s motion to
dismiss, the Supreme Court of New
York held that the barges on which
were mounted gas turbine power
plants designated to generate
electrical power, the fuel oil barges
which supplied fuel oil to the power
plant barges, and the accessory
equipment mounted on the barges
were subject to real property taxation.
Moreover, Article 415 (9) of the New
Civil Code provides that "[d]ocks and
structures which, though floating, are
intended by their nature and object to
remain at a fixed place on a river, lake,
or coast" are considered immovable
property. Thus, power barges are
categorized as immovable property by
destination, being in the nature of
machinery and other implements
intended by the owner for an industry
or work which may be carried on in a
building or on a piece of land and
which tend directly to meet the needs
of said industry or work.51
Petitioners maintain nevertheless that
the power barges are exempt from real
estate tax under Section 234 (c) of R.A.
No. 7160 because they are actually,
directly and exclusively used by
petitioner NPC, a government- owned
and controlled corporation engaged in
the supply, generation, and
transmission of electric power.
We affirm the findings of the LBAA and
CBAA that the owner of the taxable
properties is petitioner FELS, which in
fine, is the entity being taxed by the
local government. As stipulated under
Section 2.11, Article 2 of the
Agreement:
OWNERSHIP OF POWER
BARGES. POLAR shall own the Power
Barges and all the fixtures, fittings,
machinery and equipment on the Site
used in connection with the Power
Barges which have been supplied by it
at its own cost. POLAR shall operate,
manage and maintain the Power
Barges for the purpose of converting
Fuel of NAPOCOR into electricity.52
It follows then that FELS cannot escape
liability from the payment of realty
taxes by invoking its exemption in
Section 234 (c) of R.A. No. 7160, which
reads:
SECTION 234. Exemptions from Real
Property Tax. – The following are
exempted from payment of the real
property tax:
xxx
(c) All machineries and equipment that
are actually, directly and exclusively
used by local water districts and
government-owned or controlled
corporations engaged in the supply
and distribution of water and/or
generation and transmission of electric
power; x x x
Indeed, the law states that the
machinery must be actually, directly
and exclusively used by the
government owned or controlled
corporation; nevertheless, petitioner
FELS still cannot find solace in this
provision because Section 5.5, Article 5
of the Agreement provides:
OPERATION. POLAR undertakes that
until the end of the Lease Period,
subject to the supply of the necessary
Fuel pursuant to Article 6 and to the
other provisions hereof, it will operate
the Power Barges to convert such Fuel
into electricity in accordance with Part
A of Article 7.53
It is a basic rule that obligations arising
from a contract have the force of law
between the parties. Not being
contrary to law, morals, good customs,
public order or public policy, the
parties to the contract are bound by its
terms and conditions.54
Time and again, the Supreme Court
has stated that taxation is the rule and
exemption is the exception.55 The law
does not look with favor on tax
exemptions and the entity that would
seek to be thus privileged must justify
it by words too plain to be mistaken
and too categorical to be
misinterpreted.56 Thus, applying the
rule of strict construction of laws
granting tax exemptions, and the rule
that doubts should be resolved in favor
of provincial corporations, we hold
that FELS is considered a taxable
entity.
The mere undertaking of petitioner
NPC under Section 10.1 of the
Agreement, that it shall be responsible
for the payment of all real estate taxes
and assessments, does not justify the
exemption. The privilege granted to
petitioner NPC cannot be extended to
FELS. The 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

G.R. No. 179408, March 05, 2014
PHILIPPINE LONG DISTANCE
TELEPHONE
COMPANY, Petitioner, v. ABIGAIL R.
RAZON ALVAREZ AND VERNON R.
RAZON, Respondents.
DECISION
BRION, J.:
Before the Court is a petition for
review on certiorari1 assailing the
decision2 dated August 11, 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) of Pasay City, Branch
115.
The CA rulings (i) quashed the first two
search warrants, similarly docketed as
Search Warrant No. 03–063, issued for
violation of Article 308, in relation to
Article 309, of the Revised Penal Code
(RPC), and (ii) declared void
paragraphs 7, 8 and 9 of the other two
search warrants, also similarly wires and cables linking these handsets
docketed as Search Warrant No. 03– and/or equipment, antennae,
064, issued for violation of Presidential transmission facilities, the
Decree (PD) No. 401.4 international gateway facility (IGF) and
other telecommunications equipment
FACTUAL ANTECEDENTS providing interconnections.8 To
safeguard the integrity of its network,
Philippine Long Distance Telephone PLDT regularly conducts investigations
Company (PLDT) is the grantee of a on various prepaid cards marketed and
legislative franchise5 which authorizes sold abroad to determine alternative
it to carry on the business of providing calling patterns (ACP) and network
basic and enhanced fraud that are being perpetrated
telecommunications services in and against it.
between areas in the Philippines and
between the Philippines and other To prevent or stop network fraud,
countries and territories,6 and, PLDT’s ACP Detection Division (ACPDD)
accordingly, to establish, operate, regularly visits foreign countries to
manage, lease, maintain and purchase conduct market research on various
telecommunications system for both prepaid phone cards offered abroad
domestic and international that allow their users to make overseas
7
calls.  Pursuant to its franchise, PLDT calls to PLDT subscribers in the
offers to the public wide range of Philippines at a cheaper rate.
services duly authorized by the
National Telecommunications The ACPDD bought The Number
Commission (NTC). One prepaid card — a card principally
marketed to Filipinos residing in the
PLDT’s network is principally United Kingdom for calls to the
composed of the Public Switch Philippines – to make test calls using
Telephone Network, telephone two telephone lines: the dialing
handsets and/or telecommunications phone – an IDD–capable9 telephone
equipment used by its subscribers, the
line which makes the call and through
which the access number and the PIN
number printed at the back of the card
are entered; and the receiving
phone – a caller identification (caller
id) unit–equipped telephone line which
would receive the call and reflect the
incoming caller’s telephone number.
During a test call placed at the PLDT–
ACPDD office, the receiving phone
reflected a PLDT telephone number (2–
8243285) as the calling number
used, as if the call was originating from
a local telephone in Metro Manila.
Upon verification with the PLDT’s
Integrated Customer Management
(billing) System, the ACPDD learned
that the subscriber of the reflected
telephone number is Abigail R. Razon
Alvarez, with address at 17 Dominic
Savio St., Savio Compound, Barangay
Don Bosco, Parañaque City. It further
learned that several lines are installed
at this address with Abigail and Vernon
R. Razon (respondents), among others,
as subscribers.10
To validate its findings, the ACPDD
conducted the same test calls on
November 5, 2003 at the premises of
the NTC in Quezon City (and in the
presence of an NTC representative 11)
using the same prepaid card
(validation test). The receiving phone
at the NTC premises reflected the
telephone numbers registered in the
name of Abigail as the calling
number from the United Kingdom.12
Similar test calls subsequently
conducted using the prepaid
cards Unity Card and IDT Supercalling
Card revealed the same results. The
caller–id–equipped receiving phone
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 Subdivision, Barangay
Don Bosco, Parañaque City. It turned
out that the actual occupant of these
premises is also Abigail. Subsequently,
a validation test was also conducted,
yielding several telephone numbers
registered in the name of Experto
Phils./Experto Enterprises as the calling
numbers supposedly from the United
Kingdom.14
According to PLDT, had an ordinary
and legitimate call been made, the
screen of the caller–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 respondents would route
the call via the internet to a local
telephone number (in this case, a PLDT
telephone number) which would
connect the call to the receiving
phone. Since calls through the internet
never pass the toll center of the PLDT’s
IGF, users of these prepaid cards can
place a call to any point in the
Philippines (provided the local line is
NDD–capable) without the call
appearing as coming from abroad.15
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),
conducted an ocular inspection at 17
Dominic Savio St., Savio Compound
and at No. 38 Indonesia St., Better
Living Subdivision – both in Barangay
Don Bosco, Paranaque City – and
discovered that PLDT telephone lines
were connected to several pieces of
equipment.16 Mr. Narciso narrated the
results of the inspection, thus –
10. During [the] ocular inspection [at
17 Dominic Savio St., Savio
Compound], Ms. Abigail Razon Alvarez
allowed us to gain entry and check the
telephone installations within their
premises. First, we checked the
location of the telephone protectors
that are commonly installed at a
concrete wall boundary inside the
compound. Some of these protectors
are covered with a fabricated wooden
cabinet. Other protectors are installed
beside the said wooden cabinet, xxx.
The inside wiring installations from
telephone protectors to connecting
block were routed to the said adjacent
room passing through the house
ceiling.
11. xxx. Upon entering the so–called
adjacent room, we immediately
noticed that the PLDT telephone lines
were connected to the equipment
situated at multi–layered rack. The
equipment room contains the
following:
a. 6 Quintum router;
b. 13 Com router;
c. 1 Cisco 800
d. 1 Nokia Modem for PLDT DSL;
e. 1 Meridian Subscriber’s Unit[;]
f. 5 Personal Computers[;]
g. 1 Computer Printer[;
h. 1 Flat–bed Scanner[.]
12.  We also noticed that these routers
are connected to the Meridian’s
subscriber unit ("SU” ) 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 service of Meridian
Telekoms.
xxxx
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 cabinet with safety
padlock. Said wooden cabinet was
situated on the concrete wall inside
router; the compound near the garage
entrance gate. The telephone inside
the wiring installations from the
protector to the connecting blocks
were placed in a plastic electrical
conduit routed to the adjacent room at
the second floor.17
On December 3, 2003, Police
and] Superintendent Gilbert C. Cruz filed a
consolidated application for a search
warrant18 before Judge Francisco G.
Mendiola of the RTC, for the crimes of
theft and violation of PD No. 401.
According to PLDT, the respondents
are engaged in a form of network
fraud known as International Simple
Resale (ISR) which amounts to theft
under the RPC.
ISR is a method of routing and
completing international long distance
calls using lines, cables, antennae
and/or wave frequencies which are
connected directly to the domestic
exchange facilities of the country
where the call is destined (terminating
country); and, in the process,
bypassing the IGF at the terminating
country.19
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 Article 309,
of the RPC (SW A–1 and SW A–2) and
of PD No. 401, as amended (SW B–1
and SW B–2) for the ISR activities being
conducted at 17 Dominic Savio St.,
Savio Compound and at No. 38
Indonesia St., Better Living Subdivision,
both in Barangay Don Bosco,
Paranaque City. The four search
warrants enumerated the objects to be
searched and seized as follows:
1. MERIDIAN SUBSCRIBERS UNIT AND
PLDT DSL LINES and/or CABLES AND
ANTENNAS and/or similar equipment
or device capable of transmitting air
waves or frequency, such as a
Meridian Subscriber’s Unit, Broadband
DSL and telephone lines;
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 this
process;
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;
4. QUINTUM Equipment or any similar
equipment capable of receiving digital
signals from the internet and
converting those signals to voice;
5. QUINTUM, 3COM AND CISCO
Routers or any similar equipment
capable of switching packets of data to
their assigned destination or
addresses;
6. LINKS DSL SWITCH or any similar
equipment capable of switching data;
7. COMPUTER PRINTERS AND
SCANNERS or any similar equipment or
device used for copying and/or
printing data and/or information;
8. SOFTWARE, DISKETTES, TAPES or
any similar equipment or device used
for recording or storing information;
and
9. Manuals, phone cards, access codes,
billing statements, receipts, contracts,
checks, orders, communications and
documents, lease and/or subscription
agreements or contracts,
communications and documents
relating to securing and using
telephone lines and/or equipment[.]21
On the same date, the PNP searched
the premises indicated in the warrants.
On December 10, 2003, a return was
made with a complete inventory of the
items seized.22 On January 14, 2004,
the PLDT and the PNP filed with the
Department of Justice a joint
complaint–affidavit for theft and for
violation of PD No. 401 against the
respondents.23
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
warrants which were enforced in
Parañaque City; second, the
enumeration of the items to be
searched and seized lacked
particularity; and third, there was no
probable cause for the crime of theft.
On March 12, 2004, PLDT opposed the
respondents' motion.25
26
In a July 6, 2004 order,  the RTC
denied the respondents' motion to
quash. Having been rebuffed27 in their
motion for reconsideration,28 the
respondents filed a petition
for certiorari with the CA.” 29
RULING OF THE CA
On August 11, 2006, the CA rendered
the assailed decision and resolution,
granting the respondents' petition
for certiorari. The CA quashed SW A–l
and SW A–2 (for theft) on the ground
that they were issued for “non–
existent crimes.” 30 According to the
CA, inherent in 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 v. Judge
Abrogar,31 the CA ruled that the
respondents could not have possibly
committed the crime of theft because
PLDT’s business of providing
telecommunication services and these
services themselves are not personal
properties contemplated under Article
308 of the RPC.
With respect to SW B–l and SW B–
2 (for violation of PD No. 401), the CA
upheld paragraphs 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 warrants did not make it
suffer from generality since each
paragraph’s enumeration of items was
sufficiently qualified by the citation of
the specific objects to be seized and by
its functions which are inherently
connected with the crime allegedly
committed.
The CA, however, nullified the ensuing
paragraphs, 7, 8 and 9, for lack of
particularity and ordered the return of
the items seized under these
provisions. While the same stock
phrase 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 the
description of the things to be seized
too general in nature.
With the denial of its motion for
reconsideration,32 PLDT went to this
Court via this Rule 45 petition.
THE PETITIONER'S ARGUMENTS
PLDT faults the CA for relying
on Laurel on three grounds: first,
Laurel cannot be cited yet as an
authority under the principle of stare
decisis because Laurel is not yet final
and executory; in fact, it is the subject
of a pending motion for
reconsideration filed by PLDT
itself; second, even assuming
that Laurel is already final, the facts
in Laurel vary from the present
case. Laurel involves the quashal of an
information on the ground that the
information does 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 involves the
quashal of a search warrant. Third,
accordingly, in resolving the motion,
the issuing court only has to be
convinced that there is probable cause
to hold that: (i) the items to be seized
are connected to a criminal activity;
and (ii) these items are found in the
place to be searched. Since the matter
of quashing a search warrant may be
rooted on matters “extrinsic of the
search warrant,” 33 the issuing court
does not need to look into the
elements of the crime allegedly
committed in the same manner that
the CA did in Laurel.
PLDT adds that a finding of grave
abuse of discretion in the issuance of
search warrant may be justified only
when there is “disregard of the
requirements for the issuance of a
search warrant[.]” 34 In the present
case, the CA did not find (and could
not have found) any grave abuse of
discretion on the part of the RTC
because at the time the RTC issued the
search warrants in 2003, Laurel had
not yet been promulgated.
In defending the validity of the
nullified provisions of SW B–l and SW
B–2, PLDT argues that 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 telephone lines,
then these items bear a direct relation
to the offense of violation of PD No.
401, justifying their seizure.
The enumeration in paragraph 8 is
likewise a proper subject of seizure
because they are the fruits of the
offense as they contain information on
PLDT’s business profit and other
information relating to the commission
of violation of PD No. 401. Similarly,
paragraph 9 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.
THE RESPONDENTS' ARGUMENTS
The respondents counter that
while Laurel may not yet be final, at
least it has a persuasive effect as the
current jurisprudence on the matter.
Even without Laurel, the CA’s
nullification of SW A–l and SW A–2 can
withstand scrutiny because of the
novelty of the issue presented 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 which
punishes the theft of electricity.
OUR RULING
We partially grant the petition.
Laurel and its reversal by the Court En
Banc
Before proceeding with the case, a
review of Laurel is in order as it
involves substantially similar facts as in
the present case.
Baynet Co., Ltd. (Baynet) sells prepaid
cards, “Bay Super Orient Card,” that
allow their users to place a call to the
Philippines from Japan. PLDT asserted
that Baynet is engaged in ISR activities
by using an international private
leased line (IPL) to course Baynet’s
incoming international long distance
calls. The IPL is linked to a switching
equipment, which is then connected to
PLDT telephone lines/numbers and
equipment, with Baynet as subscriber.
To establish its case, PLDT obtained a
search warrant. On the strength of the
items seized during the search of
Baynet’s premises, the prosecutor
found probable cause for theft against
Luis Marcos Laurel (Laurel) and other
Baynet officials. Accordingly, an
information was filed, alleging that the
Baynet officials “take, steal and use the
international long distance calls
belonging to PLDT by [ISR activities] xxx
effectively stealing this business from
PLDT while using its facilities in the
estimated amount of P20,370,651.92
to the damage and prejudice of
PLDT[.]” 35
Laurel moved to quash the information
on the bold assertion that ISR activities
do not constitute a crime under
Philippine law. Laurel argued that an
ISR activity cannot entail taking of
personal property because the
international long distance telephone
calls using PLDT telephone lines belong
to the caller himself; the amount
stated in the information, if at all,
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
derived therefrom are not personal
property that can be appropriated.
Laurel went to the Court after failing to
secure the desired relief from the trial
and appellate courts,36 raising the core
issue of whether PLDT’s business of
providing telecommunication services
for international long distance calls is a
proper subject of theft under Article
308 of the RPC. The Court’s First
Division granted Laurel’s petition and
ordered the quashal of the
information.
Taking off from the basic rule that
penal laws are construed strictly
against the State, the Court ruled that
international long distance calls and
the business of providing
telecommunication or telephone
services by PLDT are not personal
properties that can be the subject of
theft.
One is apt to conclude that “personal
property” standing alone, covers both
tangible and 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 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 is that, only movable
properties which have physical or
material existence and susceptible of
occupation by another are proper
objects of theft, xxx.
xxxx
xxx. Business, like services in business,
although are properties, are not
proper subjects of theft under the
Revised Penal Code because the same
cannot be “taken” or “occupied.” If it
were otherwise, xxx there would be no
juridical difference between the taking
of the 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 “business” as personal
property under Article 308 of the
Revised Penal Code, the Philippine
Legislature should have spoken in
language that is clear and definite: that
business is personal property under
Article 308 of the Revised Penal Code.
xxxx
The petitioner is not charged, under
the Amended Information, for theft of
telecommunication or telephone
services offered by PLDT. Even if he
is, the term “personal property” under
Article 308 of the Revised Penal Code
cannot be interpreted beyond its
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 or appropriated. A
service is generally not considered
property and a theft of service would
not, therefore, constitute theft since
there can be no caption or asportation.
Neither is the unauthorized use of the
equipment and facilities of PLDT by
[Laurel] theft under [Article 308].
If it was the intent of the Philippine
Legislature, in 1930, to include services
to be the subject of theft, it should
have incorporated the same in Article
308 of the Revised Penal Code. The
Legislature did not. In fact, the Revised
Penal Code does not even contain a
definition of services.37
PLDT38 moved for reconsideration and
referral of the case to the Court En
Banc. The Court’s First Division granted
the referral.
On January 13, 2009 (or while the
present petition was pending in court),
the Court En Banc unanimously
granted PLDT’s motion for
reconsideration.39 The Court ruled that
even prior to the passage of the RPC,
jurisprudence is settled that “any
personal property, tangible or
intangible, corporeal or incorporeal,
capable of appropriation can be the
object of theft.” 40 This jurisprudence,
in turn, applied the prevailing legal
meaning of the term “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 business of
providing this was appropriable
personal property and was, in fact, the
subject of appropriation in an ISR
operation, facilitated by means of the
unlawful use of PLDT’s facilities.
In this regard, the Amended
Information inaccurately describes the
offense by making it appear that what
[Laurel] took were the international
long distance telephone calls, rather
than respondent PLDT’s business.
xxxx
Indeed, while it may be conceded that
“international long distance calls,” the
matter alleged to be stolen xxx, take
the form of electrical energy, it cannot
be said that such international long
distance calls were personal properties
belonging to PLDT since the latter
could not have acquired ownership
over such calls. PLDT merely encodes,
augments, enhances, decodes and
transmits said calls using its complex
communications infrastructure and
facilities. PLDT not being the owner of
said telephone calls, then it could not
validly claim that such telephone calls
were taken without its consent. It is
the use of these communications
facilities without the consent of PLDT
that constitutes the crime of theft,
which is the unlawful taking of the
telephone services and business.
Therefore, the business of providing
telecommunication and the telephone
service are personal property under
Article 308 of the Revised Penal Code,
and the act of engaging in ISR is an act
of “subtraction” penalized under said
article.42
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
reasons:chanRoblesvirtualLawlibrary
First, the Laurel En Banc ruling
categorically equated an ISR activity to
theft under the RPC. In so doing,
whatever alleged factual variance
there may be between Laurel and the
present case cannot
render Laurel inapplicable.
Second, and more importantly, in a
Rule 45 petition, the Court basically
determines whether the CA was legally
correct in determining whether the
RTC committed grave abuse of
discretion. Under this premise, the CA
ordinarily gauges the grave abuse of
discretion at the 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
motion for reconsideration. The CA, in
fact, did not expressly impute grave
abuse of discretion on the RTC when
the RTC issued the search warrants
and later refused to quash these.
Understandably, the CA could not have
really found the presence of grave
abuse of discretion for there was
no Laurel ruling to speak of at the time
the RTC issued the search warrants.
These peculiar facts require us to more
carefully analyze our prism of review
under Rule 45.
Requisites for the issuance of search
warrant; probable cause requires the
probable existence of an offense  The constitutional requirement for the
Section 2, Article III of the 1987
Constitution guarantees the right of
persons to be free from unreasonable
searches and seizures.
Section 2. The right of the people to be
secure in their persons, houses,
papers, and effects against
unreasonable searches and seizures of
whatever nature and for any purpose
shall be inviolable, and no search
warrant or warrant of arrest shall
issue except upon probable 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 to be
searched and the persons or things to
be seized.
The purposes of the constitutional
provision against unlawful searches
and seizures are to: (i) prevent the
officers of the law from violating
private security in person and property
and illegally invading the sanctity of
the home; and (ii) give remedy against
such usurpations when attempted or
committed.43
issuance of a search warrant is
reiterated under Sections 4 and 5, Rule
126 of the Revised Rules of Criminal
Procedure. These sections lay 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 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
personally known to them; and (5) the
warrant specifically describes the place
to be searched and the things to be
seized.44 Should any of these requisites
be absent, the party aggrieved by the
issuance and enforcement of the
search warrant may file a motion to
quash the search warrant with the
issuing court or with the court where
the action is subsequently instituted.45
A search warrant proceeding is a
special criminal and judicial process
akin to a writ of discovery. It is
designed by the Rules of Criminal
Procedure to respond only to an
incident in 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 warrant may be
questioned only via a petition
for certiorari under Rule 65.46
When confronted with this petition,
the higher court must necessarily
determine the validity of the lower
court’s action from the prism of
whether it was tainted with grave
abuse of discretion. By grave abuse of
discretion, jurisprudence refers to the
capricious and whimsical exercise of
judgment equivalent to lack of
jurisdiction, or to the exercise of power
in an arbitrary or despotic manner by
reason of passion or personal hostility
or in a manner so patent and gross as
to amount to an invasion of positive
duty or to the virtual refusal to
perform the duty enjoined or to act at
all in contemplation of the law.47
In a certiorari proceeding, the
determination translates to an inquiry
on whether the requirements and
limitations provided under the
Constitution and the Rules of Court
were properly complied with, from the
issuance of the warrant up to its
implementation. In view of the
constitutional objective of preventing
stealthy encroachment upon or the
gradual depreciation of the rights
secured by the Constitution, strict
compliance with the constitutional and
procedural requirements is required. A
judge who issues a search warrant
without complying with these
requirements commits grave abuse of
discretion.48
One of the constitutional requirements
for the validity of a search warrant is
that it must be issued based on
probable cause which, under the Rules,
must be in connection with one specific
offense. In search warrant proceedings,
probable cause is defined as such facts
and circumstances that would lead a
reasonably discreet and prudent man
to believe that an offense has been
committed and that the objects sought
in connection with the offense are in
the place sought to be searched.49
In the determination of probable
cause, the court must necessarily
determine whether an offense exists to
justify the issuance or quashal of the
search warrant50 because the personal
properties that may be subject of the
search warrant are very much
intertwined with the “one specific
offense” requirement of probable
cause.51 Contrary to PLDT’s claim, the
only way to determine whether a
warrant should issue in connection
with one specific offense is to
juxtapose the facts and circumstances
presented by the applicant with the
elements of the offense that are
alleged to support the search warrant.

Reviewing the RTC’s denial of the
motion to quash SWA–l and SW A–2  Fox ruling cannot be retroactively
a. From the prism of Rule 65  the quashal of Search Warrant No. 87–
The facts of the present case easily call
to mind the case of Columbia Pictures,
Inc. v. CA52 involving copyright
infringement. In that case, the CA
likewise voided the search warrant
issued by the trial court by applying a
doctrine that added a new
requirement (i.e., the production of
the master tape for comparison with
the allegedly pirate copies) in
determining the existence of probable
cause for the issuance of search
warrant in copyright 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 eight months
after the search warrants were issued
by the RTC. In reversing the CA, the
Court
ruled:chanRoblesvirtualLawlibrary
Mindful as we are of the ramifications
of the doctrine of stare decisis and the
rudiments of fair play, it is our
considered view that the 20th Century
applied to the instant case to justify
053. [The] petitioners' consistent
position that the order of the lower
court[,] xxx [which denied the
respondents'] motion to lift the order
of search warrant^] was properly
issued, [because there was]
satisfactory compliance with the then
prevailing standards under the law for
determination of probable cause, is
indeed well taken. The lower court
could not possibly have expected more
evidence from petitioners in their
application for a search warrant other
than what the law and jurisprudence,
then existing and judicially accepted,
required with respect to the finding of
probable cause.53
Columbia could easily be cited in favor
of PLDT to sustain the RTC’s refusal to
quash the search warrant. Indeed, in
quashing SW A–l and SW A–2, the CA
never intimated that the RTC
disregarded any of the requisites for
the issuance of a search warrant as
these requirements were interpreted
and observed under the then
prevailing jurisprudence. The CA could
not have done so because precisely the
issue of whether telephone services or
the business of providing these
services could be the subject of theft
under the RPC had not yet reached the
Court when the search warrants were
applied for and issued.
However, what
distinguishes Columbia from the
present case is the focus
of Columbia’s legal
rationale. Columbia’s focus was not on
whether the facts and circumstances
would reasonably lead to the
conclusion that an offense has been or
is being committed and that the
objects sought in connection with the
offense were in the place to be
searched – the primary points of focus
of the present case. Columbia’s focus
was on whether
the evidence presented at the
time the search warrant was applied
for was sufficient to establish the facts
and circumstances required for
establishing probable cause to issue a
search warrant.
Nonetheless, Columbia serves as a
neat guide for the CA to decide the
respondents' certiorari petition.
In Columbia, the Court applied the
principle of non–retroactivity of its
ruling in 20th Century Fox, whose
finality was not an issue, in reversing a
CA ruling. The Court’s attitude in that
case should have been adopted by the
CA in the present case a fortiori since
the ruling that the CA relied upon was
not yet final at the time the CA
resolved to quash the search warrants.
b. Supervening events justifying a
broader review under Rule 65
Ordinarily, the CA’s determination
under Rule 65 is limited to whether the
RTC gravely abused its discretion in
granting or denying the motion to
quash based on facts then existing.
Nonetheless, the Court recognizes that
supervening facts may transpire after
the issuance and implementation of
the search warrant that may provide
justification for the quashal of the
search warrant via a petition
for certiorari.
For one, if the offense for which the
warrant is issued is subsequently
decriminalized during the pendency of
the petition for certiorari, then the
warrant may be quashed.54 For
another, a subsequent ruling from the
Court that a similar set of facts and
circumstances does not constitute an
offense, as alleged in the search
warrant application, may be used as a
ground to quash a warrant.55 In both
instances, the underlying reason for
quashing the search warrant is the
absence of probable cause which can
only possibly exist when the
combination of facts and
circumstances points to the possible
commission of an offense that may be
evidenced by the personal properties
sought to be seized. To the CA, the
second instance mentioned justified
the quashal of the search warrants.
We would have readily agreed with the
CA if the Laurel Division ruling had not
been subsequently reversed. As things
turned out, however, the Court
granted PLDT’s motion for
reconsideration of the Court First
Division’s ruling in Laurel and ruled
that “the act of 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 by evidence
that Laurel’s ISR activities deprived
PLDT of its telephone services and of
its business of providing these services
without its consent.
b1. the stare decisis aspect 
With the Court En Banc’s reversal of
the earlier Laurel ruling, then the CA’s
quashal of these warrants would have
no leg to stand on. This is the dire
consequence of failing to appreciate
the full import of the doctrine of stare
decisis that the CA ignored.
Under Article 8 of the Civil Code, the
decisions of this Court form part of the
country’s legal system. While these
decisions are not laws pursuant to the
doctrine of separation of powers, they
evidence the laws' meaning, breadth,
and scope and, therefore, have the
same binding force as the laws
themselves.57 Hence, the Court’s
interpretation of a statute forms part
of the law as of the date it was
originally passed because the Court’s
construction merely establishes the
contemporaneous legislative intent
that the interpreted law carries into
effect.58
Article 8 of the Civil Code embodies
the basic principle of stare decisis et
non quieta movere (to adhere to
precedents and not to unsettle
established matters) that enjoins
adherence to judicial precedents
embodied in the decision of the
Supreme Court. That decision becomes
a judicial precedent to be followed in
subsequent cases by all courts in the
land. The doctrine of stare decisis, in
turn, is based on the principle that
once a question of law has been
examined and decided, it should be
deemed settled and closed to further
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
In the field of adjudication, a case
cannot yet acquire the status of a
“decided” case that is
“deemed settled and closed to further
argument” if the Court’s decision is still
the subject of a motion for
reconsideration seasonably filed by the
moving party. Under the Rules of
Court, a party is expressly allowed to
file a motion for reconsideration of the
Court’s decision within 15 days from
notice.61 Since the doctrine of stare
decisis is founded on the necessity of
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:
The principle of stare decisis enjoins
adherence by lower courts to doctrinal
rules established by this Court in
its final decisions. It is based on the
principle that once a question of law
has been examined and decided, it
should be deemed settled and closed
to further argument.
In applying Laurel despite PLDT’s
statement that the case is still subject
of a pending motion for
63
reconsideration,  the CA legally erred
in refusing to reconsider its ruling that
largely relied on a non–fmal ruling of
the Court. While the CA’s dutiful desire
to apply the latest pronouncement of
the Court in Laurel is expected, it
should have acted with caution,
instead of excitement, on being
informed by PLDT of its pending
motion for reconsideration; it 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
grounds not existing at the time the
warrant was issued or implemented
must still rest on prudential grounds if
only to maintain the limitation of the
scope of the remedy of certiorari as a
writ to correct errors of jurisdiction
and not mere errors of judgment.
Still, the respondents attempt to justify
the CA’s action by arguing that the CA
would still rule in the way it did64 even
without Laurel. As PLDT correctly
pointed out, there is simply nothing 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 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 jurisdiction in this case.
We simply cannot second–guess what
the CA’s action could have been.
Lastly, the CA’s reliance on Savage v.
Judge Taypin65 can neither sustain the
quashal of SW A–l and SW A–2.
In Savage, the Court granted
the certiorari petition and quashed the
search warrant because the alleged
crime (unfair competition involving
design patents) that supported the
search warrant had already been
repealed, and the act complained of, if
at all, gave rise only to civil liability (for
patent infringement). Having been
decriminalized, probable cause for the
crime alleged could not possibly exist.
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 search warrants for the
crime of theft. Unlike in Savage, the
Court in Laurel was not confronted
with the issue of decriminalization
(which is a legislative prerogative) but
whether the commission of an ISR
activity meets the elements of the
offense of theft for purposes of
quashing an information. Since the
Court, in Laurel, ultimately ruled then
an ISR activity justifies the elements of
theft that must necessarily be alleged
in the information a fortiori, the RTC’s
determination should be sustained
on certiorari.
The requirement of particularity in
SWB–1 and SWB–2  sufficient particularity is aimed at
On the issue of particularity in SW B–l
and SW B–2, we note that the
respondents have not appealed to us
the CA ruling that sustained
paragraphs 1 to 6 of the search
warrants. Hence, we shall limit our
discussion to the question of whether
the CA correctly ruled that the RTC
gravely abused its discretion insofar as
it refused to quash paragraphs 7 to 9
of SW B–l and SWB–2.
Aside from the requirement of
probable cause, the Constitution also
requires that the search warrant must
particularly describe the place to be
searched and the things to be seized.
This requirement of particularity in the
description, especially of the things to
be seized, is meant 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
regarding these articles and to give life
to the constitutional provision against
unreasonable searches and
seizures.66 In other words, the requisite
preventing the law enforcer from
exercising unlimited discretion as to
what things are to be taken under the
warrant and ensure that only those
connected with the offense for which
the warrant was issued shall be
seized.67
The requirement of specificity,
however, does not require technical
accuracy in the description of the
property to be seized. Specificity is
satisfied if the personal properties'
description is as far as the
circumstances will ordinarily allow it to
be so described. The nature of the
description should vary according to
whether the identity of the property or
its character is a matter of
concern.68 One of the tests to
determine the particularity in the
description of objects to be seized
under a search warrant is when the
things described are limited to those
which bear direct relation to the
offense for which the warrant is being
issued.69
Additionally, the Rules require that a
search warrant should be issued “in
connection with one specific offense”
to prevent the issuance of a scatter–
shot warrant.70 The one–specific–
offense requirement reinforces the
constitutional requirement that a
search warrant should issue only on
the basis of probable cause.71 Since the
primary objective of applying for a
search warrant is to obtain evidence to
be used in a subsequent prosecution
for an offense for which the search
warrant was applied, a judge issuing a
particular warrant must satisfy himself
that the evidence presented by the
applicant establishes the facts and
circumstances relating to this specific
offense for which the warrant is sought
and issued.72 Accordingly, in a electrical or gas meters, jumpers or
subsequent challenge against the
validity of the warrant, the applicant
cannot be allowed to maintain its
validity based on facts and
circumstances that may be related to
other search warrants but are extrinsic
to the warrant in question.
Under the Rules, the following
personal property may be subject of
search warrant: (i) the subject of the
offense; (ii) fruits of the offense; or (iii)
those used or intended to be used as
the means of committing an offense. In
the present case, we sustain the CA’s
ruling nullifying paragraphs 7, 8 and 9
of SW B–l and SW B–2 for failing the
test of particularity. More specifically,
these provisions do not show how the
enumerated items could have possibly
been connected with the crime for
which the warrant was issued, i.e., P.D.
No. 401. For clarity, PD No. 401
punishes:
Section 1. Any person who installs any
water, electrical, telephone or piped
gas connection without previous
authority from xxx the Philippine Long
Distance Telephone Company, xxx,
tampers and/or uses tampered water,
other devices whereby water,
electricity or piped gas is stolen; steals
or pilfers water, electric or piped gas
meters, or water, electric and/or
telephone wires, or piped gas pipes or
conduits; knowingly possesses stolen
or pilfered water, electrical or gas
meters as well as stolen or pilfered
water, electrical and/or telephone
wires, or piped gas pipes and conduits,
shall, upon conviction, be punished
with prision correccional in its
minimum period or a fine ranging from
two thousand to six thousand pesos, or
both.73
Paragraphs 7 to 8 of SW B–l and SW B–
2 read as follows:
7. COMPUTER PRINTERS AND
SCANNERS or any similar equipment or
device used for copying and/or
printing data and/or information;
8. SOFTWARE, DISKETTES, TAPES or
any similar equipment or device used
for recording or storing information;
and
9. Manuals, phone cards, access codes,
billing statements, receipts, contracts,
checks, orders, communications and
documents, lease and/or subscription
agreements or contracts,
communications and documents
relating to securing and using
telephone lines and/or equipment[.]74
According to PLDT, the items in
paragraph 7 have a direct relation to
violation of PD No. 401 because the
items are connected to computers
that, in turn, are linked to the
unauthorized connections to PLDT
telephone lines. With regard to the
software, diskette and tapes in
paragraph 8, and the items in
paragraph 9, PLDT argues that these
items are “fruits of the offense” and
that the information it contains
“constitutes the business profit” of
PLDT. According to PLDT, it
corroborates the fact that the
respondents have made a business out
of their illegal connections to its
telephone lines.
We disagree with PLDT. The fact that
the printers and scanners are or may
be connected to the other illegal
connections to the PLDT telephone
lines does not make them the subject
of the offense or fruits of the offense,
much less could they become a means
of committing an offense.
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.
G.R. No. 186166               October 20, On August 9, 1999, respondent Jose
2010 Ching, represented by his Attorney-in-
Fact, Antonio Ching, filed a verified
REPUBLIC OF THE Application for Registration of Title
PHILIPPINES, Petitioner, covering a parcel of land with
vs. improvements identified as Lot 1, SGS-
JOSE T. CHING represented by his 13-000037-D, being a portion of Lot
Attorney-in-fact, ANTONIO V. 2738, GSS-10-000043, before the RTC.
CHING, Respondent. The subject lot is a consolidation of
three (3) contiguous lots situated in
DECISION Banza, Butuan City, Agusan del Norte,
with an area of 58,229 square meters.
MENDOZA, J.: The first parcel of land is covered by
Tax Declaration No. 96GR-11-003-
In this Petition for Review 0556-A; the second parcel by Tax
on certiorari under Rule 45, the Declaration No. 96GR-11-003-0444-I;
Republic of the Philippines, and the third parcel by Tax Declaration
represented by the Office of the No. 96GR-11-003-0537-A. In support of
Solicitor General (OSG), assails the his application, respondent attached
November 28, 2008 Decision1 of the the (a) Sketch plan;3 (b) Technical
Court of Appeals (CA), in CA-G.R. CV description;4 (c) Tracing Cloth of Plan
No. 00318-MIN, reversing the of Portion of Lot 2738, Gss-10-000043,
2
December 3, 2002 Resolution  of the which is a Segregation Plan of Portion
Regional Trial Court, Butuan City, of Lot 2738, Gss-10-0000431, as
Branch 2 (RTC), disallowing the surveyed for Jose T. Ching and duly
Application for Registration of Title of approved by the Bureau of Land DENR
respondent Jose Ching, represented by Region XIII on July 08, 1998 covering
his Attorney-in-Fact, Antonio Ching, in the subject land;5 and (d) Special
Land Registration Case No. N-290. Power of Attorney executed by Jose T.
Ching authorizing Antonio V. Ching, Jr.
THE FACTS
to file an application for title over the
land.6
Respondent alleged that on April 10,
1979, he purchased the subject land
from the late former governor and
Congressman Democrito O. Plaza as
evidenced by a Deed of Sale of
Unregistered Lands.7
Initially, the RTC, acting as a land
registration court, ordered respondent
to show cause why his application for
registration of title should not be
dismissed for his failure to state the
current assessed value of the subject
land and his non-compliance with the
last paragraph of Section 17 of
Presidential Decree (P.D.) No. 1529.8
Accordingly, on September 3, 1999,
respondent filed a Verified Amended
Application9 which the RTC found to be
sufficient in form and substance. The
case was set for initial hearing on
December 22, 1999.10
On December 16, 1999, the OSG duly
deputized the Provincial Prosecutor of
Agusan del Norte to appear on behalf
of the State.11 Thereafter, on January
20, 2000, the OSG filed an Opposition
to the application for registration of
title. Specifically, the OSG alleged:
(1) That neither the applicant
nor his predecessors-in-interest
have been in open, continuous,
exclusive and notorious
possession and occupation of
the land in question since June
12, 1945 or prior thereto [Sec.
48 (b) C.A. 141, as amended by
P.D. 1073];
(2) That the muniments of title
and/or any tax declarations and
tax payments receipts of
applicant attached to or alleged
in the application, do not
constitute competent and
sufficient evidence of a bona
fide acquisition of the land
applied for or of his open,
continuous, exclusive and
notorious possession and
occupation of the land in the
concept of owner since June
12, 1945 or prior and the tax
declaration and tax payment
receipts appear not to be
genuine and are of recent
vintage;
(3) That the claim of ownership
in fee simple on the basis of
Spanish title or grant can no
longer be availed of by the
applicant who have failed to file
an appropriate application for
registration within six (6)
months from 16 February 1976
under P.D. No. 892 as the
instant application appears to
have been filed on December
17, 1998; and
(4) That the parcels of land
applied for are portions of the
public domain belonging to the
Republic of the Philippines not
subject to private
appropriation.12
On June 28, 2001, the Department of
Environment and Natural Resources
likewise filed its opposition to the
application.
On December 3, 2002, the RTC
resolved to dismiss the respondent’s
application for registration.13 The
dispositive portion reads:
IN VIEW OF THE FOREGOING, the court
resolves to dismiss as it hereby
dismisses the instant application for
registration of title for insufficiency of
evidence.
SO ORDERED.
The RTC was not convinced that
respondent’s Deed of Sale sufficiently
established that he was the owner in
fee simple of the land sought to be
registered. The RTC wrote "[e]vidence
only shows that the applicant and his
vendor as predecessor-in-interest have
been in open, peaceful, notorious and
exclusive possession starting from
1965. Among the tax declarations
marked Exhibits ‘R’ to ‘R-7’ includes
the oldest one marked Exhibit ‘R-7’
shown in the back lower portion that it
was effective beginning the year 1980,
and among the tax declarations
marked Exhibit ‘S’ to ‘S-8’ inclusive, the
oldest one marked Exhibit ‘S-8’ is
effective in the year 1980 and among
the Tax Declaration marked Exhibit ‘T’
to ‘T-7’ inclusive, the oldest one
marked Exhibit ‘T-7’ shows that it
began to be effective in the year 1980
also. In the Certification (Exhibit ‘U’)
issued by the Office of the City
Treasurer of Butuan shows that the
payment of the realty taxes paid for
the 3 parcels started only in the year
1980."14
Respondent filed a motion for
reconsideration and a subsequent
supplemental motion for
reconsideration with attached
additional tax declarations. The RTC
denied both motions in its December
11, 2003 Resolution15 stating that it
could not consider the additional tax
declarations attached in the
Supplemental Motion for
Reconsideration as these were not
formally offered in evidence. The RTC
also noted that the additional
documents were mere photocopies
and would not have any probative
value because they were not in accord
with the requirements under Act
49616 and P.D. 152917 that only original
muniments of title or copies thereof
must be presented.
Respondent appealed the RTC ruling
before the CA. Respondent claimed
that the RTC erred in dismissing the
application for registration of title for
insufficiency of evidence and in failing
to consider the additional tax
declarations attached in his
Supplemental Motion for of land had been in possession of the
Reconsideration.18 petitioner-appellant’s (respondent)
predecessors-in-interest since 1948
On November 28, 2008, the until these parcels were purchased by
CA reversed the RTC’s earlier him on 10 April 1979. Since the
resolution and granted respondent’s applicant and his predecessors-in-
application for registration of interest had been in possession of the
19
title.  The decretal portion of said land for more than thirty (30) years
decision reads: continuously, peacefully, adversely,
publicly and to the exclusion of
WHEREFORE, the appealed Decision of everybody, the same was "in the
the Regional Trial Court, Branch 2, concept of owners." This also means
Butuan City acting as land registration that petitioner-appellant is no longer
court, dismissing the application for required to prove that the property in
registration of title for insufficiency of question is classified as alienable and
evidence is hereby REVERSED and SET disposable land of the public
ASIDE. The Appellant’s application for domain.21 The long and continuous
land registration is GRANTED. possession thereof by petitioner-
appellant and his predecessors-in-
SO ORDERED.20 interest since 1948 or a total period of
fifty-one (51) years before the
The CA ruled that the RTC erred in application was filed on 09 August
failing to consider the additional 1999 converted the property to a
documents attached in respondent’s private one. This is but a mere
Supplemental Motion for reiteration of the established rule that
Reconsideration. The CA ratiocinated: alienable public land held by a
possessor, personally, or through his
Clearly from the foregoing tax predecessor-in-interest, openly,
declarations which all went continuously and exclusively for the
unchallenged and formed part of the prescribed statutory period of thirty
record of the instant case, it could (30) years under the Public Land Act,
clearly be seen that the same parcels
as amended, is converted to private
property by the mere lapse or
completion of said period, ipso jure.22
23
Hence, this petition.
