CASE #1 LEUNG YEE VS. FRANK L.

STRONG MACHINERY COMPANY

Compania Agricola Filipina bought rice cleaning machinery from the

defendant machinery company. It executed a chattel mortgage for
the building of strong materials in w/c the machinery was installed
(without reference on the land in w/c it was installed). The
mortgage was registered in the chattel mortgage registry.

Issue: Whether the building is a property which can be a subject of a

chattel mortgage.

Held: The building cannot be a subject of chattel mortgage.

The building is a real property. Inscription of sale of real property in

a chattel mortgage registry cannot be given the legal effect of an
inscription in the registry of real property. Chattel mortgage is for
personal property mortgages only.

The building of strong materials was real property and the mere fact
that the parties seem to have dealt with it separate and apart from
the land on w/c it stood in no wise changed its character as real
property.
 Davao Sawmill v. Castillo Held:
61 Phil 709, August 7, 1935 The court found the machineries to be
PERSONAL PROPERTY. As a rule, machinery should
be considered as personal since it was not placed on the
land by the owner of the land. Immobilization by
destination or purpose cannot generally be made by a
Facts: person whose possession of the property is only
TEMPORARY because machinery which is movable in
Davao Saw Mill Co., Inc., is the holder of a lumber its nature only becomes immobilized when placed in a
concession from the Government of the Philippine land by the owner of the land, unless such person acted
Islands operating in the sitio of Maa, barrio of Tigatu, as the agent of the owner.
municipality of Davao, Province of Davao. However, the
land upon which the business was conducted belonged
to another person. On the land, the sawmill company
erected a building which housed the machinery used by
it. Some machines were placed and mounted on
foundations of cement. In the contract of lease between
the owner of the land and the sawmill company, it was
stipulated that, on the expiration of the period agreed
upon or in the event the latter abandon the land leased,
all the improvements and buildings introduced and
erected by the latter shall pass to the exclusive
ownership of the former without any obligation on its part
to pay any amount for said improvements and buildings;
provided that the machineries and accessories are not
included in the improvements which will pass to the
former.
Issue:
Whether or not the machineries are personal
property.
 G.R. No. L-17870 September 29, 1962 Issue:

