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G.R. No. L-40411 August 7, 1935
DAVAO SAW MILL CO., INC.,plaintiff-appellant,
vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC.,defendants-appellees.
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees.
MALCOLM,J.:
The issue in this case, as announced in the opening sentence of the decision in the trial court and as set forth by
counsel for the parties on appeal, involves the determination of the nature of the properties described in the
complaint. The trial judge found that those properties were personal in nature, and as a consequence absolved
the defendants from the complaint, with costs against the plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine
Islands. It has operated a sawmill in the sitioof Maa, barrio of Tigatu, municipality of Davao, Province of Davao.
However, the land upon which the business was conducted belonged to another person. On the land the
sawmill company erected a building which housed the machinery used by it. Some of the implements thus used
were clearly personal property, the conflict concerning machines which were placed and mounted on
foundations of cement. In the contract of lease between the sawmill company and the owner of the land there
appeared the following provision:
That on the expiration of the period agreed upon, all the improvements and buildings introduced and erected
by the party of the second part shall pass to the exclusive ownership of the party of the first part without any
obligation on its part to pay any amount for said improvements and buildings; also, in the event the party of the
second part should leave or abandon the land leased before the time herein stipulated, the improvements and
buildings shall likewise pass to the ownership of the party of the first part as though the time agreed upon had
expired: Provided, however, That the machineries and accessories are not included in the improvements which
will pass to the party of the first part on the expiration or abandonment of the land leased.
In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc.,
was the defendant, a judgment was rendered in favor of the plaintiff in that action against the defendant in that
action; a writ of execution issued thereon, and the properties now in question were levied upon as personalty
by the sheriff. No third party claim was filed for such properties at the time of the sales thereof as is borne out
by the record made by the plaintiff herein. Indeed the bidder, which was the plaintiff in that action, and the
defendant herein having consummated the sale, proceeded to take possession of the machinery and other
properties described in the corresponding certificates of sale executed in its favor by the sheriff of Davao.
As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a
number of occasions treated the machinery as personal property by executing chattel mortgages in favor of
third persons. One of such persons is the appellee by assignment from the original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of
1. Land, buildings, roads and constructions of all kinds adhering to the soil;
x x x x x x x x x
5. Machinery, liquid containers, instruments or implements intended by the owner of any building or land for
use in connection with any industry or trade being carried on therein and which are expressly adapted to meet
the requirements of such trade of industry.
Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no doubt
that the trial judge and appellees are right in their appreciation of the legal doctrines flowing from the facts.
In the first place, it must again be pointed out that the appellant should have registered its protest before or at
the time of the sale of this property. It must further be pointed out that while not conclusive, the
characterization of the property as chattels by the appellant is indicative of intention and impresses upon the
property the character determined by the parties. In this connection the decision of this court in the case ofStandard Oil Co. of New Yorkvs. Jaramillo ( [1923], 44 Phil., 630), whether obiter dictaor not, furnishes the key
to such a situation.
It is, however not necessary to spend overly must time in the resolution of this appeal on side issues. It is
machinery which is involved; moreover, machinery not intended by the owner of any building or land for use in
connection therewith, but intended by a lessee for use in a building erected on the land by the latter to be
returned to the lessee on the expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme Court, it was
held that machinery which is movable in its nature only becomes immobilized when placed in a plant by the
owner of the property or plant, but not when so placed by a tenant, a usufructuary, or any person having only a
temporary right, unless such person acted as the agent of the owner. In the opinion written by Chief Justice
White, whose knowledge of the Civil Law is well known, it was in part said:
To determine this question involves fixing the nature and character of the property from the point of view of
the rights of Valdes and its nature and character from the point of view of Nevers & Callaghan as a judgment
creditor of the Altagracia Company and the rights derived by them from the execution levied on the machinery
placed by the corporation in the plant. Following the Code Napoleon, the Porto Rican Code treats as immovable
(real) property, not only land and buildings, but also attributes immovability in some cases to property of a
movable nature, that is, personal property, because of the destination to which it is applied. "Things," says
section 334 of the Porto Rican Code, "may be immovable either by their own nature or by their destination or
the object to which they are applicable." Numerous illustrations are given in the fifth subdivision of section 335,
which is as follows: "Machinery, vessels, instruments or implements intended by the owner of the tenements
for the industrial or works that they may carry on in any building or upon any land and which tend directly to
meet the needs of the said industry or works." (See also Code Nap., articles 516, 518 et seq. to and inclusive ofarticle 534, recapitulating the things which, though in themselves movable, may be immobilized.) So far as the
subject-matter with which we are dealing machinery placed in the plant it is plain, both under the
provisions of the Porto Rican Law and of the Code Napoleon, that machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner of the property or plant. Such result would not be
accomplished, therefore, by the placing of machinery in a plant by a tenant or a usufructuary or any person
having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit.
5, No. 447; and decisions quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et seq.) The distinction
rests, as pointed out by Demolombe, upon the fact that one only having a temporary right to the possession or
enjoyment of property is not presumed by the law to have applied movable property belonging to him so as to
deprive him of it by causing it by an act of immobilization to become the property of another. It follows that
abstractly speaking the machinery put by the Altagracia Company in the plant belonging to Sanchez did not lose
its character of movable property and become immovable by destination. But in the concrete immobilization
took place because of the express provisions of the lease under which the Altagracia held, since the lease in
substance required the putting in of improved machinery, deprived the tenant of any right to charge against the
lessor the cost such machinery, and it was expressly stipulated that the machinery so put in should become a
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part of the plant belonging to the owner without compensation to the lessee. Under such conditions the tenant
in putting in the machinery was acting but as the agent of the owner in compliance with the obligations resting
upon him, and the immobilization of the machinery which resulted arose in legal effect from the act of the
owner in giving by contract a permanent destination to the machinery.
x x x x x x x x x
The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the Altagracia
Company, being, as regards Nevers & Callaghan, movable property, it follows that they had the r ight to levy on
it under the execution upon the judgment in their favor, and the exercise of that right did not in a legal sense
conflict with the claim of Valdes, since as to him the property was a part of the realty which, as the result of hisobligations under the lease, he could not, for the purpose of collecting his debt, proceed separately against.
(Valdes vs. Central Altagracia [192], 225 U.S., 58.)
Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this instance
to be paid by the appellant.
G.R. No. L-17870 September 29, 1962
MINDANAO BUS COMPANY,petitioner,
vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City,respondents.
Binamira, Barria and Irabagon for petitioner.
Vicente E. Sabellina for respondents.
LABRADOR,J.:
This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A. Case No. 710 holding
that the petitioner Mindanao Bus Company is liable to the payment of the realty tax on its maintenance and
repair equipment hereunder referred to.
Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-mentioned
equipment. Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground that the
same are not realty. The Board of Tax Appeals of the City sustained the city assessor, so petitioner herein filed
with the Court of Tax Appeals a p etition for the review of the assessment.
In the Court of Tax Appeals the parties submitted the following stipulation of facts:
Petitioner and respondents, thru their respective counsels agreed to the following stipulation of facts:
1. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor trucks, over
its authorized lines in the Island of Mindanao, collecting rates approved by the Public Service Commission;
2. That petitioner has its main office and shop at Cagayan de Oro City. It maintains Branch Offices and/or
stations at Iligan City, Lanao; Pagadian, Zamboanga del Sur; Davao City and Kibawe, Bukidnon Province;
3. That the machineries sought to be assessed by the respondent as real properties are the following:
(a) Hobart Electric Welder Machine, appearing in the attached photograph, marked Annex "A";
(b) Storm Boring Machine, appearing in the attached photograph, marked Annex "B";
(c) Lathe machine with motor, appearing in the attached photograph, marked Annex "C";
(d) Black and Decker Grinder, appearing in the attached photograph, marked Annex "D";
(e) PEMCO Hydraulic Press, appearing in the attached photograph, marked Annex "E";
(f) Battery charger (Tungar charge machine) appearing in the attached photograph, marked Annex "F"; and
(g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked Annex "G".
