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G.R. No. L-40411 August 7, 1935

DAVAO SAW MILL CO., INC.,plaintiff-appellant,

vs.

APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC.,defendants-appellees.

Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.

J.W. Ferrier for appellees.

MALCOLM,J.:

The issue in this case, as announced in the opening sentence of the decision in the trial court and as set forth by

counsel for the parties on appeal, involves the determination of the nature of the properties described in the

complaint. The trial judge found that those properties were personal in nature, and as a consequence absolved

the defendants from the complaint, with costs against the plaintiff.

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

Islands. It has operated a sawmill in the sitioof Maa, barrio of Tigatu, municipality of Davao, Province of Davao.

However, the land upon which the business was conducted belonged to another person. On the land the

sawmill company erected a building which housed the machinery used by it. Some of the implements thus used

were clearly personal property, the conflict concerning machines which were placed and mounted on

foundations of cement. In the contract of lease between the sawmill company and the owner of the land there

appeared the following provision:

That on the expiration of the period agreed upon, all the improvements and buildings introduced and erected

by the party of the second part shall pass to the exclusive ownership of the party of the first part without any

obligation on its part to pay any amount for said improvements and buildings; also, in the event the party of the

second part should leave or abandon the land leased before the time herein stipulated, the improvements and

buildings shall likewise pass to the ownership of the party of the first part as though the time agreed upon had

expired: Provided, however, That the machineries and accessories are not included in the improvements which

will pass to the party of the first part on the expiration or abandonment of the land leased.

In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc.,

was the defendant, a judgment was rendered in favor of the plaintiff in that action against the defendant in that

action; a writ of execution issued thereon, and the properties now in question were levied upon as personalty

by the sheriff. No third party claim was filed for such properties at the time of the sales thereof as is borne out

by the record made by the plaintiff herein. Indeed the bidder, which was the plaintiff in that action, and the

defendant herein having consummated the sale, proceeded to take possession of the machinery and other

properties described in the corresponding certificates of sale executed in its favor by the sheriff of Davao.

As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has on a

number of occasions treated the machinery as personal property by executing chattel mortgages in favor of

third persons. One of such persons is the appellee by assignment from the original mortgages.

Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property consists of

1. Land, buildings, roads and constructions of all kinds adhering to the soil;

x x x x x x x x x

5. Machinery, liquid containers, instruments or implements intended by the owner of any building or land for

use in connection with any industry or trade being carried on therein and which are expressly adapted to meet

the requirements of such trade of industry.

Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain no doubt

that the trial judge and appellees are right in their appreciation of the legal doctrines flowing from the facts.

In the first place, it must again be pointed out that the appellant should have registered its protest before or at

the time of the sale of this property. It must further be pointed out that while not conclusive, the

characterization of the property as chattels by the appellant is indicative of intention and impresses upon the

property the character determined by the parties. In this connection the decision of this court in the case ofStandard Oil Co. of New Yorkvs. Jaramillo ( [1923], 44 Phil., 630), whether obiter dictaor not, furnishes the key

to such a situation.

It is, however not necessary to spend overly must time in the resolution of this appeal on side issues. It is

machinery which is involved; moreover, machinery not intended by the owner of any building or land for use in

connection therewith, but intended by a lessee for use in a building erected on the land by the latter to be

returned to the lessee on the expiration or abandonment of the lease.

A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme Court, it was

held that machinery which is movable in its nature only becomes immobilized when placed in a plant by the

owner of the property or plant, but not when so placed by a tenant, a usufructuary, or any person having only a

temporary right, unless such person acted as the agent of the owner. In the opinion written by Chief Justice

White, whose knowledge of the Civil Law is well known, it was in part said:

To determine this question involves fixing the nature and character of the property from the point of view of

the rights of Valdes and its nature and character from the point of view of Nevers & Callaghan as a judgment

creditor of the Altagracia Company and the rights derived by them from the execution levied on the machinery

placed by the corporation in the plant. Following the Code Napoleon, the Porto Rican Code treats as immovable

(real) property, not only land and buildings, but also attributes immovability in some cases to property of a

movable nature, that is, personal property, because of the destination to which it is applied. "Things," says

section 334 of the Porto Rican Code, "may be immovable either by their own nature or by their destination or

the object to which they are applicable." Numerous illustrations are given in the fifth subdivision of section 335,

which is as follows: "Machinery, vessels, instruments or implements intended by the owner of the tenements

for the industrial or works that they may carry on in any building or upon any land and which tend directly to

meet the needs of the said industry or works." (See also Code Nap., articles 516, 518 et seq. to and inclusive ofarticle 534, recapitulating the things which, though in themselves movable, may be immobilized.) So far as the

subject-matter with which we are dealing machinery placed in the plant it is plain, both under the

provisions of the Porto Rican Law and of the Code Napoleon, that machinery which is movable in its nature only

becomes immobilized when placed in a plant by the owner of the property or plant. Such result would not be

accomplished, therefore, by the placing of machinery in a plant by a tenant or a usufructuary or any person

having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent, Tit.

5, No. 447; and decisions quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et seq.) The distinction

rests, as pointed out by Demolombe, upon the fact that one only having a temporary right to the possession or

enjoyment of property is not presumed by the law to have applied movable property belonging to him so as to

deprive him of it by causing it by an act of immobilization to become the property of another. It follows that

abstractly speaking the machinery put by the Altagracia Company in the plant belonging to Sanchez did not lose

its character of movable property and become immovable by destination. But in the concrete immobilization

took place because of the express provisions of the lease under which the Altagracia held, since the lease in

substance required the putting in of improved machinery, deprived the tenant of any right to charge against the

lessor the cost such machinery, and it was expressly stipulated that the machinery so put in should become a

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part of the plant belonging to the owner without compensation to the lessee. Under such conditions the tenant

in putting in the machinery was acting but as the agent of the owner in compliance with the obligations resting

upon him, and the immobilization of the machinery which resulted arose in legal effect from the act of the

owner in giving by contract a permanent destination to the machinery.

x x x x x x x x x

The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the plant by the Altagracia

Company, being, as regards Nevers & Callaghan, movable property, it follows that they had the r ight to levy on

it under the execution upon the judgment in their favor, and the exercise of that right did not in a legal sense

conflict with the claim of Valdes, since as to him the property was a part of the realty which, as the result of hisobligations under the lease, he could not, for the purpose of collecting his debt, proceed separately against.

(Valdes vs. Central Altagracia [192], 225 U.S., 58.)

Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of this instance

to be paid by the appellant.

G.R. No. L-17870 September 29, 1962

MINDANAO BUS COMPANY,petitioner,

vs.

THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City,respondents.

Binamira, Barria and Irabagon for petitioner.

Vicente E. Sabellina for respondents.

LABRADOR,J.:

This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A. Case No. 710 holding

that the petitioner Mindanao Bus Company is liable to the payment of the realty tax on its maintenance and

repair equipment hereunder referred to.

Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-mentioned

equipment. Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground that the

same are not realty. The Board of Tax Appeals of the City sustained the city assessor, so petitioner herein filed

with the Court of Tax Appeals a p etition for the review of the assessment.

In the Court of Tax Appeals the parties submitted the following stipulation of facts:

Petitioner and respondents, thru their respective counsels agreed to the following stipulation of facts:

1. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor trucks, over

its authorized lines in the Island of Mindanao, collecting rates approved by the Public Service Commission;

2. That petitioner has its main office and shop at Cagayan de Oro City. It maintains Branch Offices and/or

stations at Iligan City, Lanao; Pagadian, Zamboanga del Sur; Davao City and Kibawe, Bukidnon Province;

3. That the machineries sought to be assessed by the respondent as real properties are the following:

(a) Hobart Electric Welder Machine, appearing in the attached photograph, marked Annex "A";

(b) Storm Boring Machine, appearing in the attached photograph, marked Annex "B";

(c) Lathe machine with motor, appearing in the attached photograph, marked Annex "C";

(d) Black and Decker Grinder, appearing in the attached photograph, marked Annex "D";

(e) PEMCO Hydraulic Press, appearing in the attached photograph, marked Annex "E";

(f) Battery charger (Tungar charge machine) appearing in the attached photograph, marked Annex "F"; and

(g) D-Engine Waukesha-M-Fuel, appearing in the attached photograph, marked Annex "G".