MINDANAO BUS COMPANY vs. THE CITY ASSESSOR & Whether or not the above mentioned equipments are
TREASURER and the BOARD OF TAX APPEALS of immovable properties subject to realty tax.
Cagayan de Oro City
Ruling:
Facts:
No. The equipments are movable properties. Movable
The petitioner is engaged in transporting passengers and equipments to be immobilized in contemplation of law must
cargoes by motor trucks, over its authorized lines in the Island first be essential and principal elements of an industry or works
of Mindanao, collecting rates approved by the Public Service without which such industry or works would be unable to
Commission. Respondents sought to assess the following real function or carry on the industrial purpose for which it was
properties of the petitioner: established. We may here distinguish those movables, which
are essential and principal elements of an industry, from those
(a) Hobart Electric Welder Machine; which may not be so considered immobilized by destination
(b) Storm Boring Machine; because they are merely incidental, not essential and principal.
(c) Lathe machine with motor; In this case, the tools and equipments in question are by their
(d) Black and Decker Grinder; nature not essential and principal elements of petitioners
(e) PEMCO Hydraulic Press; business of transporting passengers and cargoes by motor
(f) Battery charger (Tungar charge machine); and trucks. They are merely incidentals.
(g) D-Engine Waukesha-M-Fuel.
Aside from the element of essentiality the above-quoted provision
The following equipments were placed on wooden or cement also requires that the industry or works be carried on in a building or
platforms and can be moved around in the bus companys on a piece of land. Thus in the case of Berkenkotter vs. Cu Unjieng,
repair shop. Respondent City Assessor assessed at P4,400 supra, the "machinery, liquid containers, and instruments or
petitioner's above-mentioned equipment. Aggrieved, petitioner implements" are found in a building constructed on the land. A
appealed the assessment on the ground that the same are not sawmill would also be installed in a building on land more or less
realty. On the other hand, respondents contend that said permanently, and the sawing is conducted in the land or building.
equipments, though movable, are immobilized by destination,
in accordance with paragraph 5 of Article 415 of the New Civil But in the case at bar the equipments in question are destined only to
Code. repair or service the transportation business, which is not carried on
in a building or permanently on a piece of land, as demanded by the
law. Said equipments may not, therefore, be deemed real property.
[G.R. No. 137705. August 22, 2000]
SERGS PRODUCTS, INC., and SERGIO T.
GOQUIOLAY, petitioners, vs. PCI LEASING AND
FINANCE, INC., respondent.
FACTS:
PCI Leasing upon its ex-parte application, the judge
issued a writ of replevin. In implementation of said writ,
the sheriff proceeded to Sergs Products factory and
seized one machinery.
Sergs Products Inc., 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.
ISSUE:
Whether or not the machineries purchased and
imported by SERGS became real property by virtue of
immobilization.
RULING:
ART. 415. The following are immovable property:
(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 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 chocolate-making industry.
Hence, although each of them was movable or personal
property on its own, all of them have become
immobilized by destination because they are essential
and principal elements in the industry.1[16] 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
BUT said machines are still 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. 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.
BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and
CITY TREASURER OF QUEZON CITY vs. MANILA ELECTRIC
COMPANY
Facts: Philippine Commission enacted Act No. 484 which authorized
the Municipal Board of Manila to grant a franchise to construct,
maintain and operate an electric street railway and electric light, heat
and power system in the City of Manila and its suburbs to the person
or persons making the most favorable bid. Respondent Manila
Electric Co. became the transferee and owner of the franchise.
The electric transmission wires which carry high voltage current, are
fastened to insulators attached on steel towers constructed by
respondent at intervals, from its hydro-electric plant in the province of
Laguna to the City of Manila. The respondent Meralco has
constructed 40 of these steel towers within Quezon City, on land
belonging to it. Three steel towers were inspected by the lower court
and parties.
Petitioner City Assessor of Quezon City declared the aforesaid steel
towers for real property tax and required respondent to pay the
amount of P11,651.86 as real property tax on the said steel towers
for the years 1952 to 1956. Respondent paid the amount under
protest, and filed a petition for review in the Court of Tax Appeals
which rendered a decision ordering the cancellation of the said tax
declarations and the petitioner City Treasurer of Quezon City to
refund to the respondent the sum of P11,651.86.
Issue: Whether or not Meralco's steel towers are considered real
properties so that they can be subject to real property tax.
Ruling: No. 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 as contemplated
thereon, should be understood and taken as a part of the electric
power system of the respondent Meralco, for the conveyance of
electric current from the source thereof to its consumers.
Article 415 of the Civil Code stated that the following are immovable
property:
(1) Land, buildings, roads, and constructions of all kinds adhered to
the soil;
(3) Everything attached to an immovable in a fixed manner, in such a
way that it cannot be separated therefrom without breaking the
material or deterioration of the object;
(5) Machinery, receptacles, instruments or implements intended by
the owner of the tenement for an industry or works which may be
carried in a building or on a piece of land, and which tends directly to
meet the needs of the said industry or works;
The steel towers or supports in question, do not come within
the objects mentioned in paragraph 1, because they do not
constitute buildings or constructions adhered to the soil. They are not
construction analogous to buildings nor adhering to the soil. As per
description, given by the lower court, they are removable and merely
attached to a square metal frame by means of bolts, which when
unscrewed could easily be dismantled and moved from place to
place.
They cannot be included under paragraph 3, as they are not
attached to an immovable in a fixed manner, and they can be
separated without breaking the material or causing deterioration
upon the object to which they are attached. Each of these steel
towers or supports consists of steel bars or metal strips, joined
together by means of bolts, which can be disassembled by
unscrewing the bolts and reassembled by screwing the same.
These steel towers or supports do not also fall under
paragraph 5, for they are not machineries, receptacles, instruments
or implements, and even if they were, they are not intended for
industry or works on the land. Petitioner is not engaged in an
industry or works in the land in which the steel supports or towers
are constructed.
MANILA ELECTRIC COMPANY v City Assessor
GR No. 166102
August 5, 2015
Leonardo-De Castro, J.
Facts:
Petitioner Manila Electric Company (MERALCO) is a private
corporation operating as public utility that is engaged in electric
distribution. MERALCO has been granted franchises to operate in
Lucena City.
The city assessor of Lucena alleges that MERALCO the
transformers, transmission lines, insulators, and electric meters
mounted on the electric posts of MERALCO, were real properties.
Consequently, they must pay for real property taxes.
Issue: whether or not the steel supports or towers constitute real
property
Held:
Yes. The Court held that properties, including machineries become
immobilized if the following requisites concur:
a. They are placed in the tenement by the owner of such
tenement;
b. They are destined for use in the industry or work in the
tenement;
c. They tend to directly meet the needs of said industry or
works.
The Court held that the properties under Article 415 (5) of the Civil
Code are immovables by destination, or those which are essentially
movables, but by the purpose for which they have been placed in an
immovable, partake of the nature of the latter because of the added
utility derived therefrom
While the Local Government Code still does not provide for a
specific definition of "real property," Sections 199(o) and 232 of the
said Code, respectively, gives an extensive definition of what
constitutes "machinery" and unequivocally subjects such machinery
to real property tax. The Court reiterates that the machinery subject
to real property tax under the Local Government Code "may or may
not be attached, permanently or temporarily to the real property;" and
the physical facilities for production, installations, and appurtenant
service facilities, those which are mobile, self-powered or self-
propelled, or are not permanently attached must:
(a) be actually, directly, and exclusively used to
meet the needs of the particular industry,
business, or activity; and
(b) by their very nature and purpose, be designed
for, or necessary for manufacturing, mining,
logging, commercial, industrial, or agricultural
purposes.

