INCOMPLETE DIGESTED CASES
COURSE OUTLINE: PROPERTY Atty. Charizma I. Cortez-Catague PART I. PROPERTY, OWNERSHIP OWNERSHIP AND ITS MODIFICATIONS MODIFICATIONS 1.
PROPERTY IN RELATION TO THE PERSON TO WHOME IT BELONGS
Article 415 1.
Mercado Securities v. Central Board of Assessment Appeals, 114 SCRA 273 (1982)
MERALCO SECURITIES INDUSTRIAL CORPORATION vs. CENTRAL BOARD OF ASSESSMENT APPEALS, APPEALS, BOARD OF ASSESSMENT APPEALS OF LAGUNA and PROVINCIAL ASSESSOR OF LAGUNA FACTS: Meralco Securities installed from Batangas to Manila a pipeline system consisting of cylindrical steel pipes joined together and buried not less than one meter below the surface along the shoulder of the public highway. The portion passing through Laguna is about thirty kilometers long.
In order to repair, replace, remove or transfer segments of the pipeline, the pipes have to be cold-cut by means of a rotary hard-metal pipe-cutter after digging or excavating them out of the ground where they are buried. In points where the pipeline traversed rivers or creeks, the pipes were laid beneath the bed thereof. Hence, the pipes are permanently attached to the land. The rovincial assessor of Laguna treated the pipeline as real property and issued Tax Declarations. Meralco Securities appealed the assessments to the Board of Assessment Appeals of Laguna which upheld the assessments. Meralco Securities brought the case to the Central Board of Assessment Appeals also ruled that the pipeline is subject to realty tax. ISSUE: Whether the oil pipeline is real property and thus subject to realty tax. RULING:
Yes.
It should be borne in mind that what are being characterized as real property are not the steel pipes but the pipeline system as a whole Pipeline means a line of pipe connected to pumps, valves and control devices for conveying liquids, gases or finely divided solids. It is a line of pipe running upon or in the earth, carrying with it the right to the use of the soil in which it is placed. The pipeline system in question is indubitably a construction adhering to the soil (Exh. B, p. 39, Rollo). It is attached to the land in such a way that it cannot be separated therefrom without dismantling the steel pipes which were welded to form the pipeline. 2.
Lopez v. Orosa, Jr. and Plaza Theater, Inc. 103 Phil 98, 1958
Facts:
Sometime in May, 1946, Vicente Orosa, Jr., invited Lopez to make an investment in the theatre business. Although Lopez expressed his unwillingness to invest of the same, he agreed to supply the lumber necessary for the construction of the proposed theatre, and at Orosa's request and assurance that the latter would be personally liable for any account that the said construction might incur, Lopez further agreed that payment 1|Page
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therefore would be on demand and not cash on delivery basis. With this, Lopez delivered the lumber which was used for the construction of the Plaza Theatre on May 17, 1946, up to December 4 of the same year. The total cost of materials amounted to P62,255.85 but Lopez was only paid P20,848.50, thus leaving a balance of P41,771.35. Orosa and Rustia, corporation president, promised Lopez to obtain a bank loan to satisfy the balance, to which assurance Lopez had to accede. Unknown to Lopez, Orosa and Rustia already secured a loan for P30,000 from the PNB with the Luzon Surety Company as surety, and the corporation in turn executed a mortgage on the land and building in favor of said company as counter-security. As the land at that time was not yet brought under the operation of the Torrens System, the mortgage on the same was registered on 16 November 1946, under Act 3344. Subsequently, when the corporation applied for the registration of the land under Act 496, such mortgage was not revealed and thus OCT O-391 was correspondingly issued on October 25, 1947, without any encumbrance appearing thereon. Persistent demand from Lopez caused Vicente Orosa, Jr. to execute, on 17 March 1947, an alleged "deed of assignment" of his 420 shares of stock of the Plaza Theater, Inc., at P100 per share or with a total value of P42,000 in favor of the creditor, and as the obligation still remained unsettled, Lopez filed on 12 November 1947, a complaint with the CFI Batangas against Vicente Orosa Jr. and Plaza Theatre, Inc., praying that defendants be sentenced to pay him jointly and severally the sum of P41,771.35 with legal interest from the filing of the action; that in case defendants fail to pay the same, that the building and the land owned by the corporation be sold at public auction and the proceeds thereof be applied to said indebtedness. Plaintiff also caused the annotation of a notice of lis pendens on said properties with the Register of Deeds. The surety company upon discovery that the land was already registered under the Torrens System and that there was a notice of lis pendens thereon, filed a petition for review of the decree of the land registration court in order to annotate the lights and interests of the surety company over said properties. Lopez opposed by asserting that the amount demanded by him constituted a preferred lien over the properties of the obligors; that the surety company was guilty of negligence when it failed to present an opposition to the application for registration of the property; and that if any annotation of the rights and interest of said surety would ever be made, same must be subject to the lien in his favor. The court ruled that Orosa and the Plaza Theatre, Inc., were jointly liable for the unpaid balance of the cost of lumber used in the construction of the building and the plaintiff thus acquired the materialman's lien over the same; the lien being merely confined to the building and did not extend to the land on which the construction was made. Issues/ Held 1. Whether materialman’s lien for the value of the m aterials used in the construction of a building attaches to the building alone and does not extend to the land on which the building is adhered to.
YES. While it is true that generally, real estate connotes the land and the building constructed thereon, it is obvious that the inclusion of the building, separate and distinct from the land, in the enumeration of what may constitute real properties could mean only one thing — that a building is by itself an immovable property (cf. Leung Yee v. Strong Machinery). In the absence of any specific provision of law to the contrary, a building is an immovable property, proper ty, irrespective of whether or not said structure and the land on which it is adhered to belong to the same owner. 2. Whether the lower court and the CA erred in not providing that the materialman’s lien is superior to the mortgage executed in favor of the surety company not only on the building but also on the land.
No. A close examination of Article 1923 (5) of the Civil Code reveals that the law gives preference to unregistered refectionary credits only with respect to the real estate upon which the refection or work was made. 2|Page
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ART. 1923. With respect to determinate real property and real rights of the debtor, the following are preferred: xxx
xxx
xxx
5. Credits for refection, not entered or recorded, with respect to the estate upon which the refection was made, and only with respect to other credits different from those mentioned in four preceding paragraphs. This being so, the inevitable conclusion must be that the lien so created attaches merely to the immovable property for the construction or repair of which the obligation was incurred. In the case at bar, the lien for the unpaid value of the lumber used in the construction of the building attaches only to said structure and to no other property of the obligors. Thus, the materialman's lien could be charged only to the building for which the credit was made or which received the benefit of refection, the interest of the mortgagee over the land is superior and cannot be made subject to the said materialman's lien. Materialman’s lien-A type of lien
that gives a security interest in property to someone who supplies materials used during work performed on that property. Essentially, a mechanic's lien by another name. 3.
Buenget Corporation vs. CBAA, 218 SCRA 271
Doctrine: an "improvement" on a property is permanent in character and enhances both the value and utility of said property. Its immovable nature efines its character as real property. Facts: In 1985, the Provincial Assessor of Zambales assessed the petitioner's tailings dam as taxable improvements.
Petitioner contended that the the dam cannot be subjected to realty tax as a separate and independent property because it does not constitute an "assessable improvement" on the mine because it is an integral part of the mine. To supporty its contention, petitioner cited the following cases: (1) Municipality of Cotabato v. Santos - dikes and gates constructed in connection with a fishpond operation as integral parts of the fishpond. (2) Bislig Bay Lumber Co. v. Provincial - Government of Surigao the realty tax was not imposed on a road constructed by the timber concessionaire because the government had the right to use the road to promote its varied activities. (3) Kendrick v. Twin Lakes Reservoir Co. (American Case) - A reservoir dam went with and formed part of the reservoir (4) Ontario Silver Mining Co. v. Hixon (Canada) - Involved drain tunnels constructed when mining operations were expanded... it was held that "whatever value they have is connected with and in fact is an integral part of the mine itself." On the other hand, Solicitor General's argues that the dam is an assessable improvement because it enhances the value and utility of the mine. Issue: Whether or not the tailings dam in question is an "improvement" upon the land within the meaning of the Real Property Tax Code. Held: Yes. 3|Page
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The court ruled that the subject dam falls within the definition of an "improvement" because it is permanent in character and it enhances both the value and utility of petitioner's mine. The immovable nature of the dam defines its character as real property under Article 415 of the Civil Code and thus makes it taxable under Section 38 of the Real Property Tax Code. 4.
Tumalad v. Vivencio 41 SCRA 143 (1971)
Gavino Tumalad vs Alberta Vicencio and Emilano Simeon (G.R. No. L-30173; Sept. 30, 1971) Facts: On September 1, 1955, respondents executed a chattel mortgage in favor of petitioners over their house of strong materials located in Quezon City, being rented out by the Madrigal & Company, Inc. The mortgage was executed to guarantee a loan of Php 4,800.00, payable within one year at 12% per annum.