4. That these machineries are sitting on cement or wooden platforms as may be seen in the attachedphotographs which form part of this agreed stipulation of facts;

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5. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor trucks; a

repair shop; blacksmith and carpentry shops, and with these machineries which are placed therein, its TPU

trucks are made; body constructed; and same are repaired in a condition to be serviceable in the TPU land

transportation business it operates;

6. That these machineries have never been or were never used as industrial equipments to produce finished

products for sale, nor to repair machineries, parts and the like offered to the general public indiscriminately for

business or commercial purposes for which petitioner has never engaged in, to date.1awphl.nt

The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied a

motion for reconsideration, petitioner brought the case to this Court assigning the following errors:

1. The Honorable Court of Tax Appeals erred in upholding respondents' contention that the questioned

assessments are valid; and that said tools, equipments or machineries are immovable taxable real properties.

2. The Tax Court erred in its interpretation of paragraph 5 of Article 415 of the New Civil Code, and holding that

pursuant thereto the movable equipments are taxable realties, by reason of their being intended or destined for

use in an industry.

3. The Court of Tax Appeals erred in denying petitioner's contention that the respondent City Assessor's power

to assess and levy real estate taxes on machineries is further restricted by section 31, paragraph (c) of Republic

Act No. 521; and

4. The Tax Court erred in denying petitioner's motion for reconsideration.

Respondents contend that said equipments, tho movable, are immobilized by destination, in accordance

with paragraph 5 of Article 415 of the New Civil Code which provides:

Art. 415. The following are immovable properties:

x x x x x x x x x

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry

or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs

of the said industry or works. (Emphasis ours.)

Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms.They can be moved around and about in petitioner's repair shop. In the case of B. H. Berkenkotter vs. Cu

Unjieng, 61 Phil. 663, the Supreme Court said:

Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the character of real property to

"machinery, liquid containers, instruments or implements intended by the owner of any building or land for use

in connection with any industry or trade being carried on therein and which are expressly adapted to meet the

requirements of such trade or industry."

If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co.,

Inc., in lieu of the other of less capacity existing therein, for its sugar and industry, converted them into real

property by reason of their purpose, it cannot be said that their incorporation therewith was not permanent in

character because, as essential and principle elements of a sugar central, without them the sugar central would

be unable to function or carry on the industrial purpose for which it was established. Inasmuch as the central is

permanent in character, the necessary machinery and equipment installed for carrying on the sugar industry for

which it has been established must necessarily be permanent. (Emphasis ours.)

So that movable equipments to be immobilized in contemplation of the law must first be "essential and

principal elements" of an industry or works without which such industry or works would be "unable to function

or carry on the industrial purpose for which it was established." We may here distinguish, therefore, those

movable which become immobilized by destination because they are essential and principal elementsin the

industry for those which may not be so considered immobilized because they are merely incidental, not

essential and principal. Thus, cash registers, typewriters, etc., usually found and used in hotels, restaurants,

theaters, etc. are merely incidentals and are not and should not b e considered immobilized by destination, for

these businesses can continue or carry on their functions without these equity comments. Airline companies

use forklifts, jeep-wagons, pressure pumps, IBM machines, etc. which are incidentals, not essentials, and thus

retain their movable nature. On the other hand, machineries of breweries used in the manufacture of liquor and

soft drinks, though movable in nature, are immobilized because they are essential to said industries; but thedelivery trucks and adding machines which they usually own and use and are found within their industrial

compounds are merely incidental and retain their movable nature.

Similarly, the tools and equipments in question in this instant case are, by their nature, not essential and

principle municipal elements of petitioner's business of transporting passengers and cargoes by motor trucks.

They are merely incidentals acquired as movables and used only for expediency to facilitate and/or improve

its service. Even without such tools and equipments, its business may be carried on, as petitioner has carried on,

without such equipments, before the war. The transportation business could be carried on without the repair or

service shop if its rolling equipment is repaired or serviced in another shop belonging to another.

The law that governs the determination of the question at issue is as follows:

Art. 415. The following are immovable property:

x x x x x x x x x

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry

or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs

of the said industry or works; (Civil Code of the Phil.)

Aside from the element of essentiality the above-quoted provision also requires that the industry or works

be carried on in a building or on a piece of land. Thus in the case of Berkenkotter vs. Cu Unjieng, supra, the

"machinery, liquid containers, and instruments or implements" are found in a building constructed on the land.

A sawmill would also be installed in a building on land more or less permanently, and the sawing is conducted in

the land or building.

But in the case at bar the equipments in question are destined only to repair or service the transportation

business, which is not carried on in a building or permanently on a piece of land, as demanded by the law. Said

equipments may not, therefore, be deemed real property.

Resuming what we have set forth above, we hold that the equipments in question are not absolutely

essential to the petitioner's transportation business, and petitioner's business is not carried on in a building,

tenement or on a specified land, so said equipment may not be considered real estate within the meaning of

Article 415 (c) of the Civil Code.

WHEREFORE, the decision subject of the petition for review is hereby set aside and the equipment in

question declared not subject to assessment as real estate for the purposes of the real estate tax. Without

costs.

So ordered.

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G.R. No. L40474 August 29, 1975

CEBU OXYGEN & ACETYLENE CO., INC., petitioner,

vs.

HON. PASCUAL A. BERCILLES Presiding Judge, Branch XV, 14th Judicial District, and JOSE L. ESPELETA,

Assistant Provincial Fiscal, Province of Cebu, representing the Solicitor General's Office and the Bureau of

Lands, respondents.

Jose Antonio R Conde for petitioner.

Office of the Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General Octavio R. Ramirez and

Trial Attorney David R. Hilario for respondents. .

CONCEPCION, Jr.,J.:

This is a petition for the review of the order of the Court of First Instance of Cebu dismissing petitioner's

application for registration of title over a parcel of land situated in the City of Cebu.

The parcel of land sought to be registered was only a portion of M. Borces Street, Mabolo, Cebu City. On

September 23, 1968, the City Council of Cebu, through Resolution No. 2193, approved on October 3, 1968,

declared the terminal portion of M. Borces Street, Mabolo, Cebu City, as an abandoned road, the same not

being included in the City Development Plan.

1

Subsequently, on December 19, 1968, the City Council of Cebupassed Resolution No. 2755, authorizing the Acting City Mayor to sell the land through a public

bidding.2

Pursuant thereto, the lot was awarded to the herein petitioner being the highest bidder and on March

3, 1969, the City of Cebu, through the Acting City Mayor, executed a deed of absolute sale to the herein

petitioner for a total consideration of P10,800.00.3

By virtue of the aforesaid deed of absolute sale, the

petitioner filed an application with the Court of First instance of Cebu to have its title to the land registered.4

On June 26, 1974, the Assistant Provincial Fiscal of Cebu filed a motion to dismiss the application on the ground

that the property sought to be registered being a public road intended for public use is considered part of the

public domain and therefore outside the commerce of man. Consequently, it cannot be subject to registration

by any private individual.5

After hearing the parties, on October 11, 1974 the trial court issued an order dismissing the petitioner's

application for registration of title. 6Hence, the instant petition for review.

For the resolution of this case, the petitioner poses the f ollowing questions:

(1) Does the City Charter of Cebu City (Republic Act No. 3857) under Section 31, paragraph 34, give the City of

Cebu the valid right to declare a road as abandoned? and

(2) Does the declaration of the road, as abandoned, make it the patrimonial property of the City of Cebu which

may be the object of a common contract?

