1.) Laurel v. Hon.
Abrogar telephone service of PLDT as the personal properties which were
G.R. No. 155076 | January 13, 2009
FACTS:
1. On February 27, 2006, this Court’s First Division rendered judgment in this case as follows: IN LIGHT OF
ALL THE FOREGOING, the petition is GRANTED. The assailed Orders of the RTC and the Decision of
the CA are REVERSED and SET ASIDE. The RTC is directed to issue an order granting the motion of the
petitioner to quash the Amended Information.
2. By way of brief background, petitioner is one of the accused in Criminal
Case No. 99-2425, filed with the RTC of Makati City, Branch 150. The
Amended Information charged the accused with theft under Article 308 of
the Revised Penal Code, committed as follows:
a. On or about September 10-19, 1999, or prior thereto in Makati City…the accused,
conspiring and confederating together and all of them mutually helping and aiding
one another, with intent to gain and without the knowledge and consent of the
(PLDT), did then and there willfully, unlawfully and feloniously take, steal and use
the international long distance calls belonging to PLDT by conducting International
Simple Resale (ISR), which is a method of routing and completing international
long distance calls using lines, cables, antenae, and/or air wave frequency which
connect directly to the local or domestic exchange facilities of the country where
the call is destined, effectively stealing this business from PLDT while using its
facilities in the estimated amount of P20,370,651.92 to the damage and prejudice of
PLDT, in the said amount.
3. Petitioner filed a "Motion to Quash (with Motion to Defer Arraignment),"
on the ground that the factual allegations in the Amended Information do
not constitute the felony of theft. The trial court denied the Motion to Quash
the Amended Information, as well petitioner’s subsequent Motion for
Reconsideration.
4. Petitioner’s special civil action for certiorari was dismissed by the Court of
Appeals. Thus, petitioner filed the instant petition for review with this
Court.
5. In the above-quoted Decision, this Court held that the Amended
Information does not contain material allegations charging petitioner with
theft of personal property since international long distance calls and the
business of providing telecommunication or telephone services are not
personal properties under Article 308 of the Revised Penal Code.
6. Respondent Philippine Long Distance Telephone Company (PLDT) filed a
Motion for Reconsideration with Motion to Refer the Case to the Supreme
Court En Banc. It maintains that the Amended Information charging
petitioner with theft is valid and sufficient; that it states the names of all the
accused who were specifically charged with the crime of theft of PLDT’s
international calls and business of providing telecommunication or
telephone service on or about September 10 to 19, 1999 in Makati City by
conducting ISR or International Simple Resale; that it identifies the
international calls and business of providing telecommunication or
unlawfully taken by the accused; and that it satisfies the test of sufficiency
as it enabled a person of common understanding to know the charge against
him and the court to render judgment properly.
7. PLDT further insists that the Revised Penal Code should be interpreted in
the context of the Civil Code’s definition of real and personal property. The
enumeration of real properties in Article 415 of the Civil Code is exclusive
such that all those not included therein are personal properties. Since Article
308 of the Revised Penal Code used the words "personal property" without
qualification, it follows that all "personal properties" as understood in the
context of the Civil Code, may be the subject of theft under Article 308 of
the Revised Penal Code. PLDT alleges that the international calls and
business of providing telecommunication or telephone service are
personal properties capable of appropriation and can be objects of
theft.
8. PLDT also argues that "taking" in relation to theft under the Revised Penal
Code does not require "asportation," the sole requisite being that the
object should be capable of "appropriation." The element of "taking"
referred to in Article 308 of the Revised Penal Code means the act of
depriving another of the possession and dominion of a movable coupled
with the intention, at the time of the "taking," of withholding it with the
character of permanency. There must be intent to appropriate, which means
to deprive the lawful owner of the thing. Thus, the term "personal
properties" under Article 308 of the Revised Penal Code is not limited to
only personal properties which are "susceptible of being severed from a
mass or larger quantity and of being transported from place to place."
9. PLDT likewise alleges that as early as the 1930s, international telephone
calls were in existence; hence, there is no basis for this Court’s finding that
the Legislature could not have contemplated the theft of international
telephone calls and the unlawful transmission and routing of electronic
voice signals or impulses emanating from such calls by unlawfully
tampering with the telephone device as within the coverage of the Revised
Penal Code.
10. According to respondent, the "international phone calls" which are "electric
currents or sets of electric impulses transmitted through a medium, and
carry a pattern representing the human voice to a receiver," are personal
properties which may be subject of theft. Article 416(3) of the Civil Code
deems "forces of nature" (which includes electricity) which are brought
under the control by science, are personal property.
11. In his Comment to PLDT’s motion for reconsideration, petitioner Laurel
claims that a telephone call is a conversation on the phone or a
communication carried out using the telephone. It is not synonymous to
electric current or impulses. Hence, it may not be considered as personal
 property susceptible of appropriation. Petitioner claims that the analogy
between generated electricity and telephone calls is misplaced. PLDT does
not produce or generate telephone calls. It only provides the facilities or
services for the transmission and switching of the calls. He also insists that
"business" is not personal property. It is not the "business" that is protected
but the "right to carry on a business." This right is what is considered as
property. Since the services of PLDT cannot be considered as "property,"
the same may not be subject of theft. 
12. The (OSG) agrees with respondent PLDT that "international phone calls and the business or
service of providing international phone calls" are subsumed in the enumeration and definition
of personal property under the Civil Code hence, may be proper subjects of theft. It noted that
the cases of United States v. Genato,3 United States v. Carlos 4 and United States v.
Tambunting,5 which recognized intangible properties like gas and electricity as personal
properties, are deemed incorporated in our penal laws. Moreover, the theft provision in the
Revised Penal Code was deliberately couched in broad terms precisely to be all-encompassing
and embracing even such scenario that could not have been easily anticipated.
13. According to the OSG, prosecution under Republic Act (RA) No. 8484 or the Access Device
Regulations Act of 1998and RA 8792 or the Electronic Commerce Act of 2000 does not
preclude prosecution under the Revised Penal Code for the crime of theft. The latter embraces
unauthorized appropriation or use of PLDT’s international calls, service and business, for
personal profit or gain, to the prejudice of PLDT as owner thereof. On the other hand, the
special laws punish the surreptitious and advanced technical means employed to illegally
obtain the subject service and business. Even assuming that the correct indictment should have
been under RA 8484, the quashal of the information would still not be proper. The charge of
theft as alleged in the Information should be taken in relation to RA 8484 because it is the
elements, and not the designation of the crime, that control.
ISSUES:
1. W/N petitioner is guilty of theft.
RATIO:
1. We resolve to grant the Motion for Reconsideration but remand the case to
the trial court for proper clarification of the Amended Information.
2. Article 308 of the Revised Penal Code provides:
a. Art. 308. Who are liable for theft. – Theft is committed by any person who, with
intent to gain but without violence against, or intimidation of persons nor force
upon things, shall take personal property of another without the latter’s consent.
3. The elements of theft under Article 308 of the Revised Penal Code are as
follows: (1) that there be taking of personal property; (2) that said property
belongs to another; (3) that the taking be done with intent to gain; (4) that
the taking be done without the consent of the owner; and (5) that the taking
be accomplished without the use of violence against or intimidation of
persons or force upon things.  States v. Tambunting, and the use of a jumper to divert electricity, as held in
4. Prior to the passage of the Revised Penal Code on December 8, 1930, the
definition of the term "personal property" in the penal code provision on
theft had been established in Philippine jurisprudence. This Court, in United
States v. Genato, United States v. Carlos, and United States v. Tambunting,
consistently ruled that any personal property, tangible or intangible,
corporeal or incorporeal, capable of appropriation can be the object of
theft. 
5. Moreover, since the passage of the Revised Penal Code on December 8,
1930, the term "personal property" has had a generally accepted definition
in civil law. In Article 335 of the Civil Code of Spain, "personal property"
is defined as "anything susceptible of appropriation and not included in the
foregoing chapter (not real property)." Thus, the term "personal property" in
the Revised Penal Code should be interpreted in the context of the Civil
Code provisions in accordance with the rule on statutory construction that where words
have been long used in a technical sense and have been judicially construed to have a certain
meaning, and have been adopted by the legislature as having a certain meaning prior to a
particular statute, in which they are used, the words used in such statute should be construed
according to the sense in which they have been previously used. 6 In fact, this Court used
the Civil Code definition of "personal property" in interpreting the theft
provision of the penal code in United States v. Carlos.
6. Cognizant of the definition given by jurisprudence and the Civil Code of
Spain to the term "personal property" at the time the old Penal Code was
being revised, still the legislature did not limit or qualify the definition of
"personal property" in the Revised Penal Code. Neither did it provide a
restrictive definition or an exclusive enumeration of "personal property" in
the Revised Penal Code, thereby showing its intent to retain for the term an
extensive and unqualified interpretation.  Consequently, any property
which is not included in the enumeration of real properties under the
Civil Code and capable of appropriation can be the subject of theft
under the Revised Penal Code.
7. The only requirement for a personal property to be the object of theft under
the penal code is that it be capable of appropriation. It need not be capable
of "asportation," which is defined as "carrying away." 7 Jurisprudence is
settled that to "take" under the theft provision of the penal code does
not require asportation or carrying away.8
8. To appropriate means to deprive the lawful owner of the thing. 9 The
word "take" in the Revised Penal Code includes any act intended to transfer
possession which, as held in the assailed Decision, may be committed
through the use of the offenders’ own hands, as well as any mechanical
device, such as an access device or card as in the instant case. This includes
controlling the destination of the property stolen to deprive the owner of the
property, such as the use of a meter tampering, as held in Natividad v. Court
of Appeals,10 use of a device to fraudulently obtain gas, as held in United
the cases of United States v. Genato, United States v. Carlos, and United
States v. Menagas.11
9. As illustrated in the above cases, appropriation of forces of nature which are
brought under control by science such as electrical energy can be achieved
 by tampering with any apparatus used for generating or measuring such
forces of nature, wrongfully redirecting such forces of nature from such
apparatus, or using any device to fraudulently obtain such forces of nature.
10. In the instant case, petitioner was charged with engaging in International
Simple Resale (ISR) or the unauthorized routing and completing of
international long distance calls using lines, cables, antennae, and/or air
wave frequency and connecting these calls directly to the local or
domestic exchange facilities of the country where destined.
11. As early as 1910, the Court declared in Genato that ownership over
electricity (which an international long distance call consists of), as well
as telephone service, is protected by the provisions on theft of the Penal
Code. The pertinent provision of the Revised Ordinance of the City of
Manila, which was involved in the said case, reads as follows:
a. Injury to electric apparatus; Tapping current; Evidence. – No person shall destroy,
mutilate, deface, or otherwise injure or tamper with any wire, meter, or other
apparatus installed or used for generating, containing, conducting, or measuring
electricity, telegraph or telephone service, nor tap or otherwise wrongfully deflect
or take any electric current from such wire, meter, or other apparatus.
b. No person shall, for any purpose whatsoever, use or enjoy the benefits of any device
by means of which he may fraudulently obtain any current of electricity or any
telegraph or telephone service; and the existence in any building premises of any
such device shall, in the absence of satisfactory explanation, be deemed sufficient
evidence of such use by the persons benefiting thereby.
12. It was further ruled that even without the above ordinance the acts of
subtraction punished therein are covered by the provisions on theft of the
Penal Code then in force, thus:
a. Even without them (ordinance), the right of the ownership of electric current is
secured by articles 517 and 518 of the Penal Code; the application of these articles
in cases of subtraction of gas, a fluid used for lighting, and in some respects
resembling electricity, is confirmed by the rule laid down in the decisions of the
supreme court of Spain of January 20, 1887, and April 1, 1897, construing and
enforcing the provisions of articles 530 and 531 of the Penal Code of that country,
articles 517 and 518 of the code in force in these islands.
13. The acts of "subtraction" include: (a) tampering with any wire, meter, or
other apparatus installed or used for generating, containing, conducting, or
measuring electricity, telegraph or telephone service; (b) tapping or
otherwise wrongfully deflecting or taking any electric current from such
wire, meter, or other apparatus; and (c) using or enjoying the benefits of any
device by means of which one may fraudulently obtain any current of
electricity or any telegraph or telephone service.
14. In the instant case, the act of conducting ISR operations by illegally
connecting various equipment or apparatus to private respondent
PLDT’s telephone system, through which petitioner is able to resell or
re-route international long distance calls using respondent PLDT’s
facilities constitutes all three acts of subtraction mentioned above.
15. The business of providing telecommunication or telephone service is
likewise personal property which can be the object of theft under Article
308 of the Revised Penal Code. Business may be appropriated under
Section 2 of Act No. 3952 (Bulk Sales Law), hence, could be object of
theft:
a. Section 2. Any sale, transfer, mortgage, or assignment of a stock of goods, wares,
merchandise, provisions, or materials otherwise than in the ordinary course of trade
and the regular prosecution of the business of the vendor, mortgagor, transferor, or
assignor, or any sale, transfer, mortgage, or assignment of all, or substantially all, of
the business or trade theretofore conducted by the vendor, mortgagor, transferor or
assignor, or all, or substantially all, of the fixtures and equipment used in and about
the business of the vendor, mortgagor, transferor, or assignor, shall be deemed to be
a sale and transfer in bulk, in contemplation of the Act. x x x.
16. In Strochecker v. Ramirez,12 this Court stated:
a. With regard to the nature of the property thus mortgaged which is one-half interest
in the business above described, such interest is a personal property capable of
appropriation and not included in the enumeration of real properties in article 335
of the Civil Code, and may be the subject of mortgage.
17. Interest in business was not specifically enumerated as personal property in
the Civil Code in force at the time the above decision was rendered. Yet,
interest in business was declared to be personal property since it is
capable of appropriation and not included in the enumeration of real
properties.
18. Article 414 of the Civil Code provides that all things which are or may
be the object of appropriation are considered either real property or
personal property. Business is likewise not enumerated as personal
property under the Civil Code. Just like interest in business, however, it
may be appropriated.
19. Following the ruling in Strochecker v. Ramirez, business should also be
classified as personal property. Since it is not included in the exclusive
enumeration of real properties under Article 415, it is therefore personal
property.13
20. As can be clearly gleaned from the above disquisitions, petitioner’s acts
constitute theft of respondent PLDT’s business and service, committed by
means of the unlawful use of the latter’s facilities. In this regard, the
Amended Information inaccurately describes the offense by making it
appear that what petitioner took were the international long distance
telephone calls, rather than respondent PLDT’s business.
21. A perusal of the records of this case readily reveals that petitioner and
respondent PLDT extensively discussed the issue of ownership of telephone
calls. The prosecution has taken the position that said telephone calls belong
to respondent PLDT. This is evident from its Comment where it defined the
issue of this case as whether or not "the unauthorized use or appropriation
of PLDT international telephone calls, service and facilities, for the purpose
of generating personal profit or gain that should have otherwise belonged to
 PLDT, constitutes theft."14
22. In discussing the issue of ownership, petitioner and respondent PLDT gave
their respective explanations on how a telephone call is generated. 15 For its
part, respondent PLDT explains the process of generating a telephone call
as follows:
a. 38. The role of telecommunication companies is not limited to merely providing the
medium (i.e. the electric current) through which the human voice/voice signal of the
caller is transmitted. Before the human voice/voice signal can be so transmitted, a
telecommunication company, using its facilities, must first break down or
decode the human voice/voice signal into electronic impulses and subject the
same to further augmentation and enhancements. Only after such process of
conversion will the resulting electronic impulses be transmitted by a
telecommunication company, again, through the use of its facilities. Upon reaching
the destination of the call, the telecommunication company will again break down
or decode the electronic impulses back to human voice/voice signal before the
called party receives the same. In other words, a telecommunication company both
converts/reconverts the human voice/voice signal and provides the medium for
transmitting the same.
b. 39. Moreover, in the case of an international telephone call, once the electronic
impulses originating from a foreign telecommunication company country (i.e.
Japan) reaches the Philippines through a local telecommunication company (i.e.
private respondent PLDT), it is the latter which decodes, augments and enhances
the electronic impulses back to the human voice/voice signal and provides the
medium (i.e. electric current) to enable the called party to receive the call .
Thus, it is not true that the foreign telecommunication company provides (1) the
electric current which transmits the human voice/voice signal of the caller and (2)
the electric current for the called party to receive said human voice/voice signal.
c. 40. Thus, contrary to petitioner Laurel’s assertion, once the electronic impulses or
electric current originating from a foreign telecommunication company (i.e. Japan)
reaches private respondent PLDT’s network, it is private respondent PLDT which
decodes, augments and enhances the electronic impulses back to the human
voice/voice signal and provides the medium (i.e. electric current) to enable the
called party to receive the call. Without private respondent PLDT’s network, the
human voice/voice signal of the calling party will never reach the called party.16
23. In the assailed Decision, it was conceded that in making the international
phone calls, the human voice is converted into electrical impulses or electric
current which are transmitted to the party called. A telephone call,
therefore, is electrical energy. It was also held in the assailed Decision that
intangible property such as electrical energy is capable of appropriation
because it may be taken and carried away. Electricity is personal property
under Article 416 (3) of the Civil Code, which enumerates "forces of
nature which are brought under control by science." 17
24. Indeed, while it may be conceded that "international long distance calls,"
the matter alleged to be stolen in the instant case, take the form of electrical
energy, it cannot be said that such international long distance calls were
personal properties belonging to PLDT since the latter could not have
acquired ownership over such calls. PLDT merely encodes, augments,
enhances, decodes and transmits said calls using its complex
communications infrastructure and facilities. PLDT not being the
owner of said telephone calls, then it could not validly claim that such
telephone calls were taken without its consent.
25. 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.
26. 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.
27. However, the Amended Information describes the thing taken as,
"international long distance calls," and only later mentions "stealing the
business from PLDT" as the manner by which the gain was derived by the
accused.
28. In order to correct this inaccuracy of description, this case must be
remanded to the trial court and the prosecution directed to amend the
Amended Information, to clearly state that the property subject of the theft
are the services and business of respondent PLDT. Parenthetically, this
amendment is not necessitated by a mistake in charging the proper offense,
which would have called for the dismissal of the information under Rule
110, Section 14 and Rule 119, Section 19 of the Revised Rules on Criminal
Procedure. To be sure, the crime is properly designated as one of theft.
29. The purpose of the amendment is simply to ensure that the accused is fully
and sufficiently apprised of the nature and cause of the charge against him,
and thus guaranteed of his rights under the Constitution.
30. ACCORDINGLY, the motion for reconsideration is GRANTED. The
assailed Decision dated February 27, 2006 is RECONSIDERED and SET
ASIDE. The Decision of the CA in CA-G.R. SP No. 68841 affirming the
Order issued by Judge Zeus C. Abrogar of the RTC of Makati City, Branch
150, which denied the Motion to Quash (With Motion to Defer
Arraignment) in Criminal Case No. 99-2425 for theft, is AFFIRMED.
31. The case is remanded to the trial court and the Public Prosecutor of Makati
City is hereby DIRECTED to amend the Amended Information to show that
the property subject of the theft were services and business of the private
offended party.

2.) Serg’s Products, Inc. v. PCI Leasing and Finance, Inc.,
G.R. No. 137705 | August 22, 2000 | Real Prop as Personal Prop
FACTS:
1. After agreeing to a contract stipulating that a real or immovable property be
considered as personal or movable, a party is estopped from subsequently
claiming otherwise. Hence, such property is a proper subject of a writ of
replevin obtained by the other contracting party.
2. In its February 18, 1998 Order, the (RTC) of Quezon City (Branch 218) issued a Writ of Seizure. The March
18, 1998 Resolution8 denied petitioners’ Motion for Special Protective Order, praying that the deputy sheriff
be enjoined "from seizing immobilized or other real properties in (petitioners’) factory in Cainta, Rizal and
to return to their original place whatever immobilized machineries or equipments he may have removed."
CA affirmed.
3. "On February 13, 1998, respondent PCI Leasing and Finance, Inc. ("PCI
Leasing" for short) filed with the RTC-QC a complaint for [a] sum of
money (Annex ‘E’), with an application for a writ of replevin docketed as
Civil Case No. Q-98-33500.
4. "On March 6, 1998, upon an ex-parte application of PCI Leasing,
respondent judge issued a writ of replevin (Annex ‘B’) directing its
sheriff to seize and deliver the machineries and equipment to PCI Leasing
after 5 days and upon the payment of the necessary expenses.
5. "On March 24, 1998, in implementation of said writ, the sheriff proceeded
to petitioner’s factory, seized one machinery with [the] word that he
[would] return for the other machineries.
6. "On March 25, 1998, petitioners filed a motion for special protective order (Annex ‘C’),
invoking the power of the court to control the conduct of its officers and amend and control its
processes, praying for a directive for the sheriff to defer enforcement of the writ of replevin.
7. "This motion was opposed by PCI Leasing (Annex ‘F’), on the ground that
the properties [were] still personal and therefore still subject to seizure and a
writ of replevin.
8. "In their Reply, petitioners asserted that the properties sought to be seized
[were] immovable as defined in Article 415 of the Civil Code, the parties’
agreement to the contrary notwithstanding. They argued that to give effect
to the agreement would be prejudicial to innocent third parties. They further
stated that PCI Leasing [was] estopped from treating these machineries as
personal because the contracts in which the alleged agreement [were]
embodied [were] totally sham and farcical.
9. "On April 6, 1998, the sheriff again sought to enforce the writ of seizure and
take possession of the remaining properties. He was able to take two more,
but was prevented by the workers from taking the rest.
10. "On April 7, 1998, they went to [the CA] via an original action for
certiorari."
11. Ruling of the Court of Appeals : Citing the Agreement of the parties, the appellate court held
that the subject machines were personal property, and that they had only been leased, not
owned, by petitioners. It also ruled that the "words of the contract are clear and leave no doubt
upon the true intention of the contracting parties." Observing that Petitioner Goquiolay was an
experienced businessman who was "not unfamiliar with the ways of the trade," it ruled that he
"should have realized the import of the document he signed." The CA further held:
a. "Furthermore, to accord merit to this petition would be to preempt the trial court in
ruling upon the case below, since the merits of the whole matter are laid down
before us via a petition whose sole purpose is to inquire upon the existence of a
grave abuse of discretion on the part of the [RTC] in issuing the assailed Order and
Resolution. The issues raised herein are proper subjects of a full-blown trial,
necessitating presentation of evidence by both parties. The contract is being
enforced by one, and [its] validity is attacked by the other – a matter x x x which
respondent court is in the best position to determine."
12. Hence, this Petition.11 
13. In their Memorandum, petitioners submit the following issues for our
consideration:
a. "A. Whether or not the machineries purchased and imported by SERG’S became
real property by virtue of immobilization.
b. B. Whether or not the contract between the parties is a loan or a lease."12 
ISSUES:
1. In the main, the Court will resolve whether the said machines are personal,
not immovable, property which may be a proper subject of a writ of
replevin.
RATIO:
1. The Petition is not meritorious.
2. Main Issue: Nature of the Subject Machinery
3. Petitioners contend that the subject machines used in their factory were not
proper subjects of the Writ issued by the RTC, because they were in fact
real property. Serious policy considerations, they argue, militate against a
contrary characterization.
4. Rule 60 of the Rules of Court provides that writs of replevin are issued for
the recovery of personal property only.15 Section 3 thereof reads:
a. "SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the
court shall issue an order and the corresponding writ of replevin describing the
personal property alleged to be wrongfully detained and requiring the sheriff
forthwith to take such property into his custody."
5. On the other hand, Article 415 of the Civil Code enumerates immovable or
 real property as follows:
a. "ART. 415. The following are immovable property:
b. x x x           x x x          x x x (5) Machinery, receptacles, instruments or implements
intended by the owner of the tenement for an industry or works which may be
carried on in a building or on a piece of land, and which tend directly to meet the
needs of the said industry or works;
6. In the present case, the machines that were the subjects of the Writ of
Seizure were placed by petitioners in the factory built on their own land.
Indisputably, they were essential and principal elements of their chocolate-
making industry.
7. Hence, although each of them was movable or personal property on its
own, all of them have become "immobilized by destination because they
are essential and principal elements in the industry."16 In that sense,
petitioners are correct in arguing that the said machines are real, not
personal, property pursuant to Article 415 (5) of the Civil Code.17 
8. Be that as it may, we disagree with the submission of the petitioners that the
said machines are not proper subjects of the Writ of Seizure.
9. The Court has held that contracting parties may validly stipulate that a
real property be considered as personal.18 After agreeing to such
stipulation, they are consequently estopped from claiming otherwise.
Under the principle of estoppel, a party to a contract is ordinarily
precluded from denying the truth of any material fact found therein.
10. Hence, in Tumalad v. Vicencio,19 the Court upheld the intention of the parties to treat a house as
a personal property because it had been made the subject of a chattel mortgage.
a. "x x x. Although there is no specific statement referring to the subject house as
personal property, yet by ceding, selling or transferring a property by way of chattel
mortgage defendants-appellants could only have meant to convey the house as
chattel, or at least, intended to treat the same as such, so that they should not now be
allowed to make an inconsistent stand by claiming otherwise."
11. Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile
Mills20 also held that the machinery used in a factory and essential to the industry, as in the
present case, was a proper subject of a writ of replevin because it was treated as personal
property in a contract. Pertinent portions of the Court’s ruling are reproduced hereunder:
a. "x x x. If a house of strong materials, like what was involved in the above Tumalad
case, may be considered as personal property for purposes of executing a chattel
mortgage thereon as long as the parties to the contract so agree and no innocent
third party will be prejudiced thereby, there is absolutely no reason why a
machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because
one who has so agreed is estopped from denying the existence of the chattel
mortgage."
12. In the present case, the Lease Agreement clearly provides that the
machines in question are to be considered as personal property.
Specifically, Section 12.1 of the Agreement reads as follows:21  machinery as personal property, was also assailed because respondent had
a. "12.1 The PROPERTY is, and shall at all times be and remain, personal property
notwithstanding that the PROPERTY or any part thereof may now be, or hereafter
become, in any manner affixed or attached to or embedded in, or permanently
resting upon, real property or any building thereon, or attached in any manner to
what is permanent."
13. Clearly then, petitioners are estopped from denying the characterization of
the subject machines as personal property. Under the circumstances, they
are proper subjects of the Writ of Seizure.
14. It should be stressed, however, that our holding -- that the machines should
be deemed personal property pursuant to the Lease Agreement – is good
only insofar as the contracting parties are concerned. 22 Hence, while the
parties are bound by the Agreement, third persons acting in good faith are
not affected by its stipulation characterizing the subject machinery as
personal.23 In any event, there is no showing that any specific third party
would be adversely affected.
15. Validity of the Lease Agreement
16. In their Memorandum, petitioners contend that the Agreement is a loan and not a lease. 24 Submitting
documents supposedly showing that they own the subject machines, petitioners also argue in their Petition
that the Agreement suffers from "intrinsic ambiguity which places in serious doubt the intention of the
parties and the validity of the lease agreement itself." 25 In their Reply to respondent’s Comment, they further
allege that the Agreement is invalid. 26 
17. These arguments are unconvincing. The validity and the nature of the contract are the lis mota of the civil
action pending before the RTC. A resolution of these questions, therefore, is effectively a resolution of the
merits of the case. Hence, they should be threshed out in the trial, not in the proceedings involving the
issuance of the Writ of Seizure.
18. Indeed, in La Tondeña Distillers v. CA,27 the Court explained that the policy under Rule 60 was that
questions involving title to the subject property – questions which petitioners are now raising -- should be
determined in the trial. In that case, the Court noted that the remedy of defendants under Rule 60 was either
to post a counter-bond or to question the sufficiency of the plaintiff’s bond. They were not allowed,
however, to invoke the title to the subject property. The Court ruled:
a. "In other words, the law does not allow the defendant to file a motion to dissolve or discharge
the writ of seizure (or delivery) on ground of insufficiency of the complaint or of the grounds
relied upon therefor, as in proceedings on preliminary attachment or injunction, and thereby put
at issue the matter of the title or right of possession over the specific chattel being replevied, the
policy apparently being that said matter should be ventilated and determined only at the trial on
the merits."28 
19. Besides, these questions require a determination of facts and a presentation of evidence, both of which have
no place in a petition for certiorari in the CA under Rule 65 or in a petition for review in this Court under
Rule 45.29 
20. Reliance on the Lease Agreement
21. It should be pointed out that the Court in this case may rely on the Lease
Agreement, for nothing on record shows that it has been nullified or
annulled. In fact, petitioners assailed it first only in the RTC proceedings,
which had ironically been instituted by respondent. Accordingly, it must be
presumed valid and binding as the law between the parties.
22. Makati Leasing and Finance Corporation30 is also instructive on this point.
In that case, the Deed of Chattel Mortgage, which characterized the subject
allegedly been required "to sign a printed form of chattel mortgage which
was in a blank form at the time of signing." The Court rejected the argument
 and relied on the Deed, ruling as follows:
a. "x x x. Moreover, even granting that the charge is true, such fact alone does not
render a contract void ab initio, but can only be a ground for rendering said contract
voidable, or annullable pursuant to Article 1390 of the new Civil Code, by a proper
action in court. There is nothing on record to show that the mortgage has been
annulled. Neither is it disclosed that steps were taken to nullify the same. x x x"
23. Alleged Injustice Committed on the Part of Petitioners
24. Petitioners contend that "if the Court allows these machineries to be seized, then its workers would be out of
work and thrown into the streets."31 They also allege that the seizure would nullify all efforts to rehabilitate
the corporation.
25. Petitioners’ arguments do not preclude the implementation of the Writ. As earlier discussed, law and
jurisprudence support its propriety. Verily, the above-mentioned consequences, if they come true, should not
be blamed on this Court, but on the petitioners for failing to avail themselves of the remedy under Section 5
of Rule 60, which allows the filing of a counter-bond. The provision states:
a. "SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicant’s
bond, or of the surety or sureties thereon, he cannot immediately require the return of the
property, but if he does not so object, he may, at any time before the delivery of the property to
the applicant, require the return thereof, by filing with the court where the action is pending a
bond executed to the applicant, in double the value of the property as stated in the applicant’s
affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the
payment of such sum to him as may be recovered against the adverse party, and by serving a
copy bond on the applicant."
26. WHEREFORE, the Petition is DENIED and the assailed Decision of the
Court of Appeals AFFIRMED. Costs against petitioners.
3.) Meralco v. The City Assessor and City Treasurer of Lucena City
G.R. No. 166102, 5 August 2015
FACTS:
1. Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by Manila
Electric Company (MERALCO), seeking the reversal of the Decision [1] dated May 13, 2004 and
Resolution [2] dated November 18, 2004 of the Court of Appeals in CA-G.R. SP No. 67027. The appellate
court affirmed the Decision[3] dated May 3, 2001 of the Central Board of Assessment Appeals (CBAA) in
CBAA Case No. L-20-98, which, in turn, affirmed with modification the Decision [4] dated June 17, 1998[5] of
the Local Board of Assessment Appeals (LBAA) of Lucena City, Quezon Province, as regards Tax
Declaration Nos. 019-6500 and 019-7394, ruling that MERALCO is liable for real property tax on its
transformers, electric posts (or poles), transmission lines, insulators, and electric meters, beginning 1992.
2. MERALCO is a private corporation organized and existing under Philippine
laws to operate as a public utility engaged in electric distribution.
MERALCO has been successively granted franchises to operate in Lucena
City beginning 1922 until present time, particularly, by: (1) Resolution No.
36[6] dated May 15, 1922 of the Municipal Council of Lucena; (2)
Resolution No. 108[7] dated July 1, 1957 of the Municipal Council of
Lucena; (3) Resolution No. 2679[8] dated June 13, 1972 of the Municipal
Board of Lucena City;[9] (4) Certificate of Franchise[10] dated October 28,
1993 issued by the National Electrification Commission; and (5) Republic
Act No. 9209[11] approved on June 9, 2003 by Congress.[12]
3. On February 20, 1989, MERALCO received from the City Assessor of
Lucena a copy of Tax Declaration No. 019-6500[13] covering the following
electric facilities, classified as capital investment, of the company: (a)
transformer and electric post; (b) transmission line; (c) insulator; and (d)
electric meter, located in Quezon Ave. Ext., Brgy. Gulang-Gulang, Lucena
City. Under Tax Declaration No. 019-6500, these electric facilities had a
market value of P81,811,000.00 and an assessed value of P65,448,800.00,
and were subjected to real property tax as of 1985.
4. MERALCO appealed Tax Declaration No. 019-6500 before the LBAA of
Lucena City, which was docketed as LBAA-89-2. MERALCO claimed that
its capital investment consisted only of its substation facilities, the true and
correct value of which was only P9,454,400.00; and that MERALCO was
exempted from payment of real property tax on said substation facilities.
5. The LBAA rendered a Decision[14] in LBAA-89-2 on July 5, 1989, finding that under its
franchise, MERALCO was required to pay the City Government of Lucena a tax equal to 5%
of its gross earnings, and "[s]aid tax shall be due and payable quarterly and shall be in lieu of
any and all taxes of any kind, nature, or description levied, established, or collected x x x, on
its poles, wires, insulators, transformers and structures, installations, conductors, and
accessories, x x x, from which taxes the grantee (MERALCO) is hereby expressly
exempted."[15] 
6. As regards the issue of whether or not the poles, wires, insulators, transformers, and electric
meters of MERALCO were real properties, the LBAA cited the 1964 case of Board of
Assessment Appeals v. Manila Electric Company [16] (1964 MERALCO case) in which the Court
held that: (1) the steel towers fell within the term "poles" expressly exempted from taxes under
the franchise of MERALCO; and (2) the steel towers were personal properties under the
provisions of the Civil Code and, hence, not subject to real property tax. The LBAA lastly
ordered that Tax Declaration No. 019-6500 would remain and the poles, wires, insulators,
transformers, and electric meters of MERALCO would be continuously assessed, but the City
Assessor would stamp on the said Tax Declaration the word "exempt." The LBAA decreed in
the end:
a. WHEREFORE, from the evidence adduced by the parties, the Board overrules the
claim of the [City Assessor of Lucena] and sustain the claim of [MERALCO].
b. Further, the Appellant (Meralco) is hereby ordered to render an accounting to the
City Treasurer of Lucena and to pay the City Government of Lucena the amount
corresponding to the Five (5%) per centum of the gross earnings in compliance with
paragraph 13 both Resolutions 108 and 2679, respectively, retroactive from
November 9, 1957 to date, if said tax has not yet been paid.[17]
7. The City Assessor of Lucena filed an appeal with the CBAA, which was docketed as CBAA
Case No. 248. In its Decision[18] dated April 10, 1991, the CBAA affirmed the assailed LBAA
judgment. Apparently, the City Assessor of Lucena no longer appealed said CBAA Decision
and it became final and executory.
8. Six years later, on October 29, 1997, MERALCO received a letter19 dated October 16, 1997
from the City Treasurer of Lucena, which stated that the company was being assessed real
property tax delinquency on its machineries beginning 1990, in the total amount of
P17,925,117.34, computed as follows:

