Leung Yee vs Strong Machinery Co.37 PHIL 644GR No. L-11658February 15, 1918

FACTSThe Compania Agricola Filipina (CAF) purchased from Strong Machinery Co. rice–cleaning machines which CAF installed in one of its buildings.As security for the purchase price, CAF executed a chattel mortgage on the machinesand the building on which they had been installed.When CEF failed to pay, the registered mortgage was foreclosed and Strong Machinery Co. purchased the building. This sale was annotated in the Chattel Mortgage Registry.Later, Strong Machinery Co. also purchased from Agricola the lot on which the building was constructed. The sale wasn't registered in the Registry of Property BUT Strong Machinery Co. took possession of the building and the lot.However, the same building had been previously purchased by Leung Yee, a creditor ofAgricola, at a sheriff's sale despite his knowledge of the prior sale in favor of Strong Machinery Co.. The sale to Leung Yee was registered in the Registry of Property.

ISSUES1. Was the property's nature changed by its registration in the Chattel Mortgage Registry?2. Who has a better right to the property?

HELD1. Where the interest conveyed is of the nature of real property, the placing of the document on record in the Chattel Mortgage Registry is a futile act.

Chattel Mortgage refers to the mortgage of Personal Property executed in the manner and form prescribed in the statute.

Since the 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.

The mere fact that the parties decided to deal with the building as personal property does not change its character as 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.

Art. 1473 of the New Civil Code provides the following rules on determining ownership of property which has been sold to different vendees:

If Personal Property – grant ownership to person who 1st possessed it in good faith

If Real Property – grant ownership to person who 1st recorded it in the Registry

If no entry – grant to person who 1st possessed in good faith

If no proof of possession – grant to person who presents oldest title

Since Leung Yee purchased the property despite knowledge of the previous purchase of the same by Strong Machinery Co., it follows that Leung Yee was not a purchaser in good faith.

“One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein. The same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.”

Good Faith, or the want of it, is a “state or condition of mind which can only be judged of by actual or fancied tokens or signs.” (Wilder vs. Gilman, 55Vt., 504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119Mich., 8, 10, 17.)

Honesty Of Intention is the honest lawful intent constituting good faith. It implies afreedom from knowledge and circumstances which ought to put a person on inquiry.

As such, proof of such knowledge overcomes the presumption of good faith.

Following the rule on possessory rights provided in Art. 1473, Strong Machinery Co. has a better

right to the property since it first purchased the same ahead of Leung Yee, the latter not being a purchaser in good faith.

STANDARD OIL COMPANY V JARAMILLO

The Power of the Registry of Deeds is Ministerial, and

The absolute criterion to determine between real and

personal property is NOT supplied by the civil code.

Parties may agree what to treat as personal property

and what to treat as real property.

FACTSOn 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 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.

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.]

Serg's v. PCI Leasing

Serg’s Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000 

FACTS: 

PCI Leasing and Finance filed a complaint for sum of money, with an application for a writ of replevin. 

Judge issued a writ of replevin directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary expenses. 

The sheriff proceeded to petitioner's factory, seized one machinery, with word that he would return for other machineries. 

Petitioner (Serg’s Products) filed a motion for special protective order to defer enforcement of the writ of replevin. 

PCI Leasing opposed the motion on the ground that the properties were still personal and therefore can still be subjected to seizure and writ of replevin. 

Petitioner asserted that properties sought to be seized were immovable as defined in Article 415 of the Civil Code. 

Sheriff was still able to take possession of two more machineries 

In its decision on the original action for certiorari filed by the Petitioner, the appellate court, Citing the Agreement of the parties, held that the subject machines were personal property, and that they had only been leased, not owned, by petitioners; and ruled that the "words of the contract are clear and leave no doubt upon the true intention of the

contracting parties." 

ISSUE: Whether or not the machineries became real property by virtue of immobilization. 

Ruling: Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the RTC, because they were in fact real property. 

Writ of Replevin: Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only. 

Article 415 (5) of the Civil Code provides that machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works 

In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own land.They were essential and principal elements of their chocolate-making industry.Hence, although each of them was movable or personal property on its own, all of them have become “immobilized by destination because they are essential and principal elements in the industry.” 

However, contracting parties may validly stipulate that a real property be considered as personal. After agreeing to such stipulation, they are consequently estopped from claiming otherwise.Under the principle of estoppel, a party to a contract is ordinarily precluded from denying the truth of any material fact found therein. 

Section 12.1 of the Agreement between the parties provides “The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting upon, real property or any building thereon, or attached in any manner to what is permanent.” 