(1) The pertinent portions of the Revised Charter of Cebu City provides:

Section 31. Legislative Powers. Any provision of law and executive order to the contrary notwithstanding, the

City Council shall have the following legislative powers:

xxx xxx xxx

(34) ...; to close any city road, street or alley, boulevard, avenue, park or s quare. Property thus withdrawn from

public servitude may be used or conveyed for any purpose for which other real property belonging to the City

may be lawfully used or conveyed.

From the foregoing, it is undoubtedly clear that the City of Cebu is empowered to close a city road or street. In

the case of Favis vs. City of Baguio,7

where the power of the city Council of Baguio City to close city streets and

to vacate or withdraw the same from public use was similarly assailed, this court said:

5. So it is, that appellant may not challenge the city council's act of withdrawing a strip of Lapu-Lapu Street at its

dead end from public use and converting the remainder thereof into an alley. These are acts well within the

ambit of the power to close a city street. The city council, it would seem to us, is the authority competent todetermine whether or not a certain property is still necessary for public use.

Such power to vacate a street or alley is discretionary. And the discretion will not ordinarily be controlled or

interfered with by the courts, absent a plain case of abuse or fraud or collusion. Faithfulness to the public trust

will be presumed. So the fact that some private interests may be served incidentally will not invalidate the

vacation ordinance.

(2) Since that portion of the city street subject of petitioner's application for registration of title was withdrawn

from public use, it follows that such withdrawn portion becomes patrimonial property which can be the object

of an ordinary contract.

Article 422 of the Civil Code expressly p rovides that "Property of public dominion, when no longer intended for

public use or for public service, shall form part of the patrimonial property of the State."

Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and unequivocal terms, states

that: "Property thus withdrawn from public servitude may be used or conveyed for any purpose for which other

real property belonging to the City may be lawfully used or conveyed."

Accordingly, the withdrawal of the property in question from public use and its subsequent sale to the

petitioner is valid. Hence, the petitioner has a registerable title over the lot in question.

WHEREFORE, the order dated October 11, 1974, rendered by the respondent court in Land Reg. Case No. N-948,

LRC Rec. No. N-44531 is hereby set aside, and the respondent court is hereby ordered to proceed with the

hearing of the petitioner's application for registration of title.

SO ORDERED.

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G.R. No. 133250 July 9, 2002

FRANCISCO I. CHAVEZ, petitioner,

vs.

PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.

CARPIO, J.:

This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary

restraining order. The petition seeks to compel the Public Estates Authority ("PEA" for brevity) to disclose all

facts on PEA's then on-going renegotiations with Amari Coastal Bay and Development Corporation ("AMARI" forbrevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from signing a new

agreement with AMARI involving such reclamation.

Facts:

On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract with

the Construction and Development Corporation of the Philippines ("CDCP" for brevity) to reclaim certain

foreshore and offshore areas of Manila Bay. The contract also included the construction of Phases I and II of the

Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in consideration of fifty percent of

the total reclaimed land.

On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA. PD

No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas," and "to develop, improve,acquire, lease and sell any and all kinds of lands."1 On the same date, then President Marcos issued Presidential

Decree No. 1085 transferring to PEA the "lands reclaimed in the foreshore and offshore of the Manila Bay"

under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).

On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract with

CDCP, so that "*A+ll future works in MCCRRP shall be funded and owned by PEA. Accordingly, PEA and CDCP

executed a Memorandum of Agreement dated December 29, 1981.

On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 351, granting and transferring

to PEA "the parcels of land so reclaimed under the Manila-Cavite Coastal Road and Reclamation Project

(MCCRRP) containing a total area of one million nine hundred fifteen thousand eight hundred ninety four

(1,915,894) square meters." Subsequently, on April 9, 1988, the Register of Deeds of the Municipality of

Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the

three reclaimed islands known as the "Freedom Islands" located at the southern portion of the Manila-Cavite

Coastal Road, Paraaque City. The Freedom Islands have a total land area of One Million Five Hundred Seventy

Eight Thousand Four Hundred and Forty One (1,578,441) square meters or 157.841 hectares.

On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a private

corporation, to develop the Freedom Islands. The JVA also required the reclamation of an additional 250

hectares of submerged areas surrounding these islands to complete the configuration in the Master

Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA through

negotiation without public bidding. On April 28, 1995, the Board of Directors of PEA, in its Resolution No. 1245,

confirmed the JVA. On June 8, 1995, then President Fidel V. Ramos, through then Executive Secretary Ruben

Torres, approved the JVA.

On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and

denounced the JVA as the "grandmother of all scams." As a result, the Senate Committee on Government

Corporations and Public Enterprises, and the Committee on Accountability of Public Officers and Investigations,

conducted a joint investigation. The Senate Committees reported the results of their investigation in Senate

Committee Report No. 560 dated September 16, 1997. Among the conclusions of their report are: (1) the

reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the public domain which the

government has not classified as alienable lands and therefore PEA cannot alienate these lands; (2) the

certificates of title covering the Freedom Islands are thus void, and (3) the JVA itself is illegal.

On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating

a Legal Task Force to conduct a study on the legality of the JVA in view of Senate Committee Report No. 560.

The members of the Legal Task Force were the Secretary of Justice, the Chief Presidential Legal Counsel, and the

Government Corporate Counsel. The Legal Task Force upheld the legality of the JVA, contrary to the conclusionsreached by the Senate Committees.

On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going

renegotiations between PEA and AMARI under an order issued by then President Fidel V. Ramos. According to

these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz

composed the negotiating panel of PEA.

On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the

Issuance of a Temporary Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to

nullify the JVA. The Court dismissed the petition "for unwarranted disregard of judicial hierarchy, without

prejudice to the refiling of the case before the proper court."

On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition forMandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order.

Petitioner contends the government stands to lose billions of p esos in the sale by PEA of the reclaimed lands to

AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of the JVA, invoking Section

28, Article II, and Section 7, Article III, of the 1987 Constitution on the right of the people to information on

matters of public concern. Petitioner assails the sale to AMARI of lands of the public domain as a blatant

violation of Section 3, Article XII of the 1987 Constitution prohibiting the sale of alienable lands of the public

domain to private corporations. Finally, petitioner asserts that he seeks to enjoin the loss of billions of pesos in

properties of the State that are of public dominion.

On December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to submit the terms of the

renegotiated PEA-AMARI contract; (b) for issuance of a temporary restraining order; and (c) to set the case for

hearing on oral argument. Petitioner filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999, which

the Court denied in a Resolution dated June 22, 1999.

On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement ("Amended JVA," for

brevity). On May 28, 1999, the Office of the President under the administration of then President Joseph E.

Estrada approved the Amended JVA.

Issues:

The issues raised by petitioner, PEA and AMARI are as follows:

(a) Whether principal relief prayed for in the petition are moot and academic because of subsequent events;

(b) Whether the petition merits dismissal for failing to observe the principle governing the hierarchy of court;

(c) Whether the petition merits dismissal for non-exhaustion of administrative remedies;

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(d) Whether petitioner has locus standi to bring this suit;

(e) Whether the constitutional right to information includes official information on on-going negotiations before

a final agreement;

(f) Whether the stipulations in the amended joint venture agreement for the transfer to Amari of certain lands,

reclaimed and still to be reclaimed, violate the 1987 Constitution; and

(g) Whether the court is the proper forum for raising the issue of whether the amended joint venture

agreement is grossly disadvantageous to the government.

Held:

On the first issue, the Court has ruled that the signing of the Amended JVA by PEA and AMARI and its approval

by the President cannot operate to moot the petition and divest the Court of its jurisdiction. PEA and AMARI

have still to implement the Amended JVA. The prayer to enjoin the signing of the Amended JVA on

constitutional grounds necessarily includes preventing its implementation if in the meantime PEA and AMARI

have signed one in violation of the Constitution. Petitioner's principal basis in assailing the renegotiation of the

JVA is its violation of Section 3, Article XII of the Constitution, which prohibits the government from alienating

lands of the public domain to private corporations. If the Amended JVA indeed violates the Constitution, it is the

duty of the Court to enjoin its implementation, and if already implemented, to annul the effects of such

unconstitutional contract.