9. The City Treasurer of Lucena requested that MERALCO settle the payable amount soon to
avoid accumulation of penalties. Attached to the letter were the following documents: (a)
Notice of Assessment[20] dated October 20, 1997 issued by the City Assessor of Lucena,
pertaining to Tax Declaration No. 019-7394, which increased the market value and assessed
value of the machinery; (b) Property Record Form;[21] and (c) Tax Declaration No. 019-6500.[22]
10. MERALCO appealed Tax Declaration Nos. 019-6500 and 019-7394 before the LBAA of
Lucena City on December 23, 1997 and posted a surety bond[23] dated December 10, 1997 to
guarantee payment of its real property tax delinquency. MERALCO asked the LBAA to cancel
and nullify the Notice of Assessment dated October 20, 1997 and declare the properties
covered by Tax Declaration Nos. 019-6500 and 019-7394 exempt from real property tax.
11. In its Decision dated June 17, 1998 regarding Tax Declaration Nos. 019-6500 and 019-7394,
the LBAA declared that Sections 234 and 534(f) of the Local Government Code repealed the
provisions in the franchise of MERALCO and Presidential Decree No. 551 [24]pertaining to the
exemption of MERALCO from payment of real property tax on its poles, wires, insulators,
transformers, and meters.
12. The LBAA refused to apply as res judicata its earlier judgment in LBAA-89-2, as affirmed by
the CBAA, because it involved collection of taxes from 1985 to 1989, while the present case
concerned the collection of taxes from 1989 to 1997; and LBAA is only an administrative
body, not a court or quasi-judicial body. The LBAA though instructed that the computation of
the real property tax for the machineries should be based on the prevailing 1991 Schedule of
Market Values, less the depreciation cost allowed by law. The LBAA ultimately disposed:
a. WHEREFORE, in view of the foregoing, it is hereby ordered that:
b. 1) MERALCO's appeal be dismissed for lack of merit;
c. 2) MERALCO be required to pay the realty tax on the questioned properties,
because they are not exempt by law, same to be based on the 1991 level of
assessment, less depreciation cost allowed by law.[25]
13. MERALCO went before the CBAA on appeal, which was docketed as CBAA Case No. L-20-
98. The CBAA, in its Decision dated May 3, 2001, agreed with the LBAA that MERALCO
could no longer claim exemption from real property tax on its machineries with the enactment
of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, thus:
a. Indeed, the Central Board of Assessment Appeals has had the opportunity of ruling
in [MERALCO's] favor in connection with this very same issue. The matter was
settled on April 10, 1991 where this Authority ruled that "wires, insulators,
transformers and electric meters which are mounted on poles and can be separated
from the poles and moved from place to place without breaking the material or
causing [the] deterioration of the object, are deemed movable or personal property".
The same position of MERALCO would have been tenable and that decision may
have stood firm prior to the enactment of R.A. 7160 but not anymore in this
jurisdiction. The Code provides and now sets a more stringent yet broadened
concept of machinery, x x x:
b. xxxx
14.
c. The pivotal point where the difference lie between the former and the current case is
that by the very wordings of [Section 199(0)], the ground being anchored upon by
MERALCO concerning the properties in question being personal in nature does not
hold anymore for the sole reason that these come now within the purview and new
concept of Machineries. The new law has treated these in an unequivocal manner as
machineries in the sense that they are instruments, mechanical contrivances or
apparatus though not attached permanently to the real properties of [MERALCO]
are actually, directly and exclusively used to meet their business of distributing
electricity.
d. xxxx
e. Clearly, [Section 234 of the Local Government Code] lists down the instances of
exemption in real property taxation and very apparent is the fact that the
enumeration is exclusive in character in view of the wordings in the last paragraph.
Applying the maxim "Expressio Unius est Exclusio Alterius", we can say that
"Where the statute enumerates those who can avail of the exemption, it is construed
as excluding all others not mentioned therein". Therefore, the above-named
company [had] lost its previous exemptions under its franchise because of non-
inclusion in the enumeration in Section 234. Furthermore, all tax exemptions being
enjoyed by all persons, whether natural or juridical, including all government-
owned or controlled corporations are expressly withdrawn, upon effectivity of R.A.
7160.
f. In the given facts, it has been manifested that the Municipal Board of Lucena
passed Resolution No. 108 on July 1, 1957 extending the franchise of MERALCO
to operate in Lucena city an electric light system for thirty-five years, which should
have expired on November 9, 1992 and under Resolution No. 2679 passed on June
13, 1972 by the City Council of Lucena City awarding [MERALCO] a franchise to
operate for twenty years an electric light, heat and power system in Lucena City,
also to expire in the year 1992. Under those franchises, they were only bound to pay
franchise taxes and nothing more.
g. Now, granting arguendo that there is no express revocation of the exemption under
the franchise of [MERALCO] since, unquestionably [MERALCO] is a recipient of
another franchise granted this time by the National Electrification Commission as
evidenced by a certificate issued on October 28, 1993, such conferment does not
automatically include and/or award exemption from taxes, nor does it impliedly
give the franchisee the right to continue the privileges like exemption granted under
its previous franchise. It is just a plain and simple franchise. In countless times, the
Supreme Court has ruled that exemption must be clear in the language of the law
granting such exemption for it is strictly construed and favored against the person
invoking it. In addition, a franchise though in the form of a contract is also a
privilege that must yield to the sublime yet inherent powers of the state, one of these
is the power of taxation.
h. Looking into the law creating the National Electrification Administration
(Commission), P.D. 269 as amended by P.D. 1645, nowhere in those laws can we
find such authority to bestow upon the grantee any tax exemption of whatever
nature except those of cooperatives. This we believe is basically in consonance with
the provisions of the Local Government Code more particularly Section 234.
i. Furthermore, Section 534(f) of R.A. 7160 which is taken in relation to Section 234
thereof states that "All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations or part or parts
thereof which are inconsistent with any of the provisions of this Code are hereby
repealed or modified accordingly". Anent this unambiguous mandate, P.D. 551 is
mandatorily repealed due to its contradictory and irreconcilable provisions with
R.A. 7160.[26]
Yet, the CBAA modified the ruling of the LBAA by excluding from the real property tax
deficiency assessment the years 1990 to 1991, considering that:
 a. In the years 1990 and 1991, the exemption granted to MERALCO under its
franchise which incidentally expired upon the effectivity of the Local Government
Code of 1991 was very much in effect and the decision rendered by the Central
Board of Assessment Appeals (CBAA) classifying its poles, wires, insulators,
transformers and electric meters as personal property was still controlling as the law
of the case. So, from 1990 to 1991, it would be inappropriate and illegal to make the
necessary assessment on those properties, much more to impose any penalty for
nonpayment of such.
b. But, assessments made beginning 1992 until 1997 by the City Government of
Lucena is legal, both procedurally and substantially. When R.A. 7160, which
incorporated amended provisions of the Real Property Tax Code, took effect on
January 1, 1992, as already discussed, the nature of the aforecited questioned
properties considered formerly as personal metamorphosed to machineries and the
exemption being invoked by [MERALCO] was automatically withdrawn pursuant
to the letter and spirit of the law. x x x.[27]
15. Resultantly, the decretal portion of said CBAA Decision reads:
a. WHEREFORE, in view of the foregoing, the Decision appealed from is hereby
modified. The City Assessor of Lucena City is hereby directed to make a new
assessment on the subject properties to retroact from the year 1992 and the City
Treasurer to collect the tax liabilities in accordance with the provisions of the cited
Section 222 of the Local Government Code.[28]
16. The CBAA denied the Motion for Reconsideration of MERALCO in a Resolution [29] dated
August 16, 2001.
17. Disgruntled, MERALCO sought recourse from the Court of Appeals by filing a Petition for
Review under Rule 43 of the Rules of Court, which was docketed as CA-G.R. SP No. 67027.
18. The Court of Appeals rendered a Decision on May 13, 2004 rejecting all arguments proffered
by MERALCO. The appellate court found no deficiency in the Notice of Assessment issued by
the City Assessor of Lucena:
a. It was not disputed that [MERALCO] failed to provide the [City Assessor and City
Treasurer of Lucena] with a sworn statement declaring the true value of each of the
subject transformer and electric post, transmission line, insulator and electric meter
which should have been made the basis of the fair and current market value of the
aforesaid property and which would enable the assessor to identify the same for
assessment purposes. [MERALCO] merely claims that the assessment made by the
[City Assessor and City Treasurer of Lucena] was incorrect but did not even
mention in their pleading the true and correct assessment of the said properties.
Absent any sworn statement given by [MERALCO], [the City Assessor and City
Treasurer of Lucena] were constrained to make an assessment based on the
materials within [their reach].[30]
19. The Court of Appeals further ruled that there was no more basis for the real property tax
exemption of MERALCO under the Local Government Code and that the withdrawal of said
exemption did not violate the non-impairment clause of the Constitution, thus:
a. Although it could not be denied that [MERALCO] was previously granted a
Certificate of Franchise by the National Electrification Commission on October 28,
1993 x x x, such conferment does not automatically include an exemption from the
payment of realty tax, nor does it impliedly give the franchisee the right to continue
the privileges granted under its previous franchise considering that Sec. 534(f) of
the Local Government Code of 1991 expressly repealed those provisions which are
inconsistent with the Code.
b. At the outset, the Supreme Court has held that "Section 193 of the LGC prescribes
the general rule, viz., tax exemptions or incentives granted to or presently enjoyed
by natural or juridical persons are withdrawn upon the effectivity of the LGC except
with respect to those entities expressly enumerated. In the same vein, We must hold
that the express withdrawal upon effectivity of the LGC of all exemptions except
only as provided therein, can no longer be invoked by MERALCO to disclaim
liability for the local tax." (City Government of San Pablo, Laguna vs. Reyes, 305
SCRA 353, 362-363)
c. In fine, [MERALCO's] invocation of the non-impairment clause of the Constitution
is accordingly unavailing. The LGC was enacted in pursuance of the constitutional
policy to ensure autonomy to local governments and to enable them to attain fullest
development as self-reliant communities. The power to tax is primarily vested in
Congress. However, in our jurisdiction, it may be exercised by local legislative
bodies, no longer merely by virtue of a valid delegation as before, but pursuant to
[a] direct authority conferred by Section 5, Article X of the Constitution. The
important legal effect of Section 5 is that henceforth, in interpreting statutory
provisions on municipal fiscal powers, doubts will be resolved in favor of the
municipal corporations. (Ibid. pp. 363-365)[31]
20. MERALCO similarly failed to persuade the Court of Appeals that the transformers,
transmission lines, insulators, and electric meters mounted on the electric posts of MERALCO
were not real properties. The appellate court invoked the definition of "machinery" under
Section 199(o) of the Local Government Code and then wrote that:
a. We firmly believe and so hold that the wires, insulators, transformers and electric
meters mounted on the poles of [MERALCO] may nevertheless be considered as
improvements on the land, enhancing its utility and rendering it useful in
distributing electricity. The said properties are actually, directly and exclusively
used to meet the needs of [MERALCO] in the distribution of electricity.
b. In addition, "improvements on land are commonly taxed as realty even though for
some purposes they might be considered personalty. It is a familiar personalty
phenomenon to see things classed as real property for purposes of taxation which on
general principle might be considered personal property." (Caltex (Phil) Inc. vs.
Central Board of Assessment Appeals, 114 SCRA 296, 301-302)[32]
21. Lastly, the Court of Appeals agreed with the CBAA that the new assessment of the
transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO
shall retroact to 1992.
22. Hence, the Court of Appeals adjudged:
a. WHEREFORE, premises considered, the assailed Decision [dated] May 3, 2001
and Resolution dated August 16, 2001 are hereby AFFIRMED in toto and the
present petition is hereby DENIED DUE COURSE and accordingly DISMISSED
for lack of merit.[33]
23. MERALCO is presently before the Court via the instant Petition for Review
on Certiorari grounded on the following lone assignment of error:
ISSUES:
1. W/N
RATIO:
1. MERALCO argues that its transformers, electric posts, transmission lines, insulators, and
electric meters are not subject to real property tax, given that: (1) the definition of "machinery"
under Section 199(o) of the Local Government Code, on which real property tax is imposed,
must still be within the contemplation of real or immovable property under Article 415 of the
Civil Code because it is axiomatic that a statute should be construed to harmonize with other
laws on the same subject matter as to form a complete, coherent, and intelligible system; (2)
the Decision dated April 10, 1991 of the CBAA in CBAA Case No. 248, which affirmed the
 Decision dated July 5, 1989 of the LBAA in LBAA-89-2, ruling that the transformers, electric
posts, transmission lines, insulators, and electric meters of MERALCO are movable or
personal properties, is conclusive and binding; and (3) the electric poles are not exclusively
used to meet the needs of MERALCO alone since these are also being utilized by other entities
such as cable and telephone companies
2. MERALCO further asserts that even if it is assumed for the sake of argument that the
transformers, electric posts, transmission lines, insulators, and electric meters are real
properties, the assessment of said properties by the City Assessor in 1997 is a patent nullity.
The collection letter dated October 16, 1997 of the City Treasurer of Lucena, Notice of
Assessment dated October 20, 1997 of the City Assessor of Lucena, the Property Record Form
dated October 20, 1997, and Tax Declaration No. 019-6500 simply state a lump sum market
value for all the transformers, electric posts, transmission lines, insulators, and electric meters
covered and did not provide an inventory/list showing the actual number of said properties, or a
schedule of values presenting the fair market value of each property or type of property, which
would have enabled MERALCO to verify the correctness and reasonableness of the valuation
of its properties. MERALCO was not furnished at all with a copy of Tax Declaration No. 019-
7394, and while it received a copy of Tax Declaration No. 019-6500, said tax declaration did
not contain the requisite information regarding the date of operation of MERALCO and the
original cost, depreciation, and market value for each property covered. For the foregoing
reasons, the assessment of the properties of MERALCO in 1997 was arbitrary, whimsical, and
without factual basis - in patent violation of the right to due process of MERALCO.
MERALCO additionally explains that it cannot be expected to make a declaration of its
transformers, electric posts, transmission lines, insulators, and electric meters, because all the
while, it was of the impression that the said properties were personal properties by virtue of the
Decision dated July 5, 1989 of the LBAA in LBAA-89-2 and the Decision dated April 10,
1991 of the CBAA in CBAA Case No. 248.
3. Granting that the assessment of its transformers, electric posts, transmission lines, insulators,
and electric meters by the City Assessor of Lucena in 1997 is valid, MERALCO alternatively
contends that: (1) under Sections 221[35] and 222[36] of the Local Government Code, the
assessment should take effect only on January 1, 1998 and not retroact to 1992; (2)
MERALCO should not be held liable for penalties and interests since its nonpayment of real
property tax on its properties was in good faith; and (3) if interest may be legally imposed on
MERALCO, it should only begin to run on the date it received the Notice of Assessment on
October 29, 1997 and not all the way back to 1992.
4. At the end of its Petition, MERALCO prays:
a. WHEREFORE, it is respectfully prayed of this Honorable Court that the appealed
Decision dated May 13, 2004 of the Court of Appeals, together with its Resolution
dated November 18, 2004 be reversed and set aside, and judgment be rendered x x x
nullifying and cancel[l]ing the Notice of Assessment, dated October 20, 1997,
issued by respondent City Assessor, and the collection letter dated October 16, 1997
of respondent City Treasurer.
b. Petitioner also prays for such other relief as may be deemed just and equitable in the
premises.[37]
5. The City Assessor and City Treasurer of Lucena counter that: (1) MERALCO was obliged to
pay the real property tax due, instead of posting a surety bond, while its appeal was pending,
because Section 231 of the Local Government Code provides that the appeal of an assessment
shall not suspend the collection of the real property taxes; (2) the cases cited by MERALCO
can no longer be applied to the case at bar since they had been decided when Presidential
Decree No. 464, otherwise known as the Real Property Tax Code, was still in effect; (3) under
the now prevailing Local Government Code, which expressly repealed the Real Property Tax
Code, the transformers, electric posts, transmission lines, insulators, and electric meters of
MERALCO fall within the new definition of "machineries," deemed as real properties subject
to real property tax; and (4) the Notice of Assessment dated October 20, 1997 covering the
transformers, electric posts, transmission lines, insulators, and electric meters of MERALCO
only retroacts to 1992, which is less than 10 years prior to the date of initial assessment, so it is
in compliance with Section 222 of the Local Government Code, and since MERALCO has yet
to pay the real property taxes due on said assessment, then it is just right and appropriate that it
also be held liable to pay for penalties and interests from 1992 to present time. Ultimately, the
City Assessor and City Treasurer of Lucena seek judgment denying the instant Petition and
ordering MERALCO to pay the real property taxes due.
6. The Petition is partly meritorious.
7. The Court finds that the transformers, electric posts, transmission lines,
insulators, and electric meters of MERALCO are no longer exempted from
real property tax and may qualify as "machinery" subject to real property
tax under the Local Government Code.
8. Nevertheless, the Court declares null and void the appraisal and assessment
of said properties of MERALCO by the City Assessor in 1997 for failure to
comply with the requirements of the Local Government Code and, thus,
violating the right of MERALCO to due process.
9. By posting a surety bond before filing its appeal of the assessment with
the LBAA, MERALCO substantially complied
with the requirement of payment under protest in Section 252 of the Local
Government Code.
10. Section 252 of the Local Government Code mandates that "[n]o protest shall be entertained unless the
taxpayer first pays the tax." It is settled that the requirement of "payment under protest" is a condition  sine
qua non before an appeal may be entertained. [38] Section 231 of the same Code also dictates that "[a]ppeal on
assessments of real property x x x shall, in no case, suspend the collection of the corresponding realty taxes
on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent
adjustment depending upon the final outcome of the appeal." Clearly, under the Local Government Code,
even when the assessment of the real property is appealed, the real property tax due on the basis thereof
should be paid to and/or collected by the local government unit concerned.
11. In the case at bar, the City Treasurer of Lucena, in his letter dated October 16, 1997, sought to collect from
MERALCO the amount of P17,925,l 17.34 as real property taxes on its machineries, plus penalties, for the
period of 1990 to 1997, based on Tax Declaration Nos. 019-6500 and 019-7394 issued by the City Assessor
of Lucena. MERALCO appealed Tax Declaration Nos. 019-6500 and 019-7394 with the LBAA, but instead
of paying the real property taxes and penalties due, it posted a surety bond in the amount of PI 7,925,117.34.
12. By posting the surety bond, MERALCO may be considered to have substantially complied with Section 252
of the Local Government Code for the said bond already guarantees the payment to the Office of the City
Treasurer of Lucena of the total amount of real property taxes and penalties due on Tax Declaration Nos.
019-6500 and 019-7394. This is not the first time that the Court allowed a surety bond as an alternative to
cash payment of the real property tax before protest/appeal as required by Section 252 of the Local
Government Code. In Camp John Hay Development Corporation v. Central Board of Assessment
Appeals[39] the Court affirmed the ruling of the CBAA and the Court of Tax Appeals en bane applying the
"payment under protest" requirement in Section 252 of the Local Government Code and remanding the case
to the LBAA for "further proceedings subject to a full and up-to-date payment,  either in cash or surety, of
realty tax on the subject properties x x x."
13. Accordingly, the LBAA herein correctly took cognizance of and gave due course to the appeal of Tax
Declaration Nos. 019-6500 and 019-7394 filed by MERALCO.
14. Beginning January 1, 1992, MERALCO can no longer claim exemption
from real property tax of
its transformers, electric posts, transmission lines, insulators, and
electric meters based on its franchise.
15. MERALCO relies heavily on the Decision dated April 10, 1991 of the
CBAA in CBAA Case No. 248, which affirmed the Decision dated July 5,
1989 of the LBAA in LBAA-89-2. Said decisions of the CBAA and the
 LBAA, in turn, cited Board of Assessment Appeals v. Manila Electric Co.,
[40]
 which was decided by the Court way back in 1964 (1964 MERALCO
case). The decisions in CBAA Case No. 248 and the 1964 MERALCO
case recognizing the exemption from real property tax of the transformers,
electric posts, transmission lines, insulators, and electric meters of
MERALCO are no longer applicable because of subsequent developments
that changed the factual and legal milieu for MERALCO in the present
case.
16. In the 1964 MERALCO case, the City Assessor of Quezon City considered
the steel towers of MERALCO as real property and required MERALCO to
pay real property taxes for the said steel towers for the years 1952 to 1956.
MERALCO was operating pursuant to the franchise granted under
Ordinance No. 44 dated March 24, 1903 of the Municipal Board of Manila,
which it acquired from the original grantee, Charles M. Swift. Under its
franchise, MERALCO was expressly granted the following tax exemption
privilege:
a. Par 9. The grantee shall be liable to pay the same taxes upon its real estate,
buildings, plant (not including poles, wires, transformers, and insulators),
machinery and personal property as other persons are or may be hereafter required
by law to pay. x x x Said percentage shall be due and payable at the times stated in
paragraph nineteen of Part One hereof, x x x and shall be in lieu of all taxes and
assessments of whatsoever nature, and by whatsoever authority upon the privileges,
earnings, income, franchise, and poles, wires, transformers, and insulators of the
grantee from which taxes and assessments the grantee is hereby expressly
exempted, x x x.[41]
17. Given the express exemption from taxes and assessments of the
"poles, wires, transformers, and insulators" of MERALCO in the
aforequoted paragraph, the sole issue in the 1964 MERALCO case was
whether or not the steel towers of MERALCO qualified as "poles" which
were exempted from real property tax. The Court ruled in the affirmative,
ratiocinating that:
a. Along the streets, in the City of Manila, may be seen cylindrical metal poles,
cubical concrete poles, and poles of the PLDT Co. which are made of two steel bars
joined together by an interlacing metal rod. They are called "poles" notwithstanding
the fact that they are not made of wood. It must be noted from paragraph 9, above
quoted, that the concept of the "poles" for which exemption is granted, is not
determined by their place or location, nor by the character of the electric current it
carries, nor the material or form of which it is made, but the use to which they are
dedicated. In accordance with the definitions, a pole is not restricted to a long
cylindrical piece of wood or metal, but includes "upright standards to the top of
which something is affixed or by which something is supported." As heretofore
described, respondent's steel supports consist of a framework of four steel bars or
strips which are bound by steel cross-arms atop of which are cross-arms supporting
five high voltage transmission wires (See Annex A) and their sole function is to
support or carry such wires.
b. The conclusion of the CTA that the steel supports in question are embraced in the
term "poles" is not a novelty. Several courts of last resort in the United States have
called these steel supports "steel towers", and they have denominated these supports
or towers, as electric poles. In their decisions the words "towers" and "poles" were
used interchangeably, and it is well understood in that jurisdiction that a
transmission tower or pole means the same thing.
c. xxxx
d. It is evident, therefore, that the word "poles", as used in Act No. 484 and
incorporated in the petitioner's franchise, should not be given a restrictive and
narrow interpretation, as to defeat the very object for which the franchise was
granted. The poles as contemplated thereon, should be understood and taken as a
part of the electric power system of the respondent Meralco, for the conveyance of
electric current from the source thereof to its consumers, x x x.[42]
18. Similarly, it was clear that under the 20-year franchise granted to
MERALCO by the Municipal Board of Lucena City through Resolution No.
2679 dated June 13, 1972, the transformers, electric posts, transmission
lines, insulators, and electric meters of MERALCO were exempt from real
property tax. Paragraph 13 of Resolution No. 2679 is quoted in full below:
a. 13. The grantee shall be liable to pay the same taxes upon its real estate, building,
machinery, and personal property (not including poles, wires, transformers, and
insulators) as other persons are now or may hereafter be required by law to pay. In
consideration of the franchise and rights hereby granted, the grantee shall pay into
the City Treasury of Lucena a tax equal to FIVE (5%) PER CENTUM of the
gross earnings received from electric current sold or supplied under this franchise.
Said tax shall be due and payable quarterly and shall be in lieu of any and all taxes
of any kind, nature or description levied, established, or collected by any
authority whatsoever, municipal, provincial, or national, now or in the future, on its
poles, wires, insulators, switches, transformers and structures, installations,
conductors, and accessories, placed in and over and under all the private and/or
public property, including public streets and highways, provincial roads, bridges,
and public squares, and on its franchise rights, privileges, receipts, revenues and
profits, from which taxes the grantee is hereby expressly exempted. (Emphases
supplied.)
19. In CBAA Case No. 248 (and LBAA-89-2), the City Assessor assessed the
transformers, electric posts, transmission lines, insulators, and electric
meters of MERALCO located in Lucena City beginning 1985 under Tax
Declaration No. 019-6500. The CBAA in its Decision dated April 10, 1991
in CBAA Case No. 248 sustained the exemption of the said properties of
MERALCO from real property tax on the basis of paragraph 13 of
Resolution No. 2679 and the 1964 MERALCO case.
20. Just when the franchise of MERALCO in Lucena City was about to expire,
the Local Government Code took effect on January 1, 1992, Sections 193
and 234 of which provide:
a. Section 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 nonprofit hospitals and educational institutions, are hereby
withdrawn upon the effectivity of this Code.
b. Section 234. Exemptions from Real Property Tax. - The following are exempted
from payment of the real property tax:
c. (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;
d. (b) Charitable institutions, churches, parsonages or convents appurtenant thereto,
mosques, nonprofit or religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively used for religious, charitable or
educational purposes;
e. (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;
f. (d) All real property owned by duly registered cooperatives as provided for under
R.A. No. 6938; and
g. (e) Machinery and equipment used for pollution control and environmental
protection.
h. Except as provided herein, any exemption from payment of real property tax
previously granted to, or presently enjoyed by, all persons, whether natural or
juridical, including all government-owned or controlled corporations are hereby
withdrawn upon the effectivity of this Code.
21. The Local Government Code, in addition, contains a general repealing
clause under Section 534(f) which states that "[a]ll general and special laws,
acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent
with any of the provisions of this Code are hereby repealed or modified
accordingly."
22. Taking into account the above-mentioned provisions, the evident intent of
the Local Government Code is to withdraw/repeal all exemptions from local
taxes, unless otherwise provided by the Code. The limited and restrictive
nature of the tax exemption privileges under the Local Government Code is
consistent with the State policy to ensure autonomy of local governments
and the objective of the Local Government Code to grant genuine and
meaningful autonomy to enable local government units to attain their fullest
development as self-reliant communities and make them effective partners
in the attainment of national goals. The obvious intention of the law is to
broaden the tax base of local government units to assure them of substantial
sources of revenue.[43]
23. Section 234 of the Local Government Code particularly identifies the
exemptions from payment of real property tax, based on the ownership,
character, and use of the property, viz.:
a. (a) Ownership Exemptions. Exemptions from real property taxes on the basis of
ownership are real properties owned by: (i) the Republic, (ii) a province, (iii) a city,
(iv) a municipality, (v) a barangay, and (vi) registered cooperatives.
b. (b) Character Exemptions. Exempted from real property taxes on the basis of their
character are: (i) charitable institutions, (ii) houses and temples of prayer like
churches, parsonages or convents appurtenant thereto, mosques, and (iii) nonprofit
or religious cemeteries.
c. (c) Usage exemptions. Exempted from real property taxes on the basis of the actual,
direct and exclusive use to which they are devoted are: (i) all lands, buildings and
improvements which are actually directly and exclusively used for religious,
charitable or educational purposes; (ii) all machineries and equipment actually,
directly and exclusively used by local water districts or by government-owned or
controlled corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power; and (iii) all machinery and
equipment used for pollution control and environmental protection.
d. To help provide a healthy environment in the midst of the modernization of the
country, all machinery and equipment for pollution control and environmental
protection may not be taxed by local governments.
e. 2. Other Exemptions Withdrawn. All other exemptions previously granted to natural
or juridical persons including government-owned or controlled corporations are
withdrawn upon the effectivity of the Code.[44]
24. The last paragraph of Section 234 had unequivocally withdrawn, upon the
effectivity of the Local Government Code, exemptions from payment of
real property taxes granted to natural or juridical persons, including
government-owned or controlled corporations, except as provided in the
same section.
25. MERALCO, a private corporation engaged in electric distribution, and its
transformers, electric posts, transmission lines, insulators, and electric
meters used commercially do not qualify under any of the ownership,
character, and usage exemptions enumerated in Section 234 of the
Local Government Code. It is a basic precept of statutory construction that
the express mention of one person, thing, act, or consequence excludes all
others as expressed in the familiar maxim expressio unius est exclusio
alterius.[45] Not being among the recognized exemptions from real property
tax in Section 234 of the Local Government Code, then the exemption of
the transformers, electric posts, transmission lines, insulators, and electric
meters of MERALCO from real property tax granted under its franchise
was among the exemptions withdrawn upon the effectivity of the Local
Government Code on January 1, 1998.
26. It is worthy to note that the subsequent franchises for operation granted to
MERALCO, i.e., under the Certificate of Franchise dated October 28, 1993
issued by the National Electrification Commission and Republic Act No.
9209 enacted on June 9, 2003 by Congress, are completely silent on the
matter of exemption from real property tax of MERALCO or any of its
properties.
27. It is settled that tax exemptions must be clear and unequivocal. A taxpayer
claiming a tax exemption must point to a specific provision of law
conferring on the taxpayer, in clear and plain terms, exemption from a
common burden. Any doubt whether a tax exemption exists is resolved
against the taxpayer.[46] MERALCO has failed to present herein any express
grant of exemption from real property tax of its transformers, electric posts,
transmission lines, insulators, and electric meters that is valid and binding
even under the Local Government Code.
28. The transformers, electric posts,
transmission lines, insulators, and electric meters of MERALCO may
qualify as "machinery" under the Local Government
Code subject to real property tax.
29. Through the years, the relevant laws have consistently considered
"machinery" as real property subject to real property tax. It is the definition
of "machinery" that has been changing and expanding, as the following
table will show

30. MERALCO is a public utility engaged in electric distribution, and its

transformers, electric posts, transmission lines, insulators, and electric
meters constitute the physical facilities through which MERALCO delivers
electricity to its consumers. Each may be considered as one or more of the
following:A"machine,"[48] "equipment,"[49] "contrivance,"[50] "instrument,"[51] 
"appliance,"[52] "apparatus,"[53] or "installation."[54]
31. The Court highlights that under Section 199(o) of the Local Government
Code, machinery, to be deemed real property subject to real property tax,
need no longer be annexed to the land or building as these "may or may not
be attached, permanently or temporarily to the real property," and in fact,
such machinery may even be "mobile."[55] 
32. The same provision though requires that to be machinery subject to real
property tax, the physical facilities for production, installations, and
appurtenant service facilities, those which are mobile, self-powered or self-
propelled, or not permanently attached to the real property (1) must be
actually, directly, and exclusively used to meet the needs of the particular
industry, business, or activity; and (2) by their very nature and purpose, are
designed for, or necessary for manufacturing, mining, logging, commercial,
industrial, or agricultural purposes. Thus, Article 290(o) of the Rules and
Regulations Implementing the Local Government Code of 1991 recognizes
the following exemption:
a. Machinery which are of general purpose use including but not limited to office
equipment, typewriters, telephone equipment, breakable or easily damaged
containers (glass or cartons), microcomputers, facsimile machines, telex machines,
cash dispensers, furnitures and fixtures, freezers, refrigerators, display cases or
racks, fruit juice or beverage automatic dispensing machines which are not directly
and exclusively used to meet the needs of a particular industry, business or activity
shall not be considered within the definition of machinery under this Rule.

33. The 1964 MERALCO case was decided when The Assessment Law was
still in effect and Section 3(f) of said law still required that the machinery be
attached to the real property. Moreover, as the Court pointed out earlier, the
ruling in the 1964 MERALCO case - that the electric poles (including the
 steel towers) of MERALCO are not subject to real property tax - was
primarily based on the express exemption granted to MERALCO under its
previous franchise. The reference in said case to the Civil Code definition of
real property was only an alternative argument:
a. Granting for the purpose of argument that the steel supports or towers in
question are not embraced within the term poles, the logical question posited is
whether they constitute real properties, so that they can be subject to a real
property tax. The tax law does not provide for a definition of real property;
but Article 415 of the Civil Code does, by stating the following are immovable
property:
i. (1) Land, buildings, roads, and constructions of all kinds adhered to the
soil;
ii. xxxx
iii. (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;
iv. xxxx
v. (5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be carried in
a building or on a piece of land, and which tends directly to meet the
needs of the said industry or works;
b. The steel towers or supports in question, do not come within the objects mentioned
in paragraph 1, because they do not constitute buildings or constructions adhered to
the soil. They are not constructions analogous to buildings nor adhering to the soil.
As per description, given by the lower court, they are removable and merely
attached to a square metal frame by means of bolts, which when unscrewed could
easily be dismantled and moved from place to place. They can not be included
under paragraph 3, as they are not attached to an immovable in a fixed manner, and
they can be separated without breaking the material or causing deterioration upon
the object to which they are attached. Each of these steel towers or supports consists
of steel bars or metal strips, joined together by means of bolts, which can be
disassembled by unscrewing the bolts and reassembled by screwing the same. These
steel towers or supports do not also fall under paragraph 5, for they are not
machineries or receptacles, instruments or implements, and even if they were, they
are not intended for industry or works on the land. Petitioner is not engaged in an
industry or works on the land in which the steel supports or towers are constructed.
[56]
34. The aforequoted conclusions of the Court in the 1964 MERALCO case do
not hold true anymore under the Local Government Code.
35. While the Local Government Code still does not provide for a specific
definition of "real property," Sections 199(o) and 232 of the said Code,
respectively, gives an extensive definition of what constitutes "machinery"
and unequivocally subjects such machinery to real property tax.
36. The Court reiterates that the machinery subject to real property tax under
the Local Government Code "may or may not be attached, permanently or
temporarily to the real property;" and the physical facilities for production,
installations, and appurtenant service facilities, those which are mobile, self-
powered or self-propelled, or are not permanently attached must (a) be
actually, directly, and exclusively used to meet the needs of the particular
industry, business, or activity; and (2) by their very nature and purpose, be
designed for, or necessary for manufacturing, mining, logging, commercial,
industrial, or agricultural purposes.
37. Article 415, paragraph (1) of the Civil Code declares as immovables or real
properties "[l]and, buildings, roads and constructions of all kinds adhered to
the soil." The land, buildings, and roads are immovables by nature "which
cannot be moved from place to place," whereas the constructions adhered to
the soil are immovables by incorporation "which are essentially movables,
but are attached to an immovable in such manner as to be an integral part
thereof."[57] Article 415, paragraph (3) of the Civil Code, referring to
"[ejverything 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," are likewise immovables by incorporation.
38. In contrast, the Local Government Code considers as real property
machinery which "may or may not be attached, permanently or
temporarily to the real property," and even those which are "mobile."
39. Article 415, paragraph (5) of the Civil Code considers as immovables or
real properties "[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." The Civil Code, however,
does not define "machinery."
40. The properties under Article 415, paragraph (5) of the Civil Code are
immovables by destination, or "those which are essentially movables, but by
the purpose for which they have been placed in an immovable, partake of
the nature of the latter because of the added utility derived
therefrom."[58] These properties, including machinery, become immobilized
if the following requisites concur: (a) they are placed in the tenement by the
owner of such tenement; (b) they are destined for use in the industry or
work in the tenement; and (c) they tend to directly meet the needs of said
industry or works.[59] The first two requisites are not found anywhere in the
Local Government Code.
41. MERALCO insists on harmonizing the aforementioned provisions of the
Civil Code and the Local Government Code. The Court disagrees, however,
for this would necessarily mean imposing additional requirements for
classifying machinery as real property for real property tax purposes not
provided for, or even in direct conflict with, the provisions of the Local
Government Code.
42. As between the Civil Code, a general law governing property and property
relations, and the Local Government Code, a special law granting local
government units the power to impose real property tax, then the latter
shall prevail. As the Court pronounced in Disomangcop v. The Secretary of
 the Department of Public Works and Highways Simeon A. Datumanong[60]:
a. It is a finely-imbedded principle in statutory construction that a special provision or
law prevails over a general one. Lex specialis derogant generali. As this Court
expressed in the case of Leveriza v. Intermediate Appellate Court, "another basic
principle of statutory construction mandates that general legislation must give way
to special legislation on the same subject, and generally be so interpreted as to
embrace only cases in which the special provisions are not applicable, that specific
statute prevails over a general statute and that where two statutes are of equal
theoretical application to a particular case, the one designed therefor specially
should prevail." (Citations omitted.)
43. The Court also very clearly explicated in Vinzons-Chato v. Fortune
Tobacco Corporation[61] that:
a. A general law and a special law on the same subject are statutes in pah materia and
should, accordingly, be read together and harmonized, if possible, with a view to
giving effect to both. The rule is that where there are two acts, one of which is
special and particular and the other general which, if standing alone, would include
the same matter and thus conflict with the special act, the special law must prevail
since it evinces the legislative intent more clearly than that of a general statute and
must not be taken as intended to affect the more particular and specific provisions
of the earlier act, unless it is absolutely necessary so to construe it in order to give
its words any meaning at all.
b. The circumstance that the special law is passed before or after the general act does
not change the principle. Where the special law is later, it will be regarded as an
exception to, or a qualification of, the prior general act; and where the general act is
later, the special statute will be construed as remaining an exception to its terms,
unless repealed expressly or by necessary implication. (Citations omitted.)
44. Furthermore, in Caltex (Philippines), Inc. v. Central Board of Assessment
Appeals,[62] the Court acknowledged that "[i]t is a familiar phenomenon to
see things classed as real property for purposes of taxation which on general
principle might be considered personal property[.]"
45. Therefore, for determining whether machinery is real property subject to
real property tax, the definition and requirements under the Local
Government Code are controlling.
46. MERALCO maintains that its electric posts are not machinery subject to
real property tax because said posts are not being exclusively used by
MERALCO; these are also being utilized by cable and telephone
companies. This, however, is a factual issue which the Court cannot take
cognizance of in the Petition at bar as it is not a trier of facts. Whether or
not the electric posts of MERALCO are actually being used by other
companies or industries is best left to the determination of the City Assessor
or his deputy, who has been granted the authority to take evidence under
Article 304 of the Rules and Regulations Implementing the Local
Government Code of 1991.
47. Nevertheless, the appraisal and assessment of the transformers, electric
posts, transmission lines, insulators, and electric meters of MERALCO as machinery under
Tax Declaration Nos. 019-6500 and
019-7394 were not in accordance with the Local Government Code and in violation of the
right to due process of MERALCO and, therefore, null and void.
48. The Local Government Code defines "appraisal" as the "act or process of determining the value
of property as of a specific date for a specific purpose." "Assessment" is "the act or process of
determining the value of a property, or proportion thereof subject to tax, including the
discovery, listing, classification, and appraisal of the properties[.]" [63] When it comes to
machinery, its appraisal and assessment are particularly governed by Sections 224 and 225 of
the Local Government Code, which read:
a. Section 224. Appraisal and Assessment of Machinery. - (a) The fair market value of
a brand-new machinery shall be the acquisition cost. In all other cases, the fair
market value shall be determined by dividing the remaining economic life of the
machinery by its estimated economic life and multiplied by the replacement or
reproduction cost.
b. (b) If the machinery is imported, the acquisition cost includes freight, insurance,
bank and other charges, brokerage, arrastre and handling, duties and taxes, plus cost
of inland transportation, handling, and installation charges at the present site. The
cost in foreign currency of imported machinery shall be converted to peso cost on
the basis of foreign currency exchange rates as fixed by the Central Bank.
c. Section 225. Depreciation Allowance for Machinery. - For purposes of assessment,
a depreciation allowance shall be made for machinery at a rate not exceeding five
percent (5%) of its original cost or its replacement or reproduction cost, as the case
may be, for each year of use: Provided, however, That the remaining value for all
kinds of machinery shall be fixed at not less than twenty percent (20%) of such
original, replacement, or reproduction cost for so long as the machinery is useful
and in operation.
49. It is apparent from these two provisions that every machinery must be individually appraised
and assessed depending on its acquisition cost, remaining economic life, estimated economic
life, replacement or reproduction cost, and depreciation.
50. Article 304 of the Rules and Regulations Implementing the Local Government Code of 1991
expressly authorizes the local assessor or his deputy to receive evidence for the proper
appraisal and assessment of the real property:
a. Article 304. Authority of Local Assessors to Take Evidence. - For the purpose of
obtaining information on which to base the market value of any real property, the
assessor of the province, city, or municipality or his deputy may summon the
owners of the properties to be affected or persons having legal interest therein and
witnesses, administer oaths, and take deposition concerning the property, its
ownership, amount, nature, and value.
51. The Local Government Code further mandates that the taxpayer be given a notice of the
assessment of real property in the following manner:
a. Section 223. Notification of New or Revised Assessment. - When real property is
assessed for the first time or when an existing assessment is increased or decreased,
the provincial, city or municipal assessor shall within thirty (30) days give written
notice of such new or revised assessment to the person in whose name the property
is declared. The notice may be delivered personally or by registered mail or through
the assistance of the punong barangay to the last known address of the person to
served.
52. A notice of assessment, which stands as the first instance the taxpayer is officially made aware
of the pending tax liability, should be sufficiently informative to apprise the taxpayer the legal
basis of the tax.[64] In Manila Electric Company v. Barlis, [65] the Court described the contents of
a valid notice of assessment of real property and differentiated the same from a notice of
collection:
a. A notice of assessment as provided for in the Real Property Tax Code should
effectively inform the taxpayer of the value of a specific property, or proportion
thereof subject to tax, including the discovery, listing, classification, and appraisal
 of properties. The September 3, 1986 and October 31, 1989 notices do not contain
the essential information that a notice of assessment must specify, namely, the value
of a specific property or proportion thereof which is being taxed, nor does it state
the discovery, listing, classification and appraisal of the property subject to taxation.
In fact, the tenor of the notices bespeaks an intention to collect unpaid taxes, thus
the reminder to the taxpayer that the failure to pay the taxes shall authorize the
government to auction off the properties subject to taxes x x x.
53. Although the ruling quoted above was rendered under the Real Property Tax Code, the
requirement of a notice of assessment has not changed under the Local Government Code.
54. A perusal of the documents received by MERALCO on October 29, 1997 reveals that none of
them constitutes a valid notice of assessment of the transformers, electric posts, transmission
lines, insulators, and electric meters of MERALCO.
55. The letter dated October 16, 1997 of the City Treasurer of Lucena (which interestingly
precedes the purported Notice of Assessment dated October 20, 1997 of the City Assessor of
Lucena) is a notice of collection, ending with the request for MERALCO to settle the payable
amount soon in order to avoid accumulation of penalties. It only presented in table form the tax
declarations covering the machinery, assessed values in the tax declarations in lump sums for
all the machinery, the periods covered, and the taxes and penalties due again in lump sums for
all the machinery.
56. The Notice of Assessment dated October 20, 1997 issued by the City Assessor gave a summary
of the new/revised assessment of the "machinery" located in "Quezon Avenue Ext., Brgy.
Gulang-Gulang, Lucena City," covered by Tax Declaration No. 019-7394, with total market
value of P98,173,200.00 and total assessed value of P78,538,560.00. The Property Record
Form basically contained the same information. Without specific description or identification
of the machinery covered by said tax declaration, said Notice of Assessment and Property
Record Form give the false impression that there is only one piece of machinery covered.
57. In Tax Declaration No. 019-6500, the City Assessor reported its findings under "Building and
Improvements" and not "Machinery." Said tax declaration covered "capital investment-
commercial," specifically: (a) Transformer and Electric Post; (b) Transmission Line, (c)
Insulator, and (d) Electric Meter, with a total market value of P81,811,000.00, assessment level
of 80%, and assessed value of £65,448,800.00. Conspicuously, the table for "Machinery" -
requiring the description, date of operation, replacement cost, depreciation, and market value of
the machinery - is totally blank.
58. MERALCO avers, and the City Assessor and the City Treasurer of Lucena do not refute at all,
that MERALCO has not been furnished the Owner's Copy of Tax Declaration No. 019-7394, in
which the total market value of the machinery of MERALCO was increased by
PI6,632,200.00, compared to that in Tax Declaration No. 019-6500.
59. The Court cannot help but attribute the lack of a valid notice of assessment to the apparent lack
of a valid appraisal and assessment conducted by the City Assessor of Lucena in the first place.
It appears that the City Assessor of Lucena simply lumped together all the transformers,
electric posts, transmission lines, insulators, and electric meters of MERALCO located in
Lucena City under Tax Declaration Nos. 019-6500 and 019-7394, contrary to the specificity
demanded under Sections 224 and 225 of the Local Government Code for appraisal and
assessment of machinery. The City Assessor and the City Treasurer of Lucena did not even
provide the most basic information such as the number of transformers, electric posts,
insulators, and electric meters or the length of the transmission lines appraised and assessed
under Tax Declaration Nos. 019-6500 and 019-7394. There is utter lack of factual basis for the
assessment of the transformers, electric posts, transmission lines, insulators, and electric meters
of MERALCO.
60. The Court of Appeals laid the blame on MERALCO for the lack of information regarding its
transformers, electric posts, transmission lines, insulators, and electric meters for appraisal and
assessment purposes because MERALCO failed to file a sworn declaration of said properties
as required by Section 202 of the Local Government Code. As MERALCO explained, it cannot
be expected to file such a declaration when all the while it believed that said properties were
personal or movable properties not subject to real property tax. More importantly, Section 204
of the Local Government Code exactly covers such a situation, thus:
a. Section 204. Declaration of Real Property by the Assessor. -When any person,
natural or juridical, by whom real property is required to be declared under Section
202 hereof, refuses or fails for any reason to make such declaration within the time
prescribed, the provincial, city or municipal assessor shall himself declare the
property in the name of the defaulting owner, if known, or against an unknown
owner, as the case may be, and shall assess the property for taxation in accordance
with the provision of this Title. No oath shall be required of a declaration thus made
by the provincial, city or municipal assessor.
61. Note that the only difference between the declarations of property made by the taxpayer, on
one hand, and the provincial/city/municipal assessor, on the other, is that the former must be
made under oath. After making the declaration of the property himself for the owner, the
provincial/city/municipal assessor is still required to assess the property for taxation in
accordance with the provisions of the Local Government Code.
62. It is true that tax assessments by tax examiners are presumed correct and made in good faith,
with the taxpayer having the burden of proving otherwise. [66] In this case, MERALCO was able
to overcome the presumption because it has clearly shown that the assessment of its properties
by the City Assessor was baselessly and arbitrarily done, without regard for the requirements
of the Local Government Code.
63. The exercise of the power of taxation constitutes a deprivation of property under the due
process clause, and the taxpayer's right to due process is violated when arbitrary or oppressive
methods are used in assessing and collecting taxes. [67] The Court applies by analogy its
pronouncements in Commissioner of Internal Revenue v. United Salvage and Towage (Phils.),
Inc.,[68] concerning an assessment that did not comply with the requirements of the National
Internal Revenue Code:
a. On the strength of the foregoing observations, we ought to reiterate our earlier
teachings that "in balancing the scales between the power of the State to tax and its
inherent right to prosecute perceived transgressors of the law on one side, and the
constitutional rights of a citizen to due process of law and the equal protection of
the laws on the other, the scales must tilt in favor of the individual, for a citizen's
right is amply protected by the Bill of Rights under the Constitution." Thus, while
"taxes are the lifeblood of the government," the power to tax has its limits, in spite
of all its plenitude. Even as we concede the inevitability and indispensability of
taxation, it is a requirement in all democratic regimes that it be exercised reasonably
and in accordance with the prescribed procedure. (Citations omitted.)
64. The appraisal and assessment of the transformers, electric posts, transmission lines, insulators,
and electric meters of MERALCO under Tax Declaration Nos. 019-6500 and 019-7394, not
being in compliance with the Local Government Code, are attempts at deprivation of property
without due process of law and, therefore, null and void.
65. WHEREFORE, premises considered, the Court PARTLY GRANTS the
instant Petition and AFFIRMS with MODIFICATION the Decision dated
May 13, 2004 of the Court of Appeals in CA-G.R. SP No. 67027, affirming
in toto the Decision dated May 3, 2001 of the Central Board of Assessment
Appeals in CBAA Case No. L-20-98. The Court DECLARES that the
transformers, electric posts, transmission lines, insulators, and electric
meters of Manila Electric Company are NOT EXEMPTED from real
property tax under the Local Government Code. However, the Court
also DECLARES the appraisal and assessment of the said properties under
Tax Declaration Nos. 019-6500 and 019-7394 as NULL and VOID for not
 complying with the requirements of the Local Government Code and b. APCN P203,300,000.00
violating the right to due process of Manila Electric Company, c. BMP-CNS p 65,662,000.00
and ORDERS the CANCELLATION of the collection letter dated
d. SEA-ME-WE-3 CNSP P7,540,000.00
October 16, 1997 of the City Treasurer of Lucena and the Notice of
Assessment dated October 20, 1997 of the City Assessor of Lucena, e. GP-CNS P1,789,000.00
but WITHOUT PREJUDICE to the conduct of a new appraisal and
5. Capwire claims that it also reported that the system "interconnects at the
assessment of the same properties by the City Assessor of Lucena in accord
PLDT Landing Station in Nasugbu, Batangas," which is covered by a
with the provisions of the Local Government Code and guidelines issued by
transfer certificate of title and tax declarations in the name of PLDT. 11
the Bureau of Local Government Financing.
6. As a result, the respondent Provincial Assessor of Batangas (Provincial
4.) Capitol Wireless, Inc. v. The Provincial Treasurer of Batangas, Assessor) issued the following Assessments of Real Property (ARP) against
Capwire:
G.R. No. 180110 | May 30, 2016
a. ARP Cable System Assessed Value
FACTS: b. 019-00967 BMP-CNS P52,529,600.00
1. Petitioner Capitol Wireless Inc. (Capwire) is a Philippine corporation in the c. 019-00968 APCN P162,640,000.00
business of providing international telecommunications services. 3 As such
d. 019-00969 SEA-ME-WE3-CNS P: 6,032,000.00
provider, Capwire has signed agreements with other local and foreign
telecommunications companies covering an international network of e. 019-00970 GP-CNS P: 1,431,200.00
submarine cable systems such as the Asia Pacific Cable Network System
7. In essence, the Provincial Assessor had determined that the submarine cable
(APCN) (which connects Australia, Thailand, Malaysia, Singapore, Hong
systems described in Capwire's Sworn Statement of True Value of Real
Kong, Taiwan, Korea, Japan, Indonesia and the Philippines); the Brunei-
Properties are taxable real property, a determination that was contested by
Malaysia-Philippines Cable Network System (BMP-CNS), the Philippines-
Capwire in an exchange of letters between the company and the public
Italy (SEA-ME-WE-3 CNS), and the Guam Philippines (GP-CNS)
respondent. 12 The reason cited by Capwire is that the cable system lies
systems. 4 The agreements provide for co-ownership and other rights
outside of Philippine territory, i.e., on international waters. 13
among the parties over the network. 5
8. On February 7, 2003 and March 4, 2003, Capwire received a Warrant
2. Petitioner Capwire claims that it is co-owner only of the so-called "Wet
of Levy and a Notice of Auction Sale, respectively, from the respondent
Segment" of the APCN, while the landing stations or terminals and
Provincial Treasurer of Batangas (Provincial Treasurer). 14
Segment E of APCN located in Nasugbu, Batangas are allegedly owned by
the Philippine Long Distance Telephone Corporation (PLDT). 6 Moreover, 9. On March I 0, 2003, Capwire filed a Petition for Prohibition and
it alleges that the Wet Segment is laid in international, and not Philippine, Declaration of Nullity of Warrant of Levy, Notice of Auction Sale and/or
waters. 7 Auction Sale with the Regional Trial Court (RTC) of Batangas City. 15
3. Capwire claims that as co-owner, it does not own any particular physical 10. After the filing of the public respondents' Comment, 16 on May 5, 2003, the RTC issued an
Order dismissing the petition for failure of the petitioner Capwire to follow the requisite of
part of the cable system but, consistent with its financial contributions, it payment under protest as well as failure to appeal to the Local Board of Assessment Appeals
owns the right to use a certain capacity of the said system. 8 This property (LBAA), as provided for in Sections 206 and 226 of Republic Act (R.A.) No. 7160, or the
right is allegedly reported in its financial books as "Indefeasible Rights in Local Government Code. 17
Cable Systems."9 11. On May 30, 2007, the Court of Appeals promulgated its Decision dismissing the appeal filed
by Capwire and affirming the order of the trial court. The dispositive portion of the CA's
4. However, for loan restructuring purposes, Capwire claims that "it was decision states: RTC AFFIRMED.
required to register the value of its right," hence, it engaged an appraiser to
"assess the market value of the international submarine cable system and the 12. The appellate court held that the trial court correctly dismissed Capwire's petition because of
the latter's failure to comply with the requirements set in Sections 226 and 229 of the Local
cost to Capwire." 10 On May 15, 2000, Capwire submitted a Sworn Government Code, that is, by not availing of remedies before administrative bodies like the
Statement of True Value of Real Properties at the Provincial Treasurer's LBAA and the Central Board of Assessment Appeals (CBAA). 22Although Capwire claims that
Office, Batangas City, Batangas Province, for the Wet Segment of the it saw no need to undergo administrative proceedings because its petition raises purely legal
system, stating: questions, the appellate court did not share this view and noted that the case raises questions of
fact, such as the extent to which parts of the submarine cable system lie within the territorial
a. System Sound Value jurisdiction of the taxing authorities, the public respondents. 23 Further, the CA noted that
 Capwire failed to pay the tax assessed against it under protest, another strict requirement under
Section 252 of the Local Government Code24
13. Hence, the instant petition for review of Capwire.
14. Petitioner Capwire asserts that recourse to the Local Board of Assessment Appeals, or payment
of the tax under protest, is inapplicable to the case at bar since there is no question of fact
involved, or that the question involved is not the reasonableness of the amount assessed but,
rather, the authority and power of the assessor to impose the tax and of the treasurer to collect
it.25 It contends that there is only a pure question of law since the issue is whether its submarine
cable system, which it claims lies in international waters, is taxable. 26 Capwire holds the
position that the cable system is not subject to tax.27
15. Respondents assessors and treasurers of the Province of Batangas and Municipality of
Nasugbu, Batangas disagree with Capwire and insist that the case presents questions of fact
such as the extent and portion of the submarine cable system that lies within the jurisdiction of
the said local governments, as well as the nature of the so-called indefeasible rights as property
of Capwire.28 Such questions are allegedly resolvable only before administrative agencies like
5.
the Local Board of Assessment Appeals. 29
ISSUES:
application of law or jurisprudence to a certain set of facts; or when the issue does
not call for an examination of the probative value of the evidence presented, the
truth or falsehood of facts being admitted. In contrast, a question of fact exists
when the doubt or difference arises as to the truth or falsehood of facts or when the
query invites calibration of the whole evidence considering mainly the credibility
of the witnesses, the existence and relevancy of specific surrounding circumstances
as well as their relation to each other and to the whole, and the probability of the
situation.
e. For the sake of brevity, We shall label this the law application and calibration dichotomy.
f. In contrast, the dynamic legal scholarship in the United States has birthed many commentaries
on the question of law and question of fact dichotomy. As early as 1944, the law was described
as growing downward toward "roots of fact" which grew upward to meet it. In 1950, the late
Professor Louis Jaffe saw fact and law as a spectrum, with one shade blending imperceptibly
into the other. Others have defined questions of law as those that deal with the general body of
legal principles; questions of fact deal with "all other phenomena xx x." Kenneth Culp Davis
also weighed in and noted that the difference between fact and law has been characterized as
that between "ought" questions and "is" questions. 34
Guided by the quoted pronouncement, the Court sustains the CA's finding that petitioner's case is one
replete with questions of fact instead of pure questions of law, which renders its filing in a judicial
forum improper because it is instead cognizable by local administrative bodies like the Board of
Assessment Appeals, which are the proper venues for trying these factual issues.