In its Memorandum,24 the OSG submits
the following
ISSUES
I be filed;
The Court of Appeals erred in
reversing and setting aside the
Resolution dated December 23, 2002
of the Land Registration Court
denying the BELATED submission of
tax declarations which the herein
respondent merely attached in its
supplemental motion for
reconsideration and which were NOT
FORMALLY OFFERED in evidence
during the trial of the case, as
required under Section 34 of Rule 132
of the 1997 Revised Rules of Civil
Procedure;
II
The Court of Appeals erred in
reversing and setting aside the
Resolution dated December 23, 2002
of the Land Registration Court
denying the admission of MERE
PHOTOCOPIES of tax declarations
which have not been verified or
authenticated, in flagrant violation of
the requirements of both Act 496
(Land Registration Act) and PD 1529
(Property Registration Act) providing
that only ORIGINAL muniments of
titles or original copies thereof shall
III
The Court of Appeals erred in
reversing and setting aside the subject
Resolution of the Land Registration
Court which denied the application
for registration on the ground that the
respondent herein failed to prove that
the subject land is alienable and
disposable land of the public domain
and have been in possession for the
length of time and manner and
concept prescribed in Section 48(b) of
the CA 141 as amended.25
The petition is meritorious.
Sec. 14(1) of P.D. 152926 in relation to
Section 48(b) of Commonwealth Act
141, as amended by Section 4 of P.D.
1073,27 provides:
SEC. 14. Who may apply.—The
following persons may file in the
proper Court of First Instance
[now Regional Trial Court] an
application for registration of title to
land, whether personally or through
their duly authorized representatives:
(1) Those who by themselves or
through their predecessors-in-interest
have been in open, continuous,
exclusive and notorious possession and
occupation of alienable and disposable
lands of the public domain under
a bona fide claim of ownership since
June 12, 1945, or earlier.
Xxx
Section 48. The following described
citizens of the Philippines, occupying
lands of the public domain or claiming
to own any such lands or an interest
therein, but whose titles have not
been perfected or completed, may
apply to the Court of First Instance
[now Regional Trial Court] of the
province where the land is located for
confirmation of their claims and the
issuance of a certificate of title
therefor, under the Land Registration
Act, to wit:
Xxx
(b) Those who by themselves or
through their predecessors-in-interest
have been in open, continuous,
exclusive and notorious possession and
occupation of agricultural lands of the
public domain, under a bona fide claim
of acquisition of ownership, since June
12, 1945, or earlier, immediately
preceding the filing of the application
for confirmation of title except when
prevented by war or force majeure.
These shall be conclusively presumed
to have performed all the conditions
essential to a Government grant and
shall be entitled to a certificate of title
under the provisions of this chapter.
Based on these legal parameters,
applicants for registration of title
under Section 14(1) must sufficiently
establish: (1) that the subject land
forms part of the disposable and
alienable lands of the public domain;
(2) that the applicant and his
predecessors-in-interest have been in
open, continuous, exclusive and
notorious possession and occupation
of the same; and (3) that it is under a
bona fide claim of ownership since
June 12, 1945, or earlier.
Thus, before an applicant can adduce
evidence of open, continuous,
exclusive and notorious possession and
occupation of the property in question,
he must first prove that the land
belongs to the alienable and
disposable lands of the public domain.
It is doctrinal that, under the Regalian
doctrine, all lands of the public domain
pertain to the State and the latter is
the foundation of any asserted right to
ownership in land. Accordingly, the
State presumably owns all lands not
otherwise appearing to be clearly
within private ownership. To overcome
such presumption, irrefutable evidence
must be shown by the applicant that
the land subject of registration has
been declassified and now belongs to
the alienable and disposable portion of
the public domain.28
Notably, the Court finds no evidence in
this case that would show that the
land in question has been classified as
alienable and disposable land of the
public domain. The sketch plan,
technical description and the tracing
clothing plan that respondent
presented do not show the actual legal
status of the land. Hence, the
conclusion reached by the CA that it
was no longer necessary for the
respondent to prove the alienability of
the land in question on the assumption
that he had already completed the
thirty-year possessory requirement
was misplaced. The requirements of
alienability and possession and
occupation since June 12, 1945 or
earlier under Section 14(1) are
indispensable prerequisites to a
favorable registration of his title to the
property. Absent one, the application
for registration is materially infirmed.
Since respondent provided no
competent and persuasive evidence to
show that the land has been classified
as alienable and disposable, then the
application for registration should be
denied.
At any rate, after reviewing the
documents submitted by the
respondent, it is clear that there was
no substantive evidence to show that
he complied with the requirement of
possession and occupation since June
12, 1945 or earlier.
The earliest tax declaration that
respondent tried to incorporate in his
Supplemental Motion for
Reconsideration does not measure up
to the time requirement. In particular,
the tax declaration on the first lot, as
shown by Tax Declaration No. 6932 in
the name of Adulfo Calo, only began in
1948.29 On the second lot, Tax
Declaration No. 3852 in the name of
Marcos Azote merely appeared in
1952.30 While on the third lot, Tax
Declaration No. 6891 registered in the
name of the Heirs of Felipe Calo came
up in 1948.31 Unmistakably, the
respondent cannot avail of registration
under Section 14(1) of P.D. 1529.
In his Memorandum,32 respondent
proffered that should not the land be
registrable under Section 14(1) of P.D.
1529, it could still be registered under
Section 14(2) of P.D. 1529.33
He cannot.
The case of Heirs of Mario Malabanan
vs. Republic34 summarized the
distinctions between the legal
requisites in applications for
registration of title under Section 14(1)
and Section 14(2) of P.D. 1529, to wit:
(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 extraordinary. Under Thus, absent an express declaration by
that the property is already ordinary acquisitive the State, the land remains to be
patrimonial or no longer prescription, a person property of public dominion.
retained for public service or acquires ownership of a
the development of national patrimonial property WHEREFORE, the petition is GRANTED.
wealth, under Article 422 of through possession for The November 28, 2008 Decision of
the Civil Code.36 And only when at least ten (10) years, the Court of Appeals is
the property has become in good faith and with hereby REVERSED and SET ASIDE. The
patrimonial can the prescriptive just title. Under Application for Registration of Title of
period for the acquisition of extraordinary respondent Jose T. Ching in Land
property of the public acquisitive prescription, Registration Case No. N-290 is DENIED.
dominion begin to run. a person’s
uninterrupted adverse SO ORDERED.
(a) Patrimonial property possession of
is private property of patrimonial property for
the government. The at least thirty (30) years,
person acquires regardless of good faith
ownership of or just title, ripens into
patrimonial property by ownership.
prescription under the
Civil Code is entitled to The import of this ruling is clear. Under
secure registration Section 14(2) of P.D. 1529, before
thereof under Section acquisitive prescription could
14(2) of the Property commence, the property sought to be
Registration registered must not only be classified
Decree.lawp++il as alienable and disposable; it must
also be expressly declared by the State
(b) There are two kinds that it is no longer intended for public
of prescription by which service or the development of the
patrimonial property national wealth or that the property
may be acquired, one has been converted into patrimonial.
ordinary and other
REPUBLIC OF THE PHILIPPINES,
represented by the PHILIPPINE
RECLAMATION AUTHORITY
(PRA), Petitioner,
vs.
CITY OF PARANAQUE, Respondent.
DECISION
MENDOZA, J.:
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 Order1 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
Parañaque 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.
WHEREFORE, the instant petition is
dismissed. The Motion for Leave to File
and Admit Attached Supplemental
Petition is denied and the
supplemental petition attached
thereto is not admitted.
The Public Estates Authority (PEA) is a
government corporation created by
virtue of Presidential Decree (P.D.) No.
1084 (Creating the Public Estates
Authority, Defining its Powers and
Functions, Providing Funds Therefor
and For Other Purposes) which took
effect on February 4,
1977 to provide a coordinated,
economical and efficient reclamation
of lands, and the administration and
operation of lands belonging to,
managed and/or operated by, the
government with the object of
maximizing their utilization and
hastening their development
consistent with public interest.
On February 14, 1979, by virtue of
Executive Order (E.O.) No. 525 issued
by then President Ferdinand Marcos,
PEA was designated as the agency
primarily responsible for integrating,
directing and coordinating all
reclamation projects for and on behalf
of the National Government.
On October 26, 2004, then President
Gloria Macapagal-Arroyo issued E.O.
No. 380 transforming PEA into PRA,
which shall perform all the powers and
functions of the PEA relating to
reclamation activities.
By virtue of its mandate, PRA
reclaimed several portions of the
foreshore and offshore areas of Manila
Bay, including those located in
Parañaque City, and was issued
Original Certificates of Title (OCT Nos.
180, 202, 206, 207, 289, 557, and 559)
and Transfer Certificates of Title (TCT
Nos. 104628, 7312, 7309, 7311, 9685,
and 9686) over the reclaimed lands.
On February 19, 2003, then Parañaque
City Treasurer Liberato M. Carabeo
(Carabeo) issued Warrants of Levy on
PRA’s reclaimed properties (Central
Business Park and Barangay San
Dionisio) located in Parañaque City
based on the assessment for
delinquent real property taxes made
by then Parañaque City Assessor
Soledad Medina Cue for tax years 2001
and 2002.
On March 26, 2003, PRA filed a
petition for prohibition with prayer for
temporary restraining order (TRO)
and/or writ of preliminary injunction
against Carabeo before the RTC.
On April 3, 2003, after due hearing, the
RTC issued an order denying PRA’s
petition for the issuance of a
temporary restraining order.
On April 4, 2003, PRA sent a letter to
Carabeo requesting the latter not to
proceed with the public auction of the
subject reclaimed properties on April
7, 2003. In response, Carabeo sent a
letter stating that the public auction
could not be deferred because the RTC
had already denied PRA’s TRO
application.
On April 25, 2003, the RTC denied
PRA’s prayer for the issuance of a writ
of preliminary injunction for being
moot and academic considering that
the auction sale of the subject
properties on April 7, 2003 had already
been consummated.
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 PRA’s 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. In fact, PRA
admitted its corporate personality and
that said properties were registered in
its name as shown by the certificates
of title. Therefore, as a GOCC, local tax
exemption is withdrawn by virtue of
Section 193 of Republic Act (R.A.) No.
7160 Local Government Code (LGC)
which was the prevailing law in 2001
and 2002 with respect to real property
taxation. The RTC also ruled that the
tax exemption claimed by PRA under
E.O. No. 654 had already been
expressly repealed by R.A. No. 7160
and that PRA failed to comply with the
procedural requirements in Section
206 thereof.
Not in conformity, PRA filed this
petition for certiorari assailing the
January 8, 2010 RTC Order based on
the following GROUNDS
I
THE TRIAL COURT GRAVELY ERRED IN
FINDING THAT PETITIONER IS LIABLE
TO PAY REAL PROPERTY TAX ON THE
SUBJECT RECLAIMED LANDS
CONSIDERING
THAT PETITIONER IS AN
INCORPORATED INSTRUMENTALITY OF
THE NATIONAL GOVERNMENT AND IS,
THEREFORE, EXEMPT FROM PAYMENT
OF REAL PROPERTY TAX UNDER
SECTIONS 234(A) AND 133(O) OF
REPUBLIC ACT 7160 OR THE LOCAL
GOVERNMENT CODE VIS-À-VIS
MANILA INTERNATIONAL AIRPORT
AUTHORITY V. COURT OF APPEALS.
II
THE TRIAL COURT GRAVELY ERRED IN
FAILING TO CONSIDER THAT
RECLAIMED LANDS ARE PART OF THE
PUBLIC DOMAIN AND, HENCE, EXEMPT
FROM REAL PROPERTY TAX.
PRA asserts that it is not a GOCC under
Section 2(13) of the Introductory
Provisions of the Administrative Code.
Neither is it a GOCC under Section 16,
Article XII of the 1987 Constitution
because it is not required to meet the
test of economic viability. Instead, PRA
is a government instrumentality vested
with corporate powers and performing
an essential public service pursuant to
Section 2(10) of the Introductory
Provisions of the Administrative Code.
Although it has a capital stock divided
into shares, it is not authorized to
distribute dividends and allotment of
surplus and profits to its stockholders.
Therefore, it may not be classified as a
stock corporation because it lacks the
second requisite of a stock corporation
which is the distribution of dividends
and allotment of surplus and profits to
the stockholders.
It insists that it may not be classified as
a non-stock corporation because it has
no members and it is not organized for
charitable, religious, educational,
professional, cultural, recreational,
fraternal, literary, scientific, social, civil
service, or similar purposes, like trade,
industry, agriculture and like chambers
as provided in Section 88 of the
Corporation Code.
Moreover, PRA points out that it was
not created to compete in the market
place as there was no competing
reclamation company operated by the
private sector. Also, while PRA is
vested with corporate powers under
P.D. No. 1084, such circumstance does
not make it a corporation but merely
an incorporated instrumentality and
that the mere fact that an
incorporated instrumentality of the
National Government holds title to real
property does not make said
instrumentality a GOCC. Section 48,
Chapter 12, Book I of the
Administrative Code of 1987
recognizes a scenario where a piece of
land owned by the Republic is titled in
the name of a department, agency or
instrumentality.
Thus, PRA insists that, as an
incorporated instrumentality of the
National Government, it is exempt
from payment of real property tax
except when the beneficial use of the
real property is granted to a taxable
person. PRA claims that based on
Section 133(o) of the LGC, local
governments cannot tax the national
government which delegate to local
governments the power to tax.
It explains that reclaimed lands are
part of the public domain, owned by
the State, thus, exempt from the
payment of real estate taxes.
Reclaimed lands retain their inherent
potential as areas for public use or
public service. While the subject
reclaimed lands are still in its hands,
these lands remain public lands and
form part of the public domain. Hence,
the assessment of real property taxes
made on said lands, as well as the levy
thereon, and the public sale thereof on
April 7, 2003, including the issuance of
the certificates of sale in favor of the
respondent Parañaque City, are invalid
and of no force and effect.
On the other hand, the City of
Parañaque (respondent) argues that
PRA since its creation consistently
represented itself to be a GOCC. PRA’s
very own charter (P.D. No. 1084)
declared it to be a GOCC and that it
has entered into several thousands of
contracts where it represented itself to
be a GOCC. In fact, PRA admitted in its
original and amended petitions and
pre-trial brief filed with the RTC of
Parañaque City that it was a GOCC.
Respondent further argues that PRA is
a stock corporation with an authorized
capital stock divided into 3 million no
par value shares, out of which 2 million
shares have been subscribed and fully
paid up. Section 193 of the LGC of
1991 has withdrawn tax exemption
privileges granted to or presently
enjoyed by all persons, whether
natural or juridical, including GOCCs.
Hence, since PRA is a GOCC, it is not
exempt from the payment of real
property tax.
THE COURT’S RULING
The Court finds merit in the petition.
Section 2(13) of the Introductory
Provisions of the Administrative Code
of 1987 defines a GOCC as follows:
SEC. 2. General Terms Defined. – x x x x
(13) Government-owned or controlled
corporation refers to any agency
organized as a stock or non-stock
corporation, vested with functions
relating to public needs whether
governmental or proprietary in nature,
and owned by the Government directly
or through its instrumentalities either
wholly, or, where applicable as in the
case of stock corporations, to the
extent of at least fifty-one
(51) percent of its capital stock: x x x.
On the other hand, Section 2(10) of the
Introductory Provisions of the
Administrative Code defines a When the law vests in a government
government "instrumentality" as
follows:
SEC. 2. General Terms Defined. –– x x x
x organized as a stock or non-stock
(10) Instrumentality refers to any
agency of the National Government,
not integrated within the department
framework, vested with special
functions or jurisdiction by law,
endowed with some if not all
corporate powers, administering
special funds, and enjoying operational
autonomy, usually through a charter. x
xx
From the above definitions, it is clear
that a GOCC must be "organized as a
stock or non-stock corporation" while
an instrumentality is vested by law
with corporate powers. Likewise, when
the law makes a government
instrumentality operationally
autonomous, the instrumentality
remains part of the National
Government machinery although not
integrated with the department
framework.
instrumentality corporate powers, the
instrumentality does not necessarily
become a corporation. Unless the
government instrumentality is
corporation, it remains a government
instrumentality exercising not only
governmental but also corporate
powers.
Many government instrumentalities
are vested with corporate powers but
they do not become stock or non-stock
corporations, which is a necessary
condition before an agency or
instrumentality is deemed a GOCC.
Examples are the Mactan International
Airport Authority, the Philippine Ports
Authority, the University of the
Philippines, and Bangko Sentral ng
Pilipinas. All these government
instrumentalities exercise corporate
powers but they are not organized as
stock or non-stock corporations as
required by Section 2(13) of the
Introductory Provisions of the
Administrative Code. These
government instrumentalities are
sometimes loosely called government
corporate entities. They are not,
however, GOCCs in the strict sense as
understood under the Administrative
Code, which is the governing law
defining the legal relationship and
status of government entities.2
Correlatively, Section 3 of the
Corporation Code defines a stock
corporation as one whose "capital
stock is divided into shares and x x x
authorized to distribute to the holders
of such shares dividends x x x." Section
87 thereof defines a non-stock
corporation as "one where no part of
its income is distributable as dividends
to its members, trustees or officers."
Further, Section 88 provides that non-
stock corporations are "organized for
charitable, religious, educational,
professional, cultural, recreational,
fraternal, literary, scientific, social, civil
service, or similar purposes, like trade,
industry, agriculture and like
chambers."
Two requisites must concur before one
may be classified as a stock
corporation, namely: (1) that it has
capital stock divided into shares; and
(2) that it is authorized to distribute
dividends and allotments of surplus
and profits to its stockholders. If only
one requisite is present, it cannot be
properly classified as a stock
corporation. As for non-stock
corporations, they must have
members and must not distribute any
part of their income to said members.3
In the case at bench, PRA is not a
GOCC because it is neither a stock nor
a non-stock corporation. It cannot be
considered as a stock corporation
because although it has a capital stock
divided into no par value shares as
provided in Section 74 of P.D. No. 1084,
it is not authorized to distribute
dividends, surplus allotments or profits
to stockholders. There is no provision
whatsoever in P.D. No. 1084 or in any
of the subsequent executive issuances
pertaining to PRA, particularly, E.O. No.
525,5 E.O. No. 6546 and EO No.
7987 that authorizes PRA to distribute
dividends, surplus allotments or profits
to its stockholders.
PRA cannot be considered a non-stock
corporation either because it does not
have members. A non-stock
corporation must have
8 
members. Moreover, it was not
organized for any of the purposes
mentioned in Section 88 of the
Corporation Code. Specifically, it was
created to manage all government
reclamation projects.
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 The first condition is
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.
Sections 2 and 4 of P.D. No. 1084
reads, as follows:
Section 2. Declaration of policy. It is
the declared policy of the State to
provide for a coordinated, economical
and efficient reclamation of lands, and
the administration and operation of
lands belonging to, managed and/or
operated by the government, with the
object of maximizing their utilization
and hastening their development
consistent with the public interest.
Section 4. Purposes. The Authority is
hereby created for the following
purposes:
(a) To reclaim land, including
foreshore and submerged
areas, by dredging, filling or
other means, or to acquire
reclaimed land;
(b) To develop, improve,
acquire, administer, deal in,
subdivide, dispose, lease and
sell any and all kinds of lands,
buildings, estates and other
forms of real property, owned,
managed, controlled and/or
operated by the government.
(c) To provide for, operate or
administer such services as may
be necessary for the efficient,
economical and beneficial
utilization of the above
properties.
The twin requirement of common
good and economic viability was
lengthily discussed in the case of
Manila International Airport Authority
v. Court of Appeals,9 the pertinent
portion of which reads:
Third, the government-owned or
controlled corporations created
through special charters are those that
meet the two conditions prescribed in
Section 16, Article XII of the
Constitution.
that the
government-owned or controlled
corporation must be established for
the common good. The second
condition is that the government-
owned or controlled corporation must
meet the test of economic viability.
Section 16, Article XII of the 1987
Constitution provides:
SEC. 16. The Congress shall not, except
by general law, provide for the
formation, organization, or regulation
of private corporations. Government-
owned or controlled corporations may
be created or established by special
charters in the interest of the common
good and subject to the test of
economic viability.
The Constitution expressly authorizes
the legislature to create "government-
owned or controlled corporations"
through special charters only if these
entities are required to meet the twin
conditions of common good and
economic viability. In other words,
Congress has no power to create
government-owned or controlled
corporations with special charters
unless they are made to comply with
the two conditions of common good
and economic viability. The test of
economic viability applies only to
government-owned or controlled
corporations that perform economic or
commercial activities and need to
compete in the market place. Being
essentially economic vehicles of the
State for the common good —
meaning for economic development
purposes — these government-owned
or controlled corporations with special
charters are usually organized as stock
corporations just like ordinary private
corporations.
In contrast, government
instrumentalities vested with
corporate powers and performing
governmental or public functions need
not meet the test of economic viability.
These instrumentalities perform
essential public services for the
common good, services that every
modern State must provide its citizens.
These instrumentalities need not be
economically viable since the
government may even subsidize their
entire operations. These
instrumentalities are not the
"government-owned or controlled
corporations" referred to in Section 16,
Article XII of the 1987 Constitution.
Thus, the Constitution imposes no
limitation when the legislature creates
government instrumentalities vested
with corporate powers but performing
essential governmental or public
functions. Congress has plenary
authority to create government
instrumentalities vested with
corporate powers provided these
instrumentalities perform essential
government functions or public
services. However, when the
legislature creates through special
charters corporations that perform
economic or commercial activities,
such entities — known as
"government-owned or controlled
corporations" — must meet the test of
economic viability because they
compete in the market place.
This is the situation of the Land Bank of
the Philippines and the Development
Bank of the Philippines and similar
government-owned or controlled
corporations, which derive their
incometo meet operating expenses
solely from commercial transactions in
competition with the private sector.
The intent of the Constitution is to
prevent the creation of government-
owned or controlled corporations that
cannot survive on their own in the
market place and thus merely drain
the public coffers.
Commissioner Blas F. Ople, proponent
of the test of economic viability,
explained to the Constitutional
Commission the purpose of this test, as
follows:
MR. OPLE: Madam President, the
reason for this concern is really that
when the government creates a
corporation, there is a sense in which
this corporation becomes exempt from
the test of economic performance. We
know what happened in the past. If a
government corporation loses, then it
makes its claim upon the taxpayers'
money through new equity infusions
from the government and what is
always invoked is the common good.
That is the reason why this year, out of
a budget of P115 billion for the entire
government, about P28 billion of this
will go into equity infusions to support
a few government financial
institutions. And this is all taxpayers'
money which could have been
relocated to agrarian reform, to social
services like health and education, to
augment the salaries of grossly
underpaid public employees. And yet
this is all going down the drain.
Therefore, when we insert the phrase
"ECONOMIC VIABILITY" together with
the "common good," this becomes a
restraint on future enthusiasts for
state capitalism to excuse themselves
from the responsibility of meeting the
market test so that they become
viable. And so, Madam President, I
reiterate, for the committee's
consideration and I am glad that I am
joined in this proposal by
Commissioner Foz, the insertion of the
standard of "ECONOMIC VIABILITY OR
THE ECONOMIC TEST," together with
the common good.1âwphi1
Father Joaquin G. Bernas, a leading
member of the Constitutional
Commission, explains in his textbook
The 1987 Constitution of the Republic
of the Philippines: A Commentary:
The second sentence was added by the
1986 Constitutional Commission. The
significant addition, however, is the
phrase "in the interest of the common
good and subject to the test of
economic viability." The addition
includes the ideas that they must show
capacity to function efficiently in
business and that they should not go
into activities which the private sector
can do better. Moreover, economic
viability is more than financial viability
but also includes capability to make
profit and generate benefits not
quantifiable in financial terms.
Clearly, the test of economic viability
does not apply to government entities
vested with corporate powers and
performing essential public services.
The State is obligated to render
essential public services regardless of
the economic viability of providing
such service. The non-economic
viability of rendering such essential
public service does not excuse the
State from withholding such essential
services from the public.
However, government-owned or
controlled corporations with special
charters, organized essentially for
economic or commercial objectives,
must meet the test of economic
viability. These are the government-
owned or controlled corporations that
are usually organized under their
special charters as stock corporations,
like the Land Bank of the Philippines
and the Development Bank of the
Philippines. These are the government-
owned or controlled corporations,
along with government-owned or
controlled corporations organized
under the Corporation Code, that fall
under the definition of "government-
owned or controlled corporations" in
Section 2(10) of the Administrative
Code. [Emphases supplied]
This Court is convinced that PRA is not
a GOCC either under Section 2(3) of
the Introductory Provisions of the
Administrative Code or under Section
16, Article XII of the 1987 Constitution.
The facts, the evidence on record and
jurisprudence on the issue support the
position that PRA was not organized
either as a stock or a non-stock
corporation. Neither was it created by
Congress to operate commercially and
compete in the private market.
Instead, PRA is a government
instrumentality vested with corporate
powers and performing an essential
public service pursuant to Section
2(10) of the Introductory Provisions of
the Administrative Code. Being an
incorporated government
instrumentality, it is exempt from
payment of real property tax.
Clearly, respondent has no valid or
legal basis in taxing the subject
reclaimed lands managed by PRA. On
the other hand, Section 234(a) of the
LGC, in relation to its Section 133(o),
exempts PRA from paying realty taxes
and protects it from the taxing powers
of local government units.
Sections 234(a) and 133(o) of the LGC
provide, as follows:
SEC. 234. Exemptions from Real
Property Tax – The following are
exempted from payment of the real
property tax:
(a) Real property owned by the
Republic of the Philippines or any of its
political subdivisions except when the
beneficial use thereof has been
granted, for consideration or
otherwise, to a taxable person.
xxxx
SEC. 133. Common Limitations on the
Taxing Powers of Local Government
Units. – Unless otherwise provided
herein, the exercise of the taxing
powers of provinces, cities,
municipalities, and barangays shall not
extend to the levy of the following:
xxxx
(o) Taxes, fees or charges of any kinds
on the National Government, its
agencies and instrumentalities, and
local government units. [Emphasis
supplied]
It is clear from Section 234 that real
property owned by the Republic of the
Philippines (the Republic) is exempt
from real property tax unless the
beneficial use thereof has been
granted to a taxable person. In this
case, there is no proof that PRA
granted the beneficial use of the
subject reclaimed lands to a taxable
entity. There is no showing on record
either that PRA leased the subject
reclaimed properties to a private
taxable entity.
This exemption should be read in
relation to Section 133(o) of the same
Code, which prohibits local
governments from imposing "taxes,
fees or charges of any kind on the
National Government, its agencies and
instrumentalities x x x." The
Administrative Code allows real
property owned by the Republic to be
titled in the name of agencies or
instrumentalities of the national
government. Such real properties
remain owned by the Republic and
continue to be exempt from real estate
tax.
Indeed, the Republic grants the
beneficial use of its real property to an
agency or instrumentality of the
national government. This happens
when the title of the real property is
transferred to an agency or
instrumentality even as the Republic
remains the owner of the real
property. Such arrangement does not
result in the loss of the tax exemption,
unless "the beneficial use thereof has
been granted, for consideration or
otherwise, to a taxable person."10
The rationale behind Section 133(o)
has also been explained in the case of
the Manila International Airport
Authority,11 to wit:
Section 133(o) recognizes the basic
principle that local governments
cannot tax the national government,
which historically merely delegated to
local governments the power to tax.
While the 1987 Constitution now
includes taxation as one of the powers
of local governments, local
governments may only exercise such
power "subject to such guidelines and
limitations as the Congress may
provide."
When local governments invoke the
power to tax on national government
instrumentalities, such power is
construed strictly against local
governments. The rule is that a tax is
never presumed and there must be
clear language in the law imposing the
tax. Any doubt whether a person,
article or activity is taxable is resolved
against taxation. This rule applies with
greater force when local governments
seek to tax national government
instrumentalities.
Another rule is that a tax exemption is
strictly construed against the taxpayer
claiming the exemption. However,
when Congress grants an exemption to
a national government instrumentality
from local taxation, such exemption is
construed liberally in favor of the
national government instrumentality.
As this Court declared in Maceda v.
Macaraig, Jr.:
The reason for the rule does not apply
in the case of exemptions running to
the benefit of the government itself or
its agencies. In such case the practical
effect of an exemption is merely to
reduce the amount of money that has
to be handled by government in the
course of its operations. For these
reasons, provisions granting
exemptions to government agencies
may be construed liberally, in favor of
non tax-liability of such agencies.
There is, moreover, no point in
national and local governments taxing
each other, unless a sound and
compelling policy requires such
transfer of public funds from one
government pocket to another.
There is also no reason for local
governments to tax national
government instrumentalities for
rendering essential public services to
inhabitants of local governments. The
only exception is when the legislature
clearly intended to tax government
instrumentalities for the delivery of
essential public services for sound and
compelling policy considerations.
There must be express language in the
law empowering local governments to
tax national government
instrumentalities. Any doubt whether
such power exists is resolved against
local governments.
Thus, Section 133 of the Local
Government Code states that "unless
otherwise provided" in the Code, local
governments cannot tax national
government instrumentalities. As this
Court held in Basco v. Philippine
Amusements and Gaming Corporation:
The states have no power by taxation
or otherwise, to retard, impede,
burden or in any manner control the
operation of constitutional laws
enacted by Congress to carry into
execution the powers vested in the
federal government. (MC Culloch v.
Maryland, 4 Wheat 316, 4 L Ed. 579)
This doctrine emanates from the
"supremacy" of the National
Government over local governments.
"Justice Holmes, speaking for the
Supreme Court, made reference to the
entire absence of power on the part of
the States to touch, in that way
(taxation) at least, the
instrumentalities of the United States
(Johnson v. Maryland, 254 US 51) and
it can be agreed that no state or
political subdivision can regulate a
federal instrumentality in such a way
as to prevent it from consummating its
federal responsibilities, or even to
seriously burden it in the
accomplishment of them." (Antieau,
Modern Constitutional Law, Vol. 2, p.
140, emphasis supplied)
Otherwise, mere creatures of the State
can defeat National policies thru
extermination of what local authorities
may perceive to be undesirable
activities or enterprise using the power
to tax as "a tool for regulation." (U.S. v.
Sanchez, 340 US 42)
The power to tax which was called by
Justice Marshall as the "power to
destroy" (McCulloch v. Maryland,
supra) cannot be allowed to defeat an
instrumentality or creation of the very
entity which has the inherent power to
wield it. [Emphases supplied]
The Court agrees with PRA that the
subject reclaimed lands are still part of
the public domain, owned by the State
and, therefore, exempt from payment
of real estate taxes.
Section 2, Article XII of the 1987
Constitution reads in part, as follows:
Section 2. All lands of the public
domain, waters, minerals, coal,
petroleum, and other mineral oils, all
forces of potential energy, fisheries,
forests or timber, wildlife, flora and
fauna, and other natural resources are
owned by the State. With the
exception of agricultural lands, all
other natural resources shall not be
alienated. The exploration,
development, and utilization of natural
resources shall be under the full
control and supervision of the State.
The State may directly undertake such
activities, or it may enter into co-
production, joint venture, or
production-sharing agreements with
Filipino citizens, or corporations or
associations at least 60 per centum of
whose capital is owned by such
citizens. Such agreements may be for a
period not exceeding twenty-five
years, renewable for not more than
twenty-five years, and under such
terms and conditions as may provided
by law. In cases of water rights for
irrigation, water supply, fisheries, or
industrial uses other than the
development of waterpower,
beneficial use may be the measure and
limit of the grant.
Similarly, Article 420 of the Civil Code
enumerates properties belonging to
the State:
Art. 420. The following things are
property of public dominion:
(1) Those intended for public
use, such as roads, canals,
rivers, torrents, ports and
bridges constructed by the
State, banks, shores,
roadsteads, and others of
similar character;
(2) Those which belong to the
State, without being for public
use, and are intended for some
public service or for the
development of the national
wealth. [Emphases supplied]
Here, the subject lands are reclaimed
lands, specifically portions of the
foreshore and offshore areas of Manila
Bay. As such, these lands remain public
lands and form part of the public
domain. In the case of Chavez v. Public
Estates Authority and AMARI Coastal
Development Corporation,12 the Court
held that foreshore and submerged
areas irrefutably belonged to the
public domain and were inalienable
unless reclaimed, classified as alienable
lands open to disposition and further
declared no longer needed for public
service. The fact that alienable lands of
the public domain were transferred to
the PEA (now PRA) and issued land
patents or certificates of title in PEA’s
name did not automatically make such
lands private. This Court also held
therein that reclaimed lands retained
their inherent potential as areas for
public use or public service.
As the central implementing agency
tasked to undertake reclamation
projects nationwide, with authority to
sell reclaimed lands, PEA took the
place of DENR as the government
agency charged with leasing or selling
reclaimed lands of the public domain.
The reclaimed lands being leased or
sold by PEA are not private lands, in
the same manner that DENR, when it
disposes of other alienable lands, does
not dispose of private lands but
alienable lands of the public domain.
Only when qualified private parties
acquire these lands will the lands
become private lands. In the hands of
the government agency tasked and
authorized to dispose of alienable of
disposable lands of the public domain,
these lands are still public, not private
lands.
Furthermore, PEA's charter expressly
states that PEA "shall hold lands of the
public domain" as well as "any and all
kinds of lands." PEA can hold both
lands of the public domain and private
lands. Thus, the mere fact that
alienable lands of the public domain
like the Freedom Islands are
transferred to PEA and issued land
patents or certificates of title in PEA's
name does not automatically make
such lands private.13
Likewise, it is worthy to mention
Section 14, Chapter 4, Title I, Book III of
the Administrative Code of 1987, thus:
SEC 14. Power to Reserve Lands of the
Public and Private Dominion of the
Government.-
(1)The President shall have the power
to reserve for settlement or public use,
and for specific public purposes, any of
the lands of the public domain, the use
of which is not otherwise directed by
law. The reserved land shall thereafter
remain subject to the specific public
purpose indicated until otherwise
provided by law or proclamation.
Reclaimed lands such as the subject
lands in issue are reserved lands for
public use. They are properties of
public dominion. The ownership of
such lands remains with the State
unless they are withdrawn by law or
presidential proclamation from public
use.
Under Section 2, Article XII of the 1987
Constitution, the foreshore and
submerged areas of Manila Bay are
part of the "lands of the public domain,
waters x x x and other natural
resources" and consequently "owned
by the State." As such, foreshore and
submerged areas "shall not be
alienated," unless they are classified as
"agricultural lands" of the public Authority are hereby declared EXEMPT
domain. The mere reclamation of from real estate taxes. All real estate
these areas by PEA does not convert tax assessments, including the final
these inalienable natural resources of notices of real estate tax
the State into alienable or disposable delinquencies, issued by the City of
lands of the public domain. There must Parañaque on the subject reclaimed
be a law or presidential proclamation properties; the assailed auction sale,
officially classifying these reclaimed dated April 7, 2003; and the
lands as alienable or disposable and Certificates of Sale subsequently issued
open to disposition or concession. by the Parañaque City Treasurer in
Moreover, these reclaimed lands favor of the City of Parañaque, are all
cannot be classified as alienable or declared VOID.
disposable if the law has reserved
them for some public or quasi-public SO ORDERED.
use.
As the Court has repeatedly ruled,
properties of public dominion are not
subject to execution or foreclosure
sale.14 Thus, the assessment, levy and
foreclosure made on the subject
reclaimed lands by respondent, as well
as the issuances of certificates of title
in favor of respondent, are without
basis.
WHEREFORE, the petition is GRANTED.
The January 8, 2010 Order of the
Regional Trial Court, Branch 195,
Parañaque City, is REVERSED and SET
ASIDE. All reclaimed properties owned
by the Philippine Reclamation
G.R. No. 93654 May 6, 1992
FRANCISCO U. DACANAY, petitioner,
vs.
MAYOR MACARIO ASISTIO, JR., CITY
ENGR. LUCIANO SARNE, JR. of
Kalookan City, Metro Manila, MILA
PASTRANA AND/OR RODOLFO TEOFE,
STALLHOLDERS AND REPRESENTING
CO-STALLHOLDERS, respondents.
David D. Advincula, Jr. for petitioner.
Juan P. Banaga for private
respondents.
GRIÑO-AQUINO, J.:
May public streets or thoroughfares be
leased or licensed to market
stallholders by virtue of a city
ordinance or resolution of the Metro
Manila Commission? This issue is
posed by the petitioner, an aggrieved
Caloocan City resident who filed a
special civil action
of mandamus against the incumbent
city mayor and city engineer, to
compel these city officials to remove
the market stalls from certain city
streets which the aforementioned city
officials have designated as flea
markets, and the private respondents
(stallholders) to vacate the streets.
On January 5, 1979, MMC Ordinance
No. 79-02 was enacted by the
Metropolitan Manila Commission,
designating certain city and municipal
streets, roads and open spaces as sites
for flea markets. Pursuant, thereto, the
Caloocan City mayor opened up seven
(7) flea markets in that city. One of
those streets was the "Heroes del '96"
where the petitioner lives. Upon
application of vendors Rodolfo Teope,
Mila Pastrana, Carmen Barbosa, Merle
Castillo, Bienvenido Menes, Nancy
Bugarin, Jose Manuel, Crisaldo
Paguirigan, Alejandro Castron, Ruben
Araneta, Juanita and Rafael Malibaran,
and others, the respondents city
mayor and city engineer, issued them
licenses to conduct vending activities
on said street.
In 1987, Antonio Martinez, as OIC city
mayor of Caloocan City, caused the
demolition of the market stalls on
Heroes del '96, V. Gozon and Gonzales
streets. To stop Mayor Martinez'
efforts to clear the city streets, Rodolfo
Teope, Mila Pastrana and other
stallowners filed an action for
prohibition against the City of
Caloocan, the OIC City Mayor and the
City Engineer and/or their deputies
(Civil Case No. C-12921) in the Regional
Trial Court of Caloocan City, Branch
122, praying the court to issue a writ of
preliminary injunction ordering these
city officials to discontinue the
demolition of their stalls during the
pendency of the action.
The court issued the writ prayed for.
However, on December 20, 1987, it
dismissed the petition and lifted the
writ of preliminary injunction which it
had earlier issued. The trial court
observed that:
A perusal of Ordinance
2, series of 1979 of the
Metropolitan Manila
Commission will show
on the title itself that it
is an ordinance ––
Authorizi
ng and
regulatin Manila services rendered; and
g the use Commissi other matters and
of certain on, and activities related to the
city for other establishment,
and/or purposes maintenance and
municipal management and
streets, which is further operation of flea
roads amplified in Section 2 of markets and vending
and open the said ordinance, areas, shall be
spaces quoted hereunder: determined and
within prescribed by the
Metropol Sec. 2. The streets, mayors of the cities and
itan roads and open spaces municipalities in the
Manila as to be used as sites for Metropolitan Manila
sites for flea markets (tiangge) or where the same are
flea vending areas; the located, subject to the
market design, measurement or approval of the
and/or specification of the Metropolitan Manila
vending structures, equipment Commission and
areas, and apparatuses to be consistent with the
under used or put up; the guidelines hereby
certain allowable distances; the prescribed.
terms days and time allowed
and for the conduct of the Further, it is
condition businesses and/or so provided in the
s, subject activities herein guidelines under the
to the authorized; the rates or said Ordinance No. 2 of
approval fees or charges to be the MMC that —
of the imposed, levied and
Metropol collected; the kinds of Sec. 6. In the
itan merchandise, goods and establishment,
commodities sold and operation, maintenance
 and management of flea the commerce of man. by
markets and vending Considering the nature prescripti
areas, the following of the subject premises, on
guidelines, among the following against
others, shall be jurisprudence the state
observed: co/principles are (Insular
applicable on the Governm
xxx xxx xxx matter: ent vs.
Aldecoa,
(m) That the permittee 1) They 19 Phil.
shall remove the cannot 505).
equipment, facilities and be Even
other appurtenances alienated municipal
used by him in the or leased ities can
conduct of his or not
business after the close otherwis acquire
or termination of e be the them for
business subject use as
hours. (Emphasis ours; matter of commun
pp. 15-16, Rollo.) contracts al lands
. against
The trial court found that Heroes del (Municip the state
'96, Gozon and Gonzales streets are of ality of (City of
public dominion, hence, outside the Cavite vs. Manila
commerce of man: Rojas, 30 vs.
Phil. Insular
The Heroes del '96 602); Governm
street, V. Gozon street ent, 10
and Gonzales street, 2) They Phil.
being of public cannot 327);
dominion must, be
therefore, be outside of acquired
3) They 1983 Ed. part of
are not pp. 29- the plaza
subject 30). from
to public
attachme In the use. If
nt and aforecite possessio
execution d case of n has
(Tan Toco Municipa already
vs. lity of been
Municipa Cavite vs. given,
l Council Rojas, it the
of Iloilo, was held lessee
49 Phil. that prop must
52); erties for restore
public possessio
4) They use may n by
cannot not be vacating
be leased to it and the
burdened private municipal
by any individua ity must
voluntary ls. Such a thereupo
easemen lease is n restore
t (2-II null and to him
Colin & void for any sums
Capitant the it may
520) reason have
(Tolentin that a collected
o, Civil municipal as rent.
Code of council
the Phils., cannot In the
Vol. II, withdraw case of
City of give reite
Manila perm rated
vs. its, in
Gerardo writt the
Garcia, en or case
19 SCRA oral, of B
413, the to agui
Supreme the o
Court squa Citiz
held: tters, ens
and Actio
The that n
prop the Inc.
erty perm vs.
bein its The
g a grant City
publi ed Coun
c are cil, 1
one, ther 21
the efore SCRA
Mani consi 368,
la dere wher
May d e it
ors null was
did and held
not void. that:
have
the This An
auth doctr ordin
ority ine ance
to was legali
 zing is along
the mandate railroad
occu d by tracks
panc P.D. 772, and
y by and Sec. those
squa 1 of built
tters Letter of without
of Instructio permits
publi n No. 19 on public
c orders or private
land certain property
is public (Zansibari
null officials, an
and one of Residents
void. whom is Associati
the on vs.