Respondents defaulted in paying and the mortgage was extrajudically foreclosed. The house was sold at a public auction on March 27, 1956, with petitioners as the highest bidder. Thereafter, on petitioners commenced for ejectment and to pay the rent of Php 200.00 monthly from the date of the sale up to the time the possession is surrendered. The Municipal Court ruled in favor of petitioner ordering respondents to vacate the premises and to pay the monthly rent of Php 200.00. During the pendency of the appeal to the Court of First Instance, defendants-appellants failed to deposit the rent for November, 1956 within the first 10 days of December, 1956 as ordered in the decision of the municipal court. As a result, the court granted plaintiffs-appellees' motion for execution, and it was actually issued on 24 January 1957. On October 7, 1957, the motion of plaintiffs for dismissal of the appeal, execution of the bond and withdrawal of deposited rentals was denied due to the fact that the liability was disclaimed and was still being litigated, and under Section 8, Rule 72, rentals deposited had to be held until final disposition of the appeal. Upon appeal, respondents predicate their theory of nullity of the chattel mortgage on two grounds, which are: (a) that, their signatures on the chattel mortgage were obtained through fraud, deceit, or trickery; and (b) that the subject matter of the mortgage is a house of strong materials, and, being an immovable, it can only be the subject of a real estate mortgage and not a chattel mortgage Issue: WON the contention of the respondents are tenable. Held: NO. Fraud or deceit does not render a contract void ab initio, and can only be a ground for rendering the contract voidable or annullable pursuant to Article 1390 of the New Civil Code, by a proper action in court. It is obvious that the inclusion of the building, separate and distinct from the land, in the enumeration of what may constitute real properties (art. 415, New Civil Code) could only mean one thing —that a building is by itself an immovable property irrespective of whether or not said structure and the land on which it is adhered to belong to the same owner.
Certain deviations, however, have been allowed for various reasons. In the case of Manarang vs. Ofilada, No. L-8133, 18 May 1956, 99 Phil. 109, this Court stated that ‘‘it is undeniable that the parties to a contract may by agreement treat as personal property that which by nature would be real property.’’ Again, in the case of Luna vs. Encarnacion, No. L-4637, 30 June 1952, 91 Phil. 531, the subject of the contract designated as Chattel Mortgage was a house of mixed materials, and this Court held therein that it was a valid Chattel mortgage because it was so expressly designated and specifically that the property given as security ‘‘is a house of mixed materials, which by its very nature is c onsidered personal property.” 4|Page
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Leung Yee vs. FL Strong Machinery Co. and Williamson 37 SCRA 644, 1918
FACTS: In 1913, Compania Agricola Filipina (CAF) was indebted to two personalities: Leung Yee and Frank L. Strong Machinery Co. CAF purchased some rice cleaning machines from Strong Machinery. CAF installed the machines in a building. As security for the purchase price, CAF executed a chattel mortgage on the rice cleaning machines including the building where the machines were installed. CAF failed to pay Strong Machinery, hence the latter foreclosed the mortgage – the same was registered in the chattel mortgage registry .
CAF also sold the land (where the building was standing) to Strong Machinery. Strong Machinery took possession of the building and the land. On the other hand, Yee, another creditor of CAF who engaged in the construction of the building, being the highest bidder in an auction conducted by the sheriff, purchased the same building where the machines were installed. Apparently CAF also executed a chattel mortgage in favor Yee. Yee registered the sale in the registry of land . Yee was however aware that prior to his buying, the property has been sold in favor of Strong Machinery – evidence is the chattel mortgage already registered by Strong Machinery (constructive notice). ISSUE: Who is the owner of the building? HELD: The SC ruled that Strong Machinery has a better right to the contested property. Yee cannot be regarded as a buyer in good faith as he was already aware of the fact that there was a prior sale of the same property to Strong Machinery.
The SC also noted that the Chattel Mortgage Law expressly contemplates provisions for chattel mortgages which only deal with personal properties. The fact that the parties dealt the building as if it’s a personal property does not change the nature of the thing. It is still a real property. Its inscription in the Chattel Mortgage registry does not modify its inscription the registry of real property. 6.
Standard Oil Co. vs Jaramillo, 44 Phil 644 1918
FACTS: Gervasia dela Rosa executed a document in the form of a Chattel Mortgage purporting to convey to Standard Oil Co. by way of mortgage both the leasehold interest of the land she leases in Manila and the building which stands thereon. The clauses in said document describe the property as personal including the right, title and interest of the mortgagor in and to the contract of lease and also the building of the said premises therein.
After said document had been duly acknowledge and delivered, the petitioner presented it to Joaquin Jaramillo, as register of deeds of the City of Manila, for the purpose of having the same recorded. The respondent opined that it was not a chattel mortgage for the interests mortgaged did not appear to be personal property within the meaning of the Chattel Mortgage Law and registration was refused on this ground only. HELD: The duties of a register of deeds in respect to the registration of chattel mortgages are of purely ministerial character and no provision of law can be cited which confers upon him any judicial or quasi- judicial power to determine the nature of any document of which registration is sought as a chattel mortgage. 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. Registration adds nothing to the instrument, considered as a source of title, and affects nobody’s rights except as a species of notice.
The parties to a contract may by 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 5|Page
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on general principle might be considered personal property. It is unnecessary to determine whether or not the property described in the document is real or personal. The issue is to be determined by the Court and not by the register of deeds 7.
Mindanao Bus Company vs. City Assessor and Treasurer 6 SCRA 197, 1962
MINDANAO BUS COMPANY, petitioner, vs. THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of Cagayan de Oro City, respondents. G.R. No. L-17870, September 29, 1962 FACTS: Petitioner Mindanao Bus Company is a public utility company engaged in the transport of passengers and cargoes by motor trucks in Mindanao with main offices in CDO. It is the owner of the land where it maintains and operates a garage for its TPU motor trucks, and the machineries which are placed therein are used for the construction and repair of the same.
The said machineries are placed in wooden and cement platforms and have never been or were never used as industrial equipment 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. Respondent City Assessor assessed the machineries at P4,400. Mindanao Bus appealed the assessment to the Board of Tax Appeals on the ground that the same are not realty. The Court of Tax Appeals sustained the City Assessor's ruling, and Mindanao Bus brought the case to the Supreme Court alleging that the questioned assessments are not valid, and that the said tools, equipment or machineries are not immovable taxable real properties. ISSUE: Whether or not the said equipment or machineries are immobilized by destination in accordance with paragraph 5 of Article 415 of the New Civil Code. HELD: No. Movable equipment 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.
The tools and equipment 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. 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
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(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. However, the equipment 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 equipment may not, therefore, be deemed real property. 8.
Caltex (Philippines) Inc. vs. Central Board of Assessment Appeals, 114 SCRA 296
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Caltex vs Central Board of Assessment Appeals & City Assessor of Pasay GR No. L-50466 May 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. FACTS: Caltex 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. ISSUE: WON the pieces of gas station equipment and machinery permanently affixed by Caltex to its gas station and pavement should be subject to realty tax. HELD : Sec.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 tha n 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 P HIL 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 7|Page
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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.
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Serg’s Products vs. PCI, GR No. 137705, August 22, 2000
Serg’s Products and Goquiola v. PCI Leasing and Finance 338 SCRA 499
DOCTRINE: After agreeing to a contract stipulating that a real or immovable property be considered as personal or movable, a party is estopped from subsequently claiming otherwise. Hence, such property is a proper subject of a writ of replevin obtained by the other contracting party. FACTS: PCI Leasing and Finance, Inc. filed a complaint with the RTC for a sum of money with an application for a writ of replevin. Upon an ex-parte application of PCI Leasing, respondent 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. Serg’s filed a motion for special protective order. This motion was opposed by PCI Leasing on the ground that the properties [were] still personal and therefore still subject to seizure and a writ of replevin.
In their Reply, petitioners asserted that the properties sought to be seized were immovable as defined in Article 415 of the Civil Code, the parties’ agreement to the contrary notwithstanding. They argued that to give effect to the agreement would be prejudicial to innocent third parties. They further stated that PCI Leasing was estopped from treating these machineries as personal because the contracts in which the alleged agreement were embodied were totally sham and farcical. Citing the Agreement of the parties, the appellate court held that the subject machines were personal property, and that they had only been leased, n ot owned, by petitioners. It also 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 purchased and imported by SERG’S became real property by virtue of immobilization. HELD: The machineries herein are real properties but are considered personal by the parties’ agreement.
The Court will resolve whether the said machines are personal, not immovable, property which may be a proper subject of a writ of replevin. Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only. Section 3 thereof reads: 8|Page
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“SEC. 3. Order . -- Upon the filing of such affidavit and approval of the bond, the court shall issue an order and the corresponding writ of replevin describing the personal property alleged to be wrongfully detained and requiring the sheriff forthwith to take such property into his custody.”
On the other hand, Article 415 of the Civil Code enumerates immovable or real property 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; x x x....................................x x x................................. ...x x x” 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. Indisputably, they were essential and principal elements of their chocolatemaking 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.” In that sense, petitioners are correct in arguing that the said machines are real, not personal, property pursuant to Article 415 (5) of the Civil Code. Be that as it may, we disagree with the submission of the petitioners that the said machines are not proper subjects of the Writ of Seizure. The Court has held that 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. Hence, in Tumalad v. Vicencio, the Court upheld the intention of the parties to treat a house as a personal property because it had been made the subject of a chattel mortgage. It should be stressed, however, that our holding -- that the machines should be deemed personal property pursuant to the Lease Agreement – is good only insofar as the contracting parties are concerned. Hence, while the parties are bound by the Agreement, third persons acting in good faith are not affected by its stipulation characterizing the subject machinery as personal. In any event, there is no showing that any specific third party would be adversely affected. 10.