1. Is the case cognizable by the administrative agencies and covered by the requirements in
Sections 226 and 229 of the Local Government Code which makes the dismissal of Capwire's
petition by the RTC proper? May submarine communications cables be classified
as taxable real property by the local governments?
RATIO:
1. The petition is denied. No error attended the ruling of the appellate court
that the case involves factual questions that should have been resolved
before the appropriate administrative bodies.
2. In disputes involving real property taxation, the general rule is to require the taxpayer to first avail of
administrative remedies and pay the tax under protest before allowing any resort to a judicial action, except
when the assessment itself is alleged to be illegal or is made without legal authority. 30
3. For example, prior resort to administrative action is required when among the issues raised is an allegedly
erroneous assessment, like when the reasonableness of the amount is challenged, while direct court action is
permitted when only the legality, power, validity or authority of the; assessment itself is in question. Stated
differently, the general rule of a prerequisite recourse to administrative remedies applies when questions of
fact are raised, but the exception of direct court action is allowed when purely questions of law are
involved.32
4. This Court has previously and rather succinctly discussed the difference between a question of fact and a
question of law. In Cosmos Bottling Corporation v. Nagrama, Jr., 33 it held:
a. The Court has made numerous dichotomies between questions of law and fact. A reading of
these dichotomies shows that labels attached to law and fact are descriptive rather than
definitive. We are not alone in Our difficult task of clearly distinguishing questions of fact from
questions of law. The United States Supreme Court has ruled that: "we [do not] yet know of any
other rule or principle that will unerringly distinguish a factual finding from a legal conclusion."
b. In Ramos v. Pepsi-Cola Bottling Co. of the PI., the Court ruled:
i. There is a question of law in a given case when the doubt or difference arises as to
what the law is on a certain state of facts; there is a question of fact when the doubt
or difference arises as to the truth or the falsehood of alleged facts.
c. We shall label this the doubt dichotomy.
d. In Republic v. Sandiganbayan, the Court ruled:
i. x x x A question of law exists when the doubt or controversy concerns the correct
6. Verily, what is alleged by Capwire in its petition as "the crux of the controversy," that is, "whether or not an
indefeasible right over a submarine cable system that lies in international waters can be subject to real
property tax in the Philippines,"35 is not the genuine issue that the case presents - as it is already obvious and
fundamental that real property that lies outside of Philippine territorial jurisdiction cannot be subjected to its
domestic and sovereign power of real property taxation - but, rather, such factual issues as the extent and
status of Capwire's ownership of the system, the actual length of the cable/s that lie in Philippine territory,
and the corresponding assessment and taxes due on the same, because the public respondents imposed and
collected the assailed real property tax on the finding that at least a portion or some portions of the
submarine cable system that Capwire owns or co-owns lies inside Philippine territory. Capwire's
disagreement with such findings of the administrative bodies presents little to no legal question that only the
courts may directly resolve.
7. Instead, Capwire argues and makes claims on mere assumptions of certain facts as if they have been already
admitted or established, when they have not, since no evidence of such have yet been presented in the proper
agencies and even in the current petition.
8. As such, it remains unsettled whether Capwire is a mere co-owner, not full owner, of the subject submarine
cable and, if the former, as to what extent; whether all or certain portions of the cable are indeed submerged
in water; and whether the waters wherein the cable/s is/are laid are entirely outside of Philippine territorial or
inland waters, i.e., in international waters. More simply, Capwire argues based on mere legal conclusions,
culminating on its claim of illegality of respondents' acts, but the conclusions are yet unsupported by facts
that should have been threshed out quasi-judicially before the administrative agencies. It has been held that
"a bare characterization in a petition of unlawfulness, is merely a legal conclusion and a wish of the pleader,
and such a legal conclusion unsubstantiated by facts which could give it life, has no standing in any court
where issues must be presented and determined by facts in ordinary and concise language."36 
9. Therefore, Capwire's resort to judicial action, premised on its legal conclusion that its cables (the equipment
being taxed) lie entirely on international waters, without first administratively substantiating such a factual
premise, is improper and was rightly denied. Its proposition that the cables lie entirely beyond Philippine
territory, and therefore, outside of Philippine sovereignty, is a fact that is not subject to judicial notice since,
on the contrary, and as will be explained later, it is in fact certain that portions of the cable would definitely
lie within Philippine waters. Jurisprudence on the Local Government Code is clear that facts such as these
must be threshed out administratively, as the courts in these types of cases step in at the first instance only
when pure questions of law are involved.
10. Nonetheless, We proceed to decide on whether submarine wires or cables
used for communications may be taxed like other real estate.
11. We hold in the affirmative.
12. Submarine or undersea communications cables are akin to electric
transmission lines which this Court has recently declared in Manila
 Electric Company v. City Assessor and City Treasurer of Lucena City, 37 as
"no longer exempted from real property tax" and may qualify as
"machinery" subject to real property tax under the Local Government
Code.
13. To the extent that the equipment's location is determinable to be within
the taxing authority's jurisdiction, the Court sees no reason to
distinguish between submarine cables used for communications and
aerial or underground wires or lines used for electric transmission, so
that both pieces of property do not merit a different treatment in the
aspect of real property taxation.
14. Both electric lines and communications cables, in the strictest sense, are not
directly adhered to the soil but pass through posts, relays or landing
stations, but both may be classified under the term "machinery" as real
property under Article 415(5)38 of the Civil Code for the simple reason
that such pieces of equipment serve the owner's business or tend to
meet the needs of his industry or works that are on real estate.
15. Even objects in or on a body of water may be classified as such, as "waters"
is classified as an immovable under Article 415(8)39 of the Code. A classic
example is a boathouse which, by its nature, is a vessel and, therefore, a
personal property but, if it is tied to the shore and used as a residence, and
since it floats on waters which is immovable, is considered real
property.40 Besides, the Court has already held that "it is a familiar
phenomenon to see things classed as real property for purposes of
taxation which on general principle might be considered personal
property."41
16. Thus, absent any showing from Capwire of any express grant of an
exemption for its lines and cables from real property taxation, then this
interpretation applies and Capwire's submarine cable may be held subject to
real property tax.
17. Having determined that Capwire is liable, and public respondents have the
right to impose a real property tax on its submarine cable, the issue that is
unresolved is how much of such cable is taxable based on the extent of
Capwire's ownership or co-ownership of it and the length that is laid within
respondents' taxing jurisdiction. The matter, however, requires a factual
determination that is best performed by the Local and Central Boards of
Assessment Appeals, a remedy which the petitioner did not avail of.
18. At any rate, given the importance of the issue, it is proper to lay down the
other legal bases for the local taxing authorities' power to tax portions of the
submarine cables of petitioner.
19. It is not in dispute that the submarine cable system's Landing Station in
Nasugbu, Batangas is owned by PLDT and not by Capwire. Obviously,
Capwire is not liable for the real property tax on this Landing Station.
Nonetheless, Capwire admits that it co-owns the submarine cable
system that is subject of the tax assessed and being collected by public
respondents.
20. As the Court takes judicial notice that Nasugbu is a coastal town and the
surrounding sea falls within what the United Nations Convention on the
Law of the Sea (UN CLOS) would define as the country's territorial sea
(to the extent of 12 nautical miles outward from the nearest baseline, under
Part II, Sections 1 and 2) over which the country has sovereignty, including
the seabed and subsoil, it follows that indeed a portion of the submarine
cable system lies within Philippine territory and thus falls within the
jurisdiction of the said local taxing authorities.42 
21. It easily belies Capwire's contention that the cable system is entirely in
international waters. And even if such portion does not lie in the 12-
nautical-mile vicinity of the territorial sea but further inward, in Prof
Magallona v. Hon. Ermita, et al. 43 this Court held that "whether referred to
as Philippine 'internal waters' under Article I of the Constitution 44 or as
'archipelagic waters' under UNCLOS Part III, Article 49(1, 2, 4), the
Philippines exercises sovereignty over the body of water lying landward of
(its) baselines, including the air space over it and the submarine areas
underneath." Further, under Part VI, Article 7946 of the UNCLOS, the
Philippines clearly has jurisdiction with respect to cables laid in its
territory that are utilized in support of other installations and
structures under its jurisdiction.
22. And as far as local government units are concerned, the areas described
above are to be considered subsumed under the term "municipal waters"
which, under the Local Government Code, includes "not only streams,
lakes, and tidal waters within the municipality, not being the subject of
private ownership and not comprised within the national parks, public
forest, timber lands, forest reserves or fishery reserves, but also marine
waters included between two lines drawn perpendicularly to the
general coastline from points where the boundary lines of the
municipality or city touch the sea at low tide and a third line parallel
with the general coastline and fifteen (15) kilometers from it."47
23. Although the term "municipal waters" appears in the Code in the context of
the grant of quarrying and fisheries privileges for a fee by local
governments,48 its inclusion in the Code's Book II which covers local
taxation means that it may also apply as guide in determining the territorial
extent of the local authorities' power to levy real property taxation.
24. Thus, the jurisdiction or authority over such part of the subject submarine
cable system lying within Philippine jurisdiction includes the authority to
tax the same, for taxation is one of the three basic and necessary attributes
of sovereignty,49 and such authority has been delegated by the national
legislature to the local governments with respect to real property. taxation.
25. As earlier stated, a way for Capwire to claim that its cable system is not
 covered by such authority is by showing a domestic enactment or even
contract, or an international agreement or treaty exempting the same
from real property taxation.
26. It failed to do so, however, despite the fact that the burden of proving
exemption from local taxation is upon whom the subject real property is
declared. 51 Under the Local Government Code, every person by or for
whom real property is declared, who shall claim tax exemption for such
property from real property taxation "shall file with the provincial, city or
municipal assessor within thirty (30) days from the date of the declaration
of real property sufficient documentary evidence in support of such
claim."52 
FACTS:
27. Capwire omitted to do so. And even under Capwire's legislative franchise,
RA 4387, which amended RA 2037, where it may be derived that there was
a grant of real property tax exemption for properties that are part of its
franchise, or directly meet the needs of its business, 53 such had been
expressly withdrawn by the Local Government Code, which took effect on
January l, 1992, Sections 193 and 234 of which provide:54
a. Section 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, nonstock and nonprofit hospitals and educational institutions, arc hereby
withdrawn upon the effectivity of this Code.
b. x x x x Section 234. Exemptions from Real Property Tax. - The following are
exempted from payment of the real property tax:
c. (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 of otherwise, to a taxable person;
d. (b) Charitable institutions, churches, parsonages or convents appurtenant thereto,
mosques, nonprofit or religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively used for religious, charitable or
educational purposes;
e. (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;
f. (d) All real property owned by duly registered cooperatives as provided for under
R.A. No. 6938; and
g. (e) Machinery and equipment used for pollution control and environmental
protection.
h. Except as provided herein, any exemption from payment of real property tax
previously granted to, or presently enjoyed by, all persons, whether natural or
iuridical, including all government-owned or controlled corporations are
hereby withdrawn upon the effectivity of this Code.55
28. Such express withdrawal had been previously held effective upon
exemptions bestowed by legislative franchises granted prior to the
effectivity of the Local Government Code.56 
29. Capwire fails to allege or provide any other privilege or exemption that
were granted to it by the legislature after the enactment of the Local
Government Code. Therefore, the presumption stays that it enjoys no such
privilege or exemption. Tax exemptions arc strictly construed against the
taxpayer because taxes are considered the lifeblood of the nation.57
30. AFFIRMED.
5.) Laud v. People
G.R. No. 199032 | November 19, 2014
1. Assailed in this petition for review on certiorari 1 are the CA Decision2 dated April 25, 2011
upholding the validity of Search Warrant No. 09-14407.4
2. On July 10, 2009, the Philippine National Police (PNP), through Police
Senior Superintendent Roberto B. Fajardo, applied with the (RTC) of
Manila, Branch-50 (Manila-RTC) for a warrant to search three (3) caves
located inside the Laud Compound in Purok 3, Barangay Ma-a, Davao
City, where the alleged remains of the victims summarily executed by the
so-called "Davao Death Squad" may be found.5 
3. In support of the application, a certain Ernesto Avasola (Avasola) was
presented to the RTC and there testified that he personally witnessed the
killing of six (6) persons in December 2005, and was, in fact, part of the
group that buried the victims.6
4. Judge William Simon P. Peralta (Judge Peralta), acting as Vice Executive
Judge of the Manila-RTC, found probable cause for the issuance of a search
warrant, and thus, issued Search Warrant No. 09-14407 7 which was later
enforced by the elements of the PNP-Criminal Investigation and Detection
Group, in coordination with the members of the Scene of the Crime
Operatives on July 15, 2009.The search of the Laud Compound caves
yielded positive results for the presence of human remains.8
5. On July 20, 2009, herein petitioner, retired SPO4 Bienvenido Laud (Laud),
filed an Urgent Motion to Quash and to Suppress Illegally Seized
Evidence9 premised on the following grounds: (a) Judge Peralta had no
authority to act on the application for a search warrant since he had been
automatically divested of his position as Vice Executive Judge when several
administrative penalties were imposed against him by the Court; 10 (b) the
Manila-RTC had no jurisdiction to issue Search Warrant No. 09-14407
which was to be enforced in Davao City;11 (c) the human remains sought
to be seized are not a proper subject of a search warrant; 12 (d) the police
officers are mandated to follow the prescribed procedure for exhumation of
human remains;13 (e) the search warrant was issued despite lack of probable
cause;14 (f) the rule against forum shopping was violated; 15 and (g) there was
a violation of the rule requiring one specific offense and the proper
 specification of the place to be searched and the articles to be seized. 16
6. The Manila-RTC Ruling: In an Order  dated July 23, 2009, the Manila-RTC granted the
17
motion of Laud "after a careful consideration [of] the grounds alleged [therein]." Aside from
this general statement, the said Order contained no discussion on the particular reasons from
which the Manila-RTC derived its conclusion.
7. Respondent, the People of the Philippines (the People), filed a Motion for
Reconsideration18 which was, however, denied in an Order 19 dated December 8, 2009, wherein
the Manila-RTC, this time, articulated its reasons for the warrant’s quashal, namely: (a) the
People failed to show any compelling reason to justify the issuance of a search warrant by the
Manila RTC which was to be implemented in Davao City where the offense was allegedly
committed, in violation of Section 2, Rule 126 of the Rules of Court; 20 (b) the fact that the
alleged offense happened almost four (4) years before the search warrant application was filed
rendered doubtful the existence of probable cause; 21 and (c) the applicant, i.e., the PNP,
violated the rule against forum shopping as the subject matter of the present search warrant
application is exactly the same as the one contained in a previous application 22 before the RTC
of Davao City, Branch 15 (Davao-RTC) which had been denied. 23 Unconvinced, the People
filed a petition for certiorari before the CA, docketed as CA-G.R. SP. No. 113017.
8. The CA Ruling: In a Decision24 dated April 25, 2011, the CA granted the People’s petition
and thereby annulled and set aside the Orders of the Manila-RTC for having been tainted with
grave abuse of discretion.
9. It held that the requirements for the issuance of a search warrant were satisfied, pointing out
that an application therefor involving a heinous crime, such as Murder, is an exception to the
compelling reasons requirement under Section 2, Rule 126 of the Rules of Court as explicitly
recognized in A.M. No. 99-20-09-SC25 and reiterated in A.M. No. 03-8-02-SC,26 provided that
the application is filed by the PNP, the (NBI), the Presidential Anti-Organized Crime Task
Force (PAOC-TF) or the Reaction Against Crime Task Force (REACT-TF), 27with the
endorsement of its head, before the RTC of Manila or Quezon City, and the warrant be
consequently issued by the Executive Judge or Vice-Executive Judge of either of the said
courts, as in this case.28
10. Also, the CA found that probable cause was established since, among others, witness Avasola
deposed and testified that he personally witnessed the murder of six (6) persons in December
2005 and was actually part of the group that buried the victims – two bodies in each of the
three (3) caves.29 Further, it observed that the Manila-RTC failed to consider the fear of reprisal
and natural reluctance of a witness to get involved in a criminal case, stating that these are
sufficient reasons to justify the delay attending the application of a search
warrant.30 Accordingly, it deemed that the physical evidence of a protruding human bone in
plain view in one of the caves, and Avasola’s first-hand eye witness account both concur and
point to the only reasonable conclusion that the crime of Murder had been committed and that
the human remains of the victims were located in the Laud Compound.31
11. Finally, the CA debunked the claim of forum shopping, finding that the prior application for a
search warrant filed before the Davao-RTC was based on facts and circumstances different
from those in the application filed before the Manila-RTC.32
ISSUES:
1. (a) whether the administrative penalties imposed on Judge Peralta invalidated Search Warrant
No. 09-14407; (b) whether the Manila-RTC had jurisdiction to issue the said
warrant despite non-compliance with the compelling reasons requirement
under Section 2, Rule126 of the Rules of Court; (c) whether the
requirements of probable cause and particular description were complied
with and the one-specific-offense rule under Section 4, Rule 126 of the
Rules of Court was violated; and (d) whether the applicant for the search warrant,
i.e., the PNP, violated the rule against forum shopping.
RATIO:
1. The petition has no merit.
2. A. Effect of Judge Peralta’s Administrative Penalties.
3. Citing Section 5, Chapter III of A.M. No. 03-8-02-SC which provides that "[t]he imposition upon an
Executive Judge or Vice-Executive Judge of an administrative penalty of at least a reprimand shall
automatically operate to divest him of his position as such," Laud claims that Judge Peralta had no authority
to act as Vice-Executive Judge and accordingly issue Search Warrant No. 09-14407 in view of the Court’s
Resolution in Dee C. Chuan & Sons, Inc. v. Judge Peralta 34 wherein he was administratively penalized with
fines of ₱15,000.00 and ₱5,000.00.35
4. While the Court does agree that the imposition of said administrative penalties did operate to divest Judge
Peralta’s authority to act as Vice Executive Judge, it must be qualified that the abstraction of such authority
would not, by and of itself, result in the invalidity of Search Warrant No. 09-14407 considering that Judge
Peralta may be considered to have made the issuance as a de facto officer whose acts would,
nonetheless, remain valid.
5. Funa v. Agra36 defines who a de facto officer is and explains that his acts are just as valid for all purposes as
those of a de jure officer, in so far as the public or third persons who are interested therein are concerned,
viz.:
a. A de facto officer is one who derives his appointment from one having colorable authority to
appoint, if the office is an appointive office, and whose appointment is valid on its face. He may
also be one who is in possession of an office, and is discharging [his] duties under color of
authority, by which is meant authority derived from an appointment, however irregular or
informal, so that the incumbent is not a mere volunteer. Consequently, the acts of the de facto
officer are just as valid for all purposes as those of a de jure officer, in so far as the public or
third persons who are interested therein are concerned.37
6. The treatment of a de facto officer’s acts is premised on the reality that third persons cannot always
investigate the right of one assuming to hold an important office and, as such, have a right to assume that
officials apparently qualified and in office are legally such. 38 Public interest demands that acts of persons
holding, under color of title, an office created by a valid statute be, likewise, deemed valid insofar as the
public – as distinguished from the officer in question – is concerned. 39 Indeed, it is far more cogently
acknowledged that the de facto doctrine has been formulated, not for the protection of the de facto officer
principally, but rather for the protection of the public and individuals who get involved in the official acts of
persons discharging the duties of an office without being lawful officers. 40
7. In order for the de facto doctrine to apply, all of the following elements must concur: (a) there must be a de
jure office; (b) there must be color of right or general acquiescence by the public; and (c) there must be
actual physical possession of the office in good faith.41
8. The existence of the foregoing elements is rather clear in this case. Undoubtedly, there is a de jure office of a
2nd Vice-Executive Judge. Judge Peralta also had a colorable right to the said office as he was duly
appointed to such position and was only divested of the same by virtue of a supervening legal technicality –
that is, the operation of Section 5, Chapter III of A.M. No. 03-8-02-SC as above-explained; also, it may be
said that there was general acquiescence by the public since the search warrant application was regularly
endorsed to the sala of Judge Peralta by the Office of the Clerk of Court of the Manila-RTC under his
apparent authority as 2nd Vice Executive Judge.42Finally, Judge Peralta’s actual physical possession of the
said office is presumed to bei n good faith, as the contrary was not established. 43 Accordingly, Judge Peralta
can be considered to have acted as a de facto officer when he issued Search Warrant No. 09-14407, hence,
treated as valid as if it was issued by a de jure officer suffering no administrative impediment.
9. B. Jurisdiction of the Manila-RTC to Issue Search Warrant No. 09- 14407; Exception to
the Compelling Reasons Requirement Under Section 2, Rule 126 of the Rules of Court.
10. Section 12, Chapter V of A.M.No. 03-8-02-SC states the requirements for the issuance of
search warrants in special criminal cases by the RTCs of Manila and Quezon City. These
special criminal cases pertain to those "involving heinous crimes, illegal gambling, illegal
possession of firearms and ammunitions, as well as violations of the Comprehensive
Dangerous Drugs Act of 2002, the Intellectual Property Code, the Anti-Money Laundering Act
of 2001, the Tariff and Customs Code, as amended, and other relevant laws that may hereafter
be enacted by Congress, and included herein by the Supreme Court."
11. Search warrant applications for such cases may be filed by "the National Bureau of
 Investigation (NBI), the Philippine National Police(PNP) and the Anti Crime Task Force
(ACTAF)," and "personally endorsed by the heads of such agencies." As in ordinary search
warrant applications, they "shall particularly describe therein the places to be searched and/or
the property or things to be seized as prescribed in the Rules of Court." "The Executive Judges
[of these RTCs] and, whenever they are on official leave of absence or are not physically
present in the station, the Vice-Executive Judges" are authorized to act on such applications
and "shall issue the warrants, if justified, which may be served in places outside the territorial
jurisdiction of the said courts."
12. The Court observes that all the above-stated requirements were complied with in this case.
13. As the records would show, the search warrant application was filed before the Manila-RTC by
the PNP and was endorsed by its head, PNP Chief Jesus Ame Versosa, 44 particularly describing
the place to be searched and the things to be seized (as will be elaborated later on) in
connection with the heinous crime of Murder.45 Finding probable cause therefor, Judge
Peralta, in his capacity as 2nd Vice-Executive Judge, issued Search Warrant No. 09-14407
which, as the rules state, may be served in places outside the territorial jurisdiction of the said
RTC.
14. Notably, the fact that a search warrant application involves a "special criminal case" excludes it
from the compelling reason requirement under Section 2, Rule 126 of the Rules of Court which
provides:
a. SEC. 2. Court where application for search warrant shall be filed. — An application
for search warrant shall be filed with the following:
b. a) Any court within whose territorial jurisdiction a crime was committed.
c. b) For compelling reasons stated in the application, any court within the judicial
region where the crime was committed if the place of the commission of the crime
is known, or any court within the judicial region where the warrant shall be
enforced.
d. However, if the criminal action has already been filed, the application shall only be
made in the court where the criminal action is pending. (Emphasis supplied)
15. As explicitly mentioned in Section 12, Chapter V of A.M. No. 03-8- 02-SC, the rule on search
warrant applications before the Manila and Quezon City RTCs for the above-mentioned special
criminal cases "shall be an exception to Section 2 of Rule 126 of the Rules of Court."
Perceptibly, the fact that a search warrant is being applied for in connection with a special
criminal case as above-classified already presumes the existence of a compelling reason;
hence, any statement to this effect would be superfluous and therefore should be dispensed
with.
16. By all indications, Section 12, Chapter V of A.M. No. 03-8-02-SC allows the Manila and
Quezon City RTCs to issue warrants to be served in places outside their territorial jurisdiction
for as long as the parameters under the said section have been complied with, as in this case.
Thus, on these grounds, the Court finds nothing defective in the preliminary issuance of Search
Warrant No. 09-14407. Perforce, the RTC-Manila should not have overturned it.
17. C. Compliance with the Constitutional Requirements for the Issuance
of Search Warrant No. 09-14407 and the One-Specific Offense Rule
Under Section 4, Rule 126 of the Rules of Court.
18. In order to protect the people’s right against unreasonable searches and
seizures, Section 2, Article III of the 1987 Philippine Constitution
(Constitution) provides that no search warrant 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:
a. SEC. 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.
19. Complementarily, Section 4, Rule 126 of the Rules of Court states that a
search warrant shall not be issued except upon probable cause in connection
with one specific offense:
a. SEC. 4. Requisites for issuing search warrant. - A search warrant shall not issue except upon
probable cause in connection with one specific offense 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 things to be seized which
may be anywhere in the Philippines.
20. In this case, the existence of probable cause for the issuance of Search
Warrant No. 09-14407 is evident from the first-hand account of Avasola
who, in his deposition, stated that he personally witnessed the
commission of the afore-stated crime and was, in fact, part of the group
that buried the victims:
a. Q9-Who are these six (6) male victims who were killed and buried in the caves in
December 2005 at around 9:00 p.m.?
b. A9-I heard Tatay Laud calling the names of the two victims when they were still
alive as Pedro and Mario. I don’t know the names of the other four victims.
c. Q10-What happened after Pedro, Mario and the other four victims were killed?
d. A10-Tatay Laud ordered me and the six (6) killers to bring and bury equally the
bodies in the three caves. We buried Pedro and Mario altogether in the first cave,
located more or less 13 meters from the makeshift house of Tatay Laud, the other
two victims in the second cave and the remaining two in the third cave.
e. Q11-How did you get there at Laud Compound in the evening of December 2005?
f. A11-I was ordered by Tatay Laud to go [to] the place. I ran errands [for] him.46
21. Avasola’s statements in his deposition were confirmed during the hearing
on July 10, 2009, where Judge Peralta conducted the following
examination:
a. Court: x x x Anong panandaan mo? Nandoon ka ba noong naghukay, nakatago o
kasama ka?
b. Mr. Avasola: Kasama po ako sa pagbuhat ng mga tao, sir.
c. Court: Mga ilang katao?
d. Mr. Avasola: Anim (6) po.
e. Court: May mass grave ba na nahukay?
f. Mr. Avasola: May tatlong kweba po na maliliit yung isa malaki. x x x.47
22. Verily, the facts and circumstances established from the testimony of
 Avasola, who was personally examined by Judge Peralta, sufficiently show
that more likely than not the crime of Murder of six (6) persons had been
perpetrated and that the human remains in connection with the same are in
the place sought to be searched. In Santos v. Pryce Gases, Inc.,48 the Court
explained the quantum of evidence necessary to establish probable cause for
a search warrant, as follows:
a. Probable cause for a search warrant is defined as such facts and circumstances
which would lead a reasonably discrete 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. A finding of probable cause needs only to rest on
evidence showing that, more likely than not, a crime has been committed and that it
was committed by the accused. Probable cause demands more than bare
suspicion; it requires less than evidence which would justify conviction. The
existence depends to a large degree upon the finding or opinion of the judge
conducting the examination. However, the findings of the judge should not
disregard the facts before him nor run counter to the clear dictates of reason.49
23. In light of the foregoing, the Court finds that the quantum of proof to
establish the existence of probable cause had been met. That a "considerable
length of time" attended the search warrant’s application from the crime’s
commission does not, by and of itself, negate the veracity of the applicant’s
claims or the testimony of the witness presented.
24. As the CA correctly observed, the delay may be accounted for by a
witness’s fear of reprisal and natural reluctance to get involved in a criminal
case.50 Ultimately, in determining the existence of probable cause, the facts
and circumstances must be personally examined by the judge in their
totality, together with a judicious recognition of the variable complications
and sensibilities attending a criminal case. To the Court’s mind, the
supposed delay in the search warrant’s application does not dilute the
probable cause finding made herein. In fine, the probable cause requirement
has been sufficiently met.
25. The Court similarly concludes that there was compliance with the
constitutional requirement that there be a particular description of "the place
to be searched and the persons or things to be seized."
26. "[A] description of a place to be searched is sufficient if the officer with the
warrant can, with reasonable effort, ascertain and identify the place
intended and distinguish it from other places in the community. Any
designation or description known to the locality that points out the place to
the exclusion of all others, and on inquiry leads the officers unerringly to it,
satisfies the constitutional requirement."51
27. Search Warrant No. 09-14407 evidently complies with the foregoing
standard since it particularly describes the place to be searched, namely, the
three (3) caves located inside the Laud Compound in Purok 3,
Barangay Maa, Davao City:
a. You are hereby commanded to make an immediate search at any time [of] the day
of the premises above describe[d] particularly the three (3) caves (as sketched)
inside the said Laud Compound, Purok 3, Brgy. Ma-a, Davao Cityand forthwith
seize and take possession of the remains of six (6) victims who were killed and
buried in the just said premises.
28. For further guidance in its enforcement, the search warrant even made
explicit reference to the sketch 53 contained in the application. These, in
the Court’s view, are sufficient enough for the officers to, with reasonable
effort, ascertain and identify the place to be searched, which they in fact did.
29. The things to be seized were also particularly described, namely, the
remains of six (6) victims who were killed and buried in the aforesaid
premises.
30. Laud’s posturing that human remains are not "personal property" and,
hence, could not be the subject of a search warrant deserves scant
consideration. Section 3, Rule 126 of the Rules of Court states:
a. SEC. 3.Personal property to be seized. – A search warrant may be issued for the
search and seizure of personal property:
b. (a) Subject of the offense;
c. (b) Stolen or embezzled and other proceeds, or fruits of the offense; or
d. (c) Used or intended to be used as the means of committing an offense.
31. "Personal property" in the foregoing context actually refers to the
thing’s mobility, and not to its capacity to be owned or alienated by a
particular person. Article 416 of the Civil Code,54 which Laud himself
cites,55 states that in general, all things which can be transported from
place to place are deemed to be personal property.
32. Considering that human remains can generally be transported from
place to place, and considering further that they qualify under the
phrase "subject of the offense" given that they prove the crime’s
corpus delicti,56 it follows that they may be valid subjects of a search
warrant under the above-cited criminal procedure provision.
33. Neither does the Court agree with Laud’s contention that the term "human
remains" is too all-embracing so as to subvert the particular description
requirement. As the Court sees it, the description points to no other than
the things that bear a direct relation to the offense committed, i.e., of
Murder.
34. It is also perceived that the description is already specific as the
circumstances would ordinarily allow given that the buried bodies would
have naturally decomposed over time. These observations on the
description’s sufficient particularity square with the Court’s pronouncement
in Bache and Co., (Phil.), Inc. v. Judge Ruiz,57 wherein it was held:
a. A search warrant may be said to particularly describe the things to be seized when
the description therein is as specific as the circumstances will ordinarily allow
(People v. Rubio, 57 Phil. 384 [1932]); or when the description expresses a
conclusion of fact — not of law — by which the warrant officer may be guided in
 making the search and seizure (idem., dissent of Abad Santos, J.); or when the
things described are limited to those which bear direct relation to the offense for
which the warrant is being issued(Sec. 2, Rule 126, Revised Rules of Court) x x x If
the articles desired to be seized have any direct relation to an offense committed,
the applicant must necessarily have some evidence, other than those articles, to
prove the said offense; and the articles subject of search and seizure should come in
handy merely to strengthen such evidence. (Emphases supplied)58
35. Consequently, the Court finds that the particular description requirement –
both as to the place to be searched and the things to be seized – had been
complied with.
36. Finally, the Court finds no violation of the one-specific-offense rule under Section 4, Rule 126 of the Rules
of Court as above-cited which, to note, was intended to prevent the issuance of scattershot warrants, or those
which are issued for more than one specific offense. The defective nature of scatter-shot warrants was
discussed in the case of People v. CA59 as follows:
a. There is no question that the search warrant did not relate to a specific offense, in violation of
the doctrine announced in Stonehill v. Diokno and of Section 3 [now, Section 4] of Rule 126
providing as follows:
i. SEC. 3. Requisites for issuing search warrant.— A search warrant shall not issue
but upon probable cause in connection with one specific offense 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 things to be seized.
b. Significantly, the petitioner has not denied this defect in the search warrant and has merely said
that there was probable cause, omitting to continue that it was in connection withone specific
offense. He could not, of course, for the warrant was a scatter-shot warrant that could refer, in
Judge Dayrit’s own words, "to robbery, theft, qualified theft or estafa." On this score alone, the
search warrant was totally null and void and was correctly declared to be so by the very judge
who had issued it.60
37. In Columbia Pictures, Inc. v. CA, 61 the Court, however, settled that a search warrant that covers several
counts of a certain specific offense does not violate the one-specific-offense rule, viz.:
a. That there were several counts of the offenseof copyright infringement and the search warrant
uncovered several contraband items in the form of pirated video tapes is not to be confused with
the number of offenses charged. The search warrant herein issued does not violate the one-
specific-offense rule. (Emphasis supplied)62
38. Hence, given that Search Warrant No. 09-14407 was issued only for one specific offense – that is, of
Murder, albeit for six (6) counts – it cannot be said that Section 4, Rule 126 of the Rules of Court had been
violated.
39. That being said, the Court now resolves the last issue on forum shopping.
40. D. Forum Shopping. Forum shopping cannot be said to have been committed in this case considering the
various points of divergence attending the search warrant application before the Manila-RTC and that before
the Davao-RTC. For one, the witnesses presented in each application were different. Likewise, the
application filed in Manila was in connection with Murder, while the one in Davao did not specify any
crime. Finally, and more importantly, the places to be searched were different – that in Manila sought the
search of the Laud Compound caves, while that in Davao was for a particular area in the Laud Gold Cup
Firing Range. There being no identity of facts and circumstances between the two applications, the rule
against forum shopping was therefore not violated.
41. Thus, for all the above-discussed reasons, the Court affirms the CA Ruling
which upheld the validity of Search Warrant No. 09-14407.
42. WHEREFORE, the petition is DENIED. The Decision dated April 25, 2011
and the Resolution dated October 17, 2011 of the Court of Appeals in CA-
G.R. SP. No. 113017 are hereby AFFIRMED.
6.) Dumo v. Republic
G.R. No. 218269 | 6 June 2018
FACTS:
1. This is a petition for review on certiorari under Rule 45 of the Rules of Court. Petitioner Suprema T. Dumo
(Dumo) challenges the 28 January 2014 Decision[1] and the 19 May 2015 Resolution [2] of the Court of
Appeals (CA) in CA-G.R. CV No. 95732, which modified the Joint Decision of the Regional Trial Court
(RTC), Branch 67, Bauang, La Union, in Civil Case No. 1301-Bg for Accion Reivindicatoria[3] and LRC
Case No. 270-Bg for Application for Land Registration. [4]
2. Severa Espinas, Erlinda Espinas, Aurora Espinas, and Virginia Espinas filed
a Complaint for Recovery of Ownership, Possession and Damages with
Prayer for Writ of Preliminary Injunction against the heirs of Bernarda M.
Trinidad (Trinidad), namely, Leticia T. Valmonte, Lydia T. Nebab, Purita T.
Tanag, Gloria T. Antolin, Nilo Trinidad, Elpidio Trinidad, Fresnida T.
Saldana, Nefresha T. Tolentino, and Dumo.
3. The plaintiffs are the heirs of Marcelino Espinas (Espinas), who died
intestate on 6 November 1991, leaving a parcel of land (Subject Property)
covered by Tax Declaration No. 13823-A, which particularly described the
property as follows: 
a. A parcel of land located [in] Paringao, Bauang, La Union classified as unirrigated
Riceland with an area of 1,065 square meters covered by Tax Declaration No.
13823-A, bounded on the North by Felizarda N. Mabalay; on the East by Pedro
Trinidad; on the South by Girl Scout[s] of the Philippines and on the West by China
Sea and assessed at P460.00.[5]
4. The Subject Property was purchased by Espinas from Carlos Calica through
a Deed of Absolute Sale dated 19 October 1943. Espinas exercised acts of
dominion over the Subject Property by appointing a caretaker to oversee
and administer the property. In 1963, Espinas executed an affidavit stating
his claim of ownership over the Subject Property. Espinas had also been
paying realty taxes on the Subject Property.
5. Meanwhile, on 6 February 1987, the heirs of Trinidad executed a Deed of
Partition with Absolute Sale over a parcel of land covered by Tax
Declaration No. 17276, which particularly described the property as
follows: 
a. A parcel of sandy land located [in] Paringao, Bauang, La Union, bounded on the
North by Emiliana Estepa, on the South by Carlos Calica and Girl Scout[s] Camp
and on the West by China Sea, containing an area of 1[,]514 square meters more or
less, with an assessed value [of] P130.00.[6]
6. Finding that the Deed of Partition with Absolute Sale executed by the
heirs of Trinidad included the Subject Property, the heirs of Espinas
filed a Complaint for Recovery of Ownership, Possession and Damages to
protect their interests (Civil Case No. 1301-Bg). The heirs of Espinas also
sought a TRO to enjoin the Writ of Partial Execution of the Decision in
Civil Case No. 881, a Forcible Entry complaint filed by the heirs of
Trinidad against them.
7. In the Complaint for Recovery of Ownership, Possession and Damages,
Dumo, one of the defendants therein, filed a Motion to Dismiss based
on res judicata. Dumo argued that Espinas had already applied for the
registration of the Subject Property and that such application had been
dismissed. The dismissal of the land registration application of Espinas was
affirmed by the CA, and attained finality on 5 December 1980.  longer bounded on the west by Espinas, but rather, by the China Sea. The RTC held that the only logical
8. The Motion to Dismiss filed by Dumo was denied by the RTC, which held
that the land registration case cannot operate as a bar to the Complaint for
Recovery of Ownership, Possession and Damages because the decision in
the land registration case did not definitively and conclusively adjudicate
the ownership of the Subject Property in favor of any of the parties.
9. The heirs of Trinidad thereafter filed their collective Answer, where they
denied the material allegations in the complaint.
10. Additionally, Dumo filed an application for registration of two parcels of
land, covered by Advance Plan of Lot Nos. 400398 and 400399 with a total
area of 1,273 square meters (LRC Case No. 270-Bg). Dumo alleged that the
lots belonged to her mother and that she and her siblings inherited them
upon their mother's death.
11. She further alleged that through a Deed of Partition with Absolute Sale
dated 6 February 1987, she acquired the subject lots from her siblings.
Dumo traces her title from her mother, Trinidad, who purchased the lots
from Florencio Mabalay in August 1951. Mabalay was Dumo's maternal
grandfather. Mabalay, on the other hand, purchased the properties from
Carlos Calica.
12. The heirs of Espinas opposed Dumo's application for land registration on
the ground that the properties sought to be registered by Dumo are involved
in the accion reivindicatoria case. Thus, the RTC consolidated the land
registration case with the Complaint for Recovery of Ownership, Possession
and Damages.
13. The Office of the Solicitor General entered its appearance and filed its
opposition for the State in the land registration case.  2.
14. The Ruling of the RTC
15. On 2 July 2010, the RTC rendered its Joint Decision, finding that the Subject Property was owned by the
heirs of Espinas. The RTC ordered the dismissal of Dumo's land registration application on the ground of
lack of registerable title, and ordered Dumo to restore ownership and possession of the lots to the heirs of
Espinas. The dispositive portion of the Joint Decision reads:  (1) the issue of whether she was in open, continuous, exclusive and
a. WHEREFORE, premises considered[,] judgment is rendered:
b. In LRC Case No. 270-Bg: Ordering the dismissal of the land registration on [the] ground of lack
of registerable title on the part of Suprema Dumo.
c. In Civil Case No. 1301-Bg: Declaring the Heirs of Marcelino Espinas as the owners of the lots
subject of [the] application; ordering the applicant-defendant Suprema Dumo to restore
ownership and possession of the lots in question to the Heirs of Marcelino Espinas.  violated since the issues considered by the CA were not properly raised
16. The RTC found that based on the evidence presented, the heirs of Espinas had a better right to the Subject
Property. In particular, the RTC found that based on the records of the Bureau of Lands, the lot of Espinas
was previously surveyed and approved by the Bureau of Lands and when the survey was made for Trinidad,
there was already an approved plan for Espinas. Also, the RTC found that the tax declarations submitted by
Dumo in support of her application failed to prove any rights over the land. Specifically, the tax declaration
of Mabalay, from whom Dumo traces her title, showed that the land was first described as bounded on the
west by Espinas. The subsequent tax declaration in the name of Trinidad, which cancelled the tax declaration
in the name of Mabalay, showed that the land was no longer bounded on the west by Espinas, but rather, by
the China Sea. The area of the lot also increased from 3,881 to 5,589 square meters. All of the subsequent
tax declarations submitted by Dumo covering the lot in the name of her mother stated that the lot was no
explanation to the inconsistency in the description of the land and the corresponding area thereof is that the
lot of Espinas was included in the survey conducted for Trinidad. 
17. The RTC also rejected the theory of Dumo that the lot of Espinas was eaten by the sea. The RTC found that
during the ocular inspection, it was established that the lots adjoining the lot of Espinas on the same
shoreline were not inundated by the sea. To hold the theory posited by Dumo to be true, the RTC reasoned
that all the adjoining lots should also have been inundated by the sea. However, it was established through
the ocular inspection that the lots adjoining the property of Espinas on the same shoreline remained the
same, and thus the Subject Property had not been eaten by the sea.
18. The Ruling of the CA
19. The CA rendered its Decision dated 28 January 2014, affirming the RTC's decision dismissing the
application for land registration of Dumo, and finding that she failed to demonstrate that she and her
predecessors-in interest possessed the property in the manner required by law to merit the grant of her
application for land registration. 
20. The CA, however, modified the decision of the RTC insofar as it found that the Subject Property belonged to
the heirs of Espinas. The CA found that since the property still belonged to the public domain, and the
heirs of Espinas were not able to establish their open, continuous, exclusive and notorious possession
and occupation of the land under a bona fide claim of ownership since 12 June 1945 or earlier, it was
erroneous for the RTC to declare the heirs of Espinas as the owners of the Subject Property.
21. The dispositive portion of the Decision of the CA reads: 
a. WHEREFORE, premises considered, the Appeal is PARTLY GRANTED and the assailed Joint
Decision issued by the court a quo is hereby MODIFIED in that the Complaint for Accion
Reivindicatoria (Civil Case No. 1301-Bg) filed by plaintiffs-appellees is DISMISSED for lack
of cause of action.
b. The Decision is AFFIRMED in all other respects. 
22. Dumo filed a Motion for Partial Reconsideration and subsequently, an Omnibus Motion for Entry of
Judgment and to Resolve, asking the CA to issue an entry of judgment insofar as the civil case is concerned
and to declare the land registration case submitted for resolution without any comment/opposition. The CA
denied both motions in a Resolution dated 19 May 2015.[9]
23. Hence, this petition.
ISSUES:
W/N
RATIO:
1. Essentially, Dumo argues that the CA committed a reversible error because
notorious possession of the land since 12 June 1945 was not an issue in the
RTC; (2) the requirement of possession and occupation from 12 June 1945
is not essential to her application since she has acquired title over the land
by prescription; (3) she has proven that the land applied for has already
been declared alienable and disposable; and (4) her right to due process was
during the trial. 
2. We find that none of Dumo's arguments deserve any merit.
3. Going beyond the issues raised in the RTC and due process of law
4. Dumo argues that the issue of whether the possession started on 12 June
1945 or earlier was never raised in the RTC. She also argues that no issue
was raised as to whether or not the land that she seeks to register is
alienable and disposable. Thus, Dumo argues that the CA erred, and also
violated her right to due process, when it considered these issues in
determining whether or not the application for land registration should be
granted.
5. We do not agree. 
6. In an application for land registration, it is elementary that the applicant has
the burden of proving, by clear, positive and convincing evidence, that her
alleged possession and occupation were of the nature and duration required
by law.[11] Thus, it was upon Dumo to prove that she and her predecessors-
in-interest possessed and occupied the land sought to be registered in the
nature and duration required by law. 
7. Dumo cannot validly argue that she was not afforded due process when the
CA considered to review the evidence she herself offered to support her
application for land registration. On the contrary, she was given every
opportunity to submit the documents to establish her right to register the
land. She simply failed to do so.
8. When Dumo filed with the RTC the application for registration of her land,
she was asking the RTC to confirm her incomplete title. The requirements
for judicial confirmation of imperfect title are found in Section 14 of
Presidential Decree No. 1529 (PD No. 1529), which provides: 
a. Section 14. Who may apply. The following persons may file in the proper Court of
First Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
b. (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.
c. (2) Those who have acquired ownership of private lands by prescription under the
provision of existing laws.
d. (3) Those who have acquired ownership of private lands or abandoned river beds by
right of accession or accretion under the existing laws.
e. (4) Those who have acquired ownership of land in any other manner provided for
by law.
f. x x x x  XII classifies lands of the public domain into (1) agricultural, (2) forest or
9. Thus, it is necessary in an application for land registration that the court
determines whether or not an applicant fulfills the requirements under any
of the paragraphs of Section 14 of PD No. 1529.
10. Simply put, when Dumo filed her application for the registration of the lots
she claims to have inherited from her mother and bought from her siblings,
the issue of whether she complied with all the requirements was the very
crux of the application. It cannot be argued that because the Republic failed
to oppose or raise the issue in the RTC, the CA may no longer consider this
issue. On the contrary, the classification of the land sought to be registered,
and the duration and nature of the possession and occupation have always
been, and will always be the issues in an application for land registration. It
would truly be absurd for Dumo, or any other applicant for land registration,
to expect the courts to grant the application without first determining if the
requisites under the law have been complied with.
11. The CA had every right to look into the compliance by Dumo with the
requirements for the registration of the land, and we find that the CA
correctly found that Dumo has acquired no registerable title to the lots she
seeks to register.
12. Registration of land under Section 14(1)
13. To reiterate, under Section 14(1) of PD No. 1529, Dumo had the burden of
proving the following: 
a. (1) that the land or property forms part of the alienable and disposable lands
of the public domain; 
b. (2) that the applicant and his predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of the same; and
c. (3) that it is under a bona fide claim of ownership since 12 June 1945, or
earlier.[12]
14. The first requirement is to prove that the land sought to be registered is
alienable and disposable land of the public domain. This is because under
the Regalian Doctrine, as embodied in the 1987 Philippine Constitution,
lands which do not clearly appear to be within private ownership are
presumed to belong to the State. [13] Thus, in an application for land
registration, the applicant has the burden of overcoming the presumption
that the State owns the land applied for, and proving that the land has
already been classified as alienable and disposable.[14] 
15. To overcome the presumption that the land belongs to the State, the
applicant must prove by clear and incontrovertible evidence at the time of
application that the land has been classified as alienable and disposable land
of the public domain.
16. Classification of lands of the public domain may be found under Article XII
of the 1987 Philippine Constitution. More specifically, Section 3 of Article
timber, (3) mineral lands, and (4) national parks. [15] Of these four
classifications, only agricultural lands may be alienated and disposed of by
the State.
17. The 1987 Philippine Constitution also provides that "agricultural lands of
the public domain may be further classified by law according to the uses
to which they may be devoted."[16] Based on the foregoing, it is clear that the
classification of lands of the public domain is first and foremost provided by
the Constitution itself. Of the classifications of lands of the public domain,
agricultural lands may further be classified by law, according to the uses it
may be devoted to.
18. The classification of lands of the public domain into agricultural lands, as
well as their further classification into alienable and disposable lands of the
public domain, is a legislative prerogative which may be exercised only
through the enactment of a valid law.
19. This prerogative has long been exercised by the legislative department
through the enactment of Commonwealth Act No. 141 (CA No. 141) or the
Public Land Act of 1936.[17] Section 6 of CA No. 141 remains to this day the
existing general law governing the classification of lands of the public
domain into alienable and disposable lands of the public domain. [18]
20. Section 1827[19] of the Revised Administrative Code of 1917 [20] merely
authorizes the Department Head to classify as agricultural lands those forest
lands which are better adapted and more valuable for agricultural purposes.
Section 1827 does not authorize the Department Head to classify
agricultural lands as alienable and disposable lands as this power is
expressly delegated by the same Revised Administrative Code of 1917
solely to the Governor-General.  by Act of the National Assembly. (Emphasis supplied)
21. The existing administrative code under the 1987 Philippine Constitution is
Executive Order No. 292 or the Administrative Code of 1987. This existing
code did not reenact Section 1827 of the Revised Administrative Code of
1917. Nevertheless, in the absence of incompatibility between Section 1827
of the Revised Administrative Code of 1917 and the provisions of the
Administrative Code of 1987, we can grant that Section 1827 has not been
repealed.[21] This is in view of the repealing clause in Section 27, Final
Provisions, Book VII of the Administrative Code of 1987, which provides: 
22. The authority of the Department Head under Section 1827 of the Revised
Administrative Code of 1917 is merely to classify public forest lands as
public agricultural lands. Agricultural lands of the public domain are,
by themselves, not alienable and disposable. Section 1827 of the Revised
Administrative Code of 1917 provides:  Land Act of 1919), and as in turn further superseded by Section 6 of CA
a. Section 1827. Assignment of Forest Land for Agricultural Purposes. – Lands in
public forests, not including forest reserves, upon the certification of the Director of
Forestry that said lands are better adapted and more valuable for agricultural than
for forest purposes and not required by the public interests to be kept under
forest, shall be declared by the Department Head to be agricultural lands. 
23. There is nothing in Section 1827 that authorizes the Department Head to
classify agricultural lands into alienable or disposable lands of the public
domain. The power to classify public lands as agricultural lands is
separate and distinct from the power to declare agricultural lands as
alienable and disposable. The power to alienate agricultural lands of the
public domain can never be inferred from the power to classify public lands
as agricultural. Thus, public lands classified as agricultural and used by the
Bureau of Plant Industry of the Department of Agriculture for plant research
or plant propagation are not necessarily alienable and disposable lands of
the public domain despite being classified as agricultural lands. For such
agricultural lands to be alienable and disposable, there must be an
express proclamation by the President declaring such agricultural
lands as alienable and disposable. 
24. Agricultural land, the only classification of land which may be classified as
alienable and disposable under the 1987 Philippine Constitution, may still
be reserved for public or quasi-public purposes which would prohibit the
alienation or disposition of such land. Section 8 of CA No. 141 provides:
a. Section 8. Only those lands shall be declared open to disposition or
concession which have been officially delimited and classified and, when
practicable, surveyed, and which have not been reserved for public or quasi-
public uses, nor appropriated by the Government, nor in any manner become
private property, nor those on which a private right authorized and recognized by
this Act or any other valid law may be claimed, or which, having been reserved or
appropriated, have ceased to be so. However, the President may, for reasons of
public interest, declare lands of the public domain open to disposition before
the same have had their boundaries established or been surveyed, or may, for
the same reason, suspend their concession or disposition until they are again
declared open to concession or disposition by proclamation duly published or
25. Thus, to be alienable and disposable, lands of the public domain must be
expressly declared as alienable and disposable by executive or
administrative proclamation pursuant to law or by an Act of Congress.
26. Even if the Department Head has the power to classify public forest lands as
agricultural under Section 1827 of the Revised Administrative Code of
1917, this does not include the power to classify public agricultural lands as
alienable and disposable lands of the public domain. The power
to further classify agricultural lands as alienable and disposable has not
been granted in any way to the Department Head under the Revised
Administrative Code of 1917. This authority was given only to the
Governor-General under Section 64 of the Revised Administrative Code of
1917, as superseded by Section 9 of Republic Act (RA) No. 2874 (Public
No. 141 (Public Land Act of 1936), which is the existing specific provision
of law governing the classification of lands of the public domain into
alienable and disposable lands of the public domain. This delegated power
is a discretionary power, to be exercised based on the sound discretion of
the President.
27. Under Section 64 of the Revised Administrative Code of 1917, the
classification of lands of the public domain into alienable and disposable
 lands of the public domain could only be made by the Governor-General.
While Section 1827 of the Revised Administrative Code of 1917 gave to the
Department Head the power to classify public forest lands as public
agricultural lands, the very same law in its Section 64 expressly reserved to
the Governor-General the power to declare for "public sale x x x any of the
public domain of the Philippines." Section 64 of the Revised
Administrative Code of 1917 provides: 
a. Section 64. Particular powers and duties of Governor-General of the Philippines. –
In addition to his general supervisory authority, the Governor-General of the
Philippines shall have such specific powers and duties as are expressly conferred or
imposed on him by law and also, in particular, the powers and duties set forth in this
chapter.
b. Among such special powers and duties shall be:
c. xxxx
d. (d) To reserve from settlement or public sale and for specific public uses any of
the public domain of the (Philippine Islands) Philippines the use of which is not
otherwise directed by law, the same thereafter remaining subject to the specific
public uses indicated in the executive order by which such reservation is made,
until otherwise provided by law or executive order.
e. (e) To reserve from sale or other disposition and for specific public uses or service,
any land belonging to the private domain of the Government of the (Philippine
Islands) Philippines, the use of which is not otherwise directed by law; and
thereafter such land shall not be subject to sale or other disposition and shall be
used for the specific purposes directed by such executive order until otherwise
provided by law.
28. Likewise, under Section 9 of RA No. 2874, the classification of lands of
public domain into alienable and disposable lands could only be made by
the Governor-General, thus:  provides:
a. Section 9. For the purposes of their government and disposition, the lands of the
public domain alienable or open to disposition shall be classified, according to the
use or purposes to which such lands are destined, as follows: 
b. (a) Agricultural  forest, and grazing lands, and into such other classes as now or may hereafter be
c. (b) Commercial, industrial, or for similar productive purposes.
d. (c) Educational, charitable, and other similar purposes. 
e. (d) Reservations for town sites, and for public and quasi-public uses.
f. The Governor-General, upon recommendation by the Secretary of Agriculture
and Natural Resources, shall from time to time make the classification
provided for in this section, and may, at any time and in a similar manner,
transfer lands from one class to another. (Emphasis supplied)  protection and suitable for fishpond purposes shall be released to, and be placed
29. Similarly, under Section 6 of CA No. 141, the existing law on the
matter, only the President can classify lands of the public domain into
alienable or disposable lands, thus:  33. Section 3, Article XII of the 1987 Philippine Constitution states: "x x x.
a. Section 6. The President, upon the recommendation of the Secretary of Agriculture
and Commerce, shall from time to time classify the lands of the public domain
into —
i. (a) Alienable or disposable,
ii. (b) Timber, and 
iii. (c) Mineral lands,
b. and may at any time and in a like manner transfer such lands from one class to
another, for the purposes of their administration and disposition. (Emphasis
supplied)
30. Thus, under all laws during the American regime, from the Revised
Administrative Code of 1917 up to and including CA No. 141, only the
Governor-General or President could classify lands of the public domain
into alienable and disposable lands.
31. No other government official was empowered by statutory law during the
American regime. Under the 1935, [22] 1973[23] and 1987[24] Philippine
Constitutions, the power to declare or classify lands of the public domain as
alienable and disposable lands belonged to Congress. This legislative power
is still delegated to the President under Section 6 of CA No. 141 since this
Section 6 was never repealed by Congress despite successive amendments
to CA No. 141 after the adoption of the 1935, 1973 and the 1987 Philippine
Constitutions.[25]
32. Under Section 13 of PD No. 705, otherwise known as the Revised Forestry
Code of the Philippines, the Department of Environment and Natural
Resources (DENR) Secretary has been delegated by law the discretionary
power to classify as alienable and disposable forest lands of the public
domain no longer needed for forest reserves. Section 13 of the Revised
Forestry Code of the Philippines, which was enacted on 19 May 1975,
 
