PROPERTY LAW: STUDY GUIDE - Articles.

414 – 426

For our PROPERTY LAW class on 07 July 2018, 1:00 – 5:00 p.m., Sat. please
study the following for our Lecture, Graded Recitation and Reporting.
(Textbook choices: Vol. 2, Civil Code – PARAS or, Tolentino or, Pineda)

I. ARTICLES 414 – 418

A. Know the following:
 Classification of Immovable or Real Properties in Art, 415 (NATURE ,
INCORPORATION, DESTINATION, ANALOGY) and their
corresponding examples
 The 3 Tests in general to Determine whether a Property is Movable or
Immovable
 What are considered as Personal Property (Arts. 416-417)
 What are consumables & non-consumables (Art. 418)

B. DO CASE DIGEST ON THE FOLLOWING CASES:

o Know the facts, issues and rulings. You may glance at your notebook
during graded recitation.

ARTICLE 415 – 416 :

1. Biscerra v. Teneza, L-16218, Nov. 29, 1962
Bicerra v. Teneza [G.R. No. L-16218. November 29, 1962.]
Bicerra v. Teneza
[G.R. No. L-16218. November 29, 1962.]
En Banc, Makalintal (J): 10 concur.

FACTS: The Bicerras are supposedly the owners of the house worth P200,
built on a lot owned by them in Lagangilang, Abra; which the Tenezas forcibly
demolished in January 1957, claiming to be the owners thereof. The materials
of the house were placed in the custody of the barrio lieutenant. The Bicerras
filed a complaint claiming actual damages of P200, moral and consequential
damages amounting to P600, and the costs. The CFI Abra dismissed the
complaint claiming that the action was within the exclusive (original) jurisdiction
of the Justice of the Peace Court of Lagangilang, Abra.

ISSUE:
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W/N the action involves title to real propety.
W/N the dismissal of the complaint was proper.

HELD:
The Supreme Court affirmed the order appealed. Having been admitted in
forma pauperis, no costs were adjudged.

1. House is immovable property even if situated on land belonging to a different

owner; Exception, when demolished
A house is classified as immovable property by reason of its adherence to the
soil on which it is built (Article 415, paragraph 1, Civil Code). This classification
holds true regardless of the fact that the house may be situated on land
belonging to a different owner. But once the house is demolished, as in this
case, it ceases to exist as such and hence its character as an immovable
likewise ceases.

2. Recovery of damages not exceeding P2,000 and involving no real property

belong to the Justice of the Peace Court
The complaint is for recovery of damages, the only positive relief prayed for.
Further, a declaration of being the owners of the dismantled house and/or of
the materials in no wise constitutes the relief itself which if granted by final
judgment could be enforceable by execution, but is only incidental to the real
cause of action to recover damages. As this is a case for recovery of damages
where the demand does not exceed PhP 2,000 and that there is no real
property litigated as the house has ceased to exist, the case is within the
jurisdiction of the Justice of the Peace Court (as per Section 88, RA 296 as
amended) and not the CFI (Section 44, id.)

2. Lopez v. Oroso Jr. et al L-10817-18, Feb. 28, 1958;

ENRIQUE LOPEZ, petitioner,

vs.

VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.

Facts:

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After agreeing to make an investment in Orosa’s theatre business and his
assurance that he would be personally liable for any account that the said
construction might incur, Lopez delivered the lumber which was used for the
construction of the Plaza Theatre. But of the total cost of the materials
amounting to P62,255.85, Lopez was paid only P20848.50.

Plaza Theatre was erected on a piece of land formerly owned by Orosa, and
was acquired by the corporation. As Lopez was pressing Orosa for payment
of remaining unpaid obligation, the latter promised to obtain a bank loan by
mortgaging the properties of Plaza Theatre. Unknown to Lopez, the
corporation already got a loan from a bank with Luzon Surety Company as
surety, and the corporation in turn executed a mortgage on the land and
building in favor of said company as counter-security.

Persistent demand from Lopez caused Orosa to execute an alleged “deed of

assignment” of his 480 shares of stock of Plaza Theatre, at P100 per share;
and as the obligation still remain unsettled, Lopez filed a complaint against
Orosa and Plaza Theatre Inc, praying that xxx in case defendants fail to pay,
the building and land owned by corporation be sold at public auction, or the
shares of the capital stock be sold, and the proceeds thereof be applied to said
indebtedness.

As a defense, Orosa contended that the shares of stocks were personal

properties and cannot be made to cover and satisfy the obligation. it was thus
prayed that he be declared exempted from payment of deficiency in case the
proceeds from the sale of properties are not enough.

The surety company, upon discovery that the land was already registered, file
a petition to annotate the rights and interests of the surety company over the
said properties, which was opposed by Lopez who asserted that he has
preferred lien over the properties.

The two cases were heard jointly, and lower court held that Orosa were liable
for the unpaid balance of the cost of lumber used in the construction, and
Lopez thus acquired materialman’s lien over it. In making the pronouncement
that tyhe lien was merely confined to the building and did not extend to the land
where it was built, the trial jduge took into consideration that xxx codal
provisions specifying that refection credits are preferred could refer to buildings
which are also classified as real properties upon which the refaction was made.
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Orosa were thus required to xxx with respect tohe building, said mortgage was
subject to materialmen’s lien in favor of Lopez.

Lopez tried to secure a modification of decision in so far as it declared that lien

did not extend to the land, but was denied by court. Hence, the appeal.

Issue:

Whether a materialmen’s lien for the value of materials used in the construction
of building attaches to said structure alone, and does not extend to the land on
which building is adhered to.

Held:

Yes. Such lien attaches to structure alone, and does not extend to the land
where the building is.

In view of employment of the phrase, “real estate or immovable property”, and

in as much as said provision does not contain any specification delimiting the
lien to the building, said article must be construed as to embrace both the land
and building or the structure adhering thereto. SC cannot subscribe to this
view, for while it is true that real estate connotes land and building constructed
thereon, it is obvious that the inclusion of the building, separate and distinct
from the land, in the enumeration of what may constitute real properties could
mean only one thing – that the building is by itself an immovable property.
Moreover, in view of the absence of any specific provision of law to the
contrary, a building is an immovable property, irrespective of whether or not
said structure and the land on which it is adhered to belong to the same owner.

A close examination of the provision of the Civil Code reveals that the law gives
preference to unregistered refectionary credits only with respect to the real
estate upon the refection or work was made. The conclusion is that it must be
that the lien so created attaches merely to the immovable property for the
construction or repair of which the obligation was incurred. Therefore, the lien
in favor of appellant for the unpaid value of the lumber used in construction of
the building attaches only to said structure and to no other property of the
obligors.

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 3. Assoc. Inc. and Surety Co., Inc. v. Iya et al., L-10837-38, May 30, 1958
–

Facts:
Valino & Valino were the owners and possessors of a house of strong materials
in Rizal, which they purchased on installment basis. To enable her to purchase
on credit rice from NARIC, Valino filed a bond (P11,000) subscribed by
Associated Insurance and Surety Co Inc, and as a counter-guaranty, Valino
executed an alleged chattel mortgage on the aforementioned house in favour
of the surety company. At the same time, the parcel of land which the house
was erected was registered in the name of Philippine Realty Corporation.

Valino, to secure payment of an indebtedness (P12,000) executed a real

estate mortgage over the lot and the house in favour of Iya.

Valino failed to satisfy her obligation to NARIC, so the surety company was
compelled to pay the same pursuant to the undertaking of the bond. In turn,
surety company demanded reimbursement from Valino, and as they failed to
do so, the company foreclosed the chattel mortgage over the house. As a
result, public sale was conducted and the property was awarded to the surety
company.

The surety company then learned of the existence of the real estate mortgage
over the lot and the improvements thereon; thus, they prayed for the exclusion
of the residential house from the real estate mortgage and the declaration of
its ownership in virtue of the award given during bidding.

Iya alleged that she acquired a real right over the lot and the house constructed
thereon, and that the auction sale resulting from the foreclosure of chattel
mortgage was null and void.

Surety company argued that as the lot on which the house was constructed
did not belong to the spouses at the time the chattel mortgage was executed,
the house might be considered as personal property, and they prayed that the
said building be excluded from the real estate mortgage.

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Issue:
There is no question over Iya’s right over the land by real estate mortgage;
however, as the building instructed thereon has been the subject of two
mortgages, controversy arise as to which of these encumbrances should
receive preference over the other.

Held:
The building is subject to the real estate mortgage, in favour of Iya. Iya’s right
to foreclose not only the land but also the building erected thereon is
recognised.

While it is true that real estate connotes the land and the building constructed
thereon, it is obvious that the inclusion of the building, separate and distinct
from the land, in the enumeration of what may constitute real properties (Article
415), could only mean that a building is by itself an immovable property.
Moreover, in view of the absence of any specific provision to the contrary, a
building is an immovable property irrespective of whether or not said structure
and the land on which it is adhered to belong to the same owner.

A building certainly cannot be divested of its character of a realty by the fact

that the land on which it is constructed belongs to another.

In the case at bar, as personal properties could only be the subject of a chattel
mortgage and as obviously the structure in question is not one, the execution
of the chattel mortgage covering said building is clearly invalid and a nullity.
While it is true that said document was correspondingly registered in Chattel
Mortgage Registry of Rizal, this act produced no effect whatsoever, for where
the interest conveyed is in the nature of real property, the registration of the
document in the registry of chattels is merely a futile act. Thus, the registration
of the chattel mortgage of a building of strong materials produced no effect as
far as the building is concerned.

4. Tumalad v. Vivencio, G.R. No. L-30173 ,September 30, 1971

6
Alberta Vicencio and Emiliano Simeon received a loan of P4, 800 from Gavino
and Generosa Tumalad. To guaranty said loan, Vicencio executed a chattel
mortgage in favor of Tumalad over their house of strong materials which stood
on a land which was rented from the Madrigal & Company, Inc. When Vicencio
defaulted in paying, the house was extrajudicially foreclosed, pursuant to their
contract. It was sold to Tumalad and they instituted a Civil case in the Municipal
Court of Manila to have Vicencio vacate the house and pay rent.

The MTC decided in favor of Tumalad ordering Vicencio to vacate the house
and pay rent until they have completely vacated the house. Vicencio is
questioning the legality of the chattel mortgage on the ground that 1) the
signature on it was obtained thru fraud and 2) the mortgage is a house of strong
materials which is an immovable therefore can only be the subject of a REM.
On appeal, the CFI found in favor of Tumalad, and since the Vicencio failed to
deposit the rent ordered, it issued a writ of execution, however the house was
already demolished pursuant to an order of the court in an ejectment suit
against Vicencio for non-payment of rentals. Thus the case at bar.

ISSUE:
Whether or not the chattel mortgage is void since its subject is an immovable

HELD:
NO.
Although a building is by itself an immovable property, parties to a contract
may treat as personal property that which by nature would be real property and
it would be valid and good only insofar as the contracting parties are
concerned. By principle of estoppel, the owner declaring his house to be a
chattel may no longer subsequently claim otherwise.

When Vicencio executed the Chattel Mortgage, it specifically provides that the
mortgagor cedes, sells and transfers by way of Chattel mortgage. They
intended to treat it as chattel therefore are now estopped from claiming
otherwise. Also the house stood on rented land which was held in previous
7
jurisprudence to be personalty since it was placed on the land by one who had
only temporary right over the property thus it does not become immobilized by
attachment.

[Vicencio though was not made to pay rent since the action was instituted
during the period of redemption therefore Vicencio still had a right to remain in
possession of the property]

5. Board of Assessment Q.C. v. MERALCO 10 SCRA 68

Facts:

Meralco constructed 40 steel towers within Quezon City, which carry electric
transmission wires attached to insulators from its hydro-electric plant located
in the province of Laguna to the City of Manila.

The City Assessor of Quezon City declared Meralco's steel towers for real
property tax.

Issue:

Whether or not Meralco's steel towers are considered real properties so that
they can be subject to real property tax.

Held:

No, Meralco's steel towers are not considered real properties that can be
subject to real property tax.

Article 415 of the Civil Code states the following are immovable properties:

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(1) Land, buildings, roads, and constructions of all kinds adhered to the soil;

(3) Everything attached to an immovable in a fixed manner, in such a way that

it cannot be separated therefrom without breaking the material or deterioration
of the object;

(5) Machinery, receptacles, instruments or implements intended by the owner

of the tenement for an industry or works, which may be carried in a building or
on a piece of land, and which tends directly to meet the needs of the said
industry or works;

The steel towers do not come within the objects mentioned in above
paragraphs.

They are not construction analogous to buildings nor adhering to the soil. They
are removable and merely attached to a square metal frame by means of bolts,
which when unscrewed could easily be dismantled and moved from place to
place.

They are also not attached to an immovable in a fixed manner, and they can
be separated without breaking the material or causing deterioration upon the
object to which they are attached.

They are not machinery, receptacles, instruments or implements intended for

industry or works on the land. Meralco is not engaged in an industry or works
on the land in which the steel towers are constructed.

The decision of the Court of Tax Appeals, which ordered the cancellation of
the tax declarations, were affirmed by the Supreme Court.

6. Yap vs. Tanada, 163 SCRA 464, July 18, 1988

GR. No. L- 32917, July 18, 1988 Julian Yap vs. Hon. Santiago O. Tañada, etc.
and Goulds Pumps Int’l Phil., Inc.

Case: This is a collection suit instituted by Goulds Pumps against Spouses

Yap.

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Facts: Yap bought from Goulds Pumps a water pump. The water pump was
the installed in his premises. Upon failure to pay the installment, Goulds
instituted the case.
RTC: Judge Tañada rendered judgment in favor of Goulds. A writ of execution
was released and the same pump was levied by the sheriff. Yap appealed the
judgment to SC.
Issue: Whether of not the pump is immovable as contested by petitioner Yap
such that the judgment of Judge Tañada be invalidated for not following the
procedure in levying a real property.
SC: The water pump installed in movable property. The Civil Code considers
as immovable property, among others, anything "attached to an immovable in
a fixed manner, in such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object. The pump does not fit this
description. It could be, and was in fact separated from Yap's premises without
being broken or suffering deterioration. Obviously the separation or removal of
the pump involved nothing more complicated than the loosening of bolts or
dismantling of other fasteners. DENIED.

7. Evangelista v. Alto Surety, L-11139, April 23, 1958

Evangelista v. Alto Surety

Evangelista v. Alto Surety

Facts:
In 1949, Santos Evangelista instituted Civil Case No. 8235 of the CFI Manila
(Santos Evangelista vs. Ricardo Rivera) for a sum of money. On the same
date, he obtained a writ of attachment, which was levied upon a house, built
by Rivera on a land situated in Manila and leased to him, by filing copy of said
writ and the corresponding notice of attachment with the Office of the Register
of Deeds of Manila. In due course, judgment was rendered in favor of
Evangelista, who bought the house at public auction held in compliance with
the writ of execution issued in said case on 8 October 1951. The corresponding
definite deed of sale was issued to him on 22 October 1952, upon expiration
of the period of redemption. When Evangelista sought to take possession of
the house, Rivera refused to surrender it, upon the ground that he had leased
the property from the Alto Surety & Insurance Co., Inc. and that the latter is
now the true owner of said property. It appears that on 10 May 1952, a definite

10
deed of sale of the same house had been issued to Alto Surety, as the highest
bidder at an auction sale held, on 29 September 1950, in compliance with a
writ of execution issued in Civil Case 6268 of the same court (Alto Surety &
Insurance vs. Maximo Quiambao, Rosario Guevara and Ricardo Rivera)" in
which judgment for the sum of money, had been rendered in favor of Alto
Surety. Hence, on 13 June 1953, Evangelista instituted an action against Alto
Surety and Ricardo Rivera, for the purpose of establishing his title over said
house, and securing possession thereof, apart from recovering damages. After
due trial, the CFI Manila rendered judgment for Evangelista, sentencing Rivera
and Alto Surety to deliver the house in question to Evangelista and to pay him,
jointly and severally, P40.00 a month from October 1952, until said delivery.
The decision was however reversed by the Court of Appeals, which absolved
Alto Surety from the complaint on account that although the writ of attachment
in favor of Evangelista had been filed with the Register of Deeds of Manila prior
to the sale in favor of Alto Surety, Evangelista did not acquire thereby a
preferential lien, the attachment having been levied as if the house in question
were immovable property.

Issue:
Whether or not a house constructed by the lessee of the land on which it is
built, should be dealt with, for purpose of attachment, as immovable property?

Held:
The court ruled that the house is not personal property, much less a debt, credit
or other personal property not capable of manual delivery, but immovable
property. As held in Laddera vs. Hodges (48 OG 5374), "a true building is
immovable or real property, whether it is erected by the owner of the land or
by a usufructuary or lessee.” The opinion that the house of Rivera should have
been attached, as "personal property capable of manual delivery, by taking
and safely keeping in his custody", for it declared that "Evangelista could not
have validly purchased Ricardo Rivera's house from the sheriff as the latter
was not in possession thereof at the time he sold it at a public auction” is
untenable. Parties to a deed of chattel mortgage may agree to consider a
house as personal property for purposes of said contract. However, this view
is good only insofar as the contracting parties are concerned. It is based, partly,
upon the principle of estoppel. Neither this principle, nor said view, is
applicable to strangers to said contract. The rules on execution do not allow,
and should not be interpreted as to allow, the special consideration that parties
to a contract may have desired to impart to real estate as personal property,
11
when they are not ordinarily so. Sales on execution affect the public and third
persons. The regulation governing sales on execution are for public officials to
follow. The form of proceedings prescribed for each kind of property is suited
to its character, not to the character which the parties have given to it or desire
to give it. The regulations were never intended to suit the consideration that
parties, may have privately given to the property levied upon. The court
therefore affirms the decision of the CA with cost against Alto Surety.

8. Leung Yee v. Strong Machinery Co., 37 Phil. Reports 644

LEUNG YEE
vs. FRANK L. STRONG MACHINERY COMPANY & J. G. WILLIAMSON

G.R. No. L-11658

February 15, 1918

FACTS:
 Compania Agricola Filipina bought rice-cleaning machines from
Strong Machinery Co. and installed it in one of its buildings

 Agricola executed a chattel on the machines and the building where

it was installed as a security for the purchase price

 Unable to pay, mortgage was foreclosed and building was purchased

by Strong Machinery Co. – the sale was annotated in the Chattel
Mortgage Registry

 Later, Agricola sold the lot where the building was constructed to
Strong Machinery Co. – sale was not registered in Registry of
Property but the latter took possession

 Previously, Leung Yee (a creditor of Agricola) bought the building at

a sheriff’s sale, and this was recorded in the Registry

 Before purchasing the property, Yee knew about the prior sale to
Strong Machinery Co. – he now sues to recover the property from
Strong Machinery Co.

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LAW/S:
 ACT NO. 1508 (Chattel Mortgage Law)
 Chattel mortgage is a conditional sale of personal property as
security
 Should be recorded with the Chattel Mortgage Registry to be
legally binding

 ART. 415, NEW CIVIL CODE

 PAR.1: “Land, buildings, roads, and constructions of all kinds
adhered to the soil”
 Buildings and land are immovable property

 ART. 1473, NEW CIVIL CODE

 Rules on determining ownership if property is sold to different
vendees:
 Personal Property - grant ownership to person who 1st
possessed it in good faith
 Real Property – grant ownership to person who 1st recorded
it in the Registry
 No Entry – grant to person who 1st possessed in good faith
 No Proof of Possession – grant to person who presents
oldest title

ISSUE/S:
 Whether or not the property's nature changed by its registration in
the Chattel Mortgage Registry

 Whether or not Leung Yee has a better right to the property since the
sale to him was duly registered with the Land Registry

RULING:
 NO, THE NATURE OF THE PROPERTY HAS NOT CHANGED
 By inclusion, buildings and land are REAL PROPERTY
 The mere fact that the parties decided to deal with the building
as personal property does not change its character as real
property

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  STRONG MACHINERY CO. HAS BETTER RIGHT
 Leung Yee was not a buyer in good faith (had previous
knowledge of an earlier sale)
 Though the sale to Strong Machinery Co. was not recorded in
the proper registry, it was the first the possess the property in
good faith
NOTE:

 Building is REAL PROPERTY, its sale as annotated in the Chattel

Mortgage Registry cannot be given the legal effect of registration in
the Registry of Real Property

 Neither the original registry in the chattel mortgage registry, nor the
annotation in said registry of the sale of the mortgaged property had
any effect on the building

9. Standard Oil v. Jaranillo 44 Phil. 631

FACTS
On November 27, 1922, Gervasia de la Rosa was the lessee of a parcel of
land situated in the City of Manila and owner of the house of really tough
materials built thereon. She executed that fine day a document in the form of
a chattel mortgage, purporting to convey to Standard Oil Company of New
York (by way of mortgage) both the leasehold interest in said lot and the
building.

After said document had been duly acknowledged and delivered, Standard Oil
presented it to Joaquin Jaramillo, as register of deeds of the City of Manila, for
the purpose of having the same recorded in the book of record of chattel
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mortgages. Upon examination of the instrument, Jaramillo opined 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.

Later this confusion was brought to the Supreme Court upon demurrer by
Joaquin Jaramillo, register of deeds of the City of Manila, to an original petition
of the Standard Oil Company of New York, demanding a mandamus to compel
the respondent to record in the proper register a document purporting to be a
chattel mortgage executed in the City of Manila by Gervasia de la Rosa, Vda.
de Vera, in favor of the Standard Oil Company of New York.