4. That these machineries are sitting on cement or wooden platforms as may be seen in the attachedphotographs which form part of this agreed stipulation of facts;
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5. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor trucks; a
repair shop; blacksmith and carpentry shops, and with these machineries which are placed therein, its TPU
trucks are made; body constructed; and same are repaired in a condition to be serviceable in the TPU land
transportation business it operates;
6. That these machineries have never been or were never used as industrial equipments to produce finished
products for sale, nor to repair machineries, parts and the like offered to the general public indiscriminately for
business or commercial purposes for which petitioner has never engaged in, to date.1awphl.nt
The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied a
motion for reconsideration, petitioner brought the case to this Court assigning the following errors:
1. The Honorable Court of Tax Appeals erred in upholding respondents' contention that the questioned
assessments are valid; and that said tools, equipments or machineries are immovable taxable real properties.
2. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil Code, and holding that
pursuant thereto the movable equipments are taxable realties, by reason of their being intended or destined for
use in an industry.
3. The Court of Tax Appeals erred in denying petitioner's contention that the respondent City Assessor's power
to assess and levy real estate taxes on machineries is further restricted by section 31, paragraph (c) of Republic
Act No. 521; and
4. The Tax Court erred in denying petitioner's motion for reconsideration.
Respondents contend that said equipments, tho movable, are immobilized by destination, in accordance
with paragraph 5 of Article 415 of the New Civil Code which provides:
Art. 415. The following are immovable properties:
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. (Emphasis ours.)
Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms.They can be moved around and about in petitioner's repair shop. In the case of B. H. Berkenkotter vs. Cu
Unjieng, 61 Phil. 663, the Supreme Court said:
Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the character of real property to
"machinery, liquid containers, instruments or implements intended by the owner of any building or land for use
in connection with any industry or trade being carried on therein and which are expressly adapted to meet the
requirements of such trade or industry."
If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co.,
Inc., in lieu of the other of less capacity existing therein, for its sugar and industry, converted them into real
property by reason of their purpose, it cannot be said that their incorporation therewith was not permanent in
character because, as essential and principle elements of a sugar central, without them the sugar central would
be unable to function or carry on the industrial purpose for which it was established. Inasmuch as the central is
permanent in character, the necessary machinery and equipment installed for carrying on the sugar industry for
which it has been established must necessarily be permanent. (Emphasis ours.)
So that movable equipments to be immobilized in contemplation of the law must first be "essential and
principal elements" of an industry or works without which such industry or works would be "unable to function
or carry on the industrial purpose for which it was established." We may here distinguish, therefore, those
movable which become immobilized by destination because they are essential and principal elementsin the
industry for those which may not be so considered immobilized because they are merely incidental, not
essential and principal. Thus, cash registers, typewriters, etc., usually found and used in hotels, restaurants,
theaters, etc. are merely incidentals and are not and should not b e considered immobilized by destination, for
these businesses can continue or carry on their functions without these equity comments. Airline companies
use forklifts, jeep-wagons, pressure pumps, IBM machines, etc. which are incidentals, not essentials, and thus
retain their movable nature. On the other hand, machineries of breweries used in the manufacture of liquor and
soft drinks, though movable in nature, are immobilized because they are essential to said industries; but thedelivery trucks and adding machines which they usually own and use and are found within their industrial
compounds are merely incidental and retain their movable nature.
Similarly, the tools and equipments in question in this instant case are, by their nature, not essential and
principle municipal elements of petitioner's business of transporting passengers and cargoes by motor trucks.
They are merely incidentals acquired as movables and used only for expediency to facilitate and/or improve
its service. Even without such tools and equipments, its business may be carried on, as petitioner has carried on,
without such equipments, before the war. The transportation business could be carried on without the repair or
service shop if its rolling equipment is repaired or serviced in another shop belonging to another.
The law that governs the determination of the question at issue is as follows:
Art. 415. The following are immovable property:
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; (Civil Code of the Phil.)
Aside from the element of essentiality the above-quoted provision also requires that the industry or works
be carried on in a building or on a piece of land. Thus in the case of Berkenkotter vs. Cu Unjieng, supra, the
"machinery, liquid containers, and instruments or implements" are found in a building constructed on the land.
A sawmill would also be installed in a building on land more or less permanently, and the sawing is conducted in
the land or building.
But in the case at bar the equipments in question are destined only to repair or service the transportation
business, which is not carried on in a building or permanently on a piece of land, as demanded by the law. Said
equipments may not, therefore, be deemed real property.
Resuming what we have set forth above, we hold that the equipments in question are not absolutely
essential to the petitioner's transportation business, and petitioner's business is not carried on in a building,
tenement or on a specified land, so said equipment may not be considered real estate within the meaning of
Article 415 (c) of the Civil Code.
WHEREFORE, the decision subject of the petition for review is hereby set aside and the equipment in
question declared not subject to assessment as real estate for the purposes of the real estate tax. Without
costs.
So ordered.
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G.R. No. L40474 August 29, 1975
CEBU OXYGEN & ACETYLENE CO., INC., petitioner,
vs.
HON. PASCUAL A. BERCILLES Presiding Judge, Branch XV, 14th Judicial District, and JOSE L. ESPELETA,
Assistant Provincial Fiscal, Province of Cebu, representing the Solicitor General's Office and the Bureau of
Lands, respondents.
Jose Antonio R Conde for petitioner.
Office of the Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General Octavio R. Ramirez and
Trial Attorney David R. Hilario for respondents. .
CONCEPCION, Jr.,J.:
This is a petition for the review of the order of the Court of First Instance of Cebu dismissing petitioner's
application for registration of title over a parcel of land situated in the City of Cebu.
The parcel of land sought to be registered was only a portion of M. Borces Street, Mabolo, Cebu City. On
September 23, 1968, the City Council of Cebu, through Resolution No. 2193, approved on October 3, 1968,
declared the terminal portion of M. Borces Street, Mabolo, Cebu City, as an abandoned road, the same not
being included in the City Development Plan.
1
Subsequently, on December 19, 1968, the City Council of Cebupassed Resolution No. 2755, authorizing the Acting City Mayor to sell the land through a public
bidding.2
Pursuant thereto, the lot was awarded to the herein petitioner being the highest bidder and on March
3, 1969, the City of Cebu, through the Acting City Mayor, executed a deed of absolute sale to the herein
petitioner for a total consideration of P10,800.00.3
By virtue of the aforesaid deed of absolute sale, the
petitioner filed an application with the Court of First instance of Cebu to have its title to the land registered.4
On June 26, 1974, the Assistant Provincial Fiscal of Cebu filed a motion to dismiss the application on the ground
that the property sought to be registered being a public road intended for public use is considered part of the
public domain and therefore outside the commerce of man. Consequently, it cannot be subject to registration
by any private individual.5
After hearing the parties, on October 11, 1974 the trial court issued an order dismissing the petitioner's
application for registration of title. 6Hence, the instant petition for review.
For the resolution of this case, the petitioner poses the f ollowing questions:
(1) Does the City Charter of Cebu City (Republic Act No. 3857) under Section 31, paragraph 34, give the City of
Cebu the valid right to declare a road as abandoned? and
(2) Does the declaration of the road, as abandoned, make it the patrimonial property of the City of Cebu which
may be the object of a common contract?
(1) The pertinent portions of the Revised Charter of Cebu City provides:
Section 31. Legislative Powers. Any provision of law and executive order to the contrary notwithstanding, the
City Council shall have the following legislative powers:
xxx xxx xxx
(34) ...; to close any city road, street or alley, boulevard, avenue, park or s quare. Property thus withdrawn from
public servitude may be used or conveyed for any purpose for which other real property belonging to the City
may be lawfully used or conveyed.