PROVINCIAL ASSESSOR OF AGUSAN DEL SUR vs.
FILIPINAS PALM OIL PLANTATION, INC
G.R. No. 183416, October 05, 2016
FACTS:
The exemption from real property taxes given to the
cooperatives applies regardless of whether or not the land
owned is leased. This exemption benefits the cooperatives
lessee. The characterization of machinery as real property is
governed by the Local Government Code and not the Civil
Code.
Filipinas Palm Oil Plantation Inc. (Filipinas) is a private
organization engaged in palm oil plantation with a total land
area of more than 7,000 hectares of National Development
Company (NDC) lands in Agusan del Sur. Within the
plantation, there are also three plantation roads and a number
of residential homes constructed by Filipinas for its employees.
After the Comprehensive Agrarian Reform Law was passed,
NDC lands were transferred to Comprehensive Agrarian
Reform Law beneficiaries who formed themselves as the
merged NDC-Guthrie Plantations, Inc NDC-Guthrie Estates,
Inc (NGPI-NGEI) Cooperatives. Filipinas entered into a lease
contract agreement with NGPI-NGEI.
The Provincial Assessor of Agusan del Sur is a government
agency in charge with the assessment of lands under the public
domain. It assessed Filipinas properties found within the
plantation area, which Filipinas assailed before the Local
Board of Assessment Appeals (LBAA).
The LBAA found that the P207.00 market value declared in the
assessment by the Provincial Assessor was unreasonable. It
found that the market value should not have been more the
P85.00 per oil palm tree. The sudden increase of realty tax
assessment level from P42.00 for each oil palm tree in 1993 to
P207.00 was confiscatory.
The LBAA adopted Filipinas claim that the basis for
assessment should only be 98 trees. Although one hectare of
land can accommodate 124 oil palm trees, the mountainous
terrain of the plantation should be considered. The LBAA
found that roads of any kind, as well as all their improvements,
should not be taxed since these roads were intermittently used
by the public. It resolved that the market valuation should be
based on the laws of the Department of Agrarian Reform since
the area is owned by the NDC, a quasi-governmental body of
the Philippines.
The LBAA exempted the low-cost housing units from taxation
except those with a market value of more than P150,000.00
under the LGC. Finally, the LBAA considered the road
equipment and mini-haulers as movables that are vital to
Filipinas business.
Filipinas appealed before the CBAA, which set aside the
decision of the LBAA. The CBAA denied the motion for
reconsideration filed by the Provincial Assessor. The
Provincial Assessor filed a Petition for Review before the
Court of Appeals, which, in turn, sustained the CBAAs
decision.
ISSUES:
1. Whether the exemption privilege of NGPI-NGEI from
payment of real property tax extends to Filipinas Palm
Oil Plantation Inc as lessee of the parcel of land owned
by cooperatives.
2. Whether Filipinas Palm Oil Plantation Inc road
equipment and mini haulers are movable properties and
have not been immobilized by destination for real
property taxation
RULING:
The Court held that the land owned by NGPI-NGEI, which
Filipinas has been leasing, cannot be subjected to real property
tax since these are owned by cooperatives that are tax-exempt
under Section 133(n) of the Local Government Code. Whereas,
Section 234(d) of the Local Government Code exempts duly
registered cooperatives, like NGPI-NGEI, from payment of
real property taxes.
The Court held that the pertinent provisions neither
distinguishes not specifies that the exemption only applies to
real properties used by the cooperatives. It ruled that the clear
absence of any restriction or limitation in the provision could
only mean that the exemption applies to wherever the
properties are situated and to whoever uses them. Therefore,
the exemption privilege extends to Filipinas as the
cooperatives lessee.
On the roads constructed by Filipinas, the Court held that
although it is undisputed that the roads were built primarily for
Filipinas benefit, the roads should be tax-exempt since these
roads were also being used by the cooperatives and the public.
Furthermore, the Court agreed with the CBAA that the roads
constructed by Filipinas had become permanent improvements
on the land owned by NGPI-NGEI. Articles 440 and 445 of the
Civil Code provide that these improvements redound to the
benefit of the land owner under the right of accession.

On the road equipment and mini haulers as real properties

subject to tax, the Court affirmed the CBAAs decision that
these are only movables. Machinery that is movable by nature
becomes immobilized only when placed by the owner of the
tenement, but not so when places by a tenant or any other
person having a temporary right unless this person acts as an
agent of the owner. Thus, the mini haulers and other road
equipment retain their nature as movables.
 No. Article 415 (9) of the New Civil Code provides that "docks and
structures which, though floating, are intended by their nature and object
to remain at a fixed place on a river, lake, or coast" are considered
immovable property. Thus, power barges are categorized as immovable
property by destination, being in the nature of machinery and other
implements intended by the owner for an industry or work which may be
carried on in a building or on a piece of land and which tend directly to
meet the needs of said industry or work.

Petition DENIED.
FELS ENERGY, INC. V THE PROVINCE OF BATANGAS and THE OFFICE OF
THE PROVINCIAL ASSESSOR OF BATANGAS
G.R. No. 168557, February 16, 2007

FACTS
NPC (lessee) entered into a lease contract with Polar Energy, Inc. (lessor)
over diesel engine power barges moored at Batangas. The contract was for
a period of five years. Subsequently, Polar Energy, Inc. assigned its rights
under the Agreement to FELS. Thereafter, FELS received a real property tax
assessment on the power barges. FELS referred the matter to NPC,
reminding it of its obligation under the Agreement to pay all real estate
taxes. It then gave NPC the full power and authority to represent it in any
conference regarding the real property assessment of the Provincial
Assessor.

The Local Board of Assessment Appeals (LBAA) ruled that the power plant
facilities, while they may be classified as movable or personal property, are
nevertheless considered real property for taxation purposes because they
are installed at a specific location with a character of permanency. The
Central Board of Assessment Appeals (CBAA) and later the CA affirmed
that power barges are real property and thus subject to real property tax.
Hence, this petition for review on certiorari.

ISSUE
Whether power barges, which are floating and movable, are personal
properties and therefore, not subject to real property tax.

