Property

Archie M. Serrano Property Law Case digests Atty. Regalado

LPU-COL

I TITLE ONE- CLASSIFICATION OF PROPERTY A. Article 414-418 Leung Yee v. Strong Machinery Company37 Phil. 644 I Facts: The "Compañia Agricola Filipina" bought a considerable quantity of ricecleaning machinery company from the defendant machinery company, and executed a chattel mortgage thereon to secure payment of the purchase price. It included in the mortgage deed the building of strong materials in which the machinery was installed, without any reference to the land on which it stood. The indebtedness secured by this instrument not having been paid when it fell due, the mortgaged property was sold by the sheriff, in pursuance of the terms of the mortgage instrument. A few weeks thereafter, on or about the 14th of January, 1914, the "Compañia Agricola Filipina" executed a deed of sale of the land upon which the building stood to the machinery company, but this deed of sale, although executed in a public document, was not registered. The machinery company went into possession of the building at or about the time when this sale took place, that is to say, the month of December, 1913, and it has continued in possession ever since. At or about the time when the chattel mortgage was executed in favor of the machinery company, the mortgagor, the "Compañia Agricola Filipina" executed another mortgage to the plaintiff upon the building, separate and apart from the land on which it stood. Upon the failure of the mortgagor to pay the amount of the indebtedness secured by the mortgage, the plaintiff secured judgment for that amount, levied execution upon the building, bought it in at the sheriff's sale on or about the 18th of December, 1914. This action was instituted by the plaintiff to recover possession of the building from the machinery company. The trial judge gave judgment in favor of the machinery company. Hence, this appeal. Issue: Whether or not the trial judge erred in sustaining the machinery company on the ground that it had its title to the building registered prior to the date of registry of plaintiff¶s certificate.

Held: We conclude that the ruling in favor of the machinery company cannot be sustained on the ground assigned by the trial judge. We are of opinion, however, that the judgment must be sustained on the ground that the agreed statement of facts in the court below discloses that neither the purchase of the building by the plaintiff nor his inscription of the sheriff's certificate of sale in his favor was made in good faith, and that the machinery company must be held to be the owner of the property Article 1544 of the New Civil Code, it appearing that the company first took possession of the property; and further, that the building and the land were sold to the machinery company long prior to the date of the sheriff's sale to the plaintiff. But it appearing that he had full knowledge of the machinery company's claim of ownership when he executed the indemnity bond and bought in the property at the sheriff's sale, and it appearing further that the machinery company's claim of ownership was well founded, he cannot be said to have been an innocent purchaser for value. He took the risk and must stand by the consequences; and it is in this sense that we find that he was not a purchaser in good faith. The decision of the trial court is hereby affirmed.

Davao Sawmill Co. v. Castillo 61 Phil. 709 Facts: 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 thesi tio of 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. The trial judge found that those properties were personal in nature and as a consequence absolved the defendants from the complaint. Issue: Whether or not the trial judge erred in finding that the subject properties are personal in nature. Held: 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 [Old]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; 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. As a rule, the machinery should be considered as personal, since it was not placed on the land by the owner of the land immobilization by destination on purpose cannot generally be made by a person, whose possession of the property is only temporary, otherwise was will be forced to presume that be intended to give the property permanently to the owner

of the land. In this case, they had stipulated that the land in the end thereby be acted as an agent for the owner of the land. In this sense the property (machines for use in the sawmill) became real property. The judgment appealed from is hereby affirmed STANDARD OIL CO. vs. JARAMILLO Facts: On November 27, 1922, Gervasia de la Rosa, Vda. de Vera, was the lessee of a parcel of land situated in the City of Manila and owner of the house of strong materials built thereon, upon which date she executed a document in the form of a chattel mortgage to convey to the Standard Oil. Co. byway of mortgage both the leasehold interest in said lot and the building to which it stands After said document had been duly acknowledged and delivered, it was then presented to Joaquin Jaramillo, Register of Deeds of the City of Manila, for the purpose of having the same recorded. Upon examination of the instrument, the Jaramillo was of the opinion that it was not chattel mortgage, for the reason that the interest therein mortgaged did not appear to be personal property, within the meaning of the Chattel Mortgage Law, and registration was refused on this ground only. Issue: Whether or not the deed may be registered in the chattel mortgage registry? Held: Yes it may be registered. The duties of a register of deeds in respect to the registration of chattel mortgages are purely of a ministerial character, and he is clothed with no judicial or quasi-judicial power to determine the nature of the property, whether real or personal, which is the subject of the mortgage. Generally speaking, he should accept the qualification of the property adapted by the person who presents the instrument for registration and should place the instrument on record, upon payment of the proper fee, leaving the effects of registration to be determined by the court if such question should arise for legal determination.

The efficacy of the act of recording a chattel mortgage consists in the fact that registration operates as constructive notice of the existence of the contract, and the legal effects of the instrument must be discovered in the document itself, in relation with the fact of notice. Registration adds nothing to the instrument, considered as a source of title, and affects nobody's rights except as a species of constructive notice. MINDANAO BUS V CITY ASSESOR FACTS:-Mindanao Bus Company is a public utility engaged in transporting passengers and cargoes by motor trucks in Mindanao; having its main offices in Cagayan de Oro. The company is also owner to the land where it maintains and operates a garage, a repair shop, blacksmith and carpentry shops; the machineries are placed therein on wooden and cement platforms.-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. 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 Mindanao Bus has never engaged in.-City Assessor of Cagayan de Oro City assessed at P4,400 as realty tax imposed on the maintenance and repair equipment of Mindanao Bus. Mindanao appealed the assessment to the respondent Board of Tax Appeals on the ground that the equipment are not realty. The Board of Tax Appeals of the City as well as the CTA sustained the city assessor, thus Mindanao appealed. ISSUE:W/N the equipment are immovable HELD: NO.-The tools and equipments in question are, by their nature, not essential and principle municipal elements of Mindanao’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 Mindanao 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 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.-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.

Berkenkotter v. Cu Unjieng Facts: On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos, a loan secured by a first mortgage constituted on 2 parcels of land "with all its buildings, improvements, sugar-cane mill, steel railway, telephone line, apparatus, utensils and whatever forms part or is a necessary complement of said sugar-cane mill, steel railway, telephone line, now existing or that may in the future exist in said lots.” On 5 October 1926, the Mabalacat Sugar Company decided to increase the capacity of its sugar central by buying additional machinery and equipment, so that instead of milling 150 tons daily, it could produce 250. Green proposed to the Berkenkotter, to advance the necessary amount for the purchase of said machinery and equipment, promising to reimburse him as soon as he could obtain an additional loan from the mortgagees, Cu Unjieng e Hijos, and that in case Green should fail to obtain an additional loan from Cu Unjieng e Hijos, said machinery and equipment would become security therefore, said Green binding himself not to mortgage nor encumber them to anybody until Berkenkotter be fully reimbursed for the corporation's indebtedness to him. Having agreed to said proposition made in a letter dated 5 October 1926, Berkenkotter, on 9 October 1926, delivered the sum of P1,710 to Green, the total amount supplied by him to Green having been P25,750. Furthermore, Berkenkotter had a credit of P22,000 against said corporation for unpaid salary. With the loan of P25,750 and said credit of P22,000, the Mabalacat Sugar Co., Inc.,

purchased the additional machinery and equipment. On 10 June 1927, Green applied to Cu Unjieng e Hijos for an additional loan of P75,000 offering as security the additional machinery and equipment acquired by said Green and installed in the sugar central after the execution of the original mortgage deed, on 27 April 1927, together with whatever additional equipment acquired with said loan. Green failed to obtain said loan. Hence, above mentioned mortgage was in effect.

Issue: Are the additional machines also considered mortgaged?