From the foregoing, it is undoubtedly clear that the City of Cebu is empowered to close a city road or street. In
the case of Favis vs. City of Baguio,7
where the power of the city Council of Baguio City to close city streets and
to vacate or withdraw the same from public use was similarly assailed, this court said:
5. So it is, that appellant may not challenge the city council's act of withdrawing a strip of Lapu-Lapu Street at its
dead end from public use and converting the remainder thereof into an alley. These are acts well within the
ambit of the power to close a city street. The city council, it would seem to us, is the authority competent todetermine whether or not a certain property is still necessary for public use.
Such power to vacate a street or alley is discretionary. And the discretion will not ordinarily be controlled or
interfered with by the courts, absent a plain case of abuse or fraud or collusion. Faithfulness to the public trust
will be presumed. So the fact that some private interests may be served incidentally will not invalidate the
vacation ordinance.
(2) Since that portion of the city street subject of petitioner's application for registration of title was withdrawn
from public use, it follows that such withdrawn portion becomes patrimonial property which can be the object
of an ordinary contract.
Article 422 of the Civil Code expressly p rovides that "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."
Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and unequivocal terms, states
that: "Property thus withdrawn from public servitude may be used or conveyed for any purpose for which other
real property belonging to the City may be lawfully used or conveyed."
Accordingly, the withdrawal of the property in question from public use and its subsequent sale to the
petitioner is valid. Hence, the petitioner has a registerable title over the lot in question.
WHEREFORE, the order dated October 11, 1974, rendered by the respondent court in Land Reg. Case No. N-948,
LRC Rec. No. N-44531 is hereby set aside, and the respondent court is hereby ordered to proceed with the
hearing of the petitioner's application for registration of title.
SO ORDERED.
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G.R. No. 133250 July 9, 2002
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary
restraining order. The petition seeks to compel the Public Estates Authority ("PEA" for brevity) to disclose all
facts on PEA's then on-going renegotiations with Amari Coastal Bay and Development Corporation ("AMARI" forbrevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from signing a new
agreement with AMARI involving such reclamation.
Facts:
On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract with
the Construction and Development Corporation of the Philippines ("CDCP" for brevity) to reclaim certain
foreshore and offshore areas of Manila Bay. The contract also included the construction of Phases I and II of the
Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in consideration of fifty percent of
the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA. PD
No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas," and "to develop, improve,acquire, lease and sell any and all kinds of lands."1 On the same date, then President Marcos issued Presidential
Decree No. 1085 transferring to PEA the "lands reclaimed in the foreshore and offshore of the Manila Bay"
under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract with
CDCP, so that "*A+ll future works in MCCRRP shall be funded and owned by PEA. Accordingly, PEA and CDCP
executed a Memorandum of Agreement dated December 29, 1981.
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 351, granting and transferring
to PEA "the parcels of land so reclaimed under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP) containing a total area of one million nine hundred fifteen thousand eight hundred ninety four
(1,915,894) square meters." Subsequently, on April 9, 1988, the Register of Deeds of the Municipality of
Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the
three reclaimed islands known as the "Freedom Islands" located at the southern portion of the Manila-Cavite
Coastal Road, Paraaque City. The Freedom Islands have a total land area of One Million Five Hundred Seventy
Eight Thousand Four Hundred and Forty One (1,578,441) square meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a private
corporation, to develop the Freedom Islands. The JVA also required the reclamation of an additional 250
hectares of submerged areas surrounding these islands to complete the configuration in the Master
Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA through
negotiation without public bidding. On April 28, 1995, the Board of Directors of PEA, in its Resolution No. 1245,
confirmed the JVA. On June 8, 1995, then President Fidel V. Ramos, through then Executive Secretary Ruben
Torres, approved the JVA.
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and
denounced the JVA as the "grandmother of all scams." As a result, the Senate Committee on Government
Corporations and Public Enterprises, and the Committee on Accountability of Public Officers and Investigations,
conducted a joint investigation. The Senate Committees reported the results of their investigation in Senate
Committee Report No. 560 dated September 16, 1997. Among the conclusions of their report are: (1) the
reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the
government has not classified as alienable lands and therefore PEA cannot alienate these lands; (2) the
certificates of title covering the Freedom Islands are thus void, and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating
a Legal Task Force to conduct a study on the legality of the JVA in view of Senate Committee Report No. 560.
The members of the Legal Task Force were the Secretary of Justice, the Chief Presidential Legal Counsel, and the
Government Corporate Counsel. The Legal Task Force upheld the legality of the JVA, contrary to the conclusionsreached by the Senate Committees.
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going
renegotiations between PEA and AMARI under an order issued by then President Fidel V. Ramos. According to
these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz
composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the
Issuance of a Temporary Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to
nullify the JVA. The Court dismissed the petition "for unwarranted disregard of judicial hierarchy, without
prejudice to the refiling of the case before the proper court."
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition forMandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order.
Petitioner contends the government stands to lose billions of p esos in the sale by PEA of the reclaimed lands to
AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of the JVA, invoking Section
28, Article II, and Section 7, Article III, of the 1987 Constitution on the right of the people to information on
matters of public concern. Petitioner assails the sale to AMARI of lands of the public domain as a blatant
violation of Section 3, Article XII of the 1987 Constitution prohibiting the sale of alienable lands of the public
domain to private corporations. Finally, petitioner asserts that he seeks to enjoin the loss of billions of pesos in
properties of the State that are of public dominion.
On December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to submit the terms of the
renegotiated PEA-AMARI contract; (b) for issuance of a temporary restraining order; and (c) to set the case for
hearing on oral argument. Petitioner filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999, which
the Court denied in a Resolution dated June 22, 1999.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement ("Amended JVA," for
brevity). On May 28, 1999, the Office of the President under the administration of then President Joseph E.
Estrada approved the Amended JVA.
Issues:
The issues raised by petitioner, PEA and AMARI are as follows:
(a) Whether principal relief prayed for in the petition are moot and academic because of subsequent events;
(b) Whether the petition merits dismissal for failing to observe the principle governing the hierarchy of court;
(c) Whether the petition merits dismissal for non-exhaustion of administrative remedies;
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(d) Whether petitioner has locus standi to bring this suit;
(e) Whether the constitutional right to information includes official information on on-going negotiations before
a final agreement;
(f) Whether the stipulations in the amended joint venture agreement for the transfer to Amari of certain lands,
reclaimed and still to be reclaimed, violate the 1987 Constitution; and
(g) Whether the court is the proper forum for raising the issue of whether the amended joint venture
agreement is grossly disadvantageous to the government.
Held:
On the first issue, the Court has ruled that the signing of the Amended JVA by PEA and AMARI and its approval
by the President cannot operate to moot the petition and divest the Court of its jurisdiction. PEA and AMARI
have still to implement the Amended JVA. The prayer to enjoin the signing of the Amended JVA on
constitutional grounds necessarily includes preventing its implementation if in the meantime PEA and AMARI
have signed one in violation of the Constitution. Petitioner's principal basis in assailing the renegotiation of the
JVA is its violation of Section 3, Article XII of the Constitution, which prohibits the government from alienating
lands of the public domain to private corporations. If the Amended JVA indeed violates the Constitution, it is the
duty of the Court to enjoin its implementation, and if already implemented, to annul the effects of such
unconstitutional contract.
On the second issue, the Court cannot entertain cases involving factual issues. The instant case, however, raisesconstitutional issues of transcendental importance to the public.22 The Court can resolve this case without
determining any factual issue related to the case. Also, the instant case is a petition for mandamus which falls
under the original jurisdiction of the Court under Section 5, Article VIII of the Constitution. We resolve to
exercise primary jurisdiction over the instant case.