Ago vs. Court of Appeals 6 SCRA 530, 1962
Pastor D. Ago vs CA, Hon. Montaño Ortiz, The Provincial Sheriff of Surigao, and Grace Park Engineering, Inc. GR No. L-17898 October 31, 1962 FACTS: Ago bought sawmill machineries and equipments from Grace Park Engineer Domineering, Inc. (GPED) A chattel mortgage was executed over the said properties to secure the unpaid balance of P32,000, which Ago agreed to pay in installment basis. Because Ago defaulted in his payment, GPED instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin the foreclosure, Ago instituted a special civil case in the 9|Page
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CFI of Agusan. The parties then arrived at a compromise agreement. However, a year later, Ago still defaulted in his payment. GPED filed a motion for execution with the lower court, which was executed on September 23, 1959. Acting upon the writ of execution, the Provincial Sheriff of Surigao levied upon and ordered the sale of the sawmill machineries and equipment. Upon being advised that the public auction sale was set on December 4, 1959, Ago filed a petition for certiorari and prohibition on December 1, 1959 with the CA. He alleged that his counsel only received the copy of the judgment on September 25, 1959 – two days after the execution of the writ; that the order of sale of the levied properties was in grave abuse of discretion and in excess of jurisdiction; and that the Sheriff acted illegally by levying the properties and attempting to sell them without prior publication of the notice of sale thereof in some newspaper of general circulation as required by the Rules of Court. The CA issued a writ of preliminary injunction against the Sheriff, but it turned out that the properties were already sold on December 4, 1959. The CA ordered the Sheriff to suspend the issuance of the Certificate of Sale until the decision of the case. The CA then rendered its decision on November 9, 1960. 1. Is the fact that petitioner was present in open court as the judgment was rendered, ISSUES: sufficient notice of the said judgment? 2. Was the Sheriff's sale of the machineries and equipment at a public auction valid despite lack of publication of the notice of sale? HELD: 1) No. The mere pronouncement of the judgment in open court does not constitute a rendition of judgment. The filing of the judge's signed decision with the Clerk of Court constitutes the rendition of a valid and binding judgment. Sec. 1, Rule 35 of the Rules of Court require that all judgments be rendered in writing, personally and directly prepared by the judge, and signed by him, stating clearly and distinctly the facts and the law on which it is based, filed with the clerk of the court. Prior to the filing, the decision could still be subject to amendment and change and may not constitute the real judgment of the court.
Moreover, the hearing of the judgment in open court does not constitute valid notice thereof. No judgment can be notified to the parties unless it has previously been rendered. Sec.7 of Rule 27 expressly requires that final orders or judgments be served either personally or by registered mail. The signed judgment not having been served upon the petitioner, said judgment could not be effective upon him who had not received it. As a consequence, the issuance of the writ of execution is null and void, having been issued before petitioner was served a copy of the decision, personally or by registered mail. 2) The subject sawmill machineries and equipment became real estate properties in accordance with the provision of Art. 415 (5) of the NCC: ART. 415 – The following are immovable property: xxxx (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; The installation of the sawmill machineries in the building of Gold Pacific Sawmill, Inc., for use in the sawing of logs carried on in the said building converted them into Real Properties as they became a necessary & permanent part of the building or real estate on which the same was constructed. And if they are judicially sold on execution without the necessary advertisement of sale by publication in a newspaper as required in Sec.16 of Rule 39 of the Rules of Court, the sale made by the sheriff would be null and void. 11.
Berkenkotter vs. Cu Unjeing e Hijos, 61 Phils 663, 1935 B.H. Berkenkotter v. Cu Unjieng E Hijos
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G.R. No. L-41643 (July 31, 1935) Facts: On 26 April 1926, the Mabalacat Sugar Company obtained from Cu Unjieng e Hijos, a loan secured by a first mortgage constituted on 2 parcels of land "with all its buildings, improvements, sugar-cane mill, steel railway, telephone line, apparatus, utensils and whatever forms part or is a necessary complement of said sugar-cane mill, steel railway, telephone line, now existing or that may in the future exist in said lots.” On 5 October 1926, the Mabalacat Sugar Company decided to increase the capacity of its sugar central by buying additional machinery and equipment, so that instead of milling 150 tons daily, it could produce 250. Green proposed to the Berkenkotter, to advance the necessary amount for the purchase of said machinery and equipment, promising to reimburse him as soon as he could obtain an additional loan from the mortgagees, Cu Unjieng e Hijos, and that in case Green should fail to obtain an additional loan from Cu Unjieng e Hijos, said machinery and equipment would become security therefore, said Green binding himself not to mortgage nor encumber them to anybody until Berkenkotter be fully reimbursed for the corporation's indebtedness to him. Having agreed to said proposition made in a letter dated 5 October 1926, Berkenkotter, on 9 October 1926, delivered the sum of P1,710 to Green, the total amount supplied by him to Green having beenP25,750. Furthermore, Berkenkotter had a credit of P22,000 against said corporation for unpaid salary. With the loan of P25,750 and said credit of P22,000, the Mabalacat Sugar Co., Inc., purchased the additional machinery and equipment. On 10 June 1927, Green applied to Cu Unjieng for an additional loan of P75,000 offering as security the additional machinery and equipment acquired by said Green and installed in the sugar central after the execution of the original mortgage deed, on 27 April 1927, together with whatever additional equipment acquired with said loan. Green failed to obtain said loan. Hence, abovementioned mortgage was in effect. Issue: Are the additional machines also considered mortgaged? Held: YES. Article 1877 of the Civil Code provides that mortgage includes all natural accessions, improvements, growing fruits, and rents not collected when the obligation falls due, and the amount of any indemnities paid or due the owner by the insurers of the mortgaged property or by virtue of the exercise of the power of eminent domain, with the declarations, amplifications, and limitations established by law, whether the state continues in the possession of the person who mortgaged it or whether it passes into the hands of a third person. It is a rule, that in a mortgage of real estate, the improvements on the same are included; therefore, all objects permanently attached to a mortgaged building or land, although they may have been placed there after the mortgage was constituted, are also included. Article 334, paragraph 5, of the Civil Code gives the character of real property to machinery, liquid containers, instruments or implements intended by the owner of any building or land for use in connection with any industry or trade being carried on therein and which are expressly adapted to meet the requirements of such trade or industry. The installation of a machinery and equipment in a mortgaged sugar central, in lieu of another of less capacity, for the purpose of carrying out the industrial functions of the latter and increasing production, constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the mortgage constituted thereon. 12.
Sanchez, Jr. vs. Marin, 537 SCRA 323
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Heirs of Processo Bautista vs. Barza, 208 SCRA 454
G.R. No. 79167 / May 7, 1992
FACTS: On October 25, 1946, Proceso Bautista applied for a fishpond permit over a 30 hectare parcel of public land located in Sitio Central, Lupon, Davao. On November 9, 1948, the Division of Fisheri es rejected Bautista’s application because the area applied for was needed for firewood production as certified by the Bureau of 11 | P a g e
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Forestry. Between the date of his application and the date of its rejection, Bautista occupied an area which extended beyond the boundary of the one he had applied for and introduced improvements thereon. On September 23, 1948, Ester Barza filed a fishpond application covering an area of 14.85 hectares at Sitio Bundas, Lupon, Davao. The area applied for by Barza overlapped the area originally applied for by Bautista. On February 8, 1949, Bautista filed another fishpond application. The records of the Bureau of Fisheries further show that the 14.85 hectares applied for by Barza was released by the Bureau of Forestry as available for fishpond purposes while the 49 hectares applied for by Bautista was not released by the said bureau. An administrative case arose between Bautista and Barza before the Director of Fisheries and the latter ruled in favor of Barza subject however to reimbursement of the value of the improvements made by Bautista. Bautista appealed to the Secretary of Agriculture and Natural Resources and the latter affirmed the ruling of the Director of Fisheries. Meanwhile, the Director of Fisheries required Barza to remit the amount representing the value of the improvements made by Bautista. However, the parties could not agree on the amount of reimbursement. Bautista moved for the rejection of the fishpond application of Barza in view of her noncompliance with the order of the Director of Fisheries. Barza consigned the sum of P1,789.18 with the then Justice of the Peace of Lupon, Davao. Bautista, however, refused to accept the same. The final reappraisal of the value of the improvements amounted to P9,514.33. Barza filed an action in the Court of First Instance (CFI) against Bautista for the recovery of possession over the area she applied for. Bautista died while the case was pending for resolution. He was substituted by his heirs as defendants. The CFI ruled that the Barzas had not acquired a vested right to possess the areas concerned as they had not complied with the "condition precedent" to such possession - the reimbursement of the value of the improvements made by Bautista. Barza appealed to the Court of Appeals (CA). The CA reversed the decision of the CFI, i t gave great weight to the decision of the Secretary of Agriculture on Barza’s right over the area. Hence, this appeal. ISSUE: Whether Bautista has better right over the area considering that his application was made ahead the application of Barza. RULING: NO, Barza has a better right over the area than Bautista. It should be remembered that until timber or forest lands are released as disposable or alienable, neither the Bureau of Lands nor the Bureau of Fisheries has authority to lease, grant, sell, or otherwise dispose of these lands for homesteads, sales patents, leases for grazing purposes, fishpond leases and other modes of utilization. On October 25, 1946 when Bautista applied for a Fishpond permit, the area applied for could not yet be granted to him as it was yet to be released for public utilization. The situation, however, changed when Barza filed Fishpond Application, for the area had, by then, been opened for fishpond purposes. Thus, even if Bautista were ahead of Barza by two years in terms of occupation, possession and introduction of substantial improvements, he was not placed in a better position than Barza. The priority rule under Fisheries Administrative Order No. 14 applies only to public lands already released by the Bureau of Fisheries. Until such lands had been properly declared available for fishpond purposes, any application is ineffective because there is no disposable land to speak of. Accordingly, Bautista's application was premature and the ruling of the Director of Fisheries on this matter was, therefore, correct. 12 | P a g e
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It should be stressed that the function of administering and disposing of lands of the public domain in the manner prescribed by law is not entrusted to the courts but to executive officials. Matters involved in the grant, cancellation, reinstatement and revision of fishpond licenses and permits are vested under the executive supervision of the appropriate department head, in this case is the Secretary of Agriculture and Natural Resources. 14.