Held: Article 1877 of the Civil Code provides that mortgage includes all natural accessions, improvements, growing fruits, and rents not collected when the obligation falls due, and the amount of any indemnities paid or due the owner by the insurers of the mortgaged property or by virtue of the exercise of the power of eminent domain, with the declarations, amplifications, and limitations established by law, whether the state continues in the possession of the person who mortgaged it or whether it passes into the hands of a third person. It is a rule, that in a mortgage of real estate, the improvements on the same are included; therefore, all objects permanently attached to a mortgaged building or land, although they may have been placed there after the mortgage was constituted, are also included. Article 334, 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. The installation of a machinery and equipment in a mortgaged sugar central, in lieu of another of less capacity, for the purpose of carrying out the industrial functions of the latter and increasing production, constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon.

MERALCO V BOARD OF ASSESSMENT FACTS:-There are two oil storage tanks installed in 1969 by Meralco on a lot in San Pascual, Batangaswhich it leased in 1968 from Caltex (Phil.), Inc. The tanks are within the Caltex refinery compound.They have a total capacity of 566,000 barrels. They are used for storing fuel oil for Meralco's power plants.-The storage tanks are made of steel plates welded and assembled on the spot. Their bottoms reston a foundation consisting of compacted earth as the outermost layer, a sand pad as theintermediate layer and a two-inch thick bituminous asphalt stratum as the top layer. The bottom of each tank is in contact with the asphalt layer. The steel sides of the tank are directly supported underneath by a circular wall made of concrete, eighteen inches thick, to prevent the tank from sliding. Hence, according to Meralco, the tank is not attached to its foundation. It is not anchored or welded to the concrete circular wall. Its bottom plate is not attached to any part of the foundation bybolts, screws or similar devices. The tank merely sits on its foundation. Each empty tank can be floated by flooding its dike-in closed location with water four feet deep.-The Board concludes that while the tanks rest or sit on their foundation, the foundation itself and the walls, dikes and steps, which are integral parts of the tanks, are affixed to the land while the pipelines are attached to the tanks. In 1970, the municipal treasurer of Bauan, Batangas, on the basis of an assessment made by the provincial assessor, required Meralco to pay realty taxes on the two tanks. For the five-year period from 1970 to 1974, the tax and penalties amounted toP431,703.96. The Board required Meralco to pay the tax and penalties as a condition for entertaining its appeal from the adverse decision of the Batangas board of assessment appeals.-The Central Board of Assessment Appeals ruled that the tanks together with the foundation, walls,dikes, steps, pipelines and other appurtenances constitute taxable improvements. Meralco contends that the said oil storage tanks do not fall within any of the kinds of real property enumerated in article 415 of the Civil Code and, therefore, they cannot be categorized as realty by nature, by incorporation, by destination nor by analogy. Stress is laid on the fact that the tanks are not attached to the land and that they were placed on leased land, not on the land owned by Meralco.

ISSUE:W/N the oil tanks are considered as real property HELD: YES.-While the two storage tanks are not embedded in the land, they may, nevertheless, be considered as improvements on the land, enhancing its utility and rendering it useful to the oil industry. It is undeniable that the two tanks have been installed with some degree of permanence as receptacles for the considerable quantities of oil needed by Meralco for its operations.-For purposes of taxation, the term "real property" may include things which should generally be regarded as personal property. It is a familiar phenomenon to see things classed as real propertyfor purposes of taxation which on general principle might be considered personal property. -ADDITIONAL: baka lang ipa-compare: The case of Board of Assessment Appeals vs. ManilaElectric Company, 119 Phil. 328, wherein Meralco's steel towers were held not to be subject to realty tax, is not in point because in that case the steel towers were regarded as poles and under its franchise Meralco's poles are exempt from taxation. Moreover, the steel towers were notattached to any land or building. They were removable from their metal frames.

Jose Curaminas filed with the CFI of Cebu a petition praying that Francisco Jarque be declared an insolvent debtor. This was granted and Jarque’s properties were then assigned to Curaminas. A problem arose when Judge Jose Hontiveros declined to order the foreclosure of the mortgages, and instead, ruled that they were defective because they did not have affidavits of good faith. ISSUE: Whether or not the mortgages of the vessels are governed by the Chattel Mortgage Law. Whether or not an affidavit of good faith is needed to enforce a chattel mortgage on a vessel RULING: Yes. “Personal property” includes vessels. They are subject to the provisions of the Chattel Mortgage Law. The Chattel Mortgage Law says that a good chattel mortgage includes an affidavit of good faith. The absence of such affidavit makes mortgage unenforceable against creditors and subsequent encumbrances. The judge was correct. Note: A mortgage on a vessel is generally like other chattel mortgages. The only difference between a chattel mortgage of a vessel and a chattel mortgage of other personalty is that the first must be noted in the registry of the register of deeds.

PHILIPPINE REFINING COMPANY V. JARQUE

RICARDO PRESBITERO vs, FERNANDEZ(Immovable – Calinisan)

FACTS:

Facts:1) ESPERIDION Presbitero failed to furnish Nava the value of the properties under litigation.2) Presbitero was ordered by the lower court to pay Nava to settle his debts.3) Nava's counsel still tried to settle this case with Presbitero, out of court. But to no avail.4) Thereafter, the sheriff levied upon and garnished the sugar quotas allotted to the plantation and adhered to the Ma-ao Mill District and registered in the name of Presbitero as the original plantation owner.5) The sheriff was not able to present for registration thererof to the Registry of Deeds.6) The court then ordered Presbitero to segregate the portion of Lot 608 pertaining to Nava from the mass of properties belonging to the defendant within a period to expire on August 1960.7) Bottomline, Presbitero did not meet his obligations, and the auction sale was scheduled.8) Presbitero died after.9)

Plaintiff Philippine Refining Co. and defendant Jarque executed three mortgages on the motor vessels Pandan and Zargazo. The documents were recorded as transfer and encumbrances of the vessels for the port of Cebu and each was denominated a chattel mortgage. The first two mortgages did not have an affidavit of good faith. A fourth mortgage was executed by Jarque and Ramon Aboitiz over motorship Zaragoza and was entered in the Chattel Mortgage Registry on May 12, 1932, within the period of 30 days prior to the foreclosure/institution of the insolvency proceedings.

RICARDO Presbitero, the estate administrator, then petitioned that the sheriff desist in holding the auction sale on the ground that the levy on the sugar quotas was invalid because the notice thereof was not registered with the Registry of Deeds. Issue: W/N the sugar quotas are real (immovable) or personal properties. Held:1) They are real properties.2) Legal bases : a) The Sugar Limitation Law xxx attaching to the land xxx (p 631)b) RA 1825xxx to be an improvement attaching to the land xxx (p 631)c) EO # 873"plantation" xxx to which is attached an allotment of centrifugal sugar.3) Under the express provisions of law, the sugar quota allocations are accessories to the land, and cannot have independent existence away from a plantation.4) Since the levy is invalid for non-compliance with law, xxx the levy amount to no levy at all.

SIBAL v. VALDEZ G.R. No. L-26278 August 4, 1927 Johnson, J. Doctrine: • A crop raised on leased premises belongs to the lessee and in no sense forms part of the immovable. • “Ungathered products” have the nature of personal property. In other words, the phrase “personal property” should be understood to include “ungathered products.” Crops, whether growing or standing in the field ready to be harvested, are, when produced by annual cultivation, no part of the realty. • A valid sale may be made of a thing, which though not yet actually in existence, is reasonably certain to come into existence. A man may sell property of which he is potentially and not actually possessed.