On the third issue, PEA claims petitioner's direct resort to the Court violates the principle of exhaustion of
administrative remedies. It also violates the rule that mandamus may issue only if there is no other plain,
speedy and adequate remedy in the ordinary course of law. Hence, The principal issue in the instant case is the
capacity of AMARI to acquire lands held by PEA in view of the constitutional ban prohibiting the alienation of
lands of the public domain to private corporations. We rule that the principle of exhaustion of administrative
remedies does not apply in the instant case.
On the fourth issue, the rule that since the instant petition, brought by a citizen, involves the enforcement of
constitutional rights - to information and to the equitable diffusion of natural resources - matters of
transcendental public importance, the petitioner has the requisite locus standi.
On the fifth issue, Section 7, Article III of the Constitution explains the people's right to information on matters
of public concern. The court has held that the constitutional right to information includes official information on
on-going negotiations before a final contract. The information, however, must constitute definite propositions
by the government and should not cover recognized exceptions like privileged information, military and
diplomatic secrets and similar matters affecting national security and public order.40 Congress has also
prescribed other limitations on the right to information in several legislations.
On the sixth issue, the Regalian doctrine is deeply implanted in our legal system. The court has summarized in
their conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in
the name of PEA, are alienable lands of the public domain. PEA may lease these lands to private corporations
but may not sell or transfer ownership of these lands to private corporations. PEA may only sell these lands to
Philippine citizens, subject to the ownership limitations in the 1987 Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public
domain until classified as alienable or disposable lands open to disposition and declared no longer needed for
public service. The government can make such classification and declaration only after PEA has reclaimed these
submerged areas. Only then can these lands qualify as agricultural lands of the public domain, which are the
only natural resources the government can alienate. In their present state, the 592.15 hectares of submerged
areas are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares110 of
the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution
which prohibits private corporations from acquiring any kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares111 of still submerged
areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution
which prohibits the alienation of natural resources other than agricultural lands of the public domain.
PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed lands as
alienable or disposable, and further declare them no longer needed for public service. Still, the transfer of such
reclaimed alienable lands of the public domain to AMARI will be void in view of Section 3, Article XII of the
1987Constitution which prohibits private corporations from acquiring any kind of alienable land of the publicdomain.
On the last issue, Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on
this last issue. Besides, the Court is not a trier of facts, and this last issue involves a determination of factual
matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development
Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement which is
hereby declared NULL and VOID ab initio.
SO ORDERED.
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G.R. No. 133250 November 11, 2003
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT
CORPORATION, respondents.
R E S O L U T I O N
CARPIO,J.:
This Court is asked to legitimize a government contract that conveyed to a private entity
157.84 hectares of reclaimed public lands along Roxas Boulevard in Metro Manila at
the negotiated price of P1,200 per square meter. However, published reports place the
market price of land near that area at that time at a high of P90,000 per square
meter.1The difference in price is a staggering P140.16 billion, equivalent to the budget of
the entire Judiciary for seventeen years and more than three times the Marcos Swiss
deposits that this Court forfeited in favor of the government.
Many worry to death that the private investors will lose their investments, at most notmore than one-half billion pesos in legitimate expenses,
2if this Court voids the contract.
No one seems to worry about the more than tens of billion pesos that the hapless Filipino
people will lose if the contract is allowed to stand. There are those who question these
figures, but the questions arise only because the private entity somehow managed to
inveigle the government to sell the reclaimed lands without public bidding in patent
violation of the Government Auditing Code.
Fortunately for the Filipino people, two Senate Committees, the Senate Blue Ribbon
Committee and the Committee on Accountability of Public Officers, conducted extensive
public hearings to determine the actual market value of the public lands sold to the
private entity. The Senate Committees established the clear, indisputable and
unalterable fact that the sale of the public lands is grossly and unconscionably
undervalued based on official documents submitted by the proper government
agencies during the Senate investigation.We quote the joint report of these two Senate
Committees, Senate Committee Report No. 560, as approved by the Senate in plenary
session on 27 September 1997:3
The Consideration for the Property
PEA, under the JVA, obligated itself to convey title and possession over the Property,
consisting of approximately One Million Five Hundred Seventy Eight Thousand FourHundred Forty One (1,578,441) Square Meters for a total consideration of One Billion
Eight Hundred Ninety Four Million One Hundred Twenty Nine Thousand Two Hundred
(P1,894,129,200.00) Pesos, or a price of One Thousand Two Hundred (P1,200.00) Pesos
per square meter.
According to the zonal valuation of the Bureau of Internal Revenue, the value of the
Property is Seven Thousand Eight Hundred Pesos (P7,800.00) per square meter. The
Municipal Assessor of Paraaque, Metro Manila, where the Property is located, pegs
the market value of the Property at Six Thousand Pesos (P6,000.00) per square
meter.Based on these alone, the price at which PEA agreed to convey the property is apittance. And PEA cannot claim ignorance of these valuations, at least not those of the
Municipal Assessors office, since it has been trying to convince the Office of the
Municipal Assessor of Paraaque to reduce the valuation of various reclaimed properties
thereat in order for PEA to save on accrued real property taxes.
PEAs justification for the purchase price are various appraisal reports, particularly the
following:
(1) An appraisal by Vic T. Salinas Realty and Consultancy Services concluding that the
Property is worth P500.00 per square meter for the smallest island and P750.00 per
square meter for the two other islands, or a total of P1,170,000.00 as of 22 February
1995;
(2) An appraisal by Valencia Appraisal Corporation concluding that the Property is worth
P850 per square meter for Island I, P800 per square meter for Island II and P600 per
square meter for the smallest island, or a total of P1,289,732,000, also as of 22 February
1995; and
(3) An Appraisal by Asian Appraisal Company, Inc. (AACI), stating that the Property is
worth approximately P1,000 per square meter for Island I, P950 per square meter for
Island II and P600 per square meter for Island III, or a total of P1,518,805,000 as of 27February 1995.
The credibility of the foregoing appraisals, however, are [sic] greatly impaired by a
subsequent appraisal report of AACI stating that the property is worth P4,500.00 per
square meter as of 26 March 1996. Such discrepancies in the appraised value as
appearing in two different reports by the same appraisal company submitted within a
span of one year render all such appraisal reports unworthy of even the slightest
consideration. Furthermore, the appraisal report submitted by the Commission on Audit
estimates the value of the Property to be approximately P33,673,000,000.00, or
P21,333.07 per square meter.
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There were also other offers made for the property from other parties which indicate
that the Property has been undervalued by PEA. For instance, on 06 March 1995, Mr.
Young D. See, President of Saeil Heavy Industries Co., Ltd., (South Korea), offered to buy
the property at P1,400.00 and expressed its willingness to issue a stand-by letter of credit
worth $10 million. PEA did not consider this offer and instead finalized the JVA with
AMARI. Other offers were made on various dates by Aspac Management and
Development Group Inc. (for P1,600 per square meter), Universal Dragon Corporation
(for P1,600 per square meter), Cleene Far East Manila Incorporated and Hyosan Prime
Construction Co. Ltd. which had prepared an Irrevocable Clean Letter of Credit forP100,000,000.
In addition, AMARI agreed to pay huge commissions and bonuses to various persons,
amounting to P1,596,863,050.00 (P1,754,707,150.00 if the bonus is included), as will be
discussed fully below, which indicate that AMARI itself believed the market value to be
much higher than the agreed purchase price. If such commissions are added to the
purchase price, AMARIs acquisition cost for the Property will add-up to
P3,490,992,250.00 (excluding the bonus). If AMARI was willing to pay such amount for
the Property, why was PEA willing to sell for only P1,894,129,200.00, making the
Government stand to lose approximately P1,596,863,050.00?
x x x
Even if we simply assume that the market value of the Property is half of the market
value fixed by the Municipal Assessors Office of Paraaque for lands along Roxas
Boulevard, or P3,000.00 per square meter, the Government now stands to lose
approximately P2,841,193,800.00. But an even better assumption would be that the
value of the Property is P4,500.00 per square meter, as per the AACI appraisal report
dated 26 March 1996, since this is the valuation used to justify the issuance of P4 billion
worth of shares of stock of Centennial City Inc. (CCI) in exchange for 4,800,000 AMARI
shares with a total par value of only P480,000,000.00. With such valuation, the
Governments loss will amount to P5,208,855,300.00.