JG Summit Holdings, Inc. vs. Court of Appeals 450 SCRA 1 69
JG Summit Holdings Inc. vs. CA G.R. No. 124293. January 31, 2005 FACTS: The National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. for the construction, operation and management of the Subic National Shipyard, Inc., later became the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, NIDC and Kawasaki would maintain a shareholding proportion of 60%40% and that the parties have the right of first refusal in case of a sale. Through a series of transfers, NIDC’s rights, title and interest in PHILSECO eventually went to the National Government. In the interest of national economy, it was decided that PHILSECO should be privatized by selling 87.67% of its total outstanding capital stock to private entities. After negotiations, it was agreed that Kawasaki’s right of first refusal under the JVA be “exchanged” for the right to top by five percent the highest bid for said shares. Kawasaki that Philyards Holdings, Inc. (PHI), in which it was a stockholder, would exercise this right in its stead.
During bidding, Kawasaki/PHI Consortium is the losing bidder. Even so, because of the right to top by 5% percent the highest bid, it was able to top JG Summit’s bid. JG Summit protested, contending that PHILSECO, as a shipyard is a public utility and, hence, must observe the 60%-40% Filipino-foreign capitalization. By buying 87.67% of PHILSECO’s capital stock at bidding, Kawasaki/PHI in effect now owns more than 40% of t he stock. J.G. Summit alleges that PHILSECO it violates the Constitution as its foreign equity is above 40% and yet owns long-term leasehold rights which are real rights. It cites Article 415 of the Civil Code which includes in the definition of immovable property, contracts for public works, and servitudes and other real rights over immovable property. Moreover, J.G Summit argued that under the Public Land Act, corporations qualified to acquire or hold lands of the public domain are corporations at least 60% of which is owned by Filipino citizens. Hence, the mutual right of first refusal in favor of NIDC and KAWASAKI amounts to a virtual transfer of land to a non-Filipino. ISSUES: * Whether or not PHILSECO is a public utility * Whether or not Kawasaki/PHI can purchase beyond 40% of PHILSECO’s stocks A. 2003 Decision
By nature, a shipyard is not a public utility. A public utility is a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service. 13 | P a g e
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To constitute a public utility, the facility must be necessary for the maintenance of life and occupation of the residents. However, the fact that a business offers services or goods that promote public good and serve the interest of the public does not automatically make it a public utility. Public use is not synonymous with public interest. As its name indicates, the term public utility implies public use and service to the public. The principal determinative characteristic of a public utility is that of service to, or readiness to serve, an indefinite public or portion of the public as such which has a legal right to demand and receive its services or commodities. Stated otherwise, the owner or person in control of a public utility must have devoted it to such use that the public generally or that part of the public which has been served and has accepted the service, has the right to demand that use or service so long as it is continued, with reasonable efficiency and under proper charges. Unlike a private enterprise which independently determines whom it will serve, a public utility holds out generally and may not refuse legitimate demand for service. Thus, Public use means the same as use by the public. The essential feature of the public use is that it is not confined to privileged individuals, but is open to the indefinite public. It is this indefinite or unrestricted quality that gives it its public character. In determining whether a use is public, we must look not only to the character of the business to be done, but also to the proposed mode of doing it. If the use is merely optional with the owners, or the public benefit is merely incidental, it is not a public use, authorizing the exercise of jurisdiction of the public utility commission. There must be, in general, a right which the law compels the owner to give to the general public. It is not enough that the general prosperity of the public is promoted. Public use is not synonymous with public interest. The true criterion by which to judge the character of the use is whether the public may enjoy it by right or only by permission. (Iloilo Ice and Cold Storage Co. vs. Public Utility Board) Applying the criterion laid down in Iloilo to the case at bar, it is crystal clear that a shipyard cannot be considered a public utility. A shipyard is a place or enclosure where ships are built or repaired. Its nature dictates that it serves but a limited clientele whom it may choose to serve at its discretion. While it offers its facilities to whoever may wish to avail of its services, a shipyard is not legally obliged to render its services indiscriminately to the public. It has no legal obligation to render the services sought by each and every client. The fact that it publicly offers its services does not give the public a legal right to demand that such services be rendered. There can be no disagreement that the shipbuilding and ship repair industry is imbued with public interest as it involves the maintenance of the seaworthiness of vessels dedicated to the transportation of either persons or goods. Nevertheless, the fact that a business is affected with public interest does not imply that it is under a duty to serve the public. While the business may be regulated for public good, the regulation cannot justify the classification of a purely private enterprise as a public utility. The legislature cannot, by its mere declaration, make something a public utility which is not in fact such; and a private business operated under private contracts with selected customers and not devoted to public use cannot, by legislative fiat or by order of a public service commission, be declared a public utility, since that would be taking private property for public use without just compensation, which cannot be done consistently with the due process clause. B. 2005 Decision
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Whether KAWASAKI had a valid right of first refusal over PHILSECO shares under the JVA considering that PHILSECO owned land until the time of the bidding and KAWASAKI already held 40% of PHILSECOs equity. The Court uphold the validity of the mutual rights of first refusal under the JVA between KAWASAKI and NIDC. The right of first refusal is a property right of PHILSECO shareholders, KAWASAKI and NIDC, under the terms of their JVA. This right allows them to purchase the shares of their co-shareholder before they are offered to a third party. The agreement of co-shareholders to mutually grant this right to each other, by itself, does not constitute a violation of the provisions of the Constitution limiting land ownership to Filipinos and Filipino corporations. As PHILYARDS correctly puts it, if PHILSECO still owns land, the right of first refusal can be validly assigned to a qualified Filipino entity to maintain the 60%-40% ratio. This transfer, by itself, does not amount to a violation of the Anti-Dummy Laws, absent proof of any fraudulent intent. The transfer could be made either to a nominee or such other party which the holder of the right of first refusal feels it can comfortably do business with. Alternatively, PHILSECO may divest of its landholdings, in which case KAWASAKI, in exercising its right of first refusal, can exceed 40% of PHILSECOs equity. In fact, it can even be said that if the foreign shareholdings of a landholding corporation exceed 40%, it is not the foreign stockholder’s ownership of the shares wh ich is adversely affected but the capacity of the corporation to own land that is, the corporation becomes disqualified to own land. This finds support under the basic corporate law principle that the corporation and its stockholders are separate juridical entities. In this vein, the right of first refusal over shares pertains to the shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that PHILSECO owns land cannot deprive stockholders of their right of first refusal. No law disqualifies a person from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity, what the law disqualifies is the corporation from owning land . This is the clear import of the following provisions in the Constitution: Section 2. 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. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant. xxx xxx xxx Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain. The J.G Summit Holdings further argues that an option to buy land is void in itself (Philippine Banking Corporation v. Lui She, 21 SCRA 52 [1967]). The right of first refusal granted to KAWASAKI, a Japanese corporation, is similarly void. Hence, the right to top, sourced from the right of first refusal, is also void. In Lui She, the option to buy was invalidated because it amounted to a virtual transfer of ownership as the owner could not sell or dispose of his properties. The contract in Lui She prohibited the owner of the land from PROPERTY CASE DI GEST (INCOMPLETE)
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selling, donating, mortgaging, or encumbering the property during the 50-year period of the option to buy. This is not so in the case at bar where the mutual right of first refusal in favor of NIDC and KAWASAKI does not amount to a virtual transfer of land to a non-Filipino. In fact, the case at bar involves a right of first refusal over shares of stock while the Lui She case involves an option to buy the land itself. As discussed earlier, there is a distinction between the shareholders ownership of shares and the corporations’ ownership of land arising from the separate juridical personalities of the corporation and its shareholders.
Moreover, J.G. Summit alleges that PHILSECO continues to violate the Constitution as its foreign equity is above 40% and yet owns long-term leasehold rights which are real rights. It cites Article 415 of the Civil Code which includes in the definition of immovable property, contracts for public works, and servitudes and other real rights over immovable property. Any existing landholding, however, is denied by PHILYARDS citing its recent financial statements. These are questions of fact, the veracity of which would require introduction of evidence. The Court needs to validate these factual allegations based on competent and reliable evidence. As such, the Court cannot resolve the questions they pose. The prohibition in the Constitution applies only to ownership of land. It does not extend to immovable or real property as defined under Article 415 of the Civil Code. Otherwise, we would have a strange situation where the ownership of immovable property such as trees, plants and growing fruit attached to the land would be limited to Filipinos and Filipino corporations only. 15.