The Supreme Court overruled the demurrer, and ordered that unless Jaramillo
interposes a sufficient answer to the petition for mandamus by Standard Oil
within 5 days of notification, the writ would be issued as prayed, but without
costs.

ISSUE:
w/n the Registry of Deeds can determine the nature of property to be
registered.
w/n the Registry of Deeds has powers beyond Ministerial discretion.

RESOLUTION:
1.Jaramillo, register of deeds, does not have judicial or quasi-judicial power to
determine nature of document registered as chattel mortgage Section 198 of
the Administrative Code, originally of Section 15 of the Chattel Mortgage Law
(Act 1508 as amended by Act 2496), does not confer upon the register of
deeds any authority whatever in respect to the "qualification," as the term is
used in Spanish law, of chattel mortgages. His duties in respect to such
instruments are ministerial only. The efficacy of the act of recording a chattel
mortgage consists in the fact that it operates as constructive notice of the
existence of the contract, and the legal effects of the contract must be
discovered in the instrument itself in relation with the fact of notice.
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2.Article 334 and 335 of the Civil Code does not supply absolute criterion on
distinction between real and personal property for purpose of the application
of the Chattel Mortgage Law Article 334 and 335 of the Civil Code supply no
absolute criterion for discriminating between real property and personal
property for purposes of the application of the Chattel Mortgage Law. Those
articles state rules which, considered as a general doctrine, are law in this
jurisdiction; but it must not be forgotten that under given conditions property
may have character different from that imputed to it in said articles. It is
undeniable that the parties to a contract may be agreement treat as personal
property that which by nature would be real property; and it is a familiar
phenomenon to see things classed as real property for purposes of taxation
which on general principle might be considered personal property. Other
situations are constantly arising, and from time to time are presented to the
Supreme Court, in which the proper classification of one thing or another as
real or personal property may be said to be doubtful.]

10. Lavarro v. Labitoria, 54 Phil. 788

11. Sibal v. Valdez, 50 Phil. 512

SIBAL v. VALDEZ

For the purpose of attachment and execution, and for the purposes of the
Chattel Mortgage Law, "ungathered products" have the nature of personal
property.

FACTS:

(this case has a lot of confusing facts, just read the original if this digest fails
to compress everything) The 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. Included also in those
attached were real properties wherein 8mout of the 11 parcels of land, house
and camarin which was first acquired by Macondray & Co and then later on
16
bought by Valdez in an auction. First Cause for petitioner: That Within one year
from the date of the attachment and sale the 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 and that Valdez refused to accept the money and to
return the sugar cane to the plaintiff. Second Cause for petitioner: That Valdez
was trying to harvest palay from four out of seven parcels of land. Petitioner
filed for preliminary injunction to stop defendant from 1) distributing the lands
2) harvesting and selling the sugar canes, and 3) harvesting and selling the
palay. The writ was issued which prevented defendant from planting and
harvesting the lands. Defendant later appealed claiming that he was the owner
of many of the alleged land thus he also owns the crops of it. The court
awarded the defendant 9,439.08 because the petitioner unduly denied the
defendant to plant in his land thus preventing him to profit thereto.

ISSUE:
Whether the sugar cane is personal o real property? (The relevance of the
issue is with regards to the sugar cane of the Petitioner which came from the
land that now belongs to the defendant)

RULING:

It is contended that sugar cane comes under the classification of real property
as "ungathered products" in paragraph 2 of article 334 of the Civil Code. Said
paragraph 2 of article 334 enumerates as real property the following: Trees,
plants, and ungathered products, while they are annexed to the land or form
an integral part of any immovable property." That article, however, has
received in recent years an interpretation by the Tribunal Supremo de España,
which holds that, under certain conditions, growing crops may be considered
as personal property.

In some cases "standing crops" may be considered and dealt with as personal
property. In the case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418)
17
the Supreme Court said: "True, by article 465 of the Civil Code it is provided
that 'standing crops and the fruits of trees not gathered and trees before they
are cut down . . . are considered as part of the land to which they are attached,
but the immovability provided for is only one in abstracto and without reference
to rights on or to the crop acquired by others than the owners of the property
to which the crop is attached. . . . The existence of a right on the growing crop
is a mobilization by anticipation, a gathering as it were in advance, rendering
the crop movable quoad the right acquired therein. Our jurisprudence
recognizes the possible mobilization of the growing crop."

For the purpose of attachment and execution, and for the purposes of the
Chattel Mortgage Law, "ungathered products" have the nature of personal
property. SC lowered the award for damages to the defendant to 8,900.80 by
acknowledging the fact that some of the sugar canes were owned by the
petitioner and by reducing the calculated expected yield or profit that defendant
would have made if petitioner did not judicially prevent him from planting and
harvesting his lands.

12. Davao Sawmill Co., v. Castillo, 61 Phil.709

Davao Sawmill v. Castillo

DAVAO SAW MILL vs. APRONIANO G. CASTILLO and DAVAO LIGHT &
POWER CO., INC. G.R. No. L-40411 August 7, 1935

Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the
Government of the Philippine Islands. 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

18
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 lessor without any obligation on its part to pay any amount for said
improvements and buildings; which do not include the machineries and
accessories in the improvements.

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; 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

It must be noted also that on number of occasion, Davao Sawmill treated the
machinery as personal property by executing chattel mortgages in favor of third
persons. One of such is the appellee by assignment from the original
mortgages.

The lower court rendered decision in favor of the defendants herein. Hence,
this instant appeal.

Issue:
whether or not the machineries and equipments were personal in nature.

Ruling/ Rationale:
Yes. The Supreme Court affirmed the decision of the lower court.

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.

13. People´s Bank and Trust Co., v. Dahican Lumber Co., L-17500,
May 16, 1967

19
"After Acquired Properties"

Facts:

Dahican Lumber Co. (DALCO) obtained a loan from People's Bank and Trust
Co. (Bank) secured by a deed of mortgage covering 5 parcels of land together
with all the buildings and other improvements existing thereon and all the
personal properties of DALCO located in its place of business.

After the day of the execution of the mortgage, DALCO purchased various
machinery, equipment, spare parts and supplies.

Pursuant to the provision of the mortgage deeds regarding "after acquired

properties", the Bank requested DALCO to submit complete list of the said
properties but DALCO refused to do so.

Issue:

Whether or not the "after acquired properties" were subject to the deed of
mortgage.

Held:

Yes, they are subject to the deeds of mortgage.

Article 415 of the Civil Code does not define real property but enumerates what
are considered as such, among them being machinery, receptacles,
instruments or replacements intended by owner of the tenement for an industry
or works which may be carried on in a building or on a piece of land, and shall
tend directly to meet the needs of the said industry or works.

The chattels or the "after acquired properties" were placed in the real
properties mortgaged to the Bank. They came within the operation of Article
145.

Hence, the "after acquired properties" were subject to the deed of mortgage.

20
 14. Hilado v. Reg.of Deeds, 49 Phil.542
G.R. No. L-25292 November 10, 1926

CONSULTAS NOS. 450 AND 451 of the attorneys of JOSE LEDESMA Y

ROSARIO. HILADO & HILADO, appellants,
vs.
THE REGISTER OF DEEDS OF THE PROVINCE OF OCCIDENTAL
NEGROS, appellee.

The appellants in their own behalf

Attorney-General Jaranilla for appellee.

OSTRAND, J.:

It appears from the record that a mortgage deed executed by Julio Ledesma
in favor of Jose Ledesma was presented for registration to the register of deeds
of Occidental Negros sometime during the year 1925. The mortgage was given
to secure a loan of P225,000, with interest at the rate of 12 per cent per annum,
and covered two Torrens registered haciendas, one of them embracing five
parcels of land and the other only one parcel. Under Act No. 2866, the
registration fee for a mortgage of the amount is P70, and the register of deeds
was of the opinion that the full fee of P70 should be paid for each of the parcel
of land described in the mortgage. The mortgagee maintained that the
registration fee could be charged only once, that is to say, that he was only
bound to pay a fee of P70 for all six parcels covered by the mortgage.

By reason of this divergency in views, the matter was brought in consulta to

the Judge of the Fourth Branch of the Court of First Instance of Manila, who
held that, before registration could be had, it was necessary that the value of
each property described be determined and be made to appear either in the
mortgage, or else by a separate public document, and that separate fees,
based upon the value of each property, be charged in accordance with the
schedule contained in Act No. 2866. From this ruling the mortgagee Jose
Ledesma appeals to this court.

21
The schedule of fees for recording mortgages in the Torrens register is found
in section 114 of the Land Registration Act as amended by Act No. 2866. The
pertinent portions of the amended section read as follows:

SEC 114. Fees payable under this Act shall be as follows:

xxx xxx xxx

For each registration or entry, with notes in connection therewith, there shall
be collected.

For each property or right worth three hundred pesos or less, three pesos.

From three hundred one to six hundred pesos, three pesos and fifty centavos.

xxx xxx xxx

From two hundred thousand and one to three hundred thousand pesos,
seventy pesos.lawphil.net

The amending act may not be drawn as skillfully as might be desired, but upon
examination its meaning seems fairly clear. The expression "For each property
or right" does not mean that the terms "property" and "right" are to be regarded
as synonymous. A mortgage on a parcel of land is not a property in the sense
of ownership or dominion over the land; it is merely a right held by a creditor
to have the property seized and sold for the satisfaction of debt in default of
payment. We are therefore here dealing with the fee for registration of a "right"
within the meaning of the statute. The right consist in a mortgage for P225,000,
or, as the statute expresses it, a mortgage "worth" P225,000, and it is provided
that each right worth that much shall be recorded in the Torrens register upon
the payment of a fee of P70, plus the entry fee of P50 centavos. The mortgage
is one and indivisible; it covers all the parcels described in it, and each and
every parcel responds for the full amount of the debt secured. It is not a
mortgage executed in accordance with the now obsolete and rarely observed
provisions of article 119 of the Mortgage Law of 1893, under which each of
several parcels described in a mortgage deed respond for only a portion of the
total amount of the debt secured, so that one mortgage deed might, in reality,
embrace several more or less disconnected mortgages. Here we have only

22
one undivided mortgage, or, in other words, one undivided right and for the
recording of which only one fee may be charged.

But it is argued that when several separately registered parcels of land are
included in the same mortgage, its recording will entail more work than that
required for the recording of the mortgage covering only one parcel, and that
it must have been the intention of the legislature to impose larger fees where
a greater number of entries were necessary. As to this argument, it is sufficient
to say that the schedule of fees clearly shows that it is principally a revenue
measure based on the value of the interest involved rather than on the amount
of labor required for the act of recording.

Our conclusion is that, for the purpose of taxing fees, an ordinary mortgage on
Torrens registered property must be regarded as only one "right" within the
meaning of section 114 of the Land Registration Act as amended by Act No.
2866; that the fee for its recording must be based on the total amount of the
debt secured, and that only one such fee may be collected for the recording in
one province, irrespective of the number of parcels or properties covered by a
mortgage. If, by reason of the location of the properties covered by a mortgage,
it becomes necessary to record said mortgage in more than one province, each
register of deeds may charge the full fee for the total amount of the mortgage.
For instance, if one of the parcels described in the mortgage now before us
were situated in the Province of Iloilo and the other parcel in Occidental
Negros, and the mortgage should be presented in the registries of deeds in
both provinces, each register of deeds would have the right to collect the full
sum of P70, plus the entry fee of P0.50, on the ground that each parcel
responded for the full amount of the mortgage debt and that the mortgage was
recorded in two separate and distinct registries.

The ruling appealed from is therefore reversed; the respondent register of

deeds will be governed by the rules herein laid down; and is hereby ordered
that, upon payment by the petitioner of an entry fee of P0.50 and the recording
fee of P70, the mortgage in question shall be admitted to record in the Torrens
registry of the Province of Occidental Negros. No costs will be allowed in this
instance. So ordered.

15. H. Berkenkotter v. Cu Unjieng 61 Phil. 663

G.R. No. L-41643 July 31, 1935

23
B.H. BERKENKOTTER, plaintiff-appellant,
vs.
CU UNJIENG E HIJOS, YEK TONG LIN FIRE AND MARINE INSURANCE
COMPANY, MABALACAT SUGAR COMPANY and THE PROVINCE
SHERIFF OF PAMPANGA, defendants-appellees.

Briones and Martinez for appellant.

Araneta, Zaragoza and Araneta for appellees Cu Unjieng e Hijos.
No appearance for the other appellees.

VILLA-REAL, J.:

This is an appeal taken by the plaintiff, B.H. Berkenkotter, from the judgment
of the Court of First Instance of Manila, dismissing said plaintiff's complaint
against Cu Unjiengs e Hijos et al., with costs.

In support of his appeal, the appellant assigns six alleged errors as committed
by the trial court in its decision in question which will be discussed in the course
of this decision.

The first question to be decided in this appeal, which is raised in the first
assignment of alleged error, is whether or not the lower court erred in declaring
that the additional machinery and equipment, as improvement incorporated
with the central are subject to the mortgage deed executed in favor of the
defendants Cu Unjieng e Hijos.

It is admitted by the parties that on April 26, 1926, the Mabalacat Sugar Co.,
Inc., owner of the sugar central situated in Mabalacat, Pampanga, obtained
from the defendants, Cu Unjieng e Hijos, a loan secured by a first mortgage
constituted on two parcels and land "with all its buildings, improvements,
sugar-cane mill, steel railway, telephone line, apparatus, utensils and whatever
forms part or is necessary complement of said sugar-cane mill, steel railway,
telephone line, now existing or that may in the future exist is said lots."

On October 5, 1926, shortly after said mortgage had been constituted, the
Mabalacat Sugar Co., Inc., 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. The estimated cost of said additional
24
machinery and equipment was approximately P100,000. In order to carry out
this plan, B.A. Green, president of said corporation, proposed to the plaintiff,
B.H. 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, the herein defendants Cu
Unjieng e Hijos. Having agreed to said proposition made in a letter dated
October 5, 1926 (Exhibit E), B.H. Berkenkotter, on October 9th of the same
year, delivered the sum of P1,710 to B.A. Green, president of the Mabalacat
Sugar Co., Inc., the total amount supplied by him to said B.A. Green having
been P25,750. Furthermore, B.H. 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 now in litigation.

On June 10, 1927, B.A. Green, president of the Mabalacat Sugar Co., Inc.,
applied to Cu Unjieng e Hijos for an additional loan of P75,000 offering as
security the additional machinery and equipment acquired by said B.A. Green
and installed in the sugar central after the execution of the original mortgage
deed, on April 27, 1927, together with whatever additional equipment acquired
with said loan. B.A. Green failed to obtain said loan.

Article 1877 of the Civil Code provides as follows.

ART. 1877. A 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 estate continues in the possession of the person who
mortgaged it or whether it passes into the hands of a third person.

In the case of Bischoff vs. Pomar and Compañia General de Tabacos (12 Phil.,
690), cited with approval in the case of Cea vs. Villanueva (18 Phil., 538), this
court laid shown the following doctrine:

1. REALTY; MORTGAGE OF REAL ESTATE INCLUDES IMPROVEMENTS

AND FIXTURES. — It is a rule, established by the Civil Code and also by the
Mortgage Law, with which the decisions of the courts of the United States are
in accord, that in a mortgage of real estate, the improvements on the same are
25
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. (Arts. 110 and 111 of the Mortgage Law, and
1877 of the Civil Code; decision of U.S. Supreme Court in the matter of Royal
Insurance Co. vs. R. Miller, liquidator, and Amadeo [26 Sup. Ct. Rep., 46; 199
U.S., 353].)

2. ID.; ID.; INCLUSION OR EXCLUSION OF MACHINERY, ETC. — In order

that it may be understood that the machinery and other objects placed upon
and used in connection with a mortgaged estate are excluded from the
mortgage, when it was stated in the mortgage that the improvements,
buildings, and machinery that existed thereon were also comprehended, it is
indispensable that the exclusion thereof be stipulated between the contracting
parties.

The appellant contends that the installation of the machinery and equipment
claimed by him in the sugar central of the Mabalacat Sugar Company, Inc.,
was not permanent in character inasmuch as B.A. Green, in proposing to him
to advance the money for the purchase thereof, made it appear in the letter,
Exhibit E, that in case B.A. Green should fail to obtain an additional loan from
the defendants Cu Unjieng e Hijos, said machinery and equipment would
become security therefor, said B.A. Green binding himself not to mortgage nor
encumber them to anybody until said plaintiff be fully reimbursed for the
corporation's indebtedness to him.

Upon acquiring the machinery and equipment in question with money obtained
as loan from the plaintiff-appellant by B.A. Green, as president of the
Mabalacat Sugar Co., Inc., the latter became owner of said machinery and
equipment, otherwise B.A. Green, as such president, could not have offered
them to the plaintiff as security for the payment of his credit.

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.

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
26
therein, for its sugar 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 principal 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.

Furthermore, the fact that B.A. Green bound himself to the plaintiff B.H.
Berkenkotter to hold said machinery and equipment as security for the
payment of the latter's credit and to refrain from mortgaging or otherwise
encumbering them until Berkenkotter has been fully reimbursed therefor, is not
incompatible with the permanent character of the incorporation of said
machinery and equipment with the sugar central of the Mabalacat Sugar Co.,
Inc., as nothing could prevent B.A. Green from giving them as security at least
under a second mortgage.

As to the alleged sale of said machinery and equipment to the plaintiff and
appellant after they had been permanently incorporated with sugar central of
the Mabalacat Sugar Co., Inc., and while the mortgage constituted on said
sugar central to Cu Unjieng e Hijos remained in force, only the right of
redemption of the vendor Mabalacat Sugar Co., Inc., in the sugar central with
which said machinery and equipment had been incorporated, was transferred
thereby, subject to the right of the defendants Cu Unjieng e Hijos under the
first mortgage.

For the foregoing considerations, we are of the opinion and so hold: (1) That
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 (article 1877, Civil Code); (2)
that the fact that the purchaser of the new machinery and equipment has bound
himself to the person supplying him the purchase money to hold them as
security for the payment of the latter's credit, and to refrain from mortgaging or
otherwise encumbering them does not alter the permanent character of the
incorporation of said machinery and equipment with the central; and (3) that
the sale of the machinery and equipment in question by the purchaser who
27
was supplied the purchase money, as a loan, to the person who supplied the
money, after the incorporation thereof with the mortgaged sugar central, does
not vest the creditor with ownership of said machinery and equipment but
simply with the right of redemption.

Wherefore, finding no error in the appealed judgment, it is affirmed in all its

parts, with costs to the appellant. So ordered.

Malcolm, Imperial, Butte, and Goddard, JJ., concur.

16. Burgos v. Chief of Staff, G.R. No. L-64261 December 26, 1984 (En
Banc)
Jose Burgos vs. Chief of Staff
G.R. No L-64261
December 26, 1984

Facts:

Two warrants were issued against petitioners for the search on the premises
of “Metropolitan Mail” and “We Forum” newspapers and the seizure of items
alleged to have been used in subversive activities. Petitioners prayed that a
writ of preliminary mandatory and prohibitory injunction be issued for the return
of the seized articles, and that respondents be enjoined from using the articles
thus seized as evidence against petitioner.

Petitioners questioned the warrants for the lack of probable cause and that the
two warrants issued indicated only one and the same address. In addition, the
items seized subject to the warrant were real properties.

Issue:
Whether or not the two warrants were valid to justify seizure of the items.

Held:
The defect in the indication of the same address in the two warrants was held
by the court as a typographical error and immaterial in view of the correct
determination of the place sought to be searched set forth in the application.
The purpose and intent to search two distinct premises was evident in the
issuance of the two warrant.

28
As to the issue that the items seized were real properties, the court applied
the principle in the case of Davao Sawmill Co. v. Castillo, ruling “that machinery
which is movable by nature becomes immobilized when placed by the owner
of the tenement, property or plant, but not so when placed by a tenant,
usufructuary, or any other person having only a temporary right, unless such
person acted as the agent of the owner.” In the case at bar, petitioners did not
claim to be the owners of the land and/or building on which the machineries
were placed. This being the case, the machineries in question, while in fact
bolted to the ground remain movable property susceptible to seizure under a
search warrant.
However, the Court declared the two warrants null and void.

Probable cause for a search is defined as such facts and circumstances which
would lead a reasonably discreet and prudent man to believe that an offense
has been committed and that the objects sought in connection with the offense
are in the place sought to be searched.

The Court ruled that the affidavits submitted for the application of the warrant
did not satisfy the requirement of probable cause, the statements of the
witnesses having been mere generalizations.

Furthermore, jurisprudence tells of the prohibition on the issuance of general

warrants. (Stanford vs. State of Texas). The description and enumeration in
the warrant of the items to be searched and seized did not indicate with
specification the subversive nature of the said items

17. Ago v. Court of Appeals, et al., L-17898, Oct. 31, 1962

G.R. No. L-17898 October 31, 1962

PASTOR D. AGO, petitioner,

vs.

29
THE HON. COURT OF APPEALS, HON. MONTANO A. ORTIZ, Judge of the
Court of First Instance of Agusan, THE PROVINCIAL SHERIFF OF SURIGAO
and GRACE PARK ENGINEERING, INC., respondents.

Jose M. Luison for petitioner.

Norberto J. Quisumbing for respondent Grace Park Engineering, Inc.
The Provincial Fiscal of Surigao for respondent Sheriff of Surigao.