RULING
 Board of Assessment Appeals (CBAA) and later the CA
affirmed that power barges are real property and thus subject to
real property tax. Hence, this petition for review on certiorari.

ISSUE
Whether power barges, which are floating and movable, are
personal properties and therefore, not subject to real property
tax.

RULING
FELS ENERGY, INC. V THE PROVINCE OF No. Article 415 (9) of the New Civil Code provides that "docks
BATANGAS and THE OFFICE OF THE PROVINCIAL and structures which, though floating, are intended by their
ASSESSOR OF BATANGAS nature and object to remain at a fixed place on a river, lake, or
G.R. No. 168557, February 16, 2007 coast" are considered immovable property. Thus, power barges
are categorized as immovable property by destination, being in
FACTS the nature of machinery and other implements intended by the
NPC (lessee) entered into a lease contract with Polar Energy,
owner for an industry or work which may be carried on in a
Inc. (lessor) over diesel engine power barges moored at
building or on a piece of land and which tend directly to meet
Batangas. The contract was for a period of five years.
the needs of said industry or work.
Subsequently, Polar Energy, Inc. assigned its rights under the
Agreement to FELS. Thereafter, FELS received a real property Petition DENIED.
tax assessment on the power barges. FELS referred the matter
to NPC, reminding it of its obligation under the Agreement to
pay all real estate taxes. It then gave NPC the full power and
authority to represent it in any conference regarding the real
property assessment of the Provincial Assessor.

The Local Board of Assessment Appeals (LBAA) ruled that

the power plant facilities, while they may be classified as
movable or personal property, are nevertheless considered real
property for taxation purposes because they are installed at a
specific location with a character of permanency. The Central

Laurel v. Abrogar
G.R. No. 155076, January 13, 2009
Facts:
Petitioner is accused of conspiring and
confederating together and all of them mutually helping
and aiding one another, with intent to gain and without
the knowledge and consent of the Philippine Long
Distance Telephone (PLDT), did then and there willfully,
unlawfully and feloniously take, steal and use the
international long distance calls belonging to PLDT by
conducting International Simple Resale. Respondent
argues that the "international phone calls" which are
"electric currents or sets of electric impulses transmitted
through a medium, and carry a pattern representing the
human voice to a receiver," are personal properties which
may be subject of theft. Article 416(3) of the Civil Code
deems "forces of nature" (which includes electricity)
which are brought under the control by science, are
personal property. On the other hand, petitioner argues
that that a telephone call is a conversation on the phone
or a communication carried out using the telephone. It is
not synonymous to electric current or impulses. Hence, it
may not be considered as personal property susceptible
of appropriation.
Issue:
Whether or not the business of providing
telecommunication and telephone service are personal
property.
Held:
The Court ruled that the business of providing
telecommunication and telephone service are personal
property.
Article 414 of the Civil Code provides that all
things which are or may be the object of appropriation
are considered either real property or personal property.
Business is likewise not enumerated as personal
property under the Civil Code. Just like interest in
business, however, it may be appropriated. Business
should also be classified as personal property since it is
not included in the exclusive enumeration of real
properties under Article 415, it is a therefore personal
property, as ruled in Strochecker v. Ramirez.

SIBAL vs. VALDEZ et. al
FACTS:
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
Plaintiff-appellant Sibal claimed that he has the right over the
sugar cane which he planted in the parcels of land. The
plaintiff offered to redeem the sugar cane but defendant
Valdez refused. The latter contended that sugar cane had the
nature of personal property and not subject to redemption.
Defendants claim is based on the fact that deputy sheriff sold
at a public auction personal properties of plaintiff including the
sugar cane, and that he also bought the eight parcels of land
at a public auction from plaintiffs creditor, Macondry & Co.
The question raised to the court is whether the sugar cane in
question is a real property.
DOCTRINE: The Civil Code, par.2 of Art. 334 provides that
Standing crops and the fruits of trees not gathered, and trees
before they are cut down, are likewise immovable, and are
considered as part of the land to which they are attached.
HOWEVER, Manresa admits that sometimes growing crops
are considered and treated as personal property. The
Supreme Court of Louisiana held that in some cases standing
crops may be considered and dealt with as personal property.
Our jurisprudence recognizes the possible mobilization of
growing crop. On the provision that growing crops and fruits
form part of the land to which they are attached, the
immovability provided for is only one in abstracto and without
reference to rights on or to the crop acquired by other than the
owners of the property to which the crop was attached. The
immovability of a growing crop is in order of things temporary,
for the crop passes from the state of a growing to that of
gathered one, from an immovable to a movable. The existence
of a right on the growing crop is mobilization by anticipation, a
gathering as it were in advance, rendering the crop movable
quoad the right acquired thereon. The Court settled with the
doctrine that for the purpose of attachment and execution, and
for the purposes of Chattel Mortgage Law, ungathered
products have the nature of personal property.
 appropriation and not included in the enumeration of real
properties, and may be the subject of mortgage. All personal
property may be mortgaged (Sec.2, Act. No 1508). The description
contained in the document is sufficient. The description if the
mortgaged property shall be such to enable the parties to the
mortgage, or any other person, after reasonable inquiry and
investigation to identify the same.

