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G.R. No.

L-24440

March 28, 1968

THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee,


vs.
CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE,
defendants-appellants.

Facts:
Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the provincial capital of the
then Zamboanga Province. On October 12, 1936, Commonwealth Act 39 was approved converting the Municipality
of Zamboanga into Zamboanga City. Sec. 50 of the Act also provided that Buildings and properties which the
province shall abandon upon the transfer of the capital to another place will be acquired and paid for by the City of
Zamboanga at a price to be fixed by the Auditor General.
Such properties include lots of capitol site, schools, hospitals, leprosarium, high school playgrounds, burleighs, and
hydro-electric sites.
On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two (2): Zamboanga del
Norte and Zamboanga del Sur. As to how the assets and obligations of the old province were to be divided between
the two new ones, Sec. 6 of that law provided Upon the approval of this Act, the funds, assets and other properties
and the obligations of the province of Zamboanga shall be divided equitably between the Province of Zamboanga
del Norte and the Province of Zamboanga del Sur by the President of the Philippines, upon the recommendation of
the Auditor General.
However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of Commonwealth Act 39 by
providing that, All buildings, properties and assets belonging to the former province of Zamboanga and located
within the City of Zamboanga are hereby transferred, free of charge, in favor of the said City of Zamboanga.
This constrained Zamboanga del Norte to file on March 5, 1962, a complaint against defendants-appellants
Zamboanga City; that, among others, Republic Act 3039 be declared unconstitutional for depriving Zamboanga del
Norte of property without due process and just compensation.
Lower court declared RA 3039 unconstitutional as it deprives Zamboanga del Norte of its private properties.
Hence the appeal.
Issue:
Whether RA 3039 is unconstitutional on the grounds that it deprives Zamboanga del Norte of its private properties.
Held:
No. RA 3039 is valid. The properties petitioned by Zamboanga del Norte is a public property.

The validity of the law ultimately depends on the nature of the 50 lots and buildings thereon in question. For, the
matter involved here is the extent of legislative control over the properties of a municipal corporation, of which a
province is one. The principle itself is simple: If the property is owned by the municipality (meaning municipal
corporation) in its public and governmental capacity, the property is public and Congress has absolute control over
it. But if the property is owned in its private or proprietary capacity, then it is patrimonial and Congress has no
absolute control. The municipality cannot be deprived of it without due process and payment of just compensation.
The capacity in which the property is held is, however, dependent on the use to which it is intended and devoted.
Now, which of two norms, i.e., that of the Civil Code or that obtaining under the law of Municipal Corporations, must
be used in classifying the properties in question?
Civil Code
The Civil provide: ART. 423. The property of provinces, cities, and municipalities is divided into property for public
use and patrimonial property; ART. 424. Property for public use, in the provinces, cities, and municipalities, consists
of the provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public
works for public service paid for by said provinces, cities, or municipalities. All other property possessed by any of
them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws.
Applying the above cited norm, all the properties in question, except the two (2) lots used as High School
playgrounds, could be considered as patrimonial properties of the former Zamboanga province. Even the capital
site, the hospital and leprosarium sites, and the school sites will be considered patrimonial for they are not for public
use. They would fall under the phrase public works for public service for it has been held that under the ejusdem
generis rule, such public works must be for free and indiscriminate use by anyone, just like the preceding
enumerated properties in the first paragraph of Art 424. The playgrounds, however, would fit into this category.
Law of Municipal Corporations
On the other hand, applying the norm obtaining under the principles constituting the law of Municipal Corporations,
all those of the 50 properties in question which are devoted to public service are deemed public; the rest remain
patrimonial. Under this norm, to be considered public, it is enough that the property be held and, devoted for
governmental purposes like local administration, public education, public health, etc.
Final Ruling
The controversy here is more along the domains of the Law of Municipal Corporations State vs. Province than
along that of Civil Law. If municipal property held and devoted to public service is in the same category as ordinary
private property, then that would mean they can be levied upon and attached; they can even be acquired thru
adverse possession all these to the detriment of the local community. It is wrong to consider those properties as
ordinary private property.
Lastly, the classification of properties other than those for public use in the municipalities as patrimonial under Art.
424 of the Civil Code is without prejudice to the provisions of special laws. For purpose of this article, the
principles, obtaining under the Law of Municipal Corporations can be considered as special laws. Hence, the

classification of municipal property devoted for distinctly governmental purposes as public should prevail over the
Civil Code classification in this particular case.
WHEREFORE, the decision appealed from is hereby set aside and another judgment is hereby entered as follows:.
(1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del Norte in lump sum the
amount of P43,030.11 which the former took back from the latter out of the sum of P57,373.46 previously paid to
the latter; and
(2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever balance remains of plaintiffs
54.39% share in the 26 patrimonial properties, after deducting therefrom the sum of P57,373.46, on the basis of
Resolution No. 7 dated March 26, 1949 of the Appraisal Committee formed by the Auditor General, by way of
quarterly payments from the allotments of defendant City, in the manner originally adopted by the Secretary of
Finance and the Commissioner of Internal Revenue. No costs. So ordered.

G.R. No. 133250

July 9, 2002

FRANCISCO I. CHAVEZ, petitioner,


vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
Fact:
In 1973, the Comissioner on Public Highways entered into a contract to reclaim areas of Manila Bay with the
Construction and Development Corportion of the Philippines (CDCP).
PEA (Public Estates Authority) was created by President Marcos under P.D. 1084, tasked with developing and
leasing reclaimed lands. These lands were transferred to the care of PEA under P.D. 1085 as part of the Manila
Cavite Road and Reclamation Project (MCRRP). CDCP and PEA entered into an agreement that all future projects
under the MCRRP would be funded and owned by PEA.
By 1988, President Aquino issued Special Patent No. 3517 transferring lands to PEA. It was followed by the transfer
of three Titles (7309, 7311 and 7312) by the Register of Deeds of Paranaque to PEA covering the three reclaimed
islands known as the FREEDOM ISLANDS.
Subsquently, PEA entered into a joint venture agreement (JVA) with AMARI, a Thai-Philippine corporation to
develop the Freedom Islands. Along with another 250 hectares, PEA and AMARI entered the JVA which would later
transfer said lands to AMARI. This caused a stir especially when Sen. Maceda assailed the agreement, claiming
that such lands were part of public domain (famously known as the mother of all scams).
Peitioner Frank J. Chavez filed case as a taxpayer praying for mandamus, a writ of preliminary injunction and a
TRO against the sale of reclaimed lands by PEA to AMARI and from implementing the JVA. Following these events,
under President Estradas admin, PEA and AMARI entered into an Amended JVA and Mr. Chaves claim that the
contract is null and void.