a. Section 13. System of Land Classification.– The Department Head shall study,
devise, determine and prescribe the criteria, guidelines and methods for the proper
and accurate classification and survey of all lands of the public domain into
agricultural, industrial or commercial, residential, resettlement, mineral, timber or
provided by law, rules and regulations.
b. In the meantime, the Department Head shall simplify through inter-bureau action
the present system of determining which of the unclassified lands of the public
domain are needed for forest purposes and declare them as permanent forest to form
part of the forest reserves. He shall declare those classified and determined not
to be needed for forest purposes as alienable and disposable lands, the
administrative jurisdiction and management of which shall be transferred to the
Bureau of Lands: Provided, That mangrove and other swamps not needed for shore
under the administrative jurisdiction and management of, the Bureau of Fisheries
and Aquatic Resources. Those still to be classified under the present system shall
continue to remain as part of the public forest. (Emphasis supplied)
Alienable lands of the public domain shall be limited to agricultural lands. x
x x." Thus, the unclassified lands of the public domain, not needed for forest
reserve purposes, must first be declared agricultural lands of the public
 domain before the DENR Secretary can declare them alienable and
disposable.
34. Under the foregoing Section 13 of PD No. 705, the DENR Secretary has no
discretionary power to classify unclassified lands of the public domain, not
needed for forest reserve purposes, into agricultural lands. However, the
DENR Secretary can invoke his power under Section 1827 of the Revised
Administrative Code of 1917 to classify forest lands into agricultural lands.
Once so declared as agricultural lands of the public domain, the DENR
Secretary can then invoke his delegated power under Section 13 of PD No.
705 to declare such agricultural lands as alienable and disposable lands of
the public domain.
35. This Court has recognized in numerous cases the authority of the DENR
Secretary to classify agricultural lands of the public domain as alienable and
disposable lands of the public domain. [26] As we declared in Republic of the
Philippines v. Heirs of Fabio,[27] "the DENR Secretary is the only other
public official empowered by law to approve a land classification and
declare such land as alienable and disposable."  Resources Office (PENRO) of the DENR and approved by the DENR
36. Consequently, as the President's and the DENR Secretary's discretionary
power to classify land as alienable and disposable is merely delegated to
them under CA No. 141 and PD No. 705, respectively, they may not
redelegate the same to another office or officer. What has once been
delegated by Congress can no longer be further delegated or redelegated by
the original delegate to another, as expressed in the Latin maxim
— Delegata potestas non potest delegari.[28] Thus, in Aquino-Sarmiento v.
Morato,[29] this Court ruled:  (PENRO) of the DENR. He must also prove that the DENR Secretary had
a. The power to classify motion pictures into categories such as "General Patronage"
or "For Adults Only" is vested with the respondent Board itself and not with the
Chairman thereof (Sec. 3 [e], PD 1986). As Chief Executive Officer, respondent
Morato's function as Chairman of the Board calls for the implementation and
execution, not modification or reversal, of the decisions or orders of the latter (Sec.
5 [a], Ibid.). The power of classification having been reposed by law exclusively
with the respondent Board, it has no choice but to exercise the same as
mandated by law, i.e., as a collegial body, and not transfer it elsewhere or
discharge said power through the intervening mind of another. Delegata
potestas non potest delegari —a delegated power cannot be delegated. And since
the act of classification involves an exercise of the Board's discretionary power
with more reason the Board cannot, by way of the assailed resolution, delegate
said power for it is an established rule in administrative law that discretionary
authority cannot be a subject of delegation.(Emphasis supplied) 
37. Under the 1987 Philippine Constitution, the power to classify agricultural
lands of the public domain into alienable and disposable lands of the public
domain is exercised "by law" or through legislative enactment. In
accordance with Section 6 of CA No. 141, this power is delegated to the
President who may, based on his sound discretion, classify agricultural
lands as alienable and disposable lands of the public domain. This
delegated power to so classify public agricultural lands may no longer
be redelegated by the President – what has once been delegated may no
longer be delegated to another. Likewise, the same discretionary power
has been delegated "by law" to the DENR Secretary who, of course,
cannot redelegate the same to his subordinates.
38. As it is only the President or the DENR Secretary who may classify as
alienable and disposable the lands of the public domain, an applicant for
land registration must prove that the land sought to be registered has been
declared by the President or DENR Secretary as alienable and disposable
land of the public domain. To establish such character, jurisprudence has
been clear on what an applicant must submit to clearly establish that the
land forms part of the alienable and disposable lands of the public domain.
39. In Republic of the Philippines v. T.A.N. Properties, Inc.,[30] this Court has
held that an applicant must present a copy of the original classification
approved by the DENR Secretary and certified as a true copy by the legal
custodian of the official records. Additionally, a certificate of land
classification status issued by the Community Environment and Natural
Resources Office (CENRO) or the Provincial Environment and Natural
Secretary must also be presented to prove that the land subject of the
application for registration is alienable and disposable) and that it falls
within the approved area per verification through survey by the PENRO or
CENRO.[31] In Republic of the Philippines v. Roche,[32] we clearly stated: 
a. [T]he applicant bears the burden of proving the status of the land. In this
connection, the Court has held that he must present a certificate of land
classification status issued by the Community Environment and Natural Resources
Office (CENRO) or the Provincial Environment and Natural Resources Office
approved the land classification and released the land as alienable and
disposable, and that it is within the approved area per verification through
survey by the CENRO or PENRO. Further, the applicant must present a copy of
the original classification approved by the DENR Secretary and certified as true
copy by the legal custodian of the official records. These facts must be established
by the applicant to prove that the land is alienable and disposable. [33] (Emphasis
supplied) 
40. To repeat, there are two (2) documents which must be presented: first, a
copy of the original classification approved by the Secretary of the DENR
and certified as a true copy by the legal custodian of the official records,
and second, a certificate of land classification status issued by the CENRO
or the PENRO based on the land classification approved by the DENR
Secretary. The requirement set by this Court in Republic of the Philippines
v. T.A.N Properties, Inc. that both these documents be based on the land
classification approved by the DENR Secretary is not a mere superfluity.
This requirement stems from the fact that the alienable and disposable
classification of agricultural land may be made by the President or DENR
Secretary. And while the DENR Secretary may perform this act in the
regular course of business, this does not extend to the CENRO or PENRO –
the DENR Secretary may no longer delegate the power to issue such
certification as the power to classify lands of the public domain as alienable
 and disposable lands is in itself a delegated power under CA No. 141 and
PD No. 705.  registration falls within the approved area per verification through
41. Moreover, we have repeatedly stated that a CENRO or PENRO certification
is not enough to prove the alienable and disposable nature of the property
sought to be registered because the only way to prove the classification of
the land is through the original classification approved by the DENR
Secretary or the President himself. This Court has clearly held:  43. In this case, Dumo failed to submit any of the documents required to prove
a. Further, it is not enough for the PENRO or CENRO to certify that a land is
alienable and disposable. The applicant for land registration must prove that the
DENR Secretary had approved the land classification and released the land of
the public domain as alienable and disposable, and that the land subject of the
application for registration falls within the approved area per verification through
survey by the PENRO or CENRO. In addition, the applicant for land registration
must present a copy of the original classification approved by the DENR Secretary
and certified as a true copy by the legal custodian of the official records. These facts
must be established to prove that the land is alienable and disposable. Respondent
failed to do so because the certifications presented by respondent do not, by
themselves, prove that the land is alienable and disposable.[34] (Emphasis supplied)
42. A CENRO or PENRO certification is insufficient to prove the alienable and
disposable nature of the land sought to be registered it is the original
classification by the DENR Secretary or the President which is essential to
prove that the land is indeed alienable and disposable. This has been
consistently upheld by this Court in subsequent land registration cases.
Recently, in Republic of the Philippines v. Nicolas,[35] which cited Republic
of the Philippines v. Lualhati,[36] the Court rejected the attempt of the
applicant to prove the alienable and disposable character of the land through
PENRO or CENRO certifications. The Court held:  area per verification through survey by the PENRO or CENRO. Quite
a. [N]one of the documents submitted by respondent to the trial court indicated that
the subject property was agricultural or part of the alienable and disposable lands of
the public domain. At most, the CENRO Report and Certification stated that the
land was not covered by any kind of public land application. This was far from an
adequate proof of the classification of the land. In fact, in Republic v. Lualhati, the
Court rejected an attempt to prove the alienability of public land using similar
evidence:
i. Here, respondent failed to establish, by the required evidence, that the
land sought to be registered has been classified as alienable or
disposable land of the public domain. The records of this case merely
bear certifications from the DENR-CENRO, Region IV, Antipolo City,
stating that no public land application or land patent covering the subject
lots is pending nor are the lots embraced by any administrative title. Said
CENRO certifications, however, do not even make any pronouncement
as to the alienable character of the lands in question for they merely
recognize the absence of any pending land patent application,
administrative title, or government project being conducted thereon. But
even granting that they expressly declare that the subject lands form
part of the alienable and disposable lands of the public domain,
these certifications remain insufficient for purposes of granting
respondent's application for registration. As constantly held by this
Court, it is not enough for the CENRO to certify that a land is
alienable and disposable. The applicant for land registration must
prove that the DENR Secretary had approved the land classification
and released the land of the public domain as alienable and
disposable, and that the land subject of the application for
survey by the PENRO or CENRO. Unfortunately for respondent, the
evidence submitted clearly falls short of the requirements for original
registration in order to show the alienable character of the lands subject
herein. (Emphasis supplied)
that the land she seeks to register is alienable and disposable land of the
public domain. 
44. Response to the Concurring and Dissenting Opinion of Justice Caguioa
45. The Concurring and Dissenting Opinion of Justice Caguioa suggests that
certifications of land classification status issued by the CENRO and
PENRO should be deemed sufficient to prove the alienable and disposable
character of the property if these certifications bear references to the land
classification maps and the original classification issued and signed by the
DENR Secretary. This suggestion clearly undermines the requirements set
by this Court in Republic of the Philippines v. T.A.N. Properties, Inc.
[37]
 where the Court expressly stated that it is not enough for the CENRO or
PENRO to certify that the land sought to be registered is alienable and
disposable.
46. What is required from the applicant in a land registration proceeding is to
prove that the DENR Secretary had approved the land classification and
released the land of the public domain as alienable and disposable, and that
the land subject of the application for registration falls within the approved
clearly, the Court definitively stated that to prove that the land is alienable
and disposable, the applicant must present a certified true copy of the
original classification approved by the DENR Secretary or the proclamation
made by the President. Only the certified true copy of the original
classification approved by the DENR Secretary or the President will prove
to the courts that indeed, the land sought to be registered is alienable and
disposable. 
47. That the certifications of the CENRO or PENRO contain references to the
original classification approved by the DENR Secretary is not enough to
prove that the land is alienable and disposable. Mere references made in
the certifications to the classification of land as approved by the DENR
Secretary are simply insufficient. The trial court must be given a certified
true copy of the classification made by the DENR Secretary or the President
because it is the only acceptable and sufficient proof of the alienable and
disposable character of the land. 
48. In Republic of the Philippines v. T.A.N. Properties, Inc.,[38] the Court
required the submission of the certified true copy of the land
classification approved by the DENR Secretary precisely because mere
references made by the CENRO and PENRO to the land classification
 were deemed insufficient. For instance, CENRO and PENRO may
inadvertently make references to an original classification approved by the
DENR Secretary which does not cover the land sought to be registered, or
worse, to a non-existent original classification. This is the very evil that the
ruling in Republic of the Philippines v. T.A.N. Properties, Inc.[39] seeks to
avoid. Justice Caguioa's suggestion resurrects the very evil banished by this
Court in Republic of the Philippines v. T.A.N Properties, Inc. [40]
49. Decisions of this Court form part of the legal system of the
Philippines[41] and thus the CENRO, PENRO, and the DENR must follow
the decision made by this Court in Republic of the Philippines v. T.A.N
Properties, Inc.[42] The ruling of this Court requiring the submission of
the certified true copy of the original classification as approved by the
DENR Secretary cannot be overturned or amended by the CENRO or
PENRO or even by the DENR. The DENR, CENRO, and PENRO must
follow the law as laid down by this Court in Republic of the Philippines v.
T.A.N. Properties, Inc.[43]  lands of the public domain. Thus, the certifications made by the CENRO or
50. It is not this Court that should amend its ruling in Republic of the
Philippines v. T.A.N Properties, Inc.[44] to conform to the administrative
rules of the DENR, CENRO, or PENRO reversing the final ruling of this
Court in Republic of the Philippines v. T.A.N. Properties, Inc.[45] The
authority given by the Administrative Order of the DENR to the CENRO
and PENRO to issue certifications of land classification status does not and
cannot reverse the clear requirement laid down by the Court for applicants
of land registration to submit the certified true copy of the original
classification approved by the DENR Secretary to prove the alienable and
disposable character of the land.
51. To repeat, in a judicial confirmation of imperfect title under Section 14(1)
of PD No. 1529, the applicant has the burden of proving that the land sought
to be registered is alienable and disposable land of the public domain. In
turn, the best evidence of the alienable and disposable nature of the land is
the certified true copy of the original proclamation made by the President or
DENR Secretary, in accordance with CA No. 141 or PD No. 705.
52. Submitting a mere certification by the CENRO or PENRO with references
to the original classification made by the President or the DENR Secretary
is sorely inadequate since it has no probative value as a public document to
prove the alienable and disposable character of the public land.
53. Under Section 19, Rule 132 of the Rules of Court, public documents are:  Section 23 of Rule 132. The certifications do not reflect "entries in public records
a. (a) The written official acts, or records of the official acts of the sovereign authority,
official bodies and tribunals, and public officers, whether of the Philippines, or of a
foreign country;  logbook. The certifications are not the certified copies or authenticated
b. (b) Documents acknowledged before a notary public except last wills and
testaments; and
c. (c) Public records, kept in the Philippines, of private documents required by law to
be entered therein.
54. In turn, for the record of public documents referred to in paragraph (a) of
Section 19, Rule 132 to be admissible, it must be evidenced by an official
publication thereof or by a copy attested by the officer having the legal
custody of the record, or by his deputy. [46] Moreover, to be prima
facie evidence of the facts stated in public documents, such documents
must consist of entries in public records made in the performance of a
duty by a public officer. [47] This requirement can be satisfied only if a
certified true copy of the proclamation by the President or the order of the
DENR Secretary classifying the land as alienable and disposable is
presented to the trial court.
55. Quite clearly, certifications by the CENRO or PENRO do not comply with
the conditions for admissibility of evidence. The CENRO or the PENRO is
not the official repository or legal custodian of the issuances of the
President or DENR Secretary classifying lands as alienable and disposable
PENRO cannot prove the alienable and disposable character of the land,
which can only be ascertained through the classification made by the
President or DENR Secretary, the only public officials who may classify
lands into alienable and disposable lands of the public domain.
56. The Concurring and Dissenting Opinion alleges that the CENRO serves as a
repository of the land classification maps, and as such, authorizes the
CENRO to issue certified true copies of the approved land classification
maps. While the CENRO may issue certified true copies of these land
classification maps, these maps are not the required certified true copy of
the original proclamation or order classifying the public land as alienable
and disposable. Moreover, these maps are not in the possession of the
officials who have custody of the original proclamation or order classifying
the public land as alienable and disposable. Again, the best evidence of the
alienable and disposable nature of the land is the certified true copy of the
classification made by the President or the DENR Secretary – not the
certified true copy issued by the CENRO of its land classification maps.
57. It is also worthy to note that in Republic of the Philippines v. T.A.N.
Properties, Inc.,[48] we have already discussed the value of certifications
issued by the CENRO or PENRO in land registration cases: 
a. The CENRO and Regional Technical Director, FMS-DENR, certifications do not
fall within the class of public documents contemplated in the first sentence of
made in the performance of a duty by a public officer", such as entries made by the
Civil Registrar in the books of registries, or by a ship captain in the ship's
reproductions of original official records in the legal custody of a government
office. The certifications are not even records of public documents. The
certifications are conclusions unsupported by adequate proof, and thus have
no probative value. Certainly, the certifications cannot be considered prima
facie evidence of the facts stated therein.
 b. The CENRO and Regional Technical Director, FMS-DENR, certifications do not
prove that Lot 10705-B falls within the alienable and disposable land as proclaimed
by the DENR Secretary. Such government certifications do not, by their mere
issuance, prove the facts stated therein. Such government certifications may fall
under the class of documents contemplated in the second sentence of Section 23 of
Rule 132. As such, the certifications are prima facie evidence of their due execution
and date of issuance but they do not constitute prima facie  evidence of the facts
stated therein.[49] (Emphasis supplied)
58. The certification issued by the CENRO or PENRO, by itself, does not prove
the alienable and disposable character of the land sought to be registered.
The certification should always be accompanied by the original or certified
true copy of the original classification approved by the DENR Secretary or
the President.
59. Substantial Compliance with the Requirements of Section 14(1)
60. Dumo argues that the Certification from the Regional Surveys Division,
which was formally offered as Exhibit "A" and not opposed by the
Republic, should be considered substantial compliance with the requirement
that the applicant must submit the certified true copy of the original
classification of the land as approved by the DENR Secretary.  and disposable lands of the public domain under a bona fide claim of ownership
61. We do not agree. 
62. The fact that the Republic did not oppose the formal offer of evidence
of Dumo in the RTC does not have the effect of proving or impliedly
admitting that the land is alienable and disposable. The alienable and
disposable character of the land must be proven by clear and
incontrovertible evidence.
63. It may not be impliedly admitted, as Dumo vehemently argues. It was the
duty of Dumo to prove that the land she sought to register is alienable and
disposable land of the public domain. This burden would have been
discharged by submitting the required documents – a copy of the original
classification approved by the DENR Secretary and certified as a true copy
by the legal custodian thereof, and a certificate of land classification status
issued by the CENRO or the PENRO based on the approved land
classification by the DENR Secretary. Without these, the applicant simply
fails to prove that the land sought to be registered forms part of the alienable
and disposable lands of the public domain and thus, it may not be
susceptible to private ownership. As correctly pointed out by the CA, the
land is presumed to belong to the State as part of the public domain.  a.
64. Another requirement under Section 14(1) of PD No. 1529 is to prove that
the applicant and her predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of the land
under a bonafide claim of ownership since 12 June 1945 or earlier.
65. In this case, the CA found that Dumo and her predecessors-in-interest have
been in possession of the land only from 1948, which is the earliest date of
the tax declaration presented by Dumo. This fact is expressly admitted by
Dumo. Thus, from this admission alone, it is clear that she failed to prove
her and her predecessors-in-interest's possession and occupation of the land
for the duration required by law — from 12 June 1945 or earlier.
66. Dumo, however, argues that it does not matter that her possession dates
only back to 1948 because this Court has allegedly stated that even if the
possession or occupation started after 12 June 1945, this does not bar the
grant of an application for registration of land.
67. Again, we do not agree with Dumo.
68. To determine whether possession or occupation from 12 June 1945 or
earlier is material, one has to distinguish if the application for the
registration of land is being made under paragraph 1 or paragraph 2 of
Section 14 of PD No. 1529. The relevant paragraphs provide: 
a. Section 14. Who may apply. The following persons may file in the proper Court of
First Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
b. (1) Those who by themselves or through their predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of alienable
since June 12, 1945, or earlier.
c. (2) Those who have acquired ownership of private lands by prescription under the
provision of existing laws.  x x x x
69. Thus, it is clear that if the applicant is applying for the registration of land
under paragraph 1, possession and occupation of the alienable and
disposable land of the public domain under a bona fide claim of ownership
should have commenced from 12 June 1945 or earlier. If, however, the
applicant is relying on the second paragraph of Section 14 to register the
land, then it is true that a different set of requirements applies, and
possession and occupation from 12 June 1945 or earlier are not required.
70. The reliance of Dumo on Republic of the Philippines v. Court of
Appeals[50] is misplaced. The pronouncement of the Court in relation to the
phrase "June 12, 1945 or earlier" was that the alienable and disposable
classification of the land need not be from 12 June 1945 or earlier, and that
as long as such land is classified as alienable and disposable when the
application is filed, then the first requirement under the law is fulfilled. The
Court held: 
Petitioner suggests an interpretation that the alienable and disposable character of
the land should have already been established since June 12, 1945 or earlier. This is
not borne out by the plain meaning of Section 14(1). "Since June 12, 1945," as used
in the provision, qualifies its antecedent phrase "under a bona fide claim of
ownership." Generally speaking, qualifying words restrict or modify only the words
or phrases to which they are immediately associated, and not those distantly or
remotely located. Ad proximum antecedents fiat relation nisi impediatur sentencia.
b. Besides, we are mindful of the absurdity that would result if we adopt petitioner's
position. Absent a legislative amendment, the rule would be, adopting the OSG's
view, that all lands of the public domain which were not declared alienable or
 disposable before June 12, 1945 would not be susceptible to original registration, no
matter the length of unchallenged possession by the occupant. Such interpretation
renders paragraph (1) of Section 14 virtually inoperative and even precludes the
government from giving it effect even as it decides to reclassify public agricultural
lands as alienable and disposable. The unreasonableness of the situation would even
be aggravated considering that before June 12, 1945, the Philippines was not yet
even considered an independent state.
c. Instead, the more reasonable interpretation of Section 14(1) is that it merely
requires the property sought to be registered as already alienable and disposable at
the time the application for registration of title is filed. If the State, at the time the
application is made, has not yet deemed it proper to release the property for
alienation or disposition, the presumption is that the government is still reserving
the right to utilize the property; hence, the need to preserve its ownership in the
State irrespective of the length of adverse possession even if in good faith.
However, if the property has already been classified as alienable and disposable, as
it is in this case, then there is already an intention on the part of the State to abdicate
its exclusive prerogative over the property.[51]
71. Thus, it did not state that the possession and occupation from 12 June 1945
or earlier are no longer required. It merely clarified when the land should
have been classified as alienable and disposable to meet the requirements of
Section 14(1) of PD No. 1529. The property sought to be registered must be
declared alienable and disposable at the time of the filing of the application
for registration.[52] This does not require that the land be declared alienable
and disposable from 12 June 1945 or earlier.
72. Registration of land under Section 14(2)
73. Dumo also argues that she has the right to register the land because she and
her predecessors-in-interest have already acquired the land through
prescription. She states that she and her predecessors-in-interest have been
in possession and occupation of the land for fifty-six (56) years, and thus
she has already acquired ownership of the land by prescription. 
74. Again, we disagree.
75. It is true that under Section 14 of PD No. 1529, one may acquire ownership
of the land by prescription. Particularly, paragraph 2 of Section 14 provides
that "those who have acquired ownership of private lands by prescription
under the provision of existing laws" may file an application for registration
of title to land. The existing law mentioned in PD No. 1529 is the Civil
Code of the Philippines. In Heirs of Malabanan v. Republic of the
Philippines,[53] we applied the civil law concept of prescription as embodied
in the Civil Code to interpret Section 14(2) of PD No. 1529. This Court
held: 
a. The second source is Section 14(2) of P.D. 1529 itself, at least by implication, as it
applies the rules on prescription under the Civil Code, particularly Article
1113 in relation to Article 1137. Note that there are two kinds of prescription
under the Civil Code – ordinary acquisitive prescription and extraordinary
acquisitive prescription, which, under Article 1137, is completed "through
uninterrupted adverse possession... for thirty years, without need of title or of good
faith."[54] (Boldfacing and underscoring supplied)
76. Section 14(2) of PD No. 1529 puts into operation the entire regime of
prescription under the Civil Code, particularly Article 1113 in relation to
Article 1137.[55] Article 1113 provides that "[p]roperty of the State or any of
its subdivisions not patrimonial in character shall not be the object of
prescription." Thus, it is clear that the land must be patrimonial before
it may be susceptible of acquisitive prescription. Indeed, Section 14(2) of
PD No. 1529 provides that one may acquire ownership of private lands by
prescription.
77. Land of the public domain is converted into patrimonial property when
there is an express declaration by the State that the public dominion
property is no longer intended for public service or the development of
the national wealth.[56] Without such declaration, acquisitive
prescription does not start to run, even if such land is alienable and
disposable and the applicant is in possession and occupation thereof.
We have held: 
a. Accordingly, there must be an express declaration by the State that the public
dominion property is no longer intended for public service or the development of
the national wealth or that the property has been converted into patrimonial.
Without such express declaration, the property, even if classified as alienable or
disposable, remains property of the public dominion, pursuant to Article 420(2), and
thus incapable of acquisition by prescription. It is only when such alienable and
disposable lands are expressly declared by the State to be no longer intended for
public service or for the development of the national wealth that the period of
acquisitive prescription can begin to run. Such declaration shall be in the form of a
law duly enacted by Congress or a Presidential Proclamation in cases where the
President is duly authorized by law.[57]
78. Mere classification of agricultural land as alienable and disposable does
not make such land patrimonial property of the State – an express
declaration by the State that such land is no longer intended for public
use, public service or the development of national wealth is imperative.
This is because even with such classification, the land remains to be part of
the lands of the public domain. In Navy Officers' Village Association, Inc. v.
Republic of the Philippines,[58]we stated:
a. Lands of the public domain classified as reservations for public or quasi-public uses
are non-alienable and shall not be subject to disposition, although they are, by
the general classification under Section 6 of C.A. No. 141, alienable and
disposable lands of the public domain, until declared open for disposition by
proclamation of the President. (Emphasis supplied)
79. Under CA No. 141, the power given to the President to classify lands as
alienable and disposable extends only to lands of the public domain. Lands
of the public domain are public lands intended for public use, or without
being for public use, are intended for some public service or for the
development of national wealth. Lands of the public domain, like alienable
or disposable lands of the public domain, are not private lands. Article 420
of the Civil Code provides: 
a. Art. 420. The following things are property of public dominion:
 b. (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;
c. (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.
80. Classifying lands as alienable and disposable does not take away from the
fact that these lands still belong to the public domain. These lands belonged
to the public domain before they were classified as alienable and disposable
and they still remain to be lands of the public domain after such
classification.  and disposable does not make such property patrimonial. In Dream
81. In fact, these lands are classified in Section 3, Article XII of the 1987
Philippine Constitution as "[a]lienable lands of the public domain." The
alienable and disposable character of the land merely gives the State the
authority to alienate and dispose of such land if it deems that the land is no
longer needed for public use, public service or the development of national
wealth.
82. Alienable and disposable lands of the public domain are those that are to be
disposed of to private individuals by sale or application, because their
disposition to private individuals is for the development of the national
wealth. Thus, homesteads, which are granted to individuals from alienable
and disposable lands of the public domain, are for the development of
agriculture which would redound to the development of national
wealth. However, until the lands are alienated or disposed of to private
individuals, they remain "alienable lands of the public domain," as
expressly classified by the 1987 Philippine Constitution.
83. Lands of the public domain become patrimonial property only when they
are no longer intended for public use or public service or the development
of national wealth. Articles 421 and 422 of the Civil Code expressly
provide:  or no longer retained for public service or the development of national wealth. x x
a. Article 421. All other property of the State, which is not of the character stated in
the preceding article, is patrimonial property
b. 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.
84. In turn, the intention that the property is no longer needed for public use,
public service or the development of national wealth may only be
ascertained through an express declaration by the State. We have clearly
held: 
a. Accordingly, there must be an express declaration by the State that the public
dominion property is no longer intended for public service or the development of
the national wealth or that the property has been converted into
patrimonial. Without such express declaration, the property, even if classified
as alienable or disposable, remains property of the public dominion, pursuant
to Article 420(2), and thus incapable of acquisition by prescription. It is only
when such alienable and disposable lands are expressly declared by the State to be
no longer intended for public service or for the development of the national wealth
that the period of acquisitive prescription can begin to run. Such declaration shall be
in the form of a law duly enacted by Congress or a Presidential Proclamation in
cases where the President is duly authorized by law.[59] (Emphasis supplied)
85. Without an express declaration that the land is no longer needed for public
use, public service or the development of national wealth, it should be
presumed that the lands of the public domain, whether alienable and
disposable or not, remain belonging to the State under the Regalian
Doctrine.
86. We have already recognized that the classification of land as alienable
Village Neighborhood Association, Inc. v. Bases Conversion Development
Authority,[60] the Court held: 
a. One question laid before us is whether the area occupied by Dream Village is
susceptible of acquisition by prescription. In Heirs of Mario Malabanan v.
Republic, it was pointed out that from the moment R.A. No. 7227 was enacted, the
subject military lands in Metro Manila became alienable and disposable. However,
it was also clarified that the said lands did not thereby become patrimonial, since
the BCDA law makes the express reservation that they are to be sold in order to
raise funds for the conversion of the former American bases in Clark and Subic.
The Court noted that the purpose of the law can be tied to either "public service" or
"the development of national wealth" under Article 420(2) of the Civil Code, such
that the lands remain property of the public dominion, albeit their status is now
alienable and disposable. The Court then explained that it is only upon their sale to
a private person or entity as authorized by the BCDA law that they become
private property and cease to be property of the public dominion:
b. For as long as the property belongs to the State, although already classified as
alienable or disposable, it remains property of the public dominion if x x x it is
"intended for some public service or for the development of the national
wealth." 
c. Thus, under Article 422 of the Civil Code, public domain lands become patrimonial
property only if there is a declaration that these are alienable or disposable, together
with an express government manifestation that the property is already patrimonial
x. (Emphasis supplied)
87. The alienable and disposable character of public agricultural land does not
convert the land to patrimonial property. It merely gives the State the
authority to alienate or dispose the agricultural land, in accordance with law.
It is only when (1) there is an express government manifestation that the
land is already patrimonial or no longer intended for public use, public
service or the development of national wealth, or (2) land which has been
classified as alienable and disposable land is actually alienated and
disposed of by the State, that such land becomes patrimonial.
88. In the present case, Dumo not only failed to prove that the land sought to be
registered is alienable and disposable, but also utterly failed to submit any
evidence to establish that such land has been converted into patrimonial
property by an express declaration by the State.
89. To repeat, acquisitive prescription only applies to private lands as expressly
 provided in Article 1113 of the Civil Code. To register land acquired by
prescription under PD No. 1529 (in relation to the Civil Code of the
Philippines), the applicant must prove that the land is not merely
alienable and disposable, but that it has also been converted into
patrimonial property of the State. Prescription will start to run only
from the time the land has become patrimonial.[61] Unless the alienable
and disposable land of the public domain is expressly converted into
patrimonial property, there is no way for acquisitive prescription to set in
under Article 1113 of the Civil Code.
90. However, another mode of prescription specifically governs the acquisitive
prescription of alienable and disposable lands of the public domain. CA
No. 141 provides for the modes of disposing alienable and disposable
agricultural lands of the public domain:  proper court for the confirmation of his ownership claim and the issuance of the
a. Section 11. Public lands suitable for agricultural purposes can be disposed of only
as follows, and not otherwise:  b.
i. (1) For homestead settlement; (2) By sale;
ii. (3) By lease; and
iii. (4) By confirmation of imperfect or incomplete titles:  possession of the property since 12 June 1945. In turn, Section 14(a) of the
iv. (a) By judicial legalization; or (b) By
administrative legalization (free patent).
91. In turn, Section 48 of the same law provides for those who may apply for
confirmation of their imperfect or incomplete title by judicial application:
a. 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 therefor, under the Land Registration Act, to
wit:  exclusive and notorious possession and occupation of alienable and
b. x x x x 
i. (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. (Emphasis
supplied)
92. It is clear from the foregoing provisions that for lands of the public domain,
one may apply for an administrative grant from the government, through
homestead, sale, lease or free patent, or apply for the confirmation of their
title in accordance with the conditions provided under Section 48(b) of CA
No. 141. PD No. 1529 provides for the original registration procedure for
the judicial confirmation of an imperfect or incomplete title. It must also be
noted that the wording in Section 48(b) of CA No. 141 is similar to that
found in Section 14(1) of PD No. 1529. The similarity in wording has
already been explained by this Court when it recognized that Section 14(1)
of PD No. 1529 works in relation to Section 48(b) of CA No. 141 in the
registration of alienable and disposable lands of the public domain: 
a. It is clear that Section 48 of the Public Land Act is more descriptive of the nature of
the right enjoyed by the possessor than Section 14 of the Property Registration
Decree, which seems to presume the pre-existence of the right, rather than
establishing the right itself for the first time. It is proper to assert that it is the Public
Land Act, as amended by P.D. No. 1073 effective 25 January 1977, that has
primarily established the right of a Filipino citizen who has been in "open,
continuous, exclusive, and notorious possession and occupation of alienable and
disposable lands of the public domain, under a bona fide claim of acquisition of
ownership, since June 12, 1945" to perfect or complete his title by applying with the
corresponding certificate of title.
Section 48 can be viewed in conjunction with the afore-quoted Section 11 of the
Public Land Act, which provides that public lands suitable for agricultural purposes
may be disposed of by confirmation of imperfect or incomplete titles, and given the
notion that both provisions declare that it is indeed the Public Land Act that
primarily establishes the substantive ownership of the possessor who has been in
Property Registration Decree recognizes the substantive right granted under
Section 48(b) of the Public Land Act, as well as provides the corresponding
original registration procedure for the judicial confirmation of an imperfect or
incomplete title.[62] (Emphasis supplied)
93. Thus, the applicant for registration of the alienable and disposable land of
the public domain claims his right to register the land under Section 48(b)
of CA No. 141 and the procedure for registration is found under Section
14(1) of PD No. 1529 which provides that "those who by themselves or
through their predecessors-in-interest have been in open, continuous,
disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier" may file in the proper court their
application for land registration.
94. The basis for application of judicial confirmation of title over alienable and
disposable land of the public domain is not acquisitive prescription under
the Civil Code, but rather, the fulfillment of the requirements under Section
48(b) of CA No. 141.
95. To summarize the discussion and reiterate the guidelines set by this Court
in Heirs of Malabanan v. Republic of the Philippines,[63] we state: 
a. 1. If the applicant or his predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of the land sought to be
registered under a bona fide claim of ownership since 12 June 1945 or earlier, the
applicant must prove that the land has been classified by the Executive department
as alienable and disposable land of the public domain. This is covered by Section
14(1) of PD No. 1529 in relation to Section 48(b) of CA No. 141.
b. While it is not necessary that the land has been alienable and disposable since 12
 June 1945 or earlier, the applicant must prove that the President or DENR Secretary
has classified the land as alienable and disposable land of the public domain at any
time before the application was made.
c. 2. If the occupation and possession of the land commenced at any time after 12 June
1945, the applicant may still register the land if he or his predecessors-in-interest
have complied with the requirements of acquisitive prescription under the Civil
Code after the land has been expressly declared as patrimonial property or no
longer needed for public use, public service or the development of national wealth.
This is governed by Section 14(2) of PD No. 1529 in relation to the Civil Code.
d. Under the Civil Code, acquisitive prescription, whether ordinary or extraordinary,
applies only to private property. Thus, the applicant must prove when the land
sought to be registered was expressly declared as patrimonial property because it is
FACTS:
only from this time that the period for acquisitive prescription would start to run.
96. Based on the foregoing, we find that the CA committed no reversible error
in finding that Dumo had no registerable title over the land she seeks to
register. She failed to prove her right under either Section 14(1) or Section
14(2) of PD No. 1529. She failed to prove that the land she seeks to register
was alienable and disposable land of the public domain. She failed to prove
her and her predecessors-in-interest's possession and occupation since 12
June 1945 or earlier. Thus, she has no right under Section 14(1) of PD No.
1529.
97. While she argues that she and her predecessors-in-interest have been in
possession and occupation of the land for 56 years, she failed to prove that
the land has been expressly declared as patrimonial property. Therefore, she
also has no right under Section 14(2) of PD No. 1529.
98. WHEREFORE, the petition is DENIED. The assailed CA
decision AFFIRMED.
7.) Kawayan Corp. v. CA,
G.R. No. 203090 | September 05, 2018 | LEONEN
1. A court confronted with an application for judicial confirmation of
imperfect title cannot casually rely on the expedient aphorism that real
property tax declarations are not conclusive evidence of ownership as a
catch-all key to resolving the application. Instead, it must carefully weigh
competing claims and consider the totality of evidence, bearing in mind the
recognition in jurisprudence that payment of real property taxes is,
nevertheless, "good indicia of possession in the concept of an owner, and
when coupled with continuous possession, it constitutes strong evidence of
title."[1]
2. Kawayan Hills is a domestic corporation dealing with real estate. [10] It is in
possession of a 1,461-square-meter parcel of land identified as Cad. Lot No.
2512 (Lot No. 2512), located in Barangay No. 22, Nagbacalan, Paoay,
Ilocos Norte.[11] All other lots surrounding Lot No. 2512 have been titled in
Kawayan Hills' name.[12]
3. On August 7, 2001, Kawayan Hills, through its President, Pastor Laya, filed
an application for confirmation and registration of Lot No. 2512's title in its
name before the Municipal Circuit Trial Court of Paoay-Currimao.[13]
4. Kawayan Hills claimed to have acquired Lot No. 2512 on December 27,
1995 through a Deed of Adjudication with Sale executed by Servando
Teofilo and Maria Dafun, the successors-in-interest of Andres Dafun
(Andres). Andres had been Lot No. 2512's real property tax declarant
since 1931. Andres, with his eight (8) children, had also allegedly
possessed, cultivated, and harvested Lot No. 2512's fruits.[14]
5. Kawayan Hills submitted the following documents in support of its
application: 
a. Certificate of Incorporation of Kawayan Hills Corporation; Secretary's Certificate 
b. Tax Declaration No. ARP No. 96-025-02624; Deed of Adjudication with Sale dated 27
December 1995; Municipal Treasurer Certificate of Non-Tax Delinquency ; BIR Certificate
Authorizing Registration of Documents; Municipal Treasurer Certificate that applicant was a
real property taxpayer 
c. DENR Certificate re: within disposable and alienable lands; DENR Certificate re: not identical
to previously approved isolated survey
d. DAR Order of Exemption dated 28 March 2001; Technical Description 
 e. Survey/Issuance Plan of Lot 2512 (Ap-01-004666)[15]
6. On September 4, 2001, the Republic of the Philippines (the Republic),
through the Office of the Solicitor General, filed its Opposition to the
application. It asserted that Kawayan Hills failed to comply with the
requirements of Section 14(1)[16] of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree, for judicial
confirmation of imperfect title.[17]
7. Following the initial hearing of the case, Kawayan Hills presented evidence
in support of its application. It adduced a Certificate, dated March 22, 1999,
of Community Environment and Natural Resources Office (CENRO) of
Laoag City, declaring that Lot No. 2512 was "alienable and disposable
land . . . [as] certified by the Director of Forestry." [18]Additionally, it showed
a Certificate, dated August 25, 1998, of the Regional Office of the (DENR)-
San Fernando, La Union, stating that "[Lot No. 2512] was not ... identical to
any previously approved isolated survey."[19]
8. Kawayan Hills also presented evidence to the effect that Andres and his
successors-in-interest had been tilling Lot No. 2512. In particular,
Eufemiano Dafun (Eufemiano), Andres' grandson, testified that Andres had
been in possession of Lot No. 2512 since World War II, when the latter was
seven (7) years old. He recalled that Andres harvested fruits from Lot No.
2512.[20]
9. The Municipal Circuit Trial Court ordered the Land Management Bureau
and CENRO of Laoag City to submit a report, and/or to certify whether Lot
No. 2512 or any portion of it was covered by a land patent.[21]
10. In a Report dated February 9, 2004, the CENRO of Laoag City noted:  3.
a. 1. that the entire area of the land applied for registration was within the alienable
and disposable zone as classified under Land Classification Map No. 1008, Project
No. 13, released and certified on 25 May 1933 by the Bureau of Forestry (now the
Forestry Management Service);
b. 2. that the land had never been forfeited in favor of the government for non-
payment of taxes nor confiscated as bond;
c. 3. that it was not inside any forestry reserve or unclassified public forest and did not
encroach [on] any adjacent lot, road or riverbank;
d. 4. that the subject property was not covered by any kind of public land application,
patent, decree or title;
e. 5. that Kawayan Hills declared the property for taxation purposes and paid the
corresponding real property taxes thereof; and
f. 6. that Kawayan Hills was in actual occupation and possession of the property.[22]
11. In its July 8, 2010 Decision,[23] the Municipal Circuit Trial Court ruled in favor of Kawayan Hills, confirmed
its title over Lot No. 2512, and ordered Lot No. 2512's registration in Kawayan Hills' name. It reasoned:  f.
a. The fact that [Lot No. 2512] has been continuously declared in the name of Andres Dafun since
1931, coupled with actual occupation and tillage without disturbance or adverse claim is enough
to prove open, continuous, exclusive and notorious possession under a bona fide claim of
ownership since June 12, 1945 and even prior thereto pursuant to Section 14 (1) of [Presidential
Decree No.] 1529.[24]
12. In its assailed January 11, 2012 Decision, [25] the CA reversed the Municipal Circuit Trial Court July 8, 2010
Decision. It maintained that Kawayan Hills failed to establish its or its predecessors-in-interest's bona fide
claim of ownership since June 12, 1945 or earlier, as to enable confirmation of title under Section 14(1) of
the Property Registration Decree. [26] It added that Kawayan Hills could not, as an alternative, successfully
claim title by acquisitive prescription under Section 14(2) of the Property Registration Decree. It reasoned
that Kawayan Hills failed to show that there has been an express declaration by the State, whether by law or
presidential proclamation, that Lot No. 2512 "is no longer intended for public service or the development of
the national wealth or that the property has been converted into patrimonial use." Kawayan MR denied.
13. Thereafter, Kawayan Hills filed the present Petition before this Court on
September 6, 2012.[
ISSUES:
1. W/N petitioner Kawayan Hills Corporation is entitled to have title over Lot
No. 2512 confirmed and registered in its favor.
RATIO:
1. The Court of Appeals was in serious error in granting the Republic's appeal
and in concluding that title over Lot No. 2512 cannot be confirmed and
registered in petitioner's favor. It failed to acknowledge the prolonged
duration of consistent and uninterrupted payment of real property taxes; the
absence of any adverse claim, save the Republic's opposition; and the
confirmation and tillage since 1942. Its haphazard reliance on the notion
that real property tax declarations are not conclusive evidence of ownership
demonstrates its failure to go about its duty of resolving the case with care
and precision. It indicates grave abuse of discretion.
2. I
Section 14 of the Property Registration Decree, which "governs the
applications for registration of title to land,"[35]reads: 
a. Section 14. Who May Apply. — The following persons may file in the proper Court
of First Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
b. (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.
c. (2) Those who have acquired ownership of private lands by prescription under the
provision of existing laws.
d. (3) Those who have acquired ownership of private lands or abandoned river beds by
right of accession or accretion under the existing laws.
e. (4) Those who have acquired ownership of land in any other manner provided for
by law.
Where the land is owned in common, all the co-owners shall file the application
jointly. 
g. Where the land has been sold under pacto de retro, the vendor a retro may file an
application for the original registration of the land, provided, however, that should
the period for redemption expire during the pendency of the registration
 proceedings and ownership to the property consolidated in the vendee a retro, the
latter shall be substituted for the applicant and may continue the proceedings. 
h. A trustee on behalf of his principal may apply for original registration of any land
held in trust by him, unless prohibited by the instrument creating the trust. 
4. This Court has distinguished applications for registration pursuant to
Section 14, paragraphs (1) and (2). In Canlas v. Republic:[36]
a. In land registration cases, the applicants' legal basis is important in determining the
required number of years or the reference point for possession or prescription. This
court has delineated the differences in the modes of acquiring imperfect titles under
Section 14 of Presidential Decree No. 1529. Heirs of Mario Malabanan v.
Republic extensively discussed the distinction between Section 14 (1) and Section
14 (2) of Presidential Decree No. 1529. Thus, this court laid down rules to guide the
public:
b. (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.
i. (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.
ii. (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.
c. (2) In complying with Section 14(2) of the Property Registration Decree, consider
that under the Civil Code, prescription is recognized as a mode of acquiring
ownership of patrimonial property. However, public domain lands become only
patrimonial property not only with a declaration that these are alienable or
disposable. There must also be an express government manifestation that the
property is already patrimonial or no longer retained for public service or the
development of national wealth, under Article 422 of the Civil Code. And only
when the property has become patrimonial can the prescriptive period for the
acquisition of property of the public dominion begin to run.
i. (a) Patrimonial property is private property of the government. The
person [who] acquires ownership of patrimonial property by prescription
under the Civil Code is entitled to secure registration thereof under
Section 14(2) of the Property Registration Decree.  a.
ii. (b) There are two kinds of prescription by which patrimonial property
may be acquired, one ordinary and [the] other extraordinary. Under
ordinary acquisitive prescription, a person acquires ownership of a
patrimonial property through possession for at least ten (10) years, in
good faith and with just title. Under extraordinary acquisitive
prescription, a person's uninterrupted adverse possession of patrimonial
property for at least thirty (30) years, regardless of good faith or just
title, ripens into ownership. 
5. In Republic v. Gielczyk, this court summarized and affirmed the differences
between Section 14 (1) and Section 14 (2) of Presidential Decree No. 1529
as discussed in Heirs of Malabanan: 
a. In Heirs of Mario Malabanan v. Republic, the Court further clarified the difference
between Section 14(1) and Section 14(2) of P.D. No. 1529. The former refers to
registration of title on the basis of possession, while the latter entitles the applicant
to the registration of his property on the basis of prescription. Registration under the
first mode is extended under the aegis of the P.O. No. 1529 and the Public Land Act
(PLA) while under the second mode is made available both by P.D. No. 1529 and
the Civil Code. Moreover, under Section 48(b) of the PLA, as amended by Republic
Act No. 1472, the 30-year period is in relation to possession without regard to the
Civil Code, while under Section 14(2) of P.D. No. 1529, the 30-year period
involves extraordinary prescription under the Civil Code, particularly Article 1113
in relation to Article 1137.[37]
6. II
7. Contrary to the Court of Appeals' conclusion, petitioner is entitled to
registration under Section 14(1).
8. Citing Republic v. Hanover Worldwide Trading Corp.,[38] Canlas broadly
considered the requisites for availing registration under Section 14(1): 
a. An applicant for land registration or judicial confirmation of incomplete or
imperfect title under Section 14 (1) of Presidential Decree No. 1529 must prove the
following requisites: "(1) that the subject land forms part of the disposable and
alienable lands of the public domain, and (2) that [the applicant has] been in open,
continuous, exclusive and notorious possession and occupation of the same under
a bona fide claim of ownership since June 12, 1945, or earlier." Concomitantly,
the burden to prove these requisites rests on the applicant.[39]
9. Thus, two (2) things must be shown to enable registration under Section
14(1). First is the object of the application, i.e., land that is "part of the
disposable and alienable lands of the public domain." Second is
possession. This possession, in turn, must be: first, "open, continuous,
exclusive, and notorious"; second, under a bona fide claim of acquisition of
ownership; and third, has taken place since June 12, 1945, or earlier.
10. In jurisprudence, there is also a more nuanced reckoning of requisites for
registration under Section 14(1). This more nuanced reckoning untangles
the necessary characteristics of possession, as the preceding paragraph
demonstrated. In this Court's September 3, 2013 Resolution in Heirs of
Malabanan v. Republic:[40]
[T]he applicant must satisfy the following requirements in order for his application
to come under Section 14 (1) of the Property Registration Decree, to wit:
b. The applicant, by himself or through his predecessor-in-interest, has been in
possession and occupation of the property subject of the application; The possession
and occupation must be open, continuous, exclusive, and notorious; The possession
and occupation must be under a bona fide claim of acquisition of ownership; The
possession and occupation must have taken place since June 12, 1945, or earlier;
and
c. The property subject of the application must be an agricultural land of the public
domain.[41]
11. Proceeding independently of how jurisprudence reckons requisites for
registration under Section 14(1), the Court of Appeals identified three (3)
requisites: 
a. Under Section 14 (1), applicants for registration of title must sufficiently establish
first, that the subject land forms part of the disposable and alienable lands of the
public domain; second, that the applicant and his predecessors-in-interest have been
in open, continuous, exclusive and notorious possession and occupation of the
same; and third, that it is under a bona fide claim of ownership since 12 June 1945,
or earlier.[42]
12. III
13. The Court of Appeals conceded that the first of its identified requisites is
availing here.[43] Indeed, the February 9, 2004 CENRO-Laoag City Report
stated "that the entire area of the land applied for registration was within the
alienable and disposable zone as classified under Land Classification Map
No. 1008, Project No. 13, released and certified on 25 May 1933 by the
Bureau of Forestry (now the Forestry Management Service)."[44]
14. The Court of Appeals also conceded that the second of its identified
requisites is availing: 
a. Kawayan Hills had likewise met the second requirement as to ownership  and
possession. The [Municipal Circuit Trial Court] found that it had presented
sufficient testimonial and documentary evidence to show that from its first known
predecessor-in-interest, Andres Dafun, up to [itself], they were in open, continuous,
exclusive and notorious possession and occupation of the land in question.[45]  evidence was adduced that private respondent cultivated[,] much less, fenced the subject
15. Andres was asserted to have been in possession of Lot No. 2512 since
1931, when he started declaring it for real property tax purposes. The
Court of Appeals' acknowledgment of his "open, continuous, exclusive and
notorious possession and occupation,"[46] which it considered to be the
second requisite, is a concession of the duration of possession that is even
prior to June 12, 1945. 
16. Despite its acknowledgments and its own categorical statement that
"Kawayan Hills ... met the ... requirement as to ownership,"[47] the Court of
Appeals proceeded to state that the third of its identified requisites has not
been satisfied. It faulted the evidence presented by petitioner as failing
to establish a bona fide claim of ownership that dates to June 12, 1945,
or earlier. It decried petitioner's reliance on tax declarations, even if
they dated to as far back as 1931, as these supposedly did not prove
ownership: 
a. Well[-]settled is the rule that tax declarations are not conclusive evidence of
ownership or of the right to possess land when not supported by any other evidence.
The fact that the disputed property may have been declared for taxation purposes in
the name of the applicant for registration or of their predecessors-in-interest does
not necessarily prove ownership. They are merely indicia of a claim of ownership.
[48]
17. IV
18. The Court of Appeals' grossly dismissive consideration of tax declarations
dating back to 1931 is a serious error.
19. While recognizing that tax declarations do not absolutely attest to
ownership, this Court has also recognized that "[t]he voluntary declaration
of a piece of property for taxation purposes ... strengthens one's bona fide
claim of acquisition of ownership."[49] It has stated that payment of real
property taxes "is good indicia of possession in the concept of an owner,
and when coupled with continuous possession, it constitutes strong evidence
of title."[50] For after all: 
a. No person in the right mind would pay taxes on real property over which he or she
does not claim any title. Its declaration not only manifests a sincere desire to obtain
title to a property; it may be considered as an announcement of an adverse claim
against State ownership. It would be unjust for the State to take properties which
have been continuously and exclusively held since time immemorial without
showing any basis for the taking, especially when it has accepted tax payments
without question.[51]
20. There have been instances where this Court has favorably considered the
presentation of tax declarations which are "not of recent vintage" [52] as
indicating possession under a bona fide claim of ownership.
21. In Republic v. Court of Appeals,[53] this Court found no merit in the Republic's opposition
asserting that "aside from mere tax declarations all of which are of recent vintage, private
respondent has not established actual possession of the property in question in the manner
required by law (Section 14, P.D. 1529) and settled jurisprudence." [54] In claiming that the
applicant failed to establish actual possession, the Republic was noted as emphasizing that "no
property if only to prove actual possession."[55]
22. Ruling against the Republic, this Court favorably considered the presentation of tax
declarations, tax payment receipts, and a deed of sale as "strong evidence of possession in the
concept of owner."[56] It also noted that contrary to the Republic's assertion, there were
indications that the applicant occupied, possessed, and cultivated the land: 
a. We are not persuaded. On this point, the respondent Court correctly found that:
b. "Proof that petitioner-appellee and his predecessors-in-interest have acquired and
have been in open, continuous, exclusive and notorious possession of the subject
property for a period of 30 years under a bona fide claim of ownership are the tax
declarations of petitioner appellee's predecessors-in-interest, the deed of sale, tax
payment receipts and petitioner-appellee's tax declarations. The evidence on record
reveals that: (1) the predecessors in-interest of petitioner-appellee have been
declaring the property in question in their names in the years 1923, 1927, 1934 and
1960; and, (2) in 1966, petitioner-appellee purchased the same from the Heirs of Gil
Alhambra and since then paid the taxes due thereon and declared the property in his
name in 1985. . . . 
c. . . . Considering the dates of the tax declarations and the realty tax payments, they
can hardly be said to be of recent vintage indicating petitioner-appellee's pretended
possession of the property. On the contrary, they are strong evidence of possession
in the concept of owner by petitioner-appellee and his predecessors-in-interest.
Moreover, the realty tax payment receipts show that petitioner-appellee has been
very religious in paying the taxes due on the property. This is indicative of his
honest belief that he is the owner of the subject property. We are, therefore, of the
opinion that petitioner-appellee has proved that he and his predecessors-in-interest
have been in open, continuous, exclusive and notorious possession of the subject
property in the concept of owner for a period of 30 years since 12 June 1945 and
 earlier. By operation of law, the property in question has become private property.
d. "Contrary to the representations of the Republic, petitioner-appellee had introduced
some improvements on the subject property from the time he purchased it. His
witnesses testified that petitioner-appellee developed the subject property into a
ricefield and planted it with rice, but only for about five years because the return on
investment was not enough to sustain the continued operation of the rice1and.
Though not in the category of permanent structures, the preparation of the land into
a ricefield and planting it with rice are considered 'improvements' thereon."
e. Although tax declarations or realty tax payments of property are not conclusive
evidence of ownership, nevertheless, they are good indicia of possession in the
concept of owner for no one in his right mind would be paying taxes for a property
that is not in his actual or at least constructive possession. They constitute at least
proof that the holder has a claim of title over the property. The voluntary
declaration of a piece of property for taxation purposes manifests not only one's
sincere and honest desire to obtain title to the property and announces his adverse
claim against the State and all other interested parties, but also the intention to
contribute needed revenues to the Government. Such an act strengthens one's bona
fide claim of acquisition of ownership.[57]
23. Director of Lands v. Court of Appeals [58] concerned a cadastral proceeding in which this Court
affirmed the rulings of the Regional Trial Court and of the Court of Appeals, "order[ing] the
registration and confirmation of Lot 10704 in the name of the Spouses Monico Rivera and
Estrella Nota."[59] This Court found no error in the lower courts' findings that "assertion of
possession under claim of ownership [was] tenable"[60] and that "the claimant, together with his
predecessor-in-interest, has 'satisfactorily possessed and occupied the land in the concept of
owner openly, continuously, adversely, notoriously and exclusively since 1926, very much
earlier to June 12, 1945."' [61] This was so even when the documentary evidence [62] adduced by
the claimant in support of a claim of ownership was limited to tax declarations dating back to
1927, and deeds of sale:  to possession in the concept of owner.
a. Considering the date of the earliest tax declaration, which shows it is not of recent
vintage to support a pretended possession of property, it is believed that the
respondent court did not commit reversible error in affirming the finding of the trial
court that Monico Rivera's assertion of possession under claim of ownership is
tenable.
b. "Although tax declarations or realty tax payment of property are not conclusive
evidence of ownership, nevertheless, they are good indicia of possession in the
concept of owner for no one in his right mind would be paying taxes for a property
that is not in his actual or at least constructive possession. They constitute at least
proof that the holder has a claim of title over the property. The voluntary
declaration of a piece of property for taxation purposes manifests not only one's
sincere and honest desire to obtain title to the property and announces his adverse
claim against the State and all other interested parties, but also the intention to
contribute needed revenues to the Government. Such an act strengthens one's bona
fide claim of acquisition of ownership."[63]
24. Republic v. Spouses Noval[64] went a step further. It did not only favorably consider tax
declarations as "good indicia of possession in the concept of an owner, and ... [as]
constitut[ing] strong evidence of title." [65] It also considered the applicants' and their
predecessors-in-interest's consistent payment of real property taxes as militating against
the Republic's claim that the land subject of the application was not alienable and
disposable agricultural land of the public domain:  31. The Court of Appeals never bothered to mention any of these details, let
a. The State also kept silent on respondents' and their predecessor-in interest's
continuously paid taxes. The burden to prove the public character of Lot 4287
becomes more pronounced when the State continuously accepts payment of real
property taxes. This Court acknowledges its previous rulings that payment of taxes
is not conclusive evidence of ownership. However, it is good indicia of possession
in the concept of an owner, and when coupled with continuous possession, it
constitutes strong evidence of title.
b. No person in the right mind would pay taxes on real property over which he or she
does not claim any title. Its declaration not only manifests a sincere desire to obtain
title to a property; it may be considered as an announcement of an adverse claim
against State ownership. It would be unjust for the State to take properties which
have been continuously and exclusively held since time immemorial without
showing any basis for the taking, especially when it has accepted tax payments
without question.[6
25. V
26. As with Republic v. Court of Appeals,[67] Director of Lands v. Court of
Appeals,[68] and Republic v. Spouses Noval,[69] the payment of real
property taxes since as far back as 1931 by petitioner Kawayan Hills'
predecessor-in interest, Andres, should not be dismissed so easily. To
the contrary, coupled with evidence of continuous possession, it is a
strong indicator of possession in the concept of owner.
27. The Court of Appeals' reduction of the resolution of petitioner's application
to the expedient aphorism that tax declarations do not absolutely establish
ownership fails to account for composite and uncontroverted aspects of
petitioner's claim. In addition to Andres' declaration of Lot No. 2512 for the
payment of real property taxes for almost a decade and a half ahead of the
June 12, 1945 threshold, and his and his successors-in-interest's unfailing
diligence in paying real property taxes, there are more details that attest
28. Since the start of Andres' documented possession in 1931, no one has come
forward to contest his and his successors-in-interest's possession as
owners. It was only on September 4, 2001, about a month after petitioner's
filing of its application, that the Republic came forward to contest the
confirmation and registration of title in his name.
29. By then, title to every single lot surrounding Lot No. 2512 had been issued
in petitioner's name.[70]Throughout the intervening time, Andres and his
successors-in-interest tilled Lot No. 2512. Andres' grandson, Eufemiano,
testified for petitioner before the Municipal Circuit Trial Court. [71] He
unequivocally declared that Andres had been occupying Lot No. 2512 since
World War II. He affirmed that he had witnessed his grandfather harvesting
fruits.[72] The Municipal Circuit Trial Court categorically stated that Lot No.
2512 had been used by Andres and his children "for agricultural production
since 1942."[73]
30. VI
alone address the import of each of them. The most that the Court of
Appeals resorted to was a vague, dismissive reference to supposedly
"unsubstantiated general statements."[74] Its ratio decidendi denying
petitioner's application boiled down to two (2) paragraphs, [75]centering on
 how tax declarations "are not conclusive evidence of ownership." [76] This
was followed by a discussion of how petitioner was not entitled to
confirmation and registration of title under the alternative mechanism of
Section 14(2) of the Property Registration Decree. [77] This Court had to sift
through the records of the case to ascertain the matters ignored by the Court
of Appeals.
32. The Court of Appeals' reductive resort to an aphorism about tax
declarations, as though it were an incantation that conveniently resolves the
myriad dimensions of this case, is not mere error in judgment; it is grave
abuse of discretion. It amounts to its evasion of its positive duty [78] to weigh
the competing claims and to meticulously consider the evidence to arrive at
a judicious resolution.
33. In so doing, the Court of Appeals validated what amounted to a mere pro
forma opposition by the Republic, one that was triggered, not by an
independent determination of a fatal error in an application, but by the mere
occasion of the filing of an application. In Spouses Noval, this Court decried
favorable actions on such pro forma oppositions as amounting to undue
taking of property, thus, violative of the right to due process:  1.
a. When an applicant in the registration of property proves his or her open,
continuous, exclusive, and notorious possession of a land for the period required by
law, he or she has acquired an imperfect title that may be confirmed by the State.
The State may not, in the absence of controverting evidence and in a pro
forma opposition, indiscriminately take a property without violating due process.[79]
34. For decades, Andres and his descendants toiled on Lot No. 2512. No one
bothered to assail their possession or to claim it as owners. That is, until
their transferee had the prudence to submit to legal processes by finally
having title over Lot No. 2512 confirmed and registered. Rather than
upholding legal objectives, the Republic's perfunctory response
disincentivizes submission to judicial mechanisms. It unwittingly sends the
message that holders of property, albeit through imperfect titles, are better
off not bothering to abide by legal requirements.
35. It is grave error to rule for the Republic in such cases merely on account of
unquestioning belief in trite adages. The adjudication of judicial matters
demands more than swift invocations. The Court of Appeals was much too
accepting of the Republic's position. It was remiss in its duty to be a
discriminating adjudicator; it was remiss in its duty to uphold due process
and to do justice.  4.
8.) Republic v. INC
G.R. No. 180067 | June 30, 2009
FACTS:
Subject of the instant controversy is Lot No. 3946 of the Currimao
Cadastre, particularly described as follows:
a. A parcel of land (Plan Swo-I-001047, L.R.C. Rec. No. ______) situated in the
Barrio of Baramban, Municipality of Currimao, Province of Ilocos Norte, Island of
Luzon. Bounded on the SE., along line 1-2 by the National Road (20.00 m. wide);
on the SW. & NW., along lines 2-3-4 by lot 3946, Cads-562-D, Currimao Cadastral
Sketching, Bernardo Badanguio; on the NE., along line 4-1 by lot 3947, portion,
Cads-562-D; (Pacita B. Lazaro) and lot 3948, Pacita B. Lazaro, Cads-562-D,
Currimao Cadastral Sketching x x x containing an area of FOUR THOUSAND
TWO HUNDRED AND ONE (4201) SQUARE METERS. x x x
2. On November 19, 1998, Iglesia Ni Cristo (INC), represented by Eraño G.
Manalo, as corporate sole, filed its Application for Registration of Title
before the MCTC in Paoay-Currimao. Appended to the application were
the sepia or tracing cloth of plan Swo-1-001047, the technical description
of subject lot,3 the Geodetic Engineer’s Certificate,4 Tax Declaration No.
(TD) 5080265 covering the subject lot, and the September 7, 1970 Deed of
Sale6executed by Bernardo Bandaguio in favor of INC.
3. The Republic, through the (OSG), entered its appearance and deputized the Provincial
Prosecutor of Laoag City to appear on its behalf. It also filed an Opposition to INC’s
application.
The Ruling of the Cadastral Court