INVOLUNTARY INSOLVENCY OF PAUL STROCHECKER

(appelle) vs. Ramirez (appellant)
Principle:
Facts: There were three mortgagees each of whom claimed
A personal property capable of appropriation and not included in
preference, first is in favor of the Fidelity and Surety Co., second is
the enumeration of real properties, and may be the subject of
in favor of the appellant Ildefonso Ramirez and third is in favor of
mortgage. All personal property may be mortgaged. (Sec.2, Act. No
Concepcion Ayala which eventually the claim was rejected. The
1508)
thing that was mortgaged is described as his half interest in the
drug business known as Antigua Botica Ramirez owned by Srta. In the new Code:
Dolores del Rosario and the mortgagor herein referred to as the
partnership, located at Calle Real Nos. 123 and 125, District of Art. 417. The following are also considered as personal property:
Intramuros, Manila, Philippine Islands. Appellant claims preference
(1) Obligations and actions which have for their object movables or
on the ground of: the first mortgage which was excuted on March
demandable sums; and
1919 in favor of Fidelity and Surety Co. is not valid because the
property which is the subject matter thereof is not capable of being (2) Shares of stock of agricultural, commercial and industrial entities,
mortgaged and the description of said property is not sufficient. although they may have real estate. (336a)

Issue: Whether the appellants claim is correct

Ruling; No, with regard to the nature of the property thus

mortgaged, which is one-half interest in the business above
described, such interest is a personal property capable of

Republic, Petitioner, vs. Rev. Claudio R. Cortez
G.R. No. 197472 September 7, 2015
Facts:
Rev. Cortez, a missionary, established an orphanage and school
in Cagayan. He claimed that since 1962, he has been in
peaceful possession of about 50 hectares of land located in the
western portion of Palaui Island in Sitio Siwangag, Sta. Ana,
Cagayan which he, with the help of Aetas and other people
under his care, cleared and developed for agricultural purposes.
Proclamation No. 201 reserved a parcel of the public domain
situated in Palaui Island for military.
More than two decades later, Proclamation No. 447 was
enacted declaring Palaui Island and the surrounding waters
situated in the Municipality of Sta. Ana, Cagayan as marine
reserve.
In 2000, Rev. Cortez filed a Petition for Injunction with Prayer
for the Issuance of a Writ of Preliminary Mandatory Injunction
Bias in his capacity as Commanding Officer of the Philippine
Naval Command in Sta. Ana, Cagayan. According to him,
some members of the Philippine Navy, upon orders of Bias,
disturbed his peaceful and lawful possession of the said 50-
hectare portion of Palaui Island when they commanded him
and his men, through the use of force and intimidation, to
vacate the area. Thus, Rev. Cortez and his men were
constrained to leave the area. In view of these, Rev. Cortez
filed the said Petition with the RTC seeking preliminary
mandatory injunction ordering Bias to restore to him
possession and to not disturb the same, and further, for the said
preliminary writ, if issued, to be made permanent.
Issue: Whether or not Rev. Cortez is entitled to a final writ of
mandatory injunction.
Held:
No, Rev. Cortez is not entitled to a final writ of mandatory
injunction.
Jus possessionis or possession in the concept of an owner is
one of the two concepts of possession provided under Article
525 of the Civil Code.
Also referred to as adverse possession, this kind of possession
is one which can ripen into ownership by prescription.
Art. 525. The possession of things or rights may be had in one
of two concepts: either in the concept of owner, or in that of the
holder of the thing or right to keep or enjoy it, the ownership
pertaining to another person.
As correctly asserted by Rev. Cortez, a possessor in the
concept of an owner has in his favor the legal presumption that
he possesses with a just title and he cannot be obliged to show
or prove it. However, the following cannot be appropriated and
hence, cannot be possessed: 1. property of the public dominion,
2. common things (res communes) such as sunlight and air, and
3. things specifically prohibited by law.
Being such, it cannot be appropriated and therefore not a
proper subject of possession under Article 530 of the Civil
Code. Viewed in this light, Rev. Cortez' claimed right of
possession has no leg to stand on. His possession of the subject
area, even if the same be in the concept of an owner or no
matter how long, cannot produce any legal effect in his favor
since the property cannot be lawfully possessed in the first
place.

Here, the Court notes that while Rev. Cortez relies heavily on
his asserted right of possession, he, nevertheless, failed to show
that the subject area over which he has a claim is not part of the
public domain and therefore can be the proper object of
possession.

Pursuant to the Regalian Doctrine, all lands of the public

domain belong to the State. To prove that a land is alienable,
the existence of a positive act of the government, such as
presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of Lands
investigators; and a legislative act or a statute declaring the
land as alienable and disposable must be established.

In this case, there is no such proof showing that the subject

portion of Palaui Island has been declared alienable and
disposable when Rev. Cortez started to occupy the same.
Hence, it must be considered as still inalienable public domain.