Issue:
w/n: the transfer to AMARI lands reclaimed or to be reclaimed as part of the stipulations in the (Amended) JVA
between AMARI and PEA violate Sec. 3 Art. XII of the 1987 Constitution
w/n: the court is the proper forum for raising the issue of whether the amended joint venture agreement is grossly
disadvantageous to the government.
Held:
On the issue of Amended JVA as violating the constitution:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in
the name of PEA, are alienable lands of the public domain. PEA may lease these lands to private corporations but
may not sell or transfer ownership of these lands to private corporations. PEA may only sell these lands to
Philippine citizens, subject to the ownership limitations in the 1987 Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public
domain until classified as alienable or disposable lands open to disposition and declared no longer needed for
public service. The government can make such classification and declaration only after PEA has reclaimed these
submerged areas. Only then can these lands qualify as agricultural lands of the public domain, which are the only
natural resources the government can alienate. In their present state, the 592.15 hectares of submerged areas are
inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares110 of the
Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution which
prohibits private corporations from acquiring any kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares111 of still submerged
areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution which
prohibits the alienation of natural resources other than agricultural lands of the public domain.
PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed lands as alienable
or disposable, and further declare them no longer needed for public service. Still, the transfer of such reclaimed
alienable lands of the public domain to AMARI will be void in view of Section 3, Article XII of the 1987Constitution
which prohibits private corporations from acquiring any kind of alienable land of the public domain.

G.R. No. 186166


October 20, 2010
Republic of the Philippines
Vs.
Jose T. Ching, represented by his Attorney-in-fact, Antonio V. Ching

In this Petition for Review on certiorari under Rule 45, the Republic of the Philippines, represented by the
Office of the Solicitor General (OSG), assails the November 28, 2008 Decision [1] of the Court of Appeals (CA), in
CA-G.R. CV No. 00318-MIN, reversing the December 3, 2002 Resolution [2] of the Regional Trial Court, Butuan City,
Branch 2 (RTC), disallowing the Application for Registration of Title of respondent Jose Ching, represented by his
Attorney-in-Fact, Antonio Ching, in Land Registration Case No. N-290.
THE FACTS

On August 9, 1999, respondent Jose Ching, represented by his Attorney-in-Fact, Antonio Ching, filed a verified
Application for Registration of Title covering a parcel of land with improvements identified as Lot 1, SGS-13-000037D, being a portion of Lot 2738, GSS-10-000043, before the RTC. The subject lot is a consolidation of three (3)
contiguous lots situated in Banza, Butuan City, Agusan del Norte, with an area of 58,229 square meters. The first
parcel of land is covered by Tax Declaration No. 96GR-11-003-0556-A; the second parcel by Tax Declaration No.
96GR-11-003-0444-I; and the third parcel by Tax Declaration No. 96GR-11-003-0537-A. In support of his
application, respondent attached the (a) Sketch plan; [3] (b) Technical description;[4] (c) Tracing Cloth of Plan of
Portion of Lot 2738, Gss-10-000043, which is a Segregation Plan of Portion of Lot 2738, Gss-10-0000431, as
surveyed for Jose T. Ching and duly approved by the Bureau of Land DENR Region XIII on July 08, 1998 covering
the subject land;[5] and (d) Special Power of Attorney executed by Jose T. Ching authorizing Antonio V. Ching, Jr. to
file an application for title over the land.[6]
Respondent alleged that on April 10, 1979, he purchased the subject land from the late former governor
and Congressman Democrito O. Plaza as evidenced by a Deed of Sale of Unregistered Lands.[7]
Initially, the RTC, acting as a land registration court, ordered respondent to show cause why his application for
registration of title should not be dismissed for his failure to state the current assessed value of the subject land and
his non-compliance with the last paragraph of Section 17 of Presidential Decree (P.D.) No. 1529. [8]
Accordingly, on September 3, 1999, respondent filed a Verified Amended Application [9] which the RTC found to be
sufficient in form and substance. The case was set for initial hearing on December 22, 1999.[10]
On December 16, 1999, the OSG duly deputized the Provincial Prosecutor of Agusan del Norte to appear on behalf
of the State.[11] Thereafter, on January 20, 2000, the OSG filed an Opposition to the application for registration of
title. Specifically, the OSG alleged:
(1) That neither the applicant nor his predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of the land in question since June
12, 1945 or prior thereto [Sec. 48 (b) C.A. 141, as amended by P.D. 1073];
(2) That the muniments of title and/or any tax declarations and tax payments receipts of
applicant attached to or alleged in the application, do not constitute competent and sufficient

evidence of a bona fide acquisition of the land applied for or of his open, continuous, exclusive and
notorious possession and occupation of the land in the concept of owner since June 12, 1945 or
prior and the tax declaration and tax payment receipts appear not to be genuine and are of recent
vintage;
(3) That the claim of ownership in fee simple on the basis of Spanish title or grant can no
longer be availed of by the applicant who have failed to file an appropriate application for
registration within six (6) months from 16 February 1976 under P.D. No. 892 as the instant
application appears to have been filed on December 17, 1998; and
(4) That the parcels of land applied for are portions of the public domain belonging to the
Republic of the Philippines not subject to private appropriation.[12]
On June 28, 2001, the Department of Environment and Natural Resources likewise filed its opposition to
the application.
On December 3, 2002, the RTC resolved to dismiss the respondents application for registration. [13] The dispositive
portion reads:
IN VIEW OF THE FOREGOING, the court resolves to dismiss as it hereby dismisses the instant
application for registration of title for insufficiency of evidence.
SO ORDERED.