Clearly, the purchase price agreed to by PEA is way below the actual value of the
Property, thereby subjecting the Government to grave injury and enabling AMARI to
enjoy tremendous benefit and advantage.(Emphasis supplied)
The Senate Committee Report No. 560 attached the following official documents from
the Bureau of Internal Revenue,the Municipal Assessor of Paraaque, Metro Manila,
and the Commission on Audit:
1. Annex "M," Certified True Copy of BIR Zonal Valuations as certified by Antonio F.
Montemayor, Revenue District Officer. This official document fixed the market value of
the 157.84 hectares at P7,800 per square meter.
2. Annex "N," Certification of Soledad S. Medina-Cue, Municipal Assessor, Paraaque,
dated 10 December 1996. This official document fixed the market value at P6,000 per
square meter.
3. Exhibit "1-Engr. Santiago," the Appraisal Report of the Commission on Audit . This
official document fixed the market value at P21,333.07 per square meter.
Whether based on the official appraisal of the BIR, the Municipal Assessor or the
Commission on Audit, the P1,200 per square meter purchase price, or a total of P1.894
billion for the 157.84 hectares of government lands, is grossly and unconscionably
undervalued. The authoritative appraisal, of course, is that of the Commission on Audit
which valued the 157.84 hectares at P21,333.07 per square meter or a total of P33.673
billion. Thus, based on the official appraisal of the Commission on Audit, the
independent constitutional body that safeguards government assets, the actual loss to
the Filipino people is a shocking P31.779 billion.
This gargantuan monetary anomaly, aptly earning the epithet "Grandmother of All
Scams,"4is not the major defect of this government contract. The major flaw is not even
the P1.754 billion in commissions the Senate Committees discovered the private entity
paid to various persons to secure the contract,5described in Senate Report No. 560 as
follows:
A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai Karnasuta and
Emmanuel Sy for and in behalf of AMARI, on the one hand, and stockholders of AMARI
namely, Mr. Chin San Cordova (a.k.a. Benito Co) and Mr. Chua Hun Siong (a.k.a. Frank
Chua), on the other, sets forth various payments AMARI paid or agreed to pay theaforesaid stockholders by way of fees for "professional efforts and services in
successfully negotiating and securing for AMARI the Joint Venture Agreement",as
follows:
Form of Payment Paid/Payable On Amount
Managers Checks 28 April 1995 P 400,000,000.00
Managers Checks Upon signing of letter 262,500,000.00
10 Post Dated Checks (PDCs) 60 days from date of letter 127,000,000.00
24 PDCs 31 Aug. 95 to 31 Jan. 98 150,000,000.00
48 PDCs Monthly, over a 12-month pd. 357,363,050.00
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from date of letter
Cash bonus When sale of land begins not exceeding
157,844,100.00
Developed land from Project Upon completion of each
phase
Costing
300,000,000.00
TOTAL P1,754,707,150.00==============
Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that said Letter-
Agreement was approved by the AMARI Board.6(Emphasis supplied)
The private entity that purchased the reclaimed lands for P1.894 billion expressly
admitted before the Senate Committees that it spent P1.754 billion in commissions to
pay various individuals for "professional efforts and services in successfully negotiating
and securing" the contract. By any legal or moral yardstick, the P1.754 billion in
commissions obviously constitutes bribe money. Nonetheless, there are those who insist
that the billions in investments of the private entity deserve protection by this Court.
Should this Court establish a new doctrine by elevating grease money to the status of
legitimate investments deserving of protection by the law? Should this Court reward the
patently illegal and grossly unethical business practice of the private entity in securing the
contract? Should we allow those with hands dripping with dirty money equitable relief
from this Court?
Despite these revolting anomalies unearthed by the Senate Committees, thefatal flaw of
this contract is that it glaringly violates provisions of the Constitution expressly
prohibiting the alienation of lands of the public domain.
Thus, we now come to the resolution of the second Motions for Reconsideration7
filed bypublic respondent Public Estates Authority ("PEA") and private respondent Amari Coastal
Bay Development Corporation ("Amari"). As correctly pointed out by petitioner Francisco
I. Chavez in his Consolidated Comment,8the second Motions for Reconsideration raise no
new issues.
However, the Supplement to "Separate Opinion, Concurring and Dissenting" of Justice
Josue N. Bellosillo brings to the Courts attention the Resolutions of this Court on 3
February 1965 and 24 June 1966 in L- 21870 entitled "Manuel O. Ponce, et al. v. Hon.
Amador Gomez, et al." and No. L-22669 entitled "Manuel O. Ponce, et al. v. The City of
Cebu, et al." ("Ponce Cases"). In effect, the Supplement to the Dissenting Opinion claimsthat these two Resolutions serve as authority that a single private corporation like
Amari may acquire hundreds of hectares of submerged lands, as well as reclaimed
submerged lands, within Manila Bay under the Amended Joint Venture Agreement
("Amended JVA").
We find the cited Ponce Cases inapplicable to the instant case.
First, as Justice Bellosillo himself states in his supplement to his dissent, the Ponce Cases
admit that "submerged lands still belong to the National Government."9The correct
formulation, however, is that submerged lands are owned by the State and are
inalienable. Section 2, Article XII of the 1987 Constitution provides:
All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils,
all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the State. With the exception of agricultural
lands, all other natural resources shall not be alienated. x x x. (Emphasis supplied)
Submerged lands, like the waters (sea or bay) above them, are part of the States
inalienable natural resources. Submerged lands are property of public dominion,
absolutely inalienable and outside the commerce of man.10
This is also true with respect
to foreshore lands. Any sale of submerged or foreshore lands is void being contrary to the
Constitution.11
This is why the Cebu City ordinance merely granted Essel, Inc. an "irrevocable option" to
purchase the foreshore lands after the reclamation and did not actually sell to Essel, Inc.
the still to be reclaimed foreshore lands. Clearly, in the Ponce Cases the option to
purchase referred to reclaimed lands,and not to foreshore lands which are inalienable.
Reclaimed lands are no longer foreshore or submerged lands, and thus may qualify as
alienable agricultural lands of the public domain provided the requirements of public land
laws are met.
In the instant case, the bulk of the lands subject of the Amended JVA are still submerged
landseven to this very day, and therefore inalienable and outside the commerce of man.
Of the 750 hectares subject of the Amended JVA, 592.15 hectares or 78% of the total
area are still submerged, permanently under the waters of Manila Bay. Under the
Amended JVA, the PEA conveyed to Amari the submerged lands even before their actual
reclamation, although the documentation of the deed of transfer and issuance of the
certificates of title would be made only after actual reclamation.
The Amended JVA states that the PEA "hereby contributes to the Joint Venture its rights
and privilegesto perform Rawland Reclamation and Horizontal Development as well
as own the Reclamation Area."12
The Amended JVA further states that "the sharing of the
Joint Venture Proceeds shall be based on the ratio of thirty percent (30%) for PEA and
seventy percent (70%) for AMARI."13
The Amended JVA also provides that the PEA
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"hereby designates AMARI to perform PEAs rights and privileges to reclaim, own and
develop the Reclamation Area."14
In short, under the Amended JVA the PEA contributed
its rights, privileges and ownership over the Reclamation Area to the Joint Venture
which is 70% owned by Amari. Moreover, the PEA delegated to Amari the right and
privilege to reclaim the submerged lands.