NAVY OFFICERS VILLAGE ASSOCIATION INC VS
REPUBLIC OF THE PHILIPPINES
FACTS:
A Transfer Certificate Title (TCT) issued in Navy Officers
Village Association, Inc (NOVAI)s name covers a land
situated inside the former Fort Andres Bonifacio Military
Reservation in Taguig. This property was previously a part of a
larger parcel of land which TCTs under the name of the
Republic of the Philippines.
The then President Garcia issued a Proclamation No. 423
which reserves for military purposes certain parcels of the
public domain situated in Pasig, Taguig, Paranaque, Rizal and
Pasay City.
Thereafter, then President Macapagal issued Proclamation
No. 461 which excluded Fort McKinley a certain portion of land
situated in the provinces abovementioned and declared them
as AFP Officers Village to be disposed of under the provisions
of certain laws.
However, this area was subsequently reserved for veterans
rehabilitation, medicare and training center sites.
The property was the subject of deed of sale between the
Republic and NOVAI to which the TCT was registered in
favour of the latter.
The Republic then sought to cancel NOVAIs title on the
ground that the property was still part of the military
reservation thus inalienable land of the public domain and
cannot be the subject of sale.
The RTC ruled that the property was alienable and disposable
in character. The Court of Appeals reversed RTCs decision.
Issue: Whether or not the property covered by TCT issued
under the name of NOVAI is inalienable land of public domain
and cannot be the subject of sale.
Held: Yes, the property remains a part of the public domain
that could not have been validly disposed of in NOVAIs favor.
NOVAI failed to discharge its burden of proving that the
property was not intended for public or quasi-public use
or purpose.
As provided in Article 420 of Civil Code, property of the public
dominion as those which are intended for public use or, while
not intended for public use, belong to the State and are
intended for some public service.
In this case, the property was classified as military reservation
thus, remained to be property of the public dominion until
withdrawn from the public use for which they have been
reserved, by act of Congress or by proclamation of the
President.
Since there was no positive act from the government, the
property had to retain its inalienable and non-disposable
character. It cannot therefore, be subject of sale otherwise, the
sale is void for being contrary to law.
ROMAN R. SANTOS vs. HON. FLORENCIO MORENO
G.R. No. L-15829 December 4, 1967
FACTS:
The Zobel family of Spain formerly owned vast track of marshland
called Hacienda San Esteban in the municipality of Macabebe,
Pampanga province. It was administered and managed by the
Ayala y Cia, who devoted the hacienda, from 1860 to 1924, to the
planting and cultivation of nipa palms to produce nipa sap or
tuba. Then, it operated a distillery plant to the tuba into potable
alcohol.
But accessibility through the nipa palms into the hacienda posed
as a problem. So, Ayala y Cia dug canals leading towards the
hacienda's interior where most of them interlinked with each
other. The canals facilitated the gathering of tuba and the
guarding and patrolling of the hacienda by security guards. By the
gradual process of erosion these canals acquired the
characteristics and dimensions of rivers.
In 1924, Ayala y Cia changed shifted from the business of alcohol
production to bangus culture. It converted Hacienda San Esteban
from a forest of nipa groves to a web of fishponds. To do so, it cut
down the nipa palm, constructed dikes and closed the canals
criss-crossing the hacienda.
Sometime in 1925 or 1926 Ayala y Cia., sold a portion of
Hacienda San Esteban to Roman Santos who also transformed
the swamp land into a fishpond. In so doing, the latter closed and
built dikes across six canals.
In 1940, Roman Santos acquired from the Zobel family a larger
portion of Hacienda San Esteban wherein are located 25 streams
which were closed by Ayala y Cia.
On August 15, 1958 Senator de la Rosa requested in writing the
Secretary of Public Works and communications to proceed in
pursuance of Republic Act No. 2056 against fishpond owners in
the province of Pampanga who have closed rivers and
appropriated them as fishponds without color of title. On the same
day, the residents in the vicinity of Hacienda San Esteban
petitioned the Secretary of Public Works and Communications to
open certain streams.
Thereupon, the Secretary of Public Works and Communications,
ordered the opening and restoration of the channel of all the
streams in controversy, based on the result of the investigation
conducted by Julian C. Cargullo that the same streams belong to
the public domain.
On April 29, 1959, Roman Santos filed a motion with the Court of
First Instance of Man for injunction against the Secretary of Public
Works and Communications and Julian C. Cargullo, which later
on granted.
On July 18, 1959 the trial court declared all the streams private.
Consequently, the Secretary of Public Works and Communication
and Julian C. Cargullo appealed to the Supreme Court.
ISSUE:
Whether or not the assailed streams belong to the public domain
as claimed by the Secretary of Public Works and Communication
and Julian C. Cargullo.
RULING:
No. Pursuant to Article 71 of the Spanish Law of Waters of
August 3, 1866, and Article 408(5) of the Spanish Civil Code,
channels of creeks and brooks belong to the owners of estates
over which they flow. The channels, therefore, of the streams in
question which may be classified creeks, belong to the owners of
Hacienda San Esteban.
Article 71 of the Spanish Law of Waters provides that:
The water-beds of all creeks belong to the owners of the
estates or lands over which they flow.
While paragraph 5 of Article 408 states that:
Art. 407. The following are of public ownership:
xxx
5. Rain waters running through ravines or sand
beds, the channels of which are of public ownership
xxx
Also, the said streams, considered as canals, of which they
originally were, are of private ownership in contemplation of
Article 339(l) of the Spanish Civil Code. Under Article 339, canals
constructed by the State and devoted to public use are of public
ownership. Conversely, canals constructed by private persons
within private lands and devoted exclusively for private use must
be ownership
Moreover, the Court held that the present case should be
differentiated from cases wherein it held illegal the closing and/or
appropriation of rivers or streams by owners of estates through
which they flow for purposes of converting them into fishponds or
other works. In those cases, the watercourses which were
dammed were natural navigable streams and used habitually by
the public for a long time as a means of navigation.
Consequently, they belong to the public domain either as rivers
pursuant to Article 407 (1) of the Spanish Civil Code of 1889 or as
property devoted to public use under Article 339 of the same
code. Whereas, the streams involved in this case were artificially
made and devoted to the exclusive use of the hacienda owner.
 uninterruptedly, adversely against the whole world, and
in the concept of owner since then; that the land had
been declared in her name for taxation purposes; and
that the taxes due thereon had been paid.