The RTC was not convinced that respondents Deed of Sale sufficiently established that he was the owner in fee
simple of the land sought to be registered. The RTC wrote [e]vidence only shows that the applicant and his vendor
as predecessor-in-interest have been in open, peaceful, notorious and exclusive possession starting from
1965. Among the tax declarations marked Exhibits R to R-7 includes the oldest one marked Exhibit R-7 shown in
the back lower portion that it was effective beginning the year 1980, and among the tax declarations marked Exhibit
S to S-8 inclusive, the oldest one marked Exhibit S-8 is effective in the year 1980 and among the Tax Declaration
marked Exhibit T to T-7 inclusive, the oldest one marked Exhibit T-7 shows that it began to be effective in the year
1980 also. In the Certification (Exhibit U) issued by the Office of the City Treasurer of Butuan shows that the
payment of the realty taxes paid for the 3 parcels started only in the year 1980. [14]
Respondent filed a motion for reconsideration and a subsequent supplemental motion for reconsideration with
attached additional tax declarations. The RTC denied both motions in its December 11, 2003 Resolution [15] stating
that it could not consider the additional tax declarations attached in the Supplemental Motion for Reconsideration as
these were not formally offered in evidence. The RTC also noted that the additional documents were mere
photocopies and would not have any probative value because they were not in accord with the requirements under
Act 496[16] and P.D. 1529[17] that only original muniments of title or copies thereof must be presented.
Respondent appealed the RTC ruling before the CA. Respondent claimed that the RTC erred in dismissing the
application for registration of title for insufficiency of evidence and in failing to consider the additional tax
declarations attached in his Supplemental Motion for Reconsideration. [18]

On November 28, 2008, the CA reversed the RTCs earlier resolution and granted respondents application for
registration of title.[19] The decretal portion of said decision reads:
WHEREFORE, the appealed Decision of the Regional Trial Court, Branch 2, Butuan City acting as
land registration court, dismissing the application for registration of title for insufficiency of evidence
is hereby REVERSED and SET ASIDE. The Appellants application for land registration is
GRANTED.
SO ORDERED.[20]

The CA ruled that the RTC erred in failing to consider the additional documents attached in respondents
Supplemental Motion for Reconsideration. The CA ratiocinated:
Clearly from the foregoing tax declarations which all went unchallenged and formed part of
the record of the instant case, it could clearly be seen that the same parcels of land had been in
possession of the petitioner-appellants (respondent) predecessors-in-interest since 1948 until these
parcels were purchased by him on 10 April 1979. Since the applicant and his predecessors-ininterest had been in possession of the land for more than thirty (30) years continuously, peacefully,
adversely, publicly and to the exclusion of everybody, the same was in the concept of owners. This
also means that petitioner-appellant is no longer required to prove that the property in
question is classified as alienable and disposable land of the public domain.[21] The long and
continuous possession thereof by petitioner-appellant and his predecessors-in-interest since 1948
or a total period of fifty-one (51) years before the application was filed on 09 August 1999 converted
the property to a private one. This is but a mere reiteration of the established rule that alienable
public land held by a possessor, personally, or through his predecessor-in-interest, openly,
continuously and exclusively for the prescribed statutory period of thirty (30) years under the Public
Land Act, as amended, is converted to private property by the mere lapse or completion of said
period, ipso jure.[22]

Hence, this petition.[23]


In its Memorandum,[24] the OSG submits the following
ISSUES
I
The Court of Appeals erred in reversing and setting aside the Resolution dated December
23, 2002 of the Land Registration Court denying the BELATED submission of tax
declarations which the herein respondent merely attached in its supplemental motion for
reconsideration and which were NOT FORMALLY OFFERED in evidence during the trial of
the case, as required under Section 34 of Rule 132 of the 1997 Revised Rules of Civil
Procedure;
II
The Court of Appeals erred in reversing and setting aside the Resolution dated December
23, 2002 of the Land Registration Court denying the admission of MERE PHOTOCOPIES of
tax declarations which have not been verified or authenticated, in flagrant violation of the
requirements of both Act 496 (Land Registration Act) and PD 1529 (Property Registration
Act) providing that only ORIGINAL muniments of titles or original copies thereof shall be
filed;
III

The Court of Appeals erred in reversing and setting aside the subject Resolution of the Land
Registration Court which denied the application for registration on the ground that the
respondent herein failed to prove that the subject land is alienable and disposable land of
the public domain and have been in possession for the length of time and manner and
concept prescribed in Section 48(b) of the CA 141 as amended.[25]

The petition is meritorious.


Sec. 14(1) of P.D. 1529[26] in relation to Section 48(b) of Commonwealth Act 141, as amended by Section 4 of P.D.
1073,[27] provides:
SEC. 14. Who may apply.The following persons may file in the proper Court of First
Instance [now 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.
Xxx
Section 48. The following described citizens of the Philippines, occupying lands of the public
domain or claiming to own any such lands or an interest therein, but whose titles have not been
perfected or completed, may apply to the Court of First Instance [now Regional Trial Court] of the
province where the land is located for confirmation of their claims and the issuance of a certificate
of title therefor, under the Land Registration Act, to wit:
Xxx
(b) Those who by themselves or through their predecessors-in-interest
have been in open, continuous, exclusive and notorious possession and
occupation of agricultural lands of the public domain, under a bona fide claim of
acquisition of ownership, since June 12, 1945, or earlier, immediately preceding
the filing of the application for confirmation of title except when prevented by war
or force majeure. These shall be conclusively presumed to have performed all the
conditions essential to a Government grant and shall be entitled to a certificate of
title under the provisions of this chapter.
Based on these legal parameters, applicants for registration of title under Section 14(1) must sufficiently establish:
(1) that the subject land forms part of the disposable and alienable lands of the public domain; (2) that the applicant
and his predecessors-in-interest have been in open, continuous, exclusive and notorious possession and
occupation of the same; and (3) that it is under a bona fide claim of ownership since June 12, 1945, or earlier.
Thus, before an applicant can adduce evidence of open, continuous, exclusive and notorious possession
and occupation of the property in question, he must first prove that the land belongs to the alienable and disposable
lands of the public domain. It is doctrinal that, under the Regalian doctrine, all lands of the public domain pertain to
the State and the latter is the foundation of any asserted right to ownership in land. Accordingly, the State
presumably owns all lands not otherwise appearing to be clearly within private ownership. To overcome such
presumption, irrefutable evidence must be shown by the applicant that the land subject of registration has been
declassified and now belongs to the alienable and disposable portion of the public domain. [28]
Notably, the Court finds no evidence in this case that would show that the land in question has been
classified as alienable and disposable land of the public domain. The sketch plan, technical description and the
tracing clothing plan that respondent presented do not show the actual legal status of the land. Hence, the
conclusion reached by the CA that it was no longer necessary for the respondent to prove the alienability of the land
in question on the assumption that he had already completed the thirty-year possessory requirement was
misplaced. The requirements of alienability and possession and occupation since June 12, 1945 or earlier under