On the second issue, the Court cannot entertain cases involving factual issues. The instant case, however, raisesconstitutional issues of transcendental importance to the public.22 The Court can resolve this case without

determining any factual issue related to the case. Also, the instant case is a petition for mandamus which falls

under the original jurisdiction of the Court under Section 5, Article VIII of the Constitution. We resolve to

exercise primary jurisdiction over the instant case.

On the third issue, PEA claims petitioner's direct resort to the Court violates the principle of exhaustion of

administrative remedies. It also violates the rule that mandamus may issue only if there is no other plain,

speedy and adequate remedy in the ordinary course of law. Hence, The principal issue in the instant case is the

capacity of AMARI to acquire lands held by PEA in view of the constitutional ban prohibiting the alienation of

lands of the public domain to private corporations. We rule that the principle of exhaustion of administrative

remedies does not apply in the instant case.

On the fourth issue, the rule that since the instant petition, brought by a citizen, involves the enforcement of

constitutional rights - to information and to the equitable diffusion of natural resources - matters of

transcendental public importance, the petitioner has the requisite locus standi.

On the fifth issue, Section 7, Article III of the Constitution explains the people's right to information on matters

of public concern. The court has held that the constitutional right to information includes official information on

on-going negotiations before a final contract. The information, however, must constitute definite propositions

by the government and should not cover recognized exceptions like privileged information, military and

diplomatic secrets and similar matters affecting national security and public order.40 Congress has also

prescribed other limitations on the right to information in several legislations.

On the sixth issue, the Regalian doctrine is deeply implanted in our legal system. The court has summarized in

their conclusions as follows:

1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in

the name of PEA, are alienable lands of the public domain. PEA may lease these lands to private corporations

but may not sell or transfer ownership of these lands to private corporations. PEA may only sell these lands to

Philippine citizens, subject to the ownership limitations in the 1987 Constitution and existing laws.

2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public

domain until classified as alienable or disposable lands open to disposition and declared no longer needed for

public service. The government can make such classification and declaration only after PEA has reclaimed these

submerged areas. Only then can these lands qualify as agricultural lands of the public domain, which are the

only natural resources the government can alienate. In their present state, the 592.15 hectares of submerged

areas are inalienable and outside the commerce of man.

3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares110 of

the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution

which prohibits private corporations from acquiring any kind of alienable land of the public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares111 of still submerged

areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution

which prohibits the alienation of natural resources other than agricultural lands of the public domain.

PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed lands as

alienable or disposable, and further declare them no longer needed for public service. Still, the transfer of such

reclaimed alienable lands of the public domain to AMARI will be void in view of Section 3, Article XII of the

1987Constitution which prohibits private corporations from acquiring any kind of alienable land of the publicdomain.

On the last issue, Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on

this last issue. Besides, the Court is not a trier of facts, and this last issue involves a determination of factual

matters.

WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development

Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement which is

hereby declared NULL and VOID ab initio.

SO ORDERED.

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G.R. No. 133250 November 11, 2003

FRANCISCO I. CHAVEZ, petitioner,

vs.

PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT

CORPORATION, respondents.

R E S O L U T I O N

CARPIO,J.:

This Court is asked to legitimize a government contract that conveyed to a private entity

157.84 hectares of reclaimed public lands along Roxas Boulevard in Metro Manila at

the negotiated price of P1,200 per square meter. However, published reports place the

market price of land near that area at that time at a high of P90,000 per square

meter.1The difference in price is a staggering P140.16 billion, equivalent to the budget of

the entire Judiciary for seventeen years and more than three times the Marcos Swiss

deposits that this Court forfeited in favor of the government.

Many worry to death that the private investors will lose their investments, at most notmore than one-half billion pesos in legitimate expenses,

2if this Court voids the contract.

No one seems to worry about the more than tens of billion pesos that the hapless Filipino

people will lose if the contract is allowed to stand. There are those who question these

figures, but the questions arise only because the private entity somehow managed to

inveigle the government to sell the reclaimed lands without public bidding in patent

violation of the Government Auditing Code.

Fortunately for the Filipino people, two Senate Committees, the Senate Blue Ribbon

Committee and the Committee on Accountability of Public Officers, conducted extensive

public hearings to determine the actual market value of the public lands sold to the

private entity. The Senate Committees established the clear, indisputable and

unalterable fact that the sale of the public lands is grossly and unconscionably

undervalued based on official documents submitted by the proper government

agencies during the Senate investigation.We quote the joint report of these two Senate

Committees, Senate Committee Report No. 560, as approved by the Senate in plenary

session on 27 September 1997:3

The Consideration for the Property

PEA, under the JVA, obligated itself to convey title and possession over the Property,

consisting of approximately One Million Five Hundred Seventy Eight Thousand FourHundred Forty One (1,578,441) Square Meters for a total consideration of One Billion

Eight Hundred Ninety Four Million One Hundred Twenty Nine Thousand Two Hundred

(P1,894,129,200.00) Pesos, or a price of One Thousand Two Hundred (P1,200.00) Pesos

per square meter.

According to the zonal valuation of the Bureau of Internal Revenue, the value of the

Property is Seven Thousand Eight Hundred Pesos (P7,800.00) per square meter. The

Municipal Assessor of Paraaque, Metro Manila, where the Property is located, pegs

the market value of the Property at Six Thousand Pesos (P6,000.00) per square

meter.Based on these alone, the price at which PEA agreed to convey the property is apittance. And PEA cannot claim ignorance of these valuations, at least not those of the

Municipal Assessors office, since it has been trying to convince the Office of the

Municipal Assessor of Paraaque to reduce the valuation of various reclaimed properties

thereat in order for PEA to save on accrued real property taxes.

PEAs justification for the purchase price are various appraisal reports, particularly the

following:

(1) An appraisal by Vic T. Salinas Realty and Consultancy Services concluding that the

Property is worth P500.00 per square meter for the smallest island and P750.00 per

square meter for the two other islands, or a total of P1,170,000.00 as of 22 February

1995;

(2) An appraisal by Valencia Appraisal Corporation concluding that the Property is worth

P850 per square meter for Island I, P800 per square meter for Island II and P600 per

square meter for the smallest island, or a total of P1,289,732,000, also as of 22 February

1995; and

(3) An Appraisal by Asian Appraisal Company, Inc. (AACI), stating that the Property is

worth approximately P1,000 per square meter for Island I, P950 per square meter for

Island II and P600 per square meter for Island III, or a total of P1,518,805,000 as of 27February 1995.

The credibility of the foregoing appraisals, however, are [sic] greatly impaired by a

subsequent appraisal report of AACI stating that the property is worth P4,500.00 per

square meter as of 26 March 1996. Such discrepancies in the appraised value as

appearing in two different reports by the same appraisal company submitted within a

span of one year render all such appraisal reports unworthy of even the slightest

consideration. Furthermore, the appraisal report submitted by the Commission on Audit

estimates the value of the Property to be approximately P33,673,000,000.00, or

P21,333.07 per square meter.

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There were also other offers made for the property from other parties which indicate

that the Property has been undervalued by PEA. For instance, on 06 March 1995, Mr.

Young D. See, President of Saeil Heavy Industries Co., Ltd., (South Korea), offered to buy

the property at P1,400.00 and expressed its willingness to issue a stand-by letter of credit

worth $10 million. PEA did not consider this offer and instead finalized the JVA with

AMARI. Other offers were made on various dates by Aspac Management and

Development Group Inc. (for P1,600 per square meter), Universal Dragon Corporation

(for P1,600 per square meter), Cleene Far East Manila Incorporated and Hyosan Prime

Construction Co. Ltd. which had prepared an Irrevocable Clean Letter of Credit forP100,000,000.