36. WHEREFORE, the Petition for Certiorari is GRANTED. The assailed CA
decisions are NULLIFIED. The July 8, 2010 Decision of the Municipal
Circuit Trial Court of Paoay-Currimao, Ilocos Norte in Land Reg. Case No.
N-4 is REINSTATED.
5. After the required jurisdictional publication, notification, and posting, hearing ensued where
the INC presented three testimonial witnesses,7 the MCTC, acting as cadastral court, rendered
its Decision on April 26, 2005, granting INC’s application. The decretal portion reads:
a. Wherefore, the application for registration is hereby granted. Upon finality of this
decision, let an Order be issued directing the Land Registration Authority to register
and issue an Original Certificate of Title to the applicant Iglesia Ni Cristo, as
Corporation Sole, with official address at No. 1 Central Avenue, New Era, Diliman
Quezon City.
 6. The cadastral court held that based on documentary and testimonial evidence, the essential
requisites for judicial confirmation of an imperfect title over the subject lot have been complied
with.
7. It was established during trial that the subject lot formed part of a bigger lot owned by one
Dionisio Sabuco. On February 23, 1952, Sabuco sold a small portion of the bigger lot to
INC which built a chapel on the lot. Saturnino Sacayanan, who was born in 1941 and became a
member of INC in 1948, testified to the sale by Sabuco and the erection of the small chapel by
INC in 1952. Subsequently, Sabuco sold the bigger lot to Bernardo Badanguio less the
small portion where the INC chapel was built.  or a scant five years from the declaration of the subject lot to be alienable and disposable land
8. Badanguio in 1954 then declared the entire bigger lot he purchased from Sabuco for tax
purposes and was issued TD 006114. 8 In 1959, Badanguio also sold a small portion of the
bigger lot to INC for which a Deed of Absolute Sale 9 was executed on January 8, 1959. Jaime
Alcantara, the property custodian of INC, testified to the purchases constituting the subject lot
and the issuance of TDs covering it as declared by INC for tax purposes. Thus, these two
purchases by INC of a small portion of the bigger lot originally owned by Sabuco, who
inherited it from his parents and later sold it to Badanguio, constituted the subject lot.
9. On September 7, 1970, a Deed of Sale was executed by Badanguio in favor of INC formally
ceding and conveying to INC the subject lot which still formed part of the TD of the bigger lot
under his name. This was testified to by Teofilo Tulali who became a tenant of the bigger lot in
1965 and continued to be its tenant under Badanguio. Tulali testified further that the ownership
and possession of Sabuco and Badanguio of the bigger lot were never disturbed. 
10. Subsequently, TD 648510 was issued in 1970 in the name of INC pursuant to the September 7,
1970 Deed of Sale. This was subsequently replaced by TD No. 406056 11 in 1974, TD 508026
in 1980, and TD 605153 in 1985.
11. For the processing of its application for judicial confirmation of title, subject Lot No. 3946 of
the Currimao Cadastre was surveyed and consisted of 4,201 square meters. With the
presentation of the requisite sepia or tracing cloth of plan Swo-1-001047, technical description
of the subject lot, Geodetic Engineer’s Certificate, and Report given by the City Environment
and Natural Resources Office special investigator showing that the subject lot is within
alienable and disposable public zone, the MCTC found and appreciated the continuous
possession by INC of the subject lot for over 40 years after its acquisition of the lot. Besides, it
noted that Badanguio and Sabuco, the predecessors-in-interest of INC, were never
disturbed in their possession of the portions they sold to INC constituting the subject lot. 
12. Aggrieved, the Republic seasonably interposed its appeal before the CA, docketed as CA-G.R.
CV No. 85348. The Ruling of the CA: On October 11, 2007, the appellate court rendered the
assailed Decision affirming the April 26, 2005 MCTC Decision. In denying the Republic’s
appeal, the CA found that the documentary and testimonial evidence on record sufficiently
established the continuous, open, and peaceful possession and occupation of the subject lot in
the concept of an owner by INC of more than 40 years and by its predecessors-in-interest prior
to the conveyance of the lot to INC.
13. Hence, we have this petition.
ISSUES:
1. May a judicial confirmation of imperfect title prosper when the subject
property has been declared as alienable only after June 12, 1945? This is the
sole issue to be resolved.
RATIO:
1. The petition is bereft of merit. The sole issue raised is not novel.
2. The Republic’s Contention
3. The Republic contends that subject Lot No. 3946 was certified as alienable and disposable land
of the public domain only on May 16, 1993. Relying on Republic v. Herbieto,13 it argues that
prior to said date, the subject lot remained to be of the public dominion or res publicae in
nature incapable of private appropriation, and, consequently, INC and its predecessors-in-
interest’s possession and occupation cannot confer ownership or possessory rights and "any
period of possession prior to the date when the lot was classified as alienable and disposable is
inconsequential and should be excluded in the computation of the period of possession."14
4. The Republic maintains further that since the application was filed only on November 19, 1998
on May 16, 1993, INC’s possession fell short of the 30-year period required under Section
48(b) of Commonwealth Act No. (CA) 141, otherwise known as the Public Land Act.
5. The Argument of INC
6. Respondent INC counters that the Court has already clarified this issue in Republic v. Court of
Appeals (Naguit case), in which we held that what is merely required by Sec. 14(1) of
Presidential Decree No. (PD) 1529, otherwise known as the Property Registration Decree, is
that the "property sought to be registered [is] already alienable and disposable at the time of
the application for registration of title is filed."15 Moreover, INC asserts that the Herbieto
pronouncement quoted by the Republic cannot be considered doctrinal in that it is merely
an obiter dictum, stated only after the case was dismissed for the applicant’s failure to comply
with the jurisdictional requirement of publication.
7. Necessity of declaration of public agricultural land as alienable and
disposable
8. It is well-settled that no public land can be acquired by private persons
without any grant, express or implied, from the government, and it is
indispensable that the persons claiming title to a public land should show
that their title was acquired from the State or any other mode of acquisition
recognized by law.16 In the instant case, it is undisputed that the subject
lot has already been declared alienable and disposable by the
government on May 16, 1993 or a little over five years before the
application for registration was filed by INC.
9. Conflicting rulings in Herbieto and Naguit
10. It must be noted that this Court had conflicting rulings
in Naguit and Herbieto, relied on by the parties’ contradictory positions. 
11. Herbieto essentially ruled that reckoning of the possession of an applicant
for judicial confirmation of imperfect title is counted from the date when the
lot was classified as alienable and disposable, and possession before such
date is inconsequential and must be excluded in the computation of the
period of possession. This ruling is very stringent and restrictive, for there
can be no perfection of title when the declaration of public agricultural land
as alienable and disposable is made after June 12, 1945, since the reckoning
of the period of possession cannot comply with the mandatory period under
Sec. 14(1) of PD 1529.
12. In Naguit, this Court held a less stringent requirement in the application of
Sec. 14(1) of PD 1529 in that the reckoning for the period of possession is
the actual possession of the property and it is sufficient for the property
sought to be registered to be already alienable and disposable at the time of
 the application for registration of title is filed.  remotely located. A
13. A review of subsequent and recent rulings by this Court shows that the pronouncement
in Herbieto has been applied to Buenaventura v. Republic,17 Republic v. Diloy,18 Ponciano, Jr.
v. Laguna Lake Development Authority,19 and Preciosa v. Pascual.20  view, that all lands of the public domain which were not declared alienable or
14. This Court’s ruling in Naguit, on the other hand, has been applied
to Republic v. Bibonia.21
15. Core issue laid to rest in Heirs of Mario Malabanan v. Republic
16. In Heirs of Mario Malabanan v. Republic (Malabanan),22 the Court
upheld Naguit and abandoned the stringent ruling in Herbieto. 
17. Sec. 14(1) of PD 1529 pertinently provides:
a. 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:
b. (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.
18. In declaring that the correct interpretation of Sec. 14(1) of PD 1529 is that
which was adopted in Naguit, the Court ruled that "the more reasonable
interpretation of Sec. 14(1) of PD 1529 is that it merely requires the
property sought to be registered as already alienable and disposable at
the time the application for registration of title is filed."  inutility since it would only cover lands actually declared alienable and disposable
19. The Court in Malabanan traced the rights of a citizen to own alienable and
disposable lands of the public domain as granted under CA 141, otherwise
known as the Public Land Act, as amended by PD 1073, and PD 1529. The
Court observed that Sec. 48(b) of CA 141 and Sec. 14(1) of PD 1529 are
virtually the same, with the latter law specifically operationalizing the
registration of lands of the public domain and codifying the various laws
relative to the registration of property. We cited Naguit and ratiocinated:
a. Despite the clear text of Section 48(b) of the Public Land Act, as amended and
Section 14(a) of the Property Registration Decree, the OSG has adopted the position
that for one to acquire the right to seek registration of an alienable and disposable
land of the public domain, it is not enough that the applicant and his/her
predecessors-in-interest be in possession under a bona fide claim of ownership since
12 June 1945; the alienable and disposable character of the property must have been
declared also as of 12 June 1945. Following the OSG’s approach, all lands certified
as alienable and disposable after 12 June 1945 cannot be registered either under
Section 14(1) of the Property Registration Decree or Section 48(b) of the Public
Land Act as amended. The absurdity of such an implication was discussed
in Naguit. 
b. Petitioner suggests an interpretation that the alienable and disposable character of
the land should have already been established since June 12, 1945 or earlier. This is
not borne out by the plain meaning of Section 14(1). "Since June 12, 1945," as used
in the provision, qualifies its antecedent phrase "under a bonafide claim of
ownership." Generally speaking, qualifying words restrict or modify only the words
or phrases to which they are immediately associated, and not those distantly or
c. Besides, we are mindful of the absurdity that would result if we adopt petitioner’s
position. Absent a legislative amendment, the rule would be, adopting the OSG’s
disposable before June 12, 1945 would not be susceptible to original registration, no
matter the length of unchallenged possession by the occupant.
d. Such interpretation renders paragraph (1) of Section 14 virtually inoperative and
even precludes the government from giving it effect even as it decides to reclassify
public agricultural lands as alienable and disposable. The unreasonableness of the
situation would even be aggravated considering that before June 12, 1945, the
Philippines was not yet even considered an independent state. 
e. Accordingly, the Court in Naguit explained:
i. [T]he more reasonable interpretation of Section 14(1) is that it merely
requires the property sought to be registered as already alienable and
disposable at the time the application for registration of title is filed. If
the State, at the time the application is made, has not yet deemed it
proper to release the property for alienation or disposition, the
presumption is that the government is still reserving the right to utilize
the property; hence, the need to preserve its ownership in the State
irrespective of the length of adverse possession even if in good faith.
However, if the property has already been classified as alienable and
disposable, as it is in this case, then there is already an intention on the
part of the State to abdicate its exclusive prerogative over the property. 
f. The Court declares that the correct interpretation of Section 14(1) is that which was
adopted in Naguit. The contrary pronouncement in Herbieto, as pointed out
in Naguit, absurdly limits the application of the provision to the point of virtual
prior to 12 June 1945, even if the current possessor is able to establish open,
continuous, exclusive and notorious possession under a bona fideclaim of
ownership long before that date. 
g. Moreover, the Naguit interpretation allows more possessors under a bona fide claim
of ownership to avail of judicial confirmation of their imperfect titles than what
would be feasible under Herbieto. This balancing fact is significant, especially
considering our forthcoming discussion on the scope and reach of Section 14(2) of
the Property Registration Decree. 
h. Petitioners make the salient observation that the contradictory passages
from Herbieto are obiter dicta since the land registration proceedings therein is
void ab initio in the first place due to lack of the requisite publication of the notice
of initial hearing. There is no need to explicitly overturn Herbieto, as it suffices that
the Court’s acknowledgment that the particular line of argument used therein
concerning Section 14(1) is indeed obiter.
20. Naguit as affirmed in Malabanan more in accord with the State’s policy
21. Moreover, we wish to emphasize that our affirmation
of Naguit in Malabanan––as regards the correct interpretation of Sec. 14(1)
of PD 1529 relative to the reckoning of possession vis-à-vis the declaration
of the property of the public domain as alienable and disposable––is indeed
more in keeping with the spirit of the Public Land Act, as amended,
and of PD 1529.
22. These statutes were enacted to conform to the State’s policy of
 encouraging and promoting the distribution of alienable public lands to 11, 2007 CA Decision in CA-G.R. CV No. 85348 is hereby AFFIRMED 
spur economic growth and remain true to the ideal of social
justice.23 The statutes’ requirements, as couched and amended, are stringent
enough to safeguard against fraudulent applications for registration of title
over alienable and disposable public land. The application of the more
stringent pronouncement in Herbieto would indeed stifle and repress the
State’s policy.
23. Finally, the Court in Malabanan aptly synthesized the doctrine that the
period of possession required under Sec. 14(1) of PD 1527 is not reckoned
from the time of the declaration of the property as alienable and disposable,
thus:
a. We synthesize the doctrines laid down in this case, as follows:
b. (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,
9.) Diamond Farms, Inc. v. Diamond Farm-Workers Cooperative
exclusive, and notorious possession and occupation of alienable and disposable
lands of the public domain, under a bona fide claim of acquisition of ownership,
G.R. No. 192999 | 18 July 2012
since June 12, 1945" have acquired ownership of, and registrable title to, such lands FACTS:
based on the length and quality of their possession. 
c. (a) Since Section 48(b) merely requires possession since 12 June 1945 and does 1. Petitioner is a corporation engaged m commercial farming of bananas. 3 It
not require that the lands should have been alienable and disposable during the owned 1,023.8574 hectares of land in Carmen, Davao. A big portion of this
entire period of possession, the possessor is entitled to secure judicial land measuring 958.8574 hectares (958-hectare land) was initially deferred
confirmation of his title thereto as soon as it is declared alienable and for acquisition and distribution under the (CARP).
disposable, subject to the timeframe imposed by Section 47 of the Public Land Act.