Section 14(1) are indispensable prerequisites to a favorable registration of his title to the property. Absent one, the
application for registration is materially infirmed.
Since respondent provided no competent and persuasive evidence to show that the land has been
classified as alienable and disposable, then the application for registration should be denied.
At any rate, after reviewing the documents submitted by the respondent, it is clear that there was no
substantive evidence to show that he complied with the requirement of possession and occupation since June 12,
1945 or earlier.
The earliest tax declaration that respondent tried to incorporate in his Supplemental Motion for
Reconsideration does not measure up to the time requirement. In particular, the tax declaration on the first lot, as
shown by Tax Declaration No. 6932 in the name of Adulfo Calo, only began in 1948. [29] On the second lot, Tax
Declaration No. 3852 in the name of Marcos Azote merely appeared in 1952. [30] While on the third lot, Tax
Declaration No. 6891 registered in the name of the Heirs of Felipe Calo came up in 1948. [31] Unmistakably, the
respondent cannot avail of registration under Section 14(1) of P.D. 1529.
In his Memorandum,[32] respondent proffered that should not the land be registrable under Section 14(1) of
P.D. 1529, it could still be registered under Section 14(2) of P.D. 1529. [33]
He cannot.
The case of Heirs of Mario Malabanan vs. Republic[34] summarized the distinctions between the legal
requisites in applications for registration of title under Section 14(1) and Section 14(2) of P.D. 1529, to wit:
(1) In connection with Section 14(1) of the Property Registration Decree, Section 48(b) of the
Public Land Act recognizes and confirms that 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
acquisition of ownership, since June 12, 1945 have acquired ownership of, and registrable title to,
such lands based on the length and quality of their possession.
(a) Since Section 48(b) merely requires possession since 12 June 1945 and does
not require that the lands should have been alienable and disposable during the entire
period of possession, the possessor is entitled to secure judicial confirmation of his title
thereto as soon as it is declared alienable and disposable, subject to the timeframe
imposed by Section 47 of the Public Land Act.[35]
(b) The right to register granted under Section 48(b) of the Public Land Act is
further confirmed by Section 14(1) of the Property Registration Decree.
(2) In complying with Section 14(2) of the Property Registration Decree, consider that under the
Civil Code, prescription is recognized as a mode of acquiring ownership of patrimonial
property. However, public domain lands become only patrimonial property not only with a
declaration that these are alienable or disposable. There must also be an express
government manifestation that the property is already patrimonial or no longer retained for
public service or the development of national wealth, under Article 422 of the Civil Code.
[36]
And only when the property has become patrimonial can the prescriptive period for the
acquisition of property of the public dominion begin to run.
(a) Patrimonial property is private property of the government. The person acquires
ownership of patrimonial property by prescription under the Civil Code is entitled to
secure registration thereof under Section 14(2) of the Property Registration Decree.
(b) There are two kinds of prescription by which patrimonial property may be
acquired, one ordinary and other extraordinary. Under ordinary acquisitive prescription, a
person acquires ownership of a patrimonial property through possession for at least ten
(10) years, in good faith and with just title. Under extraordinary acquisitive prescription, a
persons uninterrupted adverse possession of patrimonial property for at least thirty (30)
years, regardless of good faith or just title, ripens into ownership.

The import of this ruling is clear. Under Section 14(2) of P.D. 1529, before acquisitive prescription could
commence, the property sought to be registered must not only be classified as alienable and disposable; it must
also be expressly declared by the State that it is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial. Thus, absent an express declaration by the
State, the land remains to be property of public dominion.
WHEREFORE, the petition is GRANTED. The November 28, 2008 Decision of the Court of Appeals is
hereby REVERSED and SET ASIDE. The Application for Registration of Title of respondent Jose T. Ching in Land
Registration Case No. N-290 is DENIED.
SO ORDERED.

G.R. No. 185023 : August 24, 2011


CITY OF PASIG REPRESENTED BY THE CITY TREASURER AND THE CITY ASSESSOR, Petitioner, v.
REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE PRESIDENTIAL COMMISSION ON GOOD
GOVERNANCE, Respondent.
CARPIO, J.:
FACTS:
Mid-Pasig Land Development Corporation (MPLDC) owned two parcels of land, with a total area of 18.4891
hectares, situated in Pasig City. The properties are covered by Transfer Certificate of Title (TCT) Nos. 337158 and
469702 and Tax Declaration Nos.E-030-01185 and E-030-01186 under the name of MPLDC.Portions of the
properties are leased to different business establishments.
In 1986, the registered owner of MPLDC, Jose Y. Campos (Campos), voluntarily surrendered MPLDC to the
Republic of the Philippines.
On 30 September 2002, the Pasig City Assessors Office sent MPLDC two notices of tax delinquency for its failure to
pay real property tax on the properties for the period 1979 to 2001 totaling P256,858,555.86. In a letter dated 29
October 2002, Independent Realty Corporation (IRC) President Ernesto R.Jalandoni(Jalandoni) and Treasurer
Rosario Razon informed the Pasig City Treasurer that the tax for the period 1979 to 1986 had been paid, and that
the properties were exempt from tax beginning 1987.
In letters dated 10 July 2003 and 8 January 2004, the Pasig City Treasurer informed MPLDC and IRC that the
properties were not exempt from tax. In a letter dated 16 February 2004, MPLDC General Manager Antonio
Merelos(Merelos) andJalandoniagain informed the Pasig City Treasurer that the properties were exempt from tax. In
a letter dated 11 March 2004, the Pasig City Treasurer again informed Merelos that the properties were not exempt
from tax.
On 20 October 2005, the Pasig City Assessors Office sent MPLDC a notice of final demand for payment of tax for
the period 1987 to 2005 totaling P389,027,814.48. On the same day, MPLDC paidP2,000,000partial payment under
protest.
On 9 November 2005, MPLDC received two warrants of levy on the properties. On 1 December 2005, respondent
Republic of the Philippines, through the Presidential Commission on Good Government (PCGG), filed with the RTC
a petition for prohibition with prayer for issuance of a temporary restraining order or writ of preliminary injunction to
enjoin petitioner Pasig City from auctioning the properties and from collecting real property tax.
On 2 December 2005, the Pasig City Treasurer offered the properties for sale at public auction. Since there was no
other bidder, Pasig City bought the properties and was issued the corresponding certificates of sale.
On 19 December 2005, PCGG filed with the RTC an amended petition for certiorari, prohibition and mandamus
against Pasig City.
RTC granted the petition for certiorari, prohibition and mandamus.