In addition, AMARI agreed to pay huge commissions and bonuses to various persons,

amounting to P1,596,863,050.00 (P1,754,707,150.00 if the bonus is included), as will be

discussed fully below, which indicate that AMARI itself believed the market value to be

much higher than the agreed purchase price. If such commissions are added to the

purchase price, AMARIs acquisition cost for the Property will add-up to

P3,490,992,250.00 (excluding the bonus). If AMARI was willing to pay such amount for

the Property, why was PEA willing to sell for only P1,894,129,200.00, making the

Government stand to lose approximately P1,596,863,050.00?

x x x

Even if we simply assume that the market value of the Property is half of the market

value fixed by the Municipal Assessors Office of Paraaque for lands along Roxas

Boulevard, or P3,000.00 per square meter, the Government now stands to lose

approximately P2,841,193,800.00. But an even better assumption would be that the

value of the Property is P4,500.00 per square meter, as per the AACI appraisal report

dated 26 March 1996, since this is the valuation used to justify the issuance of P4 billion

worth of shares of stock of Centennial City Inc. (CCI) in exchange for 4,800,000 AMARI

shares with a total par value of only P480,000,000.00. With such valuation, the

Governments loss will amount to P5,208,855,300.00.

Clearly, the purchase price agreed to by PEA is way below the actual value of the

Property, thereby subjecting the Government to grave injury and enabling AMARI to

enjoy tremendous benefit and advantage.(Emphasis supplied)

The Senate Committee Report No. 560 attached the following official documents from

the Bureau of Internal Revenue,the Municipal Assessor of Paraaque, Metro Manila,

and the Commission on Audit:

1. Annex "M," Certified True Copy of BIR Zonal Valuations as certified by Antonio F.

Montemayor, Revenue District Officer. This official document fixed the market value of

the 157.84 hectares at P7,800 per square meter.

2. Annex "N," Certification of Soledad S. Medina-Cue, Municipal Assessor, Paraaque,

dated 10 December 1996. This official document fixed the market value at P6,000 per

square meter.

3. Exhibit "1-Engr. Santiago," the Appraisal Report of the Commission on Audit . This

official document fixed the market value at P21,333.07 per square meter.

Whether based on the official appraisal of the BIR, the Municipal Assessor or the

Commission on Audit, the P1,200 per square meter purchase price, or a total of P1.894

billion for the 157.84 hectares of government lands, is grossly and unconscionably

undervalued. The authoritative appraisal, of course, is that of the Commission on Audit

which valued the 157.84 hectares at P21,333.07 per square meter or a total of P33.673

billion. Thus, based on the official appraisal of the Commission on Audit, the

independent constitutional body that safeguards government assets, the actual loss to

the Filipino people is a shocking P31.779 billion.

This gargantuan monetary anomaly, aptly earning the epithet "Grandmother of All

Scams,"4is not the major defect of this government contract. The major flaw is not even

the P1.754 billion in commissions the Senate Committees discovered the private entity

paid to various persons to secure the contract,5described in Senate Report No. 560 as

follows:

A Letter-Agreement dated 09 June 1995 signed by Messrs. Premchai Karnasuta and

Emmanuel Sy for and in behalf of AMARI, on the one hand, and stockholders of AMARI

namely, Mr. Chin San Cordova (a.k.a. Benito Co) and Mr. Chua Hun Siong (a.k.a. Frank

Chua), on the other, sets forth various payments AMARI paid or agreed to pay theaforesaid stockholders by way of fees for "professional efforts and services in

successfully negotiating and securing for AMARI the Joint Venture Agreement",as

follows:

Form of Payment Paid/Payable On Amount

Managers Checks 28 April 1995 P 400,000,000.00

Managers Checks Upon signing of letter 262,500,000.00

10 Post Dated Checks (PDCs) 60 days from date of letter 127,000,000.00

24 PDCs 31 Aug. 95 to 31 Jan. 98 150,000,000.00

48 PDCs Monthly, over a 12-month pd. 357,363,050.00

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from date of letter

Cash bonus When sale of land begins not exceeding

157,844,100.00

Developed land from Project Upon completion of each

phase

Costing

300,000,000.00

TOTAL P1,754,707,150.00==============

Mr. Luis Benitez of SGV, the external auditors of AMARI, testified that said Letter-

Agreement was approved by the AMARI Board.6(Emphasis supplied)

The private entity that purchased the reclaimed lands for P1.894 billion expressly

admitted before the Senate Committees that it spent P1.754 billion in commissions to

pay various individuals for "professional efforts and services in successfully negotiating

and securing" the contract. By any legal or moral yardstick, the P1.754 billion in

commissions obviously constitutes bribe money. Nonetheless, there are those who insist

that the billions in investments of the private entity deserve protection by this Court.

Should this Court establish a new doctrine by elevating grease money to the status of

legitimate investments deserving of protection by the law? Should this Court reward the

patently illegal and grossly unethical business practice of the private entity in securing the

contract? Should we allow those with hands dripping with dirty money equitable relief

from this Court?

Despite these revolting anomalies unearthed by the Senate Committees, thefatal flaw of

this contract is that it glaringly violates provisions of the Constitution expressly

prohibiting the alienation of lands of the public domain.

Thus, we now come to the resolution of the second Motions for Reconsideration7

filed bypublic respondent Public Estates Authority ("PEA") and private respondent Amari Coastal

Bay Development Corporation ("Amari"). As correctly pointed out by petitioner Francisco

I. Chavez in his Consolidated Comment,8the second Motions for Reconsideration raise no

new issues.

However, the Supplement to "Separate Opinion, Concurring and Dissenting" of Justice

Josue N. Bellosillo brings to the Courts attention the Resolutions of this Court on 3

February 1965 and 24 June 1966 in L- 21870 entitled "Manuel O. Ponce, et al. v. Hon.

Amador Gomez, et al." and No. L-22669 entitled "Manuel O. Ponce, et al. v. The City of

Cebu, et al." ("Ponce Cases"). In effect, the Supplement to the Dissenting Opinion claimsthat these two Resolutions serve as authority that a single private corporation like

Amari may acquire hundreds of hectares of submerged lands, as well as reclaimed

submerged lands, within Manila Bay under the Amended Joint Venture Agreement

("Amended JVA").

We find the cited Ponce Cases inapplicable to the instant case.

First, as Justice Bellosillo himself states in his supplement to his dissent, the Ponce Cases

admit that "submerged lands still belong to the National Government."9The correct

formulation, however, is that submerged lands are owned by the State and are

inalienable. Section 2, Article XII of the 1987 Constitution provides:

All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils,

all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and

other natural resources are owned by the State. With the exception of agricultural

lands, all other natural resources shall not be alienated. x x x. (Emphasis supplied)

Submerged lands, like the waters (sea or bay) above them, are part of the States

inalienable natural resources. Submerged lands are property of public dominion,

absolutely inalienable and outside the commerce of man.10

This is also true with respect

to foreshore lands. Any sale of submerged or foreshore lands is void being contrary to the

Constitution.11

This is why the Cebu City ordinance merely granted Essel, Inc. an "irrevocable option" to

purchase the foreshore lands after the reclamation and did not actually sell to Essel, Inc.

the still to be reclaimed foreshore lands. Clearly, in the Ponce Cases the option to

purchase referred to reclaimed lands,and not to foreshore lands which are inalienable.

Reclaimed lands are no longer foreshore or submerged lands, and thus may qualify as

alienable agricultural lands of the public domain provided the requirements of public land

laws are met.

In the instant case, the bulk of the lands subject of the Amended JVA are still submerged

landseven to this very day, and therefore inalienable and outside the commerce of man.

Of the 750 hectares subject of the Amended JVA, 592.15 hectares or 78% of the total

area are still submerged, permanently under the waters of Manila Bay. Under the

Amended JVA, the PEA conveyed to Amari the submerged lands even before their actual

reclamation, although the documentation of the deed of transfer and issuance of the

certificates of title would be made only after actual reclamation.