Rubiso and Gelito vs. Rivera 37 Phils 72
RUBISO VS. RIVERA (27PHIL72) G.R. No. L- 11407 October 30, 1917 FACTS: Gelito & Co. was owned by Bonifacio Gelito and Chinaman Sy Qui. One of the properties of the company was a pilot ship/merchant vessel called Valentina, whose ownership is at question here.
A series of sales had taken place: 1. First, Gelito had sold is 2/3 share to Chinaman Sy Qui. 2. When Sy Qui acquired full ownership of the company, he sold Valentina to Florentino Rivera for P2,500 on January 4, 1915. The sale was registered in the Bureau of Customs over two months later on March 17, 1915. 3. Shorty after the sale to Rivera, a suit was brought against Sy Qui to enforce payment of a certain sum of money. Valentina was placed at a public auction and was purchased by Sy Qui’s creditor, Fausto Rubiso. He bought the vessel for P55.45. The sale was registered in the Office of the Collector of Customs on January 27, 1915 and in the commercial registry on March 14, 1925. The first buyer, Florentino Rivera, contends that he had lost the ship when it got stranded somewhere in Batangas. He claims that Rubiso took possession of the vessel without his knowledge or consent. Rivera seeks to be indemnified for the profits he co uld have collected from the ve ssel’s voyages had Rivera not take n it. But, does he have the right to the vessel? 16 | P a g e
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ISSUE: Who is the rightful owner of the merchant vessel--Rivera or Rubiso? RULING: Rubiso. It is true that the sale to Rivera had taken place prior to the public auction where Rubiso bought the vessel, but the same was entered in the customs registry only on March 17, 1915. Rubiso, however, had acted more swiftly by registering the property much earlier in the Office of the Collector Customs and in the commercial registry in the same month. Although the sale to Rivera had taken place first, the registration made by Rubiso was made earlier.
Rubiso did the smart thing by registering the property at the commercial registry. Pursuant to Article 573 of the Code of Commerce, the acquisition of a vessel must be registered at the commercial registry in order to bind third parties. Such registration is necessary and indispensible in order that the purchaser’s rights may be maintained against a claim filed by third persons. With respect to the rights of two purchasers, whichever of them first registered his acquisition of the vessel is the one entitled to enjoy the protection of the law. By first registration, he becomes the absolute owner of the boat and is freed from all encumbrances and claims by strangers. 16.
The Diocese of Bacolod vs. Commission on Elections 747 SCRA 1
G.R. No. 205728
January 21, 2015
THE DIOCESE OF BACOLOD, REPRESENTED BY THE MOST REV. BISHOP VICENTE M. NAVARRA and THE BISHOP HIMSELF IN HIS PERSONAL CAPACITY, Petitioners, vs. COMMISSION ON ELECTIONS AND THE ELECTION OFFICER OF BACOLOD CITY, ATTY. MAVIL V. MAJARUCON, Respondents. FACTS: Petitioners posted two (2) tarpaulins within a private compound housing the San Sebastian Cathedral of Bacolod. Each tarpaulin was approximately six feet (6') by ten feet (10') in size. They were posted on the front walls of the cathedral within public view. The first tarpaulin contains the message "IBASURA RH Law" referring to the Reproductive Health Law of 2012 or Republic Act No. 10354. The second tarpaulin is the subject of the present case. This tarpaulin contains the heading "Conscience Vote" and lists candidates as either "(Anti-RH) Team Buhay" with a check mark, or "(Pro-RH) Team Patay" with an "X" mark. The electoral candidates were classified according to their vote on the adoption of Republic Act No. 10354, otherwise known as the RH Law. Those who voted for the passing of the law were classified by petitioners as comprising "Team Patay," while those who voted against it form "Team Buhay".
Respondent Atty. Mavil V. Majarucon, in her capacity as Election Officer of Bacolod City, issued a Notice to Remove Campaign Materials addressed to petitioner Most Rev. Bishop Vicente M. Navarra. The election officer ordered the tarpaulin’s removal within three (3) days from receipt for being oversized. Respondents argue that it is the right of the state to prevent the circumvention of regulations relating to election propaganda by applying such regulations to private individuals. ISSUE: Whether or not there was a violation of petitioner’s right to property. RULING: YES. The Court held that even though the tarpaulin is readily seen by the public, the tarpaulin remains the private property of petitioners. Their right to use their property is likewise protected by the Constitution.
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The Court in Adiong case held that a restriction that regulates where decals and stickers should be posted is “so broad that it encompasses even the citizen’s private property.” Consequently, it violates Article III, Section 1 of the Constitution which provides that no person shall be deprived of his property without due process of law. Property is more than the mere thing which a person owns, it includes the right to acquire, use, and dispose of it. It is more than the mere thing which a person owns. It is elementary that it includes the right to acquire, use, and dispose of it. 17.
Marcelo Soriano vs. Spouses Galit, GR No. 156295, Sept. 23, 2003
MARCELO R. SORIANO, petitioner, vs. SPOUSES RICARDO and ROSALINA GALIT, respondents. [G.R. No. 156295. September 23, 2003] FACTS: Respondent Ricardo Galit contracted a loan from petitioner Marcelo Soriano, in the total sum of P480,000.00, evidenced by four promissory notes in the amount of P120,000.00 each dated August 2, 1996; August 15, 1996; September 4, 1996 and September 14, 1996. This loan was secured by a real estate mortgage over a parcel of land. After he failed to pay his obligation, Soriano filed a complaint for sum of money against him with the Regional Trial Court of Balanga City.
Respondents, the Spouses Ricardo and Rosalina Galit, failed to file their answer. Hence, upon motion of Marcelo Soriano, the trial court declared the spouses in default and proceeded to receive evidence for petitioner Soriano ex parte. On July 7, 1997, the Regional Trial Court of Balanga City, Branch 1 rendered judgment in favor of petitioner Soriano At the sale of the above-enumerated properties at public auction held on December 23, 1998, petitioner was the highest and only bidder with a bid price of P483,000.00. Accordingly, on February 4, 1999, Deputy Sheriff Robles issued a Certificate of Sale of Execution of Real Property. Court of Appeals however nullified the writ of possession because it included a parcel of land which was not among those explicitly enumerated in the Certificate of Sale issued by the Deputy Sheriff, but on which stand the immovables covered by the said Certificate. Petitioner Contented that the issuance of the Certificate of Sale of Execution of Real Property is valid as well as the writ of possession because the same is a public document which enjoys the presumption of regularity and it cannot be overcome by a mere strange feeling that something is amiss on its surface simply because the typewritten words on the front page and at the dorsal portion thereof is different or that it is unlikely for the sheriff to use the dorsal portion of the first page because the second page is merely half filled and the notation on the dorsal portion could still be made at the second page. ISSUES: Whether or not the Court of Appeals gravely erred in declaring the Certificate of Sale on Execution of Real Property as null and void and subsequently the writ of possession HELD: Supreme Court denied the petition. It states that, in construing that the writ of possession being a public document therefore enjoying a presumption of regularity is in valid.
True, public documents by themselves may be adequate to establish the presumption of their validity. However, their probative weight must be evaluated not in isolation but in conjunction with other evidence adduced by the parties in the controversy, much more so in this case where the contents of a copy thereof subsequently registered for documentation purposes is being contested. No reason has been offered how and 18 | P a g e
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why the questioned entry was subsequently intercalated in the copy of the certificate of sale subsequently registered with the Registry of Deeds. Absent any satisfactory explanation as to why said entry was belatedly inserted, the surreptitiousness of its inclusion coupled with the furtive manner of its intercalation casts serious doubt on the authenticity of petitioners copy of the Certificate of Sale. Thus, it has been held that while a public document like a notarized deed of sale is vested with the presumption of regularity, this is not a guarantee of the validity of its contents. The certificate of sale is an accurate record of what properties were actually sold to satisfy the debt. The strictness in the observance of accuracy and correctness in the description of the properties renders the enumeration in the certificate exclusive. Thus, subsequently including properties which have not been explicitly mentioned therein for registration purposes under suspicious circumstances smacks of fraud. The explanation that the land on which the properties sold is necessarily included and, hence, was belatedly typed on the dorsal portion of the copy of the certificate subsequently registered is at best a lame excuse unworthy of belief. The appellate court correctly observed that there was a marked difference in the appearance of the typewritten words appearing on the first page of the copy of the Certificate of Sale registered with the Registry of Deeds and those appearing at the dorsal portion thereof. Underscoring the irregularity of the intercalation is the clearly devious attempt to let such an insertion pass unnoticed by typing the same at the back of the first page instead of on the second page which was merely half-filled and could accommodate the entry with room to spare. The foregoing provision of the Civil Code enumerates land and buildings separately. This can only mean that a building is, by itself, considered immovable. Thus, it has been held that . . . “while it is true that a mortgage of land necessarily includes, in the absence of stipulation of the improvements thereon, buildings, still a building by itself may be mortgaged apart from the land on which it has been built. Such mortgage would be still a real estate mortgage for the building would still be considered immovable property even if dealt with separately and apart from the land.” In this case, considering that what was sold by virtue of the writ of execution issued by the trial court was merely the storehouse and bodega constructed on the parcel of land covered by Transfer Certificate of Title No. T-40785, which by themselves are real properties of respondents spouses, the same should be regarded as separate and distinct from the conveyance of the lot on which they stand.