Pasig City appealed to the Court of Appeals. In its 31 March 2008 Decision, the Court of Appeals set aside the
RTCs 6 November 2006 Decision.
Hence, the present petition.
ISSUES:
1) Whether the lower courts erred in granting PCGGs petition for certiorari, prohibition and mandamus and
2) Whether the lower courts erred in ordering Pasig City to assess and collect real property tax from the lessees of
the properties.
HELD: The petition is partly meritorious.
CIVIL LAW: the republic is the owner of the property
As correctly found by the RTC and the Court of Appeals, the Republic of the Philippines owns the properties.
Campos voluntarily surrendered MPLDC, which owned the properties, to the Republic of the Philippines. In
Republic of the Philippines v. Sandiganbayan, the Court stated:
xxxJose Y. Campos, a confessed crony of former President Ferdinand E. Marcos, voluntarily surrendered or turned
over to the PCGG the properties, assets and corporations he held in trust for the deposed President. Among the
corporations he surrendered were the Independent Realty Corporation and the Mid-Pasig Land Development
Corporation.
InRepublic of the Philippines v. Sandiganbayan, the Court stated:
The antecedent facts are stated by the Solicitor General as follows:
xxxx
3. Sometime in the later part of August 1987, defendant Jose D. Campos, Jr., having been served with summons on
August 5, 1987, filed with the respondent Court an undated Manifestation and Motion to Dismiss Complaint with
Respect to Jose D. Campos praying that he be removed as party defendant from the complaint on the grounds that
he had voluntarily surrendered or turned over any share in his name on [sic] any of the corporations referred to,
aside from disclaiming any interest, ownership or rightthereonto the Government of the Republic of the Philippines
and that he was entitled to the immunity granted by the Presidential Commission on Good Government pursuant to
Executive Order No. 14, under the Commissions Resolution dated May 28, 1986 to Mr. Jose Y. Campos and his
family he being a member of the immediate family of Jose Y. Campos.
In the instant case, the PCGG issued a resolution dated May 28, 1986, granting immunity from both civil and
criminal prosecutions to Jose Y. Campos and his family. The pertinent provisions of the resolution read as follows:
3.0. In consideration of the full cooperation of Mr. Jose Y. Campos to this Commission, his voluntary surrender of
the properties and assets disclosed and declared by him to belong to deposed President Ferdinand E. Marcos to
the Government of the Republic of the Philippines, his full, complete and truthful disclosures, and his commitment to
pay a sum of money as determined by the Philippine Government, this Commission has decided and agreed:
Undoubtedly, this resolution embodies a compromise agreement between the PCGG on one hand and Jose Y.
Campos on the other. Hence, in exchange for the voluntary surrender of the ill-gotten properties acquired by the
then President Ferdinand E. Marcos and his family which were in Jose Campos control, the latter and his family
were given full immunity in both civil and criminal prosecutions. xxx
By virtue of the PCGGs May 28, 1986 resolution, Jose Campos, Jr. was given full immunity from both civil and
criminal prosecutions in exchange for the full cooperation of Mr. Jose Y. Campos to this Commission, his voluntary
surrender of the properties and assets disclosed and declared by him to belong to deposed President Ferdinand E.

Marcos to the Government of the Republic of the Philippines, his full, complete and truthful disclosures, and his
commitment to pay a sum of money as determined by the Philippine Government. In addition, Campos, Jr. had
already waived and surrendered to the Republic his registered equity interest in the Marcos/Romualdezcorporations
involved in the civil case.
Even as the Republic of the Philippines is now the owner of the properties in view of the voluntary surrender of
MPLDC by its former registered owner, Campos, to the State, such transfer does not prevent a third party with a
better right from claiming such properties in the proper forum. In the meantime, the Republic of the Philippines is the
presumptive owner of the properties for taxation purposes.
TAXATION LAW: properties owned by the Republic of the Philippines are exempt from real property tax;
exception
Section 234(a) of Republic Act No. 7160 states that properties owned by the Republic of the Philippines are exempt
from real property tax except when the beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person.Thus, the portions of the properties not leased to taxable entities are exempt from real estate tax
while the portions of the properties leased to taxable entities are subject to real estate tax. The law imposes the
liability to pay real estate tax on the Republic of the Philippines for the portions of the properties leased to taxable
entities. It is, of course, assumed that the Republic of the Philippines passes on the real estate tax as part of the
rent to the lessees.
Article 420 of the Civil Code classifies as properties of public dominion those that are intended for public use, such
as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,roadsteads and those
that are intended for some public service or for the development of the national wealth. Properties of public
dominion are not only exempt from real estate tax,they are exempt from sale at public auction. In Heirs of Mario
Malabanan v. Republic, the Court held that, It is clear that property of public dominion, which generally includes
property belonging to the State, cannot be subject of the commerce of man.
InPhilippine Fisheries Development Authority v. Court of Appeals,the Court held:
xxxThe real property tax assessments issued by the City of Iloilo should be upheld only with respect to the portions
leased to private persons.In case the Authority fails to pay the real property taxes due thereon, said portions cannot
be sold at public auction to satisfy the tax delinquency. In Chavez v. Public Estates Authority it was held that
reclaimed lands are lands of the public dominion and cannot, without Congressional fiat, be subject of a sale, public
or privatexxx.
In the same vein, the port built by the State in the Iloilo fishing complex is a property of the public dominion and
cannot therefore be sold at public auction. Article 420 of the Civil Code, provides:
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.
The Iloilo fishing port which was constructed by the State for public use and/or public service falls within the term
port in the aforecited provision. Being a property of public dominion the same cannot be subject to execution or
foreclosure sale. In like manner, the reclaimed land on which the IFPC is built cannot be the object of a private or
public sale without Congressional authorization.
InManila International Airport Authority, the Court held:
xxxThe Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public
dominion. Properties of public dominion are owned by the State or the Republic. Article 420 of the Civil Code
provides:
Art. 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.
The term ports constructed by the Sate includes airports and seaports. The Airport Lands and Buildings of MIAA are
intended for public use, and at the very least intended for public service. Whether intended for public use or public
service, the Airport Lands and Buildings are properties of public dominion. As properties of public dominion, the
Airport lands and Buildings are owned by the Republic and thus exempt from real estate tax under Section 234(a) of
the Local Government Code
xxx
Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public use, are
properties of public dominion and thus owned by the State or the Republic of the Philippines. Article 420 specifically
mentions ports xxxconstructed by the State, which includes public airports and seaports, as properties of public
dominion and owned by the Republic. As properties of public dominion owned by the Republic, there is no doubt
whatsoever that the Airport Lands and Buildings are expressly exempt from real estate tax under Section 234(a) of
the local Government Code.This Court has also repeatedly ruled that properties of public dominion are not subject
to execution or foreclosure sale.
In the present case, the parcels of land are not properties of public dominion because they are not intended for
public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks,
shores,roadsteads. Neither are they intended for some public service or for the development of the national wealth.
MPLDC leases portions of the properties to different business establishments. Thus, the portions of the properties
leased to taxable entities are not only subject to real estate tax, they can also be sold at public auction to satisfy the
tax delinquency.
In sum, only those portions of the properties leased to taxable entities are subject to real estate tax for the period of
such leases. Pasig City must, therefore, issue to respondent new real property tax assessments covering the
portions of the properties leased to taxable entities. If the Republic of the Philippines fails to pay the real property
tax on the portions of the properties leased to taxable entities, then such portions may be sold at public auction to
satisfy the tax delinquency.
PARTIALLY GRANTED.