Facts: Plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his tenants on seven parcels of land. Plaintiff offered to redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to cover the price paid by the latter, the interest thereon and any assessments or taxes which he may have paid thereon after the purchase, and the interest corresponding thereto. However, Valdez refused to accept the money and to return the sugar cane to the plaintiff. Meanwhile, defendant argued that the sugar cane was personal property hence not subject to redemption. Issue: 1. Whether or not the sugar cane is to be classified as personal property 2. Whether or not future crops to be harvested can be considered a valid object of sale Held: 1. No. A crop raised on leased premises in no sense forms part of the immovable. It belongs to the lessee, and may be sold by him, whether it be gathered or not, and it may be sold by his judgment creditors. “Ungathered products” have the nature of personal property. In other words, the phrase “personal property” should be understood to include “ungathered products.” Crops, whether growing or standing in the field ready to be harvested, are, when produced by annual cultivation, no part of the realty. 2. Yes. A valid sale may be made of a thing, which though not yet actually in existence, is reasonably certain to come into existence as the natural increment or usual incident of something already in existence, and then belonging to the vendor, and then title will vest in the buyer the moment the thing comes into existence (Emerson vs. European Railway Co., 67 Me., 387; Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.).

A man may sell property of which he is potentially and not actually possessed.

Chua Guan v. SAMAHANG MAGSASAKA INC.(1935) 1) Facts: Gonzalo H. Co Toco was the owner of 5,894 shares of the capital stock of the said corporation represented by nine certificates. 2) Gonzalo H. Co Toco, a resident of Manila, mortgaged said 5,894 shares to Chua Chiu to guarantee the payment of a debt 3) The said certificates of stock were delivered with the mortgage to the mortgagee, Chua Chiu. 4) The said mortgage was duly registered in the office of the register of deeds of Manila on June 23, 1931, and in the office of the said corporation on September 30, 1931. 5) Subsequently, Chua Chiu assigned all his right and interest in said mortgage to the plaintiff and the assignment was registered in the office of the register of deeds in the City of Manila on December 28, 1931, and in the office of the said corporation on January 4, 1932. 6) The debtor, Gonzalo H. Co Toco, having defaulted in the payment of said debt at maturity, the plaintiff foreclosed said mortgage and delivered the certificates of stock and copies of the mortgage and assignment to the sheriff in order to sell the said shares at public auction. 7) The sheriff auctioned said 5,894 shares of stock on December 22, 1932, and the plaintiff having been the highest bidder for the sum of P14,390, the sheriff executed in his favor a certificate of sale of said shares. 8) The plaintiff tendered the certificates of stock standing in the name of Gonzalo H. Co Toco to the proper officers of the corporation for cancellation and demanded that they issue new certificates in the name of the plaintiff. 9) The said officers (the individual defendants) refused and still refuse to issue said new shares in the name of the plaintiff. 10) The prayer is that a writ of mandamus be issued requiring the defendants to transfer the said 5,894 shares of stock to the plaintiff by cancelling the old certificates and issuing new ones in their stead. 11) C Defense: that the defendants refuse to cancel the said certificates standing in the name of Gonzalo H. Co Toco on the books .of the corporation and to issue new

ones in the name of the plaintiff because prior to the date when the plaintiff made his demand, to wit, February 4, 1933, nine attachments had been issued and served and noted on the books of the corporation against the shares of Gonzalo H. Co Toco and the plaintiff objected to having these attachments noted on the new certificates which he demanded. 12) It will be noted that the first eight of the said writs of attachment were served on the corporation and noted on its records before the corporation received notice from the mortgagee Chua Chiu of the mortgage of said shares dated June 18, 1931. 13) No question is raised as to the validity of said mortgage or of said writs of attachment and the sole question presented for decision is whether the said mortgage takes priority over the said writs of attachment. 14) ISSUE: Did the registration of said chattel mortgage in the registry of chattel mortgages in the office of the register of deeds of Manila, under date of July 23, 1931, give constructive notice to the said attaching creditors? HELD: The attaching creditors are entitled to priority over the defectively registered mortgage of the appellant RATIO: The property in the shares maybe deemed to be situated in the province in which the corporation has its principal office or place of business. If this province is also the province of the owner's domicile, a single registration is sufficient. If not, the chattel mortgage should be registered both at the owner's domicile and in the province where the corporation has its principal office or place of business. In this sense the property mortgaged is not the certificate but the participation and share of the owner in the assets of the corporation.

Bachrach vs Ledesma FACTS: June 30, 1927: CFI favored Bachrach Motor Co., Inc (Bachrach) against Mariano Lacson Ledesma Ledesma mortgaged to the Philippine National Bank (PNB) Talisay-Silay Milling Co., Inc shares

September 29, 1928: PNB brought an action against Ledesma and his wife Concepcion Diaz for the recovery of a mortgage credit January 2, 1929: PNB amended its complaint by including the Bachrach Motor Co., Inc., as party defendant because they claim to have rights to some of the subject matters of this complaint January 30, 1929: Bachrach field a gen. denial CFI: favored PNB December 20, 1929: Bachrach brought an action in the CFI against the Talisay-Silay Milling Co., Inc., to recover P13,850 against the bonus or dividend w/c, by virtue of the resolution of December 22, 1923, Central Talisay-Silay Milling Co., Inc., had declared in favor of Ledesma as one of the owners of the hacienda which had been mortgaged to the PNB to secure the obligation of the Talisay-Silay Milling Co., Inc. in favor of said bank

Certificates of stock or of stock dividends, under the Corporation Law, are quasi negotiable instruments in the sense that they may be given in pledge or mortgage to secure an obligation certificates of stock, while not negotiable in the sense of the law merchant, like bills and notes, are so framed and dealt with as to be transferable, when property endorsed, by mere delivery, and as they frequently convey, by estoppel against the corporation or against prior holders, as good a title to the transferee as if they were negotiable, and inasmuch as a large commercial use is made of such certificates as collateral security, and it is to the public interest that such use should be simplify and facilitated by placing them as nearly as possible on the plane of commercial paper, they are often spoken of and treated as quasi negotiable, that is as having some of the attributes and partaking of the character of negotiable instruments, in passing from hand to hand, especially where they are accompanied by an assignment and power of attorney, executed in blank, to transfer them to anyone who may obtain possession as holders, even though such assignment and power are under seal.

CFI: favored Bachrach ISSUE: W/N shares of stock are personal property and therefore can be subject to pledge or chattel mortgage

B. ARTICLE 419-425

HELD: YES. AFIRMED section 4 of the Chattel Mortgage Law, in so far as it provides that a chattel mortgage shall not be valid against any person except the mortgagor, his executors or administrators, unless the possession of the property is delivered to and retained by the mortgagee or unless the mortgage is recorded in the office of the register of deeds of the province in which the mortgagor resides. pledge of the 6,300 stock dividends is valid against the Bachrach because the certificate was delivered to the creditor bank, notwithstanding the fact that the contract does not appear in a public instrument

REPUBLIC VS. VDA. DE CASTELLVI, GR # L-20620 August 15, 1974 (Constitutional Law – Eminent Domain, Elements of Taking) FACTS: After the owner of a parcel of land that has been rented and occupied by the government in 1947 refused to extend the lease, the latter commenced expropriation proceedings in 1959. During the assessment of just compensation, the government argued that it had taken the property when the contract of lease commenced and not when the proceedings begun. The owner maintains that the disputed land was not taken when the

government commenced to occupy the said land as lessee because the essential elements of the “taking” of property under the power of eminent domain, namely (1) entrance and occupation by condemnor upon the private property for more than a momentary period, and (2) devoting it to a public use in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property, are not present. ISSUE: Whether or not the taking of property has taken place when the condemnor has entered and occupied the property as lessee. HELD: No, the property was deemed taken only when the expropriation proceedings commenced in 1959. The essential elements of the taking are: (1) Expropriator must enter a private property, (2) for more than a momentary period, (3) and under warrant of legal authority, (4) devoting it to public use, or otherwise informally appropriating or injuriously affecting it in such a way as (5) substantially to oust the owner and deprive him of all beneficial enjoyment thereof. In the case at bar, these elements were not present when the government entered and occupied the property under a contract of lease.