The Amended JVA mandates that the PEA had "the duty to execute without delay the
necessary deed of transfer or conveyance of the title pertaining to AMARIs Land share
based on the Land Allocation Plan."
15
The Amended JVA also provides that "PEA, whenrequested in writing by AMARI, shall then cause the issuance and delivery of the proper
certificates of title covering AMARIs Land Share in the name of AMARI, x x x."16
In the Ponce Cases, the City of Cebu retained ownership of the reclaimed foreshore lands
and Essel, Inc. only had an "irrevocable option" to purchase portions of the foreshore
lands once actually reclaimed. In sharp contrast, in the instant case ownership of the
reclamation area, including the submerged lands, was immediately transferred to the
joint venture. Amari immediately acquired the absolute right to own 70% percent of the
reclamation area, with the deeds of transfer to be documented and the certificates of
title to be issued upon actual reclamation. Amaris right to own the submerged lands is
immediately effective upon the approval of the Amended JVA and not merely an option
to be exercised in the future if and when the reclamation is actually realized. The
submerged lands, being inalienable and outside the commerce of man, could not be the
subject of the commercial transactions specified in the Amended JVA.
Second, in the Ponce Cases the Cebu City ordinance granted Essel, Inc. an "irrevocable
option" to purchase from Cebu City not more than 70% of the reclaimed lands. The
ownership of the reclaimed lands remained with Cebu City until Essel, Inc. exercised its
option to purchase. With the subsequent enactment of the Government Auditing Code
(Presidential Decree No. 1445) on 11 June 1978, any sale of government land must be
made only through public bidding. Thus, such an "irrevocable option" to purchase
government land would now be void being contrary to the requirement of public bidding
expressly required in Section 7917
of PD No. 1445. This requirement of public bidding is
reiterated in Section 37918
of the 1991 Local Government Code.19
Obviously, the
ingenious reclamation scheme adopted in the Cebu City ordinance can no longer be
followed in view of the requirement of public bidding in the sale of government lands. In
the instant case, the Amended JVA is a negotiated contract which clearly contravenes
Section 79 of PD No. 1445.
Third, Republic Act No. 1899 authorized municipalities and chartered cities to
reclaimforeshore lands. The two Resolutions in the Ponce Cases upheld the Cebu Cityordinance only with respect to foreshore areas, and nullified the same with respect to
submerged areas. Thus, the 27 June 1965 Resolution made the injunction of the trial
court against the City of Cebu "permanent insofar x x x as the area outside or beyond the
foreshore land proper is concerned."
As we held in the 1998 case of Republic Real Estate Corporation v. Court of
Appeals,20
citing the Ponce Cases, RA No. 1899 applies only to foreshore lands, not
to submergedlands. In his concurring opinion inRepublic Real Estate Corporation, Justice
Reynato S. Puno stated that under Commonwealth Act No. 141, "foreshore and lands
under water were not to be alienated and sold to private parties," and that such lands"remained property of the State." Justice Puno emphasized that "Commonwealth Act No.
141 has remained in effect at present." The instant case involves principally submerged
lands within Manila Bay. On this score, the Ponce Cases, which were decided based on RA
No. 1899, are not applicable to the instant case.
Fourth, the Ponce Cases involve the authority of the City of Cebu to reclaim foreshore
areas pursuant to a general law, RA No. 1899. The City of Cebu is a public corporation and
is qualified, under the 1935, 1973, and 1987 Constitutions, to hold alienable or even
inalienable lands of the public domain. There is no dispute that a public corporation is not
covered by the constitutional ban on acquisition of alienable public lands. Both the 9 July
2002 Decision and the 6 May 2003 Resolution of this Court in the instant case expressly
recognize this.
Cebu City is an end user government agency, just like the Bases Conversion and
Development Authority or the Department of Foreign Affairs.21
Thus, Congress may by
law transfer public lands to the City of Cebu to be used for municipal purposes, which
may be public or patrimonial. Lands thus acquired by the City of Cebu for a public
purpose may not be sold to private parties. However, lands so acquired by the City of
Cebu for a patrimonial purpose may be sold to private parties, including private
corporations.
However, in the instant case the PEA is not an end user agency with respect to the
reclaimed lands under the Amended JVA. As we explained in the 6 May 2003 Resolution:
PEA is the central implementing agencytasked to undertake reclamation
projects nationwide.PEA took the place of the Department of Environment and Natural
Resources ("DENR" for brevity) as the government agency charged with leasing or
selling all reclaimedlands of the public domain. In the hands of PEA, which took over the
leasing and selling functions of DENR, reclaimed foreshore (or submerged lands) lands
are public lands in the same manner that these same lands would have been public
lands in the hands of DENR.(Emphasis supplied)
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Our 9 July 2002 Decision explained the rationale for treating the PEA in the same manner
as the DENR with respect to reclaimed foreshore or submerged lands in this wise:
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as
private lands will sanction a gross violation of the constitutional ban on private
corporations from acquiring any kind of alienable land of the public domain. PEA will
simply turn around, as PEA has now done under the Amended JVA, and transfer several
hundreds of hectares of these reclaimed and still to be reclaimed lands to a single private
corporation in only one transaction. This scheme will effectively nullify the constitutionalban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse
equitably the ownership of alienable lands of the public domain among Filipinos, now
numbering over 80 million strong. (Emphasis supplied)
Finally, the Ponce Cases were decided under the 1935 Constitution which allowed private
corporations to acquire alienable lands of the public domain. However, the 1973
Constitution prohibited private corporations from acquiring alienable lands of the public
domain, and the 1987 Constitution reiterated this prohibition. Obviously, the Ponce Cases
cannot serve as authority for a private corporation to acquire alienable public lands,
much less submerged lands, since under the present Constitution a private corporation
like Amari is barred from acquiring alienable lands of the public domain.
Clearly, the facts in the Ponce Cases are different from the facts in the instant case.
Moreover, the governing constitutional and statutory provisions have changed since the
Ponce Cases were disposed of in 1965 and 1966 through minute Resolutions of a divided
(6 to 5) Court.
This Resolution does not prejudice any innocent third party purchaser of the reclaimed
lands covered by the Amended JVA. Neither the PEA nor Amari has sold any portion of
the reclaimed lands to third parties. Title to the reclaimed lands remains with the PEA. As
we stated in our 9 July 2002 Decision:
In the instant case, the only patent and certificates of title issued are those in the name of
PEA, a wholly government owned corporation performing public as well as proprietary
functions. No patent or certificate of title has been issued to any private party. No one is
asking the Director of Lands to cancel PEAs patent or certificates of title. In fact, the
thrust of the instant petition is that PEAs certificates of titl e should remain with PEA, and
the land covered by these certificates, being alienable lands of the public domain, should
not be sold to a private corporation.
As we held in our 9 July 2002 Decision, the Amended JVA "violates glaringly Sections 2
and 3, Article XII of the 1987 Constitution." In our 6 May 2003 Resolution,
we DENIEDwith FINALITY respondents Motions for Reconsideration. Litigations must
end some time. It is now time to write finis to this "Grandmother of All Scams."
WHEREFORE, the second Motions for Reconsideration filed by Public Estates Authority
and Amari Coastal Bay Development Corporation are DENIED for being prohibited
pleadings. In any event, these Motions for Reconsideration have no merit. No further
pleadings shall be allowed from any of the parties.
SO ORDERED.
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La Bugal-BLaan v. Ramos G.R. No. 127882. December 1, 2004
Facts:
The Petition for Prohibition and Mandamus before the Court challenges the
constitutionality of (1) Republic Act 7942 (The Philippine Mining Act of 1995); (2) its
Implementing Rules and Regulations (DENR Administrative Order [DAO] 96-40); and (3)
the Financial and Technical Assistance Agreement (FTAA) dated 30 March 1995, executed
by the government with Western Mining Corporation (Philippines), Inc. (WMCP).