LABRABOR, J.:

Appeal by certiorari to review the decision of respondent Court of Appeals in

CA-G.R. No. 26723-R entitled "Pastor D. Ago vs. The Provincial Sheriff of
Surigao, et al." which in part reads:

In this case for certiorari and prohibition with preliminary injunction, it appears
from the records that the respondent Judge of the Court of First Instance of
Agusan rendered judgment (Annex "A") in open court on January 28, 1959,
basing said judgment on a compromise agreement between the parties.

On August 15, 1959, upon petition, the Court of First Instance issued a writ of
execution.

Petitioner's motion for reconsideration dated October 12, 1959 alleges that he,
or his counsel, did not receive a formal and valid notice of said decision, which
motion for reconsideration was denied by the court below in the order of
November 14, 1959.

Petitioner now contends that the respondent Judge exceeded in his jurisdiction
in rendering the execution without valid and formal notice of the decision.

A compromise agreement is binding between the parties and becomes the law
between them. (Gonzales vs. Gonzales G.R. No. L-1254, May 21, 1948, 81
Phil. 38; Martin vs. Martin, G.R. No. L-12439, May 22, 1959) .

It is a general rule in this jurisdiction that a judgment based on a compromise

agreement is not appealable and is immediately executory, unless a motion is
filed on the ground fraud, mistake or duress. (De los Reyes vs. Ugarte, 75 Phil.
505; Lapena vs. Morfe, G.R. No. L-10089, July 31, 1957)

30
Petitioner's claim that he was not notified or served notice of the decision is
untenable. The judgment on the compromise agreement rendered by the court
below dated January 28, 1959, was given in open court. This alone is a
substantial compliance as to notice. (De los Reyes vs. Ugarte, supra)

IN VIEW THEREOF, we believe that the lower court did not exceed nor abuse
its jurisdiction in ordering the execution of the judgment. The petition for
certiorari is hereby dismissed and the writ of preliminary injunction heretofore
dissolved, with costs against the petitioner.

IT IS SO ORDERED.

The facts of the case may be briefly stated as follows: In 1957, petitioner Pastor
D. Ago bought sawmill machineries and equipments from respondent Grace
Park Engineer domineering, Inc., executing a chattel mortgage over said
machineries and equipments to secure the payment of balance of the price
remaining unpaid of P32,000.00, which petitioner agreed to pay on installment
basis.

Petitioner Ago defaulted in his payment and so, in 1958 respondent Grace
Park Engineering, Inc. instituted extra-judicial foreclosure proceedings of the
mortgage. To enjoin said foreclosure, petitioner herein instituted Special Civil
Case No. 53 in the Court of First Instance of Agusan. The parties to the case
arrived at a compromise agreement and submitted the same in court in writing,
signed by Pastor D. Ago and the Grace Park Engineering, Inc. The Hon.
Montano A. Ortiz, Judge of the Court of First Instance of Agusan, then
presiding, dictated a decision in open court on January 28, 1959.

Petitioner continued to default in his payments as provided in the judgment by

compromise, so Grace Park Engineering, Inc. filed with the lower court a
motion for execution, which was granted by the court on August 15, 1959. A
writ of execution, dated September 23, 1959, later followed.

The herein respondent, Provincial Sheriff of Surigao, acting upon the writ of
execution issued by the lower court, levied upon and ordered the sale of the
sawmill machineries and equipments in question. These machineries and
equipments had been taken to and installed in a sawmill building located in
Lianga, Surigao del Sur, and owned by the Golden Pacific Sawmill, Inc., to

31
whom, petitioner alleges, he had sold them on February 16, 1959 (a date after
the decision of the lower court but before levy by the Sheriff).

Having been advised by the sheriff that the public auction sale was set for
December 4, 1959, petitioner, on December 1, 1959, filed the petition for
certiorari and prohibition with preliminary injunction with respondent Court of
Appeals, alleging that a copy of the aforementioned judgment given in open
court on January 28, 1959 was served upon counsel for petitioner only on
September 25, 1959 (writ of execution is dated September 23, 1959); that the
order and writ of execution having been issued by the lower court before
counsel for petitioner received a copy of the judgment, its resultant last order
that the "sheriff may now proceed with the sale of the properties levied
constituted a grave abuse of discretion and was in excess of its jurisdiction;
and that the respondent Provincial Sheriff of Surigao was acting illegally upon
the allegedly void writ of execution by levying the same upon the sawmill
machineries and equipments which have become real properties of the Golden
Pacific sawmill, Inc., and is about to proceed in selling the same without prior
publication of the notice of sale thereof in some newspaper of general
circulation as required by the Rules of Court.

The Court of Appeals, on December 8, 1959, issued a writ of preliminary

injunction against the sheriff but it turned out that the latter had already sold at
public auction the machineries in question, on December 4, 1959, as
scheduled. The respondent Grace Park Engineering, Inc. was the only bidder
for P15,000.00, although the certificate sale was not yet executed. The Court
of Appeals constructed the sheriff to suspend the issuance of a certificate of
sale of the said sawmill machineries and equipment sold by him on December
4, 1959 until the final decision of the case. On November 9, 1960 the Court of
Appeals rendered the aforequoted decision.

Before this Court, petitioner alleges that the Court of Appeals erred (1) in
holding that the rendition of judgment on compromise in open court on January
1959 was a sufficient notice; and (2) in not resolving the other issues raised
before it, namely, (a) the legality of the public auction sale made by the sheriff,
and (b) the nature of the machineries in question, whether they are movables
or immovables.

The Court of Appeals held that as a judgment was entered by the court below
in open court upon the submission of the compromise agreement, the parties
32
may be considered as having been notified of said judgment and this fact
constitutes due notice of said judgment. This raises the following legal
question: Is the order dictated in open court of the judgment of the court, and
is the fact the petitioner herein was present in open court was the judgment
was dictated, sufficient notice thereof? The provisions of the Rules of Court
decree otherwise. Section 1 of Rule 35 describes the manner in which
judgment shall be rendered, thus:

SECTION 1. How judgment rendered. — All judgments determining the

merits of cases shall be in writing personally and directly prepared by the judge,
and signed by him, stating clearly and distinctly the facts and the law on which
it is based, filed with the clerk of the court.

The court of first instance being a court of record, in order that a judgment may
be considered as rendered, must not only be in writing, signed by the judge,
but it must also be filed with the clerk of court. The mere pronouncement of the
judgment in open court with the stenographer taking note thereof does not,
therefore, constitute a rendition of the judgment. It is the filing of the signed
decision with the clerk of court that constitutes rendition. While it is to be
presumed that the judgment that was dictated in open court will be the
judgment of the court, the court may still modify said order as the same is being
put into writing. And even if the order or judgment has already been put into
writing and signed, while it has not yet been delivered to the clerk for filing it is
still subject to amendment or change by the judge. It is only when the judgment
signed by the judge is actually filed with the clerk of court that it becomes a
valid and binding judgment. Prior thereto, it could still be subject to amendment
and change and may not, therefore, constitute the real judgment of the court.

Regarding the notice of judgment, the mere fact that a party heard the judge
dictating the judgment in open court, is not a valid notice of said judgment. If
rendition thereof is constituted by the filing with the clerk of court of a signed
copy (of the judgment), it is evident that the fact that a party or an attorney
heard the order or judgment being dictated in court cannot be considered as
notice of the real judgment. No judgment can be notified to the parties unless
it has previously been rendered. The notice, therefore, that a party has of a
judgment that was being dictated is of no effect because at the time no
judgment has as yet been signed by the judge and filed with the clerk.

33
Besides, the Rules expressly require that final orders or judgments be served
personally or by registered mail. Section 7 of Rule 27 provides as follows:

SEC. 7. Service of final orders or judgments. — Final orders or judgments

shall be served either personally or by registered mail.

In accordance with this provision, a party is not considered as having been

served with the judgment merely because he heard the judgment dictating the
said judgment in open court; it is necessary that he be served with a copy of
the signed judgment that has been filed with the clerk in order that he may
legally be considered as having been served with the judgment.

For all the foregoing, the fact that the petitioner herein heard the trial judge
dictating the judgment in open court, is not sufficient to constitute the service
of judgement as required by the above-quoted section 7 of Rule 2 the signed
judgment not having been served upon the petitioner, said judgment could not
be effective upon him (petitioner) who had not received it. It follows as a
consequence that the issuance of the writ of execution null and void, having
been issued before petitioner her was served, personally or by registered mail,
a copy of the decision.

The second question raised in this appeal, which has been passed upon by
the Court of Appeals, concerns the validity of the proceedings of the sheriff in
selling the sawmill machineries and equipments at public auction with a notice
of the sale having been previously published.

The record shows that after petitioner herein Pastor D. Ago had purchased the
sawmill machineries and equipments he assigned the same to the Golden
Pacific Sawmill, Inc. in payment of his subscription to the shares of stock of
said corporation. Thereafter the sawmill machinery and equipments were
installed in a building and permanently attached to the ground. By reason of
such installment in a building, the said sawmill machineries and equipment
became real estate properties in accordance with the provision of Art. 415 (5)
of the Civil Code, thus:

ART. 415. The following are immovable property:

xxx xxx xxx

34
(5) Machinery, receptacles, instruments or implements tended 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;

This Court in interpreting a similar question raised before it in the case of

Berkenkotter vs. Cu Unjieng e Hijos, 61 Phil. 683, held that the installation of
the machine and equipment in the central of the Mabalacat Sugar Co., Inc. for
use in connection with the industry carried by the company, converted the said
machinery and equipment into real estate by reason of their purpose.
Paraphrasing language of said decision we hold that by the installment of the
sawmill machineries in the building of the Gold Pacific Sawmill, Inc., for use in
the sawing of logs carried on in said building, the same became a necessary
and permanent part of the building or real estate on which the same was
constructed, converting the said machineries and equipments into real estate
within the meaning of Article 415(5) above-quoted of the Civil Code of the
Philippines.

Considering that the machineries and equipments in question valued at more

than P15,000.00 appear to have been sold without the necessary
advertisement of sale by publication in a newspaper, as required in Sec. 16 of
Rule 39 of the Rules of Court, which is as follows:

SEC. 16. Notice of sale of property on execution. — Before the sale of

property on execution, notice thereof must be given as follows:

xxx xxx xxx

(c) In case of real property, by posting a similar notice particularly

describing the property for twenty days in three public places in the municipality
or city where the property is situated, and also where the property is to be sold,
and, if the assessed value of the property exceeds four hundred pesos, by
publishing a copy of the notice once a week, for the same period, in some
newspaper published or having general circulation in the province, if there be
one. If there are newspapers published in the province in both the English and
Spanish languages, then a like publication for a like period shall be made in
one newspaper published in the English language, and in one published in the
Spanish language.

35
the sale made by the sheriff must be declared null and void.

WHEREFORE, the decision of the Court of Appeals sought to be reviewed is

hereby set aside and We declare that the issuance of the writ of execution in
this case against the sawmill machineries and equipments purchased by
petitioner Pastor D. Ago from the Grace Park Engineering, Inc., as well as the
sale of the same by the Sheriff of Surigao, are null and void. Costs shall be
against the respondent Grace Park Engineering, Inc.

18. People´s Bank and Trust Co., v. Dahican Lumber Co., L-17500,
May 16, 1967

19. Board of Assessment Appeals Q.C. v. Meralco, 10 SCRA 68

20. Meralco Securities Industrial Corporation vs. Central Board of
Assessment Appeals, 114 SCRA 260 , May 31, 1982
G.R. No. L-46245 May 31, 1982
Aquino, J.:

Facts: Petitioner questions the decision of the respondent which held that
petitioner’s pipeline is subject to realty tax. Pursuant to a concession, petitioner
installed a pipeline system from Manila to Batangas. Meanwhile, the provincial
assessor of Laguna treated the pipeline as real property. So, petitioner
appealed the assessments to the Board of Assessment Appeals of Laguna.
The board upheld the assessments and the decision became final and
executory after the lapse of fifteen days from the date of receipt of a copy of
the decision by the appellant. Meralco Securities contends that the Court of
Tax Appeals has no jurisdiction to review the decision of the Central Board of
Assessment Appeals and no judicial review of the Board's decision is provided
for in the Real Property Tax Code. Hence, the petitioner’s recourse to file a
petition for certiorari.

Held: It was held that certiorari was properly availed of in this case. It is a writ
issued by a superior court to an inferior court, board or officer exercising judicial

36
or quasi-judicial functions whereby the record of a particular case is ordered to
be elevated for review and correction in matters of law.

The rule is that as to administrative agencies exercising quasi-judicial power

there is an underlying power in the courts to scrutinize the acts of such
agencies on questions of law and jurisdiction even though no right of review is
given by the statute. The purpose of judicial review is to keep the administrative
agency within its jurisdiction and protect substantial rights of parties affected
by its decisions. The review is a part of the system of checks and balances
which is a limitation on the separation of powers and which forestalls arbitrary
and unjust adjudications. Judicial review of the decision of an official or
administrative agency exercising quasi-judicial functions is proper in cases of
lack of jurisdiction, error of law, grave abuse of discretion, fraud or collusion or
in case the administrative decision is corrupt, arbitrary or capricious.

21. Caltex (Phil.) Inc. vs. Central Board of Assessment Appeals, 114
SCRA 296, 1982
Facts:

Caltex loaned machines and equipment to gas station operators under a lease
agreement, which stipulated that upon demand, the operators shall return to
Caltex the machines and equipment. The lessor of the land does not become
the owner of the machines and equipment. Caltex retains their ownership.

The City Assessor characterized the said machines and equipment as taxable
realty. However, the City Board of Tax Appeals ruled that they are personalty.
The Assessor appealed to the Central Board of Assessment Appeals.

The Board held that the said machines are real property within the meaning of
Sec. 3(k) & (m) and 38 of the Real Property Tax Code, PD 464, and that the
Civil Code definitions of real and personal property in Articles 415 and 416 are
not applicable in this case.

Issue:

37
Whether or not the said machines and equipment are real property subject to
realty tax?

Held:

The said machines and equipment are considered real property.

Section 2 of the Assessment Law provides that the realty tax is due "on real
property, including land, buildings, machinery, and other improvements" not
specifically exempted in section 3 thereof.

This provision is reproduced with some modification in the Real Property Tax
Code which provides:

SEC. 38. Incidence of Real Property Tax.— There shall be levied, assessed
and collected in all provinces, cities and municipalities an annual ad valorem
tax on real property, such as land, buildings, machinery and other
improvements affixed or attached to real property not hereinafter specifically
exempted.

The Code contains the following definitions in its section 3:

k) Improvements — is a valuable addition made to property or an amelioration

in its condition, amounting to more than mere repairs or replacement of waste,
costing labor or capital and intended to enhance its value, beauty or utility or
to adapt it for new or further purposes.

m) Machinery — shall embrace machines, mechanical contrivances,

instruments, appliances and apparatus attached to the real estate. It includes
the physical facilities available for production, as well as the installations and
appurtenant service facilities, together with all other equipment designed for or
essential to its manufacturing, industrial or agricultural purposes (See sec. 3[f],
Assessment Law).

The machines and equipment are necessary to the operation of the gas
station, for without them the gas station would be useless, and which have
been attached or affixed permanently to the gas station site or embedded
therein, are taxable improvements and machinery within the meaning of the
Assessment Law and the Real Property Tax Code.
38
22. Ago v. Court of Appeals et, L-17898, Oct. 31, 1962
23. U.S. v. Carlos, 21 Phil. 543
FACTS:

The accused had been a consumer of electricity furnished by the Manila

Electric Railroad and Light Company for a building containing the
residence of the accused and three other residences. The representatives
of the company, believing that more light was being used than their meter
showed, installed an additional meter (Exhibit A) on a pole outside of
defendant’s house, and both it and the meter (Exhibit B) which had been
previously installed in the house were read. Exhibit A read 218 kilowatt
hours; Exhibit B, 745 kilowatt hours. On March 3, 1910 each was read
again, Exhibit A showing 2,718 kilowatt hours and Exhibit B, 968.

In other words the actual consumption, according to the outside meter,

was more than ten times as great as that registered by the one inside.
Obviously this difference could not be due to normal causes.

The city electrician testified that the electric current could have been
deflected from the inside meter by placing thereon a device known as a
“jumper”.

The trial court found the defendant guilty of the crime charged and
sentenced him to one year eight months and twenty-one days’ presidio
correccional, to indemnify the offended party, The Manila Electric Railroad
and Light Company, in the sum of P865.26, to the corresponding
subsidiary imprisonment in case of insolvency and to the payment of the
costs.

Ignacio Carlos was accused of the crime of theft for taking away two
thousand two hundred and seventy-three (2,273) kilowatts of electric

39
 current, of the value of nine hundred and nine (909) pesos and twenty (20)
cents Philippine currency.

Counsel for the appellant insists that the only corporeal property can be
the subject of the crime of larceny, and in the support of this proposition
cites several authorities for the purpose of showing that the only subjects
of larceny are tangible, movable, chattels, something which could be taken
in possession and carried away, and which had some, although trifling,
intrinsic value, and also to show that electricity is an unknown force and
cannot be a subject of larceny.

And article 518 of the revised penal code fixes the penalty for larceny in
proportion to the value of the personal property stolen.
ARTICLE 417 :
24. Involuntary Insolvency of Stochecker v. Ramirez, 44 Phil. 933
FACTS:

The half-interest in the business (Antigua Botica Ramirez) was mortgaged

with Fidelity & Surety Co. on 10 March 1919, and registered in due time in
the registry of property, while another mortgage was made with Ildefonso
Ramirez on 22 September 1919 and registered also in the registry. Raised in
the lower court, the trial court declared the mortgage of Fidelity & Surety Co.
entitled to preference over that of Ildefonso Ramirez and another mortgage
by Concepcion Ayala. Ayala did not appeal, but Ramirez did.

ISSUE:

Whether or not half-interest over a business is a movable property

RULING: Yes.

40
1. Interest in business may be subject of mortgage With regard to the nature
of the property mortgaged which is one-half interest in the business, such
interest is a personal property capable of appropriation and not included in
the enumeration of real properties in articles 335 of the Civil Code, and may
be the subject of mortgage. All personal property may be mortgaged. (Sec. 7,
Act 1508.)

2. Description of mortgage property sufficient The description contained in

the document is sufficient. The law (sec. 7, Act 1508) requires only a
description of the mortgaged property shall be such as to enable the parties
to the mortgage, or any other person, after reasonable inquiry and
investigation, to identify the same. In the case at bar, “his half interest in the
drug business known as Antigua Botica Ramirez, located at Calle Real Nos.
123 and 125, District of Intramuros, Manila Philippine Islands" is sufficient.

3. Article 1922 (1-3) of the Civil Code applicable only to mortgage property in
possession Numbers 1, 2, and 3 of the article 1922 of the Civil Code are not
applicable as neither the debtor, nor himself, is in possession of the property
mortgaged, which is, and since the registration of the mortgage has been,
legally in possession of the surety company

4. Stipulation about personal property not a mortgage upon property - In no

way can the mortgage executed be given effect as of the date of the sale of
the store in question; as there was a mere stipulation about personal security
during said date, but not a mortgage upon property, and much less upon the
property in question.

41
II. ARTICLES 419 – 426

A. PUBLIC DOMINION PROPERTIES [ Arts. 419 – 420; 423 - 424 ]

1. What are the Things Deemed as Properties of Public Dominion? (Art.

420)
2. What are the Public Dominion Properties which may be owned by the
State (Art. 420)

3. What are the Public Dominion Properties which may be owned by the
Local Govt. or political subdivisions? (Arts. 424)

4. State the Characteristics of Properties of Public Dominion

5. If a private person or entity is able to have a portion of the beach or

foreshore, included in the transfer certificate of registration, will this mean
that the said property is now considered patrimonial or private property?

o RP v. LAT VDA. DE CASTILLO et al, GR 69002, June 30, 1988 –

REPORTER: ABELLANA, Jean Marie
This is a petition for review on certiorari of the April 26, 1984
Decision of the then Intermediate Appellate Court* reversing the
February 6, 1976 Decision of the then Court of First Instance of
Batangas, Branch VI, in Civil Case No. 2044.

The antecedental facts of this case, as found by the then

Intermediate Appellate Court, are as follows:
"Sometime in 1951, the late Modesto Castillo applied for the
registration of two parcels of land, Lots 1 and 2, located in
Banadero, Tanauan, Batangas, described in Plan Psu-119166,
with a total area of 39,755 square meters. In a decision dated
August 31, 1951, the said Modesto Castillo, married to Amanda
Lat, was declared the true and absolute owner of the land with
the improvements thereon, for which Original Certificate of Title
No. 0-665 was issued to him by the Register of Deeds at
Batangas, Batangas, on February 7, 1952. By virtue of an
instrument dated March 18, 1960, the said Lots 1 and 2 covered
by Original Certificate of Title No. 0-665, together with Lot No.
12374 covered by Transfer Certificate of Title No. 3254-A and Lot
No. 12377 covered by Transfer Certificate of Title No. 3251-A,
42
were consolidated and sub-divided into Lots 1 to 9 under Pcs-
1046. After the death of Modesto Castillo, or on August 31, 1960,
Amanda Lat Vda. de Castillo, et al., executed a deed of partition
and assumption of mortgage in favor of Florencio L. Castillo, et
al., as a result of which Original Certificate of Title No. D-665 was
cancelled, and in lieu thereof, new transfer certificates of title
were issued to Florencio L. Castillo, et al., to wit: Transfer
Certificate of Title No. 21703 (Lot 4) (and) Transfer Certificate of
Title No. 21704 to Florencio Castillo (Lot 5); Transfer Certificate
of Title No. T-21708 to Carlos L. Castillo (Lot 7); Transfer
Certificate of Title No. T-21712 to Mariano L. Castillo (Lot 6);
Transfer Certificate of Title No. T-21713 to Jose L. Castillo (Lot
9); Transfer Certificate of Title No. T-21718 to Aida C. Herrera
(Lot 2); and Transfer Certificate of Title No. T-21727 to Teresita
L. Castillo (Lot 8).