Maneclang v. IAC [G.R. No. L-66575. September 30, 1986.] Second Division, Fernan (J): 4 concur Facts: Adriano Maneclang, et.al., petitioners, filed before the then CFI Pangasinan (Branch XI) a complaint for quieting of title over a certain fishpond located within 4 parcels of land belonging to them situated in Barrio Salomague, Bugallon, Pangasinan, and the annulment of Resolutions 38 and 95 of the Municipal Council of Bugallon, Pangasinan. On 15 August 1975, the trial court dismissed the complaint upon a finding that the body of water traversing the titled properties is a creek constituting a tributary of the Agno River (therefore public in nature and

not subject to private appropriation); and held that Resolution 38, ordering an ocular inspection of the Cayangan Creek situated between Barrios Salomague Sur and Salomague Norte, and Resolution 95 authorizing public bidding for the lease of all municipal ferries and fisheries were passed by the members of the Municipal Council of Bugallon, Pangasinan in the exercise of their legislative powers. Manaclang appealed said decision to the IAC, which affirmed the same on 29 April 1983. Hence, the petition for review on certiorari. Before the respondents were able to comment on the petition, the petitioners manifested that for lack of interest on the part of respondent Alfredo Maza, the awardee in the public bidding of the fishpond, as the parties desire to amicably settle the case by submitting to the Court a Compromise Agreement praying that judgment be rendered recognizing the ownership of the petitioners over the land the body of water found within their titled properties. The Supreme Court dismissed the petition for lack of merit, and set aside the Compromise Agreement and declare the same null and void for being contrary to law and public policy. 1. Stipulations null and void for being contrary to law and public policy The stipulations contained in the Compromise Agreement partake of the nature of an adjudication of ownership of the fishpond in dispute, which was originally a creek forming a tributary of the Agno River. A creek, defined as a recess or arm extending from a river and participating in the ebb and flow of the sea, is a property belonging to the public domain which is not susceptible to private appropriation and acquisitive prescription (Mercado vs. Municipal President of Macabebe), and as a public water, it cannot be registered under the Torrens System in the name of any individual (Diego v. CA; Mangaldan v. Manaoag) and considering further that neither the mere construction of irrigation dikes by the National Irrigation

Administration which prevented the water from flowing in and out of the subject fishpond, nor its conversion into a fishpond, alter or change the nature of the creek as a property of the public domain. The Compromise

guarding and patrolling of the hacienda by security guards called “arundines”. By the gradual process of erosion these canals acquired the characteristics and dimensions of rivers.

Agreement, thus, is null and void and of no legal effect, the same being contrary to law and public policy.

In 1924 Ayala y Cia shifted from the business of alcohol production to bangus culture. It converted Hacienda San Esteban from a forest of nipa groves to a web of fishponds. Sometime in 1925 or 1926 Ayala y Cia., sold a portion of Hacienda San Esteban to Roman Santos who also transformed the swamp land into a fishpond. In so doing, he closed and built dikes across Sapang Malauling Maragul, Quiñorang Silab, Pepangebunan, Bulacus, Nigui and Nasi. The closing of the man-made canals in Hacienda San Esteban drew complaints from residents of the surrounding communities. Claiming that the closing of the canals caused floods during the rainy season, and that it deprived them of their means of transportation and fishing grounds, said residents demanded re-opening of those canals. Subsequently, Mayor Lazaro Yambao of Macabebe, accompanied by policemen and some residents went to Hacienda San Esteban and opened the closure dikes at Sapang Malauling Maragul, Nigui and Quiñorang Silab. Whereupon, Roman Santos filed Civil Case 4488 in the CFI Pampanga which preliminarily enjoined Mayor Yambao and others from demolishing the dikes across the canals. The municipal officials of Macabebe countered by filing a complaint (Civil Case 4527) in the same court. The CFI Pampanga rendered judgment in both cases against Roman Santos who immediately elevated the case to the Supreme Court. In the meantime, the Secretary of Commerce and Communications conducted his own investigation, found and declared on 8 November 1930 that the streams closed by Roman Santos were natural, floatable and navigable and were utilized by the public for transportation since time immemorial. However, on 8 May 1931 the said official revoked his decision and declared the streams in question privately owned because they were artificially constructed. Subsequently, upon authority granted under Act 3982 the Secretary of Commerce and

2. Municipal council authorized to pass laws dealing with its municipal waters The Municipality of Bugallon, acting thru its duly-constituted municipal council is clothed with authority to pass, as it did the two resolutions dealing with its municipal waters. 3. Publication a constructive notice to the whole world; due process followed Petitioners were not deprived of their right to due process as mere publication of the notice of the public bidding suffices as a constructive notice to the whole world.

Santos v. Moreno [G.R. No. L-15829. December 4, 1967.] En Banc, Bengzon JP (J): 9 concur Facts: The Zobel family of Spain formerly owned a vast track of marshland in Macabebe, Pampanga called Hacienda San Esteban, which was administered and managed by the Ayala y Cia. From 1860 to 1924 Ayala y Cia., devoted the hacienda to the planting and cultivation of nipa palms from which it gathered nipa sap or “tuba”. It operated a distillery plant in barrio San Esteban to turn nipa tuba into potable alcohol which was in turn manufactured into liquor. Accessibility through the nipa palms deep into the hacienda posed as a problem; thus Ayala y Cia dug canals leading towards the hacienda’s interior where most of them interlinked with each other. The canals facilitated the gathering of tuba and the

Communications entered into a contract with Roman Santos whereby the former recognized the private ownership of 6 streams and the latter turned over for public use 2 artificial canals and bound himself to maintain them

in navigable state. The Provincial Board of Pampanga and the municipal councils of Macabebe and Masantol objected to the contract. However, the Secretary of Justice, in his opinion dated 6 March 1934, upheld its legality. Roman Santos withdrew his appeals in the Supreme Court. On 25 February 1935 the municipality of Macabebe and the Zobel family executed an agreement whereby they recognized the nature of the streams mentioned in Panopio’s report as public or private, depending on the findings in said report. This agreement was approved by the Secretary of Public Works and Communications on 27 February1935 and confirmed the next day by the municipal council of Macabebe under Resolution 36. On 12 June 1935 however, the Secretary of Justice issued an opinion holding that the contract executed by the Zobel family and the municipality of Macabebe has no validity. Still, despite the ruling of the Secretary of

rivers and appropriated them as fishponds without color of title. On the same day, Benigno Musni and other residents in the vicinity of Hacienda San Esteban petitioned the Secretary of Public Works and Communications to open the following streams: Balbaro, Batasan Matua, Bunga, Cansusu, Macabacle, Macanduling Maragul, Mariablus Malate, Matalabang Maisac, Nigui, Quiñorang Silab, Sapang Maragul and Sepung Bato. On 20 October 1958 Musni and his co-petitioners amended their petition to include other streams: Balbaro, Balili, Banawa, Batasan Matua, Bato, Bengco, Bunga, Butabuta, Camastiles, Cansusu, Cela, Don Timpo, Mabalanga, Mabutol, Macabacle, Macabacle qng. Iba, Macanduling Maragul, Malauli, Magasawa, Mariablus Malate, Masamaral, Matalabang Maisac, Mariablus, 3 Nigui, Pita, Quiñorang Silab, Sapang Maragul, Sepung Bato, Sinag and Tumbong. On March 2, 4, 10, 30 and 31, and 1 April 1959, the Secretary of Public Works and Communications rendered his decisions ordering the opening and restoration of the channel of all the streams except Sapang Malauling Maragul, Quiñorang Silab, Nigui, Pepangebonan, Nasi and Bulacus, within 30 days.