The Amended JVA states that the PEA "hereby contributes to the Joint Venture its rights

and privilegesto perform Rawland Reclamation and Horizontal Development as well

as own the Reclamation Area."12

The Amended JVA further states that "the sharing of the

Joint Venture Proceeds shall be based on the ratio of thirty percent (30%) for PEA and

seventy percent (70%) for AMARI."13

The Amended JVA also provides that the PEA

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"hereby designates AMARI to perform PEAs rights and privileges to reclaim, own and

develop the Reclamation Area."14

In short, under the Amended JVA the PEA contributed

its rights, privileges and ownership over the Reclamation Area to the Joint Venture

which is 70% owned by Amari. Moreover, the PEA delegated to Amari the right and

privilege to reclaim the submerged lands.

The Amended JVA mandates that the PEA had "the duty to execute without delay the

necessary deed of transfer or conveyance of the title pertaining to AMARIs Land share

based on the Land Allocation Plan."

15

The Amended JVA also provides that "PEA, whenrequested in writing by AMARI, shall then cause the issuance and delivery of the proper

certificates of title covering AMARIs Land Share in the name of AMARI, x x x."16

In the Ponce Cases, the City of Cebu retained ownership of the reclaimed foreshore lands

and Essel, Inc. only had an "irrevocable option" to purchase portions of the foreshore

lands once actually reclaimed. In sharp contrast, in the instant case ownership of the

reclamation area, including the submerged lands, was immediately transferred to the

joint venture. Amari immediately acquired the absolute right to own 70% percent of the

reclamation area, with the deeds of transfer to be documented and the certificates of

title to be issued upon actual reclamation. Amaris right to own the submerged lands is

immediately effective upon the approval of the Amended JVA and not merely an option

to be exercised in the future if and when the reclamation is actually realized. The

submerged lands, being inalienable and outside the commerce of man, could not be the

subject of the commercial transactions specified in the Amended JVA.

Second, in the Ponce Cases the Cebu City ordinance granted Essel, Inc. an "irrevocable

option" to purchase from Cebu City not more than 70% of the reclaimed lands. The

ownership of the reclaimed lands remained with Cebu City until Essel, Inc. exercised its

option to purchase. With the subsequent enactment of the Government Auditing Code

(Presidential Decree No. 1445) on 11 June 1978, any sale of government land must be

made only through public bidding. Thus, such an "irrevocable option" to purchase

government land would now be void being contrary to the requirement of public bidding

expressly required in Section 7917

of PD No. 1445. This requirement of public bidding is

reiterated in Section 37918

of the 1991 Local Government Code.19

Obviously, the

ingenious reclamation scheme adopted in the Cebu City ordinance can no longer be

followed in view of the requirement of public bidding in the sale of government lands. In

the instant case, the Amended JVA is a negotiated contract which clearly contravenes

Section 79 of PD No. 1445.

Third, Republic Act No. 1899 authorized municipalities and chartered cities to

reclaimforeshore lands. The two Resolutions in the Ponce Cases upheld the Cebu Cityordinance only with respect to foreshore areas, and nullified the same with respect to

submerged areas. Thus, the 27 June 1965 Resolution made the injunction of the trial

court against the City of Cebu "permanent insofar x x x as the area outside or beyond the

foreshore land proper is concerned."

As we held in the 1998 case of Republic Real Estate Corporation v. Court of

Appeals,20

citing the Ponce Cases, RA No. 1899 applies only to foreshore lands, not

to submergedlands. In his concurring opinion inRepublic Real Estate Corporation, Justice

Reynato S. Puno stated that under Commonwealth Act No. 141, "foreshore and lands

under water were not to be alienated and sold to private parties," and that such lands"remained property of the State." Justice Puno emphasized that "Commonwealth Act No.

141 has remained in effect at present." The instant case involves principally submerged

lands within Manila Bay. On this score, the Ponce Cases, which were decided based on RA

No. 1899, are not applicable to the instant case.

Fourth, the Ponce Cases involve the authority of the City of Cebu to reclaim foreshore

areas pursuant to a general law, RA No. 1899. The City of Cebu is a public corporation and

is qualified, under the 1935, 1973, and 1987 Constitutions, to hold alienable or even

inalienable lands of the public domain. There is no dispute that a public corporation is not

covered by the constitutional ban on acquisition of alienable public lands. Both the 9 July

2002 Decision and the 6 May 2003 Resolution of this Court in the instant case expressly

recognize this.

Cebu City is an end user government agency, just like the Bases Conversion and

Development Authority or the Department of Foreign Affairs.21

Thus, Congress may by

law transfer public lands to the City of Cebu to be used for municipal purposes, which

may be public or patrimonial. Lands thus acquired by the City of Cebu for a public

purpose may not be sold to private parties. However, lands so acquired by the City of

Cebu for a patrimonial purpose may be sold to private parties, including private

corporations.

However, in the instant case the PEA is not an end user agency with respect to the

reclaimed lands under the Amended JVA. As we explained in the 6 May 2003 Resolution:

PEA is the central implementing agencytasked to undertake reclamation

projects nationwide.PEA took the place of the Department of Environment and Natural

Resources ("DENR" for brevity) as the government agency charged with leasing or

selling all reclaimedlands of the public domain. In the hands of PEA, which took over the

leasing and selling functions of DENR, reclaimed foreshore (or submerged lands) lands

are public lands in the same manner that these same lands would have been public

lands in the hands of DENR.(Emphasis supplied)

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Our 9 July 2002 Decision explained the rationale for treating the PEA in the same manner

as the DENR with respect to reclaimed foreshore or submerged lands in this wise:

To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as

private lands will sanction a gross violation of the constitutional ban on private

corporations from acquiring any kind of alienable land of the public domain. PEA will

simply turn around, as PEA has now done under the Amended JVA, and transfer several

hundreds of hectares of these reclaimed and still to be reclaimed lands to a single private

corporation in only one transaction. This scheme will effectively nullify the constitutionalban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse

equitably the ownership of alienable lands of the public domain among Filipinos, now

numbering over 80 million strong. (Emphasis supplied)

Finally, the Ponce Cases were decided under the 1935 Constitution which allowed private

corporations to acquire alienable lands of the public domain. However, the 1973

Constitution prohibited private corporations from acquiring alienable lands of the public

domain, and the 1987 Constitution reiterated this prohibition. Obviously, the Ponce Cases

cannot serve as authority for a private corporation to acquire alienable public lands,

much less submerged lands, since under the present Constitution a private corporation

like Amari is barred from acquiring alienable lands of the public domain.

Clearly, the facts in the Ponce Cases are different from the facts in the instant case.

Moreover, the governing constitutional and statutory provisions have changed since the

Ponce Cases were disposed of in 1965 and 1966 through minute Resolutions of a divided

(6 to 5) Court.

This Resolution does not prejudice any innocent third party purchaser of the reclaimed

lands covered by the Amended JVA. Neither the PEA nor Amari has sold any portion of

the reclaimed lands to third parties. Title to the reclaimed lands remains with the PEA. As

we stated in our 9 July 2002 Decision:

In the instant case, the only patent and certificates of title issued are those in the name of

PEA, a wholly government owned corporation performing public as well as proprietary

functions. No patent or certificate of title has been issued to any private party. No one is

asking the Director of Lands to cancel PEAs patent or certificates of title. In fact, the

thrust of the instant petition is that PEAs certificates of titl e should remain with PEA, and

the land covered by these certificates, being alienable lands of the public domain, should

not be sold to a private corporation.

As we held in our 9 July 2002 Decision, the Amended JVA "violates glaringly Sections 2

and 3, Article XII of the 1987 Constitution." In our 6 May 2003 Resolution,

we DENIEDwith FINALITY respondents Motions for Reconsideration. Litigations must

end some time. It is now time to write finis to this "Grandmother of All Scams."

WHEREFORE, the second Motions for Reconsideration filed by Public Estates Authority

and Amari Coastal Bay Development Corporation are DENIED for being prohibited

pleadings. In any event, these Motions for Reconsideration have no merit. No further

pleadings shall be allowed from any of the parties.

SO ORDERED.