The Director of Lands and the Director of Forest

Development averred that whatever legal and possessory
rights the respondent had acquired by reason of any
Spanish government grants had been lost, abandoned or
forfeited for failure to occupy and possess the land for at
least 30 years immediately preceding the filing of the
application and that the land applied for, being actually
a portion of the Labangan Channel operated by the
Pampanga River Control System, could not be subject of
G.R. No. 163767 March 10, 2014
appropriation or land registration.
REPUBLIC OF THE PHILIPPINES, represented by
The CFI and CA rendered its decision, ordering the
THE DIRECTOR OF LANDS, Petitioner,
registration of the land in favor of the respondent on the
vs.
ground that she had sufficiently established her open,
ROSARIO DE GUZMAN VDA. DE JOSON, Respondent.
public, continuous, and adverse possession in the
concept of an owner for more than 30 years.
FACTS:
ISSUE:
Rosario De Guzman Vda. De Joson filed her application
for land registration in the CFI in Bulacan. The land
Whether or not the land subject of the application for
subject of the application was a Riceland.
registration is susceptible of private acquisition
The riceland had been originally owned and possessed
RULING:
by one Mamerto Dionisio since 1907.
The land in question is not susceptible of private
Dionisio, by way of a deed of sale, had sold the land to
acquisition.
Romualda Jacinto; that upon the death of Romualda
Jacinto, her sister Maria Jacinto (mother of the
Section 14 (1) and (2) of the Property Registration Decree
respondent) had inherited the land; that upon the death
state:
of Maria Jacinto, the respondent had herself inherited
the land, owning and possessing it openly, publicly,
Section 14. Who may apply. The following persons
may file in the proper [Regional Trial Court] an
application for registration of title to land, whether
personally or through their duly authorized
representatives:
(1) Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive and notorious possession
and occupation of alienable and disposable lands
of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.
(2) Those who have acquired ownership of private
lands by prescription under the provision of
existing laws.
Section 14(1) deals with possession and occupation in
the concept of an owner while Section 14(2) involves
prescription as a mode of acquiring ownership.
The law now stands, a mere showing of possession and
occupation for 30 years or more is not sufficient.
Under Section 14(1), therefore, the respondent had to
prove that: (1) the land formed part of the alienable and
disposable land of the public domain; and (2) she, by
herself or through her predecessors-in-interest, had
been in open, continuous, exclusive, and notorious
possession and occupation of the subject land under a
bona fide claim of ownership from June 12, 1945, or
earlier.
The respondent unquestionably complied with the
second requisite by virtue of her having been in open,
continuous, exclusive and notorious possession and
occupation of the land since June 12, 1945, or earlier.
She testified on how the land had been passed on to her
from her predecessors-in-interest.
What is left wanting is the fact that the respondent did
not discharge her burden to prove the classification of
the land as demanded by the first requisite
We reiterate the standing doctrine that land of the
public domain, to be the subject of appropriation, must
be declared alienable and disposable either by the
President or the Secretary of the DENR. In Republic v.
T.A.N. Properties, Inc., explicitly ruled:
The applicant for land registration must prove
that the DENR Secretary had approved the land
classification and released the land of the public
domain as alienable and disposable, and that the
land subject of the application for registration
falls within the approved area per verification
through survey by the PENRO or CENRO. In
addition, the applicant for land registration must
present a copy of the original classification
approved by the DENR Secretary and certified as
a true copy by the legal custodian of the official
records. These facts must be established to prove
that the land is alienable and disposable.
To prove that the land subject of an application for
registration is alienable, an applicant must establish the
existence of a positive act of the government such as a
presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of
Lands investigators; and a legislative act or a statute.
In other words, the period of possession prior to the
reclassification of the land, no matter how long, was
irrelevant because prescription did not operate against
the State before then.
MANILA INTERNATIONAL AIRPORT AUTHORITY vs. CA
G.R. No. 155650 July 20, 2006
FACTS:
Petitioner Manila International Airport Authority (MIAA) operates
the Ninoy Aquino International Airport (NAIA) Complex in
Paraaque City under Executive Order No. 903, otherwise known
as the Revised Charter of the Manila International Airport
Authority or the MIAA Charter, amended by Executive Order Nos.
909 and 298.
The MIAA Charter transferred to MIAA approximately 600
hectares of land, including the runways and buildings (Airport
Lands and Buildings). 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.
Also, Section 21 of MIAA Charter exempts MIAA from real estate
tax.
However, on 21 March 1997, the Office of the Government
Corporate Counsel (OGCC) issued Opinion No. 061 which states
that the Local Government Code of 1991 withdrew the exemption
from real estate tax granted to MIAA. Thus, MIAA negotiated with
respondent City of Paraaque and paid some of the real estate
tax already due.
On 28 June 2001, MIAA received Final Notices of Real Estate
Tax Delinquency from the City of Paraaque for the taxable years
1992 to 2001. The Mayor of the City of Paraaque threatened to
sell at public auction the Airport Lands and Buildings should MIAA
fail to pay the real estate tax delinquency. MIAA thus sought a
clarification of OGCC Opinion No. 061.