[G.R. No. 137705. August 22, 2000]


SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs. PCI LEASING AND
FINANCE, INC., respondent.

DECISION
PANGANIBAN, J.:

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.

The Case

Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision [1] of the Court
of Appeals (CA)[2] in CA-GR SP No. 47332 and its February 26, 1999 Resolution [3] denying
reconsideration. The decretal portion of the CA Decision reads as follows:
WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution dated March 31,
1998 in Civil Case No. Q-98-33500 are hereby AFFIRMED. The writ of preliminary injunction issued on June 15,
1998 is hereby LIFTED.[4]

In its February 18, 1998 Order,[5] the Regional Trial Court (RTC) of Quezon City (Branch 218)[6] issued
a Writ of Seizure.[7] The March 18, 1998 Resolution [8] denied petitioners Motion for Special Protective
Order, praying that the deputy sheriff be enjoined from seizing immobilized or other real properties in
(petitioners) factory in Cainta, Rizal and to return to their original place whatever immobilized machineries
or equipments he may have removed.[9]
The Facts

The undisputed facts are summarized by the Court of Appeals as follows: [10]

On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI Leasing for short) filed with the RTC-QC a
complaint for [a] sum of money (Annex E), with an application for a writ of replevin docketed as Civil Case No. Q98-33500.

On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of replevin (Annex
B) 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.

On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory, seized one
machinery with [the] word that he [would] return for the other machineries.

On March 25, 1998, petitioners filed a motion for special protective order (Annex C), invoking the power of the court
to control the conduct of its officers and amend and control its processes, praying for a directive for the sheriff to
defer enforcement of the writ of replevin.

This motion was opposed by PCI Leasing (Annex F), 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.

On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of the remaining
properties. He was able to take two more, but was prevented by the workers from taking the rest.
On April 7, 1998, they went to [the CA] via an original action for certiorari.

Ruling of the Court of Appeals

Citing the Agreement of the parties, the appellate court held that the subject machines were personal
property, and that they had only been leased, not 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. Observing that
Petitioner Goquiolay was an experienced businessman who was not unfamiliar with the ways of the
trade, it ruled that he should have realized the import of the document he signed. The CA further held:

Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon the case below, since
the merits of the whole matter are laid down before us via a petition whose sole purpose is to inquire upon the
existence of a grave abuse of discretion on the part of the [RTC] in issuing the assailed Order and Resolution. The
issues raised herein are proper subjects of a full-blown trial, necessitating presentation of evidence by both
parties. The contract is being enforced by one, and [its] validity is attacked by the other a matter x x x which
respondent court is in the best position to determine.

Hence, this Petition.[11]


The Issues

In their Memorandum, petitioners submit the following issues for our consideration:
A. Whether or not the machineries purchased and imported by SERGS became real property by virtue of
immobilization.

B. Whether or not the contract between the parties is a loan or a lease. [12]

In the main, the Court will resolve whether the said machines are personal, not immovable, property
which may be a proper subject of a writ of replevin. As a preliminary matter, the Court will also address
briefly the procedural points raised by respondent.

The Courts Ruling

The Petition is not meritorious.

Preliminary Matter:Procedural Questions

Respondent contends that the Petition failed to indicate expressly whether it was being filed under
Rule 45 or Rule 65 of the Rules of Court. It further alleges that the Petition erroneously impleaded Judge
Hilario Laqui as respondent.
There is no question that the present recourse is under Rule 45. This conclusion finds support in the
very title of the Petition, which is Petition for Review on Certiorari. [13]
While Judge Laqui should not have been impleaded as a respondent, [14] substantial justice requires
that such lapse by itself should not warrant the dismissal of the present Petition. In this light, the Court
deems it proper to remove, motu proprio, the name of Judge Laqui from the caption of the present case.

Main Issue: Nature of the Subject Machinery

Petitioners contend that the subject machines used in their factory were not proper subjects of the
Writ issued by the RTC, because they were in fact real property. Serious policy considerations, they
argue, militate against a contrary characterization.

Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal
property only.[15] Section 3 thereof reads:

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 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.[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. [17]

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.[18] 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,[19] 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. The Court ruled:
x x x. Although there is no specific statement referring to the subject house as personal property, yet by ceding,
selling or transferring a property by way of chattel mortgage defendants-appellants could only have meant to
convey the house as chattel, or at least, intended to treat the same as such, so that they should not now be allowed
to make an inconsistent stand by claiming otherwise.
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills [20] also
held that the machinery used in a factory and essential to the industry, as in the present case, was a
proper subject of a writ of replevin because it was treated as personal property in a contract. Pertinent
portions of the Courts ruling are reproduced hereunder:

x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be considered as
personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so
agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery, which
is movable in its nature and becomes immobilized only by destination or purpose, may not be likewise treated as
such. This is really because one who has so agreed is estopped from denying the existence of the chattel
mortgage.