On 27 January 2004, the Court en banc promulgated its Decision, granting the Petition
and declaring the unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well
as of the entire FTAA executed between the government and WMCP, mainly on the
finding that FTAAs are service contracts prohibited by the 1987 Constitution. The Decision
struck down the subject FTAA for being similar to service contracts,[9] which, though
permitted under the 1973 Constitution, were subsequently denounced for being
antithetical to the principle of sovereignty over our natural resources, because they
allowed foreign control over the exploitation of our natural resources, to the prejudice of
the Filipino nation.
The Decision quoted several legal scholars and authors who had criticized service
contracts for, inter alia, vesting in the foreign contractor exclusive management and
control of the enterprise, including operation of the field in the event petroleum was
discovered; control of production, expansion and development; nearly unfettered control
over the disposition and sale of the products discovered/extracted; effective ownership
of the natural resource at the point of extraction; and beneficial ownership of our
economic resources. According to the Decision, the 1987 Constitution (Section 2 of Article
XII) effectively banned such service contracts. Subsequently, Victor O. Ramos (Secretary,
Department of Environment and Natural Resources [DENR]), Horacio Ramos (Director,
Mines and Geosciences Bureau [MGB-DENR]), Ruben Torres (Executive Secretary), andthe WMC (Philippines) Inc. filed separate Motions for Reconsideration.
Issue:
Whether or not the Court has a role in the exercise of the power of control over the EDU
of our natural resources?
Held:
The Chief Executive is the official constitutionally mandated to enter into agreements
with foreign owned corporations. On the other hand, Congress may review the action ofthe President once it is notified of every contract entered into in accordance with this
*constitutional+ provision within thirty days from its execution. In contrast to this express
mandate of the President and Congress in the exploration, development and utilization
(EDU) of natural resources, Article XII of the Constitution is silent on the role of the
judiciary. However, should the President and/or Congress gravely abuse their discretion
in this regard, the courts may -- in a proper case -- exercise their residual duty under
Article VIII. Clearly then, the judiciary should not inordinately interfere in the exercise of
this presidential power of control over the EDU of our natural resources.
Under the doctrine of separation of powers and due respect for co-equal and coordinatebranches of government, the Court must restrain itself from intruding into policy matters
and must allow the President and Congress maximum discretion in using the resources of
our country and in securing the assistance of foreign groups to eradicate the grinding
poverty of our people and answer their cry for viable employment opportunities in the
country. The judiciary is loath to interfere with the due exercise by coequal branc hes of
government of their official functions. As aptly spelled out seven decades ago by Justice
George Malcolm, Just as the Supreme Court, as the guardian of constitutional rights,
should not sanction usurpations by any other department of government, so should it as
strictly confine its own sphere of influence to the powers expressly or by implication
conferred on it by the Organic Act. Let the development of the mining industry be theresponsibility of the political branches of government. And let not the Court interfere
inordinately and unnecessarily. The Constitution of the Philippines is the supreme law of
the land. It is the repository of all the aspirations and hopes of all the people.
The Constitution should be read in broad, life-giving strokes. It should not be used to
strangulate economic growth or to serve narrow, parochial interests. Rather, it should be
construed to grant the President and Congress sufficient discretion and reasonable
leeway to enable them to attract foreign investments and expertise, as well as to secure
for our people and our posterity the blessings of prosperity and peace. The Court fully
sympathize with the plight of La Bugal Blaan and other tribal groups, and commend their
efforts to uplift their communities. However, the Court cannot justify the invalidation of
an otherwise constitutional statute along with its implementing rules, or the nullification
of an otherwise legal and binding FTAA contract. The Court believes that it is not
unconstitutional to allow a wide degree of discretion to the Chief Executive, given the
nature and complexity of such agreements, the humongous amounts of capital and
financing required for large-scale mining operations, the complicated technology needed,
and the intricacies of international trade, coupled with the States need to maintain
flexibility in its dealings, in order to preserve and enhance our countrys competitiveness
in world markets. On the basis of this control standard, the Court upholds the
constitutionality of the Philippine Mining Law, its Implementing Rules and Regulations -insofar as they relate to financial and technical agreements - as well as the subject
Financial and Technical Assistance Agreement (FTAA).
8/13/2019 Property Midterms Case 1
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8/13/2019 Property Midterms Case 1
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G.R. No. 152115 January 26, 2005
NIMFA USERO, petitioner,
vs.
COURT OF APPEALS and SPS. HERMINIGILDO & CECILIA POLINAR, respondents.
x--------------------------------x
G.R. No. 155055 January 26, 2005
LUTGARDA R. SAMELA, petitioner,
vs.
COURT OF APPEALS and SPS. HERMINIGILDO & CECILIA POLINAR, respondents.
D E C I S I O N
CORONA,J.:
Before this Court are two consolidated petitions for review on certiorariunder Rule 45 of the Rules of Court. The
first petition, docketed as G.R. No. 152115, filed by Nimfa Usero, assails the September 19, 2001 decision1of the
Court of Appeals in CA-GR SP No. 64718. The second petition, docketed as G.R. No. 155055, filed by Lutgarda R.
Samela, assails the January 11, 2002 decision2of the Court of Appeals in CA-GR SP NO. 64181.
The undisputed facts follow.
Petitioners Lutgarda R. Samela and Nimfa Usero are the owners respectively of lots 1 and 2, Block 5, Golden
Acres Subdivision, Barrio Almanza, Las Pias City.
Private respondent spouses Polinar are the registered owners of a parcel of land at no. 18 Anahaw St., Pilar
Village, Las Pias City, behind the lots of petitioners Samela and Usero.
Situated between the lots of the parties is a low-level strip of land, with a stagnant body of water filled with
floating water lilies; abutting and perpendicular to the lot of petitioner Samela, the lot of the Polinars and the
low-level strip of land is the perimeter wall of Pilar Village Subdivision.
Apparently, every time a storm or heavy rains occur, the water in said strip of land rises and the strong current
passing through it causes considerable damage to the house of respondent Polinars. Frustrated by theirpredicament, private respondent spouses, on July 30, 1998, erected a concrete wall on the bank of the low-level
strip of land about three meters from their house and rip-rapped the soil on that portion of the strip of land.
Claiming ownership of the subject strip of land, petitioners Samela and Usero demanded that the spouses
Apolinar stop their construction but the spouses paid no heed, believing the strip to be part of a creek.
Nevertheless, for the sake of peace, the Polinars offered to pay for the land being claimed by petitioners Samela
and Usero. However, the parties failed to settle their differences.
On November 9, 1998, petitioners filed separate complaints for forcible entry against the Polinars at the
Metropolitan Trial Court of Las Pias City. The case filed by petitioner Samela was docketed as Civil Case No.
5242, while that of petitioner Usero was docketed as Civil Case No. 5243.
In Civil Case No. 5242, petitioner Samela adduced in evidence a copy of her Transfer Certificate of Title, plan ofconsolidation, subdivision survey, the tax declaration in her name, and affidavits of petitioner Usero and a
certain Justino Gamela whose property was located beside the perimeter wall of Pilar Village.
The spouses Polinar, on the other hand, presented in evidence their own TCT; a barangay certification as to the
existence of the creek; a certification from the district engineer that the western portion of Pilar Village is bound
by a tributary of Talon Creek throughout its entire length; boundary and index map of Pilar Village showing that
the village is surrounded by a creek and that the Polinar property is situated at the edge of said creek; and
pictures of the subject strip of land filled with water lilies.