ARTICLE 416 1.
Sibal vs. Valdez, 50 Phils 512 1927 GR NO. L-27532
DOCTRINE: For the purpose of attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property. (batasnatin) FACTS: As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his tenants on seven parcels of land. That within one year from the date of the attachment and sale the plaintiff offered to redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to cover the price paid by the latter, the interest thereon and any assessments or taxes which he may have paid thereon after the 19 | P a g e
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purchase, and the interest corresponding thereto and that Valdez refused to accept the money and to return the sugar cane to the plaintiff. One of the defenses of the defendant Emiliano J. Valdez is that the sugar cane in question had the nature of personal property and was not, therefore, subject to redemption. The trial court hold that the sugar cane in question was personal property and, as such, was not subject to redemption. ISSUE: Whether the sugar cane in question is personal or real property under civil code? Under chattel mortgage law? HELD: The court ruled that It is contended that sugar cane comes under the classification of real property as "ungathered products" in paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of article 334 enumerates as real property the following: Trees, plants, and ungathered products, while they are annexed to the land or form an integral part of any immovable property."
We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products" have the nature of personal property. The lower court, therefore, committed no error in holding that the sugar cane in question was personal property and, as such, was not subject to redemption. 2.
Laurel vs. Abrogas, 576 SCRA 41 2009
DOCTRINE: Telecommunication services and the business of providing said services are not personal properties and cannot be subject to Article 308 of the Revised Penal Code
Services in business, although properties, are not proper subjects of theft under the Revised Penal Code because the same cannot be "taken" or "occupied". FACTS: PLDT claims that Luis Marcos P. Laurel, board member and corporate secretary of Baynet Co., Ltd., stole and used the international long distance calls belonging to PLDT by conducting International Simple Resale (ISR) – a method of routing and completing international long distance calls using lines, cables, antennae, and/or air wave frequency which connect directly to the local or domestic exchange facilities of the country where the call is destined. PLDT alleged that such business was effectively stolen while using their facilities leading to great damage and prejudice amounting to P20,370,651.92.
Laurel however alleged that the allegations do not constitue the felony of theft under Article 308 of the RPC or any special law. He claimed that, telephone calls with the use of PLDT telephone lines, whether domestic or international, belong to the persons making the call, not to PLDT. He argued that the caller merely uses the facilities of PLDT, and what the latter owns are the telecommunication infrastructures or facilities through which the call is made. He also asserted that PLDT is com pensated for the caller’s use of its facilities by way of rental; for an outgoing overseas call, PLDT charges the caller per minute, based on the duration of the call. Thus, no personal property was stolen from PLDT. The prosecution asserted that the use of P LDT’s intangible telephone services/facilities allows electronic voice signals to pass through the same, and ultimately to the called party’s number. It averred that such service/facility is akin to electricity which, although an intangible property, may, nevertheless, be appropriated and be the subject of theft. The prosecution further alleged that "international business calls and revenues constitute personal property envisaged in Article 308 of the Revised Penal Code." Moreover, the intangible telephone services/facilities belong to PLDT and not to the movant and the other accused, because they have
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no telephone services and facilities of their own duly authorized by the NTC; thus, the taking by the movant and his co-accused of PLDT services was with intent to g ain and without the latter’s consent. ISSUE: W/N telephone calls placed by Bay Super Orient Card holders through the telecommunication services provided by PLDT are considered as personal property, and thus, proper subjects of theft under Article 308 of the Revised Penal Code. -- NO HELD: The court finds that the international telephone calls placed by Bay Super Orient Card holders, the telecommunication services provided by PLDT and its business of providing said services are not personal properties under Article 308 of the Revised Penal Code. The rule is that, penal laws are to be construed strictly. Penal statutes may not be enlarged by implication or intent beyond the fair meaning of the language used; and may not be held to include offenses other than those which are clearly described.
One is apt to conclude that "personal property" standing alone, covers both tangible and intangible properties and are subject of theft under the Revised Penal Code. But the words "Personal property" under the Revised Penal Code must be considered in tandem with the word "take" in the law. The statutory definition of "taking" and movable property indicates that, clearly, not all personal properties may be the proper subjects of theft. The general rule is that, only movable properties which have physical or material existence and susceptible of occupation by another are proper objects of theft. According to Cuello Callon, in the context of the Penal Code, only those movable properties which can be taken and carried from the place they are found are proper subjects of theft. Intangible properties such as rights and ideas are not subject of theft because the same cannot be "taken" from the place it is found and is occupied or appropriated. Gas and electrical energy should not be equated with business or services provided by business entrepreneurs to the public. Business does not have an exact definition. Business is referred as that which occupies the time, attention and labor of men for the purpose of livelihood or profit. It embraces everything that which a person can be employed. Business may also mean employment, occupation or profession. Business is also defined as a commercial activity for gain benefit or advantage. Business, like services in business, although are properties, are not proper subjects of theft under the Revised Penal Code because the same cannot be "taken" or "occupied." PLDT does not acquire possession, much less, ownership of the voices of the telephone callers or of the electronic voice signals or current emanating from said calls. The human voice and the electronic voice signals or current caused thereby are intangible and not susceptible of possession, occupation or appropriation by PLDT or even the petitioner, for that matter. PLDT merely transmits the electronic voice signals through its facilities and equipment. Baynet Card Ltd., through its operator, merely intercepts, reroutes the calls and passes them to its toll center. 3.
US vs. Carlos 21 Phils 553, 1911
DOCTRINE: The true test of what constitutes the proper subject of [theft] is not whether the subject is corporeal or incorporeal, but whether it is capable of appropriation by another other than the owner. FACTS: Ignacio Carlos has been a consumer of electricity furnished by MERALCO for a building containing the residence of the accused and 3 other residences. Representatives of the company believing that more light is consumed than what is shown in the meter installed an addi tional meter on the pole outside Carlos’ house to compare the actual consumption and found out that a jumper was used to manipulate the readings of the first meter. Further, a jumper was found in a drawer of a small cabinet in the room of the defendant’s house where 21 | P a g e
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the meter was installed. In the absence of any explanation for Carlos’ possession of said device, the presumption raised was that Carlos was the owner of the device whose only use was to deflect the current from the meter. Thus, he was charged with the crime of theft amounting to 2,273KW of electric power worth 909.20 pesos.
Carlos claimed that what he did failed to constitute an offense because the crime of theft applies only to tangibles, chattels and objects that can be taken into possession. Deliberation quickly followed at the court which subsequently sentenced him to over a year in jail. Carlos contested saying that electrical energy can’t be stolen because of its nature of being incorporeal. He filed an appeal on such grounds which the CFI affirmed. ISSUE: Whether or not theft can be committed against an intangible such as electricity. -- YES HELD: Theft of incorporeal objects is possible. The right of ownership of electrical current was secured by Art 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 it 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 (under Art. 416 of the New Civil Code). Carlos secretly and with intent to deprive the company of its rightful property, used jumper cables to appropriate the same for his own use. Such acts constitute theft.
4.
Board of Assessment Appeals vs. Manila Electric Co. 119 Phils 328
FACTS: On November 15, 1955, the QC City Assessor declared the MERALCO's steel towers subject to real property tax. After the denial of MERALCO's petition to cancel these declarations, an appeal was taken to the QC Board of Assessment Appeals, which required respondent to pay 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 (CTA) which rendered a decision ordering the cancellation of the said tax declarations and the refunding to MERALCO by the QC City Treasurer of P11,651.86. ISSUE: Are the steel towers or poles of the MERALCO considered real or personal properties? HELD: Pole – long, comparatively slender, usually cylindrical piece of wood, timber, object of metal or the like; an upright standard to the top of which something is affixed or by which something is supported. MERALCO's steel supports consists of a framework of 4 steel bars/strips which are bound by steel cross-arms atop of which are cross-arms supporting 5 high-voltage transmission wires, and their sole function is to support/carry such wires. The exemption granted to poles as quoted from Part II, Par.9 of respondent's franchise is determined by the use to which such poles are dedicated. It is evident that the word “poles”, as used in Act No. 484 and incorporated in the petitioner's franchise, should not be given a restrictive and narrow interpretation, as to defeat the very object for which the franchise was granted. The poles should be taken and understood as part of MERALCO's electric power system for the conveyance of electric current to its consumers.
Art. 415 of the NCC classifies the following as immovable property: (1) Lands, buildings, roads and constructions of all kinds adhered to the soil; 22 | P a g e
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xxx (3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object; xxx (5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for an industry ot 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; Following these classifications, MERALCO's steel towers should be considered personal property . It should be noted that the steel towers: (a) are neither buildings or constructions adhered to the soil; (b) are not attached to an immovable in a fixed manner – they can be separated without breaking the material or deterioration of the object; (c) are not machineries, receptacles or instruments, and even if they are, they are not intended for an industry to be carried on in the premises. 5.
