Secretary of DENR vs Yap

Natural Resources and Environmental Laws: Regalian Doctrine

GR No. 167707; Oct 8, 2008
FACTS:
This petition is for a review on certiorari of the decision of the Court of Appeals (CA)
affirming that of the Regional Trial Court (RTC) in Kalibo Aklan, which granted the
petition for declaratory relief filed by respondents-claimants Mayor Jose Yap et al, and
ordered the survey of Boracay for titling purposes.
On Nov. 10, 1978, President Marcos issued Proclamation No. 1801 declaring Boracay
Island as a tourist zone and marine reserve. Claiming that Proc. No. 1801 precluded
them from filing an application for a judicial confirmation of imperfect title or survey of
land for titling purposes, respondents-claimants filed a petition for declaratory relief
with the RTC in Kalibo, Aklan.
The Republic, through the Office of the Solicitor General (OSG) opposed the petition
countering that Boracay Island was an unclassified land of the public domain. It formed
part of the mass of lands classified as public forest, which was not available for
disposition pursuant to section 3(a) of PD No. 705 or the Revised Forestry Code.
ISSUE:
Whether unclassified lands of the public domain are automatically deemed agricultural
land, therefore making these lands alienable.
HELD:
No. To prove that the land subject of an application for registration is alienable, the
applicant must establish the existence of a positive act of the government such as a
presidential proclamation or an executive order, an administrative action, investigative
reports of the Bureau of Lands investigators, and a legislative act or statute.
A positive act declaring land as alienable and disposable is required. In keeping with the
presumption of state ownership, the Court has time and again emphasized that there
must be a positive act of the government, such as an official proclamation, declassifying
inalienable public land into disposable land for agricultural or other purposes.
The Regalian Doctrine dictates that all lands of the public domain belong to the State,
that the State is the source of any asserted right to ownership of land and charged with
the conservation of such patrimony.
All lands not otherwise appearing to be clearly within private ownership are presumed to
belong to the State. Thus, all lands that have not been acquired from the government,
either by purchase or by grant, belong to the State as part of the inalienable public
domain.

CLASSES OF CORPORATIONS
REPUBLIC OF THE PHILIPPINES v. CITY OF PARANAQUE
G.R. No. 191109 | July 18, 2012
MENDOZA, J.:

This is a petition for review on certiorari assailing the Order of the Regional Trial Court, Branch 195,
Paranaque City (RTC), which ruled that petitioner Philippine Reclamation Authority (PRA) is a
government-owned and controlled corporation (GOCC), a taxable entity, and, therefore, not
exempt from payment of real property taxes.
The Public Estates Authority (PEA) is a government corporation created by virtue of P.D. No. 1084
to provide a coordinated, economical and efficient reclamation of lands, and the
administration and operation of lands belonging to, managed and/or operated by, the
government with the object of maximizing their utilization and hastening their development
consistent with public interest.
By virtue of its mandate, PRA reclaimed several portions of the foreshore and offshore areas of
Manila Bay, including those located in Paraaque City. Paraaque City Treasurer issued Warrants
of Levy on PRAs reclaimed properties based on the assessment for delinquent real property for
tax years 2001 and 2002.

PRA asserted that:

It is not a GOCC under the Administrative Code, nor is it a GOCC under Section 16, Article XII of
the 1987 Constitution because it is not required to meet the test of economic viability.
It is a government instrumentality vested with corporate powers and performing an essential
public service. Although it has a capital stock divided into shares, it may not be classified as a
stock corporation because it lacks the second requisite of a stock corporation: to distribute
dividends and allotment of surplus and profits to its stockholders.
It may not be classified as a non-stock corporation because it has no members and it is not
organized for charitable, religious, educational, professional, cultural, recreational, fraternal,
literary, scientific, social, civil service, or similar purposes, like trade, industry, agriculture and like
chambers as provided in Section 88 of the Corporation Code.
It was not created to compete in the market place as there was no competing reclamation
company operated by the private sector. Also, while PRA is vested with corporate powers under
P.D. No. 1084, such circumstance does not make it a corporation but merely an incorporated
instrumentality and that the mere fact that an incorporated instrumentality of the National
Government holds title to real property does not make said instrumentality a GOCC.

City of Paraaque (respondent) argued that:

PRA since its creation consistently represented itself to be a GOCC. PRAs very own charter (P.D.
No. 1084) declared it to be a GOCC and that it has entered into several thousands of contracts
where it represented itself to be a GOCC. In fact, PRA admitted in its original and amended
petitions and pre-trial brief filed with the RTC of Paraaque City that it was a GOCC.
It argues that PRA is a stock corporation with an authorized capital stock divided into 3 million
no par value shares, out of which 2 million shares have been subscribed and fully paid up. Section
193 of the LGC of 1991 has withdrawn tax exemption privileges granted to or presently enjoyed
by all persons, whether natural or juridical, including GOCCs.

ISSUE:
Whether or not petitioner is an incorporated instrumentality of the national government and is, therefore,
exempt from payment of real property tax under sections 234(a) and 133(o) of Republic Act 7160 or the
Local Government Code vis--vis Manila International Airport Authority v. Court of Appeals.
HELD:
Yes it is a Government Instrumentality. However, it is not a GOCC. When the law vests in a government
instrumentality corporate powers, the instrumentality does not necessarily become a corporation. Unless
the government instrumentality is organized as a stock or non-stock corporation, it remains a government

instrumentality exercising not only governmental but also corporate powers.

Introductory Provisions of the Administrative Code of 1987 defines a GOCC as any agency organized as
a stock or non-stock corporation, vested with functions relating to public needs whether governmental
or proprietary in nature, and owned by the Government directly or through its instrumentalities either
wholly, or, where applicable as in the case of stock corporations, to the extent of at least fifty-one (51)
percent of its capital stock: x x x.
From the above definitions, it is clear that a GOCC must be "organized as a stock or non-stock
corporation" while an instrumentality is vested by law with corporate powers. Likewise, when the law
makes a government instrumentality operationally autonomous, the instrumentality remains part of the
National Government machinery although not integrated with the department framework.
Many government instrumentalities are vested with corporate powers but they do not become stock or
non-stock corporations, which is a necessary condition before an agency or instrumentality is deemed a
GOCC.
The fundamental provision above authorizes Congress to create GOCCs through special charters on two
conditions: 1) the GOCC must be established for the common good; and 2) the GOCC must meet the
test of economic viability. In this case, PRA may have passed the first condition of common good but
failed the second one - economic viability. Undoubtedly, the purpose behind the creation of PRA was
not for economic or commercial activities. Neither was it created to compete in the market place
considering that there were no other competing reclamation companies being operated by the private
sector.
Further, when local governments invoke the power to tax on national government instrumentalities, such
power is construed strictly against local governments. The rule is that a tax is never presumed and there
must be clear language in the law imposing the tax. Any doubt whether a person, article or activity is
taxable is resolved against taxation. This rule applies with greater force when local governments seek to
tax national government instrumentalities.
Another rule is that a tax exemption is strictly construed against the taxpayer claiming the exemption.
However, when Congress grants an exemption to a national government instrumentality from local
taxation, such exemption is construed liberally in favor of the national government instrumentality.