Justice, the streams in question remained closed. In 1939 administrative investigations were again conducted by various agencies of the Executive branch of our government culminating in an order of President Manuel Quezon immediately before the national elections in 1941 requiring the opening of Sapang Macanduling Maragul, Macabacle, Balbaro and Cansusu. Said streams were again closed in 1942 allegedly upon order of President Quezon. Roman Santos acquired in 1940 from the Zobel family a larger portion of Hacienda San Esteban wherein are located 25 streams which were closed by Ayala y Cia. 18 years later or in 1950, Congress enacted RA 2056. Thereafter, on 15 August 1958, Senator de la Rosa requested in writing the Secretary of Public Works and Communications to proceed in pursuance of Republic Act No. 2056 against fishpond owners in the province of Pampanga who have closed

On 29 April 1959, after receipt of the Secretary’s decision, Roman Santos filed a petition with the CFI Manila for injunction against the Secretary of Public Works and Communications and Julian C. Cargullo. As prayed for, preliminary injunction was granted on 8 May 1959. On April 29 and 12 June 1959, Roman Santos received the decision of the Secretary of Public Works and Communications dated March 10 and March 30, March 31, and 1 April 1959. Consequently, on June 24, 1959 he asked the court to cite in contempt Secretary Florencio Moreno, Undersecretary M. D. Bautista and Julian Cargullo for issuing and serving upon him the said decisions despite the existence of the preliminary injunction. The Cou rt however ruled that Secretary Moreno, Undersecretary Bautista and Cargullo acted in good faith, and hence were merely “admonished to desist from any and further action in this Court, with the stern warning, however, that a repetition of the acts complained of shall be dealt with severely.” On 18 July 1959 the trial court declared all the streams under litigation private, and made the writ of preliminary injunction permanent. The Secretary of Public Works and Communications and Julian Cargullo

appealed to the Supreme Couurt from the order of 17 July 1959 issued in connection with Roman Santos’ motion for contempt and from the decision of the lower court on the merits of the case. The Supreme Court affirmed the decision appealed from, except as to Sapang Cansusu which was declared public and thus as to which the judgment of the lower court was reversed. No costs.

Hilario v. City of Manila [GR No. L-19570 April 27, 1967] Bengzon JP (J): 8 concur Facts: Dr. Jose Hilario was the registered owner of a large tract of land around 49 hectares in area (Barrio Guinayang, San Mateo, Rizal). Upon his death this property was inherited by his son, Jose Hilario, Jr., to whom a new certificate of title was issued. During the lifetime of plaintiff’s father, the Hilario estate was bounded on the western side by the San Mateo River.3 To prevent its entry into the land, a bamboo and lumber post dike or ditch was constructed on the northwestern side. This was further fortified by a stonewall built on the northern side. For years, these safeguards served their purpose. However, in 1937, a great and extraordinary flood occurred which inundated the entire place including the neighboring barrios and municipalities. The River destroyed the dike on the northwest, left its original bed and meandered into the Hilario estate, segregating from the rest thereof a lenticular piece of land. The disputed area is on the eastern side of this lenticular strip which now stands between the old riverbed site and the new course. In 1945, the US Army opened a sand and gravel plant within the premises, and started scraping, excavating and extracting soil, gravel and sand from the nearby areas along the River. The operations eventually extended northward into the strip of land. Consequently, a claim for damages was filed with the US War Department by Luis Hidalgo, the then administrator of Dr. Hilario’s estate. The US Army paid. In 1947, the plant was turned over to herein defendants-appellants and appellee who took over its operations. On 22 October 22, 1949, plaintiff filed his complaint for injunction and damages

against the defendants City Engineer of Manila, District Engineer of Rizal, the Director of Public Works, and Engr. Busuego, the Engineer-incharge of the plant. Subsequently, the Bureau of Mines and Atty. Maximo Calalang were respectively allowed to join the litigation as intervenors; as per issue of fees and penalties for materials (sand and gravel) extracted. On 14 March 1954, defendants filed a petition for injunction against plaintiff and intervenor Calalang in the same case, alleging that the latter have fenced off the disputed area in contravention of an agreement had between the latter and the Director of Public Works wherein the defendants were allowed to continue their operations but subject to the final outcome of the pending suit. On 13 May 1954, plaintiff amended his complaint and impleaded as additional defendants the City of Manila, the Provincial Treasurer of Rizal, and Engr. Eulogio Sese, the new Engineer-in-charge of the plant. Plaintiff also converted his claim to one purely for damages directed against the City of Manila and the Director of Public Works, solidarily, in the amount of P1,000,000.00, as the cost of materials taken since 1949, as well as those to be extracted therefrom until defendants stop their operations. On 21 December 1956, the lower court rendered its decision, ordering the City of Manila and Director of Public Works to pay Hilario in solidum the sum of P376,989.60 as cost of gravel and sand extracted from the plaintiff’s land, plus costs; and ordering the Provincial Treasurer of Rizal to reimburse intervenor Calalang of P36.80 representing gravel fees illegally collected. None of the parties litigants seemed satisfied with this decision and they all sought a reconsideration of the same. On August 30, 1957, the lower court resolved the motions to reconsider with an order, holding that the 2/5 portion of the area in controversy to Hilario, and dismissing the case against the Bureau of Public Works insofar as money claims are concerned without prejudice to Hilario taking action against proper party in such claim. Hilario and Calalang filed a second motion for reconsideration, which the lower court denied. Hence, the appeal. The Supreme Court set aside the decision and orders appealed from, and entered another judgment to the effect that the City of Manila and the Director of Public Works, and his agent and employees, are absolved of

liability from extracting materials from subject property (of public domain); and the portion within the strip of land question declared not part of public domain and confirmed as part of Hilario’s private property. No

The natural bed or channel of a creek or river is the ground covered by its waters during the highest [ordinary]\floods (Article 70 of the Law of the Waters). 4. New bed, when river changes course, is of public ownership; Means to recover

Costs. 1. Old Civil Code and Law of Waters of 1866 controlling law Since the change in the course of the River took place in 1937, long before the present Civil Code took effect, the question should be determined in accordance with the provisions of the old Civil Code and those of the Law of Waters of 3 August 1866. 2. All riverbanks, as part of the riverbeds, are of public ownership Under the old Civil Law and the Law of Waters, all riverbanks are of public ownership, including those formed when a river leaves its old bed and opens a new course through a private estate. Artcile 339 of the old Civil Code is very clear. Without any qualifications, it provides that “that devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shores, roadsteads, and that of a similar character” are property of public ownership. Further, the riverbank is part of the riverbed. Article 73 of the Law of Waters which provides that the phrase “banks of a river” is understood those lateral strips of zones of its beds which are washed by the stream only during such high floods as do not cause inundations. The use of the words “of its bed [de sus alveos] “ clearly indicates the intent of the law to consider the banks for all legal purposes, as part of the riverbed. Thus, the banks of the River are part of its bed. Since undeniably all beds of river are of public ownership, it follows that the banks, which form part of them, are also of public ownership. 3. Natural bed or channel of a creek or river defined

Article 372 of the old Civil Code which provides that “whenever a navigable or floatable river changes its course from natural causes and opens a new bed through a private estate, the new bed shall be of public ownership, but the owner of the estate shall recover it in the event that the waters leave it dry again either naturally or as the result of any work legally authorized for this purpose.” Banks are not mentioned in the provision, as the nature of banks follows that of the bed and the running water of the river. 5. A river is a compound concept consisting of running waters, bed, and banks A river is a compound concept consisting of three elements; (1) the running waters, (2) the bed and (3) the banks. All these constitute the river. American authorities are in accord with this view, as that “‘ River’ consists of water, bed and banks”; and that “A ‘river’ consists of water, a bed and banks, these several parts constituting the river, the whole river. It is a compound idea; it cannot exist without all its parts. Evaporate the water, and you have a dry hollow. If you could sink the bed, instead of a river you would have a fathomless gulf. Remove the banks, and you have, a boundless flood” 6. River is of public ownership, elements follow same nature of ownership; Law explicit Since a river is but one compound concept, it should have only one nature, i.e., it should either be totally

public or completely private. Since rivers are of public ownership, it is implicit that all the three component elements be of the same nature also. Still, the law expressly makes all three elements public. Thus, riverbanks and beds are public under Articles 339 and 407, respectively, of the Code, while the flowing waters are declared so under Articles 33, par. 2 of the Law of Waters of 1866.