The machines are personal property and they are proper subjects of the Writ of Replevin 

PUNZALAN V. LACSAMANA

Buildings are always treated as immovable or real property under the Code… even if it was dealt with separately from the land upon which it stood

FACTS:

Some land belonging to Antonio Punzalan was foreclosed by the Philippine National Bank Tarlac, Branch in failure of the former to pay the mortgaged fee amounting to P10 grand Since PNB was the highest bidder, the land went to PNB.

Sometime 1974, while the property was still in the possession of Punzalan, Punzalan constructed a warehouse on the said land by virtue of the permit secured from the Municipal Mayor of Bamban, Tarlac. Subsequently, in 1978, a contract of sale was entered into by PNB and Remedios Vda. De Lacsamana, whom in lieu of the said sale secured a title over the property involving the warehouse allegedly owned and constructed by the plaintiff.

Punzalan filed a suit for annulment of the Deed of Sale with damages against PNB and Lacsamana before the Court of First Instance of Rizal, Branch 31, impugning the validity of the sale of the building, requesting the same to be declared null and void and that damages in the total sum of P23, 200 more or less be awarded to him.

Respondent Lacsamana in his answer averred the affirmative defense of lack of cause of action contending that she was a purchaser for value, while, PNB filed a Motion to Dismiss on the ground of improper venue, invoking that the building was a real property under Article 415 of the Civil Code, and therefore, Section 4 (a) of the Rules of Court should apply.

Punzalan filed a Motion for Reconsideration asserting that the action he filed is limited to the annulment of sale and that, it does not involved ownership of or title to property but denied by the court for lack of merit. A motion for pre-trial was also set by Punzalan but was also denied by the court invoking that the case was already dismissed.

Hence, a petition for certiorari was filed by the petitioner.

ISSUE:

Whether or not the judgment rendered by the court is proper.

HELD:

While it is true that the petitioner does not directly seek the recovery of the title or possession of the property in question, his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building, which, under the law, is considered immovable property, the recovery of which is petitioners primary objective. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the objective and nature of the case, which is to recover said property. It is a real action. Respondent Court did not err in dismissing the case on the ground of improper venue under Section 12 Rule 4 which was timely raised under Section 1 Rule 16 of the Rules of Court.

Personal Observation: The venue was improperly laid by the petitioner in the case at bar. Such ground was sufficient to render dismissal of the case, as the same is one of the grounds provided for under Rule 16 (c) of the Rules of Court.

The Denial of “Motion to Dismiss” rendered by the court in the instant case is appealable. If such denial constitute grave abuse of discretion on the

part of the court , Punzalan may file either Prohibition or Certiorari under Rule 65 of the Rules of Court

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 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.

US V. CARLOS

FACTS:

Mr Carlos stole about 2273 kilowatts of electricity worth 909 pesos from Meralco. The court issued warrant for arrest. Mr. Carlos demurred and refused to enter a plea. He claimed that what he did failed to constitute an offense. His counsel further asserted that the crime of larceny applied only to tangibles, chattels and objects that can be taken into possession and spirited away.

Deliberation quickly followed at the court which subsequently sentenced him to over a year in jail. Mr. Carlos contested saying that electrical energy can’t be stolen (how can one steal an incorporeal thing?). He filed an appeal on such grounds and the court of first instance affirmed the decision. The case reached the supreme court.

ISSUE:

Whether or not larceny can be committed against an intangible such as electricity.

HELD:

Yes, larceny of incorporeal objects is possible. The right of ownership of electrical current was secured byArt 517 and 518 of the Penal Code which applies to gas.

Analogically, electricity can be considered as ‘gas’ which can be stolen. However, the true test of what constitutes the proper subject of larceny is not whether the subject is corporeal or incorporeal, but whether is is capable of appropriation by another other than the owner. It is a valuable article of merchandise, a force of nature brought under the control of science. Mr. Carlos secretly and with intent to deprive the company of its rightful property, used jumper cables to appropriate the same for his own use. This constitutes larceny. 

Mindanao Bus Company vs City Assessor116 PHIL 501GR No. L-17870September 29, 1962

FACTSThe City Assessor of Cagayan de Oro City assessed a realty tax on several equipment and machineries of Mindanao Bus Co. These equipment were placed on wooden or cement platforms and can be moved around in the bus company’s repair shop. The bus company appealed the assessment to the Board of Tax Appeals on the ground that the same are not realty. The Board of Tax Appeals of the City, however, sustained the city assessor. Thus, the bus company appealed to the Court of Tax Appeals, which likewise sustained the city assessor.

HELD

Art. 415 of the NCC classifies the following as immovable property:

xxx

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

Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms. They can be moved around and about in petitioner's repair shop.

Before movables may be deemed immobilized in contemplation of Article 415 (5), it is necessary that they must first be “essential” and “principal” elements of an industry or works without which such industry or works would be unable to function or carry on the industrial purpose for which it was established.