The Municipa Mun. of
authority l Mayor Makati,
of to 135 SCRA
responde remove 235). The
nt all illegal City
Municipa construc Engineer
lity of tions is also
Makati to including among
demolish buildings those
the on and required
shanties along to
of the esteros comply
petitione and river with said
r's banks, Letter of
members those
Instructio the use public
n. or lease street or
of public a public
The places place
occupati under devoted
on and permits to public
use of and use,
private licenses hence,
individua issued by beyond
ls of compete the
sidewalk nt commerc
s authority e of man.
and othe , upon (Padilla,
r public the Civil Code
places theory Annotate
devoted that such d, Vol. II,
for public holders p. 59, 6th
use could not Ed., citing
constitut take Umali vs.
e both advantag Aquino,
public e of their IC. A.
and unlawful Rep.
private permits 339.)
nuisance and
s and license From the aforequoted
nuisance and claim jurisprudence/principles
per se, that the , the Court opines that
and this land in defendants have the
applies to question right to demolish the
even case is a part subject stalls of the
involving of a plaintiffs, more so when
Section 185, par. 4 of place (k)
Batas Pambansa Blg. s; With
337, otherwise known the
as the Local xxx previ
Government Code xxx ous
provides that the City xxx appr
Engineer shall: oval
(j) of
(4) . . Inspe the
. ct City
and May
(c) supe or in
Prev rvise each
ent the case,
the cons orde
encr tructi r the
oach on, remo
ment repai val
of r, of
priva remo mate
te val rials
build and empl
ings safet oyed
and y of in
fenc priva the
es on te cons
the build tructi
stree ings; on or
ts repai
and xxx r of
publi xxx any
c xxx
build e or the affected streets, wrote a letter
ing torn dated March 7, 1988 to Mayor Asistio,
or dow Jr., calling his attention to the illegally-
struc n; constructed stalls on Heroes del '96
tures Street and asked for their demolition.
mad x x x
e in x x x Dacanay followed up that letter with
viola x x x another one dated April 7, 1988
tion addressed to the mayor and the city
of Further, the Charter of engineer, Luciano Sarne, Jr. (who
law the City of Caloocan, replaced Engineer Arturo Samonte),
or Republic Act No. 5502, inviting their attention to the Regional
ordin Art. VII, Sec. 27, par. g, 1 Trial Court's decision in Civil Case No.
ance, and m, grants the City 12921. There was still no response.
and Engineer similar powers.
caus (Emphasis supplied; pp. Dacanay sought President Corazon C.
e 17-20, Rollo.) Aquino's intervention by writing her a
build letter on the matter. His letter was
ings However, shortly after the decision referred to the city mayor for
and came out, the city administration in appropriate action. The acting
struc Caloocan City changed hands. City Caloocan City secretary, Asuncion
tures Mayor Macario Asistio, Jr., as Manalo, in a letter dated August 1,
dang successor of Mayor Martinez, did not 1988, informed the Presidential Staff
erou pursue the latter's policy of clearing Director that the city officials were still
s to and cleaning up the city streets. studying the issue of whether or not to
the proceed with the demolition of the
publi Invoking the trial court's decision in market stalls.
c to Civil Case No. C-12921, Francisco U.
mad Dacanay, a concerned citizen, taxpayer Dacanay filed a complaint against
e and registered voter of Barangay 74, Mayor Asistio and Engineer Sarne
secur Zone 7, District II of Caloocan City, who (OMB-0-89-0146) in the Office of the
resides on Heroes del '96 Street, one of OMBUDSMAN. In their letter-comment
dated April 3, 1989, said city officials
explained that in view of the huge
number of stallholders involved, not to
mention their dependents, it would be
harsh and inhuman to eject them from
the area in question, for their
relocation would not be an easy task.
In reply, Dacanay maintained that
respondents have been derelict in the
performance of their duties and
through manifest partiality constituting
a violation of Section 3(e) of R.A. 3019,
have caused undue injury to the
Government and given unwarranted
benefits to the stallholders.
After conducting a preliminary
investigation, the OMBUDSMAN
rendered a final evaluation and report
on August 28, 1989, finding that the
respondents' inaction is purely
motivated by their perceived moral
and social responsibility toward their
constituents, but "the fact remains
that there is an omission of an act
which ought to be performed, in clear
violation of Sections 3(e) and (f) of
Republic Act 3019." (pp. 83-84, Rollo.)
The OMBUDSMAN recommended the
filing of the corresponding information
in court.
As the stallholders continued to
occupy Heroes del '96 Street, through
the tolerance of the public
respondents, and in clear violation of
the decision it Civil Case No. C-12921,
Dacanay filed the present petition
for mandamus on June 19, 1990,
praying that the public respondents be
ordered to enforce the final decision in
Civil Case No. C-12921 which upheld
the city mayor's authority to order the
demolition of market stalls on V.
Gozon, Gonzales and Heroes del '96
Streets and to enforce P.D. No. 772
and other pertinent laws.
On August 16, 1990, the public
respondents, through the City Legal
Officer, filed their 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 declaring that Heroes del '96, V.
contravenes the general law that Gozon, and Gonzales Streets are public
reserves city streets and roads for streets for public use, and they are
public use. Mayor Robles' Executive ordered to remove or demolish, or
Order may not infringe upon the cause to be removed or demolished,
vested right of the public to use city the market stalls occupying said city
streets for the purpose they were streets with utmost dispatch within
intended to serve: i.e., as arteries of thirty (30)days from notice of this
travel for vehicles and pedestrians. As decision. This decision is immediately
early as 1989, the public respondents executory.
bad started to look for feasible
alternative sites for flea markets. They SO ORDERED
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
G.R. No. 158687             January 27,
2006
FRISCO F. DOMALSIN, Petitioner,
vs.
SPOUSES JUANITO VALENCIANO and
AMALIA VALENCIANO, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a petition for review which
seeks to set aside the decision1 of the
Court of Appeals in CA-G.R. SP No.
69415 dated 20 August 2002 which
reversed and set aside the decision2 of
Branch 63 of the Regional Trial Court
(RTC) of La Trinidad, Benguet, in Civil
Case No. 01-CV-1582(150) dated 23
January 2002, which affirmed the
decision3 of the Municipal Circuit Trial
Court (MCTC) of Tuba-Sablan, Tuba,
Benguet, in Civil Case No. 150 dated 20
November 2000, declaring petitioner
Frisco F. Domalsin the actual possessor
of the lot in dispute and ordering, inter
alia, respondent spouses Juanito and
Amalia Valenciano to vacate and
deliver the physical possession thereof
to the former, and its
Resolution4 dated 20 May 2003
denying petitioner’s motion for
reconsideration.
The respective allegations of the
parties as contained in the complaint
and answer are substantially
summarized by the Court of Appeals as
follows:
The property subject of this action for
forcible entry is a parcel of land
located at sitio Riverside, Camp 3,
Tuba, Benguet. Respondent Frisco B.
Domalsin claims to be the lawful
owner and possessor of said parcel of
land since 1979 up to the present. He
declared it for taxation purposes in
1983 as (per) Tax Declaration No. 9540
issued on September 12, 1983 by the
Municipal Assessor of Tuba Benguet.
He allegedly introduced improvements
consisting of levelling, excavation,
riprapping of the earth and a private
road to the river, fruitbearing trees
and other agricultural plants of
economic value. He was in continuous,
adverse possession and in the concept
of an owner for the past nineteen (19)
years.
On August 1, 1998, petitioners Spouses
Juanito Valenciano and Amalia
Valenciano (Sps. Valenciano, for
brevity) allegedly entered the premises
to construct a building made of
cement and strong materials, without
the authority and consent of
respondent, by means of force and
strategy, and without a building permit
from the Department of Public Works
and Highways (DPWH, for brevity).
Respondent protested and demanded
that petitioners Sps. Valenciano halt
construction of said building, but the
latter refused to do so. Hence, he filed
the instant case.
Petitioners Sps. Valenciano, on the
other hand, claimed that the ongoing
construction was with the consent and
conformity of the DPWH and in fact
the improvements found in the
property were introduced by the
residents thereof, including its first
residents, William and Gloria Banuca,
and not by respondent. The premises
on which petitioners Sps. Valenciano
are constructing their house were
leveled after the earthquake in 1990
by the Banuca spouses. Petitioners Sps.
Valenciano are just starting the
construction because the permission
was only given now by Gloria Banuca.5
On 18 August 1998, petitioner filed
before the MCTC of Tuba, Benguet, a
complaint for Forcible Entry with
Prayer for Preliminary Mandatory
Injunction with Application for
Issuance of a Temporary Restraining
Order plus Damages.6 The complaint
was amended on 27 August 1998.7 Per
Order dated 19 August 1998, a
Temporary Restraining Order (TRO)
was issued ordering respondents to
desist and cease and refrain from
continuing the construction of a house
on the land in question.8
On 27 August 1998, respondent
spouses Juanito and Amalia Valenciano
filed their Answer with Opposition to
the Prayer for Issuance of Writ of
Preliminary Injunction.9 On 07
September 1998, they filed an Answer
to the Amended Complaint10 to which
petitioner filed a Reply.11
On 15 September 1998, the MCTC
issued another TRO.12
The pre-trial order dated 6 November
1998 contained, among other things,
petitioner’s admission that he was
temporarily not operating any business
in the area, and respondents’
admission regarding the issuance of
Tax Declarations on the property in
dispute in petitioner’s name.13
Trial ensued. Petitioner presented
Mariano Suyam and Tonsing Binay-an,
two of his former truck drivers from
1981 to 1985 in his business of hauling
sand, gravel and other aggregates at
Riverside, Camp 3, Tuba, Benguet.
Mariano Suyam testified that
sometime in 1981, petitioner caused
the construction of a private road
leading to the Bued River from Kennon
Road. He added that petitioner
constructed two houses, the first was
located along the road-right-of-way of
Kennon Road where respondents are
now constructing their house, while
the second was located below the
private road around 40 to 60 meters
down from Kennon Road. He explained
that the first house was used for
sleeping quarters and resting center
for laborers, while petitioner used the
second one as his quarters. He said
William Banuca was hired as foreman
in 1983 and that the latter and his
family stayed in the second house.
Tonsing Binay-an corroborated the
testimony of Suyam as regards the two
houses constructed by petitioner and
added that petitioner was the manager
of Salamander Enterprises and had a
concession permit from the Bureau of
Mines to haul gravel and sand.
Petitioner testified that he is a lawyer-
businessman formerly engaged in
trucking business, hauling sand and
gravel, and operated under the name
Salamander Enterprises.14 He narrated
that while he was passing Kennon
Road, he discovered that a portion of
the Bued River, Camp 3, Tuba Benguet,
can be a potential source of supplies
for his business. Though the area was
steep and deep, he scouted a place
where he can construct a road from
Kennon Road to the Bued River. In the
course of cleaning the area, his
workers noticed that the place had
been tilled. A certain Castillo Binay-an
appeared informing him that he was
the occupant of the site of the
proposed private road. After agreeing
on the consideration, the former
executed a Deed of Waiver and
Quitclaim15 over the land in his favor.
Thereafter, the Office of the Highway
District Engineer of Baguio, Ministry of
Public Highways (now Department of
Public Works and Highways [DPWH])
issued a permit in favor of petitioner to
extract construction materials at Camp
3, Tuba, Benguet,16 which was followed
by the issuance on 1 October 1981 of
Commercial Permit No. 147 by the
Office of the Mines Regional Officer,
Mineral Region No. 1, Bureau of Mines
and Geo-Sciences (Bureau of
Mines).17 The Commercial Permit,
which was renewable every year, was
last renewed in 1987.18
Based on the Deed of Waiver and
Quitclaim executed by Castillo Binay-
an, petitioner was able to apply for,
and was issued, a tax declaration over
the land covering one hectare. Tax
Declaration No. 954019 dated 12
September 1983 was issued to
petitioner describing the land bounded
on the North by Bued River, on the
South by Kennon Road, on the East by
Kennon Road, and on the West by a
Creek. With the revision of the fair
market value and assessed value of
lands, Tax Declaration No. 94-004-
00327 dated 12 November 1994 was
issued to him.20 From 1983 up to 1998,
petitioner has been regularly paying
real property taxes over the land.
Petitioner disclosed that in 1983,
William Banuca applied for, and was
accepted, as foreman.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 to him. Petitioner
revealed that the houses his former
laborers constructed were awarded to
them as a kind gesture to them. As to
the land he occupied along the Kennon
Road where the first house was
erected, he claims that same still
belongs to him. This house, which his
laborers and drivers used as a resting
area, was cannibalized and leveled,
and the land over which it once stood
was taken possession by respondents
who are now building their house
thereon.
Gloria Banuca testified for
respondents. She disclosed that it was
she who invited respondents to come
and reside at Riverside, Camp 3, Tuba,
Benguet. She said she knew petitioner
to be engaged in the sand and gravel
business in Tuba, Benguet, from 1981
to 1985, and that the latter stopped in
1985 and never returned to haul sand
and gravel at the Bued River. She
claimed she never saw petitioner
introduce any improvements on the
land he claimed he bought from
Castillo Binay-an, and that it was she
and the other residents who
introduced the existing improvements.
She narrated that in 1983, she planted
fruit-bearing trees in the area where
respondents were constructing their
house which is located along the
Kennon Road’s road-right-of-way,
fronting petitioner’s property. After
the earthquake of 1990, the private
road constructed by petitioner became
impassable and it was she who hired
the equipment used to clear the same.
She even leveled the area where
respondents were building their home.
Based on the ocular inspection, she
said this area is within the 15-meter
radius from the center of the road.
This area, she claims, was sold to her
by the Spouses Jularbal. However, the
agreement between them shows that
what was sold to her were the
improvements near her house which
was 40 meters down from Kennon
Road and the improvements along
Kennon Road.23
Agustin Domingo next testified for
respondents. He testified that in 1986,
upon the invitation of Gloria Banuca,
he transferred his residence to sitio
Riverside because of its proximity to
his place of work. He stayed there for
good and even buried his father near
his house. He said that in 1990, the
private road constructed by petitioner
was covered by boulders, soil and
rocks, and it was Mrs. Banuca who
initiated the clearing of the road.
Finally, he declared that since 1986, he
never saw petitioner introduce any
improvement in the area.
Respondent Juanito Valenciano
revealed that he is the cousin of Gloria
Banuca. He narrated that in 1984, he
went to Riverside to see the latter
whose husband, William Banuca, was
working as foreman of petitioner. At
that time, the lot under litigation was
still a hill. It was Gloria Banuca who
leveled the hill and told him to
construct his house there. Finding the
place to be an ideal place to build his
house, he paid the Banucas P10,000.00
for the improvements.
He explained that before he started
building his house, he sought the
permission of the Benguet District
Engineer, DPWH, which the latter
granted. In August 1998, he received a
notice24 to stop and desist from
continuing the construction of a
permanent one-storey house made of
hollow blocks and cement since the
condition was only to utilize light
materials. Thereafter, a letter dated 22
January 1999 was sent to him
informing him that the temporary
permit issued to him for the
improvement/utilization of a portion
of the national road along Kennon
Road had been revoked for non-
submission of the waiver as required
by the Office of the District Engineer
and his non-compliance with the
condition that no permanent
structures are to be constructed within
the road-right-of-way. He, however,
denied receiving said letter.
Juan de Vera, a retired DPWH
foreman, testified last for the
respondents. He claimed he witnessed
the execution of the
25
document  regarding the sale by
Adriano Jularbal to Gloria Banuca of
improvements found near the house of
the latter in the amount of P1,000.00.
The MCTC found that what is being
contested is the possession of a
portion of the road-right-of way of
Kennon Road which is located in front
of a parcel of land that petitioner
bought by way of Deed of Waiver and
Quitclaim from Castillo Binay-an. It
held that petitioner had prior material
possession over the subject land. It
ruled that the destruction of his house
built thereon by the earthquake in
1990, and later cannibalized without
being reconstructed was not
tantamount to abandonment of the
site by the petitioner because it was
destroyed by a fortuitous event which
was beyond his control. It explained
that his possession over the land must
be recognized by respondents who
came later after the earthquake. It
brushed aside respondents’ allegation
that the land in dispute was
abandoned by the latter after he
stopped operating his sand and gravel
business in 1985 and never returned
anymore, and when the house erected
on it was destroyed during the 1990
earthquake, it was no longer
reconstructed and was subsequently
leveled or demolished by Gloria
Banuca. However, it pronounced that
respondents’ action to occupy the land
was done in good faith considering
that their occupation of the land was
with the assurance of the seller (Gloria
Banuca) and that they were armed
with the permit issued by the DPWH
for him to construct his house thereon.
On 20 November 2000, the MCTC
came out with its decision, the decretal
portion of which reads:
WHEREFORE PREMISES CONSIDERED,
decision is hereby rendered in favor of
plaintiff, FRISCO DOMALSIN, and
against defendants, JUANITO
VALENCIANO and AMALIA
VALENCIANO, with the following:
1. Order to declare the
injunction permanent.
2. Order the plaintiff as the
actual possessor of the lot in
question.
3. Order the defendant(s) to
vacate and deliver the physical
possession voluntarily of the
disputed land to plaintiff within
60 days from receipt of this
decision.
4. Order defendant(s) to
remove his structure within
from receipt of this decision.
5. Order the defendant(s) to
(sic) plaintiff the amount of
P10,000.00, as litigation
expenses.
6. Order defendant(s) to pay
the cost of suit26
Respondents appealed the decision to
the RTC.27 In affirming the decision in
toto the RTC ratiocinated:
It may be well to consider that even
after plaintiff’s business ceased
operation, he religiously paid the taxes
due thereon.
Appellant’s theory that the plaintiff-
appellee abandoned the property does
not sit well and finds no support in the
record. Notice that since 1985 up to
mid-1990, the Banucas never laid claim
over the property taking into
consideration that they were already
residents of the place. This only goes
to show that they acknowledged and
respected the prior possession of the
plaintiff-appellee. Besides, what right
has Gloria to cause the leveling of the
property destroying the natural
contour thereof, to presume that
plaintiff-appellee abandoned it and to
invite and allow other persons to settle
thereat? Absolutely none. Knowing
fully well that the plaintiff-appellee has
prior possession of the property,
Gloria’s actions are unjustified, to say
the least. Her consummated act of
leveling the property without the
knowledge of the plaintiff-appellee is
viewed as a test to determine whether
or not the latter is still interested in the
property. From then on until 1998 (but
before the construction), the Banucas
still recognize the plaintiff’s
possession. But as Gloria claims to
have heard no word from the plaintiff,
she unilaterally declared that the place
is now abandoned as she "invited and
allowed" the defendants to live and
construct their house thereat.
Contrary to the assertion of the
appellants, there was no abandonment
simply because plaintiff-appellee
continuously paid the corresponding
taxes due thereon and that he
promptly objected to the construction
of the defendants-appellants’ house.
These are clear manifestations of his
intention not to abandon the property.
Sad to say though that here is a former
employer. By passing off such property
to be hers is so unkind, unfair and
against social order. It is very clear that
the Banucas knew of the prior
possession of the plaintiff way back
then so that they themselves never
personally build construction over the
property. If they honestly believe that
they now "own" the land, why will
they still have to invite other people
who are not their relatives to settle
thereat? Why the preference of
strangers over relatives? The Court
does not believe that they did not
receive any compensation for having
"allowed" strangers, the defendants
included, to settle on the land.
From all the foregoing, Gloria is clearly
in bad faith. And her being in bad faith
must be corrected and if warranted,
must be meted appropriate penalty. If
the Banucas are in bad faith, then the
appellants cannot have better rights
either. The Banucas transferred
nothing to them. Defendants-
appellants cannot even be considered
as builders in good faith. It must be
noted that they were prohibited by the
plaintiff from going further but they
ignored it. They shall lose what was
built (Art. 449, Civil Code). Again, if the
Banucas believe that they have an
action or a right to deprive the
plaintiff’s possession, why did they not
invoke judicial interference as required
under Art. 536 of the same code?
Nonetheless, notwithstanding the fact
of leveling without the knowledge of
the plaintiff-appellee, the same did not
affect his possession (Art. 537, Civil
Code).28
Via a petition for review, respondents
appealed to the Court of Appeals. The
Court of Appeals made a sudden turn-
around and reversed the decision
under review. Its decision dated 20
August 2002 reads in part:
[T]here is a need to clarify a few things.
What is undisputed are the identity
and nature of the property subject of
the action for forcible entry. The
subject of the action concerns a
portion of the road-right-of-way along
Kennon Road just above the private
road constructed by respondent. The
problem, however, is that petitioners
Sps. Valenciano started constructing a
house on the same spot where a house
belonging to respondent once stood.
Both parties are now asserting that
they are entitled to the possession of
said lot. But the decision of the lower
court seems to imply that respondent’s
right to possess the subject property
stems from his acquisition of the one-
hectare property below it. That is not
the case.
We must emphasize that the subject of
the deed of quitclaim and waiver of
rights of Castillo Binay-an was not the
road-right-of-way but the sloping
terrain below it. This was the property
acquired by the respondent to have
access to the sand and gravel on the
Bued River. It did not include the road-
right-of-way. As regards Gloria
Banucas’s claims, the evidence show
that her agreement with Jularbal
involved only the improvements near
her residence down the private road
and not the road-right-of-way. Since
the subject property is a road-right-of-
way, it forms part of the public
dominion. It is not susceptible to
private acquisition or ownership.
Prolonged occupation thereof,
improvements introduced thereat or
payment of the realty taxes thereon
will never ripen into ownership of said
parcel of land. Thus, what We have are
two parties, neither of which can be
owners, only possessors of the subject
property. Beyond these two, only the
government has a better right to the
subject property which right it may
exercise at any time. This bears
emphasizing because if either party
has possessory rights to the subject
property, it is not predicated on
ownership but only on their actual
possession of the subject property.
xxxx
There is no doubt that respondent had
prior physical possession of the subject
property. He entered and acquired
possession of the subject property
when he built his house thereon. The
house was destroyed during the 1990
earthquake and respondent did not
rebuild it. The mound on which it
stood was later leveled by Gloria
Banuca and in 1998 petitioners Sps.
Valenciano began construction
thereat. Petitioners Sps. Valenciano
claim there was abandonment, but the
lower court ruled that respondent did
not abandon the subject property as
he continued to pay the realty taxes
thereon and objected to petitioners
Sps. Valenciano’s construction. We
believe, and so hold, that at this point
in time, it is immaterial whether or not
there was abandonment by
respondent. The fact remains that
Gloria Banuca took possession of the
subject property soon after the
earthquake. She leveled the mound
and the ruins of respondent’s house,
yet respondent remained silent.
Respondent objected only after
petitioners Sps. Valenciano started
construction of the house on the
subject property. Respondent cannot
now interpose an action for forcible
entry against petitioners Sps.
Valenciano, which he should have filed
against Gloria Banuca, petitioners Sps.
Valenciano’s predecessor-in-interest.
But more than a year had passed and
his right to do so lapsed. Thus,
respondent’s prior possession is
material only as against Gloria Banuca
and only within a period of one year
from the time she wrested possession
of the property from respondent.
We view with distate Gloria Banuca’s
ingratitude toward her husband’s
former employer. Her actions smack of
the proverbial hand being offered in
aid but the person to whom it is
offered would rather have the whole
arm instead. This is an instance where
it is the employees who commit
injustice against their employer.
Nonetheless, petitioners Sps.
Valenciano should not suffer because
of Gloria Banuca’s ingratitude for the
former came across the property in
good faith.
But respondent is also reminded that
he only has himself to blame. His
failure to assert his right for an
unreasonable and unexplained length
of time allowed Gloria Banuca to wrest
possession from him. Especially in this
case where they do not and cannot
own the subject property, actual
possession becomes particularly
important.29
The case was disposed as follows:
WHEREFORE, in view of the foregoing,
the petition is GRANTED and the
decision of the Municipal Circuit Trial
Court of tuba-Sablan dated November
20, 2000 as affirmed by the Regional
Trial Court on January 23, 2002 is
hereby REVERSED and SET ASIDE.30
The Motion for Reconsideration filed
by petitioner was denied in a
resolution31 dated 20 May 2003.
Petitioner is now before us seeking
redress. He assigns the following as the
errors committed by the Court of
Appeals:
I.
THE HONORABLE COURT OF APPEALS
ERRED IN HOLDING THAT PRIVATE
RESPONDENT (NOW PETITIONER)
FRISCO DOMALSIN ABANDONED THE
PROPERTY SUBJECT OF THE
LITIGATION.
II.
THE HONORABLE COURT OF APPEALS
ERRED IN REVERSING AND SETTING
ASIDE THE DECISION OF THE REGIONAL
TRIAL COURT OF LA TRINIDAD,
BENGUET, BRANCH 63 WHICH
AFFIRMED THE DECISION OF THE
MUNICIPAL CIRCUIT TRIAL COURT OF
TUBA-SABLAN.
At the outset, it must be made clear
that the property subject of this case is
a portion of the road-right-of way of
Kennon Road which is located in front
of a parcel of land that petitioner
bought by way of Deed of Waiver and
Quitclaim from Castillo Binay-an.32 The
admission33 of petitioner in his
Amended Complaint that respondents
started constructing a building within
the Kennon Road road-right-of-way
belies his claim that the lot in question
is his.
In light of this exposition, it is clear that
neither the petitioner nor the
respondents can own nor possess the
subject property the same being part
of the public dominion. Property of
public dominion is defined by Article
420 of the Civil Code as follows:
ART. 420. The following things are
property of public dominion:
(1) Those intended for public use such
as roads, canals, rivers, torrents, ports
and bridges constructed by the State,
banks, shores, roadsteads, and other
of similar character.
(2) Those which belong to the State,
without being for public use, and are
intended for some public service or for
the development of the national
wealth.
Properties of public dominion are
owned by the general public.34 Public
use is "use that is not confined to
privileged individuals, but is open to
the indefinite public."35 As the land in
controversy is a portion of Kennon
Road which is for the use of the
people, there can be no dispute that
same is part of public dominion. This
being the case, the parties cannot
appropriate the land for themselves.
Thus, they cannot claim any right of
possession over it. This is clear from
Article 530 of the Civil Code which
provides:
ART. 530. Only things and rights which
are susceptible of being appropriated
may be the object of possession.
Notwithstanding the foregoing, it is
proper to discuss the position of the
Court of Appeals for comprehensive
understanding of the facts and the law
involved.
Petitioner maintains that the Court of
Appeals erred when it ruled that he
abandoned the land being disputed
contrary to the rulings of the MCTC
and RTC. The MCTC found there was
no abandonment of the land because
the house erected thereon was
destroyed by a fortuitous event
(earthquake), while the RTC ruled
there was no abandonment because
petitioner paid taxes due on the land
and that he promptly objected to the
construction of respondents’ house
which are clear manifestations of his
intention not to abandon the property.
A reading of the decision of the Court
of Appeals shows that it did not
reverse the two lower courts on the
issue of abandonment. It merely
declared that such issue is not material
in the resolution of the case at bar. It
faulted petitioner for not asserting his
right for a long time allowing Gloria
Banuca to wrest the possession of the
land in question from petitioner by
leveling the house he built thereon and
pronounced that actual possession
becomes important in a case where
parties do not and cannot own the
land in question.
From the foregoing it appears that the
Court of Appeals did not give weight or
importance to the fact that petitioner
had prior physical possession over the
subject land. It anchored its decision
on the fact that the parties do not and
cannot own the land and that
respondents now have actual
possession over it.
Ejectment proceedings are summary
proceedings intended to provide an
expeditious means of protecting actual
possession or right to possession of
property. Title is not involved. The sole
issue to be resolved is the question as
to who is entitled to the physical or
material possession of the premises or
possession de facto.36
The Court of Appeals erred when it
preferred the present and actual
possession of respondents vis-à-vis the
prior possession of petitioner on the
ground that the parties do not and
cannot own the lot in question.
Regardless of the actual condition of
the title to the property, the party in
peaceable, quiet possession shall not
be thrown out by a strong hand,
violence or terror. Neither is the
unlawful withholding of property
allowed. Courts will always uphold
respect for prior possession. Thus, a
party who can prove prior possession
can recover such possession even
against the owner himself. Whatever
may be the character of his possession,
if he has in his favor prior possession in
time, he has the security that entitles
him to remain on the property until a
person with a better right lawfully
ejects him.37
The fact that the parties do not and
cannot own the property under
litigation does not mean that the issue
to be resolved is no longer priority of
possession. The determining factor for
one to be entitled to possession will be
prior physical possession and not
actual physical possession. Since title is
never in issue in a forcible entry case,
the Court of Appeals should have
based its decision on who had prior
physical possession. The main thing to
be proven in an action for forcible
entry is prior possession and that same
was lost through force, intimidation,
threat, strategy and stealth, so that it
behooves the court to restore
possession regardless of title or
ownership.38
Inasmuch as prior physical possession
must be respected, the Court of
Appeals should have ruled squarely on
the issue of abandonment because it
gave precedence to the actual present
possession of respondents. If, indeed,
there was abandonment of the land
under consideration by petitioner, only
then should respondents be given the
possession of the same since
abandonment is one way by which a
possessor may lose his possession.39
Abandonment of a thing is the
voluntary renunciation of all rights
which a person may have in a thing,
with the intent to lose such thing.40 A
thing is considered abandoned and
possession thereof lost if the spes
recuperandi (the hope of recovery) is
gone and the animus revertendi (the
intention of returning) is finally given
up.41
In the case before us, we find that
petitioner never abandoned the
subject land. His opposition to the
construction of respondents’ house
upon learning of the same and the
subsequent filing of the instant case
are clear indicia of non-abandonment;
otherwise, he could have just allowed
the latter to continue with the
construction. Moreover, the fact that
the house petitioner built was
destroyed by the earthquake in 1990,
was never rebuilt nor repaired and
that same was leveled to the ground
by Gloria Banuca do not signify
abandonment. Although his house was
damaged by the earthquake, Gloria
Banuca, the person who supposedly
demolished said house, had no right to
do the same. Her act of removing the
house and depriving petitioner of
possession of the land was an act of
forcible entry. The entry of
respondents in 1998 was likewise an
act of forcible entry.
The next question is: Was the action
filed the correct one and was it timely
filed?
Well-settled is the rule that what
determines the nature of the action as
well as the court which has jurisdiction
over the case are the allegations in the
complaint.42 In actions for forcible
entry, the law tells us that two
allegations are mandatory for the
municipal court to acquire jurisdiction:
First, the plaintiff must allege prior
physical possession of the property.
Second, he must also allege that he
was deprived of his possession by any
of the means provided for in Section 1,
Rule 70 of the Rules of Court.43 To
effect the ejectment of an occupant or
deforciant on the land, the complaint
should embody such a statement of
facts as to bring the party clearly
within the class of cases for which the
statutes provide a remedy, as these
proceedings are summary in nature.
The complaint must show enough on
its face to give the court jurisdiction
without resort to parol evidence.44
A look at the Amended Complaint filed
by petitioner clearly shows a case for
forcible entry. Petitioner alleged
therein that he has been in possession
of the subject land for the last
nineteen years and that respondents,
in the first week of August 1998,
without his permission and consent,
entered the land by means of force,
strategy and stealth and started the
construction of a building thereon; and
upon being informed thereof, he
requested them to stop their
construction but respondents refused
to vacate the land forcing him to file
the instant case to recover possession
thereof.
The Court of Appeals pronounced that
petitioner cannot interpose an action
for forcible entry against respondents
and that the same should have been
filed against Gloria Banuca. It added
that the right to file against the latter
had already lapsed because more than
a year had passed by from the time she
wrestled possession of the property
from the petitioner.
We find such pronouncement to be
flawed. An action of forcible entry and
detainer may be maintained only
against one in possession at the
commencement of the action, and not
against one who does not in fact hold
the land.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.
G.R. No. 150000             September 26,
2006
REPUBLIC OF THE
PHILIPPINES, petitioner,
vs.
TRI-PLUS CORPORATION, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a petition for
review on certiorari under Rule 45 of
the Rules of Court assailing the
Decision1 dated September 14, 2001 of
the Court of Appeals (CA) in CA-G.R. CV
No. 60671, which affirmed the
judgment of the Municipal Trial Court
(MTC) of Consolacion, Metro Cebu in
LRC Case No. N-21 granting herein
respondent's application for
registration of title to Lots Nos. 1061
and 1062 of the Cadastral Survey of
Consolacion, Cebu.
The facts of the case are as follows:
On April 30, 1997 Tri-Plus Corporation 2,
through its president, Euclid C. Po, filed
with the MTC of Consolacion, Metro
Cebu,3 an Application for Registration
of Title over two parcels of land
designated as Lots 1061 and 1062 of
the cadastral survey of Consolacion,
Cebu, containing an area of 3,939 and
4,796 square meters, respectively, and
located at Barangay Tayud,
4
Consolacion, Cebu.  In its application,
Tri-Plus alleged that it is the owner in
fee simple of the subject parcels of
land, including the improvements
thereon, having acquired the same
through purchase; and that it is in
actual, continuous, public, notorious,
exclusive and peaceful possession of
the subject properties in the concept
of an owner for more than 30 years,
including that of its predecessors-in-
interest.5 The case was docketed as
LRC Case No. N-21.6
On September 4, 1997, the trial court
received an Opposition to the
Application for Registration filed by the
Republic of the Philippines through the
Office of the Solicitor General (OSG) on
the grounds that neither the applicant
nor its predecessors-in-interest have
been in open, continuous, exclusive
and notorious possession and
occupation of the land in question
since June 12, 1945 or prior thereto;
that the muniments of title submitted
by the applicant which consists, among
others, of tax declarations and receipts
of tax payments, do not constitute
competent and sufficient evidence of
a bona fide acquisition of the land
applied for or of its open, continuous,
exclusive and notorious possession and
occupation thereof in the concept of
owner since June 12, 1945 or prior
thereto; that the claim of ownership in
fee simple on the basis of a Spanish
title or grant may no longer be availed
of by the applicant because it failed to
file an appropriate application for
registration in accordance with the
provisions of Presidential Decree (P.D.)
No. 892; and that the subject parcels
of land are portions of the public
domain belonging to the Republic of
the Philippines and are not subject to
private appropriation.7
On September 19, 1997, Tri-Plus
presented documentary evidence to
prove compliance with the
jurisdictional requirements of the law.
On even date, a Manifestation and
Motion was filed by the heirs of Toribio
Pepito praying that they be given a
period of 10 days within which to file
their written opposition.8 However, the
oppositors failed to file their written
opposition on time. The trial court
then commissioned its clerk of court to
receive evidence from the applicant
and directed the former to submit a
report thereon. Accordingly, a
Commissioner's Report was submitted
on the proceedings taken.9
In its Judgment dated February 26,
1998, the MTC made the following
finding and conclusion:
The totality of the evidence,
both documentary and
testimonial, of the applicant
clearly shows that it and its
predecessors-in-interest had
been in actual, public, exclusive
and continuous possession in
concept of owner of the parcels
of land above-mentioned for no
less than thirty (30) years prior
to the filing of the instant
petition for registration of its
imperfect title. This being so,
the applicant is entitled that its
title be confirmed under the
provisions of the Torrens
System of Registration.10
Accordingly, it disposed of the case as
follows:
WHEREFORE, in view of the
foregoing, judgment is hereby
rendered declaring the
applicant TRI-PLUS LAND
CORPORATION the exclusive
and absolute owner of Lot 1061
of the Cadastral Survey of
Consolacion, Cebu, as shown
on plan Ap-07-002362 (Exhibit
"J") and described in its
corresponding technical
description (Exhibit "K"), and
Lot 1062 of the Cadastral
Survey of Consolacion, Cebu, as
shown on plan Ap-07-002366
(Exhibit "O") and described in
its corresponding technical
description (Exhibit "P").
Once this decision becomes
final, let an Order for the
issuance of the decree of
registration for Lots 1061 and
1062, Consolacion Cadastre, be
issued in the name of TRI-PLUS
LAND CORPORATION.
SO ORDERED.11
The OSG appealed the trial court's
judgment with the CA.12
Subsequently, the Land Registration
Authority (LRA), through its Director on
Registration, submitted a Report dated
August 6, 1998 to the MTC, pertinent
portions of which read as follows:
1. Two (2) parcels of land
described as Lots 1062 and
1061, Cad. 545-D, Consolacion
Cadastre on Plan Ap-07-002366
and Ap-07-002362, both
situated in the Barangay of
Tayud, Municipality of
Consolacion, Province of Cebu,
are being applied for original
registration of title;
2. After examining the afore-
said plan discrepancy was
noted in the bearings and
distances of line 3-4 and 4-5 of
Lot 1061, Ap-07-002362, being
S.57 deg. 19'W 8.02m. and S.52
deg. 10'W 18.24, which do not
conform with the bearings and
distances (N. 52 deg. 01'E.,
18.00m) and (N. 52 deg. 47'E.,
17.71m.) along lines 12-13 and
11-12, respectively of plan Rs-
 07-01-000358, lot 1508, THE COURT OF APPEALS
Consolacion Cad. 545-D, COMMITTED REVERSIBLE
decreed in LRA (NALTDRA) ERROR IN NOT FINDING THAT
Record No. N-60851. THE TRIAL COURT DID NOT
ACQUIRE JURISDICTION TO
3. That the above discrepancy HEAR AND DECIDE THE CASE,
was brought to the attention of BECAUSE THE IDENTITY OF THE
the Regional Technical Director, LAND REMAINS UNCERTAIN.
DENR, Land Management
Services, Region VII, Mandaue II
City, for verification and
correction in a letter dated 7 THE COURT OF APPEALS
July 1998. COMMITTED REVERSIBLE
ERROR IN NOT FINDING THAT
4. This Authority is not in a RESPONDENT FAILED TO
position to verify whether or DISCHARGE THE BURDEN OF
not the parcels of land subject PROVING THAT THE PROPERTY
of registration are already IS ALIENABLE AND DISPOSABLE.
covered by land patent.13
III
On September 14, 2001, the CA
rendered the presently assailed THE COURT OF APPEALS
Decision finding no reversible error in COMMITTED REVERSIBLE
the appealed judgment, thereby, ERROR IN NOT FINDING THAT
affirming the same.14 RESPONDENT IS DISQUALIFIED
FROM ACQUIRING LANDS OF
Hence, herein petition based on the THE PUBLIC DOMAIN.15
following assignments of errors:
As to the first assigned error,
I petitioner contends that the CA erred
in relying on the original survey plan
approved by the Lands Management
Services of the Department of
Environment and Natural Resources
(DENR) when it ruled that the applicant
was able to duly establish the identity
of Lot 1061. This reliance, petitioner
argues, is mistaken considering that
the Report of the Director on
Registration of the LRA pointed to a
discrepancy in the bearings and
distances of the boundaries which
separate Lot 1061 from an adjoining
land, Lot 1058. This discrepancy,
petitioners submit, casts doubt on the
identity of the land subject of the
application for registration. Petitioner
then concludes that if there is
uncertainty in the metes and bounds
of the property sought to be titled, the
trial court cannot acquire jurisdiction
over the subject matter of the case.
Hence, the proceedings before the trial
court, including its decision granting
the application for registration, are
void.
As to the second assignment of error,
petitioner argues that the CA erred in
holding that the applicant was able to
prove that the subject properties are
alienable and disposable lands of the
public domain. Petitioner contends
that a mere notation appearing in the
survey plans of the disputed properties
showing that the subject lands had
been classified as alienable and
disposable on June 25, 1963 is not
sufficient to establish the nature and
character of these lands. Petitioner
asserts that there should be a positive
act on the part of the government,
such as a certification from the DENR,
to prove that the said lands are indeed
alienable and disposable. Petitioner
further contends that even if the
subject properties were classified as
alienable and disposable on June 25,
1963, the law, nonetheless, requires
that such classification should have
been made on June 12, 1945 or earlier.
Anent the last assigned error,
petitioner contends that since the
applicant failed to discharge the
burden of proving that the subject
properties are alienable and
disposable, there is no basis for the CA
to rule that these properties are
private lands.
In its Comment, respondent contends
that it was able to prove the identity of
Lot 1061 with certainty. While it
admits the discrepancy in the bearings
and distances which form the
boundary between Lot 1061 and the
adjoining Lot 1058, respondent
contends that such discrepancy is
merely technical in nature because
Lots 1058 and 1061 remain the same
and that there is neither an increase
nor decrease in the area of the subject
lot sought to be titled; and that what
was required by the LRA in its Report
was for the applicant to correct and
adjust the bearings and distances of
Lot 1061 in order to conform to the
boundaries of Lot 1058.
Respondent also argues that the
notations appearing in the survey
plans of the subject properties serve as
sufficient proof that these lands are
alienable and disposable. Respondent
asserts that the survey plans were duly
approved by the DENR, Lands
Management Services whose official
acts are presumed to be in accordance
with law.
Lastly, respondent argues that its
predecessor-in-interest's continuous,
actual, adverse and peaceful
possession of the subject properties in
the concept of an owner for a period
of more than 30 years, coupled with
the fact that they declared these lands
in their name, gives a strong
presumption in respondent's favor that
the subject properties no longer form
part of the public domain.
Parties filed their respective
Memoranda.16
The Court finds the petition
meritorious.
At the outset, however, the Court does
not agree with petitioner's contention
in its first assigned error that
respondent failed to properly identify
Lot 1061 which is one of the lots
sought to be titled.
Insofar as the identity of the land
subject of an application for original
registration is concerned, this Court
has laid down the rule, as follows:
The submission in evidence of
the original tracing cloth plan,
duly approved by the Bureau of
Lands, in cases for application
of original registration of land is
a mandatory requirement. The
reason for this rule is to
establish the true identity of
 the land to ensure that it does
not overlap a parcel of land or a
portion thereof already
covered by a previous land
registration, and to forestall the
possibility that it will be
overlapped by a subsequent
registration of any adjoining
land. The failure to comply with
this requirement is fatal to
petitioner's application for
registration.17
However, in Republic of the Philippines
v. Court of Appeals18 and in the more
recent cases of Spouses Recto v.
Republic of the
19
Philippines  and Republic of the
Philippines v. Hubilla20, the Court ruled
that while the best evidence to identify
a piece of land for registration
purposes is the original tracing cloth
plan from the Bureau of Lands (now
the Lands Management Services of the
DENR), blueprint copies and other
evidence could also provide sufficient
identification. In the present case,
respondent submitted in evidence a
blueprint copy of the Advance Plan of
Lot 106121 and a Technical
22
Description  thereof, both of which
had been duly certified and approved
by the Lands Management Services of
the DENR. The Court finds these pieces
of evidence as substantial compliance
with the legal requirements for the
proper identification of Lot 1061. The
discrepancy in the common boundary
that separates Lot 1061 from Lot 1058,
as contained in the LRA Report does
not cast doubt on the identity of the
subject lot. As the CA correctly held,
the discrepancy is not substantial
because it does not unduly increase or
affect the total area of the subject lot
and at the same time prejudice the
adjoining lot owner. It is only when the
discrepancy results to an unexplained
increase in the total area of the land
sought to be registered that its identity
is made doubtful. Besides, only a
portion of the many boundaries of Lot
1061 has been found to bear a
discrepancy in relation to the
boundary of one adjoining lot and the
LRA Report simply recommends that
the Lands Management Services of the
DENR verify the reported discrepancy
and make the necessary corrections, if
needed, in order to avoid duplication
in the issuance of titles covering the
same parcels of land.