On March 22, 1999, the trial court rendered a decision in favor of petitioner Samela:
WHEREFORE, the Court hereby renders judgment ordering the defendants to vacate and remove at their
expense the improvements made on the subject lot; ordering the defendants to pay the plaintiff P1,000.00 a
month as reasonable compensation for the use of the portion encroached from the filing of the complaint until
the same is finally vacated; and to pay plaintiff P10,000.00 as reasonable attorneys fees plus costs of
suit.31vvphi1.nt
In a parallel development, the Metropolitan Trial Court, in Civil Case No. 5243, issued an order on February 29,
2000, directing petitioner Usero and the Polinar spouses to commission a professional geodetic engineer to
conduct a relocation survey and to submit the report to the trial court.
On April 24, 2000, Mariano Flotilde, a licensed geodetic engineer, conducted a relocation survey of Useros
property covered by TCT No. T- 29545. The result of the said relocation survey, as stated in his affidavit, was as
follows:
1. That I executed a relocation survey of Lot 2, Block 5, (LRC) PCS-4463 covered by TCT No. T-29545 registered in
the name of Nimfa O. Usero;
2. That according to my survey, I found out that there is no existing creek on the boundary of the said lot;
3. That based on the relocation plan surveyed by the undersigned, attached herewith, appearing is the
encroachment on the above-mentioned lot by Spouses Herminigildo and Cecilia Polinar with an area of FORTY
THREE (43) SQUARE METERS;
4. That this affidavit was made in compliance with Court Order dated February 23, 2000 of Metropolitan Trial
Court, Las Pias City, Branch LXXIX.4
On August 25, 2000, the Metropolitan Trial Court decided in favor of petitioner Usero:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the d efendants ordering them:
a) To vacate and remove at their expense the improvement made on the subject lot;
b) To pay the plaintiff P1,000.00 a month as reasonable compensation for the portion encroached from the time
of the filing of the complaint until the same is finally vacated;
c) To pay plaintiff P10,000.00 as reasonable attorneys fees plus costs of suit.
SO ORDERED.5
The Polinar spouses appealed the decisions of the two Municipal Trial Courts to the Regional Trial Court of Las
Pias, Branch 253 which heard the appeals separately.
On December 20, 2000, the Regional Trial Court, deciding Civil Case No. 5242, reversed the decision of the trial
court and ordered the dismissal of the complaint. It confirmed the existence of the creek between the
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northwestern portion of the lot of petitioner Samela and the southwestern portion of the lot of the spouses
Polinar:
Finding the existence of a creek between the respective properties of the parties, plaintiff-appellee cannot
therefore lay claim of lawful ownership of that portion because the same forms part of public
dominion.1a\^/phi1.netConsequently, she cannot legally stop the defendants-appellants from rip-rapping the
bank of the creek to protect the latters property from soil erosion thereby avoiding danger to their lives and
damage to property.
Absent a lawful claim by the plaintiff-appellee over the subject portion of that lot, defendants-appellants are
not duty bound to pay the former compensation for the use of the same. As a result, they may maintain the said
improvements introduced thereon subject to existing laws, rules and regulations and/or ordinances
appurtenant thereto.
WHEREFORE, premises considered, the Decision rendered by Branch 79 of the Metropolitan Trial Court, Las
Pias is REVERSED. Accordingly, the instant complaint is DISMISSED.
SO ORDERED.6
On March 16, 2001, the Regional Trial Court, in Civil Case No. 5243, also reversed the finding of the Municipal
Trial Court:
From the foregoing, defendants-appellants may maintain the improvements introduced on the subject portion
of the lot subject to existing laws, rules and regulations and/or ordinances pertaining thereto. Consequently, nocompensation may be awarded in favor of the plaintiff-appellee.
WHEREFORE, premises considered, the above-mentioned Decision rendered by Branch 79 of the Las Pias City
Metropolitan Trial Court is REVERSED. Accordingly, the instant complaint is DISMISSED.
From the adverse decisions of the Regional Trial Court, petitioners filed their respective petitions for review
oncertiorarito the Court of Appeals. Petitioner Samelas case was docketed as CA-G.R. SP 64181 while that of
petitioner Usero was docketed as CA-G.R. SP 64718.1awphi1.nt
Both petitions failed in the CA. Thus the instant consolidated petitions.
The pivotal issue in the case at bar is whether or not the disputed strip of land, allegedly encroached upon by
the spouses Polinar, is the private property of petitioners or part of the creek and therefore part of the publicdomain. Clearly this an issue which calls for a review of facts already determined by the Court of Appeals.
The jurisdiction of the Court in petitions for review on certiorariunder Rule 45 of the Rules of Court is limited to
reviewing only errors of law, not of fact, unless the factual findings complained of are devoid of support by the
evidence on record or the assailed judgment is based on a misapprehension of facts.7This is obviously not the
case here.
A careful scrutiny of the records reveals that the assailed decisions are fou nded on sufficient evidence. That the
subject strip of land is a creek is evidenced by: (1) a barangay certification that a creek exists in the disputed
strip of land; (2) a certification from the Second Manila Engineering District, NCR-DPWH, that the western
portion of Pilar Village where the subject strip of land is located is bounded by a tributary of Talon Creek and (3)
photographs showing the abundance of water lilies in the subject strip of land. The Court of Appeals was
correct: the fact that water lilies thrive in that strip of land can only mean that there is a permanent stream of
water or creek there.
In contrast, petitioners failed to present proof sufficient to support their claim. Petitioners presented the TCTs
of their respective lots to prove that there is no creek between their properties and that of the Polinars.
However, an examination of said TCTs reveals that the descriptions thereon are incomplete. In petitioner
Samelas TCT No. T-30088, there is no boundary description relative to the northwest portion of the property
pertaining to the site of the creek. Likewise in TCT No. T- 22329-A of the spouses Polinar, the southeast portion
which pertains to the site of the creek has no described boundary. Moreover the tax declaration presented by
petitioner is devoid of any entry on the "west boundary" vis-a-vis the location of the creek. All the pieces of
evidence taken together, we can only conclude that the adjoining portion of these boundaries is in fact a creek
and belongs to no one but the state.
Property is either of public dominion or of private ownership .
8
Concomitantly, Article 420 of the Civil Codeprovides:
ART. 420. The following things are pr operty of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the
State, banks, shores, roadsteads, and others of similar character;
The phrase "others of similar character" includes a creek which is a recess or an arm of a river. It is property
belonging to the public domain which is not susceptible to private ownership .9Being public water, a creek
cannot be registered under the Torrens System in the name of any individual10
.
Accordingly, the Polinar spouses may utilize the rip-rapped portion of the creek to prevent the erosion of their
property.
WHEREFORE, the consolidated petitions are hereby denied. The assailed decisions of the Court of Appeals in
CA-G.R. SP 64181 and CA-G.R. SP 64718 are affirmed in toto.
SO ORDERED.
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G.R. No. 167707 October 8, 2008
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE REGIONAL
EXECUTIVE DIRECTOR, DENR-REGION VI, REGIONAL TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT
BUREAU, REGION VI PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES OFFICER OF KALIBO, AKLAN,
REGISTER OF DEEDS, DIRECTOR OF LAND REGISTRATION AUTHORITY, DEPARTMENT OF TOURISM SECRETARY,
DIRECTOR OF PHILIPPINE TOURISM AUTHORITY,petitioners,
vs.
MAYOR JOSE S. YAP, LIBERTAD TALAPIAN, MILA Y. SUMNDAD, and ANICETO YAP, in their behalf and in behalf
of all those similarly situated, respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. G.R. No. 173775 October 8, 2008
DR. ORLANDO SACAY and WILFREDO GELITO, joined by THE LANDOWNERS OF BORACAY SIMILARLY SITUATED
NAMED IN A LIST, ANNEX "A" OF THIS PETITION,petitioners,
vs.
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE REGIONAL
TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT BUREAU, REGION VI, PROVINCIAL ENVIRONMENT
AND NATURAL