In this case, the tools and equipment in question are by their nature, not essential and principal elements of Mindanao Bus Co.’s business of transporting passengers and cargoes by motor trucks. They are merely incidentals — acquired as movables and used only for expediency to facilitate and/or improve its service. Even without such tools and equipments, its business may be carried on.

Aside from the element of essentiality the Art.415 (5) also requires that the industry or works be carried on in a building or on a piece of land. A sawmill would also be installed in a building on land more or less permanently, and the sawing is conducted in the land/building.

However, in the instant case, the equipments in question are destined only to repair or service the transportation business, which is not carried on in a building or permanently on a piece of land, as demanded by law. The equipments in question are not absolutely essential to the petitioner's transportation business, and petitioner's business is not carried on in a building, tenement or on a specified land.

As such, the equipments in question are not deemed real property because the transportation business is not carried on in a building or permanently on a piece of land, as demanded by law.

The transportation business could be carried on without the repair or service shop, if its rolling equipment is repaired or serviced in another shop belonging to another.

Therefore, the imposition of realty tax on the maintenance and repair equipment was not proper because the properties involved were not real property u

Board of Assessment Appeals v. MERALCO [G.R. No. L-15334. January 31, 1964.]

Jun 28

En Banc, Paredes (J): 8 concur, 1 concur in result, 1 took no part.

Facts: On 20 October 1902, the Philippine Commission enacted Act 484 which authorized the Municipal Board of Manila to grant a franchise to construct, maintain and operate an electric street railway and electric light, heat and power system in the City of Manila and its suburbs to the person or persons making the most favorable bid. Charles M. Swift was awarded the said franchise on March 1903, the terms and conditions of which were embodied in Ordinance 44 approved on 24 March 1903. Meralco became the transferee and owner of the franchise. Meralco’s electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is transmitted to the City of Manila by means of electric transmission wires, running from the province of Laguna to the said City. These electric transmission wires which carry high voltage current, are fastened to insulators attached on steel towers constructed by respondent at intervals, from its hydroelectric plant in the province of Laguna to the City of Manila. Meralco has constructed 40 of these steel towers within Quezon City, on land belonging to it.

On 15 November 1955, City Assessor of Quezon City declared the aforesaid steel towers for real property tax under Tax Declaration 31992 and 15549. After denying Meralco’s petition to cancel these declarations an appeal was taken by Meralco to the Board of Assessment Appeals of Quezon City, which required Meralco to pay the amount of P11,651.86 as real property tax on the said steel towers for the years 1952 to 1956. Meralco paid the amount under protest, and filed a petition for review in the Court of Tax Appeals which rendered a decision on 29 December 1958, ordering the

cancellation of the said tax declarations and the City Treasurer of Quezon City to refund to Meralco the sum of P11,651.86. The motion for reconsideration having been denied, on 22 April 1959, the petition for review was filed.

Issue: Whether or not the steel towers of an electric company constitute real property for the purposes of real property tax.

Held: The steel towers of an electric company don’t constitute real property for the purposes of real property tax.

Steel towers are not immovable property under paragraph 1, 3 and 5 of Article 415.

The steel towers or supports do not come within the objects mentioned in paragraph 1, because they do not constitute buildings or constructions adhered to the soil. They are not constructions analogous to buildings nor adhering to the soil. As per description, given by the lower court, they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place.

They cannot be included under paragraph 3, as they are not attached to an immovable in a fixed manner, and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together by means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing the same.

These steel towers or supports do not also fall under paragraph 5, for they are not machineries or receptacles, instruments or implements, and even if they were, they are not intended for industry or works on the land.

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

The Supreme Court affirmed the decision appealed from, with costs against the petitioners.

nder Article 415 (5).

Caltex vs Central Board of Assessment Appeals & City Assessor of PasayGR No. L-50466May 31, 1982

This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc., in its gas stations located on leased land.

FACTSCaltex loaned machines and equipment to gas station operators under an appropriate lease agreement or receipt. The lease contract stipulated that upon demand, the operators shall return to Caltex the machines and equipment in good condition as when received, ordinary wear and tear excepted.

The lessor of the land, where the gas station is located, does not become the owner of the machines and equipment installed therein. Caltex retains the ownership thereof during the term of the lease.

The City Assessor of Pasay City characterized the said items of gas station equipment and machinery 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 on June 3, 1977 that the said machines are real property within the meaning of Ses. 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.

ISSUEWON the pieces of gas station equipment and machinery permanently affixed by Caltex to its gas station and pavement should be subject to realty tax.

HELDSec.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 Sec.3 thereof.

Sec.3 of the Real Property Tax Code provides the following definitions:

k) Improvements – a valuable addition made to property or an amelioration in its condition…more than mere repairs or replacement of waste…intended to enhance its value, beauty, or utility

m) Machinery – machines, mechanical contrivances, instruments, appliances, and apparatus attached to the real estate…includes the physical facilities available for production…installation and appurtenant service facilities.