d. (b) The right to register granted under Section 48(b) of the Public Land Act is
2. On November 3, 1992, Secretary Ernesto D. Garilao of the Department of
further confirmed by Section 14(1) of the Property Registration Decree.  Agrarian Reform (DAR) likewise approved the Production and Profit
Sharing (PPS) Scheme proposed by the Philippine Banana Growers and
24. INC entitled to registrable right over subject lot Exporters Association as the mode of compliance with the required
25. With the resolution of the core issue, we find no error in the findings of the production sharing under Section 32 of Republic Act No. 6657, otherwise
courts a quo that INC had indeed sufficiently established its possession and known as the Comprehensive Agrarian Reform Law (CARL).5 
occupation of the subject lot in accordance with the Public Land Act and 3. Later, on February 14, 1995, the Deferment Order was lifted and the
Sec. 14(1) of PD 1529, and had duly proved its right to judicial aforesaid 958-hectare land was placed under CARP coverage. Thereafter,
confirmation of imperfect title over subject lot.  698.8897 hectares of the 958-hectare land were awarded to members of the
26. The possession of INC has been established not only from 1952 and 1959 Diamond Agrarian Reform Beneficiaries Multi-Purpose Cooperative
when it purchased the respective halves of the subject lot, but is also (DARBMUPCO).
tacked on to the possession of its predecessors-in-interest, Badanguio 4. Petitioner, however, maintained management and control of 277.44 hectares
and Sabuco, the latter possessing the subject lot way before June 12, of land, including a portion measuring 109.625 hectares (109-hectare land).
1945, as he inherited the bigger lot, of which the subject lot is a portion,
from his parents. 5. On November 23, 1999, petitioner’s certificates of title over the 109-hectare
land were cancelled. In lieu thereof, Transfer Certificates of Title (TCT)
27. These possessions and occupation––from Sabuco, including those of his Nos. T-154155 to T-154160 were issued in the name of the Republic of the
parents, to INC; and from Sabuco to Badanguio to INC––had been in the Philippines. On August 5, 2000, the DAR identified 278 CARP
concept of owners: open, continuous, exclusive, and notorious possession beneficiaries of the 109-hectare land, majority of whom are members of
and occupation under a bona fide claim of acquisition of property. These respondent Diamond Farm Workers Multi-Purpose Cooperative
had not been disturbed as attested to by respondent’s witnesses.  (DFWMPC). On October 26, 2000, the DAR issued six Certificates of Land
28. WHEREFORE, this petition is hereby DENIED. Accordingly, the October Ownership Award (CLOAs) collectively in favor of the 278 CARP
 beneficiaries.6  interest be granted.
6. Subsequently, on July 2, 2002, petitioner filed a complaint for unlawful
7 
occupation, damages and attorney’s fees against respondents. Petitioner
alleged that as of November 1995, it was the holder of TCT Nos. 112068
and 112073 covering two parcels of land within the 109-hectare land. It
alleged that it had been in possession for a long time of the two lands,
which had a total area of 74.3393 hectares (74-hectare land), and grew
thereon export-quality banana, producing on average 11,000 boxes per
week worth P1.46 million.
7. It alleged that the DAR’s August 5, 2000 Order distributing the 109-hectare
land to 278 CARP beneficiaries was not yet final on account of appeals, and
therefore petitioner remains the lawful possessor of the subject land (109-
hectare land) and owner of the improvements thereon. But while the CARP
beneficiaries have not been finally designated and installed, respondents –
its farm workers – refused to do their work from June 10, 2002, forcibly
entered and occupied the 74-hectare land, and prevented petitioner from
harvesting and introducing agricultural inputs. Thus, petitioner prayed that
respondents be ordered to vacate the subject land; that it be allowed to
harvest on the 74-hectare land; and that respondents be ordered to pay it lost
income of P1.46 million per week from June 10, 2002 until farm operation
normalizes, exemplary damages of P200,000, attorney’s fees of P200,000,
appearance fees, incidental expenses of P100,000 and costs.
8. In their answer with compulsory counterclaim, 8 respondents admitted that
petitioner was the holder of TCT Nos. 112068 and 112073, covering the 74-
hectare land and that the said land produces 11,000 boxes of export-quality
bananas per week. Respondents added that besides the 74-hectare land,
petitioner owned four other parcels of land covered by TCT Nos. 112058,
112059, 112062 and 112063 having a total area of 35.2857 hectares (35-
hectare land). These six parcels, which altogether have a total area of
109.625 hectares (109-hectare land), were acquired by the government upon
the issuance of TCTs in the name of the Republic of the Philippines. But
even after CLOAs were issued to the 278 CARP beneficiaries,
petitioner continued to manage the 109-hectare land, paying wages to
respondents as farm workers. Since 1995 they had been demanding from
petitioner payment of their production share to no avail.
9. Respondents further claimed that petitioner conspired with 67 CARP
beneficiaries to occupy and cultivate the 35-hectare land. Petitioner tried to
allow alleged beneficiaries to occupy portions of the 74-hectare land, but
respondents guarded it to protect their own rights, so the intruders were able
to occupy only the pumping structure. Thereafter, petitioner stopped farm
operation on the 74-hectare land and refused their request to resume farm
operation. By way of relief, respondents prayed that their rights as CARP
beneficiaries of the 109-hectare land be recognized and that their
counterclaims for production share, profit share, accrued income and
10. Petitioner filed a reply 9 and alleged that respondents initiated the
commission of premature and unlawful entry into the 35-hectare land and
did nothing to curb the unlawful entry of other parties. Petitioner also
admitted that respondents recently allowed it to harvest and perform
essential farm operations.
11. In their rejoinder,10 respondents denied that they illegally entered the 35-
hectare land. They averred that petitioner promoted the entry of third parties
and cited petitioner’s agreements with third parties for the harvest of fruits
thereon.
12. During the proceedings before the Office of the Regional Adjudicator,
petitioner submitted its computation of respondents’ production and profit
share from the 109-hectare land for the years 1995 to 1999 and accordingly
deposited the amount of P2.51 million. Respondents were required to
submit a project of distribution, and the parties were ordered to submit
position papers. Upon compliance by respondents with the order to submit a
project of distribution, the Office of the Regional Adjudicator ordered the
release of the amount deposited by petitioner to respondents. 11 Respondents
thereafter submitted their position paper, 12 wherein they reiterated that they
had to guard the land to protect their rights. They confirmed petitioner’s
acceptance of their request to resume normal farm operation, and
manifested that a precarious peace and harmony thereafter reigned on the
109-hectare land. They also repeated their prayers in their answer.
Petitioner, on the other hand, failed to file its position paper despite several
requests for extension of time to file the same.13 
13. In his Decision,14 the Regional Agrarian Reform Adjudicator ruled that petitioner lost its ownership of
the subject land when the government acquired it and CLOAs were issued in favor of the 278 CARP
beneficiaries. The appeals from the Distribution Order will not alter the fact that petitioner is no longer the
owner of the subject land. Also, respondents have been identified as CARP beneficiaries; hence, they are not
unlawfully occupying the land. The Adjudicator added that petitioner is unlawfully occupying the land since
it has no contract with the CARP beneficiaries. Thus, the Adjudicator denied petitioner’s prayers in its
complaint and granted respondents’ counterclaims. 
14. Aggrieved, petitioner appealed to the DARAB, but the DARAB denied petitioner’s appeal in a
Decision15 dated December 11, 2006. The DARAB ruled that petitioner is unlawfully occupying the subject
land; hence, its complaint against respondents for unlawful occupation lacks merit. It also ruled that
petitioner is no longer entitled to possess the subject land; that petitioner lost its ownership thereof; that
ownership was transferred to the 278 CARP beneficiaries; that the appeals from the Distribution Order
concern distribution and will not restore petitioner’s ownership; that the 278 CARP beneficiaries can now
exercise their rights of ownership and possession; and that petitioner should have delivered possession of the
109-hectare land to the CARP beneficiaries on August 5, 2000 instead of remaining in possession and in
control of farm operations.
15. In awarding production and profit share, the DARAB held that Section 32 of the CARL requires petitioner to
distribute said share to respondents. The DARAB computed the production and profit share based on the
PPS Scheme proposed by the Philippine Banana Growers and
16. Exporters Association and approved by DAR Secretary Ernesto D. Garilao. The dispositive portion of the
DARAB’s December 11, 2006 Decision reads:
a. WHEREFORE, premises considered, the Appeal is hereby DENIED for lack of merit.
b. The assailed Decision is hereby MODIFIED to read as follows:
 c. 1. DENYING the reliefs prayed for in the complaint;
d. 2. ORDERING the [petitioner] to turn over to the respondents the possession of the subject
landholding and respect the respondents’ peaceful possession thereof;
e. 3. ORDERING the [petitioner] to pay the respondents the following amount: a. P27,553,703.25
less P2,511,786.00 as Production and Profit Share (PPS) from 15 February 1995 to 31
December 2005; b. P17,796,473.43 as lease rental for the use of the land of petitioner from 26
October 2000 up to 31 December 2005; c. P6,205,011.89 as accrued interest on the unpaid PPS
from 01 March 1996 to 01 March 2006; and d. P2,241,930.90 as accrued interest on the unpaid
lease rental from 01 January 2001 to 01 January 2006.
f. 4. ENCOURAGING the parties to enter into an agribusiness venture over the subject
landholding, if feasible.
17. Its motion for reconsideration having been denied, petitioner appealed to the CA raising the following
arguments: (1) respondents are not the lawful possessors of the subject land as well as the valuable
improvements thereon, prior to receipt by petitioner of the corresponding payment for the land from the
government, or upon deposit in favor of petitioner of the compensation for the same in cash or in Land Bank
of the Philippines (LBP) bonds; (2) not being lawful possessors of the subject land, respondents are not
entitled to production share in the amount of P25.04 million and interest thereon in the amount of P6.21
million; and (3) not being lawful possessors of the subject land, respondents are not entitled to lease rentals
as well as accrued interest thereon.17  respondent cooperative now Davao Farms Agrarian Reform Beneficiaries Multi-Purpose
18. As afore-stated, the CA in the assailed Decision affirmed the DARAB decision. The CA, however, deleted
the award of lease rentals and interest thereon, to wit: The CA agreed with the DARAB in rejecting
petitioner’s bare and belated allegation that it has not received just compensation. The alleged nonpayment
of just compensation is also a collateral attack against the TCTs issued in the name of the Republic of the
Philippines. The CA found that petitioner has never sought the nullification of the Republic’s TCTs. Further,
the CA found no credible evidence relating to proceedings for payment of just compensation. The CA held
that the issuance of the Republic’s TCTs and CLOAs in favor of the 278 CARP beneficiaries implies the
deposit in cash or LBP bonds of the amount initially determined as compensation for petitioner’s land or the
actual payment of just compensation due to petitioner. Additionally, the appeals over the Distribution Order
cannot justify petitioner’s continued possession since the appeals concern only the manner of distribution.
19. The CA held that petitioner became liable for respondents’ production share when the Deferment Order was
lifted. The CA noted that the DARAB computed the production share based on the approved PPS Scheme.
The CA also noted petitioner’s deposit of P2.51 million as petitioner’s recognition of respondents’ right to
production share.
20. Hence, petitioner filed the present appeal.
ISSUES:
1. (1) whether respondents are guilty of unlawful occupation and liable to
petitioner for damages and attorney’s fees, (2) whether petitioner should
turn over possession of the subject land to respondents and respect their
possession thereof, and (3) whether the award of production share and
interest was proper.
RATIO:
1. Petitioner insists that prior to its receipt of the corresponding payment for the land from the government or
deposit in its favor of the compensation for the land in cash or in LBP bonds, respondents cannot be deemed
lawful possessors of the subject land and the valuable improvements thereon, citing Section 16 (e) of the
CARL. According to petitioner, "it has yet to receive any compensation for the lands acquired by the
government."21 Petitioner also contends that the CA erred in ruling that the issue of nonpayment of just
compensation was raised only at the DARAB level, such being an unavoidable issue intertwined with its
cause of action. Petitioner further avers that the CA erred in ruling that petitioner’s assertion of its
constitutional right to just compensation is a collateral attack on the TCTs of the Republic of the Philippines.
Petitioner maintains that the Republic’s TCTs which are derived from its TCTs pursuant to the CARL are
neither attacked nor assailed in this case. Petitioner thus prays that it be declared as the lawful owner and
possessor of the subject land until its actual receipt of just compensation.
2. In their comment, respondents claim that petitioner is just trying to mislead this Court that it has not been
paid compensation for its property. Respondents cite two Certifications 22 of Deposit (CARP Form No. 17)
showing that the LBP deposited P9.92 million in cash and agrarian reform bonds as compensation for
91.3925 hectares of land and another 18.2325 hectares of land, or for 109.625 hectares of land (109-
hectare land), owned by petitioner and covered by TCT Nos. T-112058, 112059, 112062, 112063,
112068, and 112073. Respondents also cite a DAR Memorandum 23 dated November 22, 1999 (CARP Form
No. 18) requesting the Register of Deeds to issue TCTs in the name of the Republic of the Philippines.
Respondents then summarized the consequent cancellations of the TCTs by attaching certified true copies of:
a. x x x x 4. [TCT Nos.] T-112058, T-112059, T-112062, T-112063, T-112073 and T-112068 of
petitioner which show that LBP Certificates of Deposit and DAR Memorandum-Request were
duly annotated at the back thereof, and that the same were cancelled on 23 November 1999
upon issuance of TCTs in favor [of] the Republic of the Philippines;
b. 5. [TCT Nos.] T-154159, T-154160, T-154157, T-154156, T-154155 issued in favor of the
Republic of the Philippines showing that the same were cancelled on 30 October 2000 upon
issuance of TCT[s] in favor of herein respondents;
c. 6. [TCT Nos.] C-14005, C-14006, C-15311, C-15526, C-15527, C-14007, C-14004 issued
infavor of herein respondents showing ‘THAT THE FARM/HOMELOT DESCRIBED IN
THIS CERTIFICATE OF LANDOWNERSHIP AWARD IS ENCUMBERED IN FAVOR OF
THE LAND BANK OF THE PHILIPPINES TO SECURE FULL PAYMENT OF ITS VALUE
UNDER [THE CARL] BY THE FARMER-BENEFICIARY NAMED HEREIN,’ and that the
same were already cancelled on April 30, 2009 upon issuance of TCTs in favor of herein
Cooperative – DFARBEMPCO.24 
3. In its reply, petitioner states that to "set the record straight, the documents presented by respondents refer to
the deposit of the initial valuation of the land" as determined by the LBP. This is not the just compensation
for the land which is required to be determined by a court of justice. 25 According to petitioner, Sections 56
and 57 of the CARL provides that the Regional Trial Court (RTC), acting as a Special Agrarian Court
(SAC), has the original and exclusive jurisdiction over all petitions for the determination of just
compensation to landowners. Petitioner also states that the issue of just compensation may be easily gleaned
at least from the submissions of the parties in their pleadings and one that had therefore been tried under the
parties’ implicit agreement.
4. We find petitioner’s contentions bereft of merit. On the first issue, we agree
that respondents are not guilty of unlawful occupation and that there exists
no basis to award damages and attorney’s fees to petitioner as respondents
are agrarian reform beneficiaries who have been identified as such, and in
whose favor CLOAs have been issued. We thus uphold the ruling denying
petitioner’s prayers in its complaint for unlawful occupation, damages and
attorney’s fees.
5. However, we note significant facts which dispute some findings of the
Adjudicator, DARAB and CA, and make the necessary clarification or
correction as appropriate.
6. It is beyond doubt that petitioner is the farm operator and manager while
respondents are the farm workers. Both parties enjoyed possession of the
land. Together, they worked thereon. Before CARP, petitioner was the
landowner, farm operator and manager. Respondents are its farm workers.
After the deferment period, CARP finally dawned. Petitioner lost its status
as landowner, but not as farm operator and manager. Respondents remained
as petitioner’s farm workers and received wages from petitioner.
7. Now, the unrebutted claim of respondents in their answer and position paper
is that they guarded the 74-hectare land to protect their rights as farm
workers and CARP beneficiaries. They were compelled to do so when
petitioner attempted to install other workers thereon, after it conspired with
67 CARP beneficiaries to occupy the 35-hectare land. They were fairly
 successful since the intruders were able to occupy the pumping structure.
The government, including this Court, cannot condone petitioner’s act to
thwart the CARP’s implementation. Installing workers on a CARP-covered
land when the DAR has already identified the CARP beneficiaries of the
land and has already ordered the distribution of the land to them serves no
other purpose than to create an impermissible roadblock to installing the
legitimate beneficiaries on the land.
8. We also find the action taken by respondents to guard the land as reasonable
and necessary to protect their legitimate possession and prevent precisely
what petitioner attempted to do. Such course was justified under Article 429
of the Civil Code which reads:
a. ART. 429. The owner or lawful possessor of a thing has the right to exclude any
person from the enjoyment and disposal thereof. For this purpose, he may use such
force as may be reasonably necessary to repel or prevent an actual or threatened
unlawful physical invasion or usurpation of his property.
9. Being legitimate possessors of the land and having exercised lawful means
to protect their possession, respondents were not guilty of unlawful
occupation.
10. As to the immediate resumption of farm operations, petitioner admitted that
respondents have already allowed it to harvest and perform essential
activities. Respondents have confirmed that petitioner accepted their request
to resume normal farm operations such that a precarious peace and harmony
reigned on the 109-hectare land. That farm operations resumed is evident
from petitioner’s claim of lost income amounting to P1.46 million a week
for four weeks, from June 10, 2002 to July 7, 2002. 26 Due to the parties’
quick and voluntary agreement, farm operation and the parties’ relationship
normalized within five days from the filing of the complaint on July 2,
2002. We thus agree that petitioner must respect respondents’ possession.
11. However, we disagree with the finding of the Adjudicator and DARAB that
petitioner is guilty of unlawful occupation. Since respondents themselves
have asked petitioner to resume its farm operation, petitioner’s
possession cannot be said to be illegal and unjustified.
12. This notwithstanding, we sustain the order for petitioner to turn over
possession of the 109-hectare land. The DARAB and the DAR shall ensure
that possession of the land is turned over to qualified CARP beneficiaries.
13. The procedure for acquisition of private lands under Section 16 (e) of the
CARL is that upon receipt by the landowner of the corresponding payment
or, in case of rejection or no response from the landowner, upon deposit
with an accessible bank designated by the DAR of the compensation in cash
or in LBP bonds, the DAR shall take immediate possession of the land and
request the proper Register of Deeds to issue a TCT in the name of the
Republic of the Philippines. Thereafter, the DAR shall proceed with the
redistribution of the land to the qualified beneficiaries, to wit:
a. SEC. 16. Procedure for Acquisition of Private Lands. – For purposes of acquisition
of private lands, the following procedures shall be followed:
b. x x x x (e) Upon receipt by the landowner of the corresponding payment or in case
of rejection or no response from the landowner, upon the deposit with an accessible
bank designated by the DAR of the compensation in cash or in LBP bonds in
accordance with this Act, the DAR shall take immediate possession of the land and
shall request the proper Register of Deeds to issue a Transfer Certificate of Title
(TCT) in the name of the Republic of the Philippines. The DAR shall thereafter
proceed with the redistribution of the land to the qualified beneficiaries.
14. Petitioner eventually acknowledged that there was indeed a deposit of
the initial valuation of the land. There were two deposits of cash and
agrarian reform bonds as compensation for the 109-hectare land owned by
petitioner and covered by TCT Nos. T-112058, 112059, 112062, 112063,
112068 and 112073. Notably, petitioner also manifested that the Republic’s
TCTs which are derived from its TCTs pursuant to the CARL are neither
attacked nor assailed in this case. Petitioner even argued that the transfer of
possession and ownership of the land to the government is conditioned upon
the receipt by the landowner of the corresponding payment or deposit by the
DAR of the compensation with an accessible bank. 27 Following petitioner’s
own reasoning, petitioner has already lost its possession and ownership
when the condition was fulfilled. Likewise undisputed is that in 2000,
CLOAs had been issued collectively in favor of the 278 CARP
beneficiaries of the 109-hectare land. These CLOAs constitute evidence
of ownership by the beneficiaries under the then provisions of Section
2428 of the CARL, to wit:
a. SEC. 24. Award to Beneficiaries. – The rights and responsibilities of the beneficiary
shall commence from the time the DAR makes an award of the land to him, which
award shall be completed within one hundred eighty (180) days from the time the
DAR takes actual possession of the land. Ownership of the beneficiary shall be
evidenced by a Certificate of Land Ownership Award, x x x. (Underscoring ours.)
15. In the light of the foregoing, this Court cannot grant petitioner’s plea that it
be declared as the lawful owner of the 109-hectare land. It is also to be
noted that in its complaint, petitioner did not even claim ownership of the
109-hectare land. Petitioner could only state that as of November 1995, it
was the holder of the TCTs covering the 74-hectare land and that pending
resolution of the appeals from the distribution orders, it remains in the
meantime as the lawful possessor of the 109-hectare land. Nothing therefore
supports petitioner’s claim that it is the lawful owner of the 109-hectare
land.
16. To reiterate, petitioner had lost its ownership of the 109-hectare land and
ownership thereof had been transferred to the CARP beneficiaries.
Respondents themselves have requested petitioner to resume its farm
operations and this fact has given petitioner a temporary right to enjoy
possession of the land as farm operator and manager. 
17. We, however, agree that petitioner must now turn over possession of the
109-hectare land.
18. The matter has already been settled in Hacienda Luisita, Incorporated, etc.
v. Presidential Agrarian Reform Council, et al., 29 when we ruled that the
Constitution and the CARL intended the farmers, individually or
collectively, to have control over agricultural lands, otherwise all rhetoric
about agrarian reform will be for naught. We stressed that under Section 4,
Article XIII of the 1987 Constitution and Section 2 of the CARL, the
agrarian reform program is founded on the right of farmers and regular farm
workers who are landless to own directly or collectively the lands they till.
The policy on agrarian reform is that control over the agricultural land must
always be in the hands of the farmers.
19. Under Section 16 (e) of the CARL, the DAR is mandated to proceed with
the redistribution of the land to the qualified beneficiaries after taking
possession of the land and requesting the proper Register of Deeds to issue
a TCT in the name of the Republic of the Philippines. Section 24 of the
CARL is yet another mandate to complete the award of the land to the
beneficiary within 180 days from the time the DAR takes actual possession
of the land.30  cause of action in its complaint for unlawful occupation with prayer that respondents be ordered to
20. And under Section 20 of DAR Administrative Order No. 9, Series of 1998,
also known as the Rules and Regulations on the Acquisition, Valuation,
Compensation and Distribution of Deferred Commercial Farms, CLOAs
shall be registered immediately upon generation, and the Provincial
Agrarian Reform Officer (PARO) shall install or cause the installation of
the beneficiaries in the commercial farm within seven days from registration
of the CLOA. Section 20 of the Rules provides:
a. SEC. 20. Registration of CLOAs and Installation of Beneficiaries – CLOAs shall be
registered immediately upon generation. The PARO shall install or cause the
installation of the beneficiaries in the commercial farm within seven (7) days from
registration of the CLOA.
21. We hold that the 109-hectare land must be distributed to qualified CARP
beneficiaries. They must be installed on the land and have possession and
control thereof.
22. A problem that emerged in this case is the identification of qualified CARP
beneficiaries. Respondents’ own evidence does not definitively show who
are the legitimate CARP beneficiaries in the 109-hectare land.
23. TCT Nos. 112058, 112059, 112062, 112063, 112068, and 112073, issued in the name of petitioner, were
cancelled by TCT Nos. 154155 to 154160 issued in the name of the Republic of the Philippines. The
Republic’s TCTs were cancelled by TCT Nos. C-14002 to C-14007. 31 Notably, TCT Nos. C-14004,32 C-
14006,33 and C-1400734 show that they were respectively cancelled by TCT Nos. C-27342, C-27344, and C-
27345, all in favor of DFARBEMPCO. It must be verified however if DFARBEMPCO is the legitimate
successor of DFWMPC, herein respondent cooperative. As regards TCT No. C-14005,35 there was a partial
cancellation by TCT No. C-27110 in favor of DARBMUPCO and total cancellation by TCT No. C-27343 in
favor of DFARBEMPCO. Nothing is shown about TCT Nos. C-14002 to C-14003.
24. Neither can TCT Nos. C-15311, 36 C-15526,37 and C-1552738 provide clarity. These TCTs cited by respondents
contain entries of partial or total cancellation by TCT Nos. C-27346, C-27115 and C-27114, in favor of
DFARBEMPCO or DARBMUPCO. The areas covered by TCT Nos. C-15311, C-15526, and C-15527 also
appear to be different than those covered by the cancelled TCTs in the name of petitioner and the Republic
of the Philippines.
25. Hence, it is imperative that the DAR and PARO assist the DARAB so that
the 109-hectare land may be properly turned over to qualified CARP
beneficiaries, whether individuals or cooperatives. Needless to stress, the
DAR and PARO have been given the mandate to distribute the land to
qualified beneficiaries and to install them thereon.
26. To fully address petitioner’s allegations, we move on to its claim that the issue of just compensation is an
issue that may easily be gleaned at least from the submissions of the parties in their pleadings and one that
had therefore been tried under the parties’ implicit agreement.
27. Petitioner’s claim is unfounded. Even the instant appeal 39 is silent on the factors to be considered 40 in
determining just compensation. These factors are enumerated in Section 1741 of the CARL which reads:
a. SECTION 17. Determination of Just Compensation. – In determining just compensation, the
cost of acquisition of the land, the current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations, and the assessment made by
government assessors shall be considered. The social and economic benefits contributed by the
farmers and the farmworkers and by the Government to the property as well as the nonpayment
of taxes or loans secured from any government financing institution on the said land shall be
considered as additional factors to determine its valuation.
28. What petitioner stressed before us and before the CA to assail respondents’ possession is its less-than-candid
claim that it has yet to receive any compensation for the lands acquired by the government. 42 Petitioner’s
vacate and pay damages and attorney’s fees cannot also be mistaken as one for determination of just
compensation. Thus, just compensation was never an issue in this case.
29. Sections 56 and 57 of the CARL likewise provides that the RTC, acting as SAC, has original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners:
a. SEC. 56. Special Agrarian Court. - The Supreme Court shall designate at least one (1) branch of
the Regional Trial Court (RTC) within each province to act as a Special Agrarian Court.
b. x x x SEC. 57. Special Jurisdiction. – The Special Agrarian Courts shall have original and
exclusive jurisdiction over all petitions for the determination of just compensation to
landowners, x x x.
30. We said that the DAR’s land valuation is only preliminary and is not, by any means, final and conclusive
upon the landowner. The landowner can file an original action with the RTC acting as SAC to determine just
compensation. The court has the right to review with finality the determination in the exercise of what is
admittedly a judicial function.43 
31. This case however was not brought before the SAC on determination of just compensation. No reversible
error was therefore committed by the CA when it did not rule on just compensation.
32. On the third issue, petitioner contends that respondents are not entitled to production share as well as interest
since they are not lawful possessors of the subject land. Petitioner asserts that the 3% production share under
Section 32 of the CARL may only be given if there are sales from the production of the land. Petitioner
however claims that it has incurred losses and that respondents admitted that farm operations in the subject
land have not normalized. Petitioner thus submits that there is no factual basis in the production share from
the sale of agricultural products in the subject land.
33. The contention has no merit.
34. We have already ruled that respondents’ possession is legitimate. On petitioner’s claim that it incurred
losses, Section 32 of the CARL clearly states that the 3% production share of the farm workers is based on
"gross sales from the production of such lands," to wit:
a. SEC. 32. Production-Sharing. – Pending final land transfer, individuals or entities owning, or
operating under lease or management contract, agricultural lands are hereby mandated to
execute a production-sharing plan with their farmworkers or farmworkers’ organization, if any,
whereby three percent (3%) of the gross sales from the production of such lands are distributed
within sixty (60) days of the end of the fiscal year as compensation to regular and other
farmworkers in such lands over and above the compensation they currently receive: Provided,
That these individuals or entities realize gross sales in excess of five million pesos per annum
unless the DAR, upon proper application, determines a lower ceiling. (Underscoring ours.)
35. Petitioner cites its net losses, computed after deductions were made on the amount of its sales. These losses
 however, have no bearing in computing the production share which is based on gross sales. And petitioner’s
own allegation of weekly production worth P1.46 million – the same amount used by petitioner as basis of
its claim for damages – debunks its claim that no basis exists that there were sales from agricultural products
of the subject land. Likewise supporting the existence of sales is petitioner’s own computation of
respondents’ production share and its deposit of the amount of P2.51 million before the Office of the
Regional Adjudicator. It must be noted also that farm operations normalized within five days from the filing
of the complaint.
36. In sum, petitioner failed to show any reversible error committed by the CA in affirming the DARAB’s
computation of respondents’ production share based on the approved PPS Scheme. Notably, petitioner has
admitted the fact of approval of the PPS Scheme.44 
37. WHEREFORE, we DENY the petition for lack of merit and AFFIRM the
Decision dated December 17, 2009 and Resolution dated July 15, 2010 of
the Court of Appeals in CA-G.R. SP No. 101384.
38. We also DIRECT the DAR and the Provincial Agrarian Reform Officer to assist the
Department of Agrarian Reform Adjudication Board in the distribution of the I 09-hectare land
to the qualified agrarian reform beneficiaries, whether individuals or cooperatives.
10.) King v. Lim
G.R. No. 185407, 22 June 2015
FACTS:
1. In Civil Case No. 94-71083, the Spouses Victoriano and Evelyn Calidguid
(Spouses Calidguid) executed a Compromise Agreement 1 binding
themselves to pay the amount of ₱2,520,000.00 to the Spouses Jaime Lee
(Jaime) and Lim Dechu (collectively, Spouses Lee), which was approved by
the Regional Trial Court (RTC) of Manila, Branch 4 in its Decision 2 dated
April 24, 1995.
2. However, the Spouses Calidguid failed to comply with the terms of the said
decision, leading the Spouses Lee to avail of the remedy of execution. A
Writ of Execution3 was issued on August 2, 1995 to satisfy the compromise
judgment and a property belonging to the Spouses Calidguid covered by
(TCT) No. 85561 was levied on execution. During its sale at a public
auction, the judgment creditor, Jaime emerged as the highest bidder and a
corresponding Certificate of Sale4 was issued in his favor.
3. As an assignee of the Spouses Calidguid, Sio Tiat King (King) redeemed
the subject property on October 30, 1996, before the expiration of the one-
year period of right of redemption. Hence, the sheriff executed a Certificate
of Redemption.5
4. More than 11 years after the redemption of the subject property, King
filed a motion for the issuance of a writ of possession, which was
granted by the RTC in its Order 6 dated January 22, 2008. A Writ of
Possession7 was thereafter issued on January 25, 2008. Pursuant to this,
Sheriff Cesar Javier served a Notice to Vacate 8 addressed to the Spouses
Calidguid, their agents and all other persons claiming rights under them at
109 P. Florentino Street comer Araneta Avenue, Sto. Domingo, Quezon
City, which is the location of the subject property.
5. On February 19, 2008, Michael George O. Lim, Mathew Vincent O. Lim,
Mel Patrick O. Lim, Moises Francis W. Lim and Marvin John W. Lim
(Lims) filed a Joint Affidavit of Third Party Claim, 9 alleging that they are
the registered owners of the property situated at 109 P. Florentino Street
comer Araneta Avenue, Sto. Domingo, Quezon City under TCT No.
122207.
6. On February 21, 2008, the Lims filed an Entry of Appearance with Motion
to Quash Writ of Execution. 10 On March 18, 2008, the actual and physical
possession of a part of the subject property was turned over to King,
prompting the Lims to file an Extremely Urgent Motion to Issue Status Quo
Ante Order.11 On April 4, 2008, the motion filed by the Lims was granted
but to last only until April 11, 2008.12
7. The Lims filed a Petition for Certiorari 13 before the (CA), alleging among
others, that the RTC judge committed grave abuse of discretion when they
were ousted from their property by virtue of the writ of possession, without
a separate and independent action to resolve the issue of ownership.14
8. Subsequently on April 11, 2008, the RTC issued an Order 15 commanding
the sheriff to defer completion of the implementation of the writ of
possession while the resolution of the motion to quash the writ of execution
is pending.
9. The RTC issued an Order16 dated April 28, 2008, denying the motion to
quash of the Lims. The RTC also resolved that the TCT of the Spouses
Calidguid was issued at an earlier date; therefore it shall prevail over the
TCT of the Lims. This led the Lims to file a Motion to Admit the Attached
Supplemental Petition,17 which the CA granted in its Resolution18 dated May
28, 2008. The CA also issued a temporary restraining order to preserve the
rights of both parties while awaiting resolution of the petition. 19 On June 4,
2008, the RTC issued an Order 20 suspending the execution of its Order
dated April 28, 2008 and all allied processes pertinent to the case.
10. On July 22, 2008, the CA rendered a Decision, 21 annulling the Order dated
April 28, 2008 of the RTC. The dispositive portion reads:
a. WHEREFORE, the petition is GRANTED. The Order dated April 28, 2008 issued
by the Regional Trial Court, Branch 4, Manila in Civil Case No. 94-71083 is
ANNULLED and SET ASIDE. Accordingly, the Writ of Possession issued on
January 25, 2008 is QUASHED, without prejudice to any separate action which
private respondent Sio Tiat King may file against all parties concerned for the
 enforcement of whatever right he may have over the subject property.
11. The CA decision granted the petition filed by the Lims for the following
reasons:
a. Firstly, Section 33, Rule 39 of the Rules of Court is not applicable. The second paragraph of
said rule provides:
i. "Upon expiration of the right of redemption, the purchaser or redemptioner shall be
substituted to and acquire all the rights, title, interest and claim of the judgment
obligor to the property as of the time of the levy. The possession of the property
shall be given to the purchaser or last redemptioner by the same officer unless a
third party is actually holding the property adversely to the judgment obligor."
b. The above-rule contemplates two situations wherein a writ of possession may issue: (1) only
upon the expiration of the period of redemption and no such redemption having been made[;]
and (2) only to a purchaser or redemptioner in the execution sale.
c. In relation thereto, Sec. 27 of the same Rule enumerates the persons who are entitled to exercise
the right of redemption over a property sold on execution, thus:
i. "Sec. 27. Who may redeem real property so sold. -Real property sold as provided
in the last preceding section, or any part thereof sold separately, may be redeemed
in the manner hereinafter provided, by the following persons:
ii. (a) The judgment obligor, or his successor-in-interest in the whole or any part of
the property;
iii. (b) A creditor having a lien by virtue of an attachment, judgment or mortgage on
the property sold, or on some part thereof, subsequent to the lien under which the
property was sold. Such redeeming creditor is termed as redemptioner."
d. The "successor-in-interest" contemplated under Sec. 27 includes a person to whom the
judgment debtor has transferred his right of redemption, or one to whom he has conveyed his
interests in the property for purposes of redemption, or one who succeeds to his property by
operation of law, or a person with a joint interest in the property, or his spouse or heirs. Hence,
King, by virtue of a Deed of Assignment of Real Property and Right of Redemption, is
included within the term "successor in interest."
e. In this case, not only was there a redemption made by King within the redemption period but
moreover, the writ of possession was issued not to a purchaser or redemptioner but to King
himself, a successor-in-interest of Spouses Calidguid, the judgment obligors. Hence, it was
no longer a ministerial duty of respondent Judge to issue the writ of possession.
f. Secondly, contrary to the position of respondent Judge and the contending parties, the writ of