Municipality of Cavite v. Rojas [G.R. No. 9069. March 31, 1915.] En Banc, Torres (J): 3 concur, 1concur in result Facts: The Municipality (constituted through Act 82), and as the successor to the rights said entity had under the late Spanish government, and by virtue of Act 1039, had exclusive right, control and administration over the streets, lanes, plazas, and public places of the municipality of Cavite. Rojas, et.al., by virtue of a lease secured from the Municipality (Resolution 10, dated 3 July 1907), occupied a parcel of land 93 sq. m. in area that forms part of the public plaza known under the name of Soledad, belonging to the municipality of Cavite. Rojas constructed thereon a house, paying the Municipality a rental of P5.58 a quarter in advance for occupation thereof (schedule fixed in Ordinance 43, s. 1903), with the condition that Rojas are obligated to vacate the leased land within 60 days subsequent to the Municipality’s demand to that effect. Rojas has been required by the municipality to vacate and deliver possession of the said land, wherein the 60days within which it was ought to vacated elapsed without Rojas doing so. Thus, by an instrument dated 5 December 1911, afterwards amended on 14 March 1912, the provincial fiscal of Cavite, representing the municipality, filed a complaint in the CFI Cavite against Rojas alleging that the lease secured from the municipality of Cavite is ultra vires and therefore ipso facto null and void and of no force or effect, for the said land is an integral portion of a public plaza of public domain, and thus prayed that judgment be rendered declaring that possession of the said land lies with the Municipality and ordering Rojas to vacate the land and deliver possession thereof to the Municipality. After hearing and on 27 March 1913, the court rendered the judgment dismissing the complaint

with cost against the Municipality. The counsel for the municipality excepted and in writing asked for a reopening of the case and the holding of a new trial. This motion was denied, with exception on the part of the Municipality, and the corresponding bill of exceptions was filed, approved and forwarded to the clerk of the Supreme Court. The Supreme Court reversed the judgment appealed from and declared the land occupied public, as it formed part of the public plaza called Soledad, and the lease of said parcel of land as null and void. The Court ordered Rojas to vacate it and release the land within 30 days, leaving it and as it was before her occupation. There is no ground for the indemnity sought in the nature of damages, but the municipality must in its turn restore to Rojas the rentals collected; without special finding as to the costs. 1. Plaza Soledad; Municipality or objectors not entitled for inscription of land for public use and reserved for the common benefit By section 3 of the said Act No. 1039, passed January 12, 1904, the Philippine Commission granted to the municipality of Cavite all the land included in the tract called Plaza Soledad. In the case of Nicolas vs. Jose (6 Phil 589), wherein the municipality of Cavite, represented by its president Catalino Nicolas, sought inscription in its name of the land comprised in the said Plaza Soledad, with objection on the part of Maria Jose et al., who occupied some parts thereof with their houses and who also sought that inscription be decreed in their name of the parcels of land in this plaza occupied by them, this court decided that neither the municipality nor the objectors were entitled to inscription, for with respect to the objectors said plaza belonged to the municipality of Cavite and with respect to the latter the said Plaza Soledad was not transferable property of that municipality to be inscribed in its name, because the intention of Act No. 1039 was that the said plaza and other places therein enumerated should be kept open for public transit; wherefore there can be no doubt that the defendant has no right to continue to occupy the land of the municipality leased by her, for it is an integral portion of Plaza Soledad, which is for public use and is reserved for the common benefit. 2. Property for public use in provinces and in towns

Article 344 of the Civil Code provides that “property for public use in provinces and in towns comprises the Property, 2003 ( 36 )Haystacks (Berne Guerrero) provincial and town roads, the squares, streets, fountains, and public waters, the promenades, and public works of general service supported by said towns or provinces.” Plaza Soledad being a promenade for public use, the municipal council of Cavite could not in 1907 withdraw or exclude from public use a portion thereof in order to lease it for the sole benefit of Rojas. In leasing a portion of said plaza or public place for private use, municipality exceeded its authority in the exercise of its powers by executing a contract over a thing of which it could not dispose, nor is it empowered so to do.

Sps. Teofilo and Maxima Villarico, filed an application for confirmation of the title over a parcel of land which they allege they bought from Teofilo’s father. Said application was opposed by the Director of Forestry contending that the said land forms part of the public domain as it is within the unclassified area in Meycauayan and is not available for private appropriation. The TC dismissed the case since the property forms part of the public domain therefore the certificate of title is void. The CA affirmed the findings of the Trial Court, thus the case at bar. ISSUE: Whether or not the property still forms part of the public domain

3. Communal things cannot be sold as they are outside the commerce of man

HELD: YES

Article 1271 of the Civil Code prescribes that everything which is not outside the commerce of man may be the object of a contract. As plazas and streets are outside of this commerce, the 12 February 1895 decision of the Spanish Supreme Court stated that “communal things that cannot be sold because they are by their very nature outside of commerce are those for public use, such as the plazas, streets, common lands, rivers, fountains, etc.” The lease contract, whereby the municipality of Cavite leased to Rojas a portion of the Plaza Soledad, is null and void and of no force or effect, in accordance with the provision of Article 1303 of the Civil Code, because it is contrary to the law and the thing leased cannot be the object of a contract. Thus, Rojas must restore and deliver possession of the land described in the complaint to the municipality of Cavite, which in its turn must restore to Rojas all the sums it may have received from her in the nature of rentals just as soon as she restores the land improperly leased. For the same reasons as have been set forth, consequently Rojas is not entitled to claim that the municipality indemnify her for the damages she may suffer by the removal of her house from the said land.

> The SC held that both the TC and the appellate court correctly adjudged the area to be within the unclassified forest zone therefore incapable of private appropriation.

VILLARICO V. COURT OF APPEALS 309 SCRA 193

Facts: MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to 2001. MIAA’s real estate tax delinquency was estimated at P624 million.

FACTS

> There has been no showing that a declassification has been made declaring the said lands as disposable or alienable and the spouses have not showed evidence to lead to the court to rule otherwise. > Thus, if the land in question still forms part of the public forest, then possession thereof, however long, cannot convert it into private property as it is beyond the power and jurisdiction of the cadastral court to register under the Torrens System. MANILA INTERNATIONAL AIRPORT AUTHORITY vs. COURT OF APPEALS G.R. No. 155650 July 20, 2006

The City of Parañaque, through its City Treasurer, issued notices of levy and warrants of levy on the Airport Lands and Buildings. The Mayor of the City of Parañaque threatened to sell at public auction the Airport Lands and Buildings should MIAA fail to pay the real estate tax delinquency. MIAA filed with the Court of Appeals an original petition for prohibition and injunction, with prayer for preliminary injunction or temporary restraining order. The petition sought to restrain the City of Parañaque from imposing real estate tax on, levying against, and auctioning for public sale the Airport Lands and Buildings. Paranaque’s Contention: Section 193 of the Local Government Code expressly withdrew the tax exemption privileges of “government-owned and-controlled corporations” upon the effectivity of the Local Government Code. Respondents also argue that a basic rule of statutory construction is that the express mention of one person, thing, or act excludes all others. An international airport is not among the exceptions mentioned in Section 193 of the Local Government Code. Thus, respondents assert that MIAA cannot claim that the Airport Lands and Buildings are exempt from real estate tax.

MIAA’s contention: Airport Lands and Buildings are owned by the Republic. The government cannot tax itself. The reason for tax exemption of public property is that its taxation would not inure to any public advantage, since in such a case the tax debtor is also the tax creditor.