"The Republic of the Philippines filed Civil Case No. 2044 with the
lower court for the annulment of the certificates of title issued to
defendants Amanda Lat Vda. de Castillo, et al., as
heirs/successors of Modesto Castillo, and for the reversion of the
lands covered thereby (Lots 1 and 2, Psu-119166) to the State. It
was alleged that said lands had always formed part of the Taal
Lake, washed and inundated by the waters thereof, and being of
public ownership, it could not be the subject of registration as
private property. Appellants herein, defendants below, alleged in
their answer that the Government's action was already barred by
the decision of the registration court; that the action has
prescribed; and that the government was estopped from
questioning the ownership and possession of appellants."
After trial, the then Court of First Instance of Batangas, Branch
VI, presided over by Honorable Benjamin Relova, in a Decision
dated February 6, 1976 (Record on Appeal, pp. 62- 69), ruled in
favor of herein petitioner Republic of the Philippines. The decretal
portion of the said decision, reads:
"WHEREFORE, the Register of Deeds of Batangas is hereby
ordered to cancel Original Certificate of Title No. 0-665 in the
name of Modesto Castillo and the subsequent Transfer of
Certificates of Title issued over the property in the names of the
defendants. Lots Nos. 1 and 2 of Plan Psu-119166 are hereby
43
declared public lands belonging to the state. Without
pronouncement as to costs."
The Court of Appeals, on appeal, in a Decision promulgated on
April 26, 1984, reversed and set aside the appealed decision, and
dismissed the complaint (Record, pp. 31-41). Herein petitioner
filed a Motion for Reconsideration (Record, pp. 42-51), but the
same was denied in a Resolution promulgated on October 12,
1984 (Record, p. 52). Hence, the instant petition.

The sole issue raised in this case is whether or not the decision
of the Land Registration Court involving shore lands constitutes
res adjudicata.

There is no question that one of the requisites of res judicata is

that the court rendering the final judgment must have jurisdiction
over the subject matter (Ramos v. Pablo, 146 SCRA 24 [1986];
that shores are properties of the public domain intended for public
use (Article 420, Civil Code) and, therefore, not registrable. Thus,
it has long been settled that portions of the foreshore or of the
territorial waters and beaches cannot be registered. Their
inclusion in a certificate of title does not convert the same into
properties of private ownership or confer title upon the registrant
(Republic v. Ayala y Cia, 14 SCRA 259 [1965], citing the cases
of Dizon, et al. v. Bayona, et al., 98 Phil. 943; and Dizon, et al. v.
Rodriguez, et al., 13 SCRA 704).

But an important bone of contention is the nature of the lands

involved in this case.

Petitioner contends that Lots 1 and 2, PSU-119166 had always

formed part of the Taal Lake, washed and inundated by the
waters thereof. Consequently, the same were not subject to
registration, being outside the commerce of men; and that since
the lots in litigation are of public domain (Art. 502), par. 4, Civil
Code) the registration court (of 1951) did not have jurisdiction to
adjudicate said lands as private property, hence, res judicata
does not apply. (Rollo, pp. 37-38).

The Government presented both oral and documentary evidence.

44
As summarized by the Intermediate Appellate Court (now Court
of Appeals), the testimonies of the witnesses for the petitioner are
as follows:
"1. Rosendo Arcenas, a Geodetic Engineer connected with the
Bureau of Lands since 1951, testified to the effect that Lots 1 and
2, Psu-119166, which are the lots in question, adjoin the cadastral
survey of Tanauan, Batangas (Cad. 168); that the original
boundary of the original cadastral survey was foreshore land as
indicated on the plan; that the cadastral survey of Tanauan was
executed sometime in 1923; that the first survey executed of the
land after 1923 was the one executed in 1948 under Plan Psu-
119166; that in the relocation survey of the disputed lots in 1962
under SWO-40601, said lots were annotated on the plan as
claimed by the Republic of the Philippines in the same manner
that it was so annotated in Plan Psu-119166, thus showing that
the Government was the only claimant of the land during the
survey in 1948; that during the relocation survey made in 1962,
old points cannot be identified or located because they were
under water by about forty centimeters; that during the ocular
inspection of the premises on November 23, 1970, he found that
2 monuments of the lots in question were washed out by the
waters of the Baloyboy Creek; that he also found duck pens along
the lots in question; that there are houses in the premises as well
as some camotes and bananas; and that he found also some
shells ('suso') along the banks of the Taal lake (Tsn, Nov. 16,
1970, pp. 13-21; Feb. 16, 1971, pp. 4-36).

"2. Braulio Almendral testified to the effect that he is a resident of

Tanauan, Batangas, near the Taal lake; that like himself there are
other occupants of the land among whom are Atanacio Tironas,
Gavino Mendoza, Juliano Tirones, Agapito Llarena, etc.; that it
was they who filled up the area to make it habitable; that they
filled up the area with shells and sand; that their occupation is
duck raising; and that the Castillos never stayed in or occupied
the premises (Tsn, Nov. 16, 1970, pp. 32-50).

"3. Arsenio Ibay, a Geodetic Engineer connected with the Bureau

of Lands since 1968, also testified to the effect that in accordance
45
with the cadastral plan of Tanauan, the only private claim of Sixto
Castillo referred to Lots 1006 to 1008; that the Castillos never
asserted any private claim to the lots in question during the
cadastral survey; that in the preparation of plan Psu-119166, Lots
12374 and 12377 were made as reference to conform to
previously approved plans; that Lot 12374 is a portion of cadastral
lot 10107, SWO-86738 while Lot 22377 is a portion of Lot 10108
of the same plan (Tsn, Nov. 25, 1970, pp. 115-137).

"4. Jose Isidro, a Land Investigator of the Bureau of Lands,

testified to the effect that pursuant to the order of the Director of
Lands, he, together with Engineer Rufino Santiago and the barrio
captain of Tanauan, Batangas, conducted an investigation of the
land in question; that he submitted a report of investigation, dated
October 19, 1970 (Exh. H-1); that portions of the lot in question
were covered by public land applications filed by the occupants
thereof; that Engineer Santiago also submitted a report (Exh. H-
8); that he had notified Dr. Mariano Castillo before conducting the
investigation (Tsn, Nov. 25, 1970, pp. 137-162).

"5. Rufino Santiago, another Geodetic Engineer connected with

the Bureau of Lands, testified to the effect that on October 19,
1970, he submitted a report of investigation regarding the land in
question; that he noted on the plan Exhibit H-9 the areas on which
the houses of Severino Alcantara and others were built; that he
found that the land was planted to coconuts which are about 15
years old; that the land is likewise improved with rice paddies;
that the occupants thereof are duck raisers; that the area had
been elevated because of the waste matters and duck feeds that
have accumulated on the ground through the years (Tsn, Nov.
26, 1970, pp. 163-196).

"6. Pablo Tapia, Barrio Captain of Tanauan, Batangas, since

1957, testified to the effect that the actual occupants of Lots 1 and
2 are Atanacio Tirones, etc.; that during the war the water line
reached up to a point marked Exhibit A-9 and at present the water
has receded to a point up to Exhibit A-12; that the reasons why
the waters of Taal lake have receded to the present level is
because of the fillings made by the people living in Lots 1 and 2;
46
that there are several duck pens all over the place; that the
composition of the soil is a mixture of mud and duck feeds; that
improvements consist of bananas, bamboos and palay; that the
shoreline is not even in shape because of the Baloyboy Creek;
that the people in the area never came to know about the
registration case in which the lots in question were registered;
that the people living in the area, even without any government
aid, helped one another in the construction of irrigated rice
paddies; that he helped them file their public land applications for
the portions occupied by them; that the Castillos have never been
in possession of the premises; that the people depend upon duck
raising as their means of their livelihood; that Lots 1 and 2 were
yet inexistent during the Japanese occupation; and that the
people started improving the area only during liberation and
began to build their houses thereon." (Tsn, Nov. 26, 1970, pp.
197-234)
Among the exhibits formally offered by the Government are: the
Original Plan of Tanauan, Batangas, particularly the Banader
Estate, the Original Plan of PSU-119166, Relocation-Verification
Survey Plan, maps, and reports of Geodetic Engineers, all
showing the original shoreline of the disputed areas and the fact
that the properties in question were under water at the time and
are still under water especially during the rainy season (Hearing,
March 17, 1971, TSN, pp. 46-47).

On the other hand, private respondents maintain that Lots 1 and

2 have always been in the possession of the Castillo family for
more than 76 years and that their possession was public,
peaceful, continuous, and adverse against the whole world and
that said lots were not titled during the cadastral survey of
Tanauan, because they were still under water as a result of the
eruption of Taal Volcano on May 5, 1911 and that the inundation
of the land in question by the waters of Taal Lake was merely
accidental and does not affect private respondents' ownership
and possession thereof pursuant to Article 778 of the Law of
Waters. They finally insisted that this issue of facts had been
squarely raised at the hearing of the land registration case and,
therefore, res judicata (Record on Appeal, pp. 63-64). They

47
submitted oral and documentary evidence in support of their
claim.

Also summarized by respondent Appellate Court, the testimonies

of the witnesses of private respondents are as follows:
"1. Silvino Reano, testified to the effect that he was the overseer
of the property of the late Modesto Castillo located at Banadero,
Tanauan, Batangas since 1944 to 1965; that he also knows Lots
1 and 2, the parcels of land in question, since he was managing
said property; that the occupants of said Lots 1 and 2 were
engaged in duck raising; that those occupants were paying the
Castillos certain amount of money because their animals used to
get inside the lots in question; that he was present during the
survey of the land in 1948; and that aside from the duck pens
which are built in the premises, the land is planted to rice (Tsn,
April 14, 1971, pp. 62-88).

"2. Dr. Mariano Castillo, testified to the effect that the late
Modesto Castillo was a government official who held high
positions in the Government; and that upon his death the land
was subdivided among his legal heirs." (Appellee's Brief, pp. 4-9)
As above-stated, the trial court decided the case in favor of the
government but the decision was reversed on appeal by the Court
of Appeals.

A careful study of the merits of their varied contentions readily

shows that the evidence for the government has far outweighed
the evidence for the private respondents. Otherwise stated, it has
been satisfactorily established as found by the trial court, that the
properties in question were the shorelands of Taal Lake during
the cadastral survey of 1923.

Explaining the first survey of 1923, which showed that Lots 1 and
2 are parts of the Taal Lake, Engineer Rosendo Arcenas testified
as follows:
"ATTY. AGCAOILI:
Q
Now, you mentioned Engineer that a subject matter of that plan
which appears to be Lots 1 and 2 are adjoining cadastral lots of
48
the Tanauan Cadastre, now, will you please state to the Court
what is the basis of that statement of yours?
A
A The basis of that statement is the plan itself, because there is
here an annotation that the boundary on the northeastern side is
Tanauan Cadastre 168 which indicates that the boundary of the
original cadastral survey of Tanauan Cadastre way back in the
year 1923 adjoins a foreshore land which is also indicated in this
plan as foreshore lands of Taal lake, sir.
xxx xxx xxx

"Q
Now, on this plan Exhibit "A-2", there are two lots indicated,
namely, Lots 12374 and 12377, what do these lots represent?
A
This is the cadastral lot executed in favor of a certain Modesto
Castillo that corresponds to Lots 12374 and another Lot 12377,
sir.
Q
At the time this survey plan Psu-119166 and marked as Exhibit
"A-2" was executed in 1948, were these Lots 1 and 2 already in
existence as part of the cadastral survey?
A
No, sir, because there is already a foreshore boundary.
Q
Do I understand from you Mr. Witness at the time of the survey of
this land these two lots form part of this portion?
A
Yes, sir.
Q
When again was the cadastral survey of Tanauan, Batangas,
executed if you know?
A
In the year 1923, sir." (Hearing of Nov. 16, 1970, TSN pp. 15-17).
Such fact was further verified in the Verification-Relocation
Survey of 1948 by Engineer Arcenas who conducted said survey
himself and reported the following:
"That as per original plan Psu-119166, it appears that Lot 1 and
Lot 2, Psu-119166 surveyed and approved in the name of
49
Modesto Castillo is a portion of Taal Lake and as such it appears
to be under water during the survey of cadastral Lot No. 12374
and Lot No. 12377, which was surveyed and approved in the
name of Modesto Castillo under Cad. 168. To support this theory
is the annotation appearing and printed along lines 2-3-4-5 of Lot
1, Psu-119166 and along lines 4-5-6 of Lot 2, Psu-119166 which
notations clearly indicates that such boundary of property was a
former shorelines of Taal Lake, in other words, it was the extent
of cultivation being the shorelines and the rest of the area going
to the southwestern direction are already covered by water level.

"Another theory to bolster and support this idea is the actual

location now in the verification-relocation survey of a known
geographic point were Barrio Boundary Monument (BBM N. 22)
is under water level quite for sometimes as evidence by
earthworks (collection of mud) that amount over its surface by
eighty (80) centimeters below the ground, see notation appearing
on verification- relocation plan previously submitted." (Re-
Verification-Relocation Survey Exhibits, pp. 64-65).
Said surveys were further confirmed by the testimonies of
witnesses to the effect that from 1950 to 1969, during rainy
season, the water of Taal lake even went beyond the questioned
lots; and that the water, which was about one (1) foot, stayed up
to more or less two (2) to three (3) months (Testimonies of Braulio
Almendral and Anastacio Tirones, both residents of
Banadero.Tanauan, Batangas (Hearing of Nov. 16, 1970, TSN,
pp. 41-42 and Hearing of Nov. 23, 1970, TSN, pp. 93, 98-99,
respectively). In the Relocation Survey of 1962, there were no
definite boundary or area of Lots 1 and 2 because a certain point
is existing which was under water by 40 centimeters (Testimony
of Engineer Arcena, Hearing of Nov. 16, 1970, TSN, p. 20).

Lakeshore land or lands adjacent to the lake, like the lands in

question must be differentiated from foreshore land or that part of
the land adjacent to the sea which is alternately covered and left
dry by the ordinary flow of the tides (Castillo, Law on Natural
Resources, Fifth Edition, 1954, p. 67).

50
 Such distinction draws importance from the fact that accretions
on the bank of a lake, like Laguna de Bay, belong to the owners
of the estate to which they have been added (Gov't. v. Colegio de
San Jose, 53 Phil. 423) while accretion on a sea bank still belongs
to the public domain, and is not available for private ownership
until formally declared by the government to be no longer needed
for public use (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).

But said distinction will not help private respondents because

there is no accretion shown to exist in the case at bar. On the
contrary, it was established that the occupants of the lots who
were engaged in duck raising filled up the area with shells and
sand to make it habitable.

The defense of long possession is likewise not available in this

case because, as already ruled by this Court, mere possession
of land does not by itself automatically divest the land of its public
character (Cuevas v. Pineda, 143 SCRA 674 [1968]).

PREMISES CONSIDERED, the April 26, 1984 Decision of the

then Intermediate Appellate Court is hereby SET ASIDE and
REVERSED and the February 6, 1976 Decision of the then Court
of First Instance of Batangas is hereby AFFIRMED and
REINSTATED.

6. A private estate adjoining a body of water (lake, river, stream, or sea, or

pond, lagoon) is inundated with water or flooded, and submerged for
some time. If later the water receded and the land is again uncovered
and recovered, who will own the land – the original private estate owner
or the State?

o Govt. v. Cabangis, 53 Phil. 112 - Report: AMIGLEO, Christine

Cheryl
Facts:

51
 Lot 36, 39 and 40 of Block 3035 was part of a large parcel of land
owned by Tomas Cabangis. Due to the action of the waves of Manila
Bay, the land began to wear away since 1896 until it became completely
lost or submerged in 1901. In 1912, the state started dredging operation
in Vitas Estuary in order to facilitate navigation. The sand and silt from
the dredging operation were deposited near the water surrounding the
Philippine Manufacturing Company which caused the slow and gradual
formation of Lot 36, 39 and 40. In 1926, Dr. Pedro Gil, in behalf of
Cabangis et. Al., claimed lot 40 for purposes of taxation but before that
year, no one claimed the said lots.
Issue:
WON Cabangis has a better right against the Philippine
Government over Lot 36, 39 and 40.
Held:
The Philippine Government has a better right over the lots. The
failure of Tomas to protect his land by building a retaining wall, subject
to the approval of a competent authority, in 1896 constituted
abandonment of the said property and thus became public domain. As
stated in Art. 5 of the Law of Waters, “Lands reclaimed from the sea in
consequence of works constructed by the State, or by the provinces,
pueblos or private persons, with proper permission, shall become the
property of the party constructing such
works, unless otherwise provided by the terms of the grant of
authority.” Thus the lots in questions, having been formed as a
consequence of the works constructed by the State, became the
property of the State.

o Govt. v. Colegio de San Jose, 53 Phil. 423 - Report: ANDOY,

Pembraida

G.R. No. L-30829 August 28, 1929

52
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, applicant-appellant,

vs.

COLEGIO DE SAN JOSE, ET AL., claimants.

COLEGIO DE SAN JOSE, appellee.

Attorney-General Jaranilla for appellant.

Vicente O. Romualdez for appellee.

VILLA-REAL, J.:

This is an appeal taken by the Government of the Philippine Islands

from a decision of the Court of First Instance of Laguna, rendered in
cadastral case No. 30, G. L. R. O. Record No. 359 of the municipality of
San Pedro, Province of Laguna, ordering the registration of the two
parcels of land known as lots 1 and 2 described in the application, in
favor of the Colegio de San Jose in accordance with the provisions of
law, without special pronouncement as to the costs, it being
understood, however, that the lease of said lands executed by the
aforesaid Colegio de San Jose in favor of Carlos Young y Baldwin is
valid and subsists under the terms and conditions set forth in the
instruments, Exhibits Y-1 and Y-2, and providing for the issuance of the
proper decree once said decision becomes final.

In support of the appeal, the appellant assigns the following alleged

errors as committed by the court below in its judgment, to wit:

1. The lower court erred in not holding that the parcels of land in
question are part of the bed of Laguna Lake and, therefore, belong to
the public domain.

53
2. The lower court erred in finding that said lands are included in the
title of the appellee and in finding that the appellee has been in the
possession and occupation of the same.

3. The lower court erred in qualifying as extraordinary inundations the

fact that the lands in dispute are under water during the rainy season.

4. The lower court erred in decreeing the registration of the lands in

dispute to the appellee and in denying the appellant's motion for a new
trial.

The pertinent facts necessary to decide the questions of fact and of law
raised in the instant appeal, are as follows:

During the months of September, October and November every year,

the waters of Laguna de Bay cover a long strip of land along the eastern
border of the two parcels of land in question, the width of which strip
varies from 50 to 70 meters according to the evidence of the Colegio de
San Jose and up to the eastern border of the pass claimed by the
municipality of San Pedro Tunasan, according to some witnesses for
the Insular Government; and, according to other witnesses for the
Insular Government, the flooded strip includes the aforementioned pass
itself, which is usually completely covered with water, so that the
people can fish in said flooded strip.

The claimant Colegio de San Jose contends, and its evidence tends to
prove, that the above-named parcels of land are a part of the Hacienda
de San Pedro Tunasan belonging to said claimant, which has been in
possession thereof since time immemorial by means of its tenants or
lessees and farmers.

54
On the other hand, the Government of the Philippine Islands contends
that the said two parcels of land belong to the public domain, and its
evidence tends to prove that they have always been known as the
shores of Laguna de Bay, and they are situated alongside the highway
running parallel to said shore; that the water of the lake has receded a
great distance on that side; that said parcels of land had been under
water formerly; that at present, during the rainy season, the water of the
lake reaches the highway, and that when the water recedes the people
of the place occupy and cultivate said lands during the dry season.

The only question to be decided in the present appeal is whether the

two aforesaid parcels of land in controversy belong to the Hacienda de
San Pedro Tunasan and are owned by the claimant Colegio de San
Jose, or whether they belong to the public domain as a part of the bed
of Laguna de Bay.

It is of primary importance to determine whether the body of water

called Laguna de Bay is naturally and legally a lake or a lagoon.

The Enciclopedia Juridica Espanola, volume XXI, pages 124 and 125,
defines "lake" and "lagoon" as follows:

LAKE. A body of water formed in depressions of the earth. Ordinarily

fresh water, coming from rivers, brooks, or springs, and connected with
the sea by them.

LAGOON. A small lake, the hollow bed of which is bounded by

elevations of land.

Laguna de Bay is a body of water formed in depressions of the earth; it

contains fresh water coming from rivers and brooks or springs, and is

55
connected with Manila Bay by the Pasig River. According to the
definition just quoted, Laguna de Bay is a lake.