Petitioner's argument that, on the
basis of the LRA Report, the MTC
should have dismissed respondent's
application for registration for lack of
jurisdiction over the subject matter, is
without merit. The MTC could not have
possibly done this because said Report
was submitted to the trial court more
than five months after the latter
rendered its Decision. A copy of the
LRA Report attached to the present
petition shows that it is dated August
6, 1998 while the MTC decision was
rendered much earlier on February 26,
1998. In fact, the Office of the Solicitor
General (OSG) perfected its appeal by
filing a notice of appeal of the MTC
Decision on April 2, 1998, which is also
prior to the submission of the LRA
report. Hence, by the time the LRA
report was submitted to the MTC, the
latter has already lost jurisdiction over
the case, not on the ground cited by
petitioner but because the appeal to
the CA was already perfected, vesting
jurisdiction upon the appellate court.
In any case, while the subject lands
were properly identified, the Court
finds that respondent failed to comply
with the other legal requirements for
its application for registration to be
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) that they have been in open,
continuous, exclusive and notorious
possession and occupation of the same
under a bona fide claim of ownership
either since time immemorial or since
June 12, 1945.23
In the present case, the Court finds
merit in petitioner's contention that
respondent failed to prove the first
requirement that the properties
sought to be titled forms part of the
alienable and disposable agricultural
lands of the public domain.
Section 6 of Commonwealth Act No.
141, as amended, provides that the
classification and reclassification of
public lands into alienable or
disposable, mineral or forest land is
the prerogative of the Executive
Department. Under the Regalian
doctrine, which is embodied in our
Constitution, all lands of the public
domain belong to the State, which is
the source of any asserted right to any
ownership of land.24 All lands not
appearing to be clearly within private
ownership are presumed to belong to
the State.25 Accordingly, public lands
not shown to have been reclassified or
released as alienable agricultural land
or alienated to a private person by the
State remain part of the inalienable
public domain.26
It must be stressed that
incontrovertible evidence must be
presented to establish that the land
subject of the application is alienable
or disposable.27
In the present case, the only evidence
to prove the character of the subject
lands as required by law is the notation
appearing in the Advance Plan stating
in effect that the said properties are
alienable and disposable. However,
this is hardly the kind of proof required
by law. To prove that the land subject
of an application for registration is
alienable, an applicant must establish
the existence of a positive act of the
government such as a presidential
proclamation or an executive order, an
administrative action, investigation
reports of Bureau of Lands
investigators, and a legislative act or
statute.28 The applicant may also
secure a certification from the
Government that the lands applied for
are alienable and disposable.29 In the
case at bar, while the Advance Plan
bearing the notation was certified by
the Lands Management Services of the
DENR, the certification refers only to
the technical correctness of the survey
plotted in the said plan and has
nothing to do whatsoever with the
nature and character of the property
surveyed. Respondents failed to
submit a certification from the proper
government agency to prove that the
lands subject for registration are
indeed alienable and disposable.
As to the second requirement,
testimonial evidence were presented
to prove that respondent's
predecessors-in-interest had been in
possession of the subject lots in the
concept of an owner for the period
required by law. The first witness was
Thelma Pilapil who claims to be the
daughter of Constancia Frias from
whom respondent bought Lot 1061.
Pilapil testified that her family has
been in possession of Lot 1061 since
her birth.30 When her 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
relatively recent considering that
respondent's predecessors-in-interest
claim to have been in possession of the
subject properties as early as 1947.
While belated declaration of a
property for taxation purposes does
not necessarily negate the fact of
possession, tax declarations or realty
tax payments of property are,
nevertheless, good indicia of
possession in the concept of an owner,
for no one in his right mind would be
paying taxes for a property that is not
in his actual, or at least, constructive
possession.35 In the present case,
respondent failed to explain why,
despite the claim of its predecessors-in
interest that they possessed the
subject properties in the concept of an
owner as early as 1947, it was only in
1961 that they started to declare the
same for purposes of taxation.
From the foregoing, it is clear that
respondent and its predecessors-in-
interest failed to prove that they had
been in open, continuous, exclusive
and notorious possession of the
subject properties under a bona
fide claim of ownership since June 12,
1945 or earlier, as required by law.
Well-entrenched is the rule that the
burden of proof in land registration
cases rests on the applicant who must
show clear, positive and convincing
evidence that his alleged possession
and occupation were of the nature and
duration required by law.36 In the
present case, the Court finds that
respondent failed to prove, by clear
and convincing evidence, the legal
requirements that the lands sought to
be titled are alienable and disposable
and that its predecessors-in-interest
were already in possession of the
subject lots since 1945 or earlier.
As to the last assigned error,
respondent having failed to prove that
the subject properties are alienable
and disposable public lands, the Court
agrees with petitioner that there
would be no basis in concluding that
these lands have already become
private. The presumption remains that
said properties remain part of the
inalienable public domain and,
therefore, could not become the
subject of confirmation of imperfect
title.
Finally, while it is an acknowledged
policy of the State to promote the
distribution of alienable public lands as
a spur to economic growth and in line
with the ideal of social justice, the law
imposes stringent safeguards upon the
grant of such resources lest they fall
into the wrong hands to the prejudice
of the national patrimony.37 The Court
must not, therefore, relax the stringent
safeguards relative to the registration
of imperfect titles.
WHEREFORE, the instant petition
is GRANTED. The Decision of the Court
of Appeals dated September 14, 2001
in CA-G.R. CV No. 60671
is REVERSED and SET ASIDE.
Respondent Tri-Plus Corporation's
application for registration and
issuance of title to Lots 1061 and 1062,
Consolacion Cad-545-D, in LRC Case
No. N-21 filed with the Municipal Trial
Court of Consolacion, Metro Cebu,
is DISMISSED.
SO ORDERED.
G.R. No. 164024               January 29,
2009
LUIS B. MANESE, ANTONIA ELLA,
HEIRS OF ROSARIO M. ORDOñEZ,
represented by CESAR ORDOñEZ,
SESINANDO PINEDA and AURORA
CASTRO, Petitioners,
vs.
SPOUSES DIOSCORO VELASCO and
GLICERIA SULIT, MILDRED CHRISTINE
L. FLORES TANTOCO and SYLVIA L.
FLORES, Respondents.
DECISION
QUISUMBING, J.:
For review on certiorari are the
Decision1 dated April 28, 2004 and the
Resolution2 dated June 22, 2004 of the
Court of Appeals in CA-G.R. CV No.
68934. The appellate court had
affirmed the Order3 dated June 15,
2000 of the Regional Trial Court (RTC)
of Lucena City, Branch 59, in Civil Case
No. 99-129, dismissing the petitioners’
complaint for annulment of title and
damages against the respondents.
The subject matter of the controversy
is the alleged foreshore land with an
area of about 85,521 square meters,
fronting Tayabas Bay in Guisguis,
Sariaya, Quezon.4
On October 13, 1971, respondent
Dioscoro Velasco was issued Original
Certificate of Title No. P-
5
16783  covering said property by the
Register of Deeds of Quezon Province,
based on Homestead Patent No.
133300. On March 22, 1977, Velasco
sold the property to respondent Sylvia
Flores, and Transfer Certificate of Title
(TCT) No. T-1609236 was issued in her
name. On January 4, 1981, the
property was sold by Flores to Mildred
Christine Flores-Tantoco and TCT No.
T-1777357 was issued in the latter’s
name. Later, the property was divided
into seven lots and TCT Nos. T-177777,
T-177778, T-177779, T-177780, T-
177781, T-177782, and T-177783 were
issued in the name of Mildred Christine
Flores-Tantoco. On January 18, 1992,
the lots covered by TCT Nos. T-
1777808 and T-1777819 were sold back
to Flores such that TCT No. T-
27811210 and TCT No. 27811011 were
issued in her name.
Adjacent and contiguous to the alleged
foreshore land is the agricultural land
owned by petitioners.
On August 31, 1999, the petitioners
filed a Complaint12 for Annulment of
Title and Damages against respondents
before the RTC of Lucena City. They
alleged that the issuance of the
homestead patent and the series of
transfers involving the same property
were null and void. They further
alleged that they applied for lease of
the foreshore land and the
government had approved in their
favor Foreshore, Reclaimed Land or
Miscellaneous Lease Application.
Petitioners claimed that they were in
open, continuous, exclusive and
notorious possession and use of said
foreshore land since 1961. They stated
that they had introduced
improvements thereon and planted
coconut seedlings (which had grown
up into coconut trees) as well as other
fruit-bearing trees and plants. They
added that they had subleased the
land to several tenants.
Petitioners averred that Dioscoro
Velasco was not qualified to become a
grantee of a homestead patent since
he never occupied any portion nor
introduced any improvements on the
land. They claimed that Velasco was
issued a homestead patent because he
committed fraud, misrepresentation,
and falsification in connivance with
employees of the Bureau of Lands.
They argued that the sale between
Velasco and Flores was invalid because
it was not approved by the Secretary
of Agriculture and Natural Resources
as required under Commonwealth Act
No. 141, otherwise known as "The
Public Land Act."13 Hence, they claimed
that the sale by Flores to Tantoco was
likewise invalid.
On December 2, 1999, respondents
moved to dismiss14 the complaint on
the following grounds: (1) petitioners
do not have the legal personality to file
the complaint since the property forms
part of the public domain and only the
Solicitor General could bring an action
for reversion or any action which may
have the effect of canceling a free
patent and the corresponding
certificate of title issued on the basis of
the patent; (2) the sale of the property
by Velasco to Flores is valid even
without approval of the Secretary of
Agriculture and Natural Resources as
the required approval may be obtained
after the sale had been consummated;
(3) the certificate of title issued to
Velasco can no longer be reviewed on
the ground of fraud since a homestead
patent registered in conformity with
the provisions of Act No.
15
496  partakes of the nature of a
certificate issued in a judicial
proceeding and becomes indefeasible
and incontrovertible upon the
expiration of one year from its
issuance; and (4) petitioners’ action is
barred by laches since for almost 28
years, they failed to assert their
alleged right over said property.
On June 15, 2000, the RTC granted the
Motion to Dismiss and ruled that
petitioners do not have the legal
personality to file the complaint. It
held that the government, not
petitioners, is the real party in interest
and, therefore, only the Solicitor
General may bring the action in court.
The dispositive portion of the RTC’s
Order states:
WHEREFORE, the instant Motion is
granted and the plaintiffs[’] complaint
dismissed.
SO ORDERED.16
The Court of Appeals affirmed the
RTC’s Order, disposing as follows:
WHEREFORE, premises considered, the
appeal is DISMISSED for lack of merit.
The Order dated June 15, 2000 of the
Regional Trial Court (RTC), Branch 59,
Lucena City dismissing plaintiffs-
appellants’ complaint for annulment of
title with damages
is AFFIRMED and UPHELD.
SO ORDERED.17
Hence, this petition.
Petitioners raise the following issue for
our resolution:
[WHETHER OR NOT] THE COURT OF
APPEALS ERRED IN DISMISSING THE
APPEAL AND IN AFFIRMING AND
UPHOLDING THE ORDER OF DISMISSAL
OF THE REGIONAL TRIAL COURT OF
LUCENA, BRANCH 59 THAT THE
PETITIONERS DO NOT HAVE THE LEGAL
PERSONALITY TO INSTITUTE THE
COMPLAINT FOR CANCELLATION OF
OCT NO. P-16789 ISSUED PURSUANT
TO HOMESTEAD PATENT NO. 133300
IN THE NAME OF DIOSCORO VELASCO
AND THE TRANSFER CERTIFICATES OF
TITLES SUBSEQUENTLY ISSUED IN
FAVOR OF S[Y]LVIA L. FLORES AND
MILDRED CHRISTINE FLORES-
TANTOCO. 18
Stated simply, the sole issue in this
case is whether or not petitioners are
real parties in interest with authority
to file a complaint for annulment of
title of foreshore land.
Petitioners concede that under Section
101 of Commonwealth Act No.
141,19 only the Solicitor General or the
officer acting in his stead may institute
all actions for reversion in the proper
courts. However, they invoke the
principle of equity, arguing that equity
and social justice demand that they be
deemed real parties in interest and
given a right to present evidence
showing that the land titles of
respondents are void.20 Respondents,
on the other hand, reiterate that
petitioners are not real parties in
interest because they do not represent
the State.21
After due consideration of the
submissions and arguments of the
parties, we are in agreement that the
instant petition lacks merit.
Section 2, Rule 3 of the 1997 Rules of
Civil Procedure provides:
SEC. 2. Parties in interest. - A real party
in interest is the party who stands to
be benefited or injured by the
judgment in the suit, or the party
entitled to the avails of the suit. Unless
otherwise authorized by law or these
Rules, every action must be
prosecuted or defended in the name
of the real party in interest. (Emphasis
supplied.)
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
23
Philippines.  Moreover, 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 9125 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.
G.R. Nos. 175806 and 175810              
October 20, 2010
MANUEL ALMAGRO joined by his
spouse, ELIZABETH
ALMAGRO, Petitioners,
vs.
SALVACION C. KWAN, WILLIAM C.
KWAN, VICTORIA C. KWAN, assisted
by her husband, JOSE A. ARBAS, and
CECILIA C. KWAN, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 175849
Petitioners,
vs.
WILLIAM C. KWAN, SALVACION C.
KWAN, VICTORIA C. KWAN, assisted
by her husband, JOSE A. ARBAS, and
CECILIA C. KWAN, Respondents.
MARGARITA PACHORO, DRONICA
ORLINA, PIO TUBAT, JR., ANDRES
TUBAT, EDUVIGIS KISKIS, ELSA
BIÑALBER, NOELA TUBAT, ELSA
TUBAT, and ROGELIO DURAN,
DECISION
CARPIO, J.:
This is a consolidation of two separate
petitions for review,1 assailing the 4
April 2006 Decision2 and the 31
October 2006 Resolution3 of the Court
of Appeals in CA-G.R. SP Nos. 71237
and 71437.
This case involves Lot No. 6278-M, a
17,181 square meter parcel of land
covered by TCT No. T-11397. Lot No.
6278-M is located at Maslog, Sibulan,
Negros Oriental and is registered in the
name of spouses Kwan Chin and
Zosima Sarana. Respondents are the
legitimate children of spouses Kwan
Chin and Zosima Sarana, who both
died intestate on 2 November 1986
and 23 January 1976, respectively, in
Dumaguete City. Upon the death of
their parents, respondents inherited
Lot No. 6278-M through hereditary
succession.
On 18 September 1996, respondents
filed with the Municipal Trial Court
(MTC) an action for recovery of
possession and damages against
spouses Rogelio and Lourdes Duran,
spouses Romulo Vinalver and Elsa
Vinalver,4 spouses Marte5 Bati-on and
Liz E. Bati-on, spouses Pablo Deciar and
Marlyn Deciar, spouses Salvador
Palongpalong and Bienvenida
Palongpalong, spouses Sabas Kiskis and
Eduvigis Kiskis, spouses Pio Tubat, Jr.
and Encarnita Tubat, spouses Andres
Tubat and Leonides Tubat, spouses
George Tubat and Noela Tubat,
spouses Dodong Go and Alice Go,
spouses Delano Bangay and Maria
Bangay,6 spouses Simeon Pachoro and
Margarita Pachoro, spouses
7
Cepriano  Tubat and Elsa Tubat,
spouses Jovito Remolano and Editha
Orlina Remolano, spouses Nelson
Miravalles and Erlene Miravalles,
Dronica Orlina,8 Clarita Barot Lara,
Conchita Orlina, Antonia Malahay and
the Philippine National Police
9
(PNP),  Agan-an, Sibulan, Negros
Oriental. Subsequently, spouses
Manuel Almagro and Elizabeth
Almagro intervened as successors-in-
interest of spouses Delano Bangay and
Maria Bangay.
During pre-trial, the parties agreed to
refer the case to the Chief of the Land
Management Services Division,
PENRO-DENR, Dumaguete City, to
conduct a verification survey of Lot No.
6278-M. When the PENRO personnel
failed to conduct the verification
survey, the court and the parties
designated Geodetic Engineer Jorge
Suasin, Sr. (Engr. Suasin) as joint
commissioner to do the task. Engr.
Suasin conducted the verification and
relocation survey of Lot No. 6278-M on
12-13 September 2000 in the presence
of the parties, some of their lawyers,
and the MTC Clerk of Court.
Thereafter, Engr. Suasin submitted a
written report with the following
findings:
WRITTEN REPORT
Comes now, the undersigned Geodetic
Engineer Jorge S. Suasin, Sr., to this
Honorable Court, most respectfully
submit the following written report of
the verification and relocation survey
of the lot 6278-M located at Maslog,
Sibulan, Negros Oriental with T.C.T.
No. T-11397 owned by Salvacion G.
Kwan, et al.
A. That a big portion of
the lot is submerged
under the sea and only
a small portion remain
as dry land.
 B. That some of the 6. Sps. Sabas inside Remolano . .. . .
defendants have Kiskis . . . . . . . . . ..........
constructed their ......... 15. Sps. Nelson cottage and
buildings or houses
7. Sps. Pio 2 houses, Miravalles . . . . . house -
inside the dry land while
Tubat, Jr. . . . . . . the first ......... outside
others have constructed
............ house a 16. Monica cottage
outside or only a small
portion, and Orlina . . . . . . . . inside and
portion of their
the second ........... house -
buildings or houses are
one - inside portion
on the said dry land.
8. Sps. Andres inside 17. Clarita Barot outside
The defendants and their buildings or Tubat . . . . . . . . . ..............
houses are as follows: ......... ........
9. Sps. George portion 18. Conchita outside
1. Sps. Rogelio inside Tubat . . . . . . . . . Orlina . . . . . . . .
Duran . . . . . . . . ......... ............
..........
10. Sps. Dodong inside 19. Antonia outside
2. Sps. Romulo inside Go . . . . . . . . . . . Malahay . . . . . .
Vinalver. . . . . . . ........ .............
.........
11. Sps. Delano portion
3. Sps. Marto inside Bangay-Almagro The verification and relocation survey
Bati- ......... was executed last September 12-13,
on . . . . . . . . . . . 2000 with the presence of both parties
12. Sps. Simeon inside
....... and of the Clerk of Court. The cost of
Pachoro . . . . . . .
4. Sps. Salvador inside ........ the survey was FIFTEEN THOUSAND
Palongpalong . . PESOS (P15,000) shouldered by the
13. Sps. Cipriano inside
......... plaintiffs and the defendants equally.
Tubat . . . . . . . . .
5. Sps. Pablo inside .......
Deciar . . . . . . . .
14. Sps. Jovito inside
...........
Enclosed are a blue print of the sketch
plan and a xerox copy of the land title
of the said lot.
Respectfully submitted by:
(Sgd) JORGE SUASIN, SR.
Geodetic Engineer10
After the court admitted Engr. Suasin's
report and the pleadings of the parties,
respondents filed a motion for
judgment on the pleadings, which the
MTC granted.
In its Judgment dated 11 May 2001,
the MTC dismissed the complaint on
the ground that the remaining dry
portion of Lot No. 6278-M has become
foreshore land and should be returned
to the public domain. The MTC
explained:
The term "foreshore" refers to that
part of the land adjacent to the sea
which is alternately covered and left
dry by the ordinary flow of the tides.
"Foreshore lands" refers to the strip of
land that lies between the high and
low water marks and that is alternately
wet and dry according to the flow of
the tide. The term "foreshore land"
clearly does not include submerged
lands.
From these definitions, it is safe to
conclude that the remaining dry
portion of Lot No. 6278-M is now
"foreshore land." A big portion of the
said lot is presently underwater or
submerged under the sea. When the
sea moves towards the estate and the
tide invades it, the invaded property
becomes foreshore land and passes to
the realm of public domain. The
subject land, being foreshore land,
should therefore be returned to the
public domain. Besides, Article 420 of
the Civil Code provides:
"Art. 420. The following thin[g]s are
property of public dominion:
(1) Those intended for public use, such
as roads, canals, rivers, torrents, ports
and bridges constructed by the State,
banks, shores, roadsteads, and others
of similar character;
Plaintiff cannot use the doctrine of
indefeasibility of their Torrens title, as
property in question is clearly
foreshore land. At the time of its
registration, property was along the
shores. In fact, it is bounded by the
Tañon Strait on the NW along lines 2-3-
4. The property was of public dominion
and should not have been subject of
registration. The survey showed that
the sea had advanced and the waves
permanently invaded a big portion of
the property making the land part of
the shore or the beach. The remaining
dry land is foreshore and therefore
should be returned to the public
domain.11
Respondents appealed to the Regional
Trial Court (RTC). The RTC conducted
ocular inspections of Lot No. 6278-M
on two separate dates: on 5 October
2001 during low tide and on 15
October 2001 when the high tide
registered 1.5 meters. All the parties
and their lawyers were notified before
the two ocular inspections were
conducted. During the ocular
inspections, in which some parties and
their lawyers were present, the RTC
observed that the small portion
referred to by Engr. Suasin as dry land
in his report actually remained dry
even during high tide.12 Thus, the RTC
concluded that the disputed remaining
portion of Lot No. 6278-M is not
foreshore land. The RTC stated:
It is the Court's considered view that
the small portion of plaintiff's property
which remains as dry land is not within
the scope of the well-settled definition
of foreshore and foreshore land as
mentioned above. For one thing, the
small dry portion is not adjacent to the
sea as the term adjacent as defined in
Webster's Dictionary means
"contiguous or touching one another
or lying next to." Secondly, the small
dry portion is not alternately wet and
dry by the ordinary flow of the tides as
it is dry land. Granting, as posited by
defendants, that at certain times of the
year, said dry portion is reached by the
waves, then that is not anymore
caused by the ordinary flow of the tide
as contemplated in the above
definition. The Court then finds that
the testimony of Engr. Suasin dovetails
with the import and meaning of
foreshore and foreshore land as
defined above.1avvphil
Anent the case of Republic vs. Court of
Appeals, 281 SCRA 639, also cited in
the appealed judgment, the same has
a different factual milieu. Said case
involves a holder of a free patent on a
parcel of land situated at Pinagtalleran,
Caluag, Quezon who mortgaged and
leased portions thereof within the
prescribed five-year period from the
date of issuance of the patent. It was
established in said case that the land
subject of the free patent is five (5) to
six (6) feet deep under water
during high tide and two (2) feet deep
at low tide. Such is not the situation of
the "remaining small dry portion"
which plaintiffs seek to recover in the
case at bar.13
On 8 January 2002, the RTC rendered
its Decision,14 the dispositive portion of
which reads:
WHEREFORE, all told and
circumspectly considered, the
appealed judgment is hereby reversed
and set aside insofar as it states that
plaintiffs are not entitled to recover
possession of the property in question.
Plaintiffs-appellants have the right to
recover possession of the remaining
small dry portion of the subject
property in question. It is further
ordered to remand this case to the
court of origin for the reception of
further evidence to determine who
among the defendants-appellees are
builders or possessors in good faith
and who are not and once determined,
to apply accordingly the pertinent laws
and jurisprudence on the matter.
SO ORDERED.15
Petitioners moved for reconsideration,
which the RTC denied in its
Order16 dated 6 May 2002.
Petitioners filed separate petitions for
review with the Court of Appeals,
alleging that the disputed portion of
Lot No. 6278-M is no longer private
land but has become foreshore land
and is now part of the public domain.
The Ruling of the Court of Appeals
G.R. No. 192268, January 27,
2016
DEPARTMENT OF EDUCATION,
REPRESENTED BY ITS
REGIONAL
DIRECTOR, Petitioner, v. DELFIN
A C. CASIBANG, ANGELINA C.
CANAPI, ERLINDA C. BAJAN,
LORNA G. GUMABAY, DION1SIA
C. ALONZO, MARIA C.
 BANGAYAN AND DIGNA C.
BINAYUG, Respondents.
DECISION
PERALTA, J.:
For resolution of this Court is the
Petition for Review
on Certiorari, dated June 18, 2010,
of petitioner Department of
Education (DepEd), represented by
its Regional Director seeking to
reverse and set aside the
Decision1 dated April 29, 2010 of
the Court of Appeals (CA) affirming
the Decision2 dated January 10,
2008 of the Regional Trial Court
(RTC) of Tuguegarao City, Cagayan,
Branch 5, declaring the respondents
the owners of property in
controversy and ordering the DepFd
to pay the value of the property.
The antecedents follow:
The property in controversy is a
seven thousand five hundred thirty-
two (7,532) square meter portion
of Lot 115 covered by Original
Certificate of Title (OCT) No. 0-627
registered under the name of Juan
Cepeda, the respondents' late
father.3
chanroblesvirtuallawlibrary
Sometime in 1965, upon the
request of the then Mayor Justo
Cesar Caronan, Cepeda allowed the
construction and operation of a
school on the western portion of his
property. The school is now known
as Solana North Central School,
operating under the control and
supervision of the petitioner
DepEd.4chanroblesvirtuallawlibrary
Despite Cepeda's death in 1983,
the herein respondents and other
descendants of Cepeda continued to
tolerate the use and possession of
the property by the school.5
Sometime between October 31,
2000 and November 2, 2000, the
respondents entered and occupied
a portion of the property. Upon
discovery of the said occupation,
the teachers of the school brought
the matter to the attention of the
barangay captain. The school
officials demanded the respondents
to vacate the property.6 However,
the respondents refused to vacate
the property, and asserted
Cepeda's ownership of the lot.7
On June 21, 2001, the DepEd filed
a Complaint for Forcible Entry and
Damages against respondents
before the Municipal Circuit Trial
Court (MCTC) of Solana-Enrile. The
MCTC ruled in favor of the
petitioner and directed respondents
to vacate the premises.8 On appeal,
the RTC affirmed the decision of the
MCTC.9 chanroblesvirtuallawlibrary
Thereafter, respondents demanded
the petitioner to either pay rent,
purchase the area occupied, or
vacate the premises. DepEd did not
heed the demand and refused to
recognize the ownership of the
respondents over the property.10 chanroblesvirtuallawlibrary
On March 16, 2004, the
chanroblesvirtuallawlibrary respondents filed an action for
Recovery of Possession and/or Sum
of Money against the
DepEd.11 Respondents averred that
since their late father did not have
any immediate need of the land in
1965, he consented to the building
of the temporary structure and
allowed the conduct of classes in
the premises. They claimed that
they have been deprived of the use
and the enjoyment of the portion of
the land occupied by the school,
thus, they are entitled to just
chanroblesvirtuallawlibrary compensation and reasonable rent
for the use of property.12 chanroblesvirtuallawlibrary
In its Answer, the DepEd alleged
that it owned the subject property
because it was purchased by civic-
minded residents of Solana,
Cagayan from Cepeda. It further
alleged that contrary to witness to substantiate its only relief available is
respondents' claim that the defense.17chanroblesvirtuallawlibrary for the government to
occupation is by mere tolerance, pay due compensation
the property has always been Consequently, the RTC considered which should have
occupied and used adversely, the case submitted for decision and [been] done years
peacefully, continuously and in the rendered a Decision dated January ago.
concept of owner for almost forty 10, 2008, finding that the
(40) years.13 It insisted that the respondents are the owners of the 2.1 To determine due
respondents had lost whatever right subject property, thus: compensation for the
they had over the property through Solana North Central
laches.14
chanroblesvirtuallawlibrary
WHEREFORE, judgment is hereby School the basis
rendered. should be the price or
During the trial, respondents value of the property
presented, inter alia, the OCT No. 1. Declaring plaintiffs as at the time of taking.
O-627 registered in the name of the owner of Lot 115
Juan Cepeda; Tax Declarations also covered by Original 3. No pronouncement as
in his name and the tax receipts Certificate of Title No. to cost.
showing that they had been paying 0-627.
real property taxes on the property SO ORDERED.18 chanroblesvirtuallawlibrary

since 1965.15 They also presented 2. Ordering the

the Technical Description of the lot reconveyance of the
The DepEd, through the Office of
by the Department of Environment portion of the subject
the Solicitor General (OSG),
and Natural Resources Land property occupied by
appealed the case before the CA. In
Management Services showing that the Solana North
its appeal, the DepEd insisted that
the subject property was surveyed Central School,
the respondents have lost their
in the name of Cepeda and a Solana, Cagayan.
right over the subject property for
certification from the Municipal Trial However, since
their failure to assert the same for
Court of Solana, Cagayan declaring restoration of
more than thirty (30) years,
that Lot 115 was the subject of Cad possession of said
starting in 1965, when the Mayor
Case No. N-13 in LRC Cad. Record portion by the
placed the school in possession
No. N-200 which was adjudicated to defendant Department
thereof.19
Cepeda.16 of Education is no
chanroblesvirtuallawlibrary

chanroblesvirtuallawlibrary

longer feasible or
The CA then affirmed the decision
On the other hand, despite notice convenient because it
of the RTC. The dispositive portion
and reset of hearing, the DepEd is now used for the
of the said decision reads:
failed to present its evidence or school premises, the
WHEREFORE, the appeal is
DISMISSED, and the Decision dated
10 January 2008, of the Regional
Trial Court, Branch 5, Tuguegarao,
Cagayan in Civil Case No. 6336 for
Recovery of Possession and/or Sum
of Money, declaring plaintiffs as the
owners of the property in
controversy, and ordering the
Department of Education to pay
them the value of the property
taken is AFFIRMED in toto.
SO ORDERED.20
Aggrieved, the DepEd, through the
OSG, filed before this Court the
present petition based on the sole
ground that:
THE COURT OF APPEALS ERRED IN
AFFIRMING THE TRIAL COURT'S
DECISION THAT THE
RESPONDENTS' RIGHT TO
RECOVER THE POSSESSION OF
THE SUBJECT PROPERTY IS NOT
BARRED BY PRESCRIPTION AND/OR
LACHES.21
chanroblesvirtuallawlibrary
This Court finds the petition without
merit.
Laches, in a general sense, is the
failure or neglect for an
unreasonable and unexplained
chanroblesvirtuallawlibrary
length of time, to do that which, by
exercising due diligence, could or
should have been done earlier; it is
negligence or 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.22
chanroblesvirtuallawlibrary
There is no absolute rule as to what
constitutes laches or staleness of
demand; each case is to be
determined according to its
particular circumstances. The
question of laches is addressed to
the sound discretion of the court,
and since laches is an equitable
doctrine, its application is controlled
by equitable considerations. It
cannot work to defeat justice or to
perpetrate fraud and injustice.23 chanroblesvirtuallawlibrary
Laches is evidentiary in nature, a
fact that cannot be established by
mere allegations in the
pleadings.24 The following elements,
as prescribed in the case of Go Chi
Gun, et al. v. Co Cho, et al.,25 must
be present to constitute laches:
x x x (1) conduct on the part of the
defendant, or of one under whom
he claims, giving rise to the
situation of which complaint is
made for which the complaint seeks
a remedy; (2) delay in asserting
the complainant's rights, the
complainant having had knowledge
or notice, of the defendant's
conduct and having been afforded
an opportunity to institute a suit;
(3) lack of knowledge or notice on
the part of the defendant that the
complainant would assert the right
on which he bases his suit; and (4)
injury or prejudice to the defendant
in the event relief is accorded to the
complainant, or the suit is not held
to be barred.26chanrobleslaw
To refute the respondents' claim
that its possession of the subject lot
was merely tolerated, the DepEd
averred that it owned the subject
property because the land was
purchased by the civic-minded
residents of Solana.27 It further
alleged that since it was the then
Mayor who convinced Cepeda to
allow the school to occupy the
property and use the same, it
believed in good faith that the
ownership of the property was
already transferred to it.28
chanroblesvirtuallawlibrary
However, the DepEd did not
present, in addition to the deed of
sale, a duly-registered certificate of
title in proving the alleged transfer
or sale of the property. Aside from
its allegation, the DepEd did not
adduce any evidence to the transfer
of ownership of the lot, or that
Cepeda received any. consideration
for the purported sale.
On the other hand, to support their
claim of ownership of the subject
lot, respondents presented the
following: (1) the OCT No. 0-627
registered in the name of Juan
Cepeda;29 (2) Tax Declarations in
the name of Cepeda and the tax
receipts showing the payment of
the real property taxes on the
property since 1965;30 (3) Technical
Description of the lot by the
Department of Environment and
Natural Resources Land
Management Services, surveyed in
the name of Cepeda;31 and (4)
Certification from the Municipal
Trial Court of Solana, Cagayan
declaring that Lot 115 was
adjudicated to Cepeda.32 chanroblesvirtuallawlibrary
After a scrutiny of the records, this
Court finds that the above were
sufficient to resolve the issue on
who had better right of possession.
That being the case, it is the
burden of the DepEd to prove
otherwise. Unfortunately, the
DepEd failed to present any
evidence to support its claim that
the disputed land was indeed
purchased by the residents. By the
DepEd's admission, it was the fact
that the then Mayor of Solana,
Cagayan convinced Cepeda to allow
the school to occupy the property
for its school site that made it
believe that the ownership of the
property was already transferred to
it. We are not swayed by the
DepEd's arguments. As against the
DepEd's unsubstantiated self-
serving claim that it acquired the
property by virtue of a sale, the
Torrens title of respondents must
prevail.
It is undisputed that the subject
property is covered by OCT No. O-
627, registered in the name of the
Juan Cepeda.33 A fundamental
principle in land registration under
the Torrens system is that a
certificate of title serves as
evidence of an indefeasible and
incontrovertible title to the property
in favor of the person whose name
appears therein.34 Thus, the
certificate of title becomes the best
proof of ownership of a parcel of
land.35
chanroblesvirtuallawlibrary
As registered owners of the lots in
question, the respondents have a
right to eject any person illegally
occupying their property. This right
is imprescriptible. Even if it be
supposed that they were aware of
the petitioner's occupation of the
property, and regardless of the
length of that possession, the lawful
owners have a right to demand the
return of their property at any time
as long as the possession was
unauthorized or merely tolerated, if
at all. This right is never barred by
laches.36
chanroblesvirtuallawlibrary
Case law teaches that those who
occupy the land of another at the
latter's tolerance or permission,
without any contract between
them, are necessarily bound by an
implied promise that the occupants
will vacate the property upon
demand.37 chanroblesvirtuallawlibrary
In the case of Sarona, et al. v.
Villegas, et al.,38] this Court
described what tolerated acts
mean, in this language:
Professor Arturo M. Tolentino states
that acts merely tolerated are
"those which by reason of
neighborliness or familiarity, the
owner of property allows his
neighbor or another person to do
on the property; they are generally
those particular services or benefits
which one's property can give to
another without material injury or
prejudice to the owner,
who permits them out of
friendship or courtesy." x x x.
and, Tolentino continues, even
though "this is continued for a
long time, no right will be
acquired by prescription." x x
x39
chanrobleslaw
It was out of respect and courtesy
to the then Mayor who was a
distant relative that Cepeda
consented to the building of the
school.40 The occupancy of the
subject property by the DepEd to
conduct classes therein arose from
what Professor Arturo Tolentino
refers to as the sense of
"neighborliness or familiarity" of
Cepeda to the then Mayor that he
allowed the said occupation and use
of his property.
Professor Tolentino, as cited in
the Sarona case, adds that
tolerated acts are acts of little
disturbances which a person, in the
interest of neighborliness or
friendly relations, permits others to
do on his property, such as passing
over the land, tying a horse therein,
or getting some water from a
well.41 In tolerated acts, the said
permission of the owner for the acts
done in his property arises from an
"impulse of sense of neighborliness
or good familiarity with
persons"42 or out of "friendship or
courtesy,"43 and not out of duty or
obligation. By virtue of tolerance
that is considered as an
authorization, permission, or
license, acts of possession are
realized or performed.44chanroblesvirtuallawlibrary
Thus, in light of the DepEd's
admission that it was the then
Mayor who convinced Cepeda to
allow its use of his property and in
the absence of evidence that the
same was indeed sold to it, the
occupation and use as school site of
the subject lot by the DepEd upon
Cepeda's permission is considered a
tolerated act. Cepeda allowed the
use of his property out of his
respect, courtesy and familiarity
with the then Mayor who convinced
him to allow the use of his property
as a school site.
Considering that the occupation of
the subject lot is by mere tolerance
or permission of the respondents,
the DepEd, without any contract
between them, is bound by an
implied promise that it will vacate
the same upon demand. Hence,
until such demand to vacate was
communicated by the respondents
to the DepEd, respondents are not
required to do any act to recover
the subject land, precisely because
they knew of the nature of the
DepEd's possession which is by
mere tolerance.
Therefore, respondents are not
guilty of failure or neglect to assert
a right within a reasonable time.
The nature of that possession by
the DepEd has never changed from
1965 until the filing of the
complaint for forcible entry against
the respondents on June 21, 2001.
It was only then that the
respondents had knowledge of the
adverse claim of the DepEd over
the property. The respondents filed
the action for recovery of
possession on March 16, 2004 after
they lost their appeal in the forcible
entry case and upon the continued
refusal of the DepEd to pay rent,
purchase the lot or vacate the
premises.45chanroblesvirtuallawlibrary
Lastly, the DepEd maintains that
the respondents' inaction for more
than 30 years reduced their right to
recover the subject property into a
stale demand. It cited the case
of Eduarte v. CA,46Catholic Bishop
of Balanga v. CA,47 Mactan-Cebu
International Airport Authority
(MCIAA) v. Heirs of Marcelina L.
Sero, et al.48 and DepEd Division of
Alb ay v. Oñate49 to bolster its claim
that a registered owner may lose
his right to recover the possession
of his registered property by reason
of laches. It alleged that the fact
that the respondents possess the
certificate of title of the property is
of no moment since a registered
landowner, like the respondents,
lost their right to recover the
possession of the registered
property by reason of laches.
In the  Eduarte case, the
respondents therein knew of
Eduarte's adverse possession of the
subject lot as evidenced by their
Joint Affidavit dated March 18,
1959. In the case of Catholic
Bishop of Balanga v. CA, the
petitioner, by its own admission,
was aware of private respondent's
occupation in the concept of owner
of the lot donated in its behalf to
private respondent's predecessor-
in-interest in 1936. The subject lot
in the case of Mactan-Cebu
International Airport Authority was
obtained through expropriation
proceedings and registered in the
name of the petitioner. In the
Onate case, no evidence was
presented to show that the
respondent or his predecessor-in-
interest protested against the
adverse possession of the disputed
lot by the Municipality of Daraga
and, subsequently, by the
petitioner.
Unlike the cases cited by the
DepEd, there was no solid
evidentiary basis to establish that
laches existed in the instant case.
The DepEd failed to substantiate its
claim of possession in the concept
of an owner from the time it
occupied the lot after Cepeda
allowed it to use the same for a
school site in 1965. The possession
by the DepEd of the subject lot was
clearly by mere tolerance, since it
was not proven that it laid an
adverse claim over the property by
virtue of the purported sale.
Moreover, the trial court ruled that
the DepEd is a builder in good faith.
To be deemed a builder in good
faith, it is essential that a person
asserts title to the land on which he
builds, i.e., that he be a possessor
in the concept of owner, and that
he be unaware that there exists in
his title or mode of acquisition any
flaw which invalidates it.50 However,
there are cases where Article 448 of
the Civil Code was applied beyond
the recognized and limited
definition of good faith,  e.g., cases
wherein the builder has constructed
improvements on the land of
another with the consent of the
owner.51 The Court ruled therein
that the structures were built in
good faith in those cases that the
owners knew and approved of the
construction of improvements on
the property.52chanroblesvirtuallawlibrary
Despite being a possessor by mere
tolerance, the DepEd is considered
a builder in good faith, since
Cepeda permitted the construction
of building and improvements to
conduct classes on his property.
Hence, Article 448 may be applied
in the case at bar.
Article 448, in relation to Article
546 of the Civil Code, provides for
the rights of respondents as
landowners as against the DepEd, a
builder in good faith. The provisions
respectively read:
Article 448. The owner of the land
on which anything has been built,
sown or planted in good faith, shall
have the right to appropriate as his
own the works, sowing, or planting,
after payment of the indemnity
provided for in Articles 546 and
548, or to oblige the one who built
or planted to pay the price of the
land, and the one who sowed, the
proper rent. However, the builder
or planter cannot be obliged to buy
the land if its value is considerably
more than that of the building or
trees. In such case, he shall pay
reasonable rent, if the owner of the
land does not choose to appropriate
the building or trees after proper
indemnity. The parties shall agree
upon the terms of the lease and in
case of disagreement, the court
shall fix the terms thereof.
Article 546. Necessary expenses
shall be refunded to every
possessor; but only the possessor
in good faith may retain the thing
until he has been reimbursed
therefor.
Useful expenses shall be refunded
only to the possessor in good faith
with the same right of retention,
the person who has defeated him in
the possession having the option of
refunding the amount of the
expenses or of paying the increase
in value which the thing may have
acquired by reason thereof.
In the case of Bernardo v.
Bataclan,53 the Court explicated
that Article 448 provides a just and
equitable solution to the
impracticability of creating "forced
co-ownership" by giving the owner
of the land the option to acquire the
improvements after payment of the
proper indemnity or to oblige the
builder or planter to pay for the
land and the sower to pay the
proper rent.54 The owner of the land
is allowed to exercise the said
options because his right is older
and because, by the principle of
accession, he is entitled to the
ownership of the accessory
thing.55
chanroblesvirtuallawlibrary
Thus, the two options available to
the respondents as landowners are:
(a) they may appropriate the
improvements, after payment of
indemnity representing the value of
the improvements introduced and
the necessary and useful expenses
defrayed on the subject lots; or (b)
they may oblige the DepEd to pay
the price of the land. However, it is
also provided under Article 448 that
the builder cannot be obliged to buy
the land if its value is considerably
more than that of the
improvements and buildings. If that
is the case, the DepEd is not duty-
bound to pay the price of the land
should the value of the same be
considerably higher than the value
of the improvement introduced by
the DepEd on the subject property.
In which case, the law provides that
the parties shall agree on the terms
of the lease and, in case of
disagreement, the court shall fix
the terms thereof.
The RTC, as affirmed by the CA,
ruled that the option of the
landowner to appropriate after
payment of the indemnity
representing the value of the
improvements introduced and the
necessary and useful expenses
defrayed on the subject lots is no
longer feasible or convenient
because it is now being used as
school premises. Considering that
the appropriation of improvements
upon payment of indemnity
pursuant to Article 546 by the
respondents of the buildings being
used by the school is no longer
practicable and feasible, the
respondents are thus left with the
second option of obliging the DepEd
to pay the price of the land or to
require the DepEd to pay
reasonable rent if the value of the
land is considerably more than the
value of the buildings and
improvements.
Since the determination of the
value of the subject property is
factual in nature, this Court finds a
need to remand the case to the trial
court to determine its value. In
case the trial court determines that
the value of the land is considerably
more than that of the buildings and
improvements introduced, the
DepEd may not be compelled to pay
the value of the land, instead it
shall pay reasonable rent upon
agreement by the parties of the
terms of the lease. In the event of
a disagreement between the
parties, the trial court shall fix the
terms of lease.