Held: 1. MIAA is Not a Government-Owned or Controlled Corporation. MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt from local taxation. MIAA is not a stock corporation because it has no capital stock divided into shares. MIAA has no stockholders or voting shares. MIAA is also not a non-stock corporation because it has no members. A non-stock corporation must have members. MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any other government instrumentality, the only difference is that MIAA is vested with corporate powers. When the law vests in a government instrumentality corporate powers, the instrumentality does not become a corporation. Unless the government instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only governmental but also corporate powers. Thus, MIAA exercises the governmental powers of eminent domain, police authority and the levying of fees and charges. At the same time, MIAA exercises “all the powers of a corporation under the Corporation Law, insofar as these powers are not inconsistent with the provisions of this Executive Order.” 2. Airport Lands and Buildings of MIAA are Owned by the Republic a.

Issue: WON Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws? Yes. Ergo, the real estate tax assessments issued by the City of Parañaque, and all proceedings taken pursuant to such assessments, are void.

Airport Lands and Buildings are of Public Dominion

The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like “roads, canals, rivers, torrents, ports

and bridges constructed by the State,” are owned by the State. The term “ports” includes seaports and airports. The MIAA Airport Lands and Buildings constitute a “port” constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines. The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation. The fact that the MIAA collects terminal fees and other charges from the public does not remove the character of the Airport Lands and Buildings as properties for public use. The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. Article 420 of the Civil Code defines property of public dominion as one “intended for public use.” The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines, constitute the bulk of the income that maintains the operations of MIAA. The collection of such fees does not change the character of MIAA as an airport for public use. Such fees are often termed user’s tax. This means taxing those among the public who actually use a public facility instead of taxing all the public including those who never use the particular public facility. b.

Airport Lands and Buildings are Outside the Commerce of Man

The Court has also ruled that property of public dominion, being outside the commerce of man, cannot be the subject of an auction sale. Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. Essential public services will stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale. This will happen if the City of Parañaque can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-payment of real estate tax.

c.

MIAA is a Mere Trustee of the Republic

MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48, Chapter 12, Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real properties owned by the Republic. n MIAA’s case, its status as a mere trustee of the Airport Lands and Buildings is clearer because even its executive head cannot sign the deed of conveyance on behalf of the Republic. Only the President of the Republic can sign such deed of conveyance. d.

Transfer to MIAA was Meant to Implement a Reorganization

The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose was merely toreorganize a division in the Bureau of Air Transportation into a separate and autonomous body. The Republic remains the beneficial owner of the Airport Lands and Buildings. MIAA itself is owned solely by the Republic. No party claims any ownership rights over MIAA’s assets adverse to the Republic. e.

Real Property Owned by the Republic is Not Taxable

Sec 234 of the LGC provides that 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 following are exempted from payment of the real property tax. However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. For example, the land area occupied by hangars that MIAA leases to private corporations is subject to real estate tax.

Cebu Oxygen vs Judge Bercilles FACTS: In 1968, a terminal portion of a street in Cebu was excluded in the city’s development plan hence the council declared it as abandoned and was subsequently opened for public bidding. Cebu Oxygen was the highest bidder @P10,800.00. Cebu Oxygen applied for the land’s registration before CFI Cebu but the provincial fiscal denied it, so did the court later, alleging that the road is part of the public domain hence beyond the commerce of man. ISSUE: Whether or not Cebu Oxygen can validly own said land. HELD: Yes. Under Cebu’s Charter (RA 3857), the city council “may close any city road, street or alley, boulevard, avenue, park or square. 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.” Since that portion of the city street subject of Cebu Oxygen’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 provides 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.” Chavez vs. NHA FACTS: On August 5, 2004, former Solicitor General Francisco Chavez, filed an instant petition raising constitutional issues on the JVA entered by National Housing Authority and R-II Builders, Inc. On March 1, 1988, then-President Cory Aquino issued Memorandum order No. (MO) 161 approving and directing implementation of the Comprehensive and Integrated Metropolitan Manila Waste Management Plan. During this time, Smokey Mountain, a wasteland in Tondo, Manila, are being made residence of many Filipinos living in a subhuman state.

As presented in MO 161, NHA prepared feasibility studies to turn the dumpsite into low-cost housing project, thus, Smokey Mountain Development and Reclamation Project (SMDRP), came into place. RA 6957 (Build-Operate-Transfer Law) was passed on July 1990 declaring the importance of private sectors as contractors in government projects. Thereafter, Aquino proclaimed MO 415 applying RA 6957 to SMDRP, among others. The same MO also established EXECOM and TECHCOM in the execution and evaluation of the plan, respectively, to be assisted by the Public Estates Authority (PEA). Notices of public bidding to become NHA’s venture partner for SMDRP were published in newspapers in 1992, from which R-II Builders, Inc. (RBI) won the bidding process. Then-President Ramos authorized NHA to enter into a Joint Venture Agreement with RBI. Under the JVA, the project involves the clearing of Smokey Mountain for eventual development into a low cost housing complex and industrial/commercial site. RBI is expected to fully finance the development of Smokey Mountain and reclaim 40 hectares of the land at the Manila Bay Area. The latter together with the commercial area to be built on Smokey Mountain will be owned by RBI as enabling components. If the project is revoked or terminated by the Government through no fault of RBI or by mutual agreement, the Government shall compensate RBI for its actual expenses incurred in the Project plus a reasonable rate of return not exceeding that stated in the feasibility study and in the contract as of the date of such revocation, cancellation, or termination on a schedule to be agreed upon by both parties. To summarize, the SMDRP shall consist of Phase I and Phase II. Phase I of the project involves clearing, levelling-off the dumpsite, and construction of temporary housing units for the current residents on the cleared and levelled site. Phase II involves the construction of a fenced incineration area for the on-site disposal of the garbage at the dumpsite. Due to the recommendations done by the DENR after evaluations done, the JVA was amended and restated (now ARJVA) to accommodate the design changes and additional work to be done to successfully implement the project. The original 3,500 units of temporary housing were decreased to 2,992. The reclaimed land as enabling component was increased from 40 hectares to 79 hectares, which was supported by the issuance of Proclamation No. 465 by President Ramos. The revision also provided

for the 119-hectare land as an enabling component for Phase II of the project. Subsequently, the Clean Air Act was passed by the legislature which made the establishment of an incinerator illegal, making the off-site dumpsite at Smokey Mountain necessary. On August 1, 1998, the project was suspended, to be later reconstituted by President Estrada in MO No. 33. On August 27, 2003, the NHA and RBI executed a Memorandum of Agreement whereby both parties agreed to terminate the JVA and subsequent agreements. During this time, NHA reported that 34 temporary housing structures and 21 permanent housing structures had been turned over by RBI. ISSUES: Whether respondents NHA and RBI have been granted the power and authority to reclaim lands of the public domain as this power is vested exclusively in PEA as claimed by petitioner Whether respondents NHA and RBI were given the power and authority by DENR to reclaim foreshore and submerged lands Whether respondent RBI can acquire reclaimed foreshore and submerged lands considered as alienable and outside the commerce of man Whether respondent RBI can acquire reclaimed lands when there was no declaration that said lands are no longer needed for public use Whether there is a law authorizing sale of reclaimed lands Whether the transfer of reclaimed lands to RBI was done by public bidding Whether RBI, being a private corporation, is barred by the Constitution to acquire lands of public domain Whether respondents can be compelled to disclose all information related to the SMDRP Whether the operative fact doctrine applies to the instant position HELD: Executive Order 525 reads that the PEA shall be primarily responsible for integrating, directing, and coordinating all reclamation projects for and on behalf of the National Government. This does not mean that it shall be responsible for all. The requisites for a valid and legal reclamation project are approval by the President (which were provided for by MOs), favourable recommendation of PEA (which were seen as a part of its recommendations to the EXECOM), and undertaken either by PEA or entity under contract of PEA or by the National Government Agency