Inasmuch as Laguna de Bay is a lake, we must resort to the legal

provisions governing the ownership and use of lakes and their beds
and shores, in order to determine the character and ownership of the
parcels of land in question.

Article 407 of the Civil Code says the following in its pertinent part:

ART. 407. The following are of public ownership:

xxx xxx xxx

4. Lakes and ponds formed by nature on public lands, and their channels.

xxx xxx xxx

And article 44 of the Law of Waters of August 3, 1866, provides as follows:

ART. 44. Natural ponds and lakes existing upon public lands and fed by public waters, belong
to the public domain.

xxx xxx xxx

It is beyond discussion that Laguna de Bay belongs to the public domain, being a natural lake
existing upon public lands, and fed by public waters from rivers, brooks and springs.

56
Now then, what is the bed of Laguna de Bay?

Article 74 of the Law of Waters cited above defines the bed of lake as follows:

ART. 74. The natural bed or basin of lakes, ponds, or pools, is the ground covered by their
waters when at their highest ordinary depth.

This definition raises the question: Which is the natural bed or basin of Laguna de Bay?

The evidence shows tat during the dry season, that is, during the months of December,
January, February, March, April, May, June, July and August, the water of the lake at its
highest depth reaches no farther that the line forming the northeastern boundary of the two
parcels of land in controversy, and that it is only during the wet season, that is, during the
months of September, October, and November, that said water rises to the highway,
completely covering said parcels of land. Therefore, the waters of Laguna de Bay have two
different levels during the year:

One during the dry season, which obtains during nine months, and the other during the wet
season, which continues for three months. Which of these two heights marks the land limit
of the waters of Laguna de Bay, that is, which of them forms its natural bed or basin? The law
says, the highest ordinary depth. Now then, which of the two aforesaid depths of the waters
of Laguna de Bay is the ordinary one? The word "ordinary" is defined in the Dictionary of the
Spanish Academy as follows:

ORDINARY. Not exceeding the average; common, natural, occurring always or most of the
time; not going beyond what happens or takes place.

The word extraordinary is defined in the same dictionary as follows:

EXTRAORDINARY. Uncommon, transcending the general rule, order or measure; exceeding,

surpassing, or going beyond that which is ordinary, commonly met with, current, settled, or
admitted by the majority.

57
According to the foregoing definitions of the words "ordinary" and "extraordinary," the
highest depth of the waters of Laguna de Bay during the dry season is the ordinary one, and
the highest depth they attain during the rainy season is the extraordinary one; inasmuch as
the former is the one which is regular, common, natural, which occurs always or most of the
time during the year, while the latter is uncommon, transcends the general rule, order of
measure, and goes beyond that which is the ordinary depth. If, according to the definition
given by article 74 of the Law of Waters quoted above, the natural bed or basin of the lakes is
the ground covered by their waters when at their highest ordinary depth, the natural bed or
basin of Laguna de Bay is the ground covered by its waters when at their highest depth
during the dry season, that is, up to the northeastern boundary of the two parcels of land in
question.

Inasmuch as, according to article 407 of the Civil Code, cited above, lakes and their beds
belong to the public domain, and inasmuch as, according to article 74 of the Law of Waters
cited above, the bed of lake is the ground covered by its waters at their highest ordinary
depth; whereas the waters of Laguna de Bay at their highest depth reach no farther than the
northeastern boundary of the two parcels of land in question, said parcels are outside said
bed and, consequently, do not belong to the public domain.

The Government of the Philippine Islands also contends that as the waters of Laguna de Bay
have receded very much, as a result of which the two parcels of land under discussion, which
had been under water before, were left uncovered, the claimant Colegio de San Jose which
owned the estate bordering upon said Laguna de Bay, did not acquire said two parcels of
land, in accordance with the provisions of article 367 of the Civil Code, as follows:

ART. 367. The owners of estates bordering on ponds or lagoons, do not acquire the land left
dry by the natural decrease of the waters, nor lose those inundated by them in extraordinary
floods.

As may be seen, the legal provision quoted above, cited by the appellant in support of its
contention, refers to ponds and lagoons, and has therefore no application to the case at bar,
which refers to a lake, a lagoon being legally distinct in character from a lake.

Having pointed out that the inundations of the two parcels of land in question during the
months of September, October and November, is extraordinary, the legal provision
58
applicable to the case is that contained in article 77 of the aforesaid Law of Waters, which
reads:

ART. 77. Lands accidentally inundated by the waters of lakes, or by creeks, rivers, and other
streams, shall continue to be the property of their respective owners.

If, as we have seen, the two parcels of land in litigation form no part of the bed of Laguna de
Bay, and consequently, do not belong to the public domain, they must belong to the claimant
Colegio de San Jose as a part of the Hacienda de San Pedro Tunasan, owned by it, the
northeastern part of which borders on said lake, and in accordance with the legal provision
just quoted, the fact that they are inundated by its waters during extraordinary risings, which
take place during the months of September, October and November, does not deprive said
claimant of the ownership thereof.

Article 84 of the said Law of Waters further provides:

ART 84. Accretions deposited gradually upon lands contiguous to creeks, streams, rivers, and
lakes, by accessions or sediments from the waters thereof, belong to the owners of such
lands.

xxx xxx xxx

Even if, therefore, the two parcels of land in litigation were considered as accretions
gradually deposited by accessions or sediments from the waters of Laguna de Bay, they
would still, according to the legal provision just quoted, belong to the claimant Colegio de
San Jose as owner of the lands bordering on said Laguna de Bay.

The appellant also contends that the two parcels of land form a part of the shores of Laguna
de Bay and are therefore of public ownership, citing paragraph 3 of article 1 of the Law of
Waters, which says:

ART. 1. The following are part of the national domain open to public use:

59
xxx xxx xxx

3. The shores. — By the shore is understood that space covered and uncovered by the
movement of the tide. Its interior or terrestrial is the line reached by the highest equinoctial
tides. Where the tides are not appreciable, the shore begins on the land side at the line
reached by the sea during ordinary storms or tempests.

As the court below correctly held, this legal provision refers to the waters of the sea, being
included under Title I, which treats of the ownership and use of said waters of the sea. Lake
waters, being terrestrial waters, their ownership and use are governed by Title II of said Law
of Waters. In the same manner as the shore of the sea is that space covered and uncovered
by the waters during the tides, its interior or terrestrial limit being the line reached by its
highest ordinary depth. In the instant case, the interior or terrestrial limit of the Laguna de
Bay is the ground covered by its waters in its highest ordinary depth, that is, up to the
northeastern boundary of the two parcels of land in question.

Summarizing, we find: (1) That the natural bed or basin of Laguna de Bay is the ground
covered by its waters at their highest ordinary depth during the dry season, that is, during
the months of December, January, February, March, April, May, June, July and August; (2)
that the highest depth reached by said waters during the rainy season, or during the months
of September, October and November, is extraordinary; (3) that the two parcels of land in
litigation form an integral part of the Hacienda de San Pedro Tunasan belonging to the
claimant Colegio de San Jose; (4) that said two parcels of land, being accidentally inundated
by the waters of Laguna de Bay continue to be the property of the claimant Colegio de San
Jose (art. 77, Law of Waters of August 3, 1866); (5) that even supposing that the said two
parcels of land have been formed by accession or deposits of sediment by the waters of said
Laguna de Bay, they still belong to the said claimant Colegio de San Jose, as owner of the land
of the Hacienda de San Pedro Tunasan, bordering on said Laguna de Bay (art. 84, Law of
Waters of August 3, 18660; (6) that the provisions of the Law of Waters regulating the
ownership and use of the waters of the sea are not applicable to the ownership and use of
lakes, which are governed by special provisions.

In the view of the foregoing considerations, we are of the opinion and so hold, that the
judgment appealed from should be affirmed, without special pronouncements as to costs. So
ordered.

60
Avanceña, C.J., Johnson, Villamor and Johns, JJ., concur.

 Read & explain the difference in the 2 Supreme Court rulings.

7. A private estate owner constructed canal/s on his land and nearby residents are
allowed use thereof. Later, the landowner closed access to the canal by the public.
Complaint was filed to have the landowner open the canal and to allow use and
access by the public. What is the ruling of the Supreme Court on this issue?

Study and compare the rulings of the SC in these case:

i.) Santos v. Moreno, L-15829, Dec. 4, 1967 - Report: BANTILAN, Gladys

FACTS:

1. Zobel Family of Spain formerly owned a vast track of maeshland in Macabebe,

Pampanga.

2. It operated a distillery plant in barrio San Esteban.

3. To provide access to different parts of property, they dug canals leading towards the
hacienda’s interior where most of them interlinked with each other.

4. Though erosion it gradually acquired the characteristics of rivers.

5. The company sold part of the Hacienda to Santos who closed some of the canals and
converted them into fishponds.

6. The closing of the man-made canals in Hacienda Esteban drew complaints from
residents of the surrounding barriors because of the closure, it deprived them of their means
of transportation and fishery grounds.

7. They demanded the reopening of canals.

ISSUE:

Whether or not canals are of public ownership and be ordered open?

HELD: No, because said canals are of private ownership.

61
Under Article 420 canals constructed by the state and devoted to public use are of public
ownership. Therefore, canals constructed by private persons within private property and
devoted exclusively for private use must be of private ownership.

ii.) Mercado v. Mun. Pres. of Macabebe, 59 Phil. 592 - Report: BEBERO,

Princess

Mariano Mercado, the original owner of the hacienda, in order to facilitate the cutting and
transportation of firewood and other products, produced on the said hacienda, towards the
Nasi River on the east or towards Limasan creek on the west, connected the two recesses or
bodies of water in question by means of excavation and, after having so connected them,
made other excavations at both ends towards the said directly connecting both bodies of
water, and which later became known as the Batasan-Limasan or Pinac Buñgalun creek.

Said creek or canal already existed at the time of the institution of the registration
proceedings wherein judgment was rendered resulting in the issuance of certificate of title in
favor of Romulo Mercado.

Romulo Mercado, the appellant’s (Eufemia Mercado) predecessor in interest, decided to

convert the said creek into a fish pond and with that object in view, in 1928 he closed the two
openings thereof towards the Nasi River on one side and Limasan creek on the other side
because residents nearby started using it.

The Secretary of Commerce ordered Romulo Mercado to remove the two dikes which he had
constructed at both ends of the creek. Eufemia Mercado appealed the order of the Secretary
of Commerce with the CFI Pampanga; which later dismissed said appeal, holding the creek in
question as property of the public domain.

Hence, this petition.

62
ISSUE

Whether the subject property belong to Eufemia Mercado.

RULING

No. Articles 339 of the Spanish Civil Code of 1889 provides that property of public ownership
includes “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.”
Article 407 of the same Code provides that “(1) Rivers and their natural channels; (2)
Continuous or intermittent waters from springs or brooks running in then natural channels
and the channels themselves; (3) Waters rising continuously or intermittently on lands of
public; xxx (8) Waters which flow continuously or intermittently from lands belonging to
private persons, to the State, to provinces, or to towns from the moment they leave such
lands; xxx” are of public ownership.

Article 408 of the Spanish Civil Code of 1889 provides that “(1) Waters, either continuous or
intermittent rising on private estates, while they run through them; (2) Lakes and ponds and
their beds when formed by nature on such estates; (3) Subterranean waters found therein;
(4) Rain waters falling thereon as long as they remain within their boundaries; and (5) The
channels of flowing streams, continuous or intermittent formed by rain water, and those of
brooks crossing estates which are not of public ownership” are of private ownership.
Further, “the water, bed, banks, and floodgates of a ditch or aqueduct are deemed to be an
integral part of the estate or building for which the waters are intended. The owners of
estates through or along the boundaries of which the aqueduct passes can assert no
ownership over it, nor any right to make use of its beds or banks, unless they base their claim
on title deed which specify the right or the ownership claimed.”

Appellant cannot invoke in her favor the Article 408 (5) on the ground that although it is true
that the BatasanLimasan or Pinac Buñgalun creek passes through her hacienda, it is none the
63
less true that it is not included in any of the kinds of private property therein enumerated.
The appellant and her predecessors in interest, in closing the two openings of the said creek
and converting it into a fish pond, not only appropriated for themselves the channel of the
said creek but also the creek itself.

Creeks are property of public domain. Article 339 provides that canals, rivers, torrents, and
those of a similar character are property of public ownership, and the similarity between
rivers, canals, and creeks undoubtedly obvious on the ground that, as has been stated, a
creek is no other than arm extending from a river.

 Reporters please read the full text of the case and coordinate with each other to
explain the difference in the Supreme Court rulings.

READ also these CASES:

o Maneclang et al., v. IAC, G.R. 66575, Sept. 30, 1986
ADRIANO MANECLANG, JULIETA, RAMONA, VICTOR, ANTONINA, LOURDES, TEODORO and
MYRNA, all surnamed MANECLANG, petitioners,

vs.

THE INTERMEDIATE APPELLATE COURT and ALFREDO MAZA, CORLETO CASTRO, SALOME
RODRIGUEZ, EDUCARDO CUISON, FERNANDO ZARCILLA, MARIANO GABRIEL, NICOMEDES
CORDERO, CLETO PEDROZO, FELIX SALARY and JOSE PANLILIO, respondents.

Loreto Novisteros for petitioners.

Corleto R. Castro for respondents.

64
FERNAN, J.:

Petitioners Adriano Maneclang, et. al. filed before the then Court of First Instance of
Pangasinan, Branch XI a complaint for quieting of title over a certain fishpond located within
the four [41 parcels of land belonging to them situated in Barrio Salomague, Bugallon,
Pangasinan, and the annulment of Resolutions Nos. 38 and 95 of the Municipal Council of
Bugallon Pangasinan. The trial court dismissed the complaint in a decision dated August 15,
1975 upon a finding that the body of water traversing the titled properties of petitioners is a
creek constituting a tributary of the Agno River; therefore public in nature and not subject to
private appropriation. The lower court likewise held that Resolution No. 38, ordering an ocular
inspection of the Cayangan Creek situated between Barrios Salomague Sur and Salomague
Norte, and Resolution No. 95 authorizing public bidding for the lease of all municipal ferries
and fisheries, including the fishpond under consideration, were passed by respondents herein
as members of the Municipal Council of Bugallon, Pangasinan in the exercise of their legislative
powers.

Petitioners appealed said decision to the Intermediate Appellate Court, which affirmed the
same on April 29, 1983. Hence, this petition for review on certiorari.

Acting on the petition, the Court required the respondents to comment thereon. However,
before respondents could do so, petitioners manifested that for lack of interest on the part of
respondent Alfredo Maza, the awardee in the public bidding of the fishpond, 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 petitioners over the land the body of
water found within their titled properties, stating therein, among other things, that "to pursue
the case, the same will not amount to any benefit of the parties, on the other hand it is to the
advantage and benefit of the municipality if the ownership of the land and the water found
therein belonging to petitioners be recognized in their favor as it is now clear that after the
National Irrigation Administration [NIA] had built the dike around the land, no water gets in or
out of the land. 1

The stipulations contained in the Compromise Agreement partake of the nature of an

adjudication of ownership in favor of herein petitioners of the fishpond in dispute, which, as
clearly found by the lower and appellate courts, was originally a creek forming a tributary of
the Agno River. Considering that as held in the case of Mercado vs. Municipal President of
Macabebe, 59 Phil. 592 [1934], 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, and as a public water, it
65
cannot be registered under the Torrens System in the name of any individual [Diego v. Court of
Appeals, 102 Phil. 494; Mangaldan v. Manaoag, 38 Phil. 4551; 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
Court finds the Compromise Agreement null and void and of no legal effect, the same being
contrary to law and public policy.

The finding that the subject body of water is a creek belonging to the public domain is a factual
determination binding upon this Court. 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, and it cannot be said that petitioners were 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.

IN VIEW OF THE FOREGOING, the Court Resolved to set aside the Compromise Agreement and
declare the same null and void for being contrary to law and public policy. The Court further
resolved to DISMISS the instant petition for lack of merit.

SO ORDERED.

o Chavez v. PEA, 415 SCRA 403, 2003

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 Manila-Cavite 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.

66
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.

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.

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.

o Hilario v. City of Manila, L-19570, April 27, 1967

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
67
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-in-charge 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.

68
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 Costs.

12. Ordinary and extraordinary flood

There are two types of floods in the area during the rainy season. One is the so-called
“ordinary” flood, when the river is swollen but the flowing water is kept within the confines of
the “primary” and “secondary” banks.

This occurs annually, about three to four times during the period. Then there is the
“extraordinary” flood, when the waters overflow beyond the said banks, and even inundate
the surrounding areas. However, this flood does not happen regularly. From 1947 to 1955,
there were only three such floods.

13. Movement of the river, west bank, from 1945-1955

From 1945 to 1949, the west bank of the River extended westward up to the “secondary bank”
line; from 1950 to 1952, this bank had moved, with the River, to the east, its lateral borders
running along a line just 20 meters west of the camachile tree; and from 1953 to 1955, the
extremities of the west bank further receded eastward beyond the camachile tree, until they
lay just about 20 meters east of said tree.

14. Floodings not accidental as they are annual; Government v. Colegio de San Jose does not
apply

Evidence shows that the River floods with annual regularity during the rainy season. These
floods can hardly be called “accidental”. The Colegio de San Jose case is not exactly in point.
What was mainly considered there was Article 74 of the Law of Waters relating to lakes, ponds
and pools. In the present case, none of these is involved.

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15. Movement of the river not due to excavation and extraction of materials

The excavations and extractions of materials, even from the American period, have been made
only on the strip of land west of the River. Under the “following-the nature-of-things”
argument advanced by plaintiff, the River should have moved westward, where the level of
the ground had been lowered. But the movement has been in the opposite direction instead.
Therefore, it cannot be attributed to defendants’ operations. Moreover, Hilario’s own evidence
indicates that the movement eastward was all due to natural causes. The movement eastward
of the channel by as much as 31 meters, from 1950 to 1953, was due to two typhoons which
caused the erosion of the east bank and the depositing of materials on the west side which
increased its level from as much as .93 to 2 meters.

16. River of different width; claim of unnatural widening unfounded

Reliance is made on the finding by the lower court that in 1943, the river was only 60 meters
wide, whereas in 1950, it was already 140 meters wide. Such area sampled shows only the
width of the River near the southwestern boundary of the Hilario estate. It does not indicate
how wide it was in the other parts, especially up north.

17. Extraction confined on the banks of the river and not beyond limits of the west bank to
invade his private estate; Hilario cannot recover damages from defendants

From 1947 to the early part of 1949, the defendants conducted their operations only in the
New Accretion Area along a narrow longitudinal zone contiguous to the watercourse then.
This zone, City Engineer Manila, is about 1 km. long and extends northward up to pt. 50.35.
However, no extractions nor excavations were undertaken west of this zone, i.e., above the
“temporary bank” line. This line is located east of the “secondary bank” line, the lateral
extremity of the west bank then. In the latter part of 1949, plaintiff prohibited the defendants
from extracting along the New Accretion Area and constructed a fence across the same. This
forced the defendants to go southeast of the “Excavated Area”. From 1954 to 1955,
defendants’ area of operation was still farther east of the New Accretion Area. They were.
working within a confined area along the west waterline, the northern and western boundaries
of which were 20 meters away east from the camachile tree. It appears sufficiently established,
therefore, that defendants have not gone beyond the receding western extremities of the
west riverbank. They have confined their extraction of gravel and sand only from which the
70
banks of the River, which constitute part of the public domain wherein they had the right to
operate. Plaintiff has not presented sufficient evidence that defendants have gone beyond the
limits of the west bank, as previously established, and have invaded his private estate. He
cannot, therefore, recover from

them.

18. Plaintiff not denied of property without just compensation

The Court does not declare that the entire channel, i.e., all that space between the “secondary
bank” line and the “primary bank” line, has permanently become part of the riverbed. What is
held is that at the time the defendants made their extractions, the excavations were within the
confines of the riverbanks then. All that space to the west of said receding line” would still be
part of plaintiff’s property and also whatever portion adjoining the river is, at present, no
longer reached by the non-inundating ordinary floods. Further, it is not correct to say that
plaintiff would be deprived of his property without any compensation at all. Under Article 370
of the old Civil Code, the abandoned bed of the old river belongs to the riparian owners either
fully or in part with the other riparian owners. And had the change occurred under the Civil
Code of the Philippines, plaintiff would even be entitled to all of the old bed in proportion to
the area he has lost.

19. Defendants did not unjustly profit at plaintiff’s expense as they are not responsible for the
shifting of the river

Defendants cannot be accused of unjustly profiting at plaintiff’s expense. They were not
responsible for the shifting of the river. It was due to natural causes for which no one can be
blamed. Further, defendants were extracting from public property then, under proper
authorization. The government, through the defendants, may have been enriched by chance,
but not unjustly.

o Tufexis v. Olaguera, 32 Phil. 654

VERGO D. TUFEXIS, Plaintiff-Appellant, vs. FRANCISCO OLAGUERA and THE MUNICIPAL COUNCIL OF
GUINOBATAN, represented by its president, Agapito Paulate, Defendants-Appellees.

71
Rafael de la Sierra for appellant.

Attorney-General Avanceña for appellee Municipal Council of Guinobatan.

No appearance for the other appellee.