Lastly, the RTC ruled that the basis
of due compensation for the
respondents should be the price or
value of the property at the time of
the taking. In the case of Ballatan
v. CA,56 the Court has settled that
the time of taking is determinative
of just compensation in
expropriation proceedings but not
in a case where a landowner has
been deprived of the use of a
portion of this land for years due to
the encroachment of another.57 chanroblesvirtuallawlibrary
In such instances, the case of Vda.
de Roxas v. Our Lady's Foundation,
Inc.58 is instructive. The Court
elucidated therein that the
computation of the value of the
property should be fixed at the
prevailing market value.59 The
reckoning period for valuing the
property in case the landowner
exercised his rights in accordance
with Article 448 shall be at the time
the landowner elected his
choice.60 Therefore, the basis for
the computation of the value of the
subject property in the instant case
should be its present or current fair
market value.
WHEREFORE, the Petition for
Review on Certiorari, dated June
18, 2010, of petitioner Department
of Education, represented by its
Regional Director, is
hereby DENIED. Accordingly, the
Decision dated April 29, 2010 of the
Court of Appeals in CA-G.R. CV No.
90633, affirming the Decision dated
January 10, 2008 of the Regional
Trial Court of Tuguegarao City,
Cagayan, Branch 5, which declared
the respondents the owners of
property in controversy, is
hereby AFFIRMED.
Accordingly, this case
is REMANDED to the court of
origin to determine the value of the
subject property. If the value of the
property is less than the value of
the buildings and improvements,
the Department of Education is
ordered to pay such amount. If the
value of the property is greater
than the value of the buildings and
improvements, the DepEd is
ordered to pay reasonable rent in
accordance with the agreement of
the parties. In case of
disagreement, the trial court shall
fix the amount of reasonable rent.
SO ORDERED. cralawlawlibrary
On 4 April 2006, the Court of Appeals
promulgated its decision, affirming
with modification the RTC Decision.
The dispositive portion of the Court of
Appeals Decision17 reads:
WHEREFORE, the instant petitions for
review are DENIED. And the Decision
dated January 8, 2002 of Branch 38 of
the Regional Trial Court of Dumaguete
City is hereby AFFIRMED with
MODIFICATION as regards the
dispositive portion only. Based on the
written report of Geodetic Engr. Suasin
categorically indentifying who among
herein petitioners are illegally
occupying a portion of Lot No. 6278-M,
the following petitioners are ordered
to vacate the premises and/or remove
the houses and/or cottages
constructed on Lot No. 6278-M within
thirty (30) days from finality of
judgment, namely: 1)Sps. Rogelio
Duran, 2) Sps. Romulo Vinalver, 3) Sps.
Marto Bati-on, 4) Sps. Salvador
Palongpalong, 5) Sps. Pablo Deciar, 6)
Sps. Sabas Kiskis, 7) Sps. Pio Tubat, Jr.
(first house – portion, second house–
inside), 8) Sps. Andres Tubat, 9) George
Tubat (portion), 10) Sps. Dodong Go,
11) Sps. Delano Bangay-Almagro
(portion), 12) Sps. Simeon Pachoro, 13)
Sps. Cipriano Tubat, 14) Sps. Jovito
Remolano and 15) Monica Orlina
(cottage–inside and house– portion).
Costs against petitioners.
SO ORDERED.18
In modifying the RTC Decision, the
Court of Appeals explained:
Lastly, the argument that the RTC
decision was "vague and indefinite" is
utterly bereft of merit. We have found
no reversible error in the appreciation
of the facts and in the application of
the law by the RTC which will warrant
the reversal of the questioned
decision. However, litigation must end
and terminate sometime and
somewhere, and it is essential to the
administration of justice that the
issues or causes therein should be laid
to rest. Hence, in keeping with this
principle, We modify the assailed
decision insofar as the dispositive
portion is concerned. It is our
considered view that there is no longer
a need to determine who among the
petitioners are builders in good faith or
not considering that it has been
established in the MTC that they knew
all along that the subject lot is a titled
property. As such, petitioners should
vacate and/or demolish the houses
and/or cottages they constructed on
Lot No. 6278-M as stated in the written
report of Geodetic Engineer Jorge S.
Suasin, Sr. Remanding this case to the
court of origin would not only unduly
prolong the resolution of the issues of
this case, but would also subject the
parties to unnecessary expenses.19
Hence, these consolidated petitions.
The Issue
The primary issue in this case is
whether the disputed portion of Lot
No. 6278-M is still private land or has
become foreshore land which forms
part of the public domain.
The Ruling of the Court
We find the petitions without merit.
Petitioners contend that the disputed
portion of Lot No. 6278-M is already
foreshore land. In fact, most of them
allegedly have foreshore lease permits
from the Department of Environment
and Natural Resources (DENR) on the
said foreshore land.
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:
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.20
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.21
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."22 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 Indeed, all the evidence supports the
high tide. Thus, the RTC concluded that conclusion that the disputed portion of
the said land is not foreshore land. On Lot No. 6278-M is not foreshore land
appeal, the Court of Appeals adopted but remains private land owned by
the findings and conclusion of the RTC respondents.
that the disputed land is not foreshore
land and that it remains as private land WHEREFORE, we DENY the petitions.
owned by respondents. We AFFIRM the 4 April 2006 Decision
and the 31 October 2006 Resolution of
We are in accord with the conclusion the Court of Appeals in CA-G.R. SP Nos.
of the Court of Appeals and the RTC 71237 and 71437.
that the disputed land is not foreshore
land. To qualify as foreshore land, it SO ORDERED.
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.23 The
land's proximity to the waters alone
does not automatically make it a
foreshore land.24
Thus, in Republic of the Philippines v.
Lensico,25 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.
G.R. No. 155650             July 20, 2006 Nos. 9091 and 2982 amended the MIAA some of the real estate tax already
Charter. due.
MANILA INTERNATIONAL AIRPORT
AUTHORITY, petitioner, As operator of the international On 28 June 2001, MIAA received Final
vs. airport, MIAA administers the land, Notices of Real Estate Tax Delinquency
COURT OF APPEALS, CITY OF improvements and equipment within from the City of Parañaque for the
PARAÑAQUE, CITY MAYOR OF the NAIA Complex. The MIAA Charter taxable years 1992 to 2001. MIAA's
PARAÑAQUE, SANGGUNIANG transferred to MIAA approximately real estate tax delinquency is broken
PANGLUNGSOD NG PARAÑAQUE, 600 hectares of land,3 including the down as follows:
CITY ASSESSOR OF PARAÑAQUE, and runways and buildings ("Airport Lands
CITY TREASURER OF and Buildings") then under the Bureau TAX
TAXABLE YEAR TAX DUE
PARAÑAQUE, respondents. of Air Transportation.4 The MIAA DECLARATION
Charter further provides that no E-016-01370 1992-2001 19,558,160.
DECISION portion of the land transferred to E-016-01374 1992-2001 111,689,424
MIAA shall be disposed of through sale
E-016-01375 1992-2001 20,276,058.
CARPIO, J.: or any other mode unless specifically
E-016-01376 1992-2001 58,144,028.
approved by the President of the
The Antecedents Philippines.5 E-016-01377 1992-2001 18,134,614.
E-016-01378 1992-2001 111,107,950
Petitioner Manila International Airport On 21 March 1997, the Office of the E-016-01379 1992-2001 4,322,340.0
Authority (MIAA) operates the Ninoy Government Corporate Counsel E-016-01380 1992-2001 7,776,436.0
Aquino International Airport (NAIA) (OGCC) issued Opinion No. 061. The *E-016-013-85 1998-2001 6,444,810.0
Complex in Parañaque City under OGCC opined that the Local
*E-016-01387 1998-2001 34,876,800.
Executive Order No. 903, otherwise Government Code of 1991 withdrew
known as the Revised Charter of the *E-016-01396 1998-2001 75,240.00
the exemption from real estate tax
Manila International Airport granted to MIAA under Section 21 of GRAND TOTAL P392,435,86
Authority ("MIAA Charter"). Executive the MIAA Charter. Thus, MIAA
Order No. 903 was issued on 21 July negotiated with respondent City of 1992-1997 RPT was paid on
1983 by then President Ferdinand E. Parañaque to pay the real estate tax Dec. 24, 1997 as per
Marcos. Subsequently, Executive Order imposed by the City. MIAA then paid O.R.#9476102 for
P4,207,028.75
 #9476101 for P28,676,480.00
#9476103 for P49,115.006
On 17 July 2001, the City of Parañaque,
through its City Treasurer, issued
notices of levy and warrants of levy on
the Airport Lands and Buildings. The
Mayor of the City of Parañaque
threatened to sell at public auction the
Airport Lands and Buildings should
MIAA fail to pay the real estate tax
delinquency. MIAA thus sought a
clarification of OGCC Opinion No. 061.
On 9 August 2001, the OGCC issued
Opinion No. 147 clarifying OGCC
Opinion No. 061. The OGCC pointed
out that Section 206 of the Local
Government Code requires persons
exempt from real estate tax to show
proof of exemption. The OGCC opined
that Section 21 of the MIAA Charter is
the proof that MIAA is exempt from
real estate tax.
On 1 October 2001, MIAA filed with
the Court of Appeals an original
petition for prohibition and injunction,
with prayer for preliminary injunction
or temporary restraining order. The
petition sought to restrain the City of
Parañaque from imposing real estate
tax on, levying against, and auctioning
for public sale the Airport Lands and
Buildings. The petition was docketed as
CA-G.R. SP No. 66878.
On 5 October 2001, the Court of
Appeals dismissed the petition because
MIAA filed it beyond the 60-day
reglementary period. The Court of
Appeals also denied on 27 September
2002 MIAA's motion for
reconsideration and supplemental
motion for reconsideration. Hence,
MIAA filed on 5 December 2002 the
present petition for review.7
Meanwhile, in January 2003, the City
of Parañaque posted notices of auction
sale at the Barangay Halls of Barangays
Vitalez, Sto. Niño, and Tambo,
Parañaque City; in the public market of
Barangay La Huerta; and in the main
lobby of the Parañaque City Hall. The
City of Parañaque published the
notices in the 3 and 10 January 2003
issues of the Philippine Daily Inquirer, a
newspaper of general circulation in the
Philippines. The notices announced the
public auction sale of the Airport Lands
and Buildings to the highest bidder on
7 February 2003, 10:00 a.m., at the
Legislative Session Hall Building of
Parañaque City.
A day before the public auction, or on
6 February 2003, at 5:10 p.m., MIAA
filed before this Court an Urgent Ex-
Parte and Reiteratory Motion for the
Issuance of a Temporary Restraining
Order. The motion sought to restrain
respondents — the City of Parañaque,
City Mayor of Parañaque, Sangguniang
Panglungsod ng Parañaque, City
Treasurer of Parañaque, and the City
Assessor of Parañaque ("respondents")
— from auctioning the Airport Lands
and Buildings.
On 7 February 2003, this Court issued a
temporary restraining order (TRO)
effective immediately. The Court
ordered respondents to cease and
desist from selling at public auction the
Airport Lands and Buildings.
Respondents received the TRO on the
same day that the Court issued it.
However, respondents received the
TRO only at 1:25 p.m. or three hours
after the conclusion of the public
auction.
On 10 February 2003, this Court issued
a Resolution confirming nunc pro
tunc the TRO.
On 29 March 2005, the Court heard
the parties in oral arguments. In
compliance with the directive issued
during the hearing, MIAA, respondent
City of Parañaque, and the Solicitor
General subsequently submitted their
respective Memoranda.
MIAA admits that the MIAA Charter
has placed the title to the Airport
Lands and Buildings in the name of
MIAA. However, MIAA points out that
it cannot claim ownership over these
properties since the real owner of the
Airport Lands and Buildings is the
Republic of the Philippines. The MIAA
Charter mandates MIAA to devote the
Airport Lands and Buildings for the
benefit of the general public. Since the
Airport Lands and Buildings are
devoted to public use and public
service, the ownership of these
properties remains with the State. The
Airport Lands and Buildings are thus
inalienable and are not subject to real
estate tax by local governments.
MIAA also points out that Section 21 of
the MIAA Charter specifically exempts
MIAA from the payment of real estate
tax. MIAA insists that it is also exempt
from real estate tax under Section 234
of the Local Government Code because
the Airport Lands and Buildings are
owned by the Republic. To justify the
exemption, MIAA invokes the principle
that the government cannot tax itself.
MIAA points out that the reason for tax
exemption of public property is that its
taxation would not inure to any public
advantage, since in such a case the tax
debtor is also the tax creditor.
Respondents invoke Section 193 of the
Local Government Code,
which expressly withdrew the tax
exemption privileges of "government-
owned and-controlled corporations"
upon the effectivity of the Local
Government Code. Respondents also
argue that a basic rule of statutory
construction is that the express
mention of one person, thing, or act
excludes all others. An international
airport is not among the exceptions
mentioned in Section 193 of the Local
Government Code. Thus, respondents
assert that MIAA cannot claim that the
Airport Lands and Buildings are exempt
from real estate tax.
Respondents also cite the ruling of this
Court in Mactan International Airport
v. Marcos8 where we held that the
Local Government Code has withdrawn
the exemption from real estate tax
granted to international airports.
Respondents further argue that since
MIAA has already paid some of the real
estate tax assessments, it is now
estopped from claiming that the
Airport Lands and Buildings are exempt
from real estate tax.
The Issue
This petition raises the threshold issue
of whether the Airport Lands and
Buildings of MIAA are exempt from
real estate tax under existing laws. If so
exempt, then the real estate tax
assessments issued by the City of
Parañaque, and all proceedings taken
pursuant to such assessments, are
void. In such event, the other issues
raised in this petition become moot.
The Court's Ruling
We rule that MIAA's Airport Lands and
Buildings are exempt from real estate
tax imposed by local governments.
First, MIAA is not a government-owned
or controlled corporation but
an instrumentality of the National
Government and thus exempt from
local taxation. Second, the real
properties of MIAA are owned by the
Republic of the Philippines and thus
exempt from real estate tax.
1. MIAA is Not a Government-Owned
or Controlled Corporation
Respondents argue that MIAA, being a
government-owned or controlled
corporation, is not exempt from real
estate tax. Respondents claim that the
deletion of the phrase "any
government-owned or controlled so
exempt by its charter" in Section
234(e) of the Local Government Code
withdrew the real estate tax
exemption of government-owned or
controlled corporations. The deleted
phrase appeared in Section 40(a) of
the 1974 Real Property Tax Code
enumerating the entities exempt from
real estate tax.
There is no dispute that a government-
owned or controlled corporation is not
exempt from real estate tax. However,
MIAA is not a government-owned or
controlled corporation. Section 2(13)
of the Introductory Provisions of the
Administrative Code of 1987 defines a
government-owned or controlled
corporation as follows:
SEC. 2. General Terms Defined.
–xxxx
(13) Government-owned or
controlled corporation refers to
any agency organized as a
stock or non-stock corporation,
vested with functions relating
to public needs whether
governmental or proprietary in
nature, and owned by the
Government directly or through
its instrumentalities either
wholly, or, where applicable as
in the case of stock
corporations, to the extent of
at least fifty-one (51) percent of
its capital stock: x x x.
(Emphasis supplied)
A government-owned or controlled
corporation must be "organized as a
stock or non-stock corporation." MIAA
is not organized as a stock or non-stock
corporation. MIAA is not a stock
corporation because it has no capital
stock divided into shares. MIAA has no
stockholders or voting shares. Section
10 of the MIAA Charter9 provides:
SECTION 10. Capital. — The
capital of the Authority to be
contributed by the National
Government shall be increased
from Two and One-half Billion
(P2,500,000,000.00) Pesos to
Ten Billion
(P10,000,000,000.00) Pesos to
consist of:
(a) The value of fixed assets
including airport facilities,
runways and equipment and
such other properties, movable
and immovable[,] which may
be contributed by the National
Government or transferred by
it from any of its agencies, the
valuation of which shall be
determined jointly with the
Department of Budget and
Management and the
Commission on Audit on the
date of such contribution or
 transfer after making due
allowances for depreciation
and other deductions taking
into account the loans and
other liabilities of the Authority
at the time of the takeover of
the assets and other properties;
(b) That the amount of P605
million as of December 31,
1986 representing about
seventy percentum (70%) of
the unremitted share of the
National Government from
1983 to 1986 to be remitted to
the National Treasury as
provided for in Section 11 of E.
O. No. 903 as amended, shall
be converted into the equity of
the National Government in the
Authority. Thereafter, the
Government contribution to
the capital of the Authority
shall be provided in the General
Appropriations Act.
Clearly, under its Charter, MIAA does
not have capital stock that is divided
into shares.
Section 3 of the Corporation
Code10 defines a stock corporation as
one whose "capital stock is divided
into shares and x x x authorized to
distribute to the holders of such
shares dividends x x x." MIAA has
capital but it is not divided into shares
of stock. MIAA has no stockholders or
voting shares. Hence, MIAA is not a
stock corporation.
MIAA is also not a non-stock
corporation because it has no
members. Section 87 of the
Corporation Code defines a non-stock
corporation as "one where no part of
its income is distributable as dividends
to its members, trustees or officers." A
non-stock corporation must have
members. Even if we assume that the
Government is considered as the sole
member of MIAA, this will not make
MIAA a non-stock corporation. Non-
stock corporations cannot distribute
any part of their income to their
members. Section 11 of the MIAA
Charter mandates MIAA to remit 20%
of its annual gross operating income to
the National Treasury.11 This prevents
MIAA from qualifying as a non-stock
corporation.
Section 88 of the Corporation Code
provides that non-stock corporations
are "organized for charitable, religious,
educational, professional, cultural,
recreational, fraternal, literary,
scientific, social, civil service, or similar
purposes, like trade, industry,
agriculture and like chambers." MIAA
is not organized for any of these
purposes. MIAA, a public utility, is
organized to operate an international
and domestic airport for public use.
Since MIAA is neither a stock nor a
non-stock corporation, MIAA does not
qualify as a government-owned or
controlled corporation. What then is
the legal status of MIAA within the
National Government?
MIAA is a government
instrumentality vested with corporate
powers to perform efficiently its
governmental functions. MIAA is like
any other government instrumentality,
the only difference is that MIAA is
vested with corporate powers. Section
2(10) of the Introductory Provisions of
the Administrative Code defines a
government "instrumentality" as
follows:
SEC. 2. General Terms Defined.
–– x x x x
 (10) Instrumentality refers to
any agency of the National
Government, not integrated
within the department
framework, vested with special
functions or jurisdiction by
law, endowed with some if not
all corporate powers,
administering special funds,
and enjoying operational
autonomy, usually through a
charter. x x x (Emphasis
supplied)
When the law vests in a government
instrumentality corporate powers, the
instrumentality does not become a
corporation. Unless the government
instrumentality is organized as a stock
or non-stock corporation, it remains a
government instrumentality exercising
not only governmental but also
corporate powers. Thus, MIAA
exercises the governmental powers of
eminent domain,12 police
authority13 and the levying of fees and
charges.14 At the same time, MIAA
exercises "all the powers of a
corporation under the Corporation
Law, insofar as these powers are not
inconsistent with the provisions of this
Executive Order."15
Likewise, when the law makes a
government
instrumentality operationally
autonomous, the instrumentality
remains part of the National
Government machinery although not
integrated with the department
framework. The MIAA Charter
expressly states that transforming
MIAA into a "separate and
16
autonomous body"  will make its
operation more "financially viable."17
Many government instrumentalities
are vested with corporate powers but
they do not become stock or non-stock
corporations, which is a necessary
condition before an agency or
instrumentality is deemed a of
government-owned or controlled
corporation. Examples are the Mactan
International Airport Authority, the
Philippine Ports Authority, the
University of the Philippines
and Bangko Sentral ng Pilipinas. All
these government instrumentalities
exercise corporate powers but they are
not organized as stock or non-stock
corporations as required by Section
2(13) of the Introductory Provisions of
the Administrative Code. These
government instrumentalities are
sometimes loosely called government
corporate entities. However, they are
not government-owned or controlled
corporations in the strict sense as
understood under the Administrative
Code, which is the governing law
defining the legal relationship and
status of government entities.
A government instrumentality like
MIAA falls under Section 133(o) of the
Local Government Code, which states:
SEC. 133. Common Limitations
on the Taxing Powers of Local
Government Units. – Unless
otherwise provided herein, the
exercise of the taxing powers
provinces, cities,
municipalities, and barangays
shall not extend to the levy of
the following:
xxxx
(o) Taxes, fees or charges of
any kind on the National
Government, its agencies and
instrumentalities and local
 government units.(Emphasis
and underscoring supplied)
Section 133(o) recognizes the basic
principle that local governments
cannot tax the national government,
which historically merely delegated to
local governments the power to tax.
While the 1987 Constitution now
includes taxation as one of the powers
of local governments, local
governments may only exercise such
power "subject to such guidelines and
limitations as the Congress may
provide."18
When local governments invoke the
power to tax on national government
instrumentalities, such power is
construed strictly against local
governments. The rule is that a tax is
never presumed and there must be
clear language in the law imposing the
tax. Any doubt whether a person,
article or activity is taxable is resolved
against taxation. This rule applies with
greater force when local governments
seek to tax national government
instrumentalities.
Another rule is that a tax exemption is
strictly construed against the taxpayer
claiming the exemption. However,
when Congress grants an exemption to
a national government instrumentality
from local taxation, such exemption is
construed liberally in favor of the
national government instrumentality.
As this Court declared in Maceda v.
Macaraig, Jr.:
The reason for the rule does
not apply in the case of
exemptions running to the
benefit of the government itself
or its agencies. In such case the
practical effect of an exemption
is merely to reduce the amount
of money that has to be
handled by government in the
course of its operations. For
these reasons, provisions
granting exemptions to
government agencies may be
construed liberally, in favor of
non tax-liability of such
agencies.19
There is, moreover, no point in
national and local governments taxing
each other, unless a sound and
compelling policy requires such
transfer of public funds from one
government pocket to another.
There is also no reason for local
governments to tax national
government instrumentalities for
rendering essential public services to
inhabitants of local governments. The
only exception is when the legislature
clearly intended to tax government
instrumentalities for the delivery of
essential public services for sound and
compelling policy considerations.
There must be express language in the
law empowering local governments to
tax national government
instrumentalities. Any doubt whether
such power exists is resolved against
local governments.
Thus, Section 133 of the Local
Government Code states that "unless
otherwise provided" in the Code, local
governments cannot tax national
government instrumentalities. As this
Court held in Basco v. Philippine
Amusements and Gaming
Corporation:
The states have no
power by taxation or
otherwise, to retard,
impede, burden or in
any manner control the
operation of
 constitutional laws
enacted by Congress to
carry into execution the
powers vested in the
federal government.
(MC Culloch v.
Maryland, 4 Wheat 316,
4 L Ed. 579)
This doctrine emanates from
the "supremacy" of the
National Government over local
governments.
"Justice Holmes,
speaking for the
Supreme Court, made
reference to the entire
absence of power on
the part of the States to
touch, in that way
(taxation) at least, the
instrumentalities of the
United States (Johnson
v. Maryland, 254 US 51)
and it can be agreed
that no state or political
subdivision can regulate
a federal 2. Airport Lands and Buildings of
instrumentality in such MIAA are Owned by the Republic
a way as to prevent it
from consummating its
federal responsibilities,
or even to seriously
burden it in the
accomplishment of
them." (Antieau,
Modern Constitutional
Law, Vol. 2, p. 140,
emphasis supplied)
Otherwise, mere creatures of
the State can defeat National
policies thru extermination of
what local authorities may
perceive to be undesirable
activities or enterprise using
the power to tax as "a tool for
regulation" (U.S. v. Sanchez,
340 US 42).
The power to tax which was
called by Justice Marshall as the
"power to destroy" (Mc Culloch
v. Maryland, supra) cannot be
allowed to defeat an
instrumentality or creation of
the very entity which has the
inherent power to wield it. 20
a. Airport Lands and Buildings are of
Public Dominion
The Airport Lands and Buildings of
MIAA are property of public dominion
and therefore owned by the State or
the Republic of the Philippines. The
Civil Code provides:
ARTICLE 419. Property is either
of public dominion or of private
ownership.
ARTICLE 420. The following
things are property of public
dominion:
(1) Those intended for public
use, such as roads, canals,
rivers, torrents, ports and
bridges constructed by the
State, banks, shores,
roadsteads, and others of
similar character;
(2) Those which belong to the
State, without being for public
use, and are intended for some
public service or for the
development of the national
wealth. (Emphasis supplied)
 ARTICLE 421. All other property
of the State, which is not of the
character stated in the
preceding article, is patrimonial
property.
ARTICLE 422. Property of public
dominion, when no longer
intended for public use or for
public service, shall form part
of the patrimonial property of
the State.
No one can dispute that properties of
public dominion mentioned in Article
420 of the Civil Code, like "roads,
canals, rivers, torrents, ports and
bridges constructed by the State," are
owned by the State. The term "ports"
includes seaports and airports. The
MIAA Airport Lands and Buildings
constitute a "port" constructed by the
State. Under Article 420 of the Civil
Code, the MIAA Airport Lands and
Buildings are properties of public
dominion and thus owned by the State
or the Republic of the Philippines.
The Airport Lands and Buildings are
devoted to public use because they
are used by the public for
international and domestic travel and
transportation. The fact that the MIAA
collects terminal fees and other
charges from the public does not
remove the character of the Airport
Lands and Buildings as properties for
public use. The operation by the
government of a tollway does not
change the character of the road as
one for public use. Someone must pay
for the maintenance of the road, either
the public indirectly through the taxes
they pay the government, or only
those among the public who actually
use the road through the toll fees they
pay upon using the road. The tollway
system is even a more efficient and
equitable manner of taxing the public
for the maintenance of public roads.
The charging of fees to the public does
not determine the character of the
property whether it is of public
dominion or not. Article 420 of the
Civil Code defines property of public
dominion as one "intended for public
use." Even if the government collects
toll fees, the road is still "intended for
public use" if anyone can use the road
under the same terms and conditions
as the rest of the public. The charging
of fees, the limitation on the kind of
vehicles that can use the road, the
speed restrictions and other conditions
for the use of the road do not affect
the public character of the road.
The terminal fees MIAA charges to
passengers, as well as the landing fees
MIAA charges to airlines, constitute
the bulk of the income that maintains
the operations of MIAA. The collection
of such fees does not change the
character of MIAA as an airport for
public use. Such fees are often termed
user's tax. This means taxing those
among the public who actually use a
public facility instead of taxing all the
public including those who never use
the particular public facility. A user's
tax is more equitable — a principle of
taxation mandated in the 1987
Constitution.21
The Airport Lands and Buildings of
MIAA, which its Charter calls the
"principal airport of the Philippines for
both international and domestic air
traffic,"22 are properties of public
dominion because they are intended
for public use. As properties of public
dominion, they indisputably belong to
the State or the Republic of the
Philippines.
b. Airport Lands and Buildings are
Outside the Commerce of Man
The Airport Lands and Buildings of
MIAA are devoted to public use and
thus are properties of public
dominion. As properties of public
dominion, the Airport Lands and
Buildings are outside the commerce of
man. The Court has ruled repeatedly
that properties of public dominion are
outside the commerce of man. As early
as 1915, this Court already ruled
in Municipality of Cavite v. Rojas that
properties devoted to public use are
outside the commerce of man, thus:
According to article 344 of the
Civil Code: "Property for public
use in provinces and in towns
comprises the provincial and
town roads, the squares,
streets, fountains, and public
waters, the promenades, and
public works of general service
supported by said towns or
provinces."
The said Plaza Soledad being a
promenade for public use, the
municipal council of Cavite
could not in 1907 withdraw or
exclude from public use a
portion thereof in order to
lease it for the sole benefit of
the defendant Hilaria Rojas. In
leasing a portion of said plaza
or public place to the
defendant for private use the
plaintiff municipality exceeded
its authority in the exercise of
its powers by executing a
contract over a thing of which it
could not dispose, nor is it
empowered so to do.
The Civil Code, article 1271,
prescribes that everything
which is not outside the
commerce of man may be the
object of a contract, and plazas
and streets are outside of this
commerce, as was decided by
the supreme court of Spain in
its decision of February 12,
1895, which says: "Communal
things that cannot be sold
because they are by their very
nature outside of commerce
are those for public use, such
as the plazas, streets, common
lands, rivers, fountains, etc."
(Emphasis supplied) 23
Again in Espiritu v. Municipal Council,
the Court declared that properties of
public dominion are outside the
commerce of man:
xxx Town plazas are properties
of public dominion, to be
devoted to public use and to be
made available to the public in
general. They are outside the
commerce of man and cannot
be disposed of or even leased
by the municipality to private
parties. While in case of war or
during an emergency, town
plazas may be occupied
temporarily by private
individuals, as was done and as
was tolerated by the
Municipality of Pozorrubio,
when the emergency has
ceased, said temporary
occupation or use must also
cease, and the town officials
should see to it that the town
plazas should ever be kept
open to the public and free
from encumbrances or illegal
private
constructions.24 (Emphasis
supplied)
The Court has also ruled that property
of public dominion, being outside the
commerce of man, cannot be the
subject of an auction sale.25
Properties of public dominion, being
for public use, are not subject to levy,
encumbrance or disposition through
public or private sale. Any
encumbrance, levy on execution or
auction sale of any property of public
dominion is void for being contrary to
public policy. Essential public services
will stop if properties of public
dominion are subject to
encumbrances, foreclosures and
auction sale. This will happen if the
City of Parañaque can foreclose and
compel the auction sale of the 600-
hectare runway of the MIAA for non-
payment of real estate tax.
Before MIAA can encumber26 the
Airport Lands and Buildings, the
President must first withdraw from
public use the Airport Lands and
Buildings. Sections 83 and 88 of the
Public Land Law or Commonwealth Act
No. 141, which "remains to this day
the existing general law governing the
classification and disposition of lands
of the public domain other than timber
and mineral lands,"27 provide:
SECTION 83. Upon the
recommendation of the
Secretary of Agriculture and
Natural Resources, the
President may designate by
proclamation any tract or tracts
of land of the public domain as
reservations for the use of the
Republic of the Philippines or of
any of its branches, or of the
inhabitants thereof, in
accordance with regulations
prescribed for this purposes, or
for quasi-public uses or
purposes when the public
interest requires it, including
reservations for highways,
rights of way for railroads,
hydraulic power sites, irrigation
systems, communal pastures or
lequas communales, public
parks, public quarries, public
fishponds, working men's
village and other improvements
for the public benefit.
SECTION 88. The tract or tracts
of land reserved under the
provisions of Section eighty-
three shall be non-
alienable and shall not be
subject to occupation, entry,
sale, lease, or other disposition
until again declared alienable
under the provisions of this
Act or by proclamation of the
President. (Emphasis and
underscoring supplied)
Thus, unless the President issues a
proclamation withdrawing the Airport
Lands and Buildings from public use,
these properties remain properties of
public dominion and are inalienable.
Since the Airport Lands and Buildings
are inalienable in their present status
as properties of public dominion, they
are not subject to levy on execution or
foreclosure sale. As long as the Airport
Lands and Buildings are reserved for
public use, their ownership remains
with the State or the Republic of the
Philippines.
The authority of the President to
reserve lands of the public domain for
public use, and to withdraw such
public use, is reiterated in Section 14,
Chapter 4, Title I, Book III of the
Administrative Code of 1987, which
states:
 SEC. 14. Power to Reserve
Lands of the Public and Private
Domain of the Government. —
(1) The President shall have
the power to reserve for
settlement or public use, and
for specific public purposes,
any of the lands of the public
domain, the use of which is
not otherwise directed by law.
The reserved land shall
thereafter remain subject to
the specific public purpose
indicated until otherwise
provided by law or
proclamation;
x x x x. (Emphasis supplied)
There is no question, therefore, that
unless the Airport Lands and Buildings
are withdrawn by law or presidential
proclamation from public use, they are
properties of public dominion, owned
by the Republic and outside the
commerce of man.
c. MIAA is a Mere Trustee of the
Republic
MIAA is merely holding title to the
Airport Lands and Buildings in trust for
the Republic. Section 48, Chapter 12,
Book I of the Administrative Code
allows instrumentalities like MIAA to
hold title to real properties owned by
the Republic, thus:
SEC. 48. Official Authorized to
Convey Real Property. —
Whenever real property of the
Government is authorized by
law to be conveyed, the deed
of conveyance shall be
executed in behalf of the
government by the following:
(1) For property belonging to
and titled in the name of the
Republic of the Philippines, by
the President, unless the
authority therefor is expressly
vested by law in another
officer.
(2) For property belonging to
the Republic of the Philippines
but titled in the name of any
political subdivision or of any
corporate agency or
instrumentality, by the
executive head of the agency or
instrumentality. (Emphasis
supplied)
In MIAA's case, its status as a mere
trustee of the Airport Lands and
Buildings is clearer because even its
executive head cannot sign the deed of
conveyance on behalf of the Republic.
Only the President of the Republic can
sign such deed of conveyance.28
d. Transfer to MIAA was Meant to
Implement a Reorganization
The MIAA Charter, which is a law,
transferred to MIAA the title to the
Airport Lands and Buildings from the
Bureau of Air Transportation of the
Department of Transportation and
Communications. The MIAA Charter
provides:
SECTION 3. Creation of the
Manila International Airport
Authority. — x x x x
The land where the Airport is
presently located as well as
the surrounding land area of
approximately six hundred
hectares, are hereby
transferred, conveyed and
assigned to the ownership and
administration of the
Authority, subject to existing
rights, if any. The Bureau of
Lands and other appropriate
government agencies shall
undertake an actual survey of
the area transferred within one
year from the promulgation of
this Executive Order and the
corresponding title to be issued
in the name of the
Authority. Any portion thereof
shall not be disposed through
sale or through any other
mode unless specifically
approved by the President of
the Philippines. (Emphasis
supplied)
SECTION 22. Transfer of
Existing Facilities and
Intangible Assets. — All
existing public airport facilities,
runways, lands, buildings and
other property, movable or
immovable, belonging to the
Airport, and all assets, powers,
rights, interests and
privileges belonging to the
Bureau of Air
Transportation relating to
airport works or air operations,
including all equipment which
are necessary for the operation
of crash fire and rescue
facilities, are hereby
transferred to the Authority.
(Emphasis supplied)
SECTION 25. Abolition of the
Manila International Airport as
a Division in the Bureau of Air
Transportation and Transitory
Provisions. — The Manila
International Airport including
the Manila Domestic Airport as
a division under the Bureau of
Air Transportation is hereby
abolished.
x x x x.
The MIAA Charter transferred the
Airport Lands and Buildings to MIAA
without the Republic receiving cash,
promissory notes or even stock since
MIAA is not a stock corporation.
The whereas clauses of the MIAA
Charter explain the rationale for the
transfer of the Airport Lands and
Buildings to MIAA, thus:
WHEREAS, the Manila
International Airport as the
principal airport of the
Philippines for both
international and domestic air
traffic, is required to provide
standards of airport
accommodation and service
comparable with the best
airports in the world;
WHEREAS, domestic and other
terminals, general aviation and
other facilities, have to be
upgraded to meet the current
and future air traffic and other
demands of aviation in Metro
Manila;
WHEREAS, a management and
organization study has
indicated that the objectives of
providing high standards of
accommodation and service
within the context of a
financially viable operation,
will best be achieved by a
separate and autonomous
body; and
WHEREAS, under Presidential
Decree No. 1416, as amended
by Presidential Decree No.
1772, the President of the
 Philippines is given continuing
authority to reorganize the
National Government, which
authority includes the creation
of new entities, agencies and
instrumentalities of the
Government[.] (Emphasis
supplied)
The transfer of the Airport Lands and
Buildings from the Bureau of Air
Transportation to MIAA was not meant
to transfer beneficial ownership of
these assets from the Republic to
MIAA. The purpose was merely
to reorganize a division in the Bureau
of Air Transportation into a separate
and autonomous body. The Republic
remains the beneficial owner of the
Airport Lands and Buildings. MIAA
itself is owned solely by the Republic.
No party claims any ownership rights
over MIAA's assets adverse to the
Republic.
The MIAA Charter expressly provides
that the Airport Lands and Buildings
"shall not be disposed through sale or
through any other mode unless
specifically approved by the President
of the Philippines." This only means
that the Republic retained the
beneficial ownership of the Airport
Lands and Buildings because under
Article 428 of the Civil Code, only the
"owner has the right to x x x dispose of
a thing." Since MIAA cannot dispose of
the Airport Lands and Buildings, MIAA
does not own the Airport Lands and
Buildings.
At any time, the President can transfer
back to the Republic title to the Airport
Lands and Buildings without the
Republic paying MIAA any
consideration. Under Section 3 of the
MIAA Charter, the President is the only
one who can authorize the sale or
disposition of the Airport Lands and
Buildings. This only confirms that the
Airport Lands and Buildings belong to
the Republic.
e. Real Property Owned by the
Republic is Not Taxable
Section 234(a) of the Local
Government Code exempts from real
estate tax any "[r]eal property owned
by the Republic of the Philippines."
Section 234(a) provides:
SEC. 234. Exemptions from Real
Property Tax. — The following
are exempted from payment
of the real property tax:
(a) Real property owned by the
Republic of the Philippines or
any of its political subdivisions
except when the beneficial use
thereof has been granted, for
consideration or otherwise, to
a taxable person;
x x x. (Emphasis supplied)
This exemption should be read in
relation with Section 133(o) of the
same Code, which prohibits local
governments from imposing "[t]axes,
fees or charges of any kind on the
National Government, its agencies
and instrumentalities x x x." The real
properties owned by the Republic are
titled either in the name of the
Republic itself or in the name of
agencies or instrumentalities of the
National Government. The
Administrative Code allows real
property owned by the Republic to be
titled in the name of agencies or
instrumentalities of the national
government. Such real properties
remain owned by the Republic and
continue to be exempt from real estate
tax.
The Republic may grant the beneficial
use of its real property to an agency or
instrumentality of the national
government. This happens when title
of the real property is transferred to an
agency or instrumentality even as the
Republic remains the owner of the real
property. Such arrangement does not
result in the loss of the tax exemption.
Section 234(a) of the Local
Government Code states that real
property owned by the Republic loses
its tax exemption only if the "beneficial
use thereof has been granted, for
consideration or otherwise, to
a taxable person." MIAA, as a
government instrumentality, is not a
taxable person under Section 133(o) of
the Local Government Code. Thus,
even if we assume that the Republic
has granted to MIAA the beneficial use
of the Airport Lands and Buildings,
such fact does not make these real
properties subject to real estate tax.
However, portions of the Airport Lands
and Buildings that MIAA leases to
private entities are not exempt from
real estate tax. For example, the land
area occupied by hangars that MIAA
leases to private corporations is
subject to real estate tax. In such a
case, MIAA has granted the beneficial
use of such land area for a
consideration to a taxable person and
therefore such land area is subject to
real estate tax. In Lung Center of the
Philippines v. Quezon City, the Court
ruled:
Accordingly, we hold that the
portions of the land leased to
private entities as well as those
parts of the hospital leased to
private individuals are not
exempt from such taxes. On the
other hand, the portions of the
land occupied by the hospital
and portions of the hospital
used for its patients, whether
paying or non-paying, are
exempt from real property
taxes.29
3. Refutation of Arguments of
Minority
The minority asserts that the MIAA is
not exempt from real estate tax
because Section 193 of the Local
Government Code of 1991 withdrew
the tax exemption of "all persons,
whether natural or juridical" upon the
effectivity of the Code. Section 193
provides:
SEC. 193. Withdrawal of Tax
Exemption Privileges – Unless
otherwise provided in this
Code, tax exemptions or
incentives granted to,
or presently enjoyed by all
persons, whether natural or
juridical, including
government-owned or
controlled corporations, except
local water districts,
cooperatives duly registered
under R.A. No. 6938, non-stock
and non-profit hospitals and
educational institutions are
hereby withdrawn upon
effectivity of this Code.
(Emphasis supplied)
The minority states that MIAA is
indisputably a juridical person. The
minority argues that since the Local
Government Code withdrew the tax
exemption of all juridical persons,
then MIAA is not exempt from real
estate tax. Thus, the minority declares:
 It is evident from the quoted
provisions of the Local
Government Code that the
withdrawn exemptions from
realty tax cover not just
GOCCs, but all persons. To
repeat, the provisions lay down
the explicit proposition that the
withdrawal of realty tax
exemption applies to all
persons. The reference to or
the inclusion of GOCCs is only
clarificatory or illustrative of
the explicit provision.
The term "All persons"
encompasses the two classes
of persons recognized under
our laws, natural and juridical
persons. Obviously, MIAA is
not a natural person. Thus, the
determinative test is not just
whether MIAA is a GOCC, but
whether MIAA is a juridical
person at all. (Emphasis and
underscoring in the original)
The minority posits that the
"determinative test" whether MIAA is
exempt from local taxation is its status
— whether MIAA is a juridical person
or not. The minority also insists that
"Sections 193 and 234 may be
examined in isolation from Section
133(o) to ascertain MIAA's claim of
exemption."
The argument of the minority is fatally
flawed. Section 193 of the Local
Government Code expressly withdrew
the tax exemption of all juridical
persons "[u]nless otherwise provided
in this Code." Now, Section 133(o) of
the Local Government Code expressly
provides otherwise,
specifically prohibiting local
governments from imposing any kind
of tax on national government
instrumentalities. Section 133(o)
states:
SEC. 133. Common Limitations
on the Taxing Powers of Local
Government Units. – Unless
otherwise provided herein, the
exercise of the taxing powers of
provinces, cities, municipalities,
and barangays shall not extend
to the levy of the following:
xxxx
(o) Taxes, fees or charges of
any kinds on the National
Government, its agencies and
instrumentalities, and local
government units. (Emphasis
and underscoring supplied)
By express mandate of the Local
Government Code, local governments
cannot impose any kind of tax on
national government instrumentalities
like the MIAA. Local governments are
devoid of power to tax the national
government, its agencies and
instrumentalities. The taxing powers of
local governments do not extend to
the national government, its agencies
and instrumentalities, "[u]nless
otherwise provided in this Code" as
stated in the saving clause of Section
133. The saving clause refers to Section
234(a) on the exception to the
exemption from real estate tax of real
property owned by the Republic.
The minority, however, theorizes that
unless exempted in Section 193 itself,
all juridical persons are subject to tax
by local governments. The minority
insists that the juridical persons
exempt from local taxation are limited
to the three classes of entities
specifically enumerated as exempt in
Section 193. Thus, the minority states:
 x x x Under Section 193, the
exemption is limited to (a) local
water districts; (b) cooperatives
duly registered under Republic
Act No. 6938; and (c) non-stock
and non-profit hospitals and
educational institutions. It
would be belaboring the
obvious why the MIAA does not
fall within any of the exempt
entities under Section 193.
(Emphasis supplied)
The minority's theory directly
contradicts and completely negates
Section 133(o) of the Local
Government Code. This theory will
result in gross absurdities. It will make
the national government, which itself
is a juridical person, subject to tax by
local governments since the national
government is not included in the
enumeration of exempt entities in
Section 193. Under this theory, local
governments can impose any kind of
local tax, and not only real estate tax,
on the national government.