possession applied for by King cannot be deemed to be a continuation of the execution
proceedings in Civil Case No. 94-71083 which had been terminated long ago after the issuance
of the Certificate of Redemption and the satisfaction of the claims of the judgment creditors
[Spouses Lee]. x x x
g. xxxx
h. It must be noted that King, by virtue of a Deed of Assignment of Real Property and Right of
Redemption, redeemed the property in question as an "assignee" of Sps. Calidguid, the
judgment debtors in Civil Case No. 94-71083, and as such is deemed subrogated to the rights
and obligations of the latter. x x x In this case, full ownership of the subject property was
restored to the judgment debtors, Spouses Calidguid, who were substituted by King, after the
redemption made by the latter as evidenced by the Certificate of Redemption, which reads:
i. x x x x WHEREAS, by virtue of a Deed of Assignment of Real Property and Right
of Redemption, dated October 30, 1996, the Assignee, [King], now offers to
redeem the property from the highest bidder, [Jaime], the sum of PH₱2,941,4 78.53
in Equitable Banking Corporation Cashier Check No. 0066-724519 in full
satisfaction of the bid price including all interests, rights, shares titles, claims and
participation of [Jaime] relative to the aforesaid parcel of land covered by TCT No.
85561, subject matter of Civil Case No. 94-71083 of the Regional Trial Court,
Branch 04, Manila;
ii. xxxx
iii. WHEREFORE, in view of all the foregoing, the undersigned hereby executed this
Certificate of Redemption and hereby restores the [Spouses Calidguid], now being
substituted by the Assignee, [King], full ownership of the above-mentioned levied
and sold property.
i. Thirdly, it is improper to issue a writ of possession when there has been a redemption made by
the judgment debtor, as in this case, considering that it would be very difficult to implement the
same. The dispositive portion of the Order dated January 22, 2008 granting the Writ of
Possession reads:
i. "WHEREFORE, finding the motion to be meritorious, the same is hereby granted.
As prayed for, let a writ of possession be issued directing the Sheriff of this Court
to place movant [King] in actual physical possession of the levied property covered
by [TCT] No. 85561 of the Registry of Deeds of Quezon City and to eject
therefrom [Spouses Calidguid] their agents and such other persons claiming rights
under them."
j. while the Notice to Vacate reads:
i. "TO: Sps. Evelyn P. Calidguid & Victoriano Calidguid,
their agents and ALL OTHER PERSONS
CLAIMING RIGHTS UNDER THEM
109 P. Florentino St., cor. Araneta Ave., SMH,
Quezon City
ii. Greetings:
iii. You are hereby notified by virtue of the Writ of Possession xxx being served upon
you and all other persons claiming rights upon you, DEMAND is hereby made
upon you and all other persons claiming rights upon you to VACATE the premises
xxx covered by TCT No. 85561 of the Registry of Deeds for the City of Quezon
City, within five (5) days from receipt of this Notice. x x x x"
k. This Court could hardly imagine how respondent Sheriff could possibly implement
the aforequoted Writ of Possession and Notice to Vacate by placing King in actual
physical possession of the subject property and at the same time evicting therefrom
Spouses Calidguid, their agents and all other persons claiming rights under them
when King himself is one of the persons claiming rights under Spouses
Calidguid, as he stepped into the shoes of the latter by virtue of a Deed of
Assignment of Real Property and Right of Redemption.
l. xxxx
m. Fourthly, even assuming that King is legally entitled to a writ of possession, the
mere issuance of such writ cannot summarily evict [the Lims] from the subject
property since they are occupants therein under claim of ownership. If King had
been unlawfully deprived of possession of the subject property, he may file an
independent action against [the Lims]. He cannot enforce his claim of possession
and ownership in the case terminated long ago.23 (Citations omitted and emphases in
the original)
12. His motion for reconsideration 24 having been denied by the CA in a
Resolution25 dated November 13, 2008, King filed the present petition.26
ISSUES:
1. whether the Lims may be evicted from the property by virtue of a writ of
possession issued in favor of King.
RATIO:
1. King deplored that the CA erred in ruling that he is a successor-in-interest
of the judgment debtor and not a redemptioner under Section 33 of Rule 39
of the 1997 Rules of Court, who is entitled to a writ of possession. He
 averred that the word "redemptioner" found in the same section should be
loosely applied to include the judgment debtor's successor-in-interest. 27 But
King's line of reasoning is flawed.
2. His understanding of the word "redemptioner" notwithstanding, the
fact is that the writ of possession can only be rightfully enforced against
the Spouses Calidguid and their successors-in-interest - which
ironically includes King himself. Even assuming for the sake of argument
that King is treated as a redemptioner, he seemed to have forgone that the
same provision he invoked provides for an exception, which is hereunder
quoted:
a. Sec. 33. Deed and possession to be given at expiration of redemption period; by
whom executed or given. x x x.
b. x x x The possession of the property shall be given to the purchaser or last
redemptioner by the same officer unless a third party is actually holding the
property adversely to the judgment obligor. (Emphasis ours)
3. King acquired his right over the property with TCT No. 85561 from the
Spouses Calidguid when their right to redeem the property was assigned to
him and subsequently, when redemption was made; whereas the Lims'
claim of ownership is based on TCT No. 122207 registered in their names.
This goes to show that the Lims hold the property adversely to the judgment
obligor, Spouses Calidguid.
4. The Lims are considered as a third party, whose possession over the
subject property may not be defeated summarily. "The third party's
possession of the property is legally presumed to be based on a just title,
a presumption which may be overcome by the purchaser in a judicial
proceeding for recovery of the property. Through such a judicial
proceeding, the nature of the adverse possession by the third party may be
determined, after such third party is accorded due process and the
opportunity to be heard. The third party may be ejected from the property
only after he has been given an opportunity to be heard, conformably with
the time-honored principle of due process."28
5. The foregoing elucidations find legal basis under Article 433 of the Civil
FACTS:
Code, to wit:
a. Art. 433. Actual possession under claim of ownership raises a disputable
presumption of ownership. The true owner must resort to judicial process for the
recovery of the property.
6. While King and the Lims are contending for the possession and ownership
of the same property, which has been the subject of levy and execution in
Civil Case No. 94-71083, an ejectment suit should have been filed by
King before the Lims could be evicted from the property. This is due to
the existence of their ostensibly conflicting titles coupled with the Lims'
actual possession over the property.
7. "One who claims to be the owner of a property possessed by another
must bring the appropriate judicial action for its physical recovery. The
'judicial process' could mean no less than an ejectment suit or a
reivindicatory action, in which the ownership claims of the contending
parties may be properly heard and adjudicated."29
8. King took a procedural shortcut when he applied for the issuance of a writ
of possession instead of filing a suit to recover possession of the property
against the Lims. Besides, as the CA had espoused, the issuance of the writ
of possession produced a peculiar situation in which the writ sought by
King was directed against himself as the assignee of the judgment
debtors.
9. The CA is also correct when it held that King cannot enforce his claim of
possession and ownership in a case terminated long ago,30 more so that the
possession is with the Lims, who are considered as strangers in Civil Case
No. 94-71083. As can be readily gleaned from the records, the judgment in
the aforecited case has already been executed and satisfied. In their
Comment31 to the petition before the CA, the Spouses Lee manifested that
the issuance of the Certificate of Redemption confirmed that their claims as
judgment creditors had been fully satisfied.32
10. As regards King's submission that the TCT of the Lims was fictitiously
issued, the Court holds that this is not the proper forum to resolve issues
concerning ownership of the disputed property. Matters regarding its
ownership should be ventilated in a separate proceeding, as this case is
limited to the propriety of the issuance of a writ of possession following
redemption.33
11. AFFIRMED.
11.) Heirs of Villanueva v. Heirs of Syquia Mendoza
June 5, 2017 | G.R. No. 209132
1. The case at bar resulted from a dispute between the heirs of Petronila
Syquia Mendoza and the heirs of Teresita Villanueva over a lot in Tamag,
Vigan, Ilocos Sur.
2. On September 7, 2001, the heirs of Syquia filed a Complaint for declaration
of nullity of free patent, reconveyance, and damages against Teresita
Villanueva (Villanueva). They claimed that they are co-owners of Lot No.
5667 in Tamag, Vigan City, supposedly with an area of around 5,913 square
meters. They likewise alleged that their title originated from their
predecessors-in-interest, Gregorio and Concepcion Syquia, through a
partition in 1950, and that they have been in open, peaceful, and
 uninterrupted possession of said parcel of land in the concept of an owner
for more than thirty (30) years.
3. However, sometime in 1992, Villanueva caused the survey and subdivision
of the property into Lot Nos. 5667-A and 5667-B. Then in 1994, Villanueva
obtained a Free Patent over Lot No. 5667-B and later, was issued Original
Certificate of Title (OCT) No. P- 38444.
4. The heirs of Syquia asserted that Villanueva had no registrable right over
Lot No. 5667-B and that she obtained the free patent through fraud and
misrepresentation.
5. On December 14, 2006, the (RTC) of Vigan City, Ilocos Sur in Civil Case No. 5649-V
dismissed the abovementioned complaint, the decretal portion of which states:
a. WHEREFORE, for failure of the plaintiffs to prove their cause of action by
preponderant evidence and/or, for being barred by !aches, judgment is hereby
rendered DISMISSING the Complaint in favor of substituted defendant heirs of
Teresita C. Villanueva, namely: Elsa Ana Villanueva, Leonila Villanueva, Teresita
Villanueva-Sipin, Ferdinand Villanueva and Marissa Villanueva-Madriaga.
b. The Complaint against defendants Provincial Environment and Natural Resources
Officer (PENRO) and the Register of Deeds of Ilocos Sur is also DISMISSED.
c. The Register of Deeds of !locos Sur is ordered to cancel the Notice of Lis
Pendens  dated September 7, 2001 annotated on Transfer Certificate of Title Nos. T-
37973, T-37974, T-38278, T-38279, T-38280, T-38281, T- 38282 and T-38283, all
in the name of Teresita C. Villanueva.
6. Undeterred, the heirs of Syquia elevated the case to the CA. On November 29, 2011, the
appellate court denied the appeal and affirmed the" December 14, 2006 RTC Decision.
7. Consequently, the heirs of Syquia filed a Motion for Reconsideration. And, on August 29,
2013, they finally obtained a favorable decision when the CA reversed itself and ruled against
the heirs of Villanueva, to wit:
a. WHEREFORE, premises considered, the Decision promulgated on November 29,
2011 is RECONSIDERED and SET ASIDE, and another
one PROMULGATED as follows:
b. 1. Declaring the Free Patent, OCT No. 38444, issued in the name of defendant-
appellee Teresita C. Villanueva, and all other derivative titles issued therefrom, null
and void ab initio;
c. 2. Ordering the Register of Deeds of Ilocos Sur, Vigan City Station to cancel
Transfer Certificates of Title No. T-37973, T-37974, T-37976, T-37977, T-38277,
T- 38278, T-38279, T-38280, T-38281, T-38282 and T- 38283, issued in the name
of defendant-appellee Teresita C. Villanueva, and all other derivative titles issued
therefrom; and
d. 3. Ordering defendants-appellees to pay the costs of suit.
8. Hence, the present petition.
ISSUES:
1. The sole issue in this case is whether or not the heirs of Syquia are entitled
to validly recover the subject property from the heirs of Villanueva.
RATIO:
1. The Court rules in the negative.
2. Here, the CA's amended judgment after granting the Syquias' motion for
reconsideration is clearly based on a misapprehension of facts. Upon an
exhaustive review, the Court is compelled to yield to the findings of fact by
the trial court, as affirmed by the CA in its original decision.
3. Here, the heirs of Syquia filed a complaint against the Villanuevas for the
reconveyance of the subject property. From the allegations of the
complaint itself, there is already serious doubt as to the identity of the
land sought to be recovered, both in area as well as in its boundaries.
4. Under Article 43410 of the Civil Code, to successfully maintain an action to
recover the ownership of a real property, the person who claims of having a
better right to it must prove two (2) things: first, the identity of the land
claimed and second, his title to the same. 11
5. While the complaint identified the land as Lot No. 5667, Cad 313-D, Vigan
Cadastre located in Tamag, Vigan, Ilocos Sur, it cited Tax Declaration No.
39-013194-A as part of the supporting evidence. Based on the records,
however, Lot No. 5667 has an area of 9,483 square meters, while the
riceland mentioned in the tax declaration has an area of only 5,931 square
meters.
6. As to why the area in the tax declaration had suddenly increased to almost
twice its original size, the heirs of Syquia failed to sufficiently justify during
the trial. In fact, the trial court wondered why the Syquias never tried to
offer an explanation for said substantial discrepancy.
7. But what is more perplexing is the fact that Lot No. 5667-B, the actual
property covered by Villanueva's free patent which the heirs of Syquia
have been trying to recover, is only 4,497 square meters in area.
8. Thus, the Court is placed in a serious quandary as to what the Syquias are
really seeking to recover, the 9,483-square-meter lot in their complaint (the
whole of Lot No. 5667), the 5,931-square-meter riceland in their supporting
document (tax declaration), or the 4,497-square-meter property covered by
the free patent which they are attacking as null and void (Lot No. 5667-B)?
9. They likewise failed to prove with sufficient definiteness that the
boundaries of the property covered by Tax Declaration No. 39-013194-A
are the exact same boundaries surrounding Lot No. 5667-B or even those
around Lot No. 5667. Lot No. 5667 has the following boundaries:
a. Lot No. 5663, North
b. Lot No. 5666, South
c. Quirino Boulevard, East
d. Lot No. 6167, West
10. Lot No. 5667-B has the same aforementioned boundaries, except for the
 South, which shows Lot No. 5667-A.
11. On the other hand, the tax declaration states the following:
a. Maria Angco, North
b. Heirs of Esperanza Florentino, South
c. Provincial Road, East
d. Colun Americano, West
12. The heirs of Syquia never adduced evidence tending to prove that Lot No.
5663 refers to Maria Angco, that Lot No. 5666 or that Lot No. 5667-A
pertains to the heirs of Esperanza Florentino, that Quirino Boulevard is
Provincial Road, and that Lot No. 6167 is Colun Americano.
13. The CA, in its Amended Decision, tried to justify its new ruling by
explaining that since Lot No. 5667 had already been subdivided into two (2)
lots, the boundaries and size of the property, as reflected in the tax
declaration, would no longer match the boundaries and size of the lot
covered by the free patent, which is Lot No. 5667-B, to wit:
a. x x x Resultantly, with the subdivision of plaintiffs-appellants' Lot No. 5667 into
two (2) lots, the boundaries and area as stated in plaintiffs-appellants' Tax
Declaration would no longer match with the boundaries and area as stated in the
Free Patent No. 38444 subsequently issued in favor of defendant-appellee
Villanueva. 12
14. What the CA failed to mention, however, was if said boundaries and area in
the tax declaration had actually matched those of either Lot No. 5667-B or
Lot No. 5667 prior to its subdivision.
15. The appellate court heavily relied on the following documents which the
heirs of Syquia submitted: (a) B.L. Form No. V-37 of Lot No. 5667; (b) the
Sketch Plan of Lot No. 5667, Cad 313-D; and (c) the Relocation Plan of Lot
No. 5667, all of which the CA found to have adequately established Lot No.
5667's metes and bounds. The Syquias also presented the Final Project of
Partition dated June 13, 1950 in the settlement of the estate of Concepcion
J. Vda. de Syquia, which mentioned the exact same boundaries of the
property in the tax declaration.
16. Based on the same, the CA concluded that "the above-described property in
the said Final Project of Partition pertains to plaintiffs-appellants' Lot No.
5667, which is the subject property in this case." 13 But as to how it arrived
at said conclusion, despite the blatantly differing boundaries and lot areas,
the appellate court was deafeningly silent.
17. The CA went further and stated that while the tax declaration was issued in
1949, it was only in 1981 when the Cadastral Survey of Tamag, Vigan,
Ilocos Sur was approved. In those thirty-two (32) years of interregnum, "it
is possible that the names of the boundary owners and metes, pertaining not
only to plaintiffs-appellants' Lot No. 5667 but also to other unregistered lots
in Tamag, Vigan, Ilocos Sur which were also covered by early tax
declarations, would have already changed." 14 While such pronouncement
seems logical and reasonable, it remains hypothetical since the same is
merely based on mere surmises or conjectures. The harsh truth still stands
that the heirs of Syquia failed to justify the substantial disparities in the
boundaries and sizes with sufficient evidence. No actual proof was ever
offered to show that said possibility had actually turned out to become a
reality.
18. The CA itself stated that" the tax declaration could not be expected to be as
accurate, in terms of boundaries and actual area, as compared to those found
in the Vigan Cadastral Survey, since the latter was the result of an actual
and methodological survey and plotting of all unregistered lands situated in
Tamag, Vigan, Ilocos Sur." 15 
19. However, as aptly observed by the RTC, even after the survey, there
was no indication that the heirs of Syquia ever tried to have the data in
the tax declaration corrected so as to conform with the supposedly
more accurate information in the cadastral survey. Neither was there
any explanation to warrant the lack of attempt to make said necessary
corrections.
20. To recapitulate, the heirs of Syquia failed to adequately prove that the area
of their property in the tax declaration coincides with the area of either Lot
5667-B which is 4,497 square meters or Lot 5667 which is 9,483 square
meters.
21. They likewise failed to show, based on the boundaries, that the lot they
claim to have inherited is actually either Lot 5667-B, the property in
dispute, or Lot 5667, the cadastral survey of which lists the Syquias as
claimants. Certainly, the Syquias were not able to identify their land with
that degree of certainty required to support their affirmative allegation of
ownership.
22. Simply put, the party who alleges a fact has the burden of proving it.
Section 1, Rule 131 of the Rules of Court provides that the burden of proof
is the duty of a party to prove the truth of his claim or defense, or any fact in
issue by the amount of evidence required by law. 16 In civil cases, the
burden of proof rests upon the plaintiff, who is required to establish his case
by a preponderance of evidence.  Section 1, Rule 133 of the Rules of Court
provides for the quantum of evidence for civil actions, and delineates how
preponderance of evidence is determined. As the rule indicates,
preponderant evidence refers to evidence that is of greater weight, or more
convincing, than the evidence offered in opposition to it.
23. In the instant case, aside from the tax declarations covering an
unirrigated riceland in Tamag, Vigan, the Syquia heirs failed to present
any other proof of either ownership or actual possession of the lot in
question, or even a mere indication that they exercised any act of
dominion over the property. In fact, they were not able to show that they
 have been in actual possession of the property since they allegedly inherited
the same in 1992. The Syquias' own evidence would reveal that several
houses have been constructed on the lot and third persons have actually
been occupying the subject property, despite the presence of their supposed
caretaker.
24. Well settled is the rule that tax declarations and receipts are not conclusive
evidence of ownership or of the right to possess a land when not supported
by any other evidence. The fact that the disputed property may have been
declared for taxation purposes in the names of the applicants for registration
or of their predecessors-in-interest does not necessarily amount to
ownership. These are merely indicia of a claim of ownership. 19
25. Findings of fact made by a trial court are accorded the highest degree of
respect by an appellate tribunal and, absent a clear disregard of the evidence
before it that can otherwise affect the results of the case, those findings
should not simply be ignored. Here, based on the evidence presented during
the trial, the RTC found nothing that would bare any grave abuse of
discretion on the part of the Department of Environment and Natural
Resources (DENR) when it issued the free patent in Villanueva's favor. The
records show that Villanueva submitted, in compliance with the
requirements of the DENR, a Waiver of Right by the former owner of the
property.
26. Likewise, the Syquias' own evidence, through Imelda Tabil, Land
Management Officer of the DENR, established that at the time Villanueva
filed her application, the land was investigated upon and there was no other
claimant over the lot.
27. As regards the Syquias' apprehension that Villanueva's free patent title was
based on a verification survey of another lot rather than of the lot applied
for, Engineer Raymundo Gayo, then Officer-in-Charge at the Laoag
Community Environment and Natural Resources Office, testified that an
applicant may also present a verification survey of the adjacent lot which is
already titled as long as an approved technical description would likewise
be submitted. Also, the erasures in the technical description would not
affect the subject lot since it is the approved survey plan which must prevail
in case of erasures.
28. Even assuming, without admitting, that Villanueva's evidence to support her
title is weak, the heirs of Syquia could not successfully capitalize on the
same. The Court reiterates for emphasis that in an action to recover, the
plaintiff must rely on the strength of his title and not harp on the weakness
of the defendant's claim.23 Again, in civil cases, the burden of proof rests
upon the plaintiff, who is required to establish his case by a preponderance
of evidence.24Here, unfortunately for the heirs of Syquia, they miserably
failed in discharging the heavy burden required of them.
29. After a review of the records of the case, the Court finds the totality of
evidence submitted by the heirs of Syquia insufficient to establish the
crucial facts that would justify a judgment in their favor. 25 Thus, the Court
finds no justifiable reason to deviate from the findings and ruling of the trial
court.
30. WHEREFORE, IN VIEW OF THE FOREGOING, the
Court GRANTS the petition, and REVERSES and SETS ASIDE the
Amended Decision of the Court of Appeals dated August 29, 2013 in CA-
G.R. CV No. 88873 and REINSTATES its original Decision dated
November 29, 2011, which affirmed the December 14, 2006 Decision 26 of
Regional Trial Comi, Branch 21, of Vigan City, Ilocos Sur.
12.) Southern Luzon Drug Corp. v. DSWD,
G.R. No. 199669, 25 April 2017
FACTS:
1. Before the Court is a Petition for Review on Certiorari1under Rule 45 of the Rules of Court,
assailing the Decision2dated June 17, 2011, and Resolution3 dated November 25, 2011 of the
Court of Appeals (CA) in CA-G.R. SP No. 102486, which dismissed the petition for
prohibition filed by Southern Luzon Drug Corporation (petitioner) against the Department of1
Social Welfare and Development (DSWD), the National Council for the Welfare of Disabled
Persons (NCWDP) (now National Council on Disability Affairs or NCDA), the Department of
Finance (DOF) and the Bureau of Internal Revenue (collectively, the respondents), which
sought to prohibit the implementation of Section 4(a) of Republic Act (R.A.) No. 9257,
otherwise known as the "Expanded Senior Citizens Act of 2003" and Section 32 of R.A. No.
9442, which amends the "Magna Carta for Disabled Persons," particularly the granting of
20% discount on the purchase of medicines by senior citizens and persons with disability
(PWD),: respectively, and treating them as tax deduction.
2. The petitioner is a domestic corporation engaged in the business of
drugstore operation in the Philippines while the respondents are
government' agencies, office and bureau tasked to monitor compliance with
R.A. Nos. 9257 and 9442, promulgate implementing rules and regulations
for their effective implementation, as well as prosecute and revoke licenses
of erring1 establishments.
3. On April 23, 1992, R.A. No. 7432, entitled "An Act to Maximize the
Contribution of Senior Citizens to Nation-Building, Grant Benefits and
Special Privileges and For Other Purposes," was enacted. Under the said
law, a senior citizen, who must be at least 60 years old and has an annual
income of not more than P60,000.00, 4 may avail of the privileges provided
in Section 4 thereof, one of which is 20% discount on the purchase of
medicines. The said provision states:
a. Sec. 4. Privileges for the Senior Citizen. - x x x:
b. a) the grant of twenty percent (20%) discount from all establishments relative to
utilization of transportation services, hotels and similar lodging establishment,
restaurants and recreation centers and purchase of medicine anywhere in the
country: Provided, That private establishments may claim the cost as tax
credit[.]
4. To recoup the amount given as discount to qualified senior citizens, covered
establishments can claim an equal amount as tax credit which can be
applied against the income tax due from them.
5. On February 26, 2004, then President Gloria Macapagal-Arroyo signed
R.A. No. 9257, amending some provisions of R.A. No. 7432. The new law
retained the 20% discount on the purchase of medicines but removed the
annual income ceiling thereby qualifying all senior citizens to the privileges
under the law. Further, R.A. No. 9257 modified the tax treatment of the
discount granted to senior citizens, from tax credit to tax deduction from
gross income, computed based on the net cost of goods sold or services
rendered. The pertinent provision, as amended by R.A. No. 9257, reads as
follows:
a. SEC. 4. Privileges for the Senior Citizens. - The senior citizens shall be entitled to
the following:
b. (a) the grant of twenty percent (20%) discount from all establishments relative to
the utilization of services in hotels and similar lodging establishments, restaurants
and recreation centers, and purchase of medicines in all establishments for the
exclusive use or enjoyment of senior citizens, including funeral and burial services
for the death of senior citizens;
c. xxxx
d. The establishment may claim the discounts granted under (a), (f), (g) and (h) as
tax deduction based on the net cost of the goods sold or services
rendered: Provided,  That the cost of the discount shall be allowed as deduction
from gross income for the same taxable year that the discount is granted. Provided,
further, That the total amount of the claimed tax deduction net of value-added tax if
applicable, shall be included in their gross sales receipts for tax purposes and shall
be subject to proper documentation and to the provisions of the National Internal
Revenue Code, as amended. (Emphasis ours)
6. On May 28, 2004, the DSWD issued the Implementing Rules and
Regulations (IRR) of R.A. No. 9257. Article 8 of Rule VI of the said IRR
provides:
a. Article 8. Tax Deduction of Establishments. - The establishment may claim the
discounts granted under Rule V, Section 4 - Discounts for Establishments; Section
9, Medical and Dental Services in Private Facilities and Sections 10 and 11 -Air,
Sea and Land Transportation as tax deduction based on the net cost of the goods
sold or services rendered. Provided, That the cost of the discount shall be
allowed as deduction from gross income for the same taxable year that the
discount is granted; Provided, further, That the total amount of the claimed tax
deduction net of value-added tax if applicable, shall be included in their gross sales
receipts for tax purposes and shall be subject to proper documentation and to the
provisions of the National Internal Revenue Code, as amended; Provided, finally,
that the implementation of the tax deduction shall be subject to the Revenue
Regulations to be issued by the Bureau of Internal Revenue (BIR) and approved by
the Department of Finance (DOF). (Emphasis ours)
7. The change in the tax treatment of the discount given to senior citizens did
not sit well with some drug store owners and corporations, claiming it
affected the profitability of their business.
8. Thus, on January 13, 2005, I Carlos Superdrug Corporation (Carlos
Superdrug), together with other. corporation and proprietors operating
drugstores in the Philippines, filed a Petition for Prohibition with Prayer for
Temporary Restraining Order (TRO) I and/or Preliminary Injunction before
this Court, entitled Carlos Superdrug I Corporation v. DSWD,5docketed as
G.R. No. 166494, assailing the constitutionality of Section 4(a) of R.A. No.
9257 primarily on the ground that it amounts to taking of private property
without payment of just compensation. In a Decision dated June 29, 2007,
the Court upheld the constitutionality of the assailed provision, holding that
the same is a legitimate exercise of police power. The relevant portions of
the decision read, thus:
a. The law is a legitimate exercise of police power which, similar to the power of
eminent domain, has general welfare for its object. It is "[t]he power vested in the
legislature by the constitution to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes, and ordinances, either with penalties or
without, not repugnant to the constitution, as they shall judge to be for the good and
welfare of the commonwealth, and of the subjects of the same."
b. For this reason, when the conditions so demand as determined by the legislature,
property rights must bow to the primacy of police power because property rights,
though sheltered by due process, must yield to general welfare.
c. xxxx
d. Moreover, the right to property has a social dimension. While Article XIII of the
Constitution provides the precept for the protection of property, various laws
and jurisprudence, particularly on agrarian reform and the regulation of
contracts and public utilities, continuously serve as a reminder that the right to
property can be relinquished upon the command of the State for the promotion
of public good. Undeniably, the success of the senior citizens program rests largely
on the support imparted by petitioners and the other private establishments
concerned. This being the case, the means employed in invoking the active
participation of the private sector, in order to achieve the purpose or objective of the
law, is reasonably and directly related. Without sufficient proof that Section 4(a) of
RA. No. 9257 is arbitrary, and that the continued implementation of the same would
be unconscionably detrimental to petitioners, the Court will refrain from quashing a
legislative act.
e. WHEREFORE, the petition is DISMISSED for lack of merit.6 (Citations omitted)
9. On August 1, 2007, Carlos Superdrug filed a motion for reconsideration of the foregoing decision.
Subsequently, the Court issued Resolution dated August 21, 2007, denying the said motion with finality. 7
10. Meanwhile, on March 24, 1992, R.A. No. 7277 pertaining to the "Magna
Carta for Disabled Persons" was enacted, codifying the rights and
privileges of PWDs. Thereafter, on April 30, 2007, R.A. No. 9442 was
enacted, amending R.A. No. 7277. One of the salient amendments in the
law is the insertion of Chapter 8 in Title 2 thereof, which enumerates the
other privileges and incentives of PWDs, including the grant of 20%
discount on the purchase of medicines. Similar to R.A. No. 9257, covered
establishments shall claim the discounts given to PWDs as tax deductions
from the gross income, based on the net cost of goods sold or services
rendered. Section 32 of R.A. No. 9442 reads:
a. CHAPTER 8. Other Privileges and Incentives
 b. SEC. 32. Persons with disability shall be entitled to the following:
c. xxxx
d. (c) At least twenty percent (20%) discount for the purchase of medicines in all
drugstores for the exclusive use or enjoyment of persons with disability;
e. xxxx
f. The establishments may claim the discounts granted in subsections (a), (b), (c),
(e), (t) and (g) as tax deductions based on the net cost of the goods sold or
services rendered: Provided, however, That the cost of the discount shall be
allowed as deduction from gross income for the same taxable year that the discount
is granted: Provided, further, That the total amount of the claimed tax deduction net
of value-added tax if applicable, shall be included in their gross sales receipts for
tax purposes and shall be subject to proper documentation and to the provisions of
the National Internal Revenue Code (NIRC), as amended. (Emphasis ours)
11. Pursuant to the foregoing, the IRR of R.A. No. 9442 was promulgated by
the DSWD, Department of Education, DOF, Department of Tourism and
the Department of Transportation and Communications. 8Sections 5 .1 and
6.1.d thereof provide:
a. Sec. 5. Definition of Terms.  For purposes of these Rules and Regulations, these
terms are defined as follows:
b. 5.1. Persons with Disability are those individuals defined under Section 4 of RA
7277, "An Act Providing for the Rehabilitation, Self-Development and Self-
Reliance of Persons with Disability as amended and their integration into the
Mainstream of Society and for Other Purposes." This is defined as a person
suffering from restriction or different abilities, as a result of a mental, physical or
sensory impairment, to perform an activity in a manner or within the range
considered normal for human being. Disability shall mean: (1) a physical or mental
impairment that substantially limits one or more psychological, physiological or
anatomical function of an individual or activities of such individual; (2) a record of
such an impairment; or (3) being regarded as having such an impairment.
c. xxxx
d. 6.1.d Purchase of Medicine - At least twenty percent (20%) discount on the
purchase of medicine for the exclusive use and enjoyment of persons with
disability. All drug stores, hospital, pharmacies, clinics and other similar
establishments selling medicines are required to provide at least twenty percent
(20%) discount subject to the guidelines issued by DOH and PHILHEALTH.
12. On February 26, 2008, the petitioner filed a Petition for Prohibition with
Application for TRO and/or Writ of Preliminary Injunction9 with the CA,
seeking to declare as unconstitutional (a) Section 4(a) of R.A. No.
9257, and (b) Section 32 of R.A. No. 9442 and Section 5.1 of its IRR,
insofar as these provisions only allow tax deduction on the gross income
based on the net cost of goods sold or services rendered as compensation to
private establishments for the 20% discount that they are required to grant
to senior citizens and PWDs. Further, the petitioner prayed that the
respondents be permanently enjoined from implementing the assailed
provisions.
13. Ruling of the CA
14. On June 17, 2011, the CA dismissed the petition, reiterating the ruling of the Court in Carlos
Superdrug10particularly that Section 4(a) of R.A. No. 9257 was a valid exercise of police
power. Moreover, the CA held that considering that the same question had been raised by
parties similarly situated and was resolved in Carlos Superdrug, the rule of stare decisis stood
as a hindrance to any further attempt to relitigate the same issue. It further noted that
jurisdictional considerations also compel the dismissal of the action. It particularly emphasized
that it has no original or appellate jurisdiction to pass upon the constitutionality of the assailed
laws, 11 the same pertaining to the Regional Trial Court (RTC). Even assuming that it had
concurrent jurisdiction with the RTC, the principle of hierarchy of courts mandates that the
case be commenced and heard by the lower court. 12 The CA further ruled that the petitioner
resorted to the wrong remedy as a petition for prohibition will not lie to restrain the actions of
the respondents for the simple reason that they do not exercise judicial, quasi-judicial or
ministerial duties relative to the issuance or implementation of the questioned provisions. Also,
the petition was wanting of the allegations of the specific acts committed by the respondents
that demonstrate the exercise of these powers which may be properly challenged in a petition
for prohibition.13
15. The petitioner filed its Motion for Reconsideration 14 of the Decision dated June 17, 2011 of the
CA, but the same was denied in a Resolution 15 dated November 25, 2011.
16. Unyielding, the petitioner filed the instant petition, raising the following
assignment of errors, to wit:
ISSUES:
2. W/N
RATIO:
1. The instant case is not barred by stare decisis
2. The petitioner contends that the CA erred in holding that the ruling in Carlos
Superdrug constitutes as stare decisis or law of the case which bars the relitigation of the
issues that had been resolved therein and had been raised anew in the instant petition. It argues
that there are substantial differences between Carlos Superdrug and the circumstances in the
instant case which take it out from the operation of the doctrine of  stare decisis. It cites that
in Carlos Superdrug, the Court denied the petition because the petitioner therein failed to
prove the confiscatory effect of the tax deduction scheme as no proof of actual loss was
submitted. It believes that its submission of financial statements for the years 2006 and 2007 to
prove the confiscatory effect of the law is a material fact that distinguishes the instant case
from that of Carlos Superdrug.  30
3. The Court agrees that the ruling in Carlos Superdrug does not constitute stare decisis to the
instant case, not because of the petitioner's submission of financial statements which were
wanting in the first case, but because it had the good sense of including questions that had not
been raised or deliberated in the former case of Carlos Superdrug, i.e., validity of the 20%
discount granted to PWDs, the supposed vagueness of the provisions of R.A. No. 9442 and
violation of the equal protection clause.
4. Nonetheless, the Court finds nothing in the instant case that merits a
reversal of the earlier ruling of the Court in Carlos Superdrug. Contrary to
the petitioner's claim, there is a very slim difference between the issues
in Carlos Superdrug and the instant case with respect to the nature of the
senior citizen discount. A perfunctory reading of the circumstances of the
two cases easily discloses marked similarities in the issues and the
arguments raised by the petitioners in both cases that semantics nor careful
play of words can hardly obscure.
5. In both cases, it is apparent that what the petitioners are ultimately
questioning is not the grant of the senior citizen discount per se, but the
manner by which they were allowed to recoup the said discount. In
particular, they are protesting the change in the tax treatment of the senior
i.
citizen discount from tax credit to being merely a deduction from gross
income which they claimed to have significantly reduced their profits.
similar places of culture, leisure and amusement; fares for domestic land, air and
sea travel; utilization of services in hotels and similar lodging establishments,
restaurants and recreation centers; and purchases of medicines for the exclusive use
or enjoyment of senior citizens.
As a form of reimbursement, the law provides that business establishments
extending the twenty percent discount to senior citizens may claim the discount as a
tax deduction.