TORRES, J.:

Counsel for plaintiff, in his written petition of May 13, 1913, prayed the Court of First Instance of Albay to declare
that his client was entitled to the possession and use of the land referred to in the complaint in conformity with
the terms of the Government concession (Exhibit A), of which he claimed to be the sole and lawful owner; that
the defendants be ordered to remove from the said land all the stores, sheds, billiard tables, and other
obstructions thereon, so that plaintiff might reconstruct the public market building on the said land in accordance
with the provisions of the said concession, and that they be ordered to pay jointly and severally to the plaintiff, as
damages, the sum of P250 per month from March 1, 1912, until the date on which the land be vacated, and to pay
the legal costs and expenses of the suit.chanroblesvirtualawlibrary chanrobles virtual law library

After the complaint had been answered by counsel for the defendant Francisco Olaguera, who prayed that his
client be absolved therefrom, with the costs against the plaintiff, the provincial fiscal, in the name and
representation of the municipality of Guinobatan, demurred on the ground that plaintiff lacked the personality to
institute the action and further alleged that the complaint did not set forth sufficient facts to constitute a cause of
action.chanroblesvirtualawlibrary chanrobles virtual law library

By an order of August 25, 1913, the court sustained the demurrer filed by the defendant municipality of
Guinobatan, allowed plaintiff ten days in which to amend his complaint, and notified him that unless he did so
within that period the action would be dismissed.chanroblesvirtualawlibrary chanrobles virtual law library

Counsel for plaintiff, by a writing of the 27th of the said month, set forth: That he objected to the above ruling as
he believed it erroneous and contrary to law; that he did not desire to amend his complaint, wherefore, in
accordance with the provisions of section 101 of the Code of Civil Procedure, the court should render such
judgment in the case as the law might warrant, and his exception to the said ruling should be entered on the
record. By an order of September 1, 1913, the court, overruling the motion made by the defendant Olaguera,
dismissed the complaint filed by the plaintiff, Vergo D. Tufexis, against the municipal council of Guinobatan on the
ground that plaintiff had not amended his complaint. Plaintiff's counsel, when notified of this ruling, excepted
thereto and moved for a rehearing and a new trial. This motion was overruled, whereupon the plaintiff excepted
and filed the proper bill of exceptions.chanroblesvirtualawlibrary chanrobles virtual law library

In the complaint filed by counsel for Vergo D. Tufexis, it was alleged that on September 30, 1911, plaintiff acquired
at a public sale held in execution of a judgment rendered against Ricardo Pardo y Pujol, a piece of property
situated in the municipality of Guinobatan, consisting of a frame building of strong materials with a galvanized-
iron roof, erected on a parcel of land belonging to that municipality and intended for a public market; that plaintiff
also acquired at the sale all the right, interest, title, and participation in the said property that appertained or
might appertain to Pardo y Pujol; that the said building was constructed by virtue of a concession granted by the

72
former Spanish government to Ricardo Pardo y Cabañas, father of the judgment debtor, who, by a public
instrument of July 31, 1912, renounced his right to redeem the said property and conveyed it to plaintiff, together
with all his rights therein, the instrument of grant, Exhibit A, being attached to the complaint as a part thereof;
that on January 2, 1912, the said building was totally destroyed by an accidental fire; that subsequent to the date
just mentioned and for several months thereafter the municipal council of Guinobatan carried on negotiations
with plaintiff for the purchase of his rights in the said concession; that these negotiations could not be brought to
a conclusion because the municipal council had acted therein deceitfully, fraudulently, and in bad faith and for the
sole purpose of beguiling, deceiving, and prejudicing plaintiff in order to prevent him from exercising his right to
reconstruct the burned market building and utilize it in accordance with the terms of the said concession; that the
defendant municipal council, without plaintiff's consent and in connivance with the other defendant, Francisco
Olaguera, had authorized the latter unlawfully to take possession of all the land from March 1, 1912, in violation of
plaintiff's rights; that the said Olaguera occupied the same with booths or stores for the sale of groceries and
other merchandise, for billiard tables, and other analogous uses and derived unlawful gain from the revenues and
rents produced by the said buildings; that plaintiff was entitled to the possession of the said land in accordance
with the concession, which was in full force and effect and belonged to plaintiff; that plaintiff proposed to
construct another public market building on the same land, but that the defendants had prevented him from
using the land and reconstructing thereon the said public market building, and refused to recognize plaintiff's
right and to vacate the land that had been occupied by the burned edifice.chanroblesvirtualawlibrary chanrobles
virtual law library

The provincial fiscal alleged as a ground for the demurrer that in no part of the instrument of concession did it
appear that the privilege granted to Ricardo Pardo y Cabañas had likewise been granted to his successors or
assignees, and that therefore such rights and actions as might have appertained to the assignee, Pardo y Cabañas,
could not be conveyed to nor could they be acquired by any other person; that it was alleged in the complaint
that the building was completely destroyed by fire on January 2, 1912, and that if plaintiff's right to the possession
of the land was conditioned by the existence thereon of the said market building, such right had terminated by
the disappearance of the building, inasmuch as plaintiff's right of action for the possession of the land was a
corollary of the existence or nonexistence of the market building, and upon the disappearance of the latter the
eland had reverted to the control of its owner; that pursuant to the terms of the said concession, the land
belonging to the municipality was granted for the purpose of constructing thereon a market, and as this market
had disappeared plaintiff would need a new concession, if it could be obtained, in order to be entitled to the
possession of the land and to construct a new building; that by plaintiff's acquiring the right, title and interest of
Ricardo Pardo y Pujol in the land he could not be understood to have also acquired such right and interest in the
building intended for a public market, for the purchase of the building refers only to the edifice itself and it never
could be understood that plaintiff acquired any right in the concession, which was never sold to him, as the
complaint contains no allegation whatever that he purchased or acquired such right; that a personal privilege like
the said concession is only temporary and is extinguished at the death of the grantee, unless otherwise provided
in the grant; and that, from the lack of an allegation in the complaint that plaintiff legally purchased or acquired
the right in the said concession, it was evident that the complaint did not allege sufficient facts to constitute a
cause of action and was fatally defective.chanroblesvirtualawlibrary chanrobles virtual law library

The question presented in the case at bar consists of whether a building of strong materials, erected by the said
debtor's father, Ricardo Pardo y Cabañas, on land belonging to the municipality of Guinobatan and intended for a
public market, by virtue of a concession granted on August 4, 1884, under the conditions therein imposed upon
the grantee, could be attached and sold for the payment of a certain debt owed by Ricardo Pardo y Pujol to a
third person who had obtained a final judgment.chanroblesvirtualawlibrary chanrobles virtual law library

73
In deciding this question it is indispensable to determine what rights were acquired by Pardo y Pujol's father by
virtue of the said concession granted to him by the Spanish Government, in the building erected by him on a
parcel of land belonging to the municipality of Guinobatan. The concession referred to contains, among other
provisions, the following:

ARTICLE 1. There is hereby granted to Mr. Ricardo Pardo y Cabañas the parcel of land in the pueblo of
Guinobatan, a prolongation of another parcel belonging to him, situated between the store and house of the
Chinaman Valentin Garcia and that of Mr. Roco, following the line of Calle Real or Calzada de Albay and that of
Calle del Carmen, up to and as far as the square that is to be laid out in the said pueblo.chanroblesvirtualawlibrary
chanrobles virtual law library

ART. 2. On the said land the petitioner shall construct a public market building, with a galvanized-iron roof, in
accordance with the plan submitted to this office on the 13th of last May and which was approved by his
Excellency the Governor-General in conformity with the changes recommended by the advisory board of the
consulting board of public works; and these changes are those hereinafter specified.chanroblesvirtualawlibrary
chanrobles virtual law library

ART. 3. The said Mr. Pardo is granted the right to enjoy the revenue derived from the floor space of the market
for the period of forty years, since the revenue from such floor space appertains to the grantee of the said
service. By floor space is meant the right to shelter or retail merchandise in the market belonging to the
grantee.chanroblesvirtualawlibrary chanrobles virtual law library

ART. 4. On the expiration of the said period both the land aforementioned and the building thereon constructed
shall be the property of the Government and the building shall be delivered to it in good
condition.chanroblesvirtualawlibrary chanrobles virtual law library

ART. 5. It shall be obligatory for every vendor to sell his goods in the said market, which shall be the only one in
the said pueblo.chanroblesvirtualawlibrary chanrobles virtual law library

ART. 7. The said authority shall put Mr. Pardo in possession of the land affected by this concession, and the
proper proceedings in connection therewith shall be had in the presence of the chief engineer of public works of
the said district and the headmen of the pueblo.chanroblesvirtualawlibrary chanrobles virtual law library

ART. 8. Mr. Pardo shall inform this office of the date of the commencement of the work of construction, and the
work shall be inspected by the public works officials residing in Albay; the building when completed shall be
examined and accepted by the chief engineer of the district of Nueva Caceres or by the deputy to whom the latter
may delegate this duty: all with the knowledge of the office of the inspector of public works.

The land on which the building was erected and which is referred to in the foregoing articles, contained in the
franchise granted by the Government of the former sovereignty, belongs to the municipality of Guinobatan.
74
Although the building was constructed at the expense and with the money of the grantee, Ricardo Pardo y
Cabañas, it is, nevertheless, the property of the state or of the said municipality, and was temporarily transferred
to the grantee, Pardo y Cabañas, in order that he might enjoy the usufruct of its floor space for forty years, but on
the termination of this period the said right of usufruct was to cease and the building was to belong finally and
absolutely to the state or the municipality in representation thereof.chanroblesvirtualawlibrary chanrobles virtual
law library

For these reasons, then, there is no question that the building and the land on which it was erected, since they did
not belong to the grantee, Pardo y Cabañas, nor do they belong to his son and heir, Ricardo Pardo y Pujol, could
not be attached or sold for the payment of a debt contracted by the latter.chanroblesvirtualawlibrary chanrobles
virtual law library

The concession granted by the former Spanish Government is personal and transferable only by inheritance, and
in no manner could it be conveyed as a special personal privilege to another and a third person unless were an
hereditary successor of the grantee, Pardo y Cabañas, without knowledge and consent of the administrative
authorities under whose control the special right of usufruct in the floor space of the said market building was
enjoyed and exercised.chanroblesvirtualawlibrary chanrobles virtual law library

Even though it is unquestionable that the creditor has a right to collect the money due him, out of his debtor's
property, yet when among such property is included the right of usufruct in a public-service building and this right
is closely related to a service of a public character, the right that lies in behalf of the creditor for the collection of a
debt from the person who enjoys the said special privilege of right of usufruct in the floor space of a building
intended for a public market is not absolute and may be exercised only through the action of a court of justice
with respect to the profits or revenues obtained under the special right of usufruct granted to the
debtor.chanroblesvirtualawlibrary chanrobles virtual law library

Ricardo Pardo y Pujol, as the successor and heir of the grantee, Pardo y Cabañas, is bound to pay his debts and his
property can be attached on petition of his creditors. However, his personal privilege of usufruct in the floor
space of the public market building of Guinobatan cannot be attached like any ordinary right, because that would
mean that a person who has contracted with the state or with the Governmental authorities to furnish a service
of a public character would be substituted, for another person who took no part in the contract, and that the
regular course of a public service would be disturbed by the more or less legal action of the creditors of a grantee,
to the prejudice of the state and the public interests.chanroblesvirtualawlibrary chanrobles virtual law library

It is indeed true that the building, which for many years served as a public market in the pueblo of Guinobatan,
was erected out of the private funds of the grantee, Pardo y Cabañas, and at first sight it seems natural that the
latter, who paid the cost of the construction of the building, should be its owner. However, judging from the
agreement between him and the Government authorities, he was granted the right to usufruct in the floor space
of the said building in order that, during the period of forty years, he might reimburse himself for and collect the
value of the building constructed by him; and it must be believed that Pardo y Cabañas, before executing the
contract with the Government for the purpose of obtaining the right of usufruct granted to him and before
accepting the contract, thought over its conditions deliberately and maturely and felt sure that he would profit
thereby, that is, that he would reimburse himself for the value of the building he erected, and obtain interest on
the investment and other advantages by enjoying the usufruct for the space of forty long years, as in fact even
75
after his death this right continued to be enjoyed by his son, Ricardo Pardo y Pujol. Therefore, the said privilege
conferred on the grantee by the Spanish Government on August 4, 1884, was neither onerous nor prejudicial to
him or his heir, but on the contrary was beneficial to them.chanroblesvirtualawlibrary chanrobles virtual law
library

So, if neither the land nor the building in question belongs to Pardo y Pujol, it is evident that they could not be
attached or sold at public auction to satisfy his debt and, consequently, the attachment and sale of the said
Government property executed on petition of the creditor of the said Pardo y Pujol are notoriously illegal, null and
void, and the acquisition of the property by plaintiff confers upon him no right whatever based on the said
concession.chanroblesvirtualawlibrary chanrobles virtual law library

In the decision in the case of Lopez vs. Alvarez (9 Phil. Rep., 28) the principle was asserted that:chanrobles virtual
law library

In attachments of all kinds it is an essential condition that the thing which is attached shall be the property of the
debtor, and from no provision of the Mortgage Law can any conclusion be drawn which shall be contrary to this
principle.chanroblesvirtualawlibrary chanrobles virtual law library

This same principle was set up in the decision of the case of Alvaran vs. Marquez (11 Phil. Rep.,
263).chanroblesvirtualawlibrary chanrobles virtual law library

It having been demonstrated by the foregoing reasons that the building constructed on land of the municipality
of Guinobatan for a public market could not be attached and sold as the result of a debt contracted by Ricardo
Pardo y Pujol in favor of a third person, we shall now proceed to examine whether an attachment would lie of the
special right, granted by the former Spanish Government to the said debtor's father, of usufruct in the floor space
of the said market and right to collect the revenues therefrom for the period of forty years, counted from the
date of the granting of the said right.chanroblesvirtualawlibrary chanrobles virtual law library

Without the consent of the proper administrative official, a grantee, or one charged with conducting a public
service such as a market of the municipality of Guinobatan, cannot be permitted to be substituted by any other
person, though this latter be a creditor of the usufructuary grantee. Hence, we hold that the attachment of the
right of usufruct in the said building and of collecting the revenue obtained from the floor space of the said public
market of Guinobatan, was illegal, because, were this right susceptible of attachment, a third person, as a creditor
or a purchaser, might exercise such right, notwithstanding his personal status, instead of the grantee contractor.
This theory does not bar the creditor from collecting the money owed him by the grantee, inasmuch as he has the
right to petition the courts to allow him through proper legal proceedings to collect his money out of the
revenues produced by the usufruct conferred by the Government on the grantee of the said
service.chanroblesvirtualawlibrary chanrobles virtual law library

The concession obtained by Ricardo Pardo y Pujol's father on August 4, 1884, is a true sovereignty and the
grantee, Pardo y Cabañas, and therefore the stipulations made by and between the contracting parties, the

76
obligation to which that contract may have given rise, and the consequences that may have been entailed by the
contract, all come within the scope of the civil law which guarantees the rights of the contracting
parties.chanroblesvirtualawlibrary chanrobles virtual law library

Although in our opinion the said concession is somewhat of the nature of a franchise, yet we do not think that the
provisions of sections 56 to 61 of Act No. 1459 are applicable to the case at bar, for these sections refer to a
franchise granted to a corporation, while the concession given by the former Spanish Government was granted to
a private party and not to a corporation or judicial entity. Therefore, though under the said Act a franchise is
subject to attachment, the Act contains no express provision whatever which authorizes the attachment and sale
of a right or franchise especially granted to a private party under the conditions in which the concession in
question was granted. The substitution of a third person instead of the one who obtained such an administrative
concession must be explicitly authorized by the proper official of the administrative branch of the Government in
order that the substitute may exercise the right so granted.chanroblesvirtualawlibrary chanrobles virtual law
library

In the case of Ricardo y Pujol, the grantee of the usufruct on the floor space in the said market building in
Guinobatan, his creditor, in order to obtain the payment of his credit, could have applied to the courts for an
attachment of the revenues or proceeds collected by his said debtor by virtue of the said concession; but it was in
no wise proper to attach and sell the right granted by the public administration to operate and enjoy the usufruct
of the floor space of the said public market.chanroblesvirtualawlibrary chanrobles virtual law library

Although there is no similarity between the management of a public market and that of a railroad company, yet
for the reason that the operation of the one as well as the other is of public interest, when a creditor of such a
company sues to collect a debt it would be improper to attach the stationary equipment and rolling stock of the
railroad - only the gross receipts of the business over and above the amount required for its operation could be
touched. This same legal principle holds in the case where the grantee of a market is a debtor and his property is
attached on petition of his creditor. The receipts of the market may be attached, but not the right to operate and
conduct the service, which is of a public character.chanroblesvirtualawlibrary chanrobles virtual law library

In fact, article 1448 of the Ley de Enjuiciamiento Civil, cited in this decision, not as a law now in force, but for the
purpose of setting out a principle of law, prohibits the levy of attachments on railroads opened to public service,
and on the stations, stores, shops, lands, works and buildings necessary for their operation, or on the
locomotives, rails and other material intended for the operation of the line. When execution is levied on such
railroad companies, the proceedings are governed by the provisions of the Law of November 12, 1869, extended
by a royal order of August 3, 1886, to the overseas provinces. This law prescribes among other things that
attachments may be levied and executed only on the gross receipts remaining after the necessary operating
expenses have been deducted.chanroblesvirtualawlibrary chanrobles virtual law library

In harmony with this legal provision, the supreme court of the State of Nebraska, in which State there is no law
whatever that authorizes the attachment and sale of a bridge belonging to a corporation, in the case of the
Overton Bridge co. vs. Means (33 Neb., 857) laid down the principle that such a bridge and the rights of the
corporation therein could not be sold to satisfy a judgment against the corporation for the reason that:

77
The property of corporations which are closed as public agencies, such as railroad and bridge companies, which is
essential to the exercise of their corporate franchise, and the discharge of the duties they have assumed toward
the general public, cannot, without statutory authority, be sold to satisfy a common law judgment.

It cites decisions of several states, and also, in the decision referred to, cited Morawetz on Private Corporations,
section 1125, and held that after attachment of the property not necessary to enable the corporation to perform
its duties to the public, the only remedy remaining to a judgment creditor was to obtain the appointment of a
receiver and a sequestration of the company's earnings.chanroblesvirtualawlibrary chanrobles virtual law library

The supreme court of Alabama, in deciding a similar case (Gardner vs. Mobile & Northwestern R.R. Co., 102 Ala.,
635, 645), affirmed the same principle and said:

The only remedy of a judgment creditor is to obtain the appointment of a receiver and the sequestration of its
income or earnings.

It is to be noted that section 56 of Act No. 1459, which permits the sale under execution of a corporation's
franchise, is in no wise applicable to the case at bar, for the reason that, since this Act was promulgated on March
1, 1906, it could not and cannot affect the laws, decrees, and orders of the Spanish government in conformity with
which the administrative concession, Exhibit A, was granted to Pardo y Cabañas.chanroblesvirtualawlibrary
chanrobles virtual law library

The operation of a railroad is of public interest, and concerns both the public and the state, even though the
superintendent and management thereof be conducted by a private company. Therefore, the property of a
railroad, either its rolling stock or permanent equipment, is not subject to attachment and sale, and the rights of
the creditors of the operating company may be exercised for the collection of their credit only of the gross
receipts after the operation of the railroad is insured from its own income.chanroblesvirtualawlibrary chanrobles
virtual law library

This decision is based on the provisions of the aforecited law and the premise that the usufruct of the floor space
of the public market of Guinobatan, granted to Ricardo Pardo y Pujol's father was not subject to attachment on
account of its being of a public character, but still the latter's creditor could have applied for a writ of execution
and laid an attachment on the proceeds obtained from the operation of the market, which proceeds or income
could have been collected by a receiver and intervenor.chanroblesvirtualawlibrary chanrobles virtual law library

This, however, was not done, but on the creditor's petition the public market building, which was not his debtor's
property, together with all the right, interest, title and participation which the latter had or might have had
therein, was attached and sold; and as plaintiff was unable to acquire any right or title in such property illegally
sold and illegally acquired by him at public auction or in the usufruct of the floor space of the building, it is
unquestionable that he lacks the personality to claim possession of the land that belongs to the municipality or
the enjoyment and exercise of the right conferred by the aforesaid administrative concession, which was and is

78
inalienable on account of its being a personal right. For the same reason, plaintiff has no right to reconstruct the
burned building on the land where it formerly stood.chanroblesvirtualawlibrary chanrobles virtual law library

The only right to which the creditor was entitled was to petition for the attachment of the income and proceeds
obtained from the use of the floor space of the market; but he did not avail himself of this right, nor were the
receipts therefrom attached, nor were they adjudicated either to the creditor or to the plaintiff Tufexis.
Therefore, the order of dismissal appealed is in accordance with law and the merits of the case, and likewise the
errors assigned thereto have been duly refuted by the reasons set forth herein.chanroblesvirtualawlibrary
chanrobles virtual law library

For the foregoing considerations, we hereby affirm the said order of dismissal, with the costs against the
appellant. So ordered.

o City of Manila v. Garcia, L-26053, Feb. 21, 1967 – Report: CAGATIN, Kristelle
FACTS:

1.Plaintiff is the owner of certain parcels of land. Without the knowledge and consent of
plaintiff, defendants occupied the property and built their houses.2.Having discovered, plaintiff
through its mayor gave each defendant written permits, each labeled as “lease contract” to
occupy specific areas. For their occupancy, defendants were charged nominal rentals.3.After
sometime, plaintiff, through its treasurer, demanded payment of their rentals and vacate the
premises for the Epifanio de los Santos Elementary School’s expansion.4.Despite the demand,
defendants refused to vacate the said property. Hence, this case was filed for recovery of
possession.5.The trial court ruled in favor of plaintiff taking judicial notice of Ordinance 4566 –
appropriating P100k for the construction of additional building of Epifanio De Los Santos
Elementary School.6.Defendants appealed.