Under the minority's theory, many
national government instrumentalities
with juridical personalities will also be
subject to any kind of local tax, and not
only real estate tax. Some of the
national government instrumentalities
vested by law with juridical
personalities are: Bangko Sentral ng
Pilipinas,30 Philippine Rice Research
Institute,31 Laguna Lake
Development Authority,32 Fisheries
Development Authority,33 Bases
Conversion Development
34
Authority,  Philippine Ports
35
Authority,  Cagayan de Oro Port
Authority,36 San Fernando Port
37 38
Authority,  Cebu Port Authority,  and
Philippine National Railways.39
The minority's theory violates Section
133(o) of the Local Government Code
which expressly prohibits local
governments from imposing any kind
of tax on national government
instrumentalities. Section 133(o) does
not distinguish between national
government instrumentalities with or
without juridical personalities. Where
the law does not distinguish, courts
should not distinguish. Thus, Section
133(o) applies to all national
government instrumentalities, with or
without juridical personalities. The
determinative test whether MIAA is
exempt from local taxation is not
whether MIAA is a juridical person, but
whether it is a national government
instrumentality under Section 133(o)
of the Local Government Code. Section
133(o) is the specific provision of law
prohibiting local governments from
imposing any kind of tax on the
national government, its agencies and
instrumentalities.
Section 133 of the Local Government
Code starts with the saving clause
"[u]nless otherwise provided in this
Code." This means that unless the
Local Government Code grants an
express authorization, local
governments have no power to tax the
national government, its agencies and
instrumentalities. Clearly, the rule is
local governments have no power to
tax the national government, its
agencies and instrumentalities. As an
exception to this rule, local
governments may tax the national
government, its agencies and
instrumentalities only if the Local
Government Code expressly so
provides.
The saving clause in Section 133 refers
to the exception to the exemption in
Section 234(a) of the Code, which
makes the national government
subject to real estate tax when it gives
the beneficial use of its real properties
to a taxable entity. Section 234(a) of
the Local Government Code provides:
SEC. 234. Exemptions from Real
Property Tax – The following
are exempted from payment of
the real property tax:
(a) Real property owned by the
Republic of the Philippines or
any of its political subdivisions
except when the beneficial use
thereof has been granted, for
consideration or otherwise, to a
taxable person.
x x x. (Emphasis supplied)
Under Section 234(a), real property
owned by the Republic is exempt from
real estate tax. The exception to this
exemption is when the government
gives the beneficial use of the real
property to a taxable entity.
The exception to the exemption in
Section 234(a) is the only instance
when the national government, its
agencies and instrumentalities are
subject to any kind of tax by local
governments. The exception to the
exemption applies only to real estate
tax and not to any other tax. The
justification for the exception to the
exemption is that the real property,
although owned by the Republic, is not
devoted to public use or public service
but devoted to the private gain of a
taxable person.
The minority also argues that since
Section 133 precedes Section 193 and
234 of the Local Government Code, the
later provisions prevail over Section
133. Thus, the minority asserts:
x x x Moreover, sequentially
Section 133 antecedes Section
193 and 234. Following an
accepted rule of construction,
in case of conflict the
subsequent provisions should
prevail. Therefore, MIAA, as a
juridical person, is subject to
real property taxes, the general
exemptions attaching to
instrumentalities under Section
133(o) of the Local Government
Code being qualified by
Sections 193 and 234 of the
same law. (Emphasis supplied)
The minority assumes that there is an
irreconcilable conflict between Section
133 on one hand, and Sections 193 and
234 on the other. No one has urged
that there is such a conflict, much less
has any one presenteda persuasive
argument that there is such a conflict.
The minority's assumption of an
irreconcilable conflict in the statutory
provisions is an egregious error for two
reasons.
First, there is no conflict whatsoever
between Sections 133 and 193
because Section 193 expressly admits
its subordination to other provisions of
the Code when Section 193 states
"[u]nless otherwise provided in this
Code." By its own words, Section 193
admits the superiority of other
provisions of the Local Government
Code that limit the exercise of the
taxing power in Section 193. When a
provision of law grants a power but
withholds such power on certain
matters, there is no conflict between
the grant of power and the
withholding of power. The grantee of
the power simply cannot exercise the
power on matters withheld from its
power.
Second, Section 133 is entitled
"Common Limitations on the Taxing
Powers of Local Government Units."
Section 133 limits the grant to local
governments of the power to tax, and
not merely the exercise of a delegated
power to tax. Section 133 states that
the taxing powers of local
governments "shall not extend to the
levy" of any kind of tax on the national
government, its agencies and
instrumentalities. There is no clearer
limitation on the taxing power than
this.
Since Section 133 prescribes the
"common limitations" on the taxing
powers of local governments, Section
133 logically prevails over Section 193
which grants local governments such
taxing powers. By their very meaning
and purpose, the "common
limitations" on the taxing power
prevail over the grant or exercise of
the taxing power. If the taxing power
of local governments in Section 193
prevails over the limitations on such
taxing power in Section 133, then local
governments can impose any kind of
tax on the national government, its
agencies and instrumentalities — a
gross absurdity.
Local governments have no power to
tax the national government, its
agencies and instrumentalities, except
as otherwise provided in the Local
Government Code pursuant to the
saving clause in Section 133 stating
"[u]nless otherwise provided in this
Code." This exception — which is an
exception to the exemption of the
Republic from real estate tax imposed
by local governments — refers to
Section 234(a) of the Code. The
exception to the exemption in Section
234(a) subjects real property owned by
the Republic, whether titled in the
name of the national government, its
agencies or instrumentalities, to real
estate tax if the beneficial use of such
property is given to a taxable entity.
The minority also claims that the
definition in the Administrative Code
of the phrase "government-owned or
controlled corporation" is not
controlling. The minority points out
that Section 2 of the Introductory
Provisions of the Administrative Code
admits that its definitions are not
controlling when it provides:
SEC. 2. General Terms Defined.
— Unless the specific words of
the text, or the context as a
whole, or a particular statute,
shall require a different
meaning:
xxxx
The minority then concludes that
reliance on the Administrative Code
definition is "flawed."
The minority's argument is a non
sequitur. True, Section 2 of the
Administrative Code recognizes that a
statute may require a different
meaning than that defined in the
Administrative Code. However, this
does not automatically mean that the
definition in the Administrative Code
does not apply to the Local
Government Code. Section 2 of the
Administrative Code clearly states that
"unless the specific words x x x of a
particular statute shall require a
different meaning," the definition in
Section 2 of the Administrative Code
shall apply. Thus, unless there is
specific language in the Local
Government Code defining the phrase
"government-owned or controlled
corporation" differently from the
definition in the Administrative Code,
the definition in the Administrative
Code prevails.
The minority does not point to any
provision in the Local Government
Code defining the phrase
"government-owned or controlled
corporation" differently from the
definition in the Administrative Code.
Indeed, there is none. The Local
Government Code is silent on the
definition of the phrase "government-
owned or controlled corporation." The
Administrative Code, however,
expressly defines the phrase
"government-owned or controlled
corporation." The inescapable
conclusion is that the Administrative
Code definition of the phrase
"government-owned or controlled
corporation" applies to the Local
Government Code.
The third whereas clause of the
Administrative Code states that the
Code "incorporates in a unified
document the major structural,
functional and procedural principles
and rules of governance." Thus, the
Administrative Code is the governing
law defining the status and
relationship of government
departments, bureaus, offices,
agencies and instrumentalities. Unless
a statute expressly provides for a
different status and relationship for a
specific government unit or entity, the
provisions of the Administrative Code
prevail.
The minority also contends that the
phrase "government-owned or
controlled corporation" should apply
only to corporations organized under
the Corporation Code, the general
incorporation law, and not to
corporations created by special
charters. The minority sees no reason
why government corporations with
special charters should have a capital
stock. Thus, the minority declares:
I submit that the definition of
"government-owned or
controlled corporations" under
the Administrative Code refer
to those corporations owned by
the government or its
instrumentalities which are
created not by legislative
enactment, but formed and
organized under the
Corporation Code through
registration with the Securities
and Exchange Commission. In
short, these are GOCCs without
original charters.
xxxx
It might as well be worth
pointing out that there is no
point in requiring a capital
structure for GOCCs whose full
ownership is limited by its
charter to the State or
Republic. Such GOCCs are not
empowered to declare
dividends or alienate their
capital shares.
The contention of the minority is
seriously flawed. It is not in accord
with the Constitution and existing
legislations. It will also result in gross
absurdities.
First, the Administrative Code
definition of the phrase "government-
owned or controlled corporation" does
not distinguish between one
incorporated under the Corporation
Code or under a special charter. Where
the law does not distinguish, courts
should not distinguish.
Second, Congress has created through
special charters several government-
owned corporations organized as stock
corporations. Prime examples are the
Land Bank of the Philippines and the
Development Bank of the Philippines.
The special charter40 of the Land Bank
of the Philippines provides:
SECTION 81. Capital. — The
authorized capital stock of the
Bank shall be nine billion pesos,
divided into seven hundred and
eighty million common shares
with a par value of ten pesos
each, which shall be fully
subscribed by the Government,
and one hundred and twenty
million preferred shares with a
par value of ten pesos each,
which shall be issued in
accordance with the provisions
of Sections seventy-seven and
eighty-three of this Code.
(Emphasis supplied)
Likewise, the special charter41 of the
Development Bank of the Philippines
provides:
SECTION 7. Authorized Capital
Stock – Par value. — The capital
stock of the Bank shall be Five
Billion Pesos to be divided into
Fifty Million common shares
with par value of P100 per
share. These shares are
available for subscription by the
National Government. Upon
the effectivity of this Charter,
the National Government shall
subscribe to Twenty-Five
Million common shares of stock
worth Two Billion Five Hundred
Million which shall be deemed
paid for by the Government
with the net asset values of the
Bank remaining after the
transfer of assets and liabilities
as provided in Section 30
hereof. (Emphasis supplied)
Other government-owned
corporations organized as stock
corporations under their special
charters are the Philippine Crop
Insurance Corporation,42 Philippine
International Trading
43
Corporation,  and the Philippine
National Bank44 before it was
reorganized as a stock corporation
under the Corporation Code. All these
government-owned corporations
organized under special charters as
stock corporations are subject to real
estate tax on real properties owned by
them. To rule that they are not
government-owned or controlled
corporations because they are not
registered with the Securities and
Exchange Commission would remove
them from the reach of Section 234 of
the Local Government Code, thus
exempting them from real estate tax.
Third, the government-owned or
controlled corporations created
through special charters are those that
meet the two conditions prescribed in
Section 16, Article XII of the
Constitution. The first condition is that
the government-owned or controlled
corporation must be established for
the common good. The second
condition is that the government-
owned or controlled corporation must
meet the test of economic viability.
Section 16, Article XII of the 1987
Constitution provides:
SEC. 16. The Congress shall not,
except by general law, provide
for the formation, organization,
 or regulation of private
corporations. Government-
owned or controlled
corporations may be created or
established by special charters
in the interest of the common
good and subject to the test of
economic viability. (Emphasis
and underscoring supplied)
The Constitution expressly authorizes
the legislature to create "government-
owned or controlled corporations"
through special charters only if these
entities are required to meet the twin
conditions of common good and
economic viability. In other words,
Congress has no power to create
government-owned or controlled
corporations with special charters
unless they are made to comply with
the two conditions of common good
and economic viability. The test of
economic viability applies only to
government-owned or controlled
corporations that perform economic or
commercial activities and need to
compete in the market place. Being
essentially economic vehicles of the
State for the common good —
meaning for economic development
purposes — these government-owned corporate powers provided these
or controlled corporations with special instrumentalities perform essential
charters are usually organized as stock government functions or public
corporations just like ordinary private services. However, when the
corporations. legislature creates through special
charters corporations that perform
In contrast, government economic or commercial activities,
instrumentalities vested with such entities — known as
corporate powers and performing "government-owned or controlled
governmental or public functions need corporations" — must meet the test of
not meet the test of economic viability. economic viability because they
These instrumentalities perform compete in the market place.
essential public services for the
common good, services that every This is the situation of the Land Bank of
modern State must provide its citizens. the Philippines and the Development
These instrumentalities need not be Bank of the Philippines and similar
economically viable since the government-owned or controlled
government may even subsidize their corporations, which derive their
entire operations. These income to meet operating expenses
instrumentalities are not the solely from commercial transactions in
"government-owned or controlled competition with the private sector.
corporations" referred to in Section 16, The intent of the Constitution is to
Article XII of the 1987 Constitution. prevent the creation of government-
owned or controlled corporations that
Thus, the Constitution imposes no cannot survive on their own in the
limitation when the legislature creates market place and thus merely drain
government instrumentalities vested the public coffers.
with corporate powers but performing
essential governmental or public Commissioner Blas F. Ople, proponent
functions. Congress has plenary of the test of economic viability,
authority to create government explained to the Constitutional
instrumentalities vested with
Commission the purpose of this test, as
follows:
MR. OPLE: Madam President,
the reason for this concern is
really that when the
government creates a phrase "ECONOMIC VIABILITY"
corporation, there is a sense in
which this corporation
becomes exempt from the test
of economic performance. We
know what happened in the
past. If a government
corporation loses, then it
makes its claim upon the
taxpayers' money through new
equity infusions from the
government and what is always
invoked is the common good.
That is the reason why this
year, out of a budget of P115
billion for the entire
government, about P28 billion
of this will go into equity
infusions to support a few
government financial
institutions. And this is all
taxpayers' money which could
have been relocated to agrarian
reform, to social services like
health and education, to
augment the salaries of grossly
underpaid public employees.
And yet this is all going down
the drain.
Therefore, when we insert the
together with the "common
good," this becomes a restraint
on future enthusiasts for state
capitalism to excuse
themselves from the
responsibility of meeting the
market test so that they
become viable. And so, Madam
President, I reiterate, for the
committee's consideration and
I am glad that I am joined in
this proposal by Commissioner
Foz, the insertion of the
standard of "ECONOMIC
VIABILITY OR THE ECONOMIC
TEST," together with the
common good.45
Father Joaquin G. Bernas, a leading
member of the Constitutional
Commission, explains in his textbook
The 1987 Constitution of the Republic
of the Philippines: A Commentary:
The second sentence was
added by the 1986
Constitutional Commission. The
significant addition, however, is
the phrase "in the interest of
the common good and subject
to the test of economic
viability." The addition includes
the ideas that they must show
capacity to function efficiently
in business and that they
should not go into activities
which the private sector can do
better. Moreover, economic
viability is more than financial
viability but also includes
capability to make profit and
generate benefits not
quantifiable in financial
terms.46 (Emphasis supplied)
Clearly, the test of economic viability
does not apply to government entities
vested with corporate powers and
performing essential public services.
The State is obligated to render
essential public services regardless of
the economic viability of providing
such service. The non-economic
viability of rendering such essential
public service does not excuse the
State from withholding such essential
services from the public.
However, government-owned or
controlled corporations with special
charters, organized essentially for
economic or commercial objectives,
must meet the test of economic
viability. These are the government-
owned or controlled corporations that
are usually organized under their
special charters as stock corporations,
like the Land Bank of the Philippines
and the Development Bank of the
Philippines. These are the government-
owned or controlled corporations,
along with government-owned or
controlled corporations organized
under the Corporation Code, that fall
under the definition of "government-
owned or controlled corporations" in
Section 2(10) of the Administrative
Code.
The MIAA need not meet the test of
economic viability because the
legislature did not create MIAA to
compete in the market place. MIAA
does not compete in the market place
because there is no competing
international airport operated by the
private sector. MIAA performs an
essential public service as the primary
domestic and international airport of
the Philippines. The operation of an
international airport requires the
presence of personnel from the
following government agencies:
1. The Bureau of Immigration
and Deportation, to document
the arrival and departure of
passengers, screening out
those without visas or travel
documents, or those with hold
departure orders;
2. The Bureau of Customs, to
collect import duties or enforce
the ban on prohibited
importations;
3. The quarantine office of the
Department of Health, to
enforce health measures
against the spread of infectious
diseases into the country;
4. The Department of
Agriculture, to enforce
measures against the spread of
plant and animal diseases into
the country;
5. The Aviation Security
Command of the Philippine
National Police, to prevent the
entry of terrorists and the
escape of criminals, as well as
to secure the airport premises
from terrorist attack or seizure;
6. The Air Traffic Office of the
Department of Transportation
and Communications, to
authorize aircraft to enter or
leave Philippine airspace, as
well as to land on, or take off
from, the airport; and
7. The MIAA, to provide the
proper premises — such as
runway and buildings — for the
government personnel,
passengers, and airlines, and to
manage the airport operations.
All these agencies of government
perform government functions
essential to the operation of an
international airport.
MIAA performs an essential public
service that every modern State must
provide its citizens. MIAA derives its
revenues principally from the
mandatory fees and charges MIAA
imposes on passengers and airlines.
The terminal fees that MIAA charges
every passenger are regulatory or
administrative fees47 and not income
from commercial transactions.
MIAA falls under the definition of a
government instrumentality under
Section 2(10) of the Introductory
Provisions of the Administrative Code,
which provides:
SEC. 2. General Terms Defined.
–xxxx
(10) Instrumentality refers to
any agency of the National
Government, not integrated
within the department
framework, vested with special
functions or jurisdiction by law,
endowed with some if not all
corporate powers,
administering special funds,
and enjoying operational
autonomy, usually through a
charter. x x x (Emphasis
supplied)
The fact alone that MIAA is endowed
with corporate powers does not make
MIAA a government-owned or
controlled corporation. Without a
change in its capital structure, MIAA
remains a government instrumentality
under Section 2(10) of the Introductory
Provisions of the Administrative Code.
More importantly, as long as MIAA
renders essential public services, it
need not comply with the test of
economic viability. Thus, MIAA is
outside the scope of the phrase
"government-owned or controlled
corporations" under Section 16, Article
XII of the 1987 Constitution.
The minority belittles the use in the
Local Government Code of the phrase
"government-owned or controlled
corporation" as merely "clarificatory or
illustrative." This is fatal. The 1987
Constitution prescribes explicit
conditions for the creation of
"government-owned or controlled
corporations." The Administrative
Code defines what constitutes a
"government-owned or controlled
corporation." To belittle this phrase as
"clarificatory or illustrative" is grave
error.
To summarize, MIAA is not a
government-owned or controlled
corporation under Section 2(13) of the
Introductory Provisions of the
Administrative Code because it is not
organized as a stock or non-stock
corporation. Neither is MIAA a
government-owned or controlled
corporation under Section 16, Article
XII of the 1987 Constitution because
MIAA is not required to meet the test
of economic viability. MIAA is a
government instrumentality vested
with corporate powers and performing
essential public services pursuant to
Section 2(10) of the Introductory
Provisions of the Administrative Code.
As a government instrumentality,
MIAA is not subject to any kind of tax
by local governments under Section
133(o) of the Local Government Code.
The exception to the exemption in
Section 234(a) does not apply to MIAA
because MIAA is not a taxable entity
under the Local Government Code.
Such exception applies only if the
beneficial use of real property owned
by the Republic is given to a taxable
entity.
Finally, the Airport Lands and Buildings
of MIAA are properties devoted to
public use and thus are properties of
public dominion. Properties of public
dominion are owned by the State or
the Republic. Article 420 of the Civil
Code provides:
Art. 420. The following things
are property of public
dominion:
(1) Those intended for public
use, such as roads, canals,
rivers, torrents, ports and
bridges constructed by the
State, banks, shores,
roadsteads, and others of
similar character;
(2) Those which belong to the
State, without being for public
use, and are intended for some
public service or for the
development of the national
wealth. (Emphasis supplied)
The term "ports x x x constructed by
the State" includes airports and
seaports. The Airport Lands and
Buildings of MIAA are intended for
public use, and at the very least
intended for public service. Whether
intended for public use or public
service, the Airport Lands and
Buildings are properties of public
dominion. As properties of public
dominion, the Airport Lands and
Buildings are owned by the Republic
and thus exempt from real estate tax
under Section 234(a) of the Local
Government Code.
4. Conclusion
Under Section 2(10) and (13) of the
Introductory Provisions of the
Administrative Code, which governs
the legal relation and status of
government units, agencies and offices
within the entire government
machinery, MIAA is a government
instrumentality and not a government-
owned or controlled corporation.
Under Section 133(o) of the Local
Government Code, MIAA as a
government instrumentality is not a
taxable person because it is not subject
to "[t]axes, fees or charges of any kind"
by local governments. The only
exception is when MIAA leases its real
property to a "taxable person" as
provided in Section 234(a) of the Local
Government Code, in which case the
specific real property leased becomes
subject to real estate tax. Thus, only
portions of the Airport Lands and
Buildings leased to taxable persons like
private parties are subject to real
estate tax by the City of Parañaque.
Under Article 420 of the Civil Code, the
Airport Lands and Buildings of MIAA,
being devoted to public use, are
properties of public dominion and thus
owned by the State or the Republic of
the Philippines. Article 420 specifically
mentions "ports x x x constructed by
the State," which includes public
airports and seaports, as properties of
public dominion and owned by the
Republic. As properties of public
dominion owned by the Republic,
there is no doubt whatsoever that the
Airport Lands and Buildings are
expressly exempt from real estate tax
under Section 234(a) of the Local
Government Code. This Court has also
repeatedly ruled that properties of
public dominion are not subject to
execution or foreclosure sale.
WHEREFORE, we GRANT the petition.
We SET ASIDE the assailed Resolutions
of the Court of Appeals of 5 October
2001 and 27 September 2002 in CA-
G.R. SP No. 66878. We DECLARE the
Airport Lands and Buildings of the
Manila International Airport
Authority EXEMPT from the real estate
tax imposed by the City of Parañaque.
We declare VOID all the real estate tax
assessments, including the final notices
of real estate tax delinquencies, issued
by the City of Parañaque on the Airport
Lands and Buildings of the Manila
International Airport Authority, except
for the portions that the Manila
International Airport Authority has
leased to private parties. We also
declare VOID the assailed auction sale,
and all its effects, of the Airport Lands
and Buildings of the Manila
International Airport Authority.

No costs.

SO ORDERED.
G.R. No. 179987               September 3,
2013
HEIRS OF MARIO MALABANAN,
(Represented by Sally A.
Malabanan), Petitioners,
vs.
REPUBLIC OF THE
PHILIPPINES, Respondent.
RESOLUTION
BERSAMIN, J.:
For our consideration and resolution
are the motions for reconsideration of
the parties who both assail the
decision promulgated on April 29,
2009, whereby we upheld the ruling of
the Court of Appeals (CA) denying the
application of the petitioners for the
registration of a parcel of land situated
in Barangay Tibig, Silang, Cavite on the
ground that they had not established
by sufficient evidence their right to the
registration in accordance with either
Section 14(1) or Section 14(2) of
Presidential Decree No. 1529 (Property
Registration Decree).
Antecedents
The property subject of the application
for registration is a parcel of land
situated in Barangay Tibig, Silang
Cavite, more particularly identified as
Lot 9864-A, Cad-452-D, with an area of
71,324-square meters. On February 20,
1998, applicant Mario Malabanan, who
had purchased the property from
Eduardo Velazco, filed an application
for land registration covering the
property in the Regional Trial Court
(RTC) in Tagaytay City, Cavite, claiming
that the property formed part of the
alienable and disposable land of the
public domain, and that he and his
predecessors-in-interest had been in
open, continuous, uninterrupted,
public and adverse possession and
occupation of the land for more than
30 years, thereby entitling him to the
judicial confirmation of his title.1
To prove that the property was an
alienable and disposable land of the
public domain, Malabanan presented
during trial a certification dated June
11, 2001 issued by the Community
Environment and Natural Resources
Office (CENRO) of the Department of
Environment and Natural Resources
(DENR), which reads:
This is to certify that the parcel of land
designated as Lot No. 9864 Cad 452-D,
Silang Cadastre as surveyed for Mr.
Virgilio Velasco located at Barangay
Tibig, Silang, Cavite containing an area
of 249,734 sq. meters as shown and
described on the Plan Ap-04-00952 is
verified to be within the Alienable or
Disposable land per Land Classification
Map No. 3013 established under
Project No. 20-A and approved as such
under FAO 4-1656 on March 15, 1982.2
After trial, on December 3, 2002, the
RTC rendered judgment granting
Malabanan’s application for land
registration, disposing thusly:
WHEREFORE, this Court hereby
approves this application for
registration and thus places under the
operation of Act 141, Act 496 and/or
P.D. 1529, otherwise known as
Property Registration Law, the lands
described in Plan Csd-04-0173123-D,
Lot 9864-A and containing an area of
Seventy One Thousand Three Hundred
Twenty Four (71,324) Square Meters,
as supported by its technical
description now forming part of the
record of this case, in addition to other
proofs adduced in the name of MARIO
MALABANAN, who is of legal age,
Filipino, widower, and with residence
at Munting Ilog, Silang, Cavite.
Once this Decision becomes final and
executory, the corresponding decree
of registration shall forthwith issue.
SO ORDERED.3
The Office of the Solicitor General
(OSG) appealed the judgment to the
CA, arguing that Malabanan had failed
to prove that the property belonged to
the alienable and disposable land of
the public domain, and that the RTC
erred in finding that he had been in
possession of the property in the
manner and for the length of time
required by law for confirmation of
imperfect title.
On February 23, 2007, the CA
promulgated its decision reversing the
RTC and dismissing the application for
registration of Malabanan. Citing the
ruling in Republic v. Herbieto
(Herbieto),4 the CA declared that under
Section 14(1) of the Property
Registration Decree, any period of
possession prior to the classification of
the land as alienable and disposable
was inconsequential and should be
excluded from the computation of the
period of possession. Noting that the
CENRO-DENR certification stated that
the property had been declared
alienable and disposable only on
March 15, 1982, Velazco’s possession
prior to March 15, 1982 could not be
tacked for purposes of computing
Malabanan’s period of possession.
Due to Malabanan’s intervening
demise during the appeal in the CA, his
heirs elevated the CA’s decision of
February 23, 2007 to this Court
through a petition for review on
certiorari.
The petitioners assert that the ruling in
Republic v. Court of Appeals and
Corazon Naguit5 (Naguit) remains the
controlling doctrine especially if the
property involved is agricultural land.
In this regard, Naguit ruled that any
possession of agricultural land prior to
its declaration as alienable and
disposable could be counted in the
reckoning of the period of possession
to perfect title under the Public Land
Act (Commonwealth Act No. 141) and
the Property Registration Decree. They
point out that the ruling in Herbieto, to
the effect that the declaration of the
land subject of the application for
registration as alienable and
disposable should also date back to
June 12, 1945 or earlier, was a mere
obiter dictum considering that the land
registration proceedings therein were
in fact found and declared void ab
initio for lack of publication of the
notice of initial hearing.
The petitioners also rely on the ruling
in Republic v. T.A.N. Properties, Inc.6 to
support their argument that the
property had been ipso jure converted
into private property by reason of the
open, continuous, exclusive and
notorious possession by their
predecessors-in-interest of an
alienable land of the public domain for
more than 30 years. According to
them, what was essential was that the
property had been "converted" into
private property through prescription
at the time of the application without
regard to whether the property sought
to be registered was previously
classified as agricultural land of the
public domain.
As earlier stated, we denied the
petition for review on certiorari
because Malabanan failed to establish
by sufficient evidence possession and
occupation of the property on his part
and on the part of his predecessors-in
interest since June 12, 1945, or earlier.
Petitioners’ Motion for
Reconsideration
In their motion for reconsideration, the
petitioners submit that the mere
classification of the land as alienable or
disposable should be deemed
sufficient to convert it into patrimonial
property of the State. Relying on the
rulings in Spouses De Ocampo v.
Arlos,7 Menguito v. Republic8 and
Republic v. T.A.N. Properties,
Inc.,9 they argue that the
reclassification of the land as alienable
or disposable opened it to acquisitive
prescription under the Civil Code; that
Malabanan had purchased the
property from Eduardo Velazco
believing in good faith that Velazco
and his predecessors-in-interest had
been the real owners of the land with
the right to validly transmit title and
ownership thereof; that consequently,
the ten-year period prescribed by
Article 1134 of the Civil Code, in
relation to Section 14(2) of the
Property Registration Decree, applied
in their favor; and that when
Malabanan filed the application for
registration on February 20, 1998, he
had already been in possession of the
land for almost 16 years reckoned
from 1982, the time when the land
was declared alienable and disposable
by the State.
The Republic’s Motion for Partial
Reconsideration
The Republic seeks the partial
reconsideration in order to obtain a
clarification with reference to the
application of the rulings in Naguit and
Herbieto.
Chiefly citing the dissents, the Republic
contends that the decision has
enlarged, by implication, the
interpretation of Section 14(1) of the
Property Registration Decree through
judicial legislation. It reiterates its view
that an applicant is entitled to
registration only when the land subject
of the application had been declared
alienable and disposable since June 12,
1945 or earlier.
Ruling
We deny the motions for
reconsideration.
In reviewing the assailed decision, we
consider to be imperative to discuss
the different classifications of land in
relation to the existing applicable land
registration laws of the Philippines.
Classifications of land according to
ownership
Land, which is an immovable
property,10 may be classified as either
of public dominion or of private
ownership.11 Land is considered of
public dominion if it either: (a) is
intended for public use; or (b) belongs
to the State, without being for public
use, and is intended for some public
service or for the development of the
national wealth.12 Land belonging to
the State that is not of such character,
or although of such character but no
longer intended for public use or for
public service forms part of the
patrimonial property of the
13
State.  Land that is other than part of
the patrimonial property of the State,
provinces, cities and municipalities is
of private ownership if it belongs to a
private individual.
Pursuant to the Regalian Doctrine (Jura
Regalia), a legal concept first
introduced into the country from the
West by Spain through the Laws of the
Indies and the Royal Cedulas, 14 all
lands of the public domain belong to
the State.15 This means that the State is
the source of any asserted right to
ownership of land, and is charged with
the conservation of such patrimony.16
All lands not appearing to be clearly
under private ownership are presumed
to belong to the State. Also, public
lands remain part of the inalienable
land of the public domain unless the
State is shown to have reclassified or
alienated them to private persons.17
Classifications of public lands
according to alienability
Whether or not land of the public
domain is alienable and disposable
primarily rests on the classification of
public lands made under the
Constitution. Under the 1935
18
Constitution,  lands of the public
domain were classified into three,
namely, agricultural, timber and
mineral.19 Section 10, Article XIV of the
1973 Constitution classified lands of
the public domain into seven,
specifically, agricultural, industrial or
commercial, residential, resettlement,
mineral, timber or forest, and grazing
land, with the reservation that the law
might provide other classifications. The
1987 Constitution adopted the
classification under the 1935
Constitution into agricultural, forest or
timber, and mineral, but added
national parks.20 Agricultural lands may
be further classified by law according
to the uses to which they may be
devoted.21 The identification of lands
according to their legal classification is
done exclusively by and through a
positive act of the Executive
Department.22
Based on the foregoing, the
Constitution places a limit on the type
of public land that may be alienated.
Under Section 2, Article XII of the 1987
Constitution, only agricultural lands of
the public domain may be alienated;
all other natural resources may not be.
Alienable and disposable lands of the
State fall into two categories, to wit:
(a) patrimonial lands of the State, or
those classified as lands of private
ownership under Article 425 of the
Civil Code,23 without limitation; and (b)
lands of the public domain, or the
public lands as provided by the
Constitution, but with the limitation
that the lands must only be
agricultural. Consequently, lands
classified as forest or timber, mineral,
or national parks are not susceptible of
alienation or disposition unless they
are reclassified as agricultural.24 A
positive act of the Government is
necessary to enable such
reclassification,25 and the exclusive
prerogative to classify public lands
under existing laws is vested in the
Executive Department, not in the
courts.26 If, however, public land will
be classified as neither agricultural,
forest or timber, mineral or national
park, or when public land is no longer
intended for public service or for the
development of the national wealth,
thereby effectively removing the land
from the ambit of public dominion, a
declaration of such conversion must be
made in the form of a law duly enacted
by Congress or by a Presidential
proclamation in cases where the
President is duly authorized by law to
that effect.27 Thus, until the Executive
Department exercises its prerogative
to classify or reclassify lands, or until
Congress or the President declares that
the State no longer intends the land to
be used for public service or for the
development of national wealth, the
Regalian Doctrine is applicable.
Disposition of alienable public lands
Section 11 of the Public Land Act (CA
No. 141) provides the manner by
which alienable and disposable lands
of the public domain, i.e., agricultural
lands, can be disposed of, to wit:
Section 11. Public lands suitable for
agricultural purposes can be disposed
of only as follows, and not otherwise:
(1) For homestead settlement;
(2) By sale;
(3) By lease; and
(4) By confirmation of
imperfect or incomplete titles;
(a) By judicial
legalization; or
(b) By administrative
legalization (free
patent).
The core of the controversy herein lies
in the proper interpretation of Section
11(4), in relation to Section 48(b) of
the Public Land Act, which expressly
requires possession by a Filipino citizen
of the land since June 12, 1945, or
earlier, viz:
Section 48. The following-described
citizens of the Philippines, occupying
lands of the public domain or claiming
to own any such lands or an interest
therein, but whose titles have not
been perfected or completed, may
apply to the Court of First Instance of
the province where the land is located
for confirmation of their claims and the
issuance of a certificate of title
thereafter, under the Land Registration
Act, to wit:
xxxx
(b) Those who by themselves or
through their predecessors-in-interest
have been in open, continuous,
exclusive, and notorious possession
and occupation of alienable and
disposable lands of the public domain,
under a bona fide claim of acquisition
of ownership, since June 12, 1945, or
earlier, immediately preceding the
filing of the applications for
confirmation of title, except when
prevented by war or force majeure.
These shall be conclusively presumed
to have performed all the conditions
essential to a Government grant and
shall be entitled to a certificate of title
under the provisions of this chapter.
(Bold emphasis supplied)
Note that Section 48(b) of the Public
Land Act used the words "lands of the
public domain" or "alienable and
disposable lands of the public domain"
to clearly signify that lands otherwise
classified, i.e., mineral, forest or
timber, or national parks, and lands of
patrimonial or private ownership, are
outside the coverage of the Public
Land Act. What the law does not
include, it excludes. The use of the
descriptive phrase "alienable and
disposable" further limits the coverage
of Section 48(b) to only the agricultural
lands of the public domain as set forth
in Article XII, Section 2 of the 1987
Constitution. Bearing in mind such
limitations under the Public Land Act,
the applicant must satisfy the following
requirements in order for his
application to come under Section
14(1) of the Property Registration
Decree,28 to wit:
1. The applicant, by himself or
through his predecessor-in-
interest, has been in possession
and occupation of the property
subject of the application;
2. The possession and
occupation must be open,
continuous, exclusive, and
notorious;
3. The possession and
occupation must be under a
bona fide claim of acquisition of
ownership;
4. The possession and
occupation must have taken
place since June 12, 1945, or
earlier; and
5. The property subject of the
application must be an
agricultural land of the public
domain.
Taking into consideration that the
Executive Department is vested with
the authority to classify lands of the
public domain, Section 48(b) of the
Public Land Act, in relation to Section
14(1) of the Property Registration
Decree, presupposes that the land
subject of the application for
registration must have been already
classified as agricultural land of the
public domain in order for the
provision to apply. Thus, absent proof
that the land is already classified as
agricultural land of the public domain,
the Regalian Doctrine applies, and
overcomes the presumption that the
land is alienable and disposable as laid
down in Section 48(b) of the Public
Land Act. However, emphasis is placed
on the requirement that the
classification required by Section 48(b)
of the Public Land Act is classification
or reclassification of a public land as
agricultural.
The dissent stresses that the
classification or reclassification of the
land as alienable and disposable
agricultural land should likewise have
been made on June 12, 1945 or earlier,
because any possession of the land
prior to such classification or
reclassification produced no legal
effects. It observes that the fixed date
of June 12, 1945 could not be
minimized or glossed over by mere
judicial interpretation or by judicial
social policy concerns, and insisted
that the full legislative intent be
respected.
We find, however, that the choice of
June 12, 1945 as the reckoning point of
the requisite possession and
occupation was the sole prerogative of
Congress, the determination of which
should best be left to the wisdom of
the lawmakers. Except that said date
qualified the period of possession and
occupation, no other legislative intent
appears to be associated with the
fixing of the date of June 12, 1945.
Accordingly, the Court should interpret
only the plain and literal meaning of
the law as written by the legislators.
Moreover, an examination of Section
48(b) of the Public Land Act indicates
that Congress prescribed no
requirement that the land subject of
the registration should have been
classified as agricultural since June 12,
1945, or earlier. As such, the
applicant’s imperfect or incomplete
title is derived only from possession
and occupation since June 12, 1945, or
earlier. This means that the character
of the property subject of the
application as alienable and disposable
agricultural land of the public domain
determines its eligibility for land
registration, not the ownership or title
over it.
Alienable public land held by a
possessor, either personally or through
his predecessors-in-interest, openly,
continuously and exclusively during the
prescribed statutory period is
converted to private property by the
mere lapse or completion of the
period.29 In fact, by virtue of this
doctrine, corporations may now
acquire lands of the public domain for
as long as the lands were already
converted to private ownership, by
operation of law, as a result of
satisfying the requisite period of
possession prescribed by the Public
Land Act.30 It is for this reason that the
property subject of the application of
Malabanan need not be classified as
alienable and disposable agricultural
land of the public domain for the
entire duration of the requisite period
of possession.
To be clear, then, the requirement that
the land should have been classified as
alienable and disposable agricultural
land at the time of the application for
registration is necessary only to
dispute the presumption that the land
is inalienable.
The declaration that land is alienable
and disposable also serves to
determine the point at which
prescription may run against the State.
The imperfect or incomplete title being
confirmed under Section 48(b) of the
Public Land Act is title that is acquired
by reason of the applicant’s possession
and occupation of the alienable and
disposable agricultural land of the
public domain. Where all the necessary
requirements for a grant by the
Government are complied with
through actual physical, open,
continuous, exclusive and public
possession of an alienable and
disposable land of the public domain,
the possessor is deemed to have
acquired by operation of law not only a
right to a grant, but a grant by the
Government, because it is not
necessary that a certificate of title be
issued in order that such a grant be
sanctioned by the courts.31
If one follows the dissent, the clear
objective of the Public Land Act to
adjudicate and quiet titles to
unregistered lands in favor of qualified
Filipino citizens by reason of their
occupation and cultivation thereof for
the number of years prescribed by
law32 will be defeated. Indeed, we
should always bear in mind that such
objective still prevails, as a fairly recent
legislative development bears out,
when Congress enacted legislation
(Republic Act No. 10023)33 in order to
liberalize stringent requirements and
procedures in the adjudication of
alienable public land to qualified
applicants, particularly residential
lands, subject to area limitations.34
On the other hand, if a public land is
classified as no longer intended for
public use or for the development of
national wealth by declaration of
Congress or the President, thereby
converting such land into patrimonial
or private land of the State, the
applicable provision concerning
disposition and registration is no
longer Section 48(b) of the Public Land
Act but the Civil Code, in conjunction
with Section 14(2) of the Property
Registration Decree.35 As such,
prescription can now run against the
State.
To sum up, we now observe the
following rules relative to the
disposition of public land or lands of
the public domain, namely:
(1) As a general rule and
pursuant to the Regalian
Doctrine, all lands of the public
domain belong to the State and
are inalienable. Lands that are
not clearly under private
ownership are also presumed
to belong to the State and,
therefore, may not be alienated
or disposed;
(2) The following are excepted
from the general rule, to wit:
(a) Agricultural lands of
the public domain are
rendered alienable and
disposable through any
of the exclusive modes
enumerated under
Section 11 of the Public
Land Act. If the mode is
judicial confirmation of
imperfect title under
Section 48(b) of the
Public Land Act, the
agricultural land subject
of the application needs
only to be classified as
alienable and disposable
as of the time of the
application, provided
the applicant’s
possession and
occupation of the land
dated back to June 12,
1945, or earlier.
Thereby, a conclusive
presumption that the
applicant has performed
all the conditions
essential to a Civil Code. If the mode
government grant
arises,36 and the
applicant becomes the
owner of the land by
virtue of an imperfect or
incomplete title. By
legal fiction, the land
has already ceased to
be part of the public
domain and has become
private property.37
(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
of acquisition is
prescription, whether
ordinary or
extraordinary, proof
that the land has been
 already converted to under Section 14(1) of the Property
private ownership prior Registration Decree. Likewise, the land
to the requisite continues to be ineligible for land
acquisitive prescriptive registration under Section 14(2) of the
period is a condition Property Registration Decree unless
sine qua non in Congress enacts a law or the President
observance of the law issues a proclamation declaring the
(Article 1113, Civil Code) land as no longer intended for public
that property of the service or for the development of the
State not patrimonial in national wealth.1âwphi1
character shall not be
the object of WHEREFORE, the Court DENIES the
prescription. petitioners' Motion for
Reconsideration and the respondent's
To reiterate, then, the petitioners Partial Motion for Reconsideration for
failed to present sufficient evidence to their lack of merit.
establish that they and their
predecessors-in-interest had been in SO ORDERED.
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
G.R. No. 188471 : April 20, 2010
FRANCISCO ALONSO, substituted by
MERCEDES V. ALONSO, TOMAS V.
ALONSO and ASUNCION V.
ALONSO, Petitioners, v. CEBU
COUNTRY CLUB, INC., Respondent,
REPUBLIC OF THE PHILIPPINES,
represented by the OFFICE OF THE
SOLICITOR GENERAL, Public
Respondent.
DECISION
BERSAMIN, J.:
By petition for review on certiorari, the
petitioners appeal the order dated
December 28, 2007 of the Regional
Trial Court (RTC), Branch 20, in Cebu
City, denying the motion for issuance
of writ of execution of the Office of the
Solicitor General (OSG) in behalf of the
Government, and the order dated April
24, 2009, denying their motion for
reconsideration filed against the first
order.
Antecedents
The antecedent facts are those
established in Alonso v. Cebu Country
Club,1cЃa which follow.
Petitioner Francisco M. Alonso
(Francisco) was the only son and sole
heir of the late spouses Tomas N.
Alonso and Asuncion Medalle.
Francisco died during the pendency of
this case,and was substituted by his
legal heirs, namely: his surviving
spouse, Mercedes V. Alonso, his son
Tomas V. Alonso (Tomas) and his
daughter Asuncion V. Alonso.2cЃa
In 1992, Francisco discovered
documents showing that his father
Tomas N. Alonso had acquired Lot No.