6. This question had been settled in Carlos Superdrug, where the Court ruled
that the change in the tax treatment of the discount was a valid exercise of
police power, thus:
a. Theoretically, the treatment of the discount as a deduction reduces the net income of
the private establishments concerned. The discounts given would have entered the
coffers and formed part of the gross sales of the private establishments, were it not
for R.A. No. 9257.
j. The law is a legitimate exercise of police power which, similar to the power of
eminent domain, has general welfare for its object. Police power is not capable of
an exact definition, ….
k. For this reason, when the conditions so demand as determined by the
legislature, property rights must bow to the primacy of police power because
proper rights, though sheltered by due process, must yield to general
welfare. 31 

b. xxxx
c. A tax deduction does not offer full reimbursement of the senior citizen discount. As
such, it would not meet the definition of just compensation.
d. Having said that, this raises the question of whether the State, in promoting the
health and welfare of a special group of citizens, can impose upon private
establishments the burden of partly subsidizing a government program.
e. The Court believes so.
f. The Senior Citizens Act was enacted primarily to maximize the contribution of
senior citizens to nation-building, and to grant benefits and privileges to them for
their improvement and well-being as the State considers them an integral part of our
society.
g. The priority given to senior citizens finds its basis in the Constitution as set forth in
the law itself. Thus, the Act provides:
i. SEC. 2. [R.A.] No. 7432 is hereby amended to read as follows:
ii. SEC. 1. Declaration of Policies and Objectives.- Pursuant to Article
XV, Section 4 of the Constitution, it is the duty of the family to take care
of its elderly members while the State may design programs of social
security for them. In addition to this, Section 10 in the Declaration of
Principles and State Policies provides: "The State shall provide social
justice in all phases of national development." Further, Article XIII,
Section 11, provides: "The State shall adopt an integrated and
comprehensive approach to health development which shall endeavor to
make essential goods, health and other social services available to all the
people at affordable cost. There shall be priority for the needs of the
underprivileged sick, elderly, disabled, women and children." Consonant
with these constitutional principles the following are the declared
policies of this Act:
1. xxxx
2. (f) To recognize the important role of the private sector in
the improvement of the welfare of senior citizens and to
actively seek their partnership. 
h. To implement the above policy, the law grants a twenty percent discount to senior
citizens for medical and dental services, and diagnostic and laboratory fees;
admission fees charged by theaters, concert halls, circuses, carnivals, and other
7. Verily, it is the bounden duty of the State to care for the elderly as they
reach the point in their lives when the vigor of their youth has diminished
and resources have become scarce. Not much because of choice, they
become needing of support from the society for whom they presumably
spent their productive days and for whose betterment they' exhausted their
energy, know-how and experience to make our days better to live.
8. In the same way, providing aid for the disabled persons is an equally
important State responsibility. Thus, the State is obliged to give full support
to the improvement of the total well-being of disabled persons and their
integration into the mainstream of society. 32This entails the creation of
opportunities for them and according them privileges if only to balance the
playing field which had been unduly tilted against them because of their
limitations.
9. The duty to care for the elderly and the disabled lies not only upon the State,
but also on the community and even private entities. As to the State, the
duty emanates from its role as parens patriae which holds it under
obligation to provide protection and look after the welfare of its people
especially those who cannot tend to themselves. Parens patriae means
parent of his or her country, and refers to the State in its role as "sovereign",
or the State in its capacity as a provider of protection to those unable to care
for themselves. 33 In fulfilling this duty, the State may resort to the exercise
of its inherent powers: police power, eminent domain and power of
taxation.
10. In Gerochi v. Department of Energy, 34the Court passed upon one of the
inherent powers of the state, the police power, where it emphasized, thus:
a. [P]olice power is the power of the state to promote public welfare by restraining and
regulating the use of liberty and property. The justification is found in the Latin
maxim salus populi est suprema lex (the welfare of the people is the supreme law)
and sic utere tuo ut alienum non laedas (so use your property as not to injure the
property of others).
11. It is in the exercise of its police power that the Congress enacted R.A. Nos.
 9257 and 9442, the laws mandating a 20% discount on purchases of
medicines made by senior citizens and PWDs. It is also in further exercise
of this power that the legislature opted that the said discount be claimed as
tax deduction, rather than tax credit, by covered establishments.
12. The petitioner, however, claims that the change in the tax treatment of the
discount is illegal as it constitutes taking without just compensation. It even
submitted financial statements for the years 2006 and 2007 to support its
claim of declining profits when the change in the policy was implemented.
13. The Court is not swayed.
14. To begin with, the issue of just compensation finds no relevance in the
instant case as it had already been made clear in Carlos Superdrug that the
power being exercised by the State in the imposition of senior citizen
discount was its police power. Unlike in the exercise of the power of
eminent domain, just compensation is not required in wielding police
power. This is precisely because there is no taking involved, but only an
imposition of burden.
15. In Manila Memorial Park, Inc., et al. v. Secretary of the DSWD, et al.,  36 the
Court ruled that by examining the nature and the effects of R.A. No. 9257, it
becomes apparent that the challenged governmental act was an exercise of
police power. It was held, thus:
a. [W]e now look at the nature and effects of the 20% discount to determine if it
constitutes an exercise of police power or eminent domain.
b. The 20% discount is intended to improve the welfare of senior citizens who, at
their age, are less likely to be gainfully employed, more prone to illnesses and
other disabilities, and, thus, in need of subsidy in purchasing basic
commodities. It may not be amiss to mention also that the discount serves to honor
senior citizens who presumably spent the productive years of their lives on
contributing to the development and progress of the nation. This distinct cultural
Filipino practice of honoring the elderly is an integral part of this law.
c. As to its nature and effects, the 20% discount is a regulation affecting the ability of
private establishments to price their products and services relative to a special class
of individuals, senior citizens, for which the Constitution affords preferential
concern. In turn, this affects the amount of profits or income/gross sales that a
private establishment can derive from senior citizens. In other words, the subject
regulation affects the pricing, and, hence, the profitability of a private
establishment. However, it does not purport to appropriate or burden specific
properties, used in the operation or conduct of the business of private
establishments, for the use or benefit of the public, or senior citizens for that matter,
but merely regulates the pricing of goods and services relative to, and the amount of
profits or income/gross sales that such private establishments may derive from,
senior citizens.
d. The subject regulation may be said to be similar to, but with substantial distinctions
from, price control or rate of 'return on investment control laws which are
traditionally regarded as police power measures. x x x.37 (Citations omitted)
16. In the exercise of police power, "property rights of private individuals
are subjected to restraints and burdens in order to secure the general
comfort, health, and prosperity of the State." 38 Even then, the State's
claim of police power cannot be arbitrary or unreasonable. After all, the
overriding purpose of the exercise of the power is to promote general
welfare, public health and safety, among others. It is a measure, which by
sheer necessity, the State exercises, even to the point of interfering with
personal liberties or property rights in order to advance common good.
17. To warrant such interference, two requisites must concur: (a) the
interests of the public generally, as distinguished from those of a
particular class, require the interference of the State; and (b) the means
employed are reasonably necessary to the attainment of the object
sought to be accomplished and not unduly oppressive upon individuals.
In other words, the proper exercise of the police power requires the
concurrence of a lawful subject and a lawful method.39
18. The subjects of R.A. Nos. 9257 and 9442, i.e., senior citizens and PWDs,
are individuals whose well-being is a recognized public duty. As a public
duty, the responsibility for their care devolves upon the concerted efforts of
the State, the family and the community.
19. In Article XIII, Section 1 of the Constitution, the State is mandated to give
highest priority to the enactment of measures that protect and enhance the
right of all the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by equitably diffusing
wealth and political power1 for the common good. The more apparent
manifestation of these social inequities is the unequal distribution or access
to healthcare services. To abet in alleviating this concern, the State is
committed to adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and
other social services available to all the people at affordable cost, with
priority for the needs of the underprivileged sick, elderly, disabled, women,
and children.40
20. In the same manner, the family and the community have equally significant
duties to perform in reducing social inequality. The family as the basic
social institution has the foremost duty to care for its elderly members.41 
21. On the other hand, the community, which include the private sector, is
recognized as an active partner of the State in pursuing greater causes.
The private sector, being recipients of the privilege to engage business
in our land, utilize our goods as well as the services of our people for
proprietary purposes, it is only fitting to expect their support in
measures that contribute to common good. Moreover, their right to
own, establish and operate economic enterprises is always subject to the
duty of the State to promote distributive justice and to intervene when
the common good so demands.42
22. The Court also entertains no doubt on the legality of the method taken by
the legislature to implement the declared policies of the subject laws, that is,
 to impose discounts on the medical services and purchases of senior citizens
and PWDs and to treat the said discounts as tax deduction rather than tax
credit. The measure is fair and reasonable and no credible proof was
presented to prove the claim that it was confiscatory. To be considered
confiscatory, there must be taking of property without just compensation.
23. Illuminating on this point is the discussion of the Court on the concept
of taking in City of Manila v. Hon. Laguio, Jr.,43viz.:
a. There are two different types of taking that can be identified. A "possessory" taking
occurs when the government confiscates or physically occupies property.
b. A "regulatory" taking occurs when the government's regulation leaves no
reasonable economically viable use of the property.
c. xxxx
d. No formula or rule can be devised to answer the questions of what is too far and
when regulation becomes a taking. In Mahon,  Justice Holmes recognized that it was
"a question of degree and therefore cannot be disposed of by general propositions."
On many other occasions as well, the U.S. Supreme Court has said that the issue of
when regulation constitutes a taking is a matter of considering the facts in each
case. x x x.
e. What is crucial in judicial consideration of regulatory takings is that government
regulation is a taking if it leaves no reasonable economically viable use of property
in a manner that interferes with reasonable expectations for use. A regulation that
permanently denies all economically beneficial or productive use of land is, from
the owner's point of view, equivalent to a "taking" unless principles of nuisance or
property law that existed when the owner acquired the land make the use
prohibitable. When the owner of real property has been called upon to sacrifice all
economically beneficial uses in the name of the common good, that is, to leave his
property economically idle, he has suffered a taking.
f. xxxx
g. A restriction on use of property may also constitute a "taking" if not reasonably
necessary to the effectuation of a substantial public purpose or if it has an unduly
harsh impact on the distinct investment-backed expectations of the owner.44 
24. The petitioner herein attempts to prove its claim that the pertinent
provisions of R.A. Nos. 9257 and 9442 amount to taking by presenting
financial statements purportedly showing financial losses incurred by them
due to the adoption of the tax deduction scheme.
25. For the petitioner's clarification, the presentation of the financial statement
is not of compelling significance in justifying its claim for just
compensation. What is imperative is for it to establish that there was taking
in the constitutional sense or that, in the imposition of the mandatory
discount, the power exercised by the state was eminent domain.
26. According to Republic of the Philippines v. Vda. de Castellvi,45five
circumstances must be present in order to qualify "taking" as an exercise of
eminent domain. First, the expropriator must enter a private
property. Second, the entrance into private property must be for more than
a momentary period. Third, the entry into the property should be under
warrant or color of legal authority. Fourth, the property must be devoted to
a public use or otherwise informally appropriated or injuriously
affected. Fifth, the utilization of the property for public use must be in such
a way as to oust the owner and deprive him of all beneficial enjoyment of
the property. 46
27. The first requirement speaks of entry into a private property which clearly
does not obtain in this case. There is no private property that is; invaded or
appropriated by the State. As it is, the petitioner precipitately deemed future
profits as private property and then proceeded to argue that the State took it
away without full compensation. This seemed preposterous considering that
the subject of what the petitioner supposed as taking was not even earned
profits but merely an expectation of profits, which may not even occur. For
obvious reasons, there cannot be taking of a contingency or of a mere
possibility because it lacks physical existence that is necessary before there
could be any taking. Further, it is impossible to quantify the compensation
for the loss of supposed profits before it is earned.
28. The supposed taking also lacked the characteristics of permanence 47 and
consistency.  The presence of these characteristics is significant because
they can establish that the effect of the questioned provisions is the same on
all establishments and those losses are indeed its unavoidable consequence.
29. But apparently these indications are wanting in this case. The reason is that
the impact on the establishments varies depending on their response to the
changes brought about by the subject provisions. To be clear,
establishments, are not prevented from adjusting their prices to
accommodate the effects of the granting of the discount and retain their
profitability while being fully compliant to the laws. It follows that losses
are not inevitable because establishments are free to take business measures
to accommodate the contingency.
30. Lacking in permanence and consistency, there can be no taking in the
constitutional sense. There cannot be taking in one establishment and none
in another, such that the former can claim compensation but the other may
not. Simply told, there is no taking to justify compensation; there is only
poor business decision to blame.
31. There is also no ousting of the owner or deprivation of ownership.
Establishments are neither divested of ownership of any of their properties
nor is anything forcibly taken from them. They remain the owner of their
goods and their profit or loss still depends on the performance of their sales.
32. Apart from the foregoing, covered establishments are also provided with a
mechanism to recoup the amount of discounts they grant the senior citizens
and PWDs. It is provided in Section 4(a) of R.A. No. 9257 and Section 32
of R.A. No. 9442 that establishments may claim the discounts as "tax
deduction based on the net cost of the goods sold or services rendered."
Basically, whatever amount was given as discount, covered establishments
 may claim an equal amount as an expense or tax deduction. The trouble is d. Sales
that the petitioner, in protesting the change in the tax treatment of the e. 100 x ₱10.00 = ₱1,000.00
discounts, apparently seeks tax incentive and not merely a return of the
f. Deduction: ₱100.00
amount given as discounts.
g. Profit: ₱100.00
33. It premised its interpretation of financial losses in terms of the effect of the
change in the tax treatment of the discount on its tax liability; hence, the 38. On the other hand, Establishment 2, mindful that the new law will affect the
claim that the measure was confiscatory. However, as mentioned earlier in profitability of the business, made a calculated decision by increasing the
the discussion, loss of profits is not the inevitable result of the change in tax mark up of Drug A to ₱3.20, instead of only ₱2.00. This brought a positive
treatment of the discounts; it is more appropriately a consequence of poor result to the earnings of the company.
business decision.
39. Establishment 2
34. It bears emphasizing that the law does not place a cap on the amount of a. Drug A
mark up that covered establishments may impose on their items. This
b. Acquisition cost
rests on the discretion of the establishment which, of course, is expected Selling price ;₱8.00
to put in the price of the overhead costs, expectation of profits and ₱11.20
other considerations into the selling price of an item. In a simple
c. Number of patron
illustration, here is Drug A, with acquisition cost of ₱8.00, and selling price Senior Citizens/PWDs 100
of ₱10.00. Then comes a law that imposes 20% on senior citizens and 50
PWDs, which affected Establishments 1, 2 and 3. Let us suppose that the
d. Sales
approximate number of patrons who purchases Drug A is 100, half of which
are senior citizens and PWDs. Before the passage of the law, all of the e. 100 x ₱10.00 = ₱1,000.00
establishments are earning the same amount from profit from the sale f. Deduction: ₱112.00
of Drug A, viz.:
g. Profit: ₱208.00
35. Before the passage of the law:
40. For its part, Establishment 3 raised the mark up on Drug A to only ₱3.00
a. Drug A just to even out the effect of the law. This measure left a negligible effect on
b. Acquisition cost its profit, but Establishment 3 took it as a social duty: to share in the cause
Selling price ₱8.00 being promoted by the government while still maintaining profitability.
₱10.00
41. Establishment 3
c. Number of patrons 100
a. Drug A
d. Sales:
b. Acquisition cost
e. 100 x ₱10.00 = ₱1,000.00 Selling price ₱8.00
₱11.20
f. Profit: ₱200
c. Number of patrons
36. After the passage of the law, the three establishments reacted differently. Senior Citizens/PWD 100
Establishment 1 was passive and maintained the price of Drug A at ₱8.00 50
which understandably resulted in diminution of profits. d. Sales
37. Establishment 1 e. 100 x ₱10.00 = ₱1,000.00
a. Drug A f. Deduction: ₱110.00
b. Acquisition cost g. Profit: ₱190.00
Selling price ₱8.00
;₱10.00 42. The foregoing demonstrates that it is not the law per se which occasioned
c. Number of patrons the losses in the covered establishments but bad business judgment. One of
Senior Citizens/PWD 100 the main considerations in making business decisions is the law because its
50 effect is widespread and inevitable. Literally, anything can be a subject of
 legislation. It is therefore incumbent upon business managers to cover this 'vested' unless it is more than a mere expectation based on the anticipated
continuance of present laws; it must be an established interest in property, not open
contingency and consider it in making business strategies. As shown in the to doubt. x x x To be vested in its accurate legal sense, a right must be complete
illustration, the better responses were exemplified by Establishments 2 and and consummated, and one of which the person to whom it belongs cannot be
3 which promptly put in the additional costs brought about by the law into divested without his consent.x x x.49 
the price of Drug A. In doing so, they were able to maintain the profitability
47. Right to profits does not give the petitioner the cause of action to ask for
of the business, even earning some more, while at the same time being fully
just compensation, it being only an inchoate right or one that has not fully
compliant with the law. This is not to mention that the illustration is even
developed50 and therefore cannot be claimed as one's own. An inchoate right
too simplistic and not' the most ideal since it dealt only with a single drug
is a mere expectation, which may or may not come into existence. It is
being purchased by both regular patrons and senior citizens and PWDs. It
contingent as it only comes "into existence on an event or condition which
did not consider the accumulated profits from the other medical and non-
may not happen or be performed until some other event may prevent their
medical products being sold by the establishments which are expected to
vesting."51Certainly, the petitioner cannot claim confiscation or taking of
further curb the effect of the granting of the discounts in the business.
something that has yet to exist. It cannot claim deprivation of profit before
43. It is therefore unthinkable how the petitioner could have suffered losses due the consummation of a sale and the purchase by a senior citizen or PWD.
to the mandated discounts in R.A. Nos. 9257 and 9442, when a fractional
48. Right to profit is not an accrued right; it is not fixed, absolute nor
increase in the prices of items could bring the business standing at a
indefeasible. It does not come into being until the occurrence or realization
balance even with the introduction of the subject laws.
of a condition precedent. It is a mere "contingency that might never
44. A level adjustment in the pricing of items is a reasonable business measure eventuate into a right. It stands for a mere possibility of profit but nothing
to take in order to adapt to the contingency. This could even make might ever be payable under it."52
establishments earn more, as shown in the illustration, since every fractional
49. The inchoate nature of the right to profit precludes the possibility of
increase in the price of covered items translates to a wider cushion to taper
compensation because it lacks the quality or characteristic which is
off the effect of the granting of discounts and ultimately results to additional
necessary before any act of taking or expropriation can be effected.
profits gained from the purchases of the same items by regular patrons who
Moreover, there is no yardstick fitting to quantify a contingency or to
are not entitled to the discount. Clearly, the effect of the subject laws in the
determine compensation for a mere possibility. Certainly, "taking"
financial standing of covered companies depends largely on how they
presupposes the existence of a subject that has a quantifiable or
respond and forge a balance between profitability and their sense of social
determinable value, characteristics which a mere contingency does not
responsibility. The adaptation is entirely up to them and they are not
possess.
powerless to make adjustments to accommodate the subject legislations.
50. Anent the question regarding the shift from tax credit to tax deduction,
45. Still, the petitioner argues that the law is confiscatory in the sense that the
suffice it is to say that it is within the province of Congress to do so in the
State takes away a portion of its supposed profits which could have gone
exercise of its legislative power. It has the authority to choose the subject of
into its coffers and utilizes it for public purpose. The petitioner claims that
legislation, outline the effective measures to achieve its declared policies
the action of the State amounts to taking for which it should be
and even impose penalties in case of non-compliance. It has the sole
compensated.
discretion to decide which policies to pursue and devise means to achieve
46. To reiterate, the subject provisions only affect the petitioner's right to profit, them, and courts often do not interfere in this exercise for as long as it does
and not earned profits. Unfortunately for the petitioner, the right to profit is not transcend constitutional limitations. "In performing this duty, the
not a vested right or an entitlement that has accrued on the person or entity legislature has no guide but its judgment and discretion and the wisdom of
such that its invasion or deprivation warrants compensation. Vested rights experience."53 In Carter v. Carter Coal Co.,54legislative discretion has been
are "fixed, unalterable, or irrevocable."48 More extensively, they are described as follows:
depicted as follows: a. Legislative congressional discretion begins with the choice of means, and ends
a. Rights which have so completely and definitely accrued to or settled in a person with the adoption of methods and details to carry the delegated powers into effect. x
that they are not subject to be defeated or cancelled by the act of any other private x x [W]hile the powers are rigidly limited to the enumerations of the Constitution,
person, and which it is right and equitable that the government should recognize and the means which may be employed to carry the powers into effect are not restricted,
protect, as being lawful in themselves, and settled according to the then current save that they must be appropriate, plainly adapted to the end, and not prohibited
rules of law, and of which the individual could not be deprived arbitrarily without by, but consistent with, the letter and spirit of the Constitution. x x x. 55 (Emphasis
injustice, or of which he could not justly be deprived otherwise than by the ours)
established methods of procedure and for the public welfare. x x x A right is not
51. Corollary, whether to treat the discount as a tax deduction or tax credit is a
 matter addressed to the wisdom of the legislature. After all, it is within its
prerogative to enact laws which it deems sufficient to address a specific
public concern. And, in the process of legislation, a bill goes through
rigorous tests of validity, necessity and sufficiency in both houses of
Congress before enrolment. It undergoes close scrutiny of the members of
Congress and necessarily had to surpass the arguments hurled against its
passage. Thus, the presumption of validity that goes with every law as a
form of deference to the process it had gone through and also to the
legislature's exercise of discretion. Thus, in lchong, etc., et
al. v. Hernandez) etc., and Sarmiento,56the Court emphasized, thus:
a. It must not be overlooked, in the first place, that the legislature, which is the
constitutional repository of police power and exercises the prerogative of
determining the policy of the State, is by force of circumstances primarily the judge
of necessity, adequacy or reasonableness and wisdom, of any law promulgated
in the exercise of the police power, or of the measures adopted to implement
the public policy or to achieve public interest.x x x.57 (Emphasis ours)
52. The legislature may also grant rights and impose additional burdens: It may
also regulate industries, in the exercise of police power, for the protection of
the public. R.A. Nos. 9257 and 9442 are akin to regulatory laws, the
issuance of which is within the ambit of police power. The minimum wage
law, zoning ordinances, price control laws, laws regulating the operation of
motels and hotels, laws limiting the working hours to eight, and the like fall
under this category. 58
53. Indeed, regulatory laws are within the category of police power measures
from which affected persons or entities cannot claim exclusion or
compensation. For instance, private establishments cannot protest that the
imposition of the minimum wage is confiscatory since it eats up a
considerable chunk of its profits or that the mandated remuneration is not
commensurate for the work done.
54. The compulsory nature of the provision for minimum wages underlies the
effort of the State; as R.A. No. 672759 expresses it, to promote productivity-
improvement and gain-sharing measures to ensure a decent standard of
living for the workers and their families; to guarantee the rights of labor to
its just share in the fruits of production; to enhance employment generation
in the countryside through industry dispersal; and to allow business and
industry reasonable returns on investment, expansion and growth, and as the
Constitution expresses it, to affirm labor as a primary social economic
force. 60
55. Similarly, the imposition of price control on staple goods in R.A. No.
758161 is likewise a valid exercise of police power and affected
establishments cannot argue that the law was depriving them of supposed
gains. The law seeks to ensure the availability of basic necessities and prime
commodities at reasonable prices at all times without denying legitimate
business a fair return on investment. It likewise aims to provide effective
and sufficient protection to consumers against hoarding, profiteering and
cartels with respect to the supply, distribution, marketing and pricing of said
goods, especially during periods of calamity, emergency, widespread illegal
price manipulation and other similar situations.62
56. More relevantly, in Manila Memorial Park, Inc., 63it was ruled that it is
within the bounds of the police power of the state to impose burden on
private entities, even if it may affect their profits, such as in the imposition
of price control measures. There is no compensable taking but only a
recognition of the fact that they are subject to the regulation of the State and
that all personal or private interests must bow down to the more paramount
interest of the State.
57. This notwithstanding, the regulatory power of the State does not authorize
the destruction of the business. While a business may be regulated, such
regulation must be within the bounds of reason, i.e., the regulatory
ordinance must be reasonable, and its provision cannot be oppressive
amounting to an arbitrary interference with the business or calling subject of
regulation. A lawful business or calling may not, under the guise of
regulation, be unreasonably interfered with even by the exercise of police
power. 64 After all, regulation only signifies control or restraint, it does not
mean suppression or absolute prohibition. Thus, in Philippine
Communications Satellite Corporation v. Alcuaz,  65the Court emphasized:
a. The power to regulate is not the power to destroy useful and harmless enterprises,
but is the power to protect, foster, promote, preserve, and control with due regard
for the interest, first and foremost, of the public, then of the utility and of its
patrons. Any regulation, therefore, which operates as an effective confiscation of
private property or constitutes an arbitrary or unreasonable infringement of property
rights is void, because it is repugnant to the constitutional guaranties of due process
and equal protection of the laws. 66 (Citation omitted)
58. Here, the petitioner failed to show that R.A. Nos. 9257 and 9442, under the
guise of regulation, allow undue interference in an otherwise legitimate
business.  On the contrary, it was shown that the questioned laws do not
meddle in the business or take anything from it but only regulate its
realization of profits.
59. The subject laws do not violate the
equal protection clause
60. The petitioner argues that R.A. Nos. 9257 and 9442 are violative of the equal protection clause in that it
failed to distinguish between those who have the capacity to pay and those who do not, in granting the 20%
discount. R.A. No. 9257, in particular, removed the income qualification in R.A. No. 7432 of'₱60,000.00 per
annum before a senior citizen may be entitled to the 20o/o discount.
61. The contention lacks merit.
62. The petitioner's argument is dismissive of the reasonable qualification on which the subject laws were based.
In City of Manila v. Hon. Laguio, Jr.,  67 the Court emphasized:
a. Equal protection requires that all persons or things similarly situated should be treated alike,
both as to rights conferred and responsibilities imposed. Similar subjects, in other words, should
not be treated differently, so as to give undue favor to some and unjustly discriminate against
others. The guarantee means that no person or class of persons shall be denied the same
protection of laws which is enjoyed by other persons or other classes in like
circumstances.68 (Citations omitted)
63. "The equal protection clause is not infringed by legislation which applies only to those persons falling within
a specified class. If the groupings are characterized by substantial distinctions that make real differences, one
class may be treated and regulated differently from another." 69 For a classification to be valid, (1) it must be
based upon substantial distinctions, (2) it must be germane to the purposes of the law, (3) it must not be
limited to existing conditions only, and (4) it must apply equally to all members of the same class. 70

64. To recognize all senior citizens as a group, without distinction as to income, is a valid classification. The
Constitution itself considered the elderly as a class of their own and deemed it a priority to address their
needs. When the Constitution declared its intention to prioritize the predicament of the underprivileged sick,
elderly, disabled, women, and children, 71 it did not make any reservation as to income, race, religion or any
other personal circumstances. It was a blanket privilege afforded the group of citizens in the enumeration in
view of the vulnerability of their class.

65. R.A. No. 9257 is an implementation of the avowed policy of the Constitution to enact measures that protect
and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities.
72 Specifically, it caters to the welfare of all senior citizens. The classification is based on age and therefore
qualifies all who have attained the age of 60. Senior citizens are a class of their own, who are in need and
should be entitled to government support, and the fact that they may still be earning for their own sustenance
should not disqualify them from the privilege.

66. It is well to consider that our senior citizens have already reached the age when work opportunities have
dwindled concurrently as their physical health.1âwphi1 They are no longer expected to work, but there are
still those who continue to work and contribute what they can to the country. Thus, to single them out and
take them out of the privileges of the law for continuing to strive and earn income to fend for themselves is
inimical to a welfare state that the Constitution envisions. It is tantamount to penalizing them for their
persistence. It is commending indolence rather than rewarding diligence. It encourages them to become
wards of the State rather than productive partners.

67. Our senior citizens were the laborers, professionals and overseas contract workers of the past. While some
may be well to do or may have the capacity to support their sustenance, the discretion to avail of the
privileges of the law is up to them. But to instantly tag them. as undeserving of the privilege would be the
height of ingratitude; it is an outright discrimination.

68. The same ratiocination may be said of the recognition of PWDs as a class in R.A. No. 9442 and in granting
them discounts.1âwphi1 It needs no further explanation that PWDs have special needs which, for most,' last
their entire lifetime. They constitute a class of their own, equally deserving of government support as our
elderlies. While some of them maybe willing to work and earn income for themselves, their disability deters
them from living their full potential. Thus, the need for assistance from the government to augment the
reduced income or productivity brought about by their physical or intellectual limitations.

69. There is also no question that the grant of mandatory discount is germane to the purpose of R.A. Nos. 9257
and 9442, that is, to adopt an integrated and comprehensive approach to health development and make
essential goods and other social services available to all the people at affordable cost, with special priority
given to the elderlies and the disabled, among others. The privileges granted by the laws ease their concerns
and allow them to live more comfortably.

70. The subject laws also address a continuing concern of the government for the welfare of the senior citizens
and PWDs. It is not some random predicament but an actual, continuing and pressing concern that requires
preferential attention. Also, the laws apply to all senior citizens and PWDs, respectively, without further
distinction or reservation. Without a doubt, all the elements for a valid classification were met.

71. WHEREFORE, in view of the foregoing disquisition, Section 4(a) of

Republic Act No. 9257 and Section 32 of Republic Act No. 9442 are hereby
declared CONSTITUTIONAL.