Consequently, the OGCC issued Opinion No. 147 clarifying
OGCC Opinion No. 061, stating that Section 206 of the Local
Government Code requires persons exempt from real estate tax
to show proof of exemption, and Section 21 of the MIAA Charter
is the proof that MIAA is exempt from real estate tax.
Then, MIAA filed a petition with the CA to restrain the City of
Paraaque from imposing real estate tax on, levying against, and
auctioning for public sale the Airport Lands and Buildings. But the
CA dismissed the petitioner and MIAAs motion for
reconsideration and supplemental motion for reconsideration.
Hence, on December 5, 2002, the MIAA filed petitioner for review
with the Supreme Court.
In January 2003, the City of Paraaque nevertheless posted
notices announcing the public auction sale of the Airport Lands
and Buildings.
On 7 February 2003, this Court issued a temporary restraining
order (TRO) ordering the City of Paraaque to cease and desist
from selling at public auction the Airport Lands and Buildings.
MIAA admits that the MIAA Charter has placed the title to the
Airport Lands and Buildings in the name of MIAA. However, MIAA
points out that it cannot claim ownership over these properties
since the real owner of the Airport Lands and Buildings is the
Republic of the Philippines. The MIAA Charter mandates MIAA to
devote the Airport Lands and Buildings for the benefit of the
general public. Since the Airport Lands and Buildings are devoted
to public use and public service, the ownership of these
properties remains with the State. The Airport Lands and
Buildings are thus inalienable and are not subject to real estate
tax by local governments.
MIAA also points out that Section 21 of the MIAA Charter
specifically exempts MIAA from the payment of real estate tax.
MIAA insists that it is also exempt from real estate tax under
Section 234 of the Local Government Code because the Airport
Lands and Buildings are owned by the Republic. To justify the
exemption, MIAA invokes the principle that the government
cannot tax itself. MIAA points out that the reason for tax
exemption of public property is that its taxation would not inure to
any public advantage, since in such a case the tax debtor is also
the tax creditor.
The City of Paranaque, on the other hand, invoke Section 193 of
the Local Government Code, which expressly withdrew the tax
exemption privileges of "government-owned and-controlled
corporations" upon the effectivity of the Local Government
Code.
ISSUE:
Whether or not the Airport Lands and Buildings are owned by the
Republic of the Philippines, must be utilized for the benefit of the
public, and exempted from real estate tax.
RULING:
Yes. MIAA is not a government-owned or controlled corporation
but an instrumentality of the National Government and thus
exempt from local taxation
There is no dispute that a government-owned or controlled
corporation is not exempt from real estate tax. A government-
owned or controlled corporation must be "organized as a stock
or non-stock corporation, as provided by Section 2(13) of the
Introductory Provisions of the Administrative Code of 1987. MIAA
is not organized as a stock or non-stock corporation. MIAA is not
a stock corporation because it has no capital stock divided into
shares. MIAA has no stockholders or voting shares.
MIAA is a government instrumentality vested with corporate
powers to perform efficiently its governmental functions. MIAA is
like any other government instrumentality, the only difference is
that MIAA is vested with corporate powers.
When the law vests in a government instrumentality corporate
powers, the instrumentality does not become a corporation.
Furthermore, the properties of public dominion mentioned in
Article 420 of the Civil Code, like "roads, canals, rivers,
torrents, ports and bridges constructed by the State," are
owned by the State. The term "ports" includes seaports and
airports. The MIAA Airport Lands and Buildings constitute a
"port" constructed by the State. Under Article 420 of the Civil
Code, the MIAA Airport Lands and Buildings are properties of
public dominion and thus owned by the State or the Republic of
the Philippines.
The Airport Lands and Buildings are devoted to public use
because they are used by the public for international and
domestic travel and transportation. The fact that the MIAA levy on execution or foreclosure sale. As long as the Airport
collects terminal fees and other charges from the public does not Lands and Buildings are reserved for public use, their ownership
remove the character of the Airport Lands and Buildings as remains with the State or the Republic of the Philippines.
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.

Also, the Airport Lands and Buildings of MIAA are devoted to

public use and thus are properties of public dominion. As
properties of public dominion, the Airport Lands and
Buildings are outside the commerce of man. The Court has
ruled repeatedly that properties of public dominion are outside the
commerce of man.

Properties of public dominion, being for public use, are not

subject to levy, encumbrance or disposition through public or
private sale. Any encumbrance, levy on execution or auction sale
of any property of public dominion is void for being contrary to
public policy. Essential public services will stop if properties of
public dominion are subject to encumbrances, foreclosures and
auction sale. This will happen if the City of Paraaque can
foreclose and compel the auction sale of the 600-hectare runway
of the MIAA for non-payment of real estate tax.

Before MIAA can encumber the Airport Lands and Buildings, the
President must first withdraw from public use the Airport Lands
and Buildings.

Unless the President issues a proclamation withdrawing the

Airport Lands and Buildings from public use, these properties
remain properties of public dominion and are inalienable. Since
the Airport Lands and Buildings are inalienable in their present
status as properties of public dominion, they are not subject to