(NHA is a government agency whose authority to reclaim lands under consultation with PEA is derived under PD 727 and RA 7279). Notwithstanding the need for DENR permission, the DENR is deemed to have granted the authority to reclaim in the Smokey Mountain Project for the DENR is one of the members of the EXECOM which provides reviews for the project. ECCs and Special Patent Orders were given by the DENR which are exercises of its power of supervision over the project. Furthermore, it was the President via the abovementioned MOs that originally authorized the reclamation. It must be noted that the reclamation of lands of public domain is reposed first in the Philippine President. The reclaimed lands were classified alienable and disposable via MO 415 issued by President Aquino and Proclamation Nos. 39 and 465 by President Ramos. Despite not having an explicit declaration, the lands have been deemed to be no longer needed for public use as stated in Proclamation No. 39 that these are to be “disposed to qualified beneficiaries.” Furthermore, these lands have already been necessarily reclassified as alienable and disposable lands under the BOT law. Letter I of Sec. 6 of PD 757 clearly states that the NHA can acquire property rights and interests and encumber or otherwise dispose of them as it may deem appropriate. There is no doubt that respondent NHA conducted a public bidding of the right to become its joint venture partner in the Smokey Mountain Project. It was noted that notices were published in national newspapers. The bidding proper was done by the Bids and Awards Committee on May 18, 1992. RA 6957 as amended by RA 7718 explicitly states that a contractor can be paid “a portion as percentage of the reclaimed land” subject to the constitutional requirement that only Filipino citizens or corporation with at least 60% Filipino equity can acquire the same. In addition, when the lands were transferred to the NHA, these were considered Patrimonial lands of the state, by which it has the power to sell the same to any qualified person. This relief must be granted. It is the right of the Filipino people to information on matters of public concerned as stated in Article II, Sec. 28, and Article III, Sec. 7 of the 1987 Constitution. When the petitioner filed the case, the JVA had already been terminated by virtue of MOA between RBI and NHA. The properties and rights in question after the passage of around 10 years from the start of the project’s implementation cannot be disturbed or questioned. The petitioner, being the Solicitor General at the time SMDRP was

formulated, had ample opportunity to question the said project, but did not do so. The moment to challenge has passed.

HELD: The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine, which holds that the State owns all lands and waters of the public domain. The 1987 Constitution recognizes the Regalian doctrine. It declares that all natural resources are owned by the State and except for alienable agricultural lands of the public domain, natural resources cannot be alienated.

CHAVEZ V. PUBLIC ESTATES AUTHORITY 384 SCRA 152 FACTS: President Marcos through a presidential decree created PEA, which was tasked with the development, improvement, and acquisition, lease, and sale of all kinds of lands. The then president also transferred to PEA the foreshore and offshore lands of Manila Bay under the ManilaCavite Coastal Road and Reclamation Project. Thereafter, PEA was granted patent to the reclaimed areas of land and then, years later, PEA entered into a JVA with AMARI for the development of the Freedom Islands. These two entered into a joint venture in the absence of any public bidding. Later, a privilege speech was given by Senator President Maceda denouncing the JVA as the grandmother of all scams. An investigation was conducted and it was concluded that the lands that PEA was conveying to AMARI were lands of the public domain; the certificates of title over the Freedom Islands were void; and the JVA itself was illegal. This prompted Ramos to form an investigatory committee on the legality of the JVA. Petitioner now comes and contends that the government stands to lose billions by the conveyance or sale of the reclaimed areas to AMARI. He also asked for the full disclosure of the renegotiations happening between the parties. ISSUE: W/N stipulations in the amended JVA for the transfer to AMARI of the lands, reclaimed or to be reclaimed, violate the Constitution.

The Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the 750 hectare reclamation project have been reclaimed, and the rest of the area are still submerged areas forming part of Manila Bay. Further, it is provided that AMARI will reimburse the actual costs in reclaiming the areas of land and it will shoulder the other reclamation costs to be incurred. The foreshore and submerged areas of Manila Bay are part of the lands of the public domain, waters and other natural resources and consequently owned by the State. As such, foreshore and submerged areas shall not be alienable unless they are classified as agricultural lands of the public domain. The mere reclamation of these areas by the PEA doesn’t convert these inalienable natural resources of the State into alienable and disposable lands of the public domain. There must be a law or presidential proclamation officially classifying these reclaimed lands as alienable and disposable if the law has reserved them for some public or quasi-public use.

DACANAY JR. V. ASISTIO JR. 208 SCRA 404 FACTS: An ordinance was issued designated certain city and municipal streets, roads, and other public areas for sites of public markets. Pursuant to this, licenses were issued to market stall owners to put up their stalls in certain streets. Thereafter, the OIC mayor of Caloocan has caused the demolition of the stalls, which was upheld by the trial court, saying

that the public streets are part of the public dominion and is not open to the commerce of man. Then there come about a change in administration of the city. The next mayor did not continue the demolition of the stalls. Using the trial court’s decision, here now comes petitioner asking for the demolition of the stalls. HELD: There is no doubt that the disputed areas from which the private respondent’s market stalls are sought to be evicted are public streets. A public street is property for public use hence outside the commerce of man. Being outside the commerce of man, it may not be the subject of lease or other contract. The right of the public to use the city streets may not be bargained away through contract. The interests of the few should not prevail over the good of the greater number in the community. Republic v. IAC [G.R. No. 73085. June 4, 1990.] Second Division, Paras (J): 4 concur Facts: Claiming that they acquired the property by virtue of a document which they alleged to be a Spanish title originally issued in the name of Bernardo Merchan, the Merchans filed a complaint dated 7 August 1974 against Republic of the Philippines for quieting of title over said property located in Sitio de Malapianbato alias Arras, Barrio de Ayuti, Lucban, Quezon, containing an area of 166 hectares, more or less. The Government moved to dismiss the complaint on the ground that the trial court had no jurisdiction over the subject matter of the case because the land is part of a forest reserve established by Proclamation 42 (14 October 1921), and by Proclamation 716 (26 May 1941) which declared the area as part of the “Mts. Banahaw-San Cristobal National Park.” The motion was denied. The Merchans filed a motion to declare the Government in default for failure to file its answer within the reglementary period. The latter motion was granted. The Government filed for a motion for reconsideration. On 18 December 1975, Judge Manolo L. Madella rendered a decision declaring the Merchans as owners of Property, 2003 ( 170 )Haystacks (Berne Guerrero) the land subject of the litigation. Meanwhile, the Supreme Court rendered a resolution declaring null and void

all judicial acts, decisions, orders and resolutions performed promulgated and issued by then Judge Madella after 2 January 1976. A motion to set aside the decision of 18 December 1975 was filed. On 21 April 1976, Judge Delia P. Medina now presiding in the trial court, issued an order declaring the Government’s motion for reconsideration moot and academic in light of the aforementioned resolution; and required the Merchans to file an answer to the motion to set aside the decision of December 1975. Thereafter, and on 23 July 23, the motion to vacate was granted. Motion for reconsideration was filed by the Merchans, but were denied. On 16 September 1976, the Merchans filed a manifestation assailing the jurisdiction of the court to hear the case, which was denied. Thereafter on 27 September 1976, the Merchans filed with the Court of Appeals a petition for certiorari and prohibition with preliminary injunction against Judge Medina. On 29 November 1977, the CA denied the petition for certiorari and lifted the restraining order that it previously issued. Meanwhile, while the case above was pending before the CA and on 29 December 1976, 6 months after the effectivity of PD 892, the Merchans filed an application for the registration of the parcel of land involved in Civil Case 7840 (LRC N-1055). The trial court, this time presided by Judge Benigno M. Puno, issued an order setting the case for pre-trial. For failure of Government’s counsel to attend the scheduled hearing, the trial court issued an order declaring the said failure as a waiver to present evidence and to cross-examine the Merchans’ witnesses and declared the case submitted for decision. On 3 March 1980, the trial court rendered its decision in favor of the Merchans. The Government appealed to the then IAC, which affirmed the judgment of the trial court. Hence, the petition. The Supreme Court reversed the decision of the appellate court, and dismissed Civil Case 7840 and Registration Case N-1055.