Navarro vs. Pineda 9 SCRA 631, 1963
DOCTRINE: Estoppel, in that "the parties have so expressly agreed " in the mortgage to consider the house as chattel "for its smallness and mixed materials of sawali and wood". FACTS: December 14, 1959, Rufino G. Pineda and his mother Juana Gonzales (married to Gregorio Pineda), borrowed from plaintiff Conrado P. Navarro, the sum of P2,500.00, payable 6 months after said date or on June 14, 1959. To secure the indebtedness, Rufino executed a document captioned "DEED OF REAL ESTATE and CHATTEL MORTGAGES", whereby Juana Gonzales, by way of Real Estate Mortgage hypothecated a parcel of land, belonging to her, registered with the Register of Deeds of Tarlac, under Transfer Certificate of Title No. 25776, and Rufino G. Pineda, by way of Chattel Mortgage , mortgaged his two-story residential house, having a floor area of 912 square meters, erected on a lot belonging to Atty. Vicente Castro, located at Bo. San Roque, Tarlac, Tarlac; and one motor truck, registered in his name, under Motor Vehicle Registration Certificate No. A-171806. Both mortgages were contained in one instrument, which was registered in both the Office of the Register of Deeds and the Motor Vehicles Office of Tarlac.
After failing to settle amount due, respondent was then granted an extension on June 30,1960 and consequently July 30th of the same year for still being unable to comply. Rufino Pineda then issued a document entitled "Promise," stating that defendant would no longer ask for further extension and there would be no need for any formal demand, and plaintiff could proceed to take whatever action he might desire to enforce his rights, under the said mortgage contract. On August 10, 1960, plaintiff filed a complaint for foreclosure of the mortgage and for damages, which consisted of liquidated damages in the sum of P500.00 and 12% per annum interest on the principal, effective on the date of maturity, until fully paid. Defendants admit that the loan is overdue but deny that portion of paragraph 4 of the First Cause of Action which states that the defendants unreasonably failed and refuse to pay their obligation to the plaintiff the truth being the defendants are hard up these days and pleaded to the plaintiff to grant them more time within which to pay their obligation and the plaintiff refused; WHEREFORE, in view of the foregoing it is most respectfully prayed that this Honorable Court render judgment granting the defendants until January 31, 1961, within which to pay their obligation to the plaintiff. November 11, 1960, however, the parties submitted a Stipulation of Facts, wherein the defendants admitted 23 | P a g e
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the indebtedness, the authenticity and due execution of the Real Estate and Chattel Mortgages; that the indebtedness has been due and unpaid since June 14, 1960; that a liability of 12% per annum as interest was agreed, upon failure to pay the principal when due and P500.00 as liquidated damages; that the instrument had been registered in the Registry of Property and Motor Vehicles Office, both of the province of Tarlac. ISSUE: W/N the residential house, subject of the mortgage therein, can be considered a Chattel and the propriety of the attorney's fees. HELD: The court ruled "a property may have a character different from that imputed to it in said articles. It is undeniable that the parties to a contract may by agreement, treat as personal property that which by nature would be real property" (Standard Oil Co. of N.Y. v. Jaranillo, 44 Phil. 632-633)."There can not be any question that a building of mixed materials may be the subject of a chattel mortgage, in which case, it is considered as between the parties as personal property. ... The matter depends on the circumstances and the intention of the parties". "Personal property may retain its character as such where it is so agreed by the parties interested even though annexed to the realty ...". (42 Am. Jur. 209-210, cited in Manarang, et al. v. Ofilada, et al., G.R. No. L-8133, May 18, 1956; 52 O.G. No. 8, p. 3954.) Moreover, the court continues and makes plain that it "is good only insofar as the contracting parties are concerned. It is based partly, upon the principles of estoppel ..." (Evangelista v. Alto Surety, No. L-11139, Apr. 23, 1958). WHEREBY, previous judgment is hereby AFFIRMED costs against appelant. 6.
Tsai vs. Court of Appeals, 366 SCRA 324, GR No. 120098
DOCTRINE: Even if the properties are immovable by nature, nothing detracts the parties from treating them as chattels to secure an obligation under the principle of estoppel. FACTS:
EVERTEX secured a loan from PBC, guaranteed by real estate and chattel mortgage over a parcel of land where the factory stands, and the chattels located therein, as included in a schedule attached to the mortgage contract. another loan was obtained secured by a chattel mortgage over properties with similar descriptions listed in the first schedule. ● During the date of execution of the second mortgage. EVERTEX purchased machineries and equipment. ● Due to business reverses, EVERTEX filed for insolvency proceedings. It failed to pay its obligation and thus, PBC initiated extrajudicial foreclosure of the mortgages. ● PBC was the highest bidder in the public auctions, making it the owner of the properties. It then leased the factory premises to Tsai. ● Afterwards, EVERTEX sought the annulment of the sale and conveyance of the properties to PBC as it was allegedly a violation of the insolvency law. ● The RTC held that the lease and sale were irregular as it involved properties not included in the schedule of the mortgage contract. ●
ISSUE: Whether or not the (immovable) properties in question can be entered into a chattel mortgage. -- YES HELD: An immovable may be considered a personal property if there is a stipulation as when it is used as security in the payment of an obligation where a chattel mortgage is executed over it, as in the case at bar. While it is true that the controverted properties appear to be immobile, a perusal of the contract of real estate mortgage and chattel mortgage by the parties gives a contrary indication. Both the trial and appellate courts show that the intention was to treat the machineries as movables or personal property.
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chattels to secure an obligation under the principle of estoppel. 7. 8. 9.
Valino vs. Adriano, 723 SCRA 1 People vs. Jumawan, 722 SCRA 108 Strocker vs. Ramirez, 44 Phils 933, 1922
Involuntary Insolvency of Strochecker v. Ramirez, 44 Phil. 933 DOCTRINE: All personal properties may be mortgaged. Interest in business is personal property capable of appropriation and not included in the enumeration of real properties under Article 335 of the Civil Code. Thus, interest in business may be subject of mortgage. FACTS: Three mortgages seek preference in the lower court: one in favor of Fidelity and Surety Co., another in favor of Ramirez, and the last one in favor of Ayala. Ayala’s claim was rejected by trial court from which she didn’t appeal.
As to the time of the mortgages, the one in favor of Fidelity and Surety Co. is preferred because it was executed and registered in the registry of pr operty prior to that of Ramirez’s. However, Ramirez claimed that the mortgage in favor of Fidelity and Surety Co. is invalid because the property, the half interest in the drug business, is incapable of being mortgaged. Trial court ruled that the mortgage in favor of Fidelity and Surety Co. is entitled to preference. ISSUE: Whether or not one-half interest in the business is capable of being mortgaged. -- YES HELD: YES. All personal properties may be mortgaged. Interest in business is personal property capable of appropriation and not included in the enumeration of real properties under Article 335 of the Civil Code. Thus, interest in business may be subject of mortgage.
In this case, the mortgaged property of one-half interest in the drug business in favor of Fidelity and Surety Co. is a valid subject of mortgage.
10.
Tufexis v. Olaguera and Municipal Council of Guinobatan 32 Phils 654, 1915
DOCTRINE: Special concession of the right to usufruct in a public market cannot be attached like any ordinary right Facts: During the Spanish regime, Pardo Cabañas was allowed by the Spanish government to have the usufruct of the public market for 40 years. Pardo Cabañas died, and the usufruct was inherited by Ricardo Pujol, his son. When Ricardo Pujol, became indebted, his properties were sold in an auction sale, and the usufruct was bought by Vergo Tufexis. The a fire destroyed the market. The Council granted b the right to reconstruct the building and continue the usufruct. Vergo Tufexis complained on the ground that he bought at the auction sale Ricardo Pujol’s usufruct. Issue: Whether or not Vergo Tufexis can be given the usufruct and administration of the market. Ruling: Vergo Tufexis cannot be given the right because the right is public character and could not be bought at an auction sale. What he should have done before the building was burned was to attach the income already received by Ricardo Pujol. For Vergo Tufexis now to take Ricar do Pujol’s place is contrary to law, for this would be allowing a stranger who had not been selected by the government, to take over a public function. On the 25 | P a g e
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hand, the transfer of A to B is personal, and is transferrable only by inheritance. C not being an heir, cannot therefore exercise the right. Where the public market had been levied upon by virtue of the execution arising from the debt of the municipality of Guinobatan, that “even though a creditor is unquestionably entitled to recover out of his debtor's property, yet when among such property there is included the special right granted by the Government of usufruct in a building intended for a public service, and when this privilege is closely related to a service of a public character, such right of the creditor to the collection of a debt owed him by the debtor who enjoys the said special privilege of usufruct in a public market is not absolute and may be exercised only through the action of a court of justice with respect to the profits or revenue obtained under the special right of usufruct enjoyed by debtor. The special concession of the right to usufruct in a public market cannot be attached like any ordinary right, because that would be to permit a person who has contracted with the state or with the administrative officials thereof to conduct and manage a service of a public character, to be substituted, without the knowledge and consent of the administrative authorities, by one who took no part in the contract, thus giving rise to the possibility of the regular course of a public service being disturbed by the more or less legal action of a grantee, to the prejudice of the state and the public interests. The privilege or franchise granted to a private person to enjoy the usufruct of a public market cannot lawfully be attached and sold, and a creditor of such person can recover his debt only out of the income or revenue obtained by the debtor from the enjoyment or usufruct of the said privilege, in the same manner that the rights of the creditors of a railroad company can be exercised and their creditors collected only out of the gross receipts remaining after deduction has been made therefrom of the operating expenses of the road. “
ARTICLE 419 Ramos-Balalio vs. Ramos, 479 SCRA 533
ARTICLE 420 1.