In the present case, the Lease Agreement clearly provides that the machines in question are to be
considered as personal property. Specifically, Section 12.1 of the Agreement reads as follows: [21]
12.1 The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the
PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed or attached to or
embedded in, or permanently resting upon, real property or any building thereon, or attached in any manner to what
is permanent.

Clearly then, petitioners are estopped from denying the characterization of the subject machines as
personal property. Under the circumstances, they are proper subjects of the Writ of Seizure.
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.
[22]
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. [23] In any event, there is no
showing that any specific third party would be adversely affected.

Validity of the Lease Agreement

In their Memorandum, petitioners contend that the Agreement is a loan and not a lease. [24] Submitting
documents supposedly showing that they own the subject machines, petitioners also argue in their
Petition that the Agreement suffers from intrinsic ambiguity which places in serious doubt the intention of
the parties and the validity of the lease agreement itself. [25] In their Reply to respondents Comment, they
further allege that the Agreement is invalid.[26]

These arguments are unconvincing. The validity and the nature of the contract are the lis mota of the
civil action pending before the RTC. A resolution of these questions, therefore, is effectively a resolution of
the merits of the case. Hence, they should be threshed out in the trial, not in the proceedings involving the
issuance of the Writ of Seizure.

Indeed, in La Tondea Distillers v. CA,[27] the Court explained that the policy under Rule 60 was that
questions involving title to the subject property questions which petitioners are now raising -- should be
determined in the trial. In that case, the Court noted that the remedy of defendants under Rule 60 was
either to post a counter-bond or to question the sufficiency of the plaintiffs bond. They were not allowed,
however, to invoke the title to the subject property. The Court ruled:

In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ of seizure (or
delivery) on ground of insufficiency of the complaint or of the grounds relied upon therefor, as in proceedings on
preliminary attachment or injunction, and thereby put at issue the matter of the title or right of possession over the
specific chattel being replevied, the policy apparently being that said matter should be ventilated and determined
only at the trial on the merits.[28]

Besides, these questions require a determination of facts and a presentation of evidence, both of
which have no place in a petition for certiorari in the CA under Rule 65 or in a petition for review in this
Court under Rule 45.[29]

Reliance on the Lease Agreement

It should be pointed out that the Court in this case may rely on the Lease Agreement, for nothing on
record shows that it has been nullified or annulled. In fact, petitioners assailed it first only in the RTC
proceedings, which had ironically been instituted by respondent. Accordingly, it must be presumed valid
and binding as the law between the parties.

Makati Leasing and Finance Corporation [30] is also instructive on this point. In that case, the Deed of
Chattel Mortgage, which characterized the subject machinery as personal property, was also assailed
because respondent had allegedly been required to sign a printed form of chattel mortgage which was in a
blank form at the time of signing.The Court rejected the argument and relied on the Deed, ruling as
follows:
x x x. Moreover, even granting that the charge is true, such fact alone does not render a contract void ab initio, but
can only be a ground for rendering said contract voidable, or annullable pursuant to Article 1390 of the new Civil
Code, by a proper action in court. There is nothing on record to show that the mortgage has been annulled. Neither
is it disclosed that steps were taken to nullify the same. x x x

Alleged Injustice Committed on the Part of Petitioners

Petitioners contend that if the Court allows these machineries to be seized, then its workers would be
out of work and thrown into the streets. [31] They also allege that the seizure would nullify all efforts to
rehabilitate the corporation.

Petitioners arguments do not preclude the implementation of the Writ. As earlier discussed, law and
jurisprudence support its propriety. Verily, the above-mentioned consequences, if they come true, should
not be blamed on this Court, but on the petitioners for failing to avail themselves of the remedy under
Section 5 of Rule 60, which allows the filing of a counter-bond. The provision states:

SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicants bond, or of the surety
or sureties thereon, he cannot immediately require the return of the property, but if he does not so object, he may, at
any time before the delivery of the property to the applicant, require the return thereof, by filing with the court where
the action is pending a bond executed to the applicant, in double the value of the property as stated in the

applicants affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the payment of
such sum to him as may be recovered against the adverse party, and by serving a copy bond on the applicant.

WHEREFORE, the Petition is DENIED and


Appeals AFFIRMED. Costs against petitioners.

the

assailed

Decision

of

the

Court

of

SO ORDERED.

G.R. No. L-50466 May 31, 1982


CALTEX (PHILIPPINES) INC., petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF PASAY, respondents.
AQUINO, J.:
This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc. in its gas stations
located on leased land.
The machines and equipment consists of underground tanks, elevated tank, elevated water tanks, water tanks,
gasoline pumps, computing pumps, water pumps, car washer, car hoists, truck hoists, air compressors and
tireflators. The city assessor described the said equipment and machinery in this manner:
A gasoline service station is a piece of lot where a building or shed is erected, a water tank if there
is any is placed in one corner of the lot, car hoists are placed in an adjacent shed, an air
compressor is attached in the wall of the shed or at the concrete wall fence.
The controversial underground tank, depository of gasoline or crude oil, is dug deep about six feet
more or less, a few meters away from the shed. This is done to prevent conflagration because
gasoline and other combustible oil are very inflammable.
This underground tank is connected with a steel pipe to the gasoline pump and the gasoline pump
is commonly placed or constructed under the shed. The footing of the pump is a cement pad and
this cement pad is imbedded in the pavement under the shed, and evidence that the gasoline
underground tank is attached and connected to the shed or building through the pipe to the pump
and the pump is attached and affixed to the cement pad and pavement covered by the roof of the
building or shed.
The building or shed, the elevated water tank, the car hoist under a separate shed, the air
compressor, the underground gasoline tank, neon lights signboard, concrete fence and pavement
and the lot where they are all placed or erected, all of them used in the pursuance of the gasoline
service station business formed the entire gasoline service-station.
As to whether the subject properties are attached and affixed to the tenement, it is clear they are,
for the tenement we consider in this particular case are (is) the pavement covering the entire lot