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La Bugal-BLaan v. Ramos G.R. No. 127882. December 1, 2004

Facts:

The Petition for Prohibition and Mandamus before the Court challenges the

constitutionality of (1) Republic Act 7942 (The Philippine Mining Act of 1995); (2) its

Implementing Rules and Regulations (DENR Administrative Order [DAO] 96-40); and (3)

the Financial and Technical Assistance Agreement (FTAA) dated 30 March 1995, executed

by the government with Western Mining Corporation (Philippines), Inc. (WMCP).

On 27 January 2004, the Court en banc promulgated its Decision, granting the Petition

and declaring the unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well

as of the entire FTAA executed between the government and WMCP, mainly on the

finding that FTAAs are service contracts prohibited by the 1987 Constitution. The Decision

struck down the subject FTAA for being similar to service contracts,[9] which, though

permitted under the 1973 Constitution, were subsequently denounced for being

antithetical to the principle of sovereignty over our natural resources, because they

allowed foreign control over the exploitation of our natural resources, to the prejudice of

the Filipino nation.

The Decision quoted several legal scholars and authors who had criticized service

contracts for, inter alia, vesting in the foreign contractor exclusive management and

control of the enterprise, including operation of the field in the event petroleum was

discovered; control of production, expansion and development; nearly unfettered control

over the disposition and sale of the products discovered/extracted; effective ownership

of the natural resource at the point of extraction; and beneficial ownership of our

economic resources. According to the Decision, the 1987 Constitution (Section 2 of Article

XII) effectively banned such service contracts. Subsequently, Victor O. Ramos (Secretary,

Department of Environment and Natural Resources [DENR]), Horacio Ramos (Director,

Mines and Geosciences Bureau [MGB-DENR]), Ruben Torres (Executive Secretary), andthe WMC (Philippines) Inc. filed separate Motions for Reconsideration.

Issue:

Whether or not the Court has a role in the exercise of the power of control over the EDU

of our natural resources?

Held:

The Chief Executive is the official constitutionally mandated to enter into agreements

with foreign owned corporations. On the other hand, Congress may review the action ofthe President once it is notified of every contract entered into in accordance with this

*constitutional+ provision within thirty days from its execution. In contrast to this express

mandate of the President and Congress in the exploration, development and utilization

(EDU) of natural resources, Article XII of the Constitution is silent on the role of the

judiciary. However, should the President and/or Congress gravely abuse their discretion

in this regard, the courts may -- in a proper case -- exercise their residual duty under

Article VIII. Clearly then, the judiciary should not inordinately interfere in the exercise of

this presidential power of control over the EDU of our natural resources.

Under the doctrine of separation of powers and due respect for co-equal and coordinatebranches of government, the Court must restrain itself from intruding into policy matters

and must allow the President and Congress maximum discretion in using the resources of

our country and in securing the assistance of foreign groups to eradicate the grinding

poverty of our people and answer their cry for viable employment opportunities in the

country. The judiciary is loath to interfere with the due exercise by coequal branc hes of

government of their official functions. As aptly spelled out seven decades ago by Justice

George Malcolm, Just as the Supreme Court, as the guardian of constitutional rights,

should not sanction usurpations by any other department of government, so should it as

strictly confine its own sphere of influence to the powers expressly or by implication

conferred on it by the Organic Act. Let the development of the mining industry be theresponsibility of the political branches of government. And let not the Court interfere

inordinately and unnecessarily. The Constitution of the Philippines is the supreme law of

the land. It is the repository of all the aspirations and hopes of all the people.

The Constitution should be read in broad, life-giving strokes. It should not be used to

strangulate economic growth or to serve narrow, parochial interests. Rather, it should be

construed to grant the President and Congress sufficient discretion and reasonable

leeway to enable them to attract foreign investments and expertise, as well as to secure

for our people and our posterity the blessings of prosperity and peace. The Court fully

sympathize with the plight of La Bugal Blaan and other tribal groups, and commend their

efforts to uplift their communities. However, the Court cannot justify the invalidation of

an otherwise constitutional statute along with its implementing rules, or the nullification

of an otherwise legal and binding FTAA contract. The Court believes that it is not

unconstitutional to allow a wide degree of discretion to the Chief Executive, given the

nature and complexity of such agreements, the humongous amounts of capital and

financing required for large-scale mining operations, the complicated technology needed,

and the intricacies of international trade, coupled with the States need to maintain

flexibility in its dealings, in order to preserve and enhance our countrys competitiveness

in world markets. On the basis of this control standard, the Court upholds the

constitutionality of the Philippine Mining Law, its Implementing Rules and Regulations -insofar as they relate to financial and technical agreements - as well as the subject

Financial and Technical Assistance Agreement (FTAA).

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G.R. No. 152115 January 26, 2005

NIMFA USERO, petitioner,

vs.

COURT OF APPEALS and SPS. HERMINIGILDO & CECILIA POLINAR, respondents.

x--------------------------------x

G.R. No. 155055 January 26, 2005

LUTGARDA R. SAMELA, petitioner,

vs.

COURT OF APPEALS and SPS. HERMINIGILDO & CECILIA POLINAR, respondents.

D E C I S I O N

CORONA,J.:

Before this Court are two consolidated petitions for review on certiorariunder Rule 45 of the Rules of Court. The

first petition, docketed as G.R. No. 152115, filed by Nimfa Usero, assails the September 19, 2001 decision1of the

Court of Appeals in CA-GR SP No. 64718. The second petition, docketed as G.R. No. 155055, filed by Lutgarda R.

Samela, assails the January 11, 2002 decision2of the Court of Appeals in CA-GR SP NO. 64181.

The undisputed facts follow.

Petitioners Lutgarda R. Samela and Nimfa Usero are the owners respectively of lots 1 and 2, Block 5, Golden

Acres Subdivision, Barrio Almanza, Las Pias City.

Private respondent spouses Polinar are the registered owners of a parcel of land at no. 18 Anahaw St., Pilar

Village, Las Pias City, behind the lots of petitioners Samela and Usero.

Situated between the lots of the parties is a low-level strip of land, with a stagnant body of water filled with

floating water lilies; abutting and perpendicular to the lot of petitioner Samela, the lot of the Polinars and the

low-level strip of land is the perimeter wall of Pilar Village Subdivision.

Apparently, every time a storm or heavy rains occur, the water in said strip of land rises and the strong current

passing through it causes considerable damage to the house of respondent Polinars. Frustrated by theirpredicament, private respondent spouses, on July 30, 1998, erected a concrete wall on the bank of the low-level

strip of land about three meters from their house and rip-rapped the soil on that portion of the strip of land.

Claiming ownership of the subject strip of land, petitioners Samela and Usero demanded that the spouses

Apolinar stop their construction but the spouses paid no heed, believing the strip to be part of a creek.

Nevertheless, for the sake of peace, the Polinars offered to pay for the land being claimed by petitioners Samela

and Usero. However, the parties failed to settle their differences.

On November 9, 1998, petitioners filed separate complaints for forcible entry against the Polinars at the

Metropolitan Trial Court of Las Pias City. The case filed by petitioner Samela was docketed as Civil Case No.

5242, while that of petitioner Usero was docketed as Civil Case No. 5243.

In Civil Case No. 5242, petitioner Samela adduced in evidence a copy of her Transfer Certificate of Title, plan ofconsolidation, subdivision survey, the tax declaration in her name, and affidavits of petitioner Usero and a

certain Justino Gamela whose property was located beside the perimeter wall of Pilar Village.

The spouses Polinar, on the other hand, presented in evidence their own TCT; a barangay certification as to the

existence of the creek; a certification from the district engineer that the western portion of Pilar Village is bound

by a tributary of Talon Creek throughout its entire length; boundary and index map of Pilar Village showing that

the village is surrounded by a creek and that the Polinar property is situated at the edge of said creek; and

pictures of the subject strip of land filled with water lilies.