Villarico vs. Sarmiento, 442 SCRA 110, 2004
FACTS: Villarico here is an owner of a lot that is separated from the Ninoy Aquino Avenue highway by a strip of land belonging to the government.
Sarmiento had a building constructed on a portion of the said government land and a part thereof was occupied by Andoks Litson Corp. In 1993, by means of a Deed of Exchange of Real Property, Villarico acquired a portion of the same area owned by the government. He then filed an accion publiciana alleging that respondents (Sarmiento) on the government land closed his right of way to the Ninoy Aquino Avenue and encroached on a portion of his lot. ISSUE: Whether or not VIllarico has a right of way to the NAA. RULING: No. It is not disputed in this case that the alleged right of way to the lot belongs to the state or 26 | P a g e
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property of public dominion. It is intended for public use meaning that it is not confined to privileged individuals but is open to the indefinite public. Records show that the lot on which the stairways were built is for the use of the people as passageway hence, it is a property for public dominion. Public dominion property is outside the commerce of man and hence, it cannot be: Alienated or leased or otherwise be the subject matter of contracts Acquired by prescription against the state Cannot be the subject of attachment and execution Be burdened by any voluntary easement It cannot be burdened by a voluntary easement of right of way in favor of the petitioner and petitioner cannot appropriate it for himself and he cannot claim any right of possession over it.
3. 4.
2. Domaisin vs. Valenciano, GR No. 158678, Jan. 25, 2006 Spouses Morandante and Febreras vs. CA, GR No. 123586 Aug. 12, 2004
MIAA vs. CA, 495 SCRA 591
MIAA v. Court of Appeals G.R. No. 155650 DOCTRINE: The term “ports” includes seaports and airports. The MIAA Airport Lands and Buildings constitute a “port” constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines. FACTS: Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport Complex in Parañaque City. As operator of the international airport, MIAA administers the land, improvements and equipment within the NAIA Complex.
The MIAA Charter transferred to MIAA approximately 600 hectares of land including the runways and buildings (“Airport Lands and Buildings”) then under the Bureau of Air Transportatio n. The MIAA Charter further provides that no portion of the land transferred to MIAA shall be disposed of through sale or any other mode unless specifically approved by the President of the Philippines. OGCC (Office of the Government Corporate Counsel) issued Opinion No. 061, in which it said that the Local Government Code of 1991 withdrew the exemption for real estate tax granted to MIAA under Section 21 of the MIAA charter. Therefore, MIAA was held to be delinquent in paying its taxes. The City of Parañaque Levied upon the properties of MIAA, and posted invitations for public biddings of MIAA’s properties. MIAA filed with CA an action for prohibition / injunction. The City of Parañaque averred that Section 193 of the Local Government code expressly withdrew tax exemptions from government owned and controlled corporations (GOCCs). CA dismissed the petition for filing beyond the 60 day reglementary period ISSUE: Whether properties of the MIAA are subject to real estate taxes. -- NO 27 | P a g e
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HELD: In the first place, MIAA is not a GOCC, it is an instrumentality of the government. MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any other government instrumentality, the only difference is that MIAA is vested with corporate powers. As operator of the international airport, MIAA administers the land, improvements and equipment within the NAIA Complex. The MIAA Charter transferred to MIAA approximately 600 hectares of land, including the runways and buildings (“Airport Lands and Buildings”) then under the Bureau of Air Transportation. The MIAA Charter further provides that no portion of the land transferred to MIAA shall be disposed of through sale or any other mode unless specifically approved by the President of the Philippines.
Furthermore, Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. Article 419 of the Civil Code provides, The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. The Civil Code provides: ARTICLE 419. Property is either of public dominion or of private ownership.
ARTICLE 420. The following things are property 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; (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth. (Emphasis supplied) ARTICLE 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property. ARTICLE 422. 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. No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like “roads, canals, rivers, torrents, ports and bridges constructed by the State,” are owned by the State. The term “ports” includes seaports and airports. The MIAA Airport Lands and Buildings constitute a “port” construc ted by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines. The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation. The fact that the MIAA collects terminal fees and other charges from the public does not remove the character of the Airport Lands and Buildings as properties for public use. The operation by the government of a tollway does not change the character of the road as one for public use. Someone must pay for the maintenance of the road, either the public indirectly through the taxes they pay the government, or only those among the public who actually use the road through the toll fees they pay upon using the road. The tollway system is even a more efficient and equitable manner of taxing the public for the maintenance of public roads. The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. Article 420 of t he Civil Code defines property of public dominion as one “intended for public use.” Even if the government collects toll fees, the road is still “intended for public use” if anyone can use the road under the same terms and conditions as the rest of the public. The charging of fees, the limitation on the kind of vehicles that can use the road, the speed restrictions and other conditions for the use of the road do PROPERTY CASE DI GEST (INCOMPLETE)
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not affect the public character of the road. The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines, constitute the bulk of the income that maintains the operations of MIAA. The collection of such fees does not change the character of MIAA as an airport for public use. Such fees are often termed user’s tax. This means taxing those among the public who actually use a public facility instead of taxing all the public including those who never use the particular public facility. A user’s tax is more equitable — a principle of taxation mandated in the 1987 Constitution. The Airport Lands and Buildings of MIAA, which its Charter calls the “principal airport of the Philippines for both international and domestic air traffic,” are properties of public dominion because they are intended for public use. As properties of public dominion, they indisputably belong to the State or the Republic of the Philippines.
Being a property of public dominion, the properties of MIAA are beyond the commerce of man.
5.
Mactan Cebu International Airport Authority vs. City of Lapu-Lapu, 757 SCRA 323
6.
Laurel vs. Garcia, 187 SCRA 797, 1990
DOCTRINE: An abandonment of the intention to use the property for public service and to make it patrimonial property under Article 422 of the Civil Code must be definite Abandonment and it cannot be inferred from the non-use alone specially if the non-use was attributable not to the government's own deliberate and indubitable will but to a lack of financial support to repair and improve the property Abandonment must be a certain and positive act based on correct legal premises. FACTS: These are two petitions for prohibition seeking to enjoin respondents, their representatives and agents from proceeding with the bidding for the sale of the 3,179 square meters of land at Tokyo, Japan scheduled on February 21, 1990.
The subject property in this case is 1 of the 4 properties in Japan acquired by the Philippine government under the Reparations Agreement entered into with Japan on May 9, 1956. 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. A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos J. Valdez, to make the property the subject of a lease agreement with a Japanese firm. No change of ownership or title shall occur. The Philippine government retains the title all throughout the lease period and thereafter. However, the government has not acted favorably. On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to avail of separations' capital goods and services in the event of sale, lease or disposition. The four properties in Japan including the Roppongi were specifically mentioned in the first "Whereas" clause. Amidst opposition by various sectors, the Executive branch of the government has been pushing its decision to sell the reparations properties starting with the Roppongi lot. The property has twice been set for bidding at a minimum floor price of $225 million. 29 | P a g e
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ISSUE: W/N the Roppongi property and others of its kind be alienated by the Philippine Government. -- NO HELD: NO, the subject property cannot be alienated by the government, even if the property has not been in use for a long time.
Vice President Laurel asserts that the lands were acquired as part of the reparations for diplomatic and consular use by the Philippine government. Laurel states that the Roppongi property is classified as one of public dominion, and not of private ownership under Article 420 of the Civil Code. The petitioner submits that the Roppongi property comes under "property intended for public service" in paragraph 2 of the above provision. He states that being one of public dominion, no ownership by anyone can attach to it, not even by the State. The Roppongi and related properties were acquired for "sites for chancery, diplomatic, and consular quarters, buildings and other improvements. The petitioner states that they continue to be intended for a necessary service. They are held by the State in anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the commerce of man, or to put it in more simple terms, it cannot be alienated nor be the subject matter of contracts (Citing Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at the moment, the petitioner avers that the same remains property of public dominion so long as the government has not used it for other purposes nor adopted any measure constituting a removal of its original purpose or use. 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 enjoyment, an application to the satisfaction of collective needs, and resides in the social group. The purpose is not to serve the State as a juridical person, but the citizens; it is intended for the common and public welfare and cannot be the object of appropration The applicable provisions of the Civil Code are: ART. 419. Property is either of public dominion or of private ownership. ART. 420. The following things are property of public dominion Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges (1) constructed by the State, banks shores roadsteads, and others of similar character; (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth. ART. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property. The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property belonging to the State and intended for some public service. The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public use. A property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from being such. An abandonment of the intention to use the Roppongi property for public service and to make it patrimonial property under Article 422 of the Civil Code must be definite Abandonment cannot be inferred from the nonuse alone specially if the non-use was attributable not to the government's own deliberate and indubitable will but to a lack of financial support to repair and improve the property Abandonment must be a certain and positive act based on correct legal premises. 30 | P a g e
PROPERTY
CASE
DI GEST
(INCOMPLETE)
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