727 of the Banilad Friar Lands Estate
from the Government in or about the
year 1911; that the original vendee of
Lot No. 727 had assigned his sales
certificate to Tomas N. Alonso, who
had been consequently issued Patent
No. 14353; and that on March 27,
1926, the Director of Lands had
executed a final deed of sale in favor of
Tomas N. Alonso, but the final deed of
sale had not been registered with the
Register of Deeds because of lack of
requirements, like the approval of the
final deed of sale by the Secretary of
Agriculture and Natural Resources, as
required by law.3cräläwvirtualibräry
Francisco subsequently found that the
certificate of title covering Lot No. 727-
D-2 of the Banilad Friar Lands Estate
had been "administratively
reconstituted from the owner's
duplicate" of Transfer Certificate of
Title (TCT) No. RT-1310 in the name of
United Service Country Club, Inc., the
predecessor of respondent Cebu
Country Club, Inc (Cebu Country Club);
and that upon the order of the court
that had heard the petition for
reconstitution of the TCT, the name of
the registered owner in TCT No. RT-
1310 had been changed to that of
Cebu Country Club; and that the TCT
stated that the reconstituted title was
a transfer from TCT No. 1021.4cЃa
It is relevant to mention at this point
that the current TCT covering Lot 727-
D-2 in the name of Cebu Country Club
is TCT No. 94905, which was entered in
the land records of Cebu City on
August 8, 1985.5cräläwvirtualibräry
With his discoveries, Francisco formally
demanded upon Cebu Country Club to
restore the ownership and possession
of Lot 727-D-2 to him. However, Cebu
Country Club denied Francisco's
demand and claim of ownership, and
refused to deliver the possession to
him.6cräläwvirtualibräry
On September 25, 1992, Francisco
commenced against Cebu Country Club
in the RTC in Cebu City an action for
the declaration of nullity and non-
existence of deed/title, the
cancellation of certificates of title, and
the recovery of property. On
November 5, 1992, Cebu Country Club
filed its answer with
counterclaim.7cräläwvirtualibräry
On May 7, 1993, the RTC decided in
favor of Cebu Country Club.
Both parties appealed to the Court of
Appeals (CA), which ultimately
affirmed the RTC on March 31, 1997.
Thus, Francisco filed a motion for
reconsideration, which was denied on
October 2, 1997.8cЃa
Nothing daunted, Francisco appealed
to this Court (G.R. No. 130876).
On January 31, 2002, this Court
decided G.R. No. 130876, decreeing:
WHEREFORE, we DENY the petition for
review. However, we SET ASIDE the
decision of the Court of Appeals and
that of the Regional Trial Court, Cebu
City, Branch 08.
IN LIEU THEREOF, we DISMISS the
complaint and counterclaim of the
parties in Civil Cases No. CEB 12926 of
the trial court. We declare that Lot No.
727 D-2 of the Banilad Friar Lands
Estate covered by Original Certificate
of Title Nos. 251, 232, and 253 legally
belongs to the Government of the
Philippines.9
The petitioners sought a
reconsideration. On December 5, 2003,
however, the Court denied their
motion for
reconsideration.10cЃa Hence, the
decision in G.R. No. 130876 became
final and executory.
In late 2004, the Government, through
the OSG, filed in the RTC a motion for
the issuance of a writ of
execution.11cЃa Cebu Country Club
opposed the motion for the issuance
of a writ of execution in due course.
Later on, the proceedings on the OSG's
motion for the issuance of a writ of
execution at the instance of Cebu
Country Club in deference to the on-
going hearings being conducted by the
Committee on Natural Resources of
the House of Representatives on a
proposed bill to confirm the TCTs and
reconstituted titles covering the
Banilad Friar Lands Estate in Cebu
City.12cЃa The Congress ultimately
enacted a law to validate the TCTs and
reconstituted titles covering the
Banilad Friar Lands Estate in Cebu City.
This was Republic Act No.
9443,13cЃa effective on July 27, 2007.
Thereafter, both Cebu Country Club
and the OSG brought the passage of
R.A. No. 9443 to the attention of the
RTC for its consideration in resolving
the OSG's motion for the issuance of a
writ of execution.14cЃa On December
28, 2007, therefore, the RTC denied
the OSG's motion for the issuance of a
writ of execution through the first
appealed order.15cräläwvirtualibräry
The petitioners filed a motion for
reconsideration dated February 1,
2008, questioning the denial of the
OSG's motion for the issuance of a writ
of execution.16cЃa
Upon being directed by the RTC to
comment on the petitioners' motion
for reconsideration, the OSG
manifested in writing that the
Government was no longer seeking the
execution of the decision in G.R. No.
130876, subject to its reservation to
contest any other titles within the
Banilad Friar Lands Estate should clear
evidence show such titles as having
been obtained through
17
fraud. cräläwvirtualibräry
After the filing of the OSG's comment,
the RTC issued the second appealed
order, denying the petitioners' motion
for reconsideration, giving the
following reasons:
1. The party who had a direct interest
in the execution of the decision and
the reconsideration of the denial of the
motion for execution was the
Government, represented only by the
OSG; hence, the petitioners had no
legal standing to file the motion for
reconsideration, especially that they
were not authorized by the OSG for
that purpose;
2. R.A. No. 9443 "confirms and
declares as valid" all "existing" TCTs
and reconstituted titles; thereby, the
State in effect waived and divested
itself of whatever title or ownership
over the Banilad Friar Lands Estate in
favor of the registered owners thereof,
including Lot 727 D-2; and
3. The situation of the parties had
materially changed, rendering the
enforcement of the final and executory
judgment unjust, inequitable, and
impossible, because Cebu Country Club
was now recognized by the State itself
as the absolute owner of Lot 727 D-2.18
Hence, the petitioners appeal by
petition for review oncertiorari.
Contentions of the Petitioners
The petitioners challenge the orders
dated December 28, 2007 and April 29,
2009, because:
1. R.A. No. 9443 did not improve Cebu
Country Club's plight, inasmuch as R.A.
No. 9443 presupposed first a sales
certificate that lacked the required
signature, but Cebu Country Club did
not have such sales certificate.
Moreover, the titleholders were in fact
the owners of the lands covered by
their respective titles, which was not
true with Cebu Country Club due to its
being already adjudged with finality to
be not the owner of Lot 727-D-2.
Lastly, Cebu Country Club's title was
hopelessly defective, as found by the
Supreme Court itself;
2. The doctrine of law of the case
barred the application of R.A. No. 9443
to Cebu Country Club;
3. The RTC's declaration that R.A. No.
9443 confirmed Cebu Country Club as
the absolute owner of Lot 727-D-2
despite the prior and final judgment of
the Supreme Court that Cebu Country
Club was not the owner was
unconstitutional, because it virtually
allowed the legislative review of the
Supreme Court's decision rendered
against Cebu Country Club;
4. The use of R.A. No. 9443 as a waiver
on the part of the Government vis-à-
vis Cebu Country Club was not only
misplaced but downrightly repugnant
to Act 1120, the law governing the
legal disposition and alienation of Friar
Lands; and
5. The petitioners had the requisite
standing to question the patent errors
of the RTC, especially in the face of the
unholy conspiracy between the OSG
and Cebu Country Club, on the one
hand, and, on the other hand, the
passage of R.A. No. 9443 and DENR
Memorandum No. 16, both of which in
fact made their predecessor Tomas N.
Alonso's sales certificate and patent
valid.19
Issues
The Court confronts and resolves the
following issues, to wit:
1. Whether or not the petitioners were
the real parties-in-interest to question
the denial by the RTC of the
OSG's motion for the issuance of a writ
of execution;
2. Whether or not R.A. No. 9443 gave
the petitioners a legal interest to assail
the RTC's orders; and
3. Whether or not the petitioners can
appeal by petition for review
on certiorari in behalf of the OSG.
Ruling
The petition for review is denied due
course.
A. Preliminary Considerations:
Petitioners contravene the hierarchy of
courts, and the petition is fatally
defective
Before delving on the stated issues,
the Court notes that the petitioners
are guilty of two violations that
warrant the immediate dismissal of the
petition for review on certiorari.
The first refers to the petitioners'
breach of the hierarchy of courts by
coming directly to the Court to appeal
the assailed issuances of the RTC via
petition for review on certiorari. They
should not have done so, bypassing a
review by the Court of Appeals (CA),
because the hierarchy of courts is
essential to the efficient functioning of
the courts and to the orderly
administration of justice. Their non-
observance of the hierarchy of courts
has forthwith enlarged the docket of
the Court by one more case, which,
though it may not seem burdensome
to the layman, is one case too much to
the Court, which has to devote time
and effort in poring over the papers
submitted herein, only to discover in
the end that a review should have first
been made by the CA. The time and
effort could have been dedicated to
other cases of importance and impact
on the lives and rights of others.
The hierarchy of courts is not to be
lightly regarded by litigants. The CA
stands between the RTC and the Court,
and its establishment has been
precisely to take over much of the
work that used to be done by the
Court. Historically, the CA has been of
the greatest help to the Court in
synthesizing the facts, issues, and
rulings in an orderly and intelligible
manner and in identifying errors that
ordinarily might escape detection. The
Court has thus been freed to better
discharge its constitutional duties and
perform its most important work,
which, in the words of Dean Vicente G.
Sinco,20cЃa "is less concerned with the
decision of cases that begin and end
with the transient rights and
obligations of particular individuals but
is more intertwined with the direction
of national policies, momentous
economic and social problems, the
delimitation of governmental authority
and its impact upon fundamental
rights."21cräläwvirtualibräry
The need to elevate the matter first to
the CA is also underscored by the
reality that determining whether the
petitioners were real parties in interest
entitled to bring this appeal against the
denial by the RTC of the OSG's motion
for the issuance of a writ of
execution was a mixed question of fact
and law. As such, the CA was in the
better position to review and to
determine. In that regard, the
petitioners violate Section 1, Rule 45 of
the 1997 Rules of Civil Procedure,
which demands that an appeal by
petition for review on certiorari be
limited to questions of
law.22cräläwvirtualibräry
The second violation concerns the
omission of a sworn certification
against forum shopping from the
petition for review on certiorari.
Section 4, Rule 45 of the 1997 Rules of
Civil Procedure requires that the
petition for review should contain,
among others, the sworn certification
on the undertakings provided in the
last paragraph of Section 2, Rule 42 of
the 1997 Rules of Civil Procedure, viz:
Section 2. xxx
The petitioner shall also submit
together with the petition a
certification under oath that he has not
theretofore commenced any other
action involving the same issues in the
Supreme Court, the Court of Appeals
or different divisions thereof, or any
other tribunal or agency; if there is
such other action or proceeding, he
must state the status of the same; and
if he should thereafter learn that a
similar action or proceeding has been
filed or is pending before the Supreme
Court, the Court of Appeals, or
different divisions thereof, or any
other tribunal or agency, he
undertakes to promptly inform the
aforesaid courts and other tribunal or
agency thereof within five (5) days
therefrom. (n)
Only petitioner Tomas V. Alonso has
executed and signed the sworn
certification against forum shopping
attached to the petition. Although
neither of his co-petitioners –
Mercedes V. Alonso and Asuncion V.
Alonso – has joined the certification,
Tomas did not present any written
express authorization in his favor
authorizing him to sign the certification
in their behalf. The signing of the
certification by only one of the
petitioners could not be presumed to
reflect the personal knowledge by his
co-petitioners of the filing or non-filing
of any similar action or
23
claim. cЃa Hence, the failure of
Mercedes and Asuncion to sign and
execute the certification along with
Tomas warranted the dismissal of their
petition.24cräläwvirtualibräry
B. Petitioners are not proper parties
to appeal and assail the order of the
RTC
The petitioners are relentless in
insisting that their claim to Lot No.
727-D-2 of the Banilad Friar Lands
Estate should be preferred to that of
Cebu Country Club, despite the final
judgment in G.R. No. 130876 being
adverse to their claim. Their insistence
raises the need to resolve once and for
all whether or not the petitioners
retained any legal right to assert over
Lot No. 727-D-2 following the
Government's manifest desistance
from the execution of the judgment in
G.R. No. 130876 against Cebu Country
Club.
The above-noted defects of the
petition for review notwithstanding,
therefore, the Court has now to
address and resolve the stated issues
on the sole basis of the results the
Court earlier reached in G.R. No.
130876. In this regard, whether or not
the petitioners are the proper parties
to bring this appeal is decisive.
After careful consideration, the Court
finds that the cause of the petitioners
instantly fails.
In G.R. No. 130876, the Court found
that the petitioners did not validly
acquire ownership of Lot No. 727-D-2,
and declared that Lot No. 727 D-2
legally belonged to the Government,
thus:
The second issue is whether the Court
of Appeals erred in ruling that the
Cebu Country Club, Inc. is owner of Lot
No. 727.
Admittedly,neither petitioners nor
their predecessor had any title to the
land in question. The most that
petitioners could claim was that the
Director of Lands issued a sales patent
in the name of Tomas N. Alonso. The
sales patent, however, and even the
corresponding deed of salewere not
registered with the Register of Deeds
and no title was ever issued in the
name of the latter. This is because
there were basic requirements not
complied with, the most important of
which was that the deed of sale
executed by the Director of Lands was
not approved by the Secretary of
Agriculture and Natural
Resources. Hence, the deed of sale
was void. "Approval by the Secretary
of Agriculture and Commerce is
indispensable for the validity of the
sale." Moreover, Cebu Country Club,
Inc. was in possession of the land since
1931, and had been paying the real
estate taxes thereon based on tax
declarations in its name with the title
number indicated thereon. Tax
receipts and declarations of ownership
for taxation purposes are strong
evidence of ownership. This Court has
ruled that although tax declarations or
realty tax payments are not conclusive
evidence of ownership, nevertheless,
they are good indicia of possession in
the concept of owner for no one in his
right mind will be paying taxes for a
property that is not in his actual or
constructive possession.
Notwithstanding this fatal defect, the
Court of Appeals ruled that "there was
substantial compliance with the
requirement of Act No. 1120 to validly
convey title to said lot to Tomas N.
Alonso."
On this point, the Court of Appeals
erred.
Under Act No. 1120, which governs the
administration and disposition of friar
lands, the purchase by an actual and
bona fide settler or occupant of any
portion of friar land shall be "agreed
upon between the purchaser and the
Director of Lands, subject to the
approval of the Secretary of
Agriculture and Natural
Resources (mutatis mutandis)."
In his Memorandum filed on May 25,
2001, the Solicitor General submitted
to this Court certified copies of Sale
Certificate No. 734, in favor of Leoncio
Alburo, and Assignment of Sale
Certificate No. 734, in favor of Tomas
N. Alonso. Conspicuously, both
instruments do not bear the signature
of the Director of Lands and the
Secretary of the Interior. They also do
not bear the approval of the Secretary
of Agriculture and Natural Resources.
Only recently, in Jesus P. Liao v. Court
of Appeals, the Court has ruled
categorically that approval by the
Secretary of Agriculture and
Commerce of the sale of friar lands is
indispensable for its validity, hence,
the absence of such approval made the
sale null and void ab-
initio. Necessarily, there can be no
valid titles issued on the basis of such
sale or assignment. Consequently,
petitioner Francisco's father did not
have any registerable title to the land
in question. Having none, he could
not transmit anything to his sole heir,
petitioner Francisco Alonso or the
latter's heirs.
In a vain attempt at showing that he
had succeeded to the estate of his
father, on May 4, 1991, petitioner
Francisco Alonso executed an affidavit
adjudicating the entire estate to
himself (Exh. "Q"),duly published in a
newspaper of general circulation in the
province and city of Cebu (Exh. "Q-1").
Such affidavit of self-adjudication is
inoperative, if not void, not only
because there was nothing to
adjudicate, but equally important
because petitioner Francisco did not
show proof of payment of the estate
tax and submit a certificate of
clearance from the Commissioner of
Internal Revenue. Obviously, petitioner
Francisco has not paid the estate taxes.
Consequently, we rule that neither
Tomas N. Alonso nor his son Francisco
M. Alonso or the latter's heirs are the
lawful owners of Lot No. 727 in
dispute. xxx.25cräläwvirtualibräry
The pronouncement in G.R. No.
130876 renders beyond dispute that
the non-execution of the judgment
would not adversely affect the
petitioners, who now hold no right
whatsoever in Lot No. 727-D-2.
Otherwise put, they are not the proper
parties to assail the questioned orders
of the RTC, because they stand to
derive nothing from the execution of
the judgment against Cebu Country
Club.
Every action must be prosecuted or
defended in the name of the real party
in interest, unless otherwise
authorized by law or the rules.26cЃa A
real party in interest is one who stands
to be benefited or injured by the
judgment in the suit, or the party
entitled to the avails of the
suit.27cЃa "Interest" within the meaning
of the rule means material interest, an
interest in issue and to be affected by
the decree, as distinguished from mere
interest in the question involved, or a
mere incidental interest. The rule
refers to a real or present substantial
interest, as distinguished from a mere
expectancy; or from a future,
contingent, subordinate, or
28
consequential interest. cЃa One
having no right or interest to protect
cannot invoke the jurisdiction of the
court as a party-plaintiff in an
action.29cЃa
Thus, an appeal, like this one, is an
action to be prosecuted by a party in
interest before a higher court. In order
for the appeal to prosper, the litigant
must of necessity continue to hold a
real or present substantial interest that
entitles him to the avails of the suit on
appeal. If he does not, the appeal, as
to him, is an exercise in futility. So it is
with the petitioners!
In contrast, the Government, being the
legal owner of Lot No. 727-D-2, is the
only party adversely affected by the
denial, and is the proper party entitled
to assail the denial.30cЃa However, its
manifest desistance from the
execution of the decision effectively
barred any challenge against the
denial, for its non-appeal rendered the
denial final and immutable.
C. R.A. No. 9443 gives petitioners no
legal interest to assail the denial of
the motion for execution
Section 1 of R.A. No. 9443 provides:
Section 1. All existing Transfer
Certificates of Title and Reconstituted
Certificates of Title duly issued by the
Register of Deeds of Cebu Province
and/or Cebu City covering any portion
of the Banilad Friar Lands Estate,
notwithstanding the lack of signatures
and/or approval of the then Secretary
of Interior (later Secretary of
Agriculture and Natural Resources)
and/or the then Chief of the Bureau of
Public Lands (later Director of Public
Lands) in the copies of the duly
executed Sale Certificates and
Assignments of Sale Certificates, as the
case may be, now on file with the
Community Environment and Natural
Resources Office (CENRO), Cebu
City, are hereby declared as valid titles
and the registered owners recognized
as absolute owners thereof.
The law expressly declares as valid
"(a)ll existing Transfer Certificates of
Title and Reconstituted Certificates of
Title duly issued by the Register of
Deeds of Cebu Province and/or Cebu
City covering any portion of the
Banilad Friar Lands Estate," and
recognizes the registered ownersas
absolute owners. To benefit from R.A.
No. 9443, therefore, a person must
hold as a condition precedent a duly
issued Transfer Certificate of Title or a
Reconstituted Certificate of Title.
Although Lot 727-D-2 was earlier
declared to be owned by the
Government in G.R. No. 130876, R.A.
No. 9443 later validated Cebu Country
Club's registered ownership due to its
holding of TCT No. RT-1310 (T-11351)
in its own name. As the OSG explained
in its manifestation in lieu of
comment31cЃa (filed in the RTC vis-à-vis
the petitioners' motion for
reconsideration against the RTC's
denial of the OSG's motion for issuance
of a writ of execution), the enactment
of R.A. No. 9443 had "mooted the final
and executory Decision of the Supreme
Court in "Alonso v. Cebu Country Club,
Inc.," docketed as G.R. No. 130876,
which declared the Government as the
owner of Lot 727-D-2 based on the
absence of signature and approval of
the then Secretary of Interior;" and
that the decision in G.R. No. 130876
had "ceased to have any practical
effect" as the result of the enactment
of R.A. No. 9443, and had thereby
become
"academic."32cräläwvirtualibräry
On the other hand, the petitioners
could not benefit from R.A. No. 9443
because of their non-compliance with
the express condition of holding any
Transfer Certificate of Title or
Reconstituted Certificate of Title
respecting Lot 727-D-2 or any portion
thereof.
The appropriate recourse for the
petitioners, if they persist in the belief
that the TCT of Cebu Country Club
should be nullified, is to compel the
OSG through the special civil action for
mandamus to commence the action to
annul on the ground that Cebu Country
Club had obtained its title to Lot 7217-
D-2 through fraud. Yet, that recourse is
no longer availing, for the decision in
G.R. No. 130876 explicitly found and
declared that the reconstituted title of
Cebu Country Club had not been
obtained through fraud. Said the
Court:
On the question that TCT No. RT-1310
(T-11351) bears the same number as
another title to another land, we agree
with the Court of Appeals that there is
nothing fraudulent with the fact that
Cebu Country Club, Inc.'s
reconstituted title bears the same
number as the title of another parcel
of land. This came about because
under General Land Registration Office
(GLRO) Circular No. 17, dated February
19, 1947, and Republic Act No. 26 and
Circular No. 6, RD 3, dated August
5, 1946, which were in force at the
time the title was reconstituted on July
26, 1948, the titles issued before the
inauguration of the Philippine Republic
were numbered consecutively and the
titles issued after the inauguration
were numbered also consecutively
starting with No. 1, so that eventually,
the titles issued before the
inauguration were duplicated by titles
issued after the inauguration of the
Philippine Republic. 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 executed on March 27,
1926 by the Director of Lands was not
approved by the Secretary of
Agriculture and Natural Resources and
could not be registered. "Under the
law, it is the act of registration of the
deed of conveyance that serves as the
operative act to convey the land
registered under the Torrens system.
The act of registration creates
constructive notice to the whole world
of the fact of such conveyance." On
this point, petitioner alleges that Cebu
Country Club, Inc. obtained its title by
fraud in connivance with personnel of
the Register of Deeds in 1941 or in
1948, when the title was
administratively
reconstituted. Imputations of fraud
must be proved by clear and
convincing evidence. Petitioner failed
to adduce evidence of fraud. In an
action for re-conveyance based on
fraud, he who charges fraud must
prove such fraud in obtaining a
title. "In this jurisdiction, fraud is
never presumed." The strongest
suspicion cannot sway judgment or
overcome the presumption of
regularity. "The sea of suspicion has no
shore, and the court that embarks
upon it is without rudder or
compass." Worse, the imputation of
fraud was so tardily brought, some
forty-four (44) years or sixty-one (61)
years after its supposed
occurrence, that is, from the
administrative reconstitution of title on
July 26, 1948, or from the issuance of
the original title on November 19,
1931, that verification is rendered
extremely difficult, if not impossible,
especially due to the supervening
event of the second world war during
which practically all public records
were lost or destroyed, or no longer
available.33
IN VIEW OF THE FOREGOING, the
petition for review on certiorari is
denied for lack of merit.
The Court declares that Cebu Country
Club, Inc. is the exclusive owner of Lot
No.727-D-2 of the Banilad Friar Lands
Estate, as confirmed by Republic Act
No. 9443.
Costs of suit to be paid by the
petitioners.
SO ORDERED.
G.R. No. 146997. April 26, 2005
SPOUSES GODOFREDO & DOMINICA
FLANCIA, Petitioners,
vs.
COURT OF APPEALS & WILLIAM ONG
GENATO, Respondents.
DECISION
CORONA, J.:
Before us is a petition for review under
Rule 45 of the Rules of Court, seeking
to set aside the October 6, 2000
decision1 of the Court of Appeals in CA-
G.R. CV No. 56035.
The facts as outlined by the trial
court2 follow.
This is an action to declare null and
void the mortgage executed by
defendant Oakland Development
Resources Corp. xxx in favor of
defendant William Ong Genato over
the house and lot plaintiffs spouses
Godofredo and Dominica Flancia
purchased from defendant
corporation.
In the complaint, plaintiffs allege that
they purchased from defendant
corporation a parcel of land known as
Lot 12, Blk. 3, Phase III-A containing an
area of 128.75 square meters situated
in Prater Village Subd. II located at
Brgy. Old Balara, Quezon City; that by
virtue of the contract of sale,
defendant corporation authorized
plaintiffs to transport all their personal
belongings to their house at the
aforesaid lot; that on December 24,
1992, plaintiffs received a copy of the
execution foreclosing [the] mortgage
issued by the RTC, Branch 98 ordering
defendant Sheriff Sula to sell at public
auction several lots formerly owned by
defendant corporation including
subject lot of plaintiffs; that the alleged
mortgage of subject lot is null and void
as it is not authorized by plaintiffs
pursuant to Art. 2085 of the Civil Code
which requires that the mortgagor
must be the absolute owner of the
mortgaged property; that as a
consequence of the nullity of said
mortgage, the execution foreclosing
[the] mortgage is likewise null and
void; that plaintiffs advised defendants
to exclude subject lot from the auction
sale but the latter refused. Plaintiffs
likewise prayed for damages in the
sum of ₱50,000.00.
Defendant William Ong Genato filed a
motion to dismiss the complaint which
was opposed by the plaintiffs and
denied by the Court in its Order dated
February 16, 1993.
Defendant Genato, then filed his
answer averring that on May 19, 1989
co-defendant Oakland Development
Resources Corporation mortgaged to
Genato two (2) parcels of land covered
by TCT Nos. 356315 and 366380 as
security and guaranty for the payment
of a loan in the sum of ₱2,000,000.00;
that it appears in the complaint that
the subject parcel of land is an
unsubdivided portion of the aforesaid
TCT No. 366380 which covers an area
of 4,334 square meters more or less;
that said real estate mortgage has
been duly annotated at the back of TCT
No. 366380 on May 22, 1989; that for
non-payment of the loan of
₱2,000,000.00 defendant Genato filed
an action for foreclosure of real estate
mortgage against co-defendant
corporation; that after [trial], a
decision was rendered by the Regional
Trial Court of Quezon City, Branch 98
against defendant corporation which
decision was affirmed by the
Honorable Court of Appeals; that the
decision of the Court of Appeals has
long become final and thus, the
Regional Trial Court, Brach 98 of
Quezon City issued an Order dated
December 7, 1992 ordering defendant
Sheriff Ernesto Sula to cause the sale at
public auction of the properties
covered by TCT No. 366380 for failure
of defendant corporation to deposit in
Court the money judgment within
ninety (90) days from receipt of the
decision of the Court of Appeals; that
plaintiffs have no cause of action
against defendant Genato; that the
alleged plaintiffs’ Contract to Sell does
not appear to have been registered
with the Register of Deeds of Quezon
City to affect defendant Genato and
the latter is thus not bound by the
plaintiffs’ Contract to Sell; that the
registered mortgage is superior to
plaintiffs’ alleged Contract to Sell and it
is sufficient for defendant Genato as
mortgagee to know that the subject
TCT No. 366380 was clean at the time
of the execution of the mortgage
contract with defendant corporation
and defendant Genato is not bound to
go beyond the title to look for flaws in
the mortgagor’s title; that plaintiffs’
alleged Contract to Sell is neither a
mutual promise to buy and sell nor a
Contract of Sale. Ownership is retained
by the seller, regardless of delivery and
is not to pass until full payment of the
price; that defendant Genato has not
received any advice from plaintiffs to
exclude the subject lot from the
auction sale, and by way of
counterclaim, defendant Genato prays
for ₱150,000.00 moral damages and
₱20,000.00 for attorney’s fees.
On the other hand, defendant Oakland
Development Resources Corporation
likewise filed its answer and alleged
that the complaint states no cause of
action; xxx Defendant corporation also
prays for attorney’s fees of ₱20,000.00
in its counterclaim.3
4 
After trial, the assisting judge of the
trial court rendered a decision dated
August 16, 1996, the decretal portion
of which provided:
Wherefore, premises considered,
judgment is hereby rendered.
1) Ordering defendant Oakland Dev’t.
Resources Corporation to pay
plaintiffs:
a) the amount of ₱10,000.00
representing payment for the ‘option
to purchase lot’;
b) the amount of ₱140,000.00
representing the first downpayment of
the contract price;
c) the amount of ₱20,520.80
representing five monthly
amortizations for February, March,
April, May and June 1990;
d) the amount of ₱3,000.00
representing amortization for
November 1990; all plus legal interest
from the constitution of the mortgage
up to the time the instant case was
filed.
2) Ordering said defendant corporation
to pay further to plaintiffs the sum of
₱30,000.00 for moral damages,
₱10,000.00 for exemplary damages
and ₱20,000.00 for and as reasonable
attorney’s fees plus cost;
3) Dismissing defendant corporation’s
counterclaim;
4) Dismissing defendant Genato’s
counterclaim.5
On motion for reconsideration, the
regular presiding judge set aside the
judgment of the assisting judge and
rendered a new one on November 27,
1996, the decretal portion of which
read:
WHEREFORE, premises considered, the
Motion for Reconsideration is hereby
GRANTED. The decision dated August
16, 1996 is hereby set aside and a new
one entered in favor of the plaintiffs,
declaring the subject mortgage and the
foreclosure proceedings held
thereunder as null and void insofar as
they affect the superior right of the
plaintiffs over the subject lot, and
ordering as follows:
1. Defendant Oakland Development
Resources to pay to plaintiffs the
amount of ₱20,000.00 for litigation-
related expenses;
2. Ordering defendant Sheriff Ernesto
L. Sula to desist from conducting
further proceedings in the extra-
judicial foreclosure insofar as they
affect the plaintiffs, or, in the event
that title has been consolidated in the
name of defendant William O. Genato,
ordering said defendant to reconvey to
plaintiffs the title corresponding to Lot
12, Blk. 3, Phase III-A of Prater Village
[Subd. II], located in Old Balara,
Quezon City, containing an area of
128.75 square meters; and
3. Dismissing the counterclaims of
defendants Oakland and Genato and
with costs against them.6
On appeal, the Court of Appeals issued
the assailed order:
Wherefore, foregoing premises
considered, the appeal having merit in
fact and in law is hereby GRANTED and
the decision of the Trial Court dated 27
November 1996 hereby SET
ASIDE and REVERSED, and its
judgment dated August 16,
1996 REINSTATED and AFFIRMED IN
TOTO. No Costs.
SO ORDERED.
1. Metro Mla. Transit v.
D.M. Consortium 517
SCRA 632
G.R. No. 133140           August 10, 1999
JOSE MA. T. GARCIA, petitioner,
vs.
COURT OF APPEALS, SPS. LUISITO &
MA. LUISA MAGPAYO AND
PHILIPPINE BANK OF
COMMUNICATIONS, respondents.
PUNO, J.:
This is a petition for review under Rule
45 of the Rules of Court to set aside
the decision rendered by the Court of
Appeals in CA-G.R. No. 44707 entitled
"Jose Ma. T. Garcia, Plaintiff-Appellee
versus Spouses Luisito and Ma. Luisa
Magpayo and Sheriff of Makati,
Defendants, Philippine Bank of
Communications, Defendant-
1
Appellant".
The facts are as succinctly summarized
by the appellate court, viz.:
Atty. Pedro V. Garcia, in whose
name TCT No. S-31269 covering
a parcel of land identified as Lot
17 situated at Bel Air II Village,
Makati, was registered, sold
with the consent of his wife
Remedios T. Garcia, the same
to their daughter Ma. Luisa
Magpayo and her husband
Luisito Magpayo (the
Magpayos).
On March 5, 1981, the
Magpayos mortgaged the land
to the Philippine Bank of
Communications (PBCom) to
secure a loan, Five Hundred
Sixty Four Thousand
(P564,000.00) Pesos according
to them, One Million Two
Hundred Thousand
(P1,200,000.00) Pesos
according to
PBCom.1âwphi1.nêt
On March 9, 1981, Atty.
Garcia's Title was cancelled and
in its stead Transfer Certificate
of Title No. S-108412/545 was
issued in the name of the
Magpayos.
The Deed of Real Estate
Mortgage was registered at the
Makati Register of Deeds and
annotated on the Magpayos
title.
The Magpayos failed to pay
their loan upon its maturity,
hence, the mortgage was
extrajudicially foreclosed and at
the public auction sale, PBCom
which was the highest bidder
bought the land.
The redemption period of the
foreclosed mortgage expired
without the Magpayos
redeeming the same, hence,
title over the land was
consolidated in favor of PBCom
which cancelled the Magpayo's
title and Transfer Certificate of
Title No. 138233 was issued in
its name.
On October 4, 1985, the
Magpayos filed at the RTC of
Makati a complaint seeking the
nullification of the extrajudicial
foreclosure of mortgage, public
auction sale, and PBCom's title
docketed as Civil Case No.
11891. This complaint was
dismissed for failure to
prosecute.
On October 15, 1985, PBCom
filed at the Regional Trial Court
(RTC) of Makati a petition for
the issuance of a writ of
possession over the land,
docketed as LRC Case No. M-
731, which Branch 148 thereof
granted.
Upon service of the writ of
possession, Mrs. Magpayo's
brother, Jose Ma. T. Garcia
(Garcia), who was in possession
of the land, refused to honor it
and filed a motion for
Intervention in the above-said
PBCom petition, which motion
was denied.
Garcia thereupon filed against
PBCom, the Magpayos, and the
RTC Sheriff the instant suit for
recovery of realty and damages
wherein he alleged, inter alia,
that he inherited the land as
one of the heirs of his mother
Remedios T. Garcia, and that
PBCom acquired no right
thereover.
In its answer, PBCom
averred, inter alia, that Garcia's
claim over the land is belied by
the fact that it is not among the
properties owned by his
mother listed in the Inventory
of Real Estate filed at the then
CFI of Pasay City, Branch 27, in
SP Proc. No. 2917-P, "In the
Matter of the Intestate Estate
of Remedios T. Garcia Petition
for Letters of Administration,
Pedro V. Garcia Petitioner-
Administrator.
The Magpayos, on the other
hand, asserted that title over
the land was transferred to
them by Mrs. Magpayo's
parents to enable them
(Magpayos) to borrow from
PBCom.
Garcia filed a Motion for
Summary Judgment praying
that judgment be rendered in
his favor to which PBCom
counter-motioned that
judgment should be rendered
in its favor.
The court a quo denied the
motion for summary judgment
on the ground that PBCom
raised in its answer both factual
and legal issues which could
only be ventilated in a full-
blown trial.
The court a quo, however, later
issued a summary judgment.2
In its summary judgment, the lower
court held that the mortgage executed
by the Magpayo spouses in favor of
PBCom was void. It found that:
. . . [A]t the time that the
defendants Magpayo spouses
executed the mortgage in favor
of the defendant PBCom on
March 5, 1981, the said
spouses were not yet the
owners of the property. This
finding is evident from the
other undisputed fact that a
new Torrens title was issued to
the defendants Magpayo
spouses only on March 9,
1981 . . . . The Magpayo
spouses could not have
acquired the said property
merely by the execution of the
Deed of Sale because the
property was in the possession
of the plaintiff. The vendor,
 Pedro V. Garcia, was not in
possession and hence could not
deliver the property merely by
the execution of the document
(MANALILI V. CESAR, 39 PHIL.
134). The conclusion is
therefore inescapable that the
said mortgage is null and void
for lack of one of the essential
elements of a mortgage as
required by Art. 2085 of our
Civil Code . . . .3
Thus, it invalidated the foreclosure sale
and nullified TCT No. 138233 issued to
PBCom. Dissatisfied, PBCom appealed.
In reversing the trial court, the Court of
Appeals held:
(P)laintiff-appellee's assertion
that ownership over the
disputed property was not
transmitted to his sister and her
husband-Magpayo spouses at
the time of the execution of the
Deed of Sale as he was still in
actual and adverse possession
thereof does not lie.
For in his complaint, plaintiff-
appellee alleged that he
entered into possession of the
disputed property only upon
the demise of his mother, from
whom he alleges to have
inherited it but who was not
the registered owner of the
property, that is, on October
31, 1980 (Certificate of Death,
p. 17, Records), by which
admission he is bound. Since
the execution of the deed of
sale by Atty. Pedro V. Garcia in
favor of the Magpayos took
place earlier or on August 1,
1980, then contrary to his
claim, plaintiff-appellee was not
in possession of the property at
the time of the execution of
said public instrument.
Furthermore, it appearing that
the vendor Atty. Garcia had
control of the property which
was registered in his name and
that the deed of sale was
likewise registered, then the
sale was consummated and the
Magpayos were free to exercise
the attributes of ownership
including the right to mortgage
the land.
When the land is registered in
the vendor's name, and the
public instrument of sale is also
registered, the sale may be
considered consummated and
the buyer may exercise the
actions of an owner (Tolentino,
Commentaries and
Jurisprudence on the Civil Code
of the Philippines, 1992 Ed., p.
55).
That the Magpayos' title, TCT
No. S-108412, was issued four
(4) days following the execution
of the deed of real estate
mortgage is of no moment, for
registration under the Torrens
system does not vest
ownership but is intended
merely to confirm and register
the title which one may already
have on the land (Municipality
of Victorias v. Court of Appeals,
149 SCRA 32, 44-45 [1987]).
Petitioner Garcia moved for a
reconsideration of above decision
which was denied. He now comes
before us raising the following errors
committed by the Court Appeals:
I Anent the first assignment of error,
The respondent Court of Appeals has
departed from the accepted and usual
course of proceedings when it decided
the appeal subject of this case based
on issues which were raised neither in
the trial court nor in the appellant's
brief.
II
The Court of Appeals decided the
appeal in a manner not in accord with
applicable jurisprudence when it
disregarded the admissions of the
private respondents and, despite ruling
that Summary Judgment was proper,
made its own findings of facts which
were contrary to the said admissions.
III
The Decision of the respondent Court
of Appeals was not in accord with
established jurisprudence and even
contradicts itself, as far as the issue of
the propriety of the Summary
Judgment is concerned.
The petition has no merit.
petitioner alleged that the Court of
Appeals resolved the issues
"ownership" and "possession" though
they were not raised by PBCom in its
appellant's brief. The allegation is
belied by page 17 of PBCom's appellate
brief, viz.:
Due to the wrong cited case,
the trial court opined
erroneously that "Magpayo
Spouses could not have
acquired the property merely
by the execution of the deed of
sale because the property was
in the possession of the
plaintiff" (Order, p. 10).
Again, the trial court could not
distinguish ownership from
possession. Ownership and
possession are two entirely
different legal concepts.
Plaintiff-appellee's possession
as found by the trial court,
started only "at the time of the
filing of the complaint in this
present case up to the
present." (page 2, Summary
Judgment).
Assuming that to be true,
plaintiff-appellee's possession
which started only in 1986
could not ripen into ownership.
He has no valid title thereto.
His possession in fact was that
of an intruder, one done in bad
faith (to defeat PBCom's Writ of
Possession). His possession is
certainly not in the concept of
an owner. This is so because as
early as 1981, title thereto was
registered in the name of the
Magpayo Spouses which title
was subsequently cancelled
when the property was
purchased by PBCom in a public
auction sale resulting in the
issuance of title in favor of the
latter in 1985.
Anent the second-assignment of error,
petitioner contends that the following
facts were admitted by the parties in
the trial court:
1. The petitioner is a
compulsory heir of the late
spouses Atty. Pedro V. Garcia
and Remedios Tablan Garcia;
 2. The property subject of this
dispute was previously the
conjugal property of the said
spouses;
3. The petitioner and his family
have been and are continuously
to the present in actual physical
possession of the property. At
the time of the alleged sale to
the Magpayo spouses,
petitioner was in possession of
the property;
4. When his mother Remedios
Tablan (sic) Garcia died,
sometime in October, 1980, he
became, by operation of law, a
co-owner of the property;
5. Atty. Pedro V. Garcia, at the
time of the execution of the
instrument in favor of the
Magpayo spouses was not in
possession of the subject
property.4
We reject the contention of petitioner
for a perusal of the records shows that
these alleged admitted facts are his
own paraphrased portions of the
findings of fact listed by the trial court
in the summary judgment.5 Indeed
petitioner did not cite any page
number of the records or refer to any
documentary Exhibit to prove how and
who admitted the said facts.
Petitioner's third assignment of error
that he alone as plaintiff in the trial
court is entitled to a summary
judgment merits scant attention. A
summary judgment is one granted by
the court, upon motion by either party,
for an expeditious settlement of the
case, there appearing from the
pleadings, depositions, admissions,
and affidavits that no important
questions or issues of fact are involved
(except the determination of the
amount of damages) and that
therefore the moving party is entitled
to a judgment as a matter of
law.6 Under Rule 34, either party may
move for a summary judgment — the
claimant by virtue of Section 1 and the
defending party by virtue of Section
2, viz.:
Sec. 1. Summary judgment for
claimant. — A party seeking to
recover upon a claim, counter-
claim, or cross-claim or to
obtain a declaratory relief may,
at any time after the pleading
in answer thereto has been
served, move with supporting
affidavits for a summary
judgment in his favor upon all
or any part thereof.
Sec. 2. Summary judgment for
defending party. — A party
against whom a claim,
counterclaim, or cross-claim is
asserted or a declaratory relief
is sought may, at any time,
move with supporting affidavits
for a summary judgment in his
favor as to all or any part
thereof.
It is true that petitioner made the
initial move for summary judgment.
Nonetheless, PBCom likewise moved
for a summary judgment with
supporting affidavit and documentary
exhibits, to wit:
COUNTER-MOTION FOR
SUMMARY JUDGMENT
PBCom Is Entitled To A
Summary Judgment
 The procedure for summary
judgment may be availed of
also by the defending parties
who may be the object of
unfounded claims as clearly
shown in Sections 1 and 2 of
Rule 34.
xxx     xxx     xxx
WHEREFORE, it is respectfully
prayed of this Honorable Court
to render summary judgment in
PBCom's favor by DISMISSING
plaintiff's Complaint as well as
Sps. Magpayo's Cross-Claim for
being sham and frivolous.7
Needless to state, there was no error
on the part of the appellate court in
resorting to summary judgment as
prayed for by both parties.
We stress again that possession and
ownership are distinct legal concepts.
Ownership exists when a thing
pertaining to one person is completely
subjected to his will in a manner not
prohibited by law and consistent with
the rights of others.8 Ownership
confers certain rights to the owner,
one of which is the right to dispose of
the thing by way of sale.9 Atty. Pedro
Garcia and his wife Remedios exercised
their right to dispose of what they
owned when they sold the subject
property to the Magpayo spouses. On
the other hand, possession is defined
as the holding of a thing or the
enjoyment of a right.10 Literally, to
possess means to actually and
physically occupy a thing with or
without right. Possession may be had
in one of two ways: possession in the
concept of an owner and possession of
a holder.11 "A possessor in the concept
of an owner may be the owner himself
or one who claims to be so." 12 On the
other hand, "one who possesses as a
mere holder acknowledges in another
a superior right which he believes to
be ownership, whether his belief be
right or wrong."13 The records show
that petitioner occupied the property
not in the concept of an owner for his
stay was merely tolerated by his
parents. We held in Caniza v. Court of
Appeals  14 that an owner's act of
allowing another to occupy his house,
rent-free does not create a permanent
and indefeasible right of possession in
the latter's favor. Consequently, it is of
no moment that petitioner was in
possession of the property at the time
of the sale to the Magpayo spouses. It
was not a hindrance to a valid transfer
of ownership. On the other hand,
petitioner's subsequent claim of
ownership as successor to his mother's
share in the conjugal asset is belied by
the fact that the property was not
included in the inventory of the estate
submitted by his father to the intestate
court. This buttresses the ruling that
indeed the property was no longer
considered owned by petitioner's
parents. We also uphold the Court of
Appeals in holding that the mortgage
to PBCom by the Magpayo spouses is
valid notwithstanding that the transfer
certificate of title over the property
was issued to them after the mortgage
contract was entered into. Registration
does not confer ownership, it is merely
evidence of such ownership over a
particular property.15 The deed of sale
operates as a formal or symbolic
delivery of the property sold and
authorizes the buyer to use the
document as proof of ownership.16 All
said, the Magpayo spouses were
already the owners when they
mortgaged the property to PBCom.17
IN VIEW WHEREOF, the decision of the
Court of Appeals in CA-G.R. No. 44707
is AFFIRMED. Costs against
petitioner.1âwphi1.nêt

SO ORDERED.