The subject machines and equipment are taxable improvement and machinery within the meaning of the Assessment Law and the Real Property Tax Code, because the same are necessary to the operation of the gas station and have been attached/affixed/embedded permanently to the gas station site.

Improvements on land are commonly taxed as realty even though they might be considered personalty. “It is a familiar phenomenon to see things classified as real property for purposes of taxation which on general principle might be considered personal property” (Standard Oil Co., vs Jaramillo, 44 PHIL 630).

This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., (119 Phil. 328) where Meralco's steel towers were exempted from taxation. The steel towers were considered personalty because they were attached to square metal frames by means of bolts and could be moved from place to place when unscrewed and dismantled.

Nor are Caltex's gas station equipment and machinery the same as the tools and equipment in the repair shop of a bus company which were held to be personal property not subject to realty tax (Mindanao Bus Co. vs. City Assessor, 116 Phil. 501).

The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding the

City Assessor's imposition of the realty tax on Caltex's gas station and equipment.

Laurel vs. GarciaDoctrine: 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.

Facts: The subject Roppongi property is one of the four properties in Japan acquired by the Philippine government under the Reparations Agreement entered into with Japan on 9 May 1956, the other lots being the Nampeidai Property (site of Philippine Embassy Chancery), the Kobe Commercial Property (Commercial lot used as warehouse and parking lot of consulate staff), and the Kobe Residential Property (a vacant residential lot).The properties and the capital goods and services procured from the Japanese government for national development projects are part of the indemnification to the Filipino people for their losses in life and property and their suffering during World War II.

The Reparations Agreement provides that reparations valued at $550 million would be payable in 20 years in accordance with annual schedules of procurements to be fixed by the Philippine and Japanese governments (Article 2, Reparations Agreement).

The Roppongi property was acquired from the Japanese government under the Second Year Schedule and listed under the heading “Government Sector”, through Reparations Contract 300 dated 27 June 1958. The Roponggi property consists of the land and building “for the Chancery of the Philippine Embassy.” As intended, it became the site of the Philippine Embassy until the latter was transferred to Nampeidai on 22 July 1976 when the Roppongi building needed major repairs. Due to the failure of our government to provide necessary funds, the Roppongi property has remained undeveloped since that time.

During the incumbency of President Aquino, a proposal was made by former Philippine Ambassador to Japan, Carlos J. Valdez, to lease

the subject property to Kajima Corporation, a Japanese firm, in exchange of the construction of 2 buildings in Roppongi, 1 building in Nampeidai, and the renovation of the Philippine Chancery in Nampeidai. The Government did not act favorably to said proposal, but instead, on 11 August 1986, President Aquino created a committee to study the disposition or utilization of Philippine government properties in Tokyo and Kobe though AO-3, and AO 3-A to 3-D. On 25 July 1987, the President issued EO 296 entitling non-Filipino citizens or entities to avail of reparations’ 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. Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor, its decision to sell the reparations properties starting with the Roppongi lot.

Two petitions for prohibition were filed seeking to enjoin respondents, their representatives and agents from proceeding with the bidding for the sale of the 3,179 sq. m. of land at 306 Ropponggi, 5-Chome Minato-ku, Tokyo, Japan scheduled on 21 February 1990; the temporary restaining order of which was granted by the court on 20 February 1990. In G.R. No. 92047, a writ of mandamus was prayed for to compel the respondents to fully disclose to the public the basis of their decision to push through with the sale of the Roppongi property inspite of strong public opposition and to explain the proceedings which effectively prevent the participation of Filipino citizens and entities in the bidding process.

Issues: Can the Roppongi property and others of its kind be alienated by the Philippine Government?Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the Roppongi property?

Held: No. The Roppongi property was acquired together with the other properties through reparation agreements. They were assigned to the government sector and that the Roppongi property was specifically designated under the agreement to house the Philippine embassy. It is of public dominion unless it is convincingly shown that the

property has become patrimonial. The respondents have failed to do so.

As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its ownership is a special collective ownership for general use and payment, in application to the satisfaction of collective needs, and resides in the social group. The purpose is not to serve the State as the juridical person but the citizens; it is intended for the common and public welfare and cannot be the object of appropriation.

The fact that the Roppongi site has not been used for a long time for actual Embassy service doesn’t 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.

CHAVEZ V. PUBLIC ESTATES AUTHORITY

384 SCRA 152

 

FACTS:

President  Marcos  through  a  presidential  decree  created  PEA,  which  was tasked  with  the  development,  improvement,  and  acquisition,  lease,  and sale of all kinds of lands.  The then president also transferred to PEA the foreshore and offshore lands of Manila Bay under the 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.  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.