which was constructed by the owner of the gasoline station and the improvement which holds all
the properties under question, they are attached and affixed to the pavement and to the
improvement.
The pavement covering the entire lot of the gasoline service station, as well as all the
improvements, machines, equipments and apparatus are allowed by Caltex (Philippines) Inc. ...
The underground gasoline tank is attached to the shed by the steel pipe to the pump, so with the
water tank it is connected also by a steel pipe to the pavement, then to the electric motor which
electric motor is placed under the shed. So to say that the gasoline pumps, water pumps and
underground tanks are outside of the service station, and to consider only the building as the
service station is grossly erroneous. (pp. 58-60, Rollo).
The said machines and equipment are loaned by Caltex to gas station operators under an appropriate lease
agreement or receipt. It is stipulated in the lease contract that the operators, upon demand, 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. The realty tax on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax appeals
ruled that they are personalty. The assessor appealed to the Central Board of Assessment Appeals.
The Board, which was composed of Secretary of Finance Cesar Virata as chairman, Acting Secretary of Justice
Catalino Macaraig, Jr. and Secretary of Local Government and Community Development Jose Roo, held in its
decision of June 3, 1977 that the said machines and equipment are real property within the meaning of sections
3(k) & (m) and 38 of the Real Property Tax Code, Presidential Decree No. 464, which took effect on June 1, 1974,
and that the definitions of real property and personal property in articles 415 and 416 of the Civil Code are not
applicable to this case.
The decision was reiterated by the Board (Minister Vicente Abad Santos took Macaraig's place) in its resolution of
January 12, 1978, denying Caltex's motion for reconsideration, a copy of which was received by its lawyer on April
2, 1979.
On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for the setting aside of the Board's decision and
for a declaration that t he said machines and equipment are personal property not subject to realty tax (p. 16, Rollo).
The Solicitor General's contention that the Court of Tax Appeals has exclusive appellate jurisdiction over this case is
not correct. When Republic act No. 1125 created the Tax Court in 1954, there was as yet no Central Board of
Assessment Appeals. Section 7(3) of that law in providing that the Tax Court had jurisdiction to review by appeal
decisions of provincial or city boards of assessment appeals had in mind the local boards of assessment appeals
but not the Central Board of Assessment Appeals which under the Real Property Tax Code has appellate jurisdiction
over decisions of the said local boards of assessment appeals and is, therefore, in the same category as the Tax
Court.
Section 36 of the Real Property Tax Code provides that the decision of the Central Board of Assessment Appeals
shall become final and executory after the lapse of fifteen days from the receipt of its decision by the appellant.
Within that fifteen-day period, a petition for reconsideration may be filed. The Code does not provide for the review
of the Board's decision by this Court.
Consequently, the only remedy available for seeking a review by this Court of the decision of the Central Board of
Assessment Appeals is the special civil action of certiorari, the recourse resorted to herein by Caltex (Philippines),
Inc.

The issue is whether the pieces of gas station equipment and machinery already enumerated are subject to realty
tax. This issue has to be resolved primarily under the provisions of the Assessment Law and the Real Property Tax
Code.
Section 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 section 3 thereof. This provision is reproduced
with some modification in the Real Property Tax Code which provides:
SEC. 38. Incidence of Real Property Tax. There shall be levied, assessed and collected in all
provinces, cities and municipalities an annual ad valorem tax on real property, such as land,
buildings, machinery and other improvements affixed or attached to real property not hereinafter
specifically exempted.
The Code contains the following definitions in its section 3:
k) Improvements is a valuable addition made to property or an amelioration in its condition,
amounting to more than mere repairs or replacement of waste, costing labor or capital and intended
to enhance its value, beauty or utility or to adapt it for new or further purposes.
m) Machinery shall embrace machines, mechanical contrivances, instruments, appliances and
apparatus attached to the real estate. It includes the physical facilities available for production, as
well as the installations and appurtenant service facilities, together with all other equipment
designed for or essential to its manufacturing, industrial or agricultural purposes (See sec. 3[f],
Assessment Law).
We hold that the said equipment and machinery, as appurtenances to the gas station building or shed owned by
Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the operation of the gas station, for
without them the gas station would be useless, and which have been attached or affixed permanently to the gas
station site or embedded therein, are taxable improvements and machinery within the meaning of the Assessment
Law and the Real Property Tax Code.
Caltex invokes the rule that machinery which is movable in its nature only becomes immobilized when placed in a
plant by the owner of the property or plant but not when so placed by a tenant, a usufructuary, or any person having
only a temporary right, unless such person acted as the agent of the owner (Davao Saw Mill Co. vs. Castillo, 61 Phil
709).
That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding machinery that becomes real
property by destination. In the Davao Saw Mills case the question was whether the machinery mounted on
foundations of cement and installed by the lessee on leased land should be regarded as real property forpurposes
of execution of a judgment against the lessee. The sheriff treated the machinery as personal property. This Court
sustained the sheriff's action. (Compare with Machinery & Engineering Supplies, Inc. vs. Court of Appeals, 96 Phil.
70, where in a replevin case machinery was treated as realty).
Here, the question is whether the gas station equipment and machinery permanently affixed by Caltex to its gas
station and pavement (which are indubitably taxable realty) should be subject to the realty tax. This question is
different from the issue raised in the Davao Saw Mill case.
Improvements on land are commonly taxed as realty even though for some purposes they might be considered
personalty (84 C.J.S. 181-2, Notes 40 and 41). "It is a familiar phenomenon to see things classed as real property
for purposes of taxation which on general principle might be considered personal property" (Standard Oil Co. of
New York vs. Jaramillo, 44 Phil. 630, 633).
This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., 119 Phil. 328,
where Meralco's steel towers were considered poles within the meaning of paragraph 9 of its franchise which

exempts its poles from taxation. The steel towers were considered personalty because they were attached to
square metal frames by means of bolts and could be moved from place to place when unscrewed and dismantled.
Nor are Caltex's gas station equipment and machinery the same as 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 is imposition of the realty tax on Caltex's gas station and equipment.
WHEREFORE, the questioned decision and resolution of the Central Board of Assessment Appeals are affirmed.
The petition for certiorari is dismissed for lack of merit. No costs.
SO ORDERED.