G.R. No. 120784-85        January 24,
2001
SPOUSES WARLITO BUSTOS and
HERMINIA REYES-BUSTOS, petitioners,
vs.
COURT OF APPEALS, SPOUSES
VENANCIO VIRAY and CECILIA
NUNGA-VIRAY, respondents.
PARDO, J.:
The case before the Court is an
appeal via certiorari seeking to set
aside the Court of Appeals1 modifying
that of the Regional trial Court,
Pampanga, Macabebe, Branch 552 and
the resolution denying
reconsideration.3
Paulino Fajardo died intestate on April
2, 1957.4 He had four (4) children,
namely: Manuela, Trinidad, Beatriz and
Marcial, all surnamed Fajardo.
On September 30, 1964, the heirs
executed an extra-judicial partition5 of
the estate of Paulino Fajardo. On the
same date, Manuela sold her share to
Moses6 G. Mendoza, husband of
Beatriz by deed of absolute sale.7 The
description of the property reads as
follows:
"A parcel of an irrigated
riceland located in the barrio of
San Isidro, Masantol,
Pampanga. Bounded on the
North, by Paulino Fajardo; on
the East, by Paulino Fajardo; on
the South, by Paulino Guinto.
Containing an area of 5,253 sq.
mts., more or less. Declared
under Tax Declaration No. 3029
in the sum of P710.00."
At the time of the sale, there was no
cadastral survey in Masantol,
Pampanga. Later, the cadastre was
conducted and the property involved
in the partition case were specified as
Lots 280, 283, 284, 1000-A and 1000-B.
The share of Manuela, which was sold
to Moses, includes Lot 284 of the
Masantol Cadastre and Lot 284 was
subdivided into Lots 284-A and 284-B.
Trinidad was in physical possession of
the land. She refused to surrender the
land to her brother-in-law Moses G.
Mendoza, despite several demands.
On September 3, 1971, Moses filed
with the Court of First Instance,
Pampanga a complaint for partition
claiming the one fourth (1/4) share of
Manuela which was sold to him.8
During the pendency of the case for
partition, Trinidad Fajardo died. On
December 15, 1984, the heirs executed
an extra-judicial partition of the estate
of Trinidad Fajardo. On February 16,
1987, Lucio Fajardo Ignacio, son of
Trinidad sold Lot 284-B to spouses
Venancio Viray and Cecilia Nunga-
Viray.
On February 8, 1989, the Regional Trial
Court, Pampanga, Macabebe, Branch
55 rendered a decision in favor of
Moses G. Mendoza, the dispositive
portion of which provides:
"WHEREFORE, premises
considered, judgment is hereby
rendered in favor of the
plaintiffs and against the
defendants, and hereby
orders.1âwphi1.nêt
"1. The division and partition of
the parcel of land identified
and described earlier with the
aid and assistance of a qualified
surveyor, segregating
therefrom an area equivalent
to 1/4 portion to be taken from
the vacant right eastern portion
which is toward the national
road the same to be
determined by one (or the said
surveyor) standing on the
subject land facing the
municipal road, at the expense
of the plaintiffs;
"2. The said 1/4 portion
segregated shall be a fixed
portion, described by metes
and bounds, and shall be
adjudicated and assigned to the
plaintiffs;
"3. In case of disagreement as
to where the said right eastern
portion should be taken, a
commission is hereby
constituted, and the OIC-Clerk
of Court is hereby appointed
chairman, and the OIC-Branch
Clerk of Court of Branches 54
and 55 of this Court are hereby
appointed members, to carry
out the orders contained in the
foregoing first two paragraphs;
"4. The defendants to pay the
plaintiffs the sum of P500.00 as
attorney's fees, and to pay the
costs of the proceedings.
"SO ORDERED."9
On September 13, 1991, Moses sold
the subject land to spouses Warlito
Bustos and Herminia Reyes-Bustos.
In the meantime, on November 6,
1989, spouses Venancio Viray and
Cecilia Nunga-Viray, buyers of Lucio
Ignacio's share of the property, filed
with the Municipal Circuit Trial Court,
Macabebe-Masantol, Pampanga an
action for unlawful detainer10 against
spouses Bustos, the buyers of Moses
G. Mendoza, who were in actual
possession as lessees of the husband
of Trinidad, Francisco Ignacio, of the
subject land.
The municipal circuit trial court
decided the case in favor of spouses
Viray. Subsequently, the trial court
issued writs of execution and
demolition, but were stayed when
spouses Bustos filed with the regional
Trial Court, Pampanga, Macabebe,
Branch 55,11 a petition for certiorari,
prohibition and injunction.
On December 18, 1992, the regional
trial court rendered a decision, the
dispositive portion of which reads:
"WHEREFORE, premises
considered, this case, is as it is
hereby, dismissed. The
preliminary injunction is
ordered dissolved and the
petitioners and Meridian
Assurance Corporation are
hereby ordered jointly and
severally, to pay the private
respondents the sum of
P20,000.00 by way of litigation
expenses and attorney's fees,
and to pay the cost of the
proceedings."12
In time, the spouses Bustos appealed
the decision to the Court of Appeals.13
On February 27, 1989, Lucio Fajardo
Ignacio also appealed the decision to
the Court of Appeals.14
Upon motion for consolidation of the
petitioners, on August 9, 1993, the
Court of Appeals resolved to
consolidate CA-G.R. SP No. 30369 and
CA-G.R. CV No. 37606.15
On August 26, 1994, the Court of
Appeals promulgated its decision in
the two cases, the dispositive portion
of which provides:
"WHEREFORE, in view of all the
foregoing, consolidated
judgment is hereby rendered
for bot CA-G.R. SP No. 37607
and CA-G.R. SP No. 30369 as
follows:
"1. The appeal docketed as CA-
G.R. CV No. 37607 is dismissed;
Moses Mendoza is declared as
owner of the 1/4 undivided
share previously owned by
Manuela Fajardo; and the
decision of the Regional Trial
Court dated February 8, 1989 in
Civil Case No. 83-0005-M is
affirmed but MODIFIED as
follows:
"WHEREFORE, premises
considered, judgment is
hereby rendered in "3. The said 1/4 portion
favor of the plaintiffs segregated shall be a
and against the fixed portion, described
defendants, and hereby by metes and bounds,
orders. and shall be adjudicated
and assigned to the
"1. A relocation survey plaintiffs-appellees;
to be conducted (at the
expense of the "4. In case of
plaintiffs) to retrace the disagreement as to
land subject of the deed where the said right
of sale dated September eastern portion should
30, 1964 between be taken, a Commission
Manuela Fajardo and is hereby constituted,
Moses Mendoza; with the OIC/present
Clerk of Court as
"2. The division and Chairman, and the
partition of said OIC/present Branch
relocated land by Clerk of Court of
segregating therefrom Branches 54 and 55 of
an area equivalent to the Court (RTC) as
1/4 portion to be taken members, to carry out
from the vacant right and implement the
eastern portion which is Orders contained in the
toward the national second and third
road, the same to be paragraphs hereof;
determined by one
standing on the subject "5. The defendants are
land facing the ordered to pay the
municipal road, at the plaintiffs the sum of
expense of the plaintiff- P500.00 as attorney's
appellees; fees, and to pay the
 costs of the
proceedings.
"2. The dismissal of Civil Case
No. 92-0421-M is AFFIRMED
but the reasons for its dismissal
shall be effective only as to the
issue of possession. CA-G.R. SP
No. 30369 is DISMISSED.
"3. No. pronouncement as to
costs.
16
"SO ORDERED."
On September 9, 1994, petitioners
filed a motion for
17
reconsideration;  however, on June
21, 1995, the Court of Appeals denied
the motion.18
Hence, this petition.19
The issue raised is whether petitioners
could be ejected from what is now
their own land.
The petition is meritorious.
In this case, the issue of possession is
intertwined with the issue of
ownership. In the unlawful detailer
case, the Court of Appeals affirmed the
decision of the trial court as to
possession on the ground that the
decision has become final and
executory. This means that the
petitioners may be evicted. In
the accion reinvindicatoria, the Court
of Appeals affirmed the ownership of
petitioners over the subject land.
Hence, the court declared petitioners
as the lawful owners of the land.
Admittedly, the decision in the
ejectment case is final and executory.
However, the ministerial duty of the
court to order execution of a final and
executory judgment admits of
exceptions. In Lipana vs. Development
Bank of Rizal,20 the Supreme Court
reiterated the rule "once a decision
becomes final and executory, it is the
ministerial duty of the court to order
its execution, admits of certain
exceptions as in cases of special and
exceptional nature where it becomes
imperative in the higher interest of
justice to direct the suspension of its
execution (Vecine v. Geronimo, 59 O.
G. 579); whenever it is necessary to
accomplish the aims of justice (Pascual
v. Tan 85 Phil. 164); or when certain
facts and circumstances transpired
after the judgment became final which
could render the execution of the
judgment unjust (Cabrias v. Adil, 135
SCRA 354)."
In the present case, the stay of
execution is warranted by the fact that
petitioners are now legal owners of the
land in question and are occupants
thereof. To execute the judgment by
ejecting petitioners from the land that
they owned would certainly result in
grave injustice. Besides, the issue of
possession was rendered moot when
the court adjudicated ownership to the
spouses Bustos by virtue of a valid
deed of sale.
Placing petitioners in possession of the
land in question is the necessary and
logical consequence of the decision
declaring them as the rightful owners
is possession. It follows that as owners
of the subject property, petitioners are
entitled to possession of the same. "An
owner who cannot exercise the seven
(7) "juses" or attributes of ownership-
the right to possess, to use and enjoy,
to abuse or consume, to accessories,
to dispose or alienate, to recover or
vindicate and to the fruits is a crippled
owner."22

WHEREFORE, we GRANT the petition.
We SET ASIDE the decision of the
Court of Appeals I Ca G.R. SP No.
30609 for being moot and academic.
We AFFIRM the decision of the Court
of Appeals in CA G.R. CV No.
37606.1âwphi1.nêt

No costs.

SO ORDERED.
G.R. No. 205664               June 9, 2014
DEPARTMENT OF EDUCATION,
represented by its REGIONAL
DIRECTOR TERESITA
DOMALANTA, Petitioner,
vs.
MARIANO TULIAO, Respondent.
DECISION
MENDOZA, J.:
This petition for review on certiorari
under Rule 45 of the Rules of Court
filed by the Department of Education
(DepEd) assails the January 31, 2013
Decision1 of the Court of Appeals (CA)
in G.R. SP No. 123450 which dismissed
DepEd's petition for review.
The Factual Antecedents:
On October 8, 2002, Mariano Tuliao
(Tuliao) filed an action for recovery of
possession and removal of structure
with damages against the Department
of Education (DepEd) with the
Municipal Trial Court in Cities of
Tuguegarao City (MTCCJ. He alleged
that he was the registered owner of
the subject parcel of land and that a
portion of the said property was
allowed by his predecessors-in-interest
to be used by the Atulayan Elementary
School (AES) as an access road for the
schoolchildren in going to and from the
school. In March 2000, upon
discovering that a structure was being
constructed on the land, he demanded
that the DepED cease and desist and
vacate the property. The respondent,
however, refused. Tuliao likewise
demanded payment for reasonable
rent, but his demand was also ignored.
In its defense, the DepEd denied the
material allegations of the complaint
and averred that it did not state a
cause of action. Even if there was, the
same was already barred by
prescription and/or laches. Its
occupation of the subject land was
adverse, peaceful, continuous, and in
the concept of an owner for more than
fifty (50) years. It also alleged that it
did not receive a notice to cease and
desist or notice to vacate. As owner of
the school site, it could not be
compelled to pay rent or its reasonable
value.
On January 26, 2010, the MTCC
rendered its decision, ruling that Tuliao
was the registered owner of the
subject property and, thus, had a right
of action against the holder and
possessor of the said property.
Further, it found that respondent’s
possession of the subject property was
merely tolerated by Tuliao. For said
reason, his right to recover it was
never barred by laches.
As to the structures, the MTCC stated
that it could not allow the immediate
removal thereof in view of the
provisions of Article 4482 of the New
Civil Code and directed Tuliao to
exercise his options under said article.
Pertinent portions of the MTCC
decision, including the fallo reads:
Plaintiff’s prayer that the structures
built on his lot be removed
immediately cannot be allowed in view
of the provision of Article 448.
WHEREFORE, premises considered,
judgment is hereby rendered by:
1. Declaring the plaintiff to be
the lawful possessor of the lot
in suit;
2. Directing the plaintiff to
exercise his option under the
law (Article 448, Civil Code)
whether to appropriate the
structures built on the lot in
suit as his own by paying to the
defendant the amount of the
expenses spent for the
structures or to oblige the
defendant to pay the price of
the land, and said option must
be exercised and relayed to this
court formally within 30 days
from receipt of this decision
and a copy of such notice must
be furnished to the defendant.
a. If in case the plaintiff
exercises the option to
appropriate the
structures built on the
lot in suit, the
defendant is hereby
directed to submit to
this court the amount of
the expenses spent for
the structures within 15
days from receipt of the
notice of the plaintiff of
his desired option.
b. If the plaintiff decides
to oblige the defendant
to pay the price of the
land, the current market
value of the land
including its
improvements as
determined by the City
Assessor’s Office shall
be the basis for the
price thereof.
c. In case the plaintiff
exercises the option to
oblige the defendant to
pay the price of the land
but the latter rejects
such purchase because
the value of the land is
considerably more than
that of the structures,
the parties shall agree
upon the terms of a
forced lease, and give
the court a formal
written notice of such
agreement and its
provisos.
d. If no formal
agreement shall be
entered into within a
reasonable period, the
court shall fix the terms
of the forced lease.
3. Directing the defendant to
pay the plaintiff the amount of
five hundred pesos (₱500.00)
as reasonable compensation
for the occupancy of the
encroached property from the
time the complaint was filed
until such time the possession
of the property is delivered to
the plaintiff subject to the
reimbursement of the aforesaid
expenses in favor of the
defendant or until such time
the payment of the purchase
price of the lot be made by the
defendant in favor of the
plaintiff in case the latter opts
for the compulsory sale of the
same;
4. Directing the defendant to
pay the plaintiff the amount of
₱20,000.00 as attorney’s fees
and to pay the costs of the suit.
So Ordered.3
On appeal to the RTC, aside from the
issue of inaction, the DepEd argued
that Tuliao failed to sufficiently and
competently prove the identity of the
property – the exact location, area and
boundaries. The DepEd further claimed
that the material allegations of the
complaint established one of accion
reivindicatoria, and not accion
publiciana, because Tuliao raised the
issue of ownership and made it the
anchor of his claim for juridical
possession.
Acting thereon, the RTC dismissed the
appeal and affirmed the MTCC
decision. It stated that "[i]f a party in
accion publiciana alleges that he owns
the property in question, it is not ex
sequitur that the action is a
reinvindicatory one," and that a
claimant could assert ownership as
basis of his claim of possession. 4 The
RTC also wrote that Tuliao was able to
present evidence establishing a
definite and unmistakable
identification of the land and its
ownership over the subject property.
Moreover, the DepEd’s possession was
with the acquiescence of Tuliao’s
predecessors-in-interest, thus, the
defense of laches was found weak.5
Interestingly, despite having affirmed
the MTCC decision, the RTC opined
that the case was impressed with
public interest6 and it was the
paramount interest of the pupils who
would be prejudiced by the finality and
execution of the appealed
7
decision.  The RTC strongly suggested
that the DepEd, or if unable, the City
Government of Tuguegarao City, be
requested to pay Tuliao the just
compensation of the land in question
the amount of which to be determined
by a panel of three commissioners
appointed by the court and whose
determination was to be approved by
the said court.8
Aggrieved, the DepEd elevated the
case to the CA via a petition for review
under Rule 42. Finding no merit, the
CA affirmed the RTC decision. It stated
that the DepEd’s reliance on the case
of Bote vs. San Pedro Cineplex
Properties Corporation9 in arguing that
Tuliao’s certificate of title alone was
inadequate to hand over possession of
an unidentified parcel of land was
misplaced. In Bote, both parties
asserted ownership and possession of
the land and presented their
respective titles as evidence thereof.
Hence, it was ruled therein that
geodetic survey was necessary to
determine whose title actually covered
the disputed property.10
In this case, however, only Tuliao
presented a certificate of title as well
as tax declaration and real property tax
receipts for the years 2003-2005. 11 The
pieces of evidence Tuliao presented
resolved the issue of who had the
better right of possession and
dispensed with the need for the
testimony of an expert witness.12
Hence, the present petition.
ISSUES:
I.
WHETHER THE COURT OF APPEALS
ERRED IN AFFIRMING THE REGIONAL
TRIAL COURT AND HOLDING THAT
THERE IS A SUFFICIENT DESCRIPTION
OF THE LAND IN DISPUTE.
II.
WHETHER THE COURT OF APPEALS
ERRED IN AFFIRMING THE REGIONAL
TRIAL COURT AND HOLDING THAT
PETITIONER’S POSSESSION WAS ONLY
DUE TO THE ACQUIESCENCE OR
TOLERANCE OF HEREIN RESPONDENT.
III.
WHETHER THE COURT OF APPEALS
ERRED IN FAILING TO CONSIDER THAT
RESPONDENT’S CLAIM IS BARRED BY
LACHES DUE TO THE UNINTERRUPTED
POSSESSION OF ATULAYAN
ELEMENTARY SCHOOL FOR AT LEAST
THIRTYTWO (32) YEARS.13
Firstly, the DepEd has argued that
Tuliao failed to discharge the burden of
proving ownership over the disputed
property. It asserts that presentation
of a certificate of title does not
automatically entitle the claimant to
possession; that he has to first prove,
by competent and reliable evidence,
that the land he is claiming falls within
his title; that the allegations and
declarations of a party with a
certificate of title are inadequate; and
that where a claimant asserts
ownership over a disputed property, it
is essential that the boundaries of his
title be correlated with the area
claimed as this might be a case of an
owner mistaking another’s property as
one’s own.
Secondly, the DepEd avers that its
witness, Caridad Soriano, who was a
retired teacher of AES and who had
taught at the said school for more than
30 years, testified that its possession of
the subject land was open, continuous,
exclusive, notorious, and in the
concept of an owner since 1970. AES
has delineated its possession by
fencing its campus. Thus, whatever is
within this fence is part of AES.14
Thirdly, the DepEd declares that Tuliao
has lost his right to recover by his
inaction for thirty two (32)
years.15 After a scrutiny of the records,
the Court is not swayed by DepEd’s
arguments.
It has been consistently held that the
Court is not a trier of facts.
Moreover, the factual findings of the
trial court, when affirmed by the CA,
are generally binding on this
Court.16 Subject to certain exceptions,
the Court will not review, analyze and
weigh all over again evidence already
considered in the proceedings below.
From the records, it appears that there
is no necessity to disturb the factual
findings and conclusions of law by the
CA. Time and again, it has been ruled
that he who alleges the affirmative of
the issue has the burden of
proof.17 Upon the plaintiff in a civil
case, the burden of proof never parts.
Once the plaintiff makes out a prima
facie case in his favor in the course of
the trial, however, the duty or the
burden of evidence shifts to defendant
to controvert plaintiff’s prima facie
case, otherwise, a verdict must be
returned in favor of plaintiff.18
Here, Tuliao, as the registered owner,
filed a complaint for recovery of
possession and removal of
structure.1âwphi1 To support his
claim, he presented not only tax
declarations and tax receipts, but also
a certificate of title. The Court agrees
with the CA that the said pieces of
evidence were sufficient to resolve the
issue of who had the better right of
possession. That being the case, the
burden was shifted to the DepEd to
prove otherwise. Unfortunately, the
DepEd only presented testimonial
evidence and nothing more to prove
its defense and refute Tuliao’s claim.
Its lone witness was all that the DepEd
had to prove its right of possession. As
between a certificate of title, which is
an incontrovertible proof of
19
ownership,  accompanied with a tax
declaration and a tax receipt on one
hand, and a testimony of a lone
witness who is a retired teacher on the
other, the former prevails in
establishing who has a better right of
possession over the property,
following the rule that testimonial
evidence cannot prevail over
20
documentary evidence.
As regards the DepEd 's defense of ]
aches, it has no merit either. It avers
that its possession of the subject land
was open, continuous, exclusive,
adverse, notorious and in the concept
of an owner for at least thirty-two (32)
years already at the time Tuliao filed
the complaint. It must be noted,
however, that Tuliao's claim that the
DepEd's possession of a portion of his
land to be used as a passageway for
the students was mere tolerance was
not refuted. Thus, the same is deemed
admitted. This means that the DepEd 's If that would not be feasible or
possession was not truly adverse. practical for DepEd, its remedy is to file
an action for expropriation.
The Court once ruled that mere
material possession of the land was WHEREFORE, the petition is DENIED.
not adverse as against the owner and
W8S insufficient to vest title, unless SO ORDERED.
such possession was accompanied by
the intent to possess as an
owner.21 Accordingly, the DepEd 's
possession can only be considered as
adverse from the time the gymnasium
was being constructed in 1999 on the
subject portion of Tuliao's property. In
March 2000, Tuliao discovered the
construction and demanded that the
DepEd cease and desist from
continuing the same. When DepEd
refused, Tuliao filed a complaint for
recovery of possession of the subject
lot in 2002. Thus, only two (2) years
had elapsed from the time the DepEd
resisted Tuliao's claims. Clearly, he did
not sleep on his rights. There was no
prolonged inaction that barred him
from prosecuting his claims.
At any rate, the MTCC was fair when it
stated that it could not order the
immediately removal of the structures
and directed Tuliao to exercise his
option under Article 448.
G.R. No. 192268, January 27, 2016
DEPARTMENT OF EDUCATION,
REPRESENTED BY ITS REGIONAL
DIRECTOR, Petitioner, v. DELFINA C.
CASIBANG, ANGELINA C. CANAPI,
ERLINDA C. BAJAN, LORNA G.
GUMABAY, DION1SIA C. ALONZO,
MARIA C. BANGAYAN AND DIGNA C.
BINAYUG, Respondents.
DECISION
PERALTA, J.:
For resolution of this Court is the
Petition for Review on Certiorari, dated
June 18, 2010, of petitioner
Department of Education (DepEd),
represented by its Regional Director
seeking to reverse and set aside the
Decision1 dated April 29, 2010 of the
Court of Appeals (CA) affirming the
Decision2 dated January 10, 2008 of
the Regional Trial Court (RTC) of
Tuguegarao City, Cagayan, Branch 5,
declaring the respondents the owners
of property in controversy and
ordering the DepFd to pay the value of
the property.
The antecedents follow:
The property in controversy is a seven
thousand five hundred thirty-two
(7,532) square meter portion of Lot
115 covered by Original Certificate of
Title (OCT) No. 0-627 registered under
the name of Juan Cepeda, the
respondents' late
3
father. chanroblesvirtuallawlibrary
Sometime in 1965, upon the request of
the then Mayor Justo Cesar Caronan,
Cepeda allowed the construction and
operation of a school on the western
portion of his property. The school is
now known as Solana North Central
School, operating under the control
and supervision of the petitioner
DepEd.4chanroblesvirtuallawlibrary
Despite Cepeda's death in 1983, the
herein respondents and other
descendants of Cepeda continued to
tolerate the use and possession of the
property by the
5
school. chanroblesvirtuallawlibrary
Sometime between October 31, 2000
and November 2, 2000, the
respondents entered and occupied a
portion of the property. Upon
discovery of the said occupation, the
teachers of the school brought the
matter to the attention of the
barangay captain. The school officials
demanded the respondents to vacate
the property.6 However, the
respondents refused to vacate the
property, and asserted Cepeda's
ownership of the
lot.7chanroblesvirtuallawlibrary
On June 21, 2001, the DepEd filed a
Complaint for Forcible Entry and
Damages against respondents before
the Municipal Circuit Trial Court
(MCTC) of Solana-Enrile. The MCTC
ruled in favor of the petitioner and
directed respondents to vacate the
premises.8 On appeal, the RTC affirmed
the decision of the
9
MCTC. chanroblesvirtuallawlibrary
Thereafter, respondents demanded
the petitioner to either pay rent,
purchase the area occupied, or vacate
the premises. DepEd did not heed the
demand and refused to recognize the
ownership of the respondents over the
property.10chanroblesvirtuallawlibrary whatever right they had over the Consequently, the RTC considered the
property through case submitted for decision and
14
On March 16, 2004, the respondents laches. chanroblesvirtuallawlibrary rendered a Decision dated January 10,
filed an action for Recovery of 2008, finding that the respondents are
Possession and/or Sum of Money During the trial, respondents the owners of the subject property,
against the DepEd.11 Respondents presented, inter alia, the OCT No. O- thus:
averred that since their late father did 627 registered in the name of Juan
not have any immediate need of the Cepeda; Tax Declarations also in his WHEREFORE, judgment is hereby
land in 1965, he consented to the name and the tax receipts showing rendered.
building of the temporary structure that they had been paying real
and allowed the conduct of classes in property taxes on the property since 1. Declaring plaintiffs as
the premises. They claimed that they 1965.15 They also presented the the owner of Lot 115
have been deprived of the use and the Technical Description of the lot by the covered by Original
enjoyment of the portion of the land Department of Environment and Certificate of Title No. 0-
occupied by the school, thus, they are Natural Resources Land Management 627.
entitled to just compensation and Services showing that the subject
2. Ordering the
reasonable rent for the use of property was surveyed in the name of
property.12chanroblesvirtuallawlibrary Cepeda and a certification from the reconveyance of the
portion of the subject
Municipal Trial Court of Solana,
In its Answer, the DepEd alleged that it Cagayan declaring that Lot 115 was the property occupied by
the Solana North
owned the subject property because it subject of Cad Case No. N-13 in LRC
was purchased by civic-minded Cad. Record No. N-200 which was Central School, Solana,
Cagayan. However,
residents of Solana, Cagayan from adjudicated to
Cepeda. It further alleged that contrary 16
Cepeda. chanroblesvirtuallawlibrary since restoration of
possession of said
to respondents' claim that the
occupation is by mere tolerance, the On the other hand, despite notice and portion by the
defendant Department
property has always been occupied reset of hearing, the DepEd failed to
and used adversely, peacefully, present its evidence or witness to of Education is no
longer feasible or
continuously and in the concept of substantiate its
owner for almost forty (40) years. 13 It 17
defense. chanroblesvirtuallawlibrary convenient because it is
now used for the school
insisted that the respondents had lost
premises, the only relief
 available is for the The CA then affirmed the decision of
government to pay due the RTC. The dispositive portion of the
compensation which said decision reads:
should have [been]
done years ago. WHEREFORE, the appeal is DISMISSED,
and the Decision dated 10 January
2.1 To determine due 2008, of the Regional Trial Court,
compensation for the Branch 5, Tuguegarao, Cagayan in Civil
Solana North Central Case No. 6336 for Recovery of
School the basis should Possession and/or Sum of Money,
be the price or value of declaring plaintiffs as the owners of
the property at the time the property in controversy, and
of taking. ordering the Department of Education
to pay them the value of the property
3. No pronouncement as taken is AFFIRMED in toto.
to cost.
SO
SO ORDERED.20chanroblesvirtuallawlibrary
ORDERED.18chanroblesvirtuallawlibrary
Aggrieved, the DepEd, through the
The DepEd, through the Office of the OSG, filed before this Court the
Solicitor General (OSG), appealed the present petition based on the sole
case before the CA. In its appeal, the ground that:
DepEd insisted that the respondents
have lost their right over the subject THE COURT OF APPEALS ERRED IN
property for their failure to assert the AFFIRMING THE TRIAL COURT'S
same for more than thirty (30) years, DECISION THAT THE RESPONDENTS'
starting in 1965, when the Mayor RIGHT TO RECOVER THE POSSESSION
placed the school in possession OF THE SUBJECT PROPERTY IS NOT
thereof.19chanroblesvirtuallawlibrary BARRED BY PRESCRIPTION AND/OR
LACHES.21chanroblesvirtuallawlibrary
This Court finds the petition without
merit.
Laches, in a general sense, is the failure
or neglect for an unreasonable and
unexplained length of time, to do that
which, by exercising due diligence,
could or should have been done
earlier; it is negligence or 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.22chanroblesvirtuallawlibrary
There is no absolute rule as to what
constitutes laches or staleness of
demand; each case is to be determined
according to its particular
circumstances. The question of laches
is addressed to the sound discretion of
the court, and since laches is an
equitable doctrine, its application is
controlled by equitable considerations.
It cannot work to defeat justice or to
perpetrate fraud and
injustice.23chanroblesvirtuallawlibrary
Laches is evidentiary in nature, a fact
that cannot be established by mere
allegations in the pleadings.24 The
following elements, as prescribed in
the case of Go Chi Gun, et al. v. Co
Cho, et al.,25 must be present to
constitute laches:
x x x (1) conduct on the part of the
defendant, or of one under whom he
claims, giving rise to the situation of
which complaint is made for which the
complaint seeks a remedy; (2) delay in
asserting the complainant's rights, the
complainant having had knowledge or
notice, of the defendant's conduct and
having been afforded an opportunity
to institute a suit; (3) lack of
knowledge or notice on the part of the
defendant that the complainant would
assert the right on which he bases his
suit; and (4) injury or prejudice to the
defendant in the event relief is
accorded to the complainant, or the
suit is not held to be
26
barred. chanrobleslaw
To refute the respondents' claim that
its possession of the subject lot was
merely tolerated, the DepEd averred
that it owned the subject property
because the land was purchased by the
civic-minded residents of Solana.27 It
further alleged that since it was the
then Mayor who convinced Cepeda to
allow the school to occupy the
property and use the same, it believed
in good faith that the ownership of the
property was already transferred to
it.28chanroblesvirtuallawlibrary
However, the DepEd did not present,
in addition to the deed of sale, a duly-
registered certificate of title in proving
the alleged transfer or sale of the
property. Aside from its allegation, the
DepEd did not adduce any evidence to
the transfer of ownership of the lot, or
that Cepeda received any.
consideration for the purported sale.
On the other hand, to support their
claim of ownership of the subject lot,
respondents presented the following:
(1) the OCT No. 0-627 registered in the
name of Juan Cepeda;29 (2) Tax
Declarations in the name of Cepeda
and the tax receipts showing the
payment of the real property taxes on
the property since 1965;30 (3) Technical
Description of the lot by the
Department of Environment and
Natural Resources Land Management
Services, surveyed in the name of
Cepeda;31 and (4) Certification from
the Municipal Trial Court of Solana,
Cagayan declaring that Lot 115 was
adjudicated to
32
Cepeda. chanroblesvirtuallawlibrary
After a scrutiny of the records, this
Court finds that the above were
sufficient to resolve the issue on who
had better right of possession. That
being the case, it is the burden of the
DepEd to prove otherwise.
Unfortunately, the DepEd failed to
present any evidence to support its
claim that the disputed land was
indeed purchased by the residents. By
the DepEd's admission, it was the fact
that the then Mayor of Solana,
Cagayan convinced Cepeda to allow
the school to occupy the property for
its school site that made it believe that
the ownership of the property was
already transferred to it. We are not
swayed by the DepEd's arguments. As
against the DepEd's unsubstantiated
self-serving claim that it acquired the
property by virtue of a sale, the
Torrens title of respondents must
prevail.
It is undisputed that the subject
property is covered by OCT No. O-627,
registered in the name of the Juan
Cepeda.33 A fundamental principle in
land registration under the Torrens
system is that a certificate of title
serves as evidence of an indefeasible
and incontrovertible title to the
property in favor of the person whose
name appears therein.34 Thus, the
certificate of title becomes the best
proof of ownership of a parcel of
land.35chanroblesvirtuallawlibrary
As registered owners of the lots in
question, the respondents have a right
to eject any person illegally occupying
their property. This right is
imprescriptible. Even if it be supposed
that they were aware of the
petitioner's occupation of the
property, and regardless of the length
of that possession, the lawful owners
have a right to demand the return of
their property at any time as long as
the possession was unauthorized or
merely tolerated, if at all. This right is
never barred by
laches.36chanroblesvirtuallawlibrary
Case law teaches that those who
occupy the land of another at the
latter's tolerance or permission,
without any contract between them,
are necessarily bound by an implied
promise that the occupants will vacate
the property upon
37
demand. chanroblesvirtuallawlibrary
In the case of Sarona, et al. v. Villegas,
et al.,38] this Court described what
tolerated acts mean, in this language:
Professor Arturo M. Tolentino states
that acts merely tolerated are "those
which by reason of neighborliness or
familiarity, the owner of property
allows his neighbor or another person
to do on the property; they are
generally those particular services or
benefits which one's property can give
to another without material injury or
prejudice to the owner, who permits
them out of friendship or courtesy." x
x x. and, Tolentino continues, even
though "this is continued for a long
time, no right will be acquired by
prescription." x x x39chanrobleslaw
It was out of respect and courtesy to
the then Mayor who was a distant
relative that Cepeda consented to the
building of the school.40 The occupancy
of the subject property by the DepEd
to conduct classes therein arose from
what Professor Arturo Tolentino refers
to as the sense of "neighborliness or
familiarity" of Cepeda to the then
Mayor that he allowed the said
occupation and use of his property.
Professor Tolentino, as cited in
the Sarona case, adds that tolerated
acts are acts of little disturbances
which a person, in the interest of
neighborliness or friendly relations,
permits others to do on his
property, such as passing over the
land, tying a horse therein, or getting
some water from a well. 41 In tolerated
acts, the said permission of the owner
for the acts done in his property arises
from an "impulse of sense of
neighborliness or good familiarity with
persons"42 or out of "friendship or
courtesy,"43 and not out of duty or
obligation. By virtue of tolerance that
is considered as an authorization,
permission, or license, acts of
possession are realized or
performed.44chanroblesvirtuallawlibrar
y
Thus, in light of the DepEd's admission
that it was the then Mayor who
convinced Cepeda to allow its use of
his property and in the absence of
evidence that the same was indeed
sold to it, the occupation and use as
school site of the subject lot by the
DepEd upon Cepeda's permission is
considered a tolerated act. Cepeda
allowed the use of his property out of
his respect, courtesy and familiarity
with the then Mayor who convinced
him to allow the use of his property as
a school site.
Considering that the occupation of the
subject lot is by mere tolerance or
permission of the respondents, the
DepEd, without any contract between
them, is bound by an implied promise
that it will vacate the same upon
demand. Hence, until such demand to
vacate was communicated by the
respondents to the DepEd,
respondents are not required to do
any act to recover the subject land,
precisely because they knew of the
nature of the DepEd's possession
which is by mere tolerance.
Therefore, respondents are not guilty
of failure or neglect to assert a right
within a reasonable time. The nature
of that possession by the DepEd has
never changed from 1965 until the
filing of the complaint for forcible
entry against the respondents on June
21, 2001. It was only then that the
respondents had knowledge of the
adverse claim of the DepEd over the
property. The respondents filed the
action for recovery of possession on
March 16, 2004 after they lost their
appeal in the forcible entry case and
upon the continued refusal of the
DepEd to pay rent, purchase the lot or
vacate the
premises.45chanroblesvirtuallawlibrary
Lastly, the DepEd maintains that the
respondents' inaction for more than 30
years reduced their right to recover
the subject property into a stale
demand. It cited the case of Eduarte v.
CA,46Catholic Bishop of Balanga v.
CA,47 Mactan-Cebu International
Airport Authority (MCIAA) v. Heirs of
Marcelina L. Sero, et al.48 and DepEd
Division of Alb ay v. Oñate49 to bolster
its claim that a registered owner may
lose his right to recover the possession
of his registered property by reason of
laches. It alleged that the fact that the
respondents possess the certificate of
title of the property is of no moment
since a registered landowner, like the
respondents, lost their right to recover
the possession of the registered
property by reason of laches.
In the Eduarte case, the respondents
therein knew of Eduarte's adverse
possession of the subject lot as
evidenced by their Joint Affidavit dated
March 18, 1959. In the case of Catholic
Bishop of Balanga v. CA, the petitioner,
by its own admission, was aware of
private respondent's occupation in the
concept of owner of the lot donated in
its behalf to private respondent's
predecessor-in-interest in 1936. The
subject lot in the case of Mactan-Cebu
International Airport Authority was
obtained through expropriation
proceedings and registered in the
name of the petitioner. In the Onate
case, no evidence was presented to
show that the respondent or his
predecessor-in-interest protested
against the adverse possession of the
disputed lot by the Municipality of
Daraga and, subsequently, by the
petitioner.
Unlike the cases cited by the DepEd,
there was no solid evidentiary basis to
establish that laches existed in the
instant case. The DepEd failed to
substantiate its claim of possession in
the concept of an owner from the time
it occupied the lot after Cepeda
allowed it to use the same for a school
site in 1965. The possession by the
DepEd of the subject lot was clearly by
mere tolerance, since it was not
proven that it laid an adverse claim
over the property by virtue of the
purported sale.
Moreover, the trial court ruled that the
DepEd is a builder in good faith. To be
deemed a builder in good faith, it is
essential that a person asserts title to
the land on which he builds, i.e., that
he be a possessor in the concept of
owner, and that he be unaware that
there exists in his title or mode of
acquisition any flaw which invalidates
it.50 However, there are cases where
Article 448 of the Civil Code was
applied beyond the recognized and
limited definition of good faith, e.g.,
cases wherein the builder has
constructed improvements on the land
of another with the consent of the
owner.51 The Court ruled therein that
the structures were built in good faith
in those cases that the owners knew
and approved of the construction of
improvements on the
52
property. chanroblesvirtuallawlibrary
Despite being a possessor by mere
tolerance, the DepEd is considered a
builder in good faith, since Cepeda
permitted the construction of building
and improvements to conduct classes
on his property. Hence, Article 448
may be applied in the case at bar.
Article 448, in relation to Article 546 of
the Civil Code, provides for the rights
of respondents as landowners as
against the DepEd, a builder in good
faith. The provisions respectively read:
Article 448. The owner of the land on
which anything has been built, sown or
planted in good faith, shall have the
right to appropriate as his own the
works, sowing, or planting, after
payment of the indemnity provided for
in Articles 546 and 548, or to oblige the
one who built or planted to pay the
price of the land, and the one who
sowed, the proper rent. However, the
builder or planter cannot be obliged to
buy the land if its value is considerably
more than that of the building or trees.
In such case, he shall pay reasonable
rent, if the owner of the land does not
choose to appropriate the building or
trees after proper indemnity. The
parties shall agree upon the terms of
the lease and in case of disagreement,
the court shall fix the terms thereof.
Article 546. Necessary expenses shall
be refunded to every possessor; but
only the possessor in good faith may
retain the thing until he has been
reimbursed therefor.
Useful expenses shall be refunded only
to the possessor in good faith with the
same right of retention, the person
who has defeated him in the
possession having the option of
refunding the amount of the expenses
or of paying the increase in value
which the thing may have acquired by
reason thereof.
In the case of Bernardo v.
53
Bataclan,  the Court explicated that
Article 448 provides a just and
equitable solution to the
impracticability of creating "forced co-
ownership" by giving the owner of the
land the option to acquire the
improvements after payment of the
proper indemnity or to oblige the
builder or planter to pay for the land
and the sower to pay the proper
rent.54 The owner of the land is
allowed to exercise the said options
because his right is older and because,
by the principle of accession, he is
entitled to the ownership of the
accessory
thing.55chanroblesvirtuallawlibrary
Thus, the two options available to the
respondents as landowners are: (a)
they may appropriate the
improvements, after payment of
indemnity representing the value of
the improvements introduced and the
necessary and useful expenses
defrayed on the subject lots; or (b)
they may oblige the DepEd to pay the
price of the land. However, it is also
provided under Article 448 that the
builder cannot be obliged to buy the
land if its value is considerably more
than that of the improvements and
buildings. If that is the case, the DepEd
is not duty-bound to pay the price of
the land should the value of the same
be considerably higher than the value
of the improvement introduced by the
DepEd on the subject property. In
which case, the law provides that the
parties shall agree on the terms of the
lease and, in case of disagreement, the
court shall fix the terms thereof.
The RTC, as affirmed by the CA, ruled
that the option of the landowner to
appropriate after payment of the
indemnity representing the value of
the improvements introduced and the
necessary and useful expenses
defrayed on the subject lots is no
longer feasible or convenient because
it is now being used as school
premises. Considering that the
appropriation of improvements upon
payment of indemnity pursuant to
Article 546 by the respondents of the
buildings being used by the school is
no longer practicable and feasible, the
respondents are thus left with the
second option of obliging the DepEd to
pay the price of the land or to require
the DepEd to pay reasonable rent if
the value of the land is considerably
more than the value of the buildings
and improvements.
Since the determination of the value of
the subject property is factual in
nature, this Court finds a need to
remand the case to the trial court to
determine its value. In case the trial
court determines that the value of the
land is considerably more than that of
the buildings and improvements
introduced, the DepEd may not be
compelled to pay the value of the land,
instead it shall pay reasonable rent
upon agreement by the parties of the
terms of the lease. In the event of a
disagreement between the parties, the
trial court shall fix the terms of lease.
Lastly, the RTC ruled that the basis of
due compensation for the respondents
should be the price or value of the
property at the time of the taking. In
the case of Ballatan v. CA,56 the Court
has settled that the time of taking is
determinative of just compensation in
expropriation proceedings but not in a
case where a landowner has been
deprived of the use of a portion of this
land for years due to the
encroachment of
57
another. chanroblesvirtuallawlibrary
In such instances, the case of Vda. de
Roxas v. Our Lady's Foundation, Inc. 58 is the court of origin to determine the
instructive. The Court elucidated value of the subject property. If the
therein that the computation of the value of the property is less than the
value of the property should be fixed value of the buildings and
at the prevailing market value.59 The improvements, the Department of
reckoning period for valuing the Education is ordered to pay such
property in case the landowner amount. If the value of the property is
exercised his rights in accordance with greater than the value of the buildings
Article 448 shall be at the time the and improvements, the DepEd is
landowner elected his ordered to pay reasonable rent in
60
choice.  Therefore, the basis for the accordance with the agreement of the
computation of the value of the parties. In case of disagreement, the
subject property in the instant case trial court shall fix the amount of
should be its present or current fair reasonable rent.
market value.
SO ORDERED.cralawlawlibrary
WHEREFORE, the Petition for Review a
on Certiorari, dated June 18, 2010, of
petitioner Department of Education,
represented by its Regional Director, is
hereby DENIED. Accordingly, the
Decision dated April 29, 2010 of the
Court of Appeals in CA-G.R. CV No.
90633, affirming the Decision dated
January 10, 2008 of the Regional Trial
Court of Tuguegarao City, Cagayan,
Branch 5, which declared the
respondents the owners of property in
controversy, is hereby AFFIRMED.

Accordingly, this case is REMANDED to