On March 22, 1999, the trial court rendered a decision in favor of petitioner Samela:

WHEREFORE, the Court hereby renders judgment ordering the defendants to vacate and remove at their

expense the improvements made on the subject lot; ordering the defendants to pay the plaintiff P1,000.00 a

month as reasonable compensation for the use of the portion encroached from the filing of the complaint until

the same is finally vacated; and to pay plaintiff P10,000.00 as reasonable attorneys fees plus costs of

suit.31vvphi1.nt

In a parallel development, the Metropolitan Trial Court, in Civil Case No. 5243, issued an order on February 29,

2000, directing petitioner Usero and the Polinar spouses to commission a professional geodetic engineer to

conduct a relocation survey and to submit the report to the trial court.

On April 24, 2000, Mariano Flotilde, a licensed geodetic engineer, conducted a relocation survey of Useros

property covered by TCT No. T- 29545. The result of the said relocation survey, as stated in his affidavit, was as

follows:

1. That I executed a relocation survey of Lot 2, Block 5, (LRC) PCS-4463 covered by TCT No. T-29545 registered in

the name of Nimfa O. Usero;

2. That according to my survey, I found out that there is no existing creek on the boundary of the said lot;

3. That based on the relocation plan surveyed by the undersigned, attached herewith, appearing is the

encroachment on the above-mentioned lot by Spouses Herminigildo and Cecilia Polinar with an area of FORTY

THREE (43) SQUARE METERS;

4. That this affidavit was made in compliance with Court Order dated February 23, 2000 of Metropolitan Trial

Court, Las Pias City, Branch LXXIX.4

On August 25, 2000, the Metropolitan Trial Court decided in favor of petitioner Usero:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the d efendants ordering them:

a) To vacate and remove at their expense the improvement made on the subject lot;

b) To pay the plaintiff P1,000.00 a month as reasonable compensation for the portion encroached from the time

of the filing of the complaint until the same is finally vacated;

c) To pay plaintiff P10,000.00 as reasonable attorneys fees plus costs of suit.

SO ORDERED.5

The Polinar spouses appealed the decisions of the two Municipal Trial Courts to the Regional Trial Court of Las

Pias, Branch 253 which heard the appeals separately.

On December 20, 2000, the Regional Trial Court, deciding Civil Case No. 5242, reversed the decision of the trial

court and ordered the dismissal of the complaint. It confirmed the existence of the creek between the

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northwestern portion of the lot of petitioner Samela and the southwestern portion of the lot of the spouses

Polinar:

Finding the existence of a creek between the respective properties of the parties, plaintiff-appellee cannot

therefore lay claim of lawful ownership of that portion because the same forms part of public

dominion.1a\^/phi1.netConsequently, she cannot legally stop the defendants-appellants from rip-rapping the

bank of the creek to protect the latters property from soil erosion thereby avoiding danger to their lives and

damage to property.

Absent a lawful claim by the plaintiff-appellee over the subject portion of that lot, defendants-appellants are

not duty bound to pay the former compensation for the use of the same. As a result, they may maintain the said

improvements introduced thereon subject to existing laws, rules and regulations and/or ordinances

appurtenant thereto.

WHEREFORE, premises considered, the Decision rendered by Branch 79 of the Metropolitan Trial Court, Las

Pias is REVERSED. Accordingly, the instant complaint is DISMISSED.

SO ORDERED.6

On March 16, 2001, the Regional Trial Court, in Civil Case No. 5243, also reversed the finding of the Municipal

Trial Court:

From the foregoing, defendants-appellants may maintain the improvements introduced on the subject portion

of the lot subject to existing laws, rules and regulations and/or ordinances pertaining thereto. Consequently, nocompensation may be awarded in favor of the plaintiff-appellee.

WHEREFORE, premises considered, the above-mentioned Decision rendered by Branch 79 of the Las Pias City

Metropolitan Trial Court is REVERSED. Accordingly, the instant complaint is DISMISSED.

From the adverse decisions of the Regional Trial Court, petitioners filed their respective petitions for review

oncertiorarito the Court of Appeals. Petitioner Samelas case was docketed as CA-G.R. SP 64181 while that of

petitioner Usero was docketed as CA-G.R. SP 64718.1awphi1.nt

Both petitions failed in the CA. Thus the instant consolidated petitions.

The pivotal issue in the case at bar is whether or not the disputed strip of land, allegedly encroached upon by

the spouses Polinar, is the private property of petitioners or part of the creek and therefore part of the publicdomain. Clearly this an issue which calls for a review of facts already determined by the Court of Appeals.

The jurisdiction of the Court in petitions for review on certiorariunder Rule 45 of the Rules of Court is limited to

reviewing only errors of law, not of fact, unless the factual findings complained of are devoid of support by the

evidence on record or the assailed judgment is based on a misapprehension of facts.7This is obviously not the

case here.

A careful scrutiny of the records reveals that the assailed decisions are fou nded on sufficient evidence. That the

subject strip of land is a creek is evidenced by: (1) a barangay certification that a creek exists in the disputed

strip of land; (2) a certification from the Second Manila Engineering District, NCR-DPWH, that the western

portion of Pilar Village where the subject strip of land is located is bounded by a tributary of Talon Creek and (3)

photographs showing the abundance of water lilies in the subject strip of land. The Court of Appeals was

correct: the fact that water lilies thrive in that strip of land can only mean that there is a permanent stream of

water or creek there.

In contrast, petitioners failed to present proof sufficient to support their claim. Petitioners presented the TCTs

of their respective lots to prove that there is no creek between their properties and that of the Polinars.

However, an examination of said TCTs reveals that the descriptions thereon are incomplete. In petitioner

Samelas TCT No. T-30088, there is no boundary description relative to the northwest portion of the property

pertaining to the site of the creek. Likewise in TCT No. T- 22329-A of the spouses Polinar, the southeast portion

which pertains to the site of the creek has no described boundary. Moreover the tax declaration presented by

petitioner is devoid of any entry on the "west boundary" vis-a-vis the location of the creek. All the pieces of

evidence taken together, we can only conclude that the adjoining portion of these boundaries is in fact a creek

and belongs to no one but the state.

Property is either of public dominion or of private ownership .

8

Concomitantly, Article 420 of the Civil Codeprovides:

ART. 420. The following things are pr operty of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the

State, banks, shores, roadsteads, and others of similar character;

The phrase "others of similar character" includes a creek which is a recess or an arm of a river. It is property

belonging to the public domain which is not susceptible to private ownership .9Being public water, a creek

cannot be registered under the Torrens System in the name of any individual10

.

Accordingly, the Polinar spouses may utilize the rip-rapped portion of the creek to prevent the erosion of their

property.

WHEREFORE, the consolidated petitions are hereby denied. The assailed decisions of the Court of Appeals in

CA-G.R. SP 64181 and CA-G.R. SP 64718 are affirmed in toto.

SO ORDERED.

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G.R. No. 167707 October 8, 2008

THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE REGIONAL

EXECUTIVE DIRECTOR, DENR-REGION VI, REGIONAL TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT

BUREAU, REGION VI PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES OFFICER OF KALIBO, AKLAN,

REGISTER OF DEEDS, DIRECTOR OF LAND REGISTRATION AUTHORITY, DEPARTMENT OF TOURISM SECRETARY,

DIRECTOR OF PHILIPPINE TOURISM AUTHORITY,petitioners,

vs.

MAYOR JOSE S. YAP, LIBERTAD TALAPIAN, MILA Y. SUMNDAD, and ANICETO YAP, in their behalf and in behalf

of all those similarly situated, respondents.

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

G.R. No. G.R. No. 173775 October 8, 2008

DR. ORLANDO SACAY and WILFREDO GELITO, joined by THE LANDOWNERS OF BORACAY SIMILARLY SITUATED

NAMED IN A LIST, ANNEX "A" OF THIS PETITION,petitioners,

vs.

THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE REGIONAL

TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT BUREAU, REGION VI, PROVINCIAL ENVIRONMENT

AND NATURAL