ISSUE: WoN the trial court properly found that the city needs the premises for school purposes

HELD: YES The trial court ruled out the admissibility of the documentary evidence presented by
plaintiff

– Certification of the Chairman, Committee on Appropriations of the Municipal Board which

recites the amount of P100k had been set aside in Ordinance 4566 for the construction of
additional building of the said school.

But then the decision under review, the trial court revised his views. He then declared that
there was a need for defendants to vacate the premises for school expansion; he cited the very
document. Because of the court’s contradictory stance, defendants brought this case on
appeal. However, the elimination of the certification as evidence would not profit defendants.
For, in reversing his stand, the trial judge could well have taken — because he was duty bound
to take — judicial notice of Ordinance 4566 . The reason being that the city charter of Manila

79
requires all courts sitting therein to take judicial notice of all ordinances passed by the
municipal board of Manila.

And, Ordinance4566 itself confirms the certification aforesaid that an appropriation of

P100,000.00 was set aside for the “construction of additional building” of the Epifanio de los
Santos Elementary School.

Further defendants’ entry to the said property is illegal. Their constructions are as illegal,
without permits. The city mayor doesn’t have the authority to issue permits. The permits
issued are null and void.

B. PATRIMONIAL PROPERTY or PROPERTIES OF PRIVATE OWNERSHIP (Arts. 421

– 425)

1) Study SC Jurisprudence about the 3 Kinds of Properties of Private Ownership:

i. PATRIMONIAL PROPERTY of the STATE,

o LAUREL v. GARCIA, G.R. No. 92013 July 25, 1990 - Report: DELA CRUZ, Ralph
(PIs. read the dissent of Justice Feliciano & include in the report)

LAUREL V. GARCIA

These are two petitions for prohibition from proceeding with the bidding for the
sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome Minato-ku
Tokyo, Japan.

The subject property in this case is one of the four (4) properties in Japan
acquired by the Philippine government under the Reparations Agreement
entered into with Japan on May 9, 1956.

Rep. Act No. 1789, the Reparations Law, prescribes the national policy on
procurement and utilization of reparations and development loans. The
procurements are divided into those for use by the government sector and
those for private parties in projects as the then National Economic Council shall
determine. Those intended for the private sector shall be made available by sale
to Filipino citizens or to one hundred (100%) percent Filipino-owned entities in
national development projects. The Roppongi property was acquired from the
Japanese government under the Second Year Schedule and listed under the
heading "Government Sector"

On July 25, 1987, the President issued Executive Order No. 296 entitling non-
Filipino citizens or entities to avail of separations' capital goods and services in
the event of sale, lease or disposition. The four properties in Japan including the
Roppongi were specifically mentioned in the first "Whereas" clause.

The petitioner in G.R. No. 92013 objects to the alienation of the Roppongi
property to anyone. The petitioner in G.R. No. 92047 adds as a principal

80
 objection the alleged unjustified bias of the Philippine government in favor of
selling the property to non-Filipino citizens and entities.

Issues:

1. WON the Roppongi Lot is a property of public dominion?

2. WON the Roppongi Lot has been converted into patrimonial property?

Ruling:

1. Yes. The Roppongi property is correctly classified under paragraph 2 of

Article 420 of the Civil Code as property belonging to the State and intended for
some public service.

2. No. The fact that the Roppongi site has not been used for a long time for
actual Embassy service does not automatically convert it to patrimonial
property. Any such conversion happens only if the property is withdrawn from
public use. A property continues to be part of the public domain, not available
for private appropriation or ownership until there is a formal declaration on the
part of the government to withdraw it from being such. An abandonment of the
intention to use the Roppongi property for public service and to make it
patrimonial property under Article 422 of the Civil Code must be definite.
Abandonment cannot be inferred from the non-use alone specially if the non-use
was attributable not to the government's own deliberate and indubitable will
but to a lack of financial support to repair and improve the property.
Abandonment must be a certain and positive act based on correct legal
premises. Abandonment must be a certain and positive act based on correct
legal premises. The executive order does not declare that the properties lost
their public character. It merely intends to make the properties available to
foreigners and not to Filipinos alone in case of a sale, lease or other disposition.

Section 63 (c) of Rep. Act No. 6657 (the CARP Law). It did not withdraw the
Roppongi property from being classified as one of public dominion when it
mentions Philippine properties abroad. Rep Act No. 6657, therefore, does not
authorize the Executive Department to sell the Roppongi property.

Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of
the sale of the Roppongi property does not withdraw the property from public
domain much less authorize its sale. It is a mere resolution; it is not a formal
declaration abandoning the public character of the Roppongi property.

ii. PATRIMONIAL PROPERTY of LOCAL GOVTS.

o City of Baguio v. NAWASA, G.R. No. L-12032, August 31, 1959 – Report: CUBELO,
Irvin

81
Facts: Plaintiff a municipal corporation filed a complaint against defendant a public
corporation, created under Act.1383. It contends that the said act does not include within its
purview the Baguio Water Works system, assuming that it does, is unconstitutional because it
deprives the plaintiff ownership, control and operation of said water works without just
compensation and due process of law. The defendant filed a motion to dismiss ion the ground
that it is not a proper exercise of police power and eminent domain. The court denied the
motion and ordered the defendants to file an answer. The court holds that the water works
system of Baguio belongs to private property and cannot be expropriated without just
compensation. Sec. 8 of R.A.1383 provides for the exchange of the NAWASA assets for the
value of the water works system of Baguio is unconstitutional for this is not just compensation.
Defendants motion for reconsideration was denied hence this appeal.

Issue: Whether or Not there is a valid exercise of police power of eminent domain.

Held: R.A. 1383 does not constitute a valid exercise of police power. The act does not
confiscate, destroy or appropriate property belonging to a municipal corporation. It merely
directs that all water works belonging to cities, municipalities and municipal districts in the
Philippines to be transferred to the NAWASA. The purpose is placing them under the control
and supervision of an agency with a view to promoting their efficient management, but in so
doing does not confiscate them because it directs that they be paid with equal value of the
assets of NAWASA.

The Baguio water works system is not like a public road, the park, street other public property
held in trust by a municipal corporation for the benefit of the public. But it is a property of a
municipal corporation, water works cannot be taken away except for public use and upon
payment of just compensation. Judgment affirmed.

o Province of Zamboanga del Norte v. City of Zamboanga, L-24440, March 28,

1968 – Report: ESCALANTE, Leo

THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee,

vs.

82
CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL
REVENUE,defendants-appellants.

Facts:

Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the
provincial capital of the then Zamboanga Province. On October 12, 1936, Commonwealth Act
39 was approved converting the Municipality of Zamboanga into Zamboanga City. Sec. 50 of
the Act also provided that “Buildings and properties which the province shall abandon upon
the transfer of the capital to another place will be acquired and paid for by the City of
Zamboanga at a price to be fixed by the Auditor General.”

Such properties include lots of capitol site, schools, hospitals, leprosarium, high school
playgrounds, burleighs, and hydro-electric sites.

On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two
(2): Zamboanga del Norte and Zamboanga del Sur. As to how the assets and obligations of the
old province were to be divided between the two new ones, Sec. 6 of that law provided “Upon
the approval of this Act, the funds, assets and other properties and the obligations of the
province of Zamboanga shall be divided equitably between the Province of Zamboanga del
Norte and the Province of Zamboanga del Sur by the President of the Philippines, upon the
recommendation of the Auditor General.”

However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of
Commonwealth Act 39 by providing that, “All buildings, properties and assets belonging to the
former province of Zamboanga and located within the City of Zamboanga are hereby
transferred, free of charge, in favor of the said City of Zamboanga.”

This constrained Zamboanga del Norte to file on March 5, 1962, a complaint against
defendants-appellants Zamboanga City; that, among others, Republic Act 3039 be declared
unconstitutional for depriving Zamboanga del Norte of property without due process and just
compensation.

Lower court declared RA 3039 unconstitutional as it deprives Zamboanga del Norte of its
private properties.

83
Hence the appeal.

Issue:

Whether RA 3039 is unconstitutional on the grounds that it deprives Zamboanga del Norte of
its private properties.

Held:

No. RA 3039 is valid. The properties petitioned by Zamboanga del Norte is a public property.

The validity of the law ultimately depends on the nature of the 50 lots and buildings thereon in
question. For, the matter involved here is the extent of legislative control over the properties
of a municipal corporation, of which a province is one. The principle itself is simple: If the
property is owned by the municipality (meaning municipal corporation) in its public and
governmental capacity, the property is public and Congress has absolute control over it. But if
the property is owned in its private or proprietary capacity, then it is patrimonial and Congress
has no absolute control. The municipality cannot be deprived of it without due process and
payment of just compensation.

The capacity in which the property is held is, however, dependent on the use to which it is
intended and devoted. Now, which of two norms, i.e., that of the Civil Code or that obtaining
under the law of Municipal Corporations, must be used in classifying the properties in
question?

Civil Code

The Civil provide: ART. 423. The property of provinces, cities, and municipalities is divided into
property for public use and patrimonial property; ART. 424. Property for public use, in the
provinces, cities, and municipalities, consists of the provincial roads, city streets, municipal
streets, the squares, fountains, public waters, promenades, and public works for public service
paid for by said provinces, cities, or municipalities. All other property possessed by any of them
84
is patrimonial and shall be governed by this Code, without prejudice to the provisions of special
laws.

Applying the above cited norm, all the properties in question, except the two (2) lots used as
High School playgrounds, could be considered as patrimonial properties of the former
Zamboanga province. Even the capital site, the hospital and leprosarium sites, and the school
sites will be considered patrimonial for they are not for public use. They would fall under the
phrase “public works for public service” for it has been held that under the ejusdem generis
rule, such public works must be for free and indiscriminate use by anyone, just like the
preceding enumerated properties in the first paragraph of Art 424. The playgrounds, however,
would fit into this category.

Law of Municipal Corporations

On the other hand, applying the norm obtaining under the principles constituting the law of
Municipal Corporations, all those of the 50 properties in question which are devoted to public
service are deemed public; the rest remain patrimonial. Under this norm, to be considered
public, it is enough that the property be held and, devoted for governmental purposes like
local administration, public education, public health, etc.

Final Ruling

The controversy here is more along the domains of the Law of Municipal Corporations — State
vs. Province — than along that of Civil Law. If municipal property held and devoted to public
service is in the same category as ordinary private property, then that would mean they can be
levied upon and attached; they can even be acquired thru adverse possession — all these to
the detriment of the local community. It is wrong to consider those properties as ordinary
private property.

Lastly, the classification of properties other than those for public use in the municipalities as
patrimonial under Art. 424 of the Civil Code — is “… without prejudice to the provisions of
special laws.” For purpose of this article, the principles, obtaining under the Law of Municipal
Corporations can be considered as “special laws”. Hence, the classification of municipal
property devoted for distinctly governmental purposes as public should prevail over the Civil
Code classification in this particular case.

85
WHEREFORE, the decision appealed from is hereby set aside and another judgment is hereby
entered as follows:.

(1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del Norte in
lump sum the amount of P43,030.11 which the former took back from the latter out of the sum
of P57,373.46 previously paid to the latter; and

(2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever balance
remains of plaintiff’s 54.39% share in the 26 patrimonial properties, after deducting therefrom
the sum of P57,373.46, on the basis of Resolution No. 7 dated March 26, 1949 of the Appraisal
Committee formed by the Auditor General, by way of quarterly payments from the allotments
of defendant City, in the manner originally adopted by the Secretary of Finance and the
Commissioner of Internal Revenue. No costs. So ordered.

iii. PATRIMONIAL PROPERTY of PRIVATE PERSON or Entity.

2) Can public dominion properties be later converted to, or withdrawn from public use
and form part of the patrimonial property of the State and Local Govt.?

1. Faustino Ignacio v. Dir. Of Lands, L-12958, May 30, 1960

FACTS

Faustino Ignacio filed an application to register a parcel of land (mangrove) which he alleged
he acquired by right of accretion since it adjoins a parcel of land owned by the Ignacio. His
application is opposed by the Director of Lands, Laureano Valeriano, contending that said land
forms part of the public domain. The Trial Court dismissed the application holding that said
land formed part of the public domain. Thus the case at bar.

ISSUE:

Whether or not the land forms part of the public domain

86
HELD: YES

1. The law on accretion cited by Ignacio in inapplicable in the present case because it refers to
accretion or deposits on the banks of rivers while this refers to action in the Manila Bay, which
is held to be part of the sea

2. Although it is provided for by the Law of Waters that lands added to shores by accretions
caused by actions of the sea form part of the pubic domain when they are no longer necessary
for purposes of public utility, only the executive and the legislative departments have the
authority and the power to make the declaration that any said land is no longer necessary for
public use. Until such declaration is made by said departments, the lot in question forms part
of the public domain, not available for private appropriation or ownership

2. Municipality of Oas v. Roa, 7 Phil. 20

G.R. No. L-2017 November 24, 1906

THE MUNICIPALITY OF OAS, plaintiff-appellee,

vs.

BARTOLOME ROA, defendant-appellant.

Del-Pan, Ortigas and Fisher, for appellant.

Enrique Llopiz for appellee.

WILLARD, J.:

The plaintiff brought this action for the recovery of a tract of land in the pueblo of Oas,
claiming that it was a part of the public square of said town. The defendant in his answer
alleged that he was the owner of the property. Judgment was rendered in favor of the plaintiff
and the defendant has brought the case here by bill of exceptions.
87
As we look at the case, the only question involved is one of fact. Was the property in question
a part of the public square of the town of Oas? The testimony upon this point in favor of the
plaintiff consisted of statements made by witnesses to the effect that this land had always
been a part of the public square, and of certain resolutions adopted by the principalia of the
pueblo reciting the same fact, the most important of these being the minutes of the meeting
of the 27th of February, 1892. In that document it is expressly stated that this land was bought
in 1832 by the then parish priest for the benefit of the pueblo. It recites various proceedings
taken thereafter in connection with this ownership, including among them an order of the
corregidor of Nueva Caceres prohibiting the erection of houses upon the land by reason of the
fact above recited — namely, that the land belonged to the pueblo. This resolution terminated
with an order to the occupant of the building then standing upon the property that he should
not repair it. The defendant signed this resolution.

It further appears that the same building was almost entirely destroyed by a baguio on the 13th
and 14th of May, 1893, and that the authorities of the puebo ordered the complete demolition
thereof. The resolution of the 31st of May, 1893, declared that the then owner of the building,
Jose Castillo, had no right to reconstruct it because it was situated upon land which did not
belong to him. This resolution was also signed by the defendant.

The evidence on the part of the defendant tends to show that in 1876 Juana Ricarte and Juana
Riquiza sold the land in question to Juan Roco, and that on the 17th day of December, 1894,
Jose Castillo sold it to the defendant. No deed of conveyance from Juan Roco to Jose Castillo
was presented in evidence, but Castillo, testifying as a witness, said that he had bought the
property by verbal contract from Roco, his father-in-law. The defendant, after his purchase in
1894, procured a possessory of information which was allowed by an order of the justice of the
peace of Oas on the 19th day of January, 1895, and recorded in the Registry of Property on the
28th of March of the same year.

In this state of the evidence, we can not say that the proof is plainly and manifestly against the
decision of the court below. Unless it is so, the finding of fact made by that court can not be
reversed. (De la Rama vs. De la Rama, 201 U. S., 303.)

The two statements signed by Roa, one in 1892 and the other in 1893, are competent evidence
against him. They are admissions by him to the effect that at that time the pueblo was the
owner of the property in question. They are, of course, not conclusive against him. He was
entitled to, and did present evidence to overcome the effect of these admissions. The
88
evidence does not make out a case of estoppel against him. (sec. 333, par. 1, Code of Civil
Procedure.)

The admissibility of these statements made by Roa do not rest upon section 278 of the Code of
Civil Procedure, which relates to declarations or admissions made by persons not a party to the
suit, but it rests upon the principle that when the defendant in a suit has himself made an
admission of any fact pertinent to issue involved, it can be received against him.

This action was commenced on the 17th of December, 1902. There is no evidence of any
adverse occupation of this land for thirty years, consequently the extraordinary period of
prescription does not apply. The defendant can not rely upon the ordinary period of
prescription of ten years because he was not a holder in good faith. He knew at that time of his
purchase in 1894, and had so stated in writing, that the pueblo was the owner of the property.
So that, even if the statute of limitations ran against a municipality in reference to a public
square, it could not avail the defendant in this case.

It appears that Roa has constructed upon the property, and that there now stands thereon, a
substantial building. As early as 1852 this land had been used by the municipality constructed
thereon buildings for the storage of property of the State, quarters for the cuadrilleros, and
others of a like character. It therefore had ceased to be property used by the public and had
become a part of the bienes patrimoniales of the pueblo. (Civil Code, arts. 341, 344.) To the
case are applicable those provisions of the Civil Code which relate to the construction by one
person of a building upon land belonging to another. Article 364 of the Civil Code is as follows:

Where there has been bad faith, not only on the part of the person who built, sowed, or
planted on another's land, but also on the part of the owner of the latter, the rights of both
shall be the same as if they had acted in good faith.

Bad faith on the part of the owner is understood whenever the act has been executed in his
presence with his knowledge and tolerance and without objection.

The defendant constructed the building in bad faith for, as we have said, he had knowledge of
the fact that his grantor was not the owner thereof. There was a bad faith also on the part of
the plaintiff in accordance with the express provisions of article 364 since it allowed Roa to
construct the building without any opposition on its part and to so occupy it for eight years.

89
The rights of the parties must, therefore, be determined as if they both had acted in good
faith. Their rights in such cases are governed by article 361 of the Civil Code, which is as follows:

The owner of the land on which the building, sowing, or planting is done in good faith shall
have a right to appropriate as his own the work, sowing, or planting after the indemnity
mentioned in articles 453 and 454, or, to oblige the person who has built or planted, to pay him
the value of the land and to force the person who sowed to pay the proper rent.

The judgment of the court below is so modified as to declare that the plaintiff is the owner of
the land and that it has the option of buying the building thereon, which is the property of the
defendant, or of selling to him the land on which it stands. The plaintiff is entitled to recover
the costs of both instances.1âwphil.net

After the expiration of twenty days let judgment be entered in accordance herewith and at the
proper time thereafter let the record be remanded to the court below for proper action. So
ordered.

Johnson, Carson and Tracey, JJ., concur.

3. Cebu Oxygen and Acetylene Co., Inc. v. Bercilles, L-40474, Aug. 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.

90
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 Cebu passed 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.6 Hence, the instant petition for review.

For the resolution of this case, the petitioner poses the following 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
91
(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 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.

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 to determine 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.

92
(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 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."

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.

4. Municipality of Hinunang v. Director of Lands, 24 Phils. 125

MUNICIPALITY OF HINUNANGAN, Plaintiff-Appellee, vs. THE DIRECTOR OF LANDS, Defendant-

Appellant.

Attorney-General Villamor, for appellant.

Provincial Fiscal De la Rama, for appellee.

93
MORELAND, J. :chanrobles virtual law library

This is an appeal from the judgment of the Court of Land Registration, ordering the
registration of the title of the petitioner to the lands described in the petition. The appeal is
taken by the Insular Government from the registration of the title of one of the parcels of land
only. It is situated in the municipality of Hinunangan, Province of Leyte, and contains an area of
10,328.8 square meters. It is bounded on the northeast by the maritime zone; on the southeast
by North America Street; on the southwest by Manilili Street, and on the northwest by San
Isidro Labrador Street. Upon this lot is built a stone fort which has stood there from time
immemorial and was in times past used as a defense against the invasion of the
Moros.chanroblesvirtualawlibrary chanrobles virtual law library

Formerly, as now, the defense of the national territory against invasion by foreign enemies
rested upon the state and not upon the towns and villages and for this reason all of the
defenses were constructed by the National Government. In volume 2, book 3, title 7, law 1 of
the Laws of the Indies appears the following:

We command that all the ground roundabout the castles and fortresses be clear and
unoccupied, and if any building is erected within 300 paces of the wall or other building so
strong that even at a greater distance it would prejudice the defenses, it shall be torn down,
and the owner of the same shall be paid from the Royal Treasury for the damages caused him.

Book 4, title 7, law 12, reads as follows:

We order that, for the security and defense of the cities as is now assured by the castles and
fortresses, no building shall be erected within 300 paces of the walls or stockades of the new
cities.

Article 339 of the Civil Code is as follows, in part:

ART. 339. The following are public property:

xxx xxx xxx

94
2. That which belongs privately to the state, which is not for public use and which is
destined for the public good or to increase the national riches, such as walls, fortresses and
other constructions for the defense of the country, and the mines as long as no concession in
regard to them is made.

Article 341 of the Civil Code provides:

ART. 341. Public property, when it ceases to be used for the public good or for the
necessities of the defense of the country, becomes a part of the property of the state.

From these provisions it seems clear that the fortress in question was erected for the national
defense and was a part of the property of the state destined and used for that purpose. As a
necessary result, the land upon which it stands must also have been dedicated to that
purpose.chanroblesvirtualawlibrary chanrobles virtual law library

The fact that said fortress may not have been used for many years for the purposes for which it
was originally built does not of necessity deprive the state of its ownership therein. As we have
seen, the Civil Code provides that, when the fortress ceases to be used for the purposes for
which it was constructed, it becomes the property of the state in what may be called the
private sense. That the municipality may have exercised within recent years acts of ownership
over the land by permitting it to be occupied and consenting to the erection of private houses
thereon does not determine necessarily that the land has become the property of the
municipality. We have held in several cases that, where the municipality has occupied lands
distinctly for public purposes, such as for the municipal court house, the public school, the
public market, or other necessary municipal building, we will, in the absence of proof to the
contrary, presume a grant from the state in favor of the municipality; but, as indicated by the
wording, that rule may be invoked only as to property which is used distinctly for public
purposes. It cannot be applied against the state when occupied for any other
purpose.chanroblesvirtualawlibrary chanrobles virtual law library

The evidence does not disclose that the municipality has used the land for purposes distinctly
public.chanroblesvirtualawlibrary chanrobles virtual law library

95
The judgment in relation to the parcel of land heretofore described is reversed and the petition
as to that parcel dismissed. In all other respects the judgment is affirmed. So
ordered.chanroblesvirtualawlibrary chanrobles virtual law library

5. Chavez v. NHA et al, G.R No. 164527, Aug. 15, 2007

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
96
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

97
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
98
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.

6. Dacanay v. Asistio, Jr. 208 SCRA 404

FACTS

This is a petition for mandamus to the non-action of the city government of Caloocan in
accordance with the decision of the RTC to evict the occupants of a flea market located in the
streets of Caloocan.

January 5, 1979 – Metropolitan Manila Commission enacted an ordinance allowing the use of
streets for the purpose of flea markets subject to several conditions.

1987 – Mayor Martinez caused the demolition of the flea markets and the stallowners filed a
case against such action.

RTC dismissed the case on the ground that the streets in questions (Heros del '96, Gozon and
Gonzales) are of public dominion, hence outside the commerce of man.

99
After the decision came out, there was a change in the city administration and current mayor
(Asistio) did not pursue the action of the previous mayor and left the flea markets in the
streets as is.

Dacanay, being a resident of Heroes del '96 filed a petition for mandamus to remove the stalls
in their street

ISSUE

May public streets be leased or licensed to market stallholders by virtue of a city ordinance or
resolution of Metropolitan Manila Commission?

HELD: NO

1. 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

2. The vested right of the public to use city streets for the purpose they were intended to serve
such as for traveling

3. Any executive order or city resolution cannot change the nature of the public street because
it is going to be contrary to the general law

100
 7. Salas v. Jarencio, L-29788, Aug. 30, 1972 - Report: CIRUNAY, Hazel

FACTS;

The City of Manila obtained a Torrens title over a parcel of land in the same locality. The
President then approved the conversion of said parcel of land into a patrimonial property by
virtue of the recommendation and request from the Municipal Board of Manila. Consequently,
RA 4118 was enacted to facilitate the conversion with the Land Tenure Administration (LTA)
tasked to implement the subdivision of the land. However, the same City of Manila, enjoined
the implementation of RA 4118 citing that it was unconstitutional as it deprived the city of its
property without due process of law and payment of just compensation.

ISSUE:

Whether public dominion properties can be converted to form part of the patrimonial property
of the City of Manila.

RULING:

The Court ruled on the affirmative but only limited to those that it had acquired with its own
private or corporate funds.

The Court held that, as a general rule, regardless of the source or classification of land in the
possession of a municipality, excepting those acquired with its own funds in its private or
corporate capacity, such property is held in trust for the State for the benefit of its inhabitants,
whether it be for governmental or proprietary purposes. Hence, when it comes to property of
the municipality which it did not acquire in its private or corporate capacity with its own funds,
as in this case, the legislature can transfer its administration and disposition to an agency of
the National Government to be disposed of according to its discretion. Here it did so in
obedience to the constitutional mandate of promoting social justice to insure the well-being
and economic security of the people.

8. Harty v. Mun. of Victoria, 13 Phil. 152 - Report: EVANGELISTA, Kent John

FACTS:
On January 17, 1908, the representative of Mgr. Jeremiah J. Harty,
archbishop of the Roman Catholic Church, legal administrator of the
properties and rights of the Catholic Church within the archbishopric
101
of Manila, filed a complaint in the CFI Tarlac against Mun. of Victoria,
they alleged that the parish is the owner of a parcel of land known as
the plaza of the church of Victoria, that they acquired said land more
than sixty years previously and possessed it up to 1901, the same
year that defendant municipality seized the said property.
The Defendant Municipality answered the complaint and denied all the
facts stated therein, it alleged that the plaza was founded when sitio
Canarum, was converted into a civil town in 1855, and that the
parish of Tarlac was establish many years after the civil town, it
neither had any title to the plaza claimed.
The Trial Court held that the parish of Victoria of the Roman Catholic
Apostolic Church had a better right to the possession of the land ,
and sentenced the defendant to vacate the same and to pay the
costs.

ISSUE : Whether or not the Parish of Victoria is the rightful owner and
proprietor of the plaza
HELD :
No
Article 339 of the Civil Code reads:
"Property of public ownership is:
"1. That destined to the public use, such as roads, canals, rivers,
torrents, ports, and bridges constructed by the State, and banks,
shores, roadsteads, and that of a similar character."
Article 344 of said code also reads:
"Property for public use in provinces and in towns comprises the
provincial and town roads, the squares, streets, fountains, and public
waters, the promenades, and public works of general service
supported by the said towns or provinces."
The town of Victoria was converted into a town in 1855, in the
center of which is situated the church and parish house from the
commencement, and after twelve years the parish of said town was
constituted , that from the very beginning, the large tract of land that
surrounds the church and the parish house was knows as a public
plaza, was used by all residents for public performances and religious
precession without any hindrance from local authorities or the church
.
The Father of the witness Casimiro Tañeda who owned the space
of land had voluntary donated it to the Catholic Church but proper
proof is lacking that the donation comprehends the whole of the large
tract which at the present time constitutes the plaza of the town. It
was a custom by all towns that on their creation, a certain amount of
land was always reserved for plazas, commons, and special and
communal property, and that the large space of land was left vacant
in the center of the town of Victoria when it was constituted as a civil
town, both the curates and the gobernadorcillos of the said town
procured fruit trees and plants to be set out in the plaza, does not
constitute an act of private ownership, but evidences the public use

102
 thereof, or perhaps the intention to improve the and embellish the
said plaza for the benefit of the townspeople.
The plaintiff has not proven that the Catholic Church or the parish
of Victoria was the owner or proprietor of the said extensive piece of
land which now forms the public plaza of said town, nor that it was in
possession thereof under the form and conditions required by law,
inasmuch as it has been fully proven that said plaza has been used
without let or hindrance by the public and the residents of the town of
Victoria ever since its creation

2) If a political subd. or local govt. has an unpaid debt to a private person or entity,
can the latter levy against the properties of the Local Govt.? What are the
limitations if any?

o Viuda de Tan Toco v. Mun. Council of Iloilo, 49 Phil. 52 - Report: CAYETANO, Elsie

The municipal council of Iloilo bought two strips of land owned by Tan Toco for widening of
street. The municipality of Iloilo was unable to pay due to lack of funds. The widow of Tan Toco
had sued the municipal council of Iloilo wherein a writ of execution was issued against the
property of the municipality. The sheriff attached two auto trucks used for street sprinkling,
one police patrol automobile, the police stations on Mabini street, and in Molo and Mandurriao
and the concrete structures, with the corresponding lots, used as markets by Iloilo, Molo, and
Mandurriao.

Issue:

Whether or not the property levied upon is exempt from execution.

Held:

Yes. The Court held that the principle governing property of the public domain of the State
is applicable to property for public use of the municipalities as said municipal is similar in
character. The principle is that the property for public use of the State is not within the
commerce of man and, consequently, is inalienable and not subject to prescription. Likewise,
property for public of the municipality is not within the commerce of man so long as it is used
by the public and, consequently, said property is also inalienable.

It is evident that the movable and immovable property of a municipality, necessary for
governmental purpose, may not be attached and sold for the payment of a judgment against
the municipality. The supreme reason for this rule is the character of the public use to which
such kind of property is devoted. The necessity for government service justifies that the

103
property of public of the municipality be exempt from execution just as it is necessary to
exempt certain property of private individuals in accordance with section 452 of the Code of
Civil Procedure.

o Mun. of Paoay, Ilocos Norte v. Manaois, et al., L-3485, June 30, 1950 – Report:
FERNANDEZ, Analyn

THE MUNICIPALITY OF PAOAY, ILOCOS NORTE, petitioner,

vs.
TEODORO MANAOIS and EULOGIO F. DE GUZMAN, Judge of the Court of First Instance of
Pangasinan, respondents.

First Assistant Solicitor General Roberto A. Gianzon and Solicitor Pacifico P. de Castro for
petitioner.
Primicias, Abad, Mencias and Castillo for respondents.

MONTEMAYOR, J.:

Teodoro Manaois having obtained a judgment against the municipality of Paoay, Ilocos Norte
in civil case No. 8026 of the Court of First Instance of Pangasinan, Judge De Guzman of said
province issued a writ of execution against the defendant municipality. In compliance with said
writ the Provincial Sheriff of Ilocos Norte levied upon and attached the following properties:

(1) The amount of One thousand seven hundred twelve pesos and one centavo (P1,712.01) in
the Municipal Treasury of Paoay, Ilocos Norte, representing the rental paid by Mr. Demetrio
Tabije of a fishery lot belonging to the defendant municipality;

(2) About forty fishery lots leased to thirty-five different persons by the Municipality.

On July 26, 1949, the Provincial Fiscal of Ilocos Norte in representation of the municipality of
Paoay, filed a petition in the Court of First Instance of Pangasinan asking for the dissolution of
that attachment of levy of the properties above-mentioned. Judge De Guzman in his order of
October 6, 1949, denied the petition for the dissolution of the attachment; a motion for
reconsideration was also denied. Instead of appealing from that order the municipality of
Paoay has filed the present petition for certiorari with the writ of preliminary injunction, asking
that the order of respondent Judge dated October 6, 1946, be reversed and that the
attachment of the properties of the municipality already mentioned be dissolved.

The petitioner goes on the theory that the properties attached by the sheriff for purposes of
execution are not subject to levy because they are properties for public use. It is therefore
necessary to ascertain the nature and status back a few years, specifically, to the year 1937.

It seems that the municipality of Paoay is and for many years has been operating or rather
leasing fishery lots on municipal waters. These waters have been parceled out in lots, either
singly or in groups and let out or rented after public bidding to the highest bidders, ordinarily,
for a year, but sometimes, for a longer period of time. On April 4, 1937, the municipality of
104
Paoay entered into a contract with one Francisco V. Duque for the lease of fishery lots 3, 4, 5,
6, 7, and 8 at a rental of P1,218.79 per annum, for a period of four years from January 1, 1937 to
December 31, 1940. In 1938, the municipal council of Paoay approved a resolution confiscating
said fishery lots on the ground that Duque had failed to comply with the terms of the lease
contract. Thereafter, the municipality advertised the lease of its fishery lots for public bidding,
including the lots above mentioned. Teodoro Manaois being the highest bidder for said lots 3
to 8, was awarded the lease thereof as per resolution of the municipality council of Paoay of
December 1, 1938. On January 1, 1939, Manaois paid P2,025 as rental for the said lots for the
year 1939. However, when Manaois and his men tried to enter the property in order to exercise
his rights as lessee and to catch fish, particularly bañgos fry, he found therein Duque and his
men who claimed that he (Duque) was still the lessee, and despite the appeal of Manaois to
the Municipality of Paoay to put him in possession and the efforts of the municipality to oust
Duque, the latter succeeded in continuing in his possession and keeping Manaois and his men
out. Manaois brought an action against the Municipality of Paoay to recover not only the sum
paid by him for the lease of the fishery lots but also damages. He obtained judgment in his
favor in June, 1940 in the Court of First Instance of Pangasinan, civil case No. 8026, which
decision has long become final. The writ of execution and the attachment and levy mentioned
at the beginning of this decision were issued and effected to enforce the judgment just
mentioned.

There can be no question that properties for public use held by municipal corporation are not
subject to levy and execution. The authorities are unanimous on this point. This Court in the
case of Viuda de Tantoco vs. Municipal Council of Iloilo (49 Phil., 52) after citing Manresa, the
works of McQuillin and Dillon on Municipal Corporations, and Corpus Juris, held that properties
for public use like trucks used for sprinkling the streets, police patrol wagons, police stations,
public markets, together with the land on which they stand are exempt from execution. Even
public revenues of municipal corporations destined for the expenses of the municipality are
also exempt from the execution. The reason behind this exemption extended to properties for
public use, and public municipal revenues is that they are held in trust for the people, intended
and used for the accomplishment of the purposes for which municipal corporations are
created, and that to subject said properties and public funds to execution would materially
impede, even defeat and in some instances destroy said purpose.

Property however, which is patrimonial and which is held by municipality in its proprietary
capacity is treated by great weight of authority as the private asset of the town and may be
levied upon and sold under an ordinary execution. The same rule applies to municipal funds
derived from patrimonial properties, for instance, it has been held that shares of stocks held by
municipal corporations are subject to execution. If this is true, with more reason should
income or revenue coming from these shares of stock, in the form of interest or dividends, be
subject to execution? (McQuillin on Municipal Corporations, Vol. 3, par. 1160.)

The fishery or municipal waters of the town of Paoay, Ilocos Norte, which had been parceled
out or divided into lots and later let out to private persons for fishing purposes at an annual
rental are clearly not subject to execution. In the first place, they do not belong to the
municipality. They may well be regarded as property of State. What the municipality of Paoay
hold is merely what may be considered the usufruct or the right to use said municipal waters,
granted to it by section 2321 of the Revised Administrative Code which reads as follows:

105
1. SEC. 2321. Grant of fishery. — A municipal council shall have authority, for purposes of profit,
to grant the exclusive privileges of fishery or right to conduct a fish-breeding ground within
any definite portion, or area, of the municipal waters.

"Municipal waters", as herein used, include not only streams, lakes, and tidal waters, include
within the municipality, not being the subject of private ownership, but also marine waters
include between two lines drawn perpendicular to the general coast line from points where
the boundary lines of the municipality touch the sea at high tide, and third line parallel with the
general coast line and distant from it three marine leagues.

Where two municipalities are so situated on opposite shores that there is less than six marine
leagues of marine waters between them the third line shall be a line equally distant from the
opposite shores of the respective municipalities.

Now, is this particular usufruct of the municipality of Paoay over its municipal waters, subject
to execution to enforce a judgment against the town? We are not prepared to answer this
question in the affirmative because there are powerful reasons against its propriety and
legality. In the first place, it is not a usufruct based on or derived from an inherent right of the
town. It is based merely on a grant, more or less temporary, made by the Legislature. Take the
right of fishery over the sea or marine waters bordering a certain municipality. These marine
waters are ordinarily for public use, open to navigation and fishing by the people. The
Legislature thru section 2321 of the Administrative Code, as already stated, saw fit to grant the
usufruct of said marine waters for fishery purpose, to the towns bordering said waters. Said
towns have no visited right over said marine waters. The Legislature, for reasons it may deem
valid or as a matter of public policy, may at any time, repeal or modify said section 2321 and
revoke this grant to coastal towns and open these marine waters to the public. Or the
Legislature may grant the usufruct or right of fishery to the provinces concerned so that said
provinces may operate or administer them by leasing them to private parties.

All this only goes to prove that the municipality of Paoay is not holding this usufruct or right of
fishery in a permanent or absolute manner so as to enable it to dispose of it or to allow it to be
taken away from it as its property through execution.

Another reason against subjecting this usufruct or right of fishery over municipal waters, to
execution, is that, if this were to be allowed and this right sold on execution, the buyer would
immediately step into the shoes of the judgment-debtor municipality. Such buyer presumably
buys only the right of the municipality. He does not buy the fishery itself nor the municipal
waters because that belongs to the State. All that the buyer might do would be to let out or
rent to private individuals the fishery rights over the lots into which the municipal waters had
been parceled out or divided, and that is, after public bidding. This, he must do because that is
the only right granted to the municipality by the Legislature, a right to be exercised in the
manner provided by law, namely, to rent said fishery lots after public bidding. (See sec. 2323 of
the Administrative Code in connection with sec. 2319 of the same Code.) Then, we shall have a
situation rather anomalous to be sure, of a private individual conducting public bidding, renting
to the highest bidders fishery lots over municipal waters which are property of the State, and
appropriating the results to his own private use. The impropriety, if not illegality, of such a
contingency is readily apparent. But that is not all. The situation imagined implies the
deprivation of the municipal corporation of a source of a substantial income, expressly provide
by law. Because of all this, we hold that the right or usufruct of the town of Paoay over its
106
municipal waters, particularly, the forty odd fishery lots included in the attachment by the
Sheriff, is not subject to execution.

But we hold that the revenue or income coming from the renting of these fishery lots is
certainly subject to execution. It may be profitable, if not necessary, to distinguish this kind of
revenue from that derived from taxes, municipal licenses and market fees are provided for and
imposed by the law, they are intended primarily and exclusively for the purpose of financing
the governmental activities and functions of municipal corporations. In fact, the real estate
taxes collected by a municipality do not all go to it. A portion thereof goes to the province, in
the proportion provided for by law. For the same reason, municipal markets are established
not only to provide a place where the people may sell and buy commodities but also to provide
public revenues for the municipality. To many towns, market fees constitute the bulk of their
assets and incomes. These revenues are fixed and definite, so much so that the annual
appropriations for the expenses of the municipalities are based on these revenues. Not so with
the income derived form fisheries. In the first place, the usufruct over municipal waters was
granted by the Legislature merely to help or bolster up the economy of municipal government.
There are many towns in the Philippines, specially in the interior, which do not have municipal
waters for fishery purpose and yet without much source of revenue, they can function, which
goes to prove that this kind of revenue is not indispensable for the performance of
governmental functions. In the second place, the amount of this income is far from definite or
fixed. It depends upon the amounts which prospective bidders or lessees are willing to pay. If
fishing on these marine water, lakes and rivers in the municipality is good, the bids would be
high and the income would be substantial. If the fish in these waters is depleted or, if for some
reasons or another, fishing is not profitable, then the income would be greatly reduced. In
other words, to many municipalities engaged in this business of letting out municipal waters
for fishing purposes, it is a sort of sideline, so that even for fishing purposes, it is sort of
sideline, so that even without it the municipality may still continue functioning and perform its
essential duties as such municipal corporations.

We call this activity of municipalities in renting municipal waters for fishing purposes as a
business for the reasons that the law itself (Sec. 2321, Administrative Code already mentioned
and quoted) allowed said municipalities to engage in it for profit. And it is but just that a town
so engaged should pay and liquidate obligations contracted in connection with said fishing
business, with the income derived therefrom.

In conclusion, we hold that the fishery lots numbering about forty in the municipality of Paoay,
mentioned at the beginning of this decision are not subject to execution. For this reason, the
levy and attachment made by the Provincial Sheriff of Ilocos Norte of theses fishery lots is void
and the order of the Court of First Instance of Pangasinan insofar as it failed to dissolve the
attachment made on these lots is reversed. However, the amount of P1,712.01 in the municipal
treasury of Paoay representing the rental paid by Demetrio Tabije on fishery lots let out by the
municipality of Paoay is a proper subject of levy, and the attachment made thereon by the
Sheriff is valid. We may add that other amounts coming or due from lessees of the forty odd
fishery lots leased by the municipality to different persons may also be attached or garnished
to satisfy the judgement against the municipality of Paoay.

In this connection, we wish to say that had the municipality of Paoay paid the judgment
rendered against it, all this controversy and court action with all its vexation, troubles and
expense would have been avoided. It will be remembered that the decision against the
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municipality was rendered as far back as 1940. Evidently, the municipality did not appeal from
that decision. It has long become final. The Court of Pangasinan that rendered the decision saw
no valid defense of the municipality to the legitimate claim of Teodoro Manaois. After the
municipality had failed to place Manaois in possession of the lots leased to him, the
municipality did not even offer to return or reimburse the rental paid by him. It is hard to
understand the position taken by the municipality of Paoay. The courts, including this tribunal
cannot condone, much less encourage, the repudiation of just obligations contracted by
municipal corporations. On the contrary, the courts and compel payments of their valid claims
against municipalities with which they entered into valid contracts. Municipal corporations are
authorized by law to sue and be sued. (Sec. 2165, Rev. Adm. Code). This authority naturally
carries with it all the remedies and court processes, including writs of execution and
attachment against municipal corporations. While we are willing and ready to protect
properties of municipalities held for public use, as well as public revenues such as taxes, from
execution, we believe that other properties of such municipalities not held for public use,
including funds which are not essential to the performance of their public functions, may be
levied upon and sold to satisfy valid claims against said municipalities. And this Tribunal will
help any citizen and give him every judicial facility to enforce his valid claim, especially a court
award, against municipal corporations, even to the extent of attaching and selling on
execution, municipal revenues and properties not exempt from execution.

In view of the foregoing, the order of the respondent Judge of October 6, 1949, is reversed
insofar as it failed to dissolved the attachment of the forty odd fishery lots. In all other respect,
said order is